RESIDENTIAL ASSET MORTGAGE PRODUCTS, INC.,

                                   Depositor,

                        RESIDENTIAL FUNDING CORPORATION,

                                Master Servicer,

                                       and

                               JPMORGAN CHASE BANK

                                     Trustee




                         POOLING AND SERVICING AGREEMENT

                          Dated as of February 1, 2003




                 Mortgage Asset-Backed Pass-Through Certificates

                                 Series 2003-RS1




<PAGE>

<TABLE>
<CAPTION>


                                      TABLE OF CONTENTS





                                          ARTICLE I

                                         DEFINITIONS
<S>             <C>                                                                         <C>
        Section 1.01. Definitions............................................................7
                      -----------
               Accrued Certificate Interest..................................................7
               Adjusted Mortgage Rate........................................................8
               Adjustment Date...............................................................8
               Advance.......................................................................8
               Affiliate.....................................................................8
               Agreement.....................................................................8
               Amount Held for Future Distribution...........................................8
               Appraised Value...............................................................8
               Assignment....................................................................8
               Assignment Agreement..........................................................9
               Balloon Loan..................................................................9
               Balloon Payment...............................................................9
               Bankruptcy Code...............................................................9
               Bankruptcy Loss...............................................................9
               Basis Risk Shortfall..........................................................9
               Basis Risk Shortfall Carry-Forward Amount.....................................9
               Book-Entry Certificate........................................................9
               Business Day.................................................................10
               Cash Liquidation.............................................................10
               Certificate..................................................................10
               Certificate Account..........................................................10
               Certificate Account Deposit Date.............................................10
               Certificateholder or Holder..................................................10
               Certificate Insurer Premium..................................................10
               Certificate Insurer Premium Modified Rate....................................11
               Certificate Insurer Premium Rate.............................................11
               Certificate Owner............................................................11
               Certificate Principal Balance................................................11
               Certificate Register and Certificate Registrar...............................11
               Class........................................................................11
               Class A Certificates.........................................................11
               Class A-I Certificates.......................................................11
               Class A-I Interest Distribution Amount.......................................12
               Class A-I Principal Distribution Amount......................................12
               Class A-I-1 Certificate......................................................12
               Class A-I-1 Margin...........................................................12


                                              i

<PAGE>



               Class A-I-2 Certificate......................................................12
               Class A-I-3 Certificate......................................................12
               Class A-I-4 Certificate......................................................12
               Class A-I-5 Certificate......................................................13
               Class A-I-6 Certificate......................................................13
               Class A-I-6 Lockout Distribution Amount......................................13
               Class A-I-6 Lockout Percentage...............................................13
               Class A-I-6 Pro Rata Distribution Amount.....................................13
               Class A-I-IO Certificate.....................................................13
               Class A-II Certificate.......................................................14
               Class A-II Margin............................................................14
               Class M-I Certificates.......................................................14
               Class M-I-1 Certificate......................................................14
               Class M-I-1 Interest Distribution Amount.....................................14
               Class M-I-1 Principal Distribution Amount....................................14
               Class M-I-2 Certificate......................................................15
               Class M-I-2 Interest Distribution Amount.....................................15
               Class M-I-2 Principal Distribution Amount....................................15
               Class M-I-3 Certificate......................................................15
               Class M-I-3 Interest Distribution Amount.....................................15
               Class M-I-3 Principal Distribution Amount....................................15
               Class R Certificate..........................................................16
               Class R-I Certificate........................................................16
               Class R-II Certificate.......................................................16
               Class R-III Certificate......................................................16
               Class R-IV Certificate.......................................................16
               Class SB Certificates........................................................16
               Class SB-I Certificate.......................................................16
               Class SB-II Certificate......................................................17
               Closing Date.................................................................17
               Code.........................................................................17
               Commission...................................................................17
               Compensating Interest........................................................17
               Corporate Trust Office.......................................................17
               Corresponding Class..........................................................17
               Corresponding Interest.......................................................18
               Curtailment..................................................................18
               Custodial Account............................................................18
               Custodial Agreement..........................................................19
               Custodian....................................................................19
               Cut-off Date.................................................................19
               Cut-off Date Principal Balance...............................................19
               Debt Service Reduction.......................................................19
               Deficiency Amount............................................................19
               Deficient Valuation..........................................................19
               Definitive Certificate.......................................................19


                                              ii

<PAGE>



               Deleted Mortgage Loan........................................................19
               Delinquency Ratio............................................................19
               Delinquent...................................................................20
               Depository...................................................................20
               Depository Participant.......................................................20
               Derivative Contract..........................................................20
               Derivative Counterparty......................................................20
               Destroyed Mortgage Note......................................................20
               Determination Date...........................................................20
               Disqualified Organization....................................................20
               Distribution Date............................................................21
               Due Date.....................................................................21
               Due Period...................................................................21
               Eligible Account.............................................................21
               ERISA........................................................................21
               Event of Default.............................................................22
               Excess Loss..................................................................22
               Excess Realized Loss.........................................................22
               Exchange Act.................................................................22
               Extraordinary Events.........................................................22
               Fannie Mae...................................................................22
               FASIT........................................................................23
               FDIC.........................................................................23
               FHA..........................................................................23
               Final Distribution Date......................................................23
               Final Scheduled Distribution Date............................................23
               Fitch........................................................................23
               Foreclosure Profits..........................................................23
               Fraud Losses.................................................................23
               Freddie Mac..................................................................23
               Gross Margin.................................................................23
               Group I Adjusted Net WAC Cap Rate............................................24
               Group I Available Distribution Amount........................................24
               Group II Available Distribution Amount.......................................24
               Group I Bankruptcy Amount....................................................25
               Group II Bankruptcy Amount...................................................25
               Group II Cumulative Insurance Payments.......................................25
               Group I Cut-off Date Balance.................................................25
               Group II Cut-off Date Balance................................................25
               Group I Diverted Excess Spread...............................................25
               Group II Diverted Excess Spread..............................................26
               Group I Excess Bankruptcy Loss...............................................26
               Group II Excess Bankruptcy Loss..............................................26
               Group I Excess Cash Flow.....................................................26
               Group II Excess Cash Flow....................................................26
               Group I Excess Fraud Loss....................................................26


                                             iii

<PAGE>



               Group II Excess Fraud Loss...................................................26
               Group I Excess Loss..........................................................26
               Group II Excess Loss.........................................................26
               Group I Excess Overcollateralization Amount..................................27
               Group II Excess Overcollateralization Amount.................................27
               Group I Excess Special Hazard Loss...........................................27
               Group II Excess Special Hazard Loss..........................................27
               Group I Extraordinary Losses.................................................27
               Group II Extraordinary Losses................................................27
               Group I Fraud Loss Amount....................................................27
               Group II Fraud Loss Amount...................................................28
               Group I Interest Distribution Amount.........................................28
               Group II Interest Distribution Amount........................................28
               Group I Loan.................................................................28
               Group II Loan................................................................28
               Group II Marker Rate.........................................................29
               Group I Net WAC Cap Carry-Forward Amount.....................................29
               Group I Net WAC Cap Rate.....................................................29
               Group II Net WAC Cap Rate....................................................29
               Group I Net WAC Cap Shortfall................................................29
               Group I Optional Termination Date............................................29
               Group II Optional Termination Date...........................................30
               Group I Overcollateralization Amount.........................................30
               Group II Overcollateralization Amount........................................30
               Group I Overcollateralization Increase Amount................................30
               Group II Overcollateralization Increase Amount...............................30
               Group I Overcollateralization Reduction Amount...............................30
               Group II Overcollateralization Reduction Amount..............................30
               Group I Pool Stated Principal Balance........................................30
               Group II Pool Stated Principal Balance.......................................31
               Group I Principal Distribution Amount........................................31
               Group II Principal Distribution Amount.......................................31
               Group I Principal Remittance Amount..........................................32
               Group II Principal Remittance Amount.........................................32
               Group I Senior Enhancement Percentage........................................32
               Group I Special Hazard Amount................................................32
               Group II Special Hazard Amount...............................................33
               Group I Stepdown Date........................................................34
               Group II Stepdown Date.......................................................34
               Group I Trigger Event........................................................34
               Group I Uncertificated Regular Interests.....................................34
               Group II Uncertificated Regular Interests....................................34
               Hazardous Materials..........................................................34
               Independent..................................................................35
               Index........................................................................35
               Initial Certificate Principal Balance........................................35


                                              iv

<PAGE>



               Insurance Account............................................................35
               Insurance Agreement..........................................................35
               Insurance Proceeds...........................................................35
               Insured Amount...............................................................35
               Insurer......................................................................35
               Insurer Account..............................................................35
               Insurer Default..............................................................35
               Interest Accrual Period......................................................36
               Interim Certification........................................................36
               Interested Person............................................................36
               Late Collections.............................................................36
               Late Payment Rate............................................................36
               LIBOR........................................................................36
               LIBOR Business Day...........................................................36
               LIBOR Rate Adjustment Date...................................................36
               Limited Repurchase Right Holder..............................................36
               Liquidation Proceeds.........................................................36
               Loan Group...................................................................37
               Loan-to-Value Ratio..........................................................37
               Maturity Date................................................................37
               Maximum Group II Rate........................................................37
               Maximum Mortgage Rate........................................................37
               Maximum Net Mortgage Rate....................................................37
               MERS.........................................................................37
               MERS(R)System.................................................................37
               MIN..........................................................................37
               Minimum Mortgage Rate........................................................37
               Modified Mortgage Loan.......................................................37
               Modified Net Mortgage Rate...................................................38
               MOM Loan.....................................................................38
               Monthly Payment..............................................................38
               Moody's......................................................................38
               Mortgage.....................................................................38
               Mortgage File................................................................38
               Mortgage Loan Schedule.......................................................38
               Mortgage Loans...............................................................39
               Mortgage Note................................................................39
               Mortgage Rate................................................................40
               Mortgaged Property...........................................................40
               Mortgagor....................................................................40
               Net Collections..............................................................40
               Net Mortgage Rate............................................................40
               Non-Primary Residence Loans..................................................40
               Non-United States Person.....................................................40
               Nonrecoverable Advance.......................................................40
               Nonsubserviced Mortgage Loan.................................................41


                                              v

<PAGE>



               Note Margin..................................................................41
               Notice.......................................................................41
               Notional Amount..............................................................41
               Officers' Certificate........................................................42
               Opinion of Counsel...........................................................42
               Outstanding Mortgage Loan....................................................42
               Overcollateralization Floor..................................................42
               Ownership Interest...........................................................42
               Pass-Through Rate............................................................42
               Paying Agent.................................................................44
               Percentage Interest..........................................................44
               Periodic Cap.................................................................44
               Permitted Investments........................................................44
               Permitted Transferee.........................................................45
               Person.......................................................................45
               Policy.......................................................................46
               Prepayment Assumption........................................................46
               Prepayment Interest Shortfall................................................46
               Prepayment Period............................................................46
               Primary Insurance Policy.....................................................46
               Principal Prepayment.........................................................46
               Principal Prepayment in Full.................................................46
               Program Guide................................................................46
               Purchase Price...............................................................46
               Qualified Insurer............................................................47
               Qualified Substitute Mortgage Loan...........................................47
               Rate Change Date.............................................................47
               Rating Agency................................................................48
               Realized Loss................................................................48
               Record Date..................................................................48
               Regular Certificates.........................................................49
               Regular Interest.............................................................49
               Relief Act...................................................................49
               REMIC........................................................................49
               REMIC Administrator..........................................................49
               REMIC I......................................................................49
               REMIC I Regular Interests....................................................49
               REMIC II.....................................................................50
               REMIC II Regular Interest....................................................50
               REMIC III....................................................................50
               REMIC III Group I Diverted Excess Spread.....................................50
               REMIC III Group II Diverted Excess Spread....................................50
               REMIC III Group I Interest Loss Allocation Amount............................50
               REMIC III Group II Interest Loss Allocation Amount...........................50
               REMIC III Group I Overcollateralized Amount..................................50
               REMIC III Group II Overcollateralized Amount.................................50


                                              vi

<PAGE>



               REMIC III Group I Principal Loss Allocation Amount...........................51
               REMIC III Group II Principal Loss Allocation Amount..........................51
               REMIC III Group I Regular Interests..........................................51
               REMIC III Group II Regular Interests.........................................51
               REMIC III Group I Required Overcollateralization Amount......................51
               REMIC III Group II Required Overcollateralized Amount........................51
               REMIC III Regular Interest LT3-AI-AA.........................................51
               REMIC III Regular Interest LT3-AI-1..........................................51
               REMIC III Regular Interest LT3-AI-2..........................................52
               REMIC III Regular Interest LT3-AI-3..........................................52
               REMIC III Regular Interest LT3-AI-4..........................................52
               REMIC III Regular Interest LT3-AI-5..........................................52
               REMIC III Regular Interest LT3-AI-6..........................................52
               REMIC III Regular Interest LT3-MI-1..........................................52
               REMIC III Regular Interest LT3-MI-2..........................................52
               REMIC III Regular Interest LT3-MI-3..........................................52
               REMIC III Regular Interest LT3-AI-ZZ.........................................52
               REMIC III Regular Interest LT3-AI-ZZ Maximum Interest Deferral Amount
                ............................................................................53
               REMIC III Regular Interest LT3-IAIO..........................................53
               REMIC III Regular Interest LT3-AII-AA........................................53
               REMIC III Regular Interest LT3-AII-1.........................................53
               REMIC III Regular Interest LT3-AII-ZZ........................................53
               REMIC III Regular Interest LT3-AII-ZZ Maximum
               Interest Deferral Amount.....................................................53
               REMIC IV.....................................................................53
               REMIC Provisions.............................................................54
               REO Acquisition..............................................................54
               REO Disposition..............................................................54
               REO Imputed Interest.........................................................54
               REO Proceeds.................................................................54
               REO Property.................................................................54
               Repurchase Event.............................................................54
               Repurchase Price.............................................................54
               Request for Release..........................................................55
               Required Insurance Policy....................................................55
               Reserve Fund.................................................................55
               Reserve Fund Deposit.........................................................55
               Reserve Fund Residual Right..................................................56
               Residential Funding..........................................................56
               Responsible Officer..........................................................56
               Rolling Six-Month Delinquency Ratio..........................................56
               Servicing Accounts...........................................................56
               Servicing Advances...........................................................56
               Servicing Fee................................................................56
               Servicing Fee Rate...........................................................56


                                             vii

<PAGE>



               Servicing Modification.......................................................56
               Servicing Officer............................................................57
               Servicing Trigger............................................................57
               Sixty-Plus Delinquency Percentage............................................57
               Special Hazard Loss..........................................................57
               Standard & Poor's............................................................57
               Startup Date.................................................................57
               Stated Principal Balance.....................................................58
               Subordination................................................................58
               Subordination Percentage.....................................................58
               Subserviced Mortgage Loan....................................................58
               Subservicer..................................................................58
               Subservicer Advance..........................................................58
               Subservicing Account.........................................................58
               Subservicing Agreement.......................................................58
               Subservicing Fee.............................................................58
               Subservicing Fee Rate........................................................59
               Tax Returns..................................................................59
               Transfer.....................................................................59
               Transferee...................................................................59
               Transferor...................................................................59
               Trust Fund...................................................................59
               Twelve-Month Loss Amount.....................................................59
               Uniform Single Attestation Program for Mortgage Bankers......................59
               Uncertificated Pass-Through Rate.............................................61
               Uncertificated Principal Balance.............................................61
               Uncertificated Regular Interests.............................................61
               Uncertificated REMIC II Pass-Through Rate....................................61
               Uninsured Cause..............................................................62
               United States Person.........................................................62
               VA...........................................................................62
               Voting Rights................................................................62
        Section 1.02. Determination of LIBOR................................................63



                                          ARTICLE II

                                CONVEYANCE OF MORTGAGE LOANS;
                              ORIGINAL ISSUANCE OF CERTIFICATES

        Section 2.01. Conveyance of Mortgage Loans..........................................64
        Section 2.02. Acceptance by Trustee.................................................67
        Section 2.03. Representations, Warranties and Covenants of the
                      Master Servicer and the Depositor.....................................68
        Section 2.04. Representations and Warranties of Residential Funding.................71


                                             viii

<PAGE>



        Section 2.05. Execution and Authentication of Certificates; Conveyance of Uncertificated
                      REMIC Regular Interests...............................................72



                                         ARTICLE III

                        ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
        Section 3.01. Master Servicer to Act as Servicer....................................74
        Section 3.02. Subservicing Agreements Between Master Servicer and
                      Subservicers; Enforcement of Subservicers' Obligations................75
        Section 3.03. Successor Subservicers................................................76
        Section 3.04. Liability of the Master Servicer......................................77
        Section 3.05. No Contractual Relationship Between Subservicer and
                      Trustee or Certificateholders.........................................77
        Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee.......77
        Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits
                      to Custodial Account..................................................78
        Section 3.08. Subservicing Accounts; Servicing Accounts.............................80
        Section 3.09. Access to Certain Documentation and Information Regarding
                      the Mortgage Loans....................................................81
        Section 3.10. Permitted Withdrawals from the Custodial Account......................81
        Section 3.11. Maintenance of Primary Insurance Coverage.............................83
        Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity Coverage.....84
        Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and Modification
                      Agreements; Certain Assignments.......................................85
        Section 3.14. Realization Upon Defaulted Mortgage Loans.............................87
        Section 3.15. Trustee to Cooperate; Release of Mortgage Files.......................90
        Section 3.16. Servicing and Other Compensation; Compensating Interest...............91
        Section 3.17. Reports to the Trustee and the Depositor..............................92
        Section 3.18. Annual Statement as to Compliance.....................................92
        Section 3.19. Annual Independent Public Accountants' Servicing Report...............93
        Section 3.20. Right of the Depositor in Respect of the Master Servicer..............93



                                          ARTICLE IV

                                PAYMENTS TO CERTIFICATEHOLDERS
        Section 4.01. Certificate Account...................................................94
        Section 4.02. Distributions.........................................................95
        Section 4.03. Statements to Certificateholders; Exchange Act Reporting.............106
        Section 4.04. Distribution of Reports to the Trustee and the Depositor; Advances
                      by the Master Servicer...............................................109
        Section 4.05. Allocation of Realized Losses........................................111
        Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property........113


                                              ix

<PAGE>



        Section 4.07. Optional Purchase of Defaulted Mortgage Loans........................114
        Section 4.08. Limited Mortgage Loan Repurchase Right...............................114
        Section 4.09. Distribution of Basis Risk Shortfall Carry-Forward Amount and
                      Group I Net WAC Cap Carry-Forward Amount; Reserve Fund...............114
        Section 4.10. The Policy...........................................................115
        Section 4.11. Derivative Contracts.................................................116



                                          ARTICLE V

                                       THE CERTIFICATES
        Section 5.01. The Certificates.....................................................118
        Section 5.02. Registration of Transfer and Exchange of Certificates................119
        Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates....................124
        Section 5.04. Persons Deemed Owners................................................124
        Section 5.05. Appointment of Paying Agent..........................................125



                                          ARTICLE VI

                            THE DEPOSITOR AND THE MASTER SERVICER
        Section 6.01. Respective Liabilities of the Depositor and the Master Servicer......126
        Section 6.02. Merger or Consolidation of the Depositor or the Master Servicer;
                      Assignment of Rights and Delegation of Duties by Master Servicer.....126
        Section 6.03. Limitation on Liability of the Depositor, the Master Servicer
                      and Others...........................................................127
        Section 6.04. Depositor and Master Servicer Not to Resign..........................127



                                         ARTICLE VII

                                           DEFAULT
        Section 7.01. Events of Default....................................................129
        Section 7.02. Trustee or Depositor to Act; Appointment of Successor................131
        Section 7.03. Notification to Certificateholders...................................132
        Section 7.04. Waiver of Events of Default..........................................132
        Section 7.05. Servicing Trigger; Removal of Master Servicer........................133





                                              x

<PAGE>



                                         ARTICLE VIII

                                    CONCERNING THE TRUSTEE
        Section 8.01. Duties of Trustee....................................................134
        Section 8.02. Certain Matters Affecting the Trustee................................135
        Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans................137
        Section 8.04. Trustee May Own Certificates.........................................137
        Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses;
                      Indemnification......................................................137
        Section 8.06. Eligibility Requirements for Trustee.................................138
        Section 8.07. Resignation and Removal of the Trustee...............................139
        Section 8.08. Successor Trustee....................................................140
        Section 8.09. Merger or Consolidation of Trustee...................................140
        Section 8.10. Appointment of Co-Trustee or Separate Trustee........................140
        Section 8.11. Appointment of Custodians............................................141



                                          ARTICLE IX

                                         TERMINATION
        Section 9.01. Termination Upon Purchase by the Master Servicer or
                      Liquidation of All Mortgage Loans....................................143
        Section 9.02. Additional Termination Requirements..................................146



                                          ARTICLE X

                                       REMIC PROVISIONS
        Section 10.01.REMIC Administration.................................................147
        Section 10.02.Master Servicer, REMIC Administrator and Trustee Indemnification.....150



                                          ARTICLE XI

                                   MISCELLANEOUS PROVISIONS
        Section 11.01.Amendment............................................................152
        Section 11.02.Recordation of Agreement; Counterparts...............................154
        Section 11.03.Limitation on Rights of Certificateholders...........................155
        Section 11.04.Governing Law........................................................155
        Section 11.05. Notices.............................................................156
        Section 11.06.Notices to Rating Agencies and the Insurer...........................156
        Section 11.07.Severability of Provisions...........................................157
        Section 11.08.Supplemental Provisions for Resecuritization.........................157


                                              xi

<PAGE>



        Section 11.09.Rights of the Insurer................................................158
        Section 11.10.Third Party Beneficiary..............................................158



Exhibit A      Form of Class A Certificate
Exhibit B      Form of Class B Certificate
Exhibit C      Form of Class SB Certificate
Exhibit D      Form of Class R Certificate
Exhibit E      Form of Custodial Agreement
Exhibit F-1    Group I Loan Schedule
Exhibit F-2    Group II Loan Schedule
Exhibit G      Forms of Request for Release
Exhibit H-1    Form of Transfer Affidavit and Agreement
Exhibit H-2    Form of Transferor Certificate
Exhibit I      Form of Investor Representation Letter
Exhibit J      Form of Transferor Representation Letter
Exhibit K      Text of Amendment to Pooling and Servicing Agreement Pursuant to Section
               11.01(e) for a Limited Guaranty
Exhibit L      [Reserved]
Exhibit M      Form of Lender Certification for Assignment of Mortgage Loan
Exhibit N      Form of Rule 144A Investment Representation
Exhibit O      [Reserved]
Exhibit  P-1   Form of ERISA  Letter  (Class M  Certificates)
Exhibit  P-2   Form of ERISA Letter (Class SB Certificates)
Exhibit Q      Certificate  Guaranty  Insurance Policy
Exhibit  R-1   Form  10-K  Certification
Exhibit  R-2   Form  10-K  Back-up Certification
</TABLE>


                                             xii

<PAGE>



        This Pooling and Servicing Agreement,  effective as of February 1, 2003,
among RESIDENTIAL ASSET MORTGAGE PRODUCTS, INC., as the depositor (together with
its permitted  successors and assigns,  the  "Depositor"),  RESIDENTIAL  FUNDING
CORPORATION,  as master  servicer  (together  with its permitted  successors and
assigns,  the "Master  Servicer"),  and JPMORGAN  CHASE BANK, a New York banking
corporation, as trustee (together with its permitted successors and assigns, the
"Trustee").

                                    PRELIMINARY STATEMENT:

        The  Depositor  intends  to  sell  mortgage  asset-backed   pass-through
certificates  (collectively,  the  "Certificates"),  to be issued  hereunder  in
seventeen  classes,  which in the aggregate will evidence the entire  beneficial
ownership interest in the Mortgage Loans (as defined herein).

                                           REMIC I

        As provided  herein,  the REMIC  Administrator  will make an election to
treat the segregated pool of assets  consisting of the Group I Loans and certain
other  related  assets  subject  to this  Agreement  as a real  estate  mortgage
investment  conduit  (a  "REMIC")  for  federal  income tax  purposes,  and such
segregated  pool of  assets  will be  designated  as  "REMIC  I." The  Class R-I
Certificates  will  represent the sole class of "residual  interests" in REMIC I
for purposes of the REMIC  Provisions  (as defined  herein) under federal income
tax law. The following table irrevocably sets forth the designation,  remittance
rate (the "Uncertificated REMIC I Pass-Through Rate") and initial Uncertificated
Principal  Balance for each of the "regular  interests" in REMIC I (the "REMIC I
Regular Interests").  The "latest possible maturity date" (determined solely for
purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii)) for each
REMIC I Regular Interest shall be the 360th Distribution Date. None of the REMIC
I Regular Interests will be certificated.

<TABLE>
<CAPTION>

                                               Uncertificated REMIC I       Latest Possible
    DESIGNATION         Pass-Through Rate         Principal Balance          Maturity Date
    -----------                                   -----------------          -------------
<S>         <C>                    <C>                <C>                           <C> <C>
       LT-A-1              Variable(1)                $ 272.99             February 25, 2033
       LT-A-2              Variable(1)             $ 22,400,000.00         February 25, 2033
       LT-A-3              Variable(1)             $ 20,600,000.00         February 25, 2033
       LT-A-4              Variable(1)             $ 19,100,000.00          February 25, 2033
       LT-A-5              Variable(1)             $ 17,700,000.00         February 25, 2033
       LT-A-6              Variable(1)             $ 16,400,000.00         February 25, 2033
       LT-A-7              Variable(1)             $ 15,100,000.00         February 25, 2033
       LT-A-8              Variable(1)             $ 14,100,000.00         February 25, 2033
       LT-A-9             Variable (1)             $ 13,000,000.00         February 25, 2033
      LT-A-10              Variable(1)             $ 12,000,000.00         February 25, 2033
      LT-A-11              Variable(1)             $ 11,100,000.00         February 25, 2033
      LT-A-12              Variable(1)             $ 10,300,000.00         February 25, 2033
      LT-A-13              Variable(1)             $ 9,600,000.00          February 25, 2033
      LT-A-14              Variable(1)             $ 8,800,000.00          February 25, 2033
      LT-A-15              Variable(1)             $ 8,200,000.00          February 25, 2033
      LT-A-16              Variable(1)             $ 7,500,000.00          February 25, 2033



                                              1

<PAGE>




      LT-A-17              Variable(1)             $ 7,000,000.00          February 25, 2033
      LT-A-18              Variable(1)             $ 6,500,000.00          February 25, 2033
      LT-A-19              Variable(1)             $ 6,000,000.00          February 25, 2033
      LT-A-20              Variable(1)             $ 5,600,000.00          February 25, 2033
      LT-A-21              Variable(1)             $ 5,100,000.00          February 25, 2033
      LT-A-22              Variable(1)             $ 4,800,000.00          February 25, 2033
      LT-A-23              Variable(1)             $ 4,400,000.00          February 25, 2033
      LT-A-24              Variable(1)             $ 4,100,000.00          February 25, 2033
      LT-A-25              Variable(1)             $ 3,700,000.00          February 25, 2033
      LT-A-26              Variable(1)             $ 3,500,000.00          February 25, 2033
      LT-A-27              Variable(1)             $ 3,300,000.00          February 25, 2033
      LT-A-28              Variable(1)             $ 3,000,000.00          February 25, 2033
      LT-A-29              Variable(1)             $ 2,700,000.00          February 25, 2033
      LT-A-30              Variable(1)             $ 2,600,000.00          February 25, 2033
      LT-A-31              Variable(1)             $ 31,800,000.00         February 25, 2033
</TABLE>

---------------
(1)  Calculated  as  provided  in  the  definition  of  Uncertificated  REMIC  I
Pass-Through Rate.

                                           REMIC II

        As provided  herein,  the REMIC  Administrator  will make an election to
treat the segregated pool of assets consisting of the Group II Loans and certain
other related  assets  (exclusive of the Reserve Fund) subject to this Agreement
as a REMIC for federal income tax purposes,  and such  segregated pool of assets
will be designated as "REMIC II." The Class R-II Certificates will represent the
sole  class  of  "residual  interests"  in REMIC II for  purposes  of the  REMIC
Provisions  under federal income tax law. The following table  irrevocably  sets
forth  the   designation,   remittance  rate  (the   "Uncertificated   REMIC  II
Pass-Through  Rate")  and  initial  Uncertificated  Principal  Balance  for  the
"regular  interest" in REMIC II (the "REMIC II Regular  Interest").  The "latest
possible maturity date" (determined  solely for purposes of satisfying  Treasury
regulation Section  1.860G-1(a)(4)(iii)) for the REMIC II Regular Interest shall
be the 360th  Distribution  Date.  The  REMIC II  Regular  Interest  will not be
certificated.

<TABLE>
<CAPTION>

                                               Uncertificated REMIC II      Latest Possible
    DESIGNATION         Pass-Through Rate         Principal Balance          Maturity Date
    -----------                                   -----------------          -------------
<S>                                <C>            <C>                               <C> <C>
        LT-B               Variable(1)            $ 400,000,593.79         February 25, 2033
</TABLE>

---------------
(1)  Calculated  as  provided  in the  definition  of  Uncertificated  REMIC  II
Pass-Through Rate.

                                          REMIC III

        As provided  herein,  the REMIC  Administrator  will make an election to
treat the segregated pool of assets  consisting of the REMIC I Regular Interests
and the REMIC II  Regular  Interests  subject to this  Agreement  as a REMIC for
federal  income  tax  purposes,  and  such  segregated  pool of  assets  will be
designated as "REMIC III." The Class R-III  Certificates will represent the sole
class


                                              2

<PAGE>



of "residual  interests" in REMIC III for purposes of the REMIC Provisions under
federal  income  tax  law.  The  following  table  irrevocably  sets  forth  the
designation,  remittance rate (the "Uncertificated REMIC III Pass-Through Rate")
and initial Uncertificated Principal Balance for each of the "regular interests"
in REMIC III (the "REMIC III Regular Interests").  The "latest possible maturity
date" (determined solely for purposes of satisfying  Treasury regulation Section
1.860G-1(a)(4)(iii))  for each  REMIC III  Regular  Interest  shall be the 360th
Distribution Date. None of the REMIC III Regular Interests will be certificated.

<TABLE>
<CAPTION>

                                              Uncertificated REMIC III      Latest Possible
    DESIGNATION         Pass-Through Rate         Principal Balance          Maturity Date
    -----------                                   -----------------          -------------
<S>    <C>                         <C>            <C>                               <C> <C>
     LT3-AI-AA             Variable(1)            $ 294,000,267.53         February 25, 2033
      LT3-AI-1             Variable(1)              $ 981,000.00           February 25, 2033
      LT3-AI-2             Variable(1)               $332,000.00           February 25, 2033
      LT3-AI-3             Variable(1)              $ 507,000.00           February 25, 2033
      LT3-AI-4             Variable(1)               $386,000.00           February 25, 2033
      LT3-AI-5             Variable(1)              $ 291,000.00           February 25, 2033
      LT3-AI-6             Variable(1)              $ 278,000.00           February 25, 2033
      LT3-MI-1             Variable(1)              $ 120,000.00           February 25, 2033
      LT3-MI-2             Variable(1)               $ 75,000.00           February 25, 2033
      LT3-MI-3             Variable(1)               $ 30,000.00           February 25, 2033
     LT3-AI-ZZ             Variable(1)             $ 3,000,005.46          February 25, 2033
    LT3-IAIO(2)               1.00%                      (3)               February 25, 2033
     LT3-AII-AA            Variable(1)            $ 392,000,581.91         February 25, 2033
     LT3-AII-1             Variable(1)             $ 4,000,000.00          February 25, 2033
     LT3-AII-ZZ            Variable(1)             $ 4,000,011.88          February 25, 2033
</TABLE>

---------------
(1)  Calculated  as  provided  in the  definition  of  Uncertificated  REMIC III
Pass-Through Rate.
(2) REMIC III Regular Interest LR3-IAIO will represent 30 REMIC regular interest
components, REMIC III Regular Interest Component LT3-IAIO-1 through LT3-IAIO-30.
Each  component will have (a) a rate of 1.00% per annum from the Closing Date to
but not including the Rate Change Date for such  component and thereafter a rate
of 0.00% and (b) an uncertificated  notional amount equal to the  Uncertificated
Principal  Balance of the REMIC I Regular  Interest for which such  component is
the  Corresponding  Interest.  (3) REMIC III Regular Interest  LT3-IAIO does not
have an  Uncertificated  Principal  Balance.  For  the  purpose  of  calculating
interest payments,  interest will accrue on a uncertificated  notional amount as
defined herein.

                                           REMIC IV

        As  provided  herein,  the REMIC  Administrator  will elect to treat the
segregated  pool of assets  consisting  of the REMIC III Regular  Interests as a
REMIC for federal income tax purposes,  and such  segregated pool of assets will
be designated as REMIC IV. The Class R-IV  Certificates  will represent the sole
class of "residual  interests" in REMIC IV for purposes of the REMIC  Provisions
under federal  income tax law. The following  table  irrevocably  sets forth the
designation,   Pass-  Through  Rate,  aggregate  Initial  Certificate  Principal
Balance, certain features, Final Scheduled Distribution Date and initial ratings
for each Class of Certificates comprising the interests


                                              3

<PAGE>



representing  "regular  interests"  in REMIC IV. The "latest  possible  maturity
date" (determined solely for purposes of satisfying  Treasury Regulation Section
1.860G-1(a)(4)(iii))  for each Class of REMIC IV Regular  Certificates  shall be
the 360th Distribution Date, except for the Class A-I-IO  Certificates for which
it shall be the 30th Distribution Date.


                                              4

<PAGE>




<TABLE>
<CAPTION>


                                       GGREGATE INITI               INAL SCHEDULED
                                        CERTIFICATE                 DISTRIBUTION DATE
                        PASS-THROUGH    PRINCIPAL        FEATURES
DESIGNATION     TYPE        RATE          BALANCE                                                       INITIAL RATINGS
                                                                                                         S&P   MOODY'S

                                                        Senior/
<S>       <C>                         <C>                                               <C> <C>
Class A-I-1    Senior  Adjustable Rate(1)$ 98,100,000   Adjustable Rate         January 25, 2019        AAA     Aaa
Class A-I-2    Senior      2.871%        $ 33,200,000    Senior                 April 25, 2023          AAA     Aaa
Class A-I-3    Senior      3.495%        $ 50,700,000    Senior                 May 25, 2028            AAA     Aaa
Class A-I-4    Senior      4.496%        $ 38,600,000    Senior                 March 25, 2031          AAA     Aaa
Class A-I-5    Senior   5.692%(1)(2)     $ 29,100,000    Senior                 February 25, 2033       AAA     Aaa
Class A-I-6    Senior     4.802%(1)      $ 27,800,000   Senior/Lockout          February 25, 2033       AAA     Aaa
                                                      Senior/Interes
Class A-I-IO   Senior     1.000%(3)   $           0(4)    Only                  August 25, 2005         AAA     Aaa
Class M-I-1  Mezzanine    5.756%(1)      $ 12,000,000  Mezzanine                February 25, 2033       AA     Aa2
Class M-I-2  Mezzanine    6.241%(1)     $   7,500,000  Mezzanine                February 25, 2033       A       A2
Class M-I-3  Mezzanine    6.300%(1)     $   3,000,000  Mezzanine                February 25, 2033       BBB     Baa2

 Class A-I    Senior  Adjustable(1)(2) $400,000,000 Senior/Adjustable Rate      February 25, 2033       AAA     Aaa
 Class SB-I  Subordinate Variable(5)  $      272.99 Subordinate                 February 25, 2033       N/R     N/R
Class SB-II  Subordinate Variable(5)  $      593.79 Subordinate                 February 25, 2033       N/R     N/R
 Class R-I    Residual       N/A                  N/A   Residual                        N/A             N/R     N/R
 Class R-II   Residual       N/A                  N/A   Residual                        N/A             N/R     N/R
Class R-III   Residual       N/A                  N/A   Residual                        N/A             N/R     N/R
 Class R-IV   Residual       N/A                  N/A   Residual                        N/A             N/R     N/R
</TABLE>

---------------
(1)     Subject to a cap as described in the definition of  "Pass-Through  Rate"
        herein.  Calculated in accordance  with the definition of  "Pass-Through
        Rate" herein.
(2)     On and after the second Distribution Date after the first possible Group
        I Optional  Termination Date, the Pass-Through  Rates on the Class A-I-5
        Certificates  will  increase by a per annum rate equal to 0.50%.  On and
        after the second  Distribution  Date after the first  possible  Group II
        Optional  Termination  Date,  the margin on the Class A-II  Certificates
        will double.
(3)     The Pass-Through  Rate for the Class A-I-IO  Certificates will be 1.000%
        per annum for the March 2003 through August 2005 Distribution  Date, and
        0.00% per annum thereafter.  The Class A-I-IO  Certificates will only be
        entitled to interest for the first 30 Distribution Dates.
(4)     The Class A-I-IO  Certificates do not have a principal balance.  For the
        purpose of calculating  interest  payments,  interest will accrue on the
        Class A-I-IO  Certificates on a notional amount. Such notional amount is
        equal to the lesser of (a) the amount indicated in the table included in
        the  definition  of  "Notional  Amount"  herein  and (b)  the  aggregate
        principal balance of the Mortgage Loans in Loan Group I.
(5)     The Class SB  Certificates  will  accrue  interest as  described  in the
        definition of Accrued  Certificate  Interest.  The Class SB Certificates
        will not accrue interest on their Certificate Principal Balance.


        The Group I Loans have an aggregate Cut-off Date Principal Balance equal
to  approximately  $300,000,273.   The  Group  I  Loans  are  fixed-rate,  fully
amortizing  and balloon  payment,  first lien  mortgage  loans  having  terms to
maturity at origination or modification of generally not more than 30 years. The
Group II  Loans  have an  aggregate  Cut-off  Date  Principal  Balance  equal to
approximately  $400,000,594.  The  Group II  Loans  are  adjustable-rate,  fully
amortizing, first lien


                                              5

<PAGE>



mortgage  loans  having  terms to maturity at  origination  or  modification  of
generally not more than 30 years.

        In  consideration  of  the  mutual  agreements  herein  contained,   the
Depositor, the Master Servicer and the Trustee agree as follows:


                                              6

<PAGE>



                                          ARTICLE I

                                         DEFINITIONS

        Section 1.01. Definitions.
                      -----------

        Whenever used in this Agreement, the following words and phrases, unless
the  context  otherwise  requires,  shall have the  meanings  specified  in this
Article.

        Accrued Certificate Interest: With respect to each Distribution Date and
the Class A Certificates and Class M-I Certificates, interest accrued during the
related Interest Accrual Period on its Certificate Principal Balance or Notional
Amount,  as  applicable,  immediately  prior  to such  Distribution  Date at the
related Pass-Through Rate less any of the following interest shortfalls from the
Mortgage Loans, if any,  allocated  thereto for such  Distribution  Date,  which
include:

        (i) the interest  portion  (adjusted  to the Net  Mortgage  Rate (or the
        Modified Net Mortgage Rate in the case of a Modified  Mortgage Loan)) of
        Excess Losses on the Group I Loans and the Group II Loans, respectively,
        to  the  extent   allocated  to  the  related  Class  A  and  Class  M-I
        Certificates,

        (ii) the interest portion of Advances  previously made with respect to a
        Mortgage Loan or REO Property which remained unreimbursed  following the
        Cash  Liquidation  or REO  Disposition  of  such  Mortgage  Loan  or REO
        Property  that  were  made  with  respect  to  delinquencies  that  were
        ultimately determined to be Excess Losses, and

        (iii) any other  interest  shortfalls on the Group I Loans and the Group
        II Loans,  including interest that is not collectible from the Mortgagor
        for the  related  Due  Period  pursuant  to the  Relief  Act or  similar
        legislation or  regulations  as in effect from time to time,  other than
        Prepayment  Interest  Shortfalls  and the  interest  portion of Realized
        Losses, other than Excess Losses,

with  all such  reductions  allocated  on the  Group I Loans  to the  Class  A-I
Certificates  and Class M-I  Certificates on a pro rata basis,  and allocated on
the Group II Loans to the Class A-II  Certificates,  in reduction of the Accrued
Certificate Interest which would have resulted absent such reductions.

        With respect to each  Distribution  Date and the Class SB  Certificates,
interest  accrued  during the preceding  Interest  Accrual Period at the related
Pass-Through  Rate on the  Notional  Amount as specified  in the  definition  of
Pass-Through  Rate,  immediately  prior to such  Distribution Date in each case,
reduced  by any  interest  shortfalls  with  respect to the  related  Loan Group
including   Prepayment   Interest  Shortfalls  to  the  extent  not  covered  by
Compensating  Interest pursuant to Section 3.16 or by Group I or Group II Excess
Cash Flow  pursuant  to clauses  (x) and (xi) of  Section  4.02(c)  and (d).  In
addition,  Accrued Certificate  Interest with respect to each Distribution Date,
as to the Class SB  Certificates,  shall be  reduced  by an amount  equal to the
interest    portion   of   Realized   Losses    allocated   to   the   Group   I
Overcollateralization  Amount  or  Group  II  Overcollateralization  Amount,  as
applicable, pursuant to Section 4.05 hereof. Accrued Certificate Interest on the
Class A-I  Certificates  (other  than the Class A-I-1  Certificates),  Class M-I
Certificates and Class SB-I Certificates shall


                                              7

<PAGE>



accrue on the basis of a  360-day  year  consisting  of  twelve  30-day  months.
Accrued  Certificate  Interest  on the Class  A-I-1,  Class A-II and Class SB-II
Certificates  shall accrue on the basis of a 360- day year and the actual number
of days in the related Interest Accrual Period.

        Adjusted  Mortgage Rate:  With respect to any Mortgage Loan and any date
of determination, the Mortgage Rate borne by the related Mortgage Note, less the
related Subservicing Fee Rate.

        Adjustment Date: As to each adjustable rate Mortgage Loan, each date set
forth in the related  Mortgage  Note on which an adjustment to the interest rate
on such Mortgage Loan becomes effective.

        Advance:  As to any  Mortgage  Loan,  any  advance  made  by the  Master
Servicer, pursuant to Section 4.04.

        Affiliate:  With respect to any Person,  any other  Person  controlling,
controlled by or under common  control with such first Person.  For the purposes
of this  definition,  "control"  means the power to direct  the  management  and
policies of such Person,  directly or indirectly,  whether through the ownership
of voting securities,  by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                    Agreement:  This  Pooling and  Servicing  Agreement  and all
               amendments hereof and supplements hereto.

        Amount Held for Future  Distribution:  As to any Distribution  Date, the
total of the amounts held in the  Custodial  Account at the close of business on
the  preceding  Determination  Date  on  account  of (i)  Liquidation  Proceeds,
Insurance Proceeds, Principal Prepayments, Mortgage Loan purchases made pursuant
to Section 2.02, 2.03, 2.04, 4.07 or 4.08 and Mortgage Loan  substitutions  made
pursuant  to  Section  2.03  or 2.04  received  or  made  in the  month  of such
Distribution  Date  (other  than such  Liquidation  Proceeds  and  purchases  of
Mortgage Loans that the Master  Servicer has deemed to have been received in the
preceding  month in accordance  with Section  3.07(b)) and (ii)  payments  which
represent early receipt of scheduled payments of principal and interest due on a
date or dates subsequent to the Due Date in the related Due Period.

        Appraised Value: As to any Mortgaged Property, one of the following: (i)
the lesser of (a) the appraised value of such Mortgaged  Property based upon the
appraisal made at the time of the origination of the related  Mortgage Loan, and
(b) the sales price of the Mortgaged Property at such time of origination,  (ii)
in the case of a Mortgaged  Property  securing a refinanced or modified Mortgage
Loan,  one of (1) the appraised  value based upon the appraisal made at the time
of origination  of the loan which was refinanced or modified,  (2) the appraised
value determined in an appraisal made at the time of refinancing or modification
or (3) the sales price of the Mortgaged  Property,  or (iii) with respect to the
Mortgage  Loans for which a  broker's  price  opinion  was  obtained,  the value
contained in such opinion.

        Assignment:  An  assignment  of the  Mortgage,  notice  of  transfer  or
equivalent  instrument,  in recordable  form,  sufficient  under the laws of the
jurisdiction  wherein  the related  Mortgaged  Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of


                                              8

<PAGE>



Certificateholders,   which   assignment,   notice  of  transfer  or  equivalent
instrument  may be in the  form  of one or  more  blanket  assignments  covering
Mortgages  secured  by  Mortgaged  Properties  located  in the same  county,  if
permitted by law and accompanied by an Opinion of Counsel to that effect.

        Assignment Agreement: The Assignment and Assumption Agreement, dated the
Closing Date,  between  Residential  Funding and the  Depositor  relating to the
transfer and assignment of the Mortgage Loans.

     Balloon  Loan:  Each of the  Mortgage  Loans  having  an  original  term to
maturity that is shorter than the related amortization term.

     Balloon  Payment:  With respect to any Balloon  Loan,  the related  Monthly
Payment payable on the stated maturity date of such Balloon Loan.

        Bankruptcy Code: The Bankruptcy Code of 1978, as amended.

        Bankruptcy  Loss:  With  respect  to  any  Mortgage  Loan,  a  Deficient
Valuation or Debt Service Reduction; provided, however, that neither a Deficient
Valuation  nor a Debt  Service  Reduction  shall  be  deemed a  Bankruptcy  Loss
hereunder  so long as the Master  Servicer  has  notified  the  Trustee  and the
Insurer in writing that the Master Servicer is diligently  pursuing any remedies
that may  exist in  connection  with the  representations  and  warranties  made
regarding the related  Mortgage Loan and either (A) the related Mortgage Loan is
not in default with regard to payments due thereunder or (B) delinquent payments
of principal  and interest  under the related  Mortgage Loan and any premiums on
any applicable  primary hazard  insurance policy and any related escrow payments
in respect of such  Mortgage  Loan are being  advanced on a current basis by the
Master  Servicer or a  Subservicer,  in either case without giving effect to any
Debt Service Reduction.

        Basis Risk Shortfall:  With respect to the Class A-II  Certificates  and
any Distribution  Date for which the Pass-Through  Rate for such Certificates is
equal to the Group II Net WAC Cap  Rate,  the  excess,  if any,  of (x)  Accrued
Certificate  Interest on that Class of Certificates on such  Distribution  Date,
using the lesser of (a) LIBOR plus the Class A-II Margin, as calculated for such
Distribution  Date,  and (b)  the  Maximum  Group  II  Rate,  over  (y)  Accrued
Certificate  Interest on the Class A-II  Certificates for such Distribution Date
calculated at the Group II Net WAC Cap Rate.

        Basis Risk  Shortfall  Carry-Forward  Amount:  With respect to the Class
A-II  Certificates  and each  Distribution  Date,  the sum of (a) the  aggregate
amount of Basis Risk Shortfall for such Class on such Distribution Date plus (b)
any Basis Risk Shortfall  Carry-Forward  Amount for such Class remaining  unpaid
from the  preceding  Distribution  Date,  plus (c) one  month's  interest on the
amount in clause  (b)  (based on the  number of days in the  preceding  Interest
Accrual Period),  to the extent  previously  unreimbursed by Group I Excess Cash
Flow pursuant to Section  4.02(c)(xvii) or Group II Excess Cash Flow pursuant to
Section 4.02(d)(xiii), at a rate equal to the related Pass-Through Rate.

        Book-Entry  Certificate:  Any Certificate  registered in the name of the
Depository or its nominee.



                                              9

<PAGE>



        Business  Day:  Any day other than (i) a Saturday  or a Sunday or (ii) a
day on  which  banking  institutions  in the  States  of  New  York,  Minnesota,
Illinois,  Texas or  Michigan  (and  such  other  state or  states  in which the
Custodial  Account  or the  Certificate  Account  are at the time  located)  are
required or authorized by law or executive order to be closed.

        Cash  Liquidation:  As to  any  defaulted  Mortgage  Loan  other  than a
Mortgage Loan as to which an REO Acquisition  occurred,  a determination  by the
Master  Servicer  that  it has  received  all  Insurance  Proceeds,  Liquidation
Proceeds  and  other  payments  or cash  recoveries  which the  Master  Servicer
reasonably and in good faith expects to be finally  recoverable  with respect to
such Mortgage Loan.

     Certificate:  Any  Class A  Certificate,  Class SB  Certificate  or Class R
Certificate.

        Certificate  Account:  The  account or accounts  created and  maintained
pursuant  to Section  4.01,  which shall be entitled  "JPMorgan  Chase Bank,  as
trustee,  in trust for the  registered  holders of  Residential  Asset  Mortgage
Products,  Inc.,  Mortgage  Asset-Backed   Pass-Through   Certificates,   Series
2003-RS1"  and which must be an Eligible  Account.  Any such account or accounts
created and  maintained  subsequent  to the Closing Date shall be subject to the
approval of the Insurer, which approval shall not be unreasonably withheld.

        Certificate  Account  Deposit Date:  As to any  Distribution  Date,  the
Business Day prior thereto.

        Certificateholder  or Holder:  The Person in whose name a Certificate is
registered  in the  Certificate  Register  except  that  neither a  Disqualified
Organization  nor a  Non-United  States  Person  shall be a holder  of a Class R
Certificate for any purpose hereof. Solely for the purpose of giving any consent
or direction pursuant to this Agreement,  any Certificate,  other than a Class R
Certificate, registered in the name of the Depositor, the Master Servicer or any
Subservicer or any Affiliate  thereof shall be deemed not to be outstanding  and
the Percentage  Interest or Voting Rights  evidenced  thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
or Voting  Rights  necessary to effect any such  consent or  direction  has been
obtained.  All  references  herein to  "Holders" or  "Certificateholders"  shall
reflect the rights of Certificate  Owners as they may  indirectly  exercise such
rights through the  Depository  and  participating  members  thereof,  except as
otherwise  specified  herein;  provided,  however,  that  the  Trustee  shall be
required to  recognize as a "Holder" or  "Certificateholder"  only the Person in
whose name a  Certificate  is  registered in the  Certificate  Register.  Unless
otherwise indicated in this Agreement, the Custodial Agreement or the Assignment
Agreement,  whenever  reference  is made to the actions  taken by the Trustee on
behalf of the  Certificateholders,  such reference  shall include the Insurer as
long as there is no Insurer Default continuing.

        Certificate   Insurer   Premium:   With   respect   to  the  Class  A-II
Certificates, the premium payable to the Insurer on each Distribution Date in an
amount equal to one-twelfth of the product of the  Certificate  Insurer  Premium
Rate and the  Certificate  Principal  Balance  of the  Class  A-II  Certificates
immediately prior to such Distribution Date.



                                              10

<PAGE>



        Certificate  Insurer Premium Modified Rate: With respect to any Group II
Loan and any date of determination, the Certificate Insurer Premium Rate for the
Class A-II Certificates times a fraction equal to (x) the aggregate  Certificate
Principal  Balance of the Class A-II  Certificates  as of such date over (y) the
aggregate Stated Principal Balance of the Group II Loans as of such date.

        Certificate Insurer Premium Rate: With respect to the Group II Loans and
the Class A-II  Certificates and any date of  determination,  the per annum rate
specified in the Insurance Agreement with respect to the Class A-II Certificates
for the purpose of calculating the Certificate Insurer Premium.

        Certificate Owner: With respect to a Book-Entry Certificate,  the Person
who is the beneficial owner of such Certificate, as reflected on the books of an
indirect participating brokerage firm for which a Depository Participant acts as
agent, if any, and otherwise on the books of a Depository  Participant,  if any,
and otherwise on the books of the Depository.

        Certificate  Principal Balance:  With respect to any Class A Certificate
(other than a Class A-I- IO Certificate) or Class M-I  Certificate,  on any date
of  determination,  an amount  equal to (i) the  Initial  Certificate  Principal
Balance of such Certificate as specified on the face thereof, minus (ii) the sum
of (x) the aggregate of all amounts previously  distributed with respect to such
Certificate  (or any  predecessor  Certificate)  (including  such  amounts  paid
pursuant to the Policy) and applied to reduce the Certificate  Principal Balance
or amount thereof  pursuant to Sections 4.02(c) or 4.02(d) and (y) the aggregate
of all  reductions in Certificate  Principal  Balance deemed to have occurred in
connection  with  Realized  Losses  which  were  previously  allocated  to  such
Certificate  (or any  predecessor  Certificate)  pursuant to Section 4.05 (other
than any such  amounts  included in an Insured  Amount and paid  pursuant to the
Policy).  With  respect  to  each  Class  SB-I  Certificate,   on  any  date  of
determination,  an amount  equal to the  Percentage  Interest  evidenced by such
Certificate  times an amount  equal to (i) the  excess,  if any, of (A) the then
aggregate  Stated  Principal  Balance  of the  Group I Loans  over  (B) the then
aggregate  Certificate  Principal  Balance  of the Class A-I  Certificates  then
outstanding,  plus (ii) any Group I Diverted  Excess  Spread and minus (iii) any
Group II Diverted Excess Spread.  With respect to each Class SB-II  Certificate,
on any  date of  determination,  an  amount  equal  to the  Percentage  Interest
evidenced by such Certificate  times an amount equal to (i) the excess,  if any,
of (A) the then aggregate  Stated  Principal  Balance of the Group II Loans over
(B) the Certificate Principal Balance of the Class A-II Certificates,  plus (ii)
any Group II Diverted  Excess Spread and minus (iii) any Group I Diverted Excess
Spread.  The Class A- I-IO Certificates and Class R Certificates will not have a
Certificate Principal Balance.

        Certificate Register and Certificate Registrar:  The register maintained
and the registrar appointed pursuant to Section 5.02.

     Class:  Collectively,  all of the Certificates or uncertificated  interests
bearing the same designation.

      Class A Certificates: Any one of the Class A-I or Class A-II Certificates.

        Class A-I Certificates:  Any one of the Class A-I-1,  Class A-I-2, Class
A-I-3, Class A-I-4, Class A-I-5, Class A-I-6 or Class A-I-IO Certificates.


                                              11

<PAGE>



       Class A-I Interest Distribution Amount: As defined in Section 4.02(c)(i).

        Class  A-I   Principal   Distribution   Amount:   With  respect  to  any
Distribution  Date (i)  prior to the  Group I  Stepdown  Date or on or after the
Group I  Stepdown  Date if a  Group  I  Trigger  Event  is in  effect  for  that
Distribution  Date,  the  Group  I  Principal   Distribution   Amount  for  that
Distribution  Date or (ii) on or after  the Group I  Stepdown  Date if a Group I
Trigger Event is not in effect for that Distribution Date, the lesser of:

               (i)  the  Group  I   Principal   Distribution   Amount  for  that
        Distribution Date; and

               (ii)  the  excess,  if  any,  of (A)  the  aggregate  Certificate
        Principal  Balance of the Class A-I  Certificates  immediately  prior to
        that Distribution Date over (B) the lesser of (x) the product of (1) the
        applicable   Subordination  Percentage  and  (2)  the  aggregate  Stated
        Principal   Balance  of  the  Group  I  Loans  after  giving  effect  to
        distributions to be made on that Distribution Date and (y) the aggregate
        Stated  Principal  Balance of the Group I Loans after  giving  effect to
        distributions  to be made on that  Distribution  Date,  less the related
        Overcollateralization Floor.

        Class  A-I-1  Certificate:  Any  one of  the  Class  A-I-1  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit A, senior to the Class SB-I
Certificates and Class R-IV  Certificates  with respect to distributions and the
allocation of Realized Losses in respect of Loan Group I as set forth in Section
4.05, and evidencing an interest  designated as a "regular interest" in REMIC IV
for purposes of the REMIC Provisions.

        Class A-I-1 Margin: With respect to the Class A-I-1 Certificates and any
Distribution Date, 0.16% per annum.

        Class  A-I-2  Certificate:  Any  one of  the  Class  A-I-2  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit A, senior to the Class SB-I
Certificates and Class R-IV  Certificates  with respect to distributions and the
allocation of Realized Losses in respect of Loan Group I as set forth in Section
4.05, and evidencing an interest  designated as a "regular interest" in REMIC IV
for purposes of the REMIC Provisions.

        Class  A-I-3  Certificate:  Any  one of  the  Class  A-I-3  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit A, senior to the Class SB-I
Certificates and Class R-IV  Certificates  with respect to distributions and the
allocation of Realized Losses in respect of Loan Group I as set forth in Section
4.05, and evidencing an interest  designated as a "regular interest" in REMIC IV
for purposes of the REMIC Provisions.

        Class  A-I-4  Certificate:  Any  one of  the  Class  A-I-4  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit A, senior to the Class SB-I
Certificates and Class R-IV  Certificates  with respect to distributions and the
allocation of Realized Losses in respect of Loan Group I as set forth in Section
4.05, and evidencing an interest  designated as a "regular interest" in REMIC IV
for purposes of the REMIC Provisions.



                                              12

<PAGE>



        Class  A-I-5  Certificate:  Any  one of  the  Class  A-I-5  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit A, senior to the Class SB-I
Certificates and Class R-IV  Certificates  with respect to distributions and the
allocation of Realized Losses in respect of Loan Group I as set forth in Section
4.05, and evidencing an interest  designated as a "regular interest" in REMIC IV
for purposes of the REMIC Provisions.

        Class  A-I-6  Certificate:  Any  one of  the  Class  A-I-6  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit A, senior to the Class SB-I
Certificates and Class R-IV  Certificates  with respect to distributions and the
allocation of Realized Losses in respect of Loan Group I as set forth in Section
4.05, and evidencing an interest  designated as a "regular interest" in REMIC IV
for purposes of the REMIC Provisions.

        Class A-I-6 Lockout  Distribution Amount: For any Distribution Date, the
product of (x) the Class A-I-6 Lockout Percentage for that Distribution Date and
(y) the Class A-I-6 Pro Rata Distribution  Amount for that Distribution Date. In
no event shall the Class A-I-6 Lockout  Distribution  Amount for a  Distribution
Date exceed the Group I Principal Distribution Amount for that Distribution Date
or the Certificate Principal Balance of the Class A-I-6 Certificates immediately
prior to that Distribution Date.

        Class  A-I-6  Lockout  Percentage:   For  each  Distribution  Date,  the
applicable percentage set forth below:

        (i) for any  Distribution  Date from March 2003  through  and  including
        February 2006, 0%,

        (ii) for any  Distribution  Date from March 2006  through and  including
        February 2008, 45%,

        (iii) for any  Distribution  Date from March 2008 through and  including
        February 2009, 80%,

        (iv) for any  Distribution  Date from March 2009  through and  including
        February 2010, 100%, and

        (v) for any Distribution Date on or after March 2010, 300%.

        Class A-I-6 Pro Rata Distribution  Amount: For any Distribution Date, an
amount  equal to the product of (x) a fraction,  the  numerator  of which is the
Certificate Principal Balance of the Class A-I-6 Certificates  immediately prior
to that  Distribution  Date  and  the  denominator  of  which  is the  aggregate
Certificate  Principal  Balance of the Class A-I-1,  Class  A-I-2,  Class A-I-3,
Class A-I-4, Class A-I-5 and Class A-I-6 Certificates  immediately prior to that
Distribution  Date and (y) the Group I  Principal  Distribution  Amount  payable
pursuant to Section 4.02(e)(i) hereof for that Distribution Date.

        Class  A-I-IO  Certificate:  Any one of the  Class  A-I-IO  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially in the form annexed hereto as Exhibit A,


                                              13

<PAGE>



senior to the Class SB-I  Certificates and Class R-IV  Certificates with respect
to distributions  and the allocation of Realized Losses in respect of Loan Group
I as set forth in Section  4.05,  and  evidencing  an interest  designated  as a
"regular interest" in REMIC IV for purposes of the REMIC Provisions.

        Class A-II Certificate:  Any one of the Class A-II Certificates executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit A, senior to the Class SB-II Certificates and
Class R-IV  Certificates  with respect to  distributions  and the  allocation of
Realized  Losses in respect of Loan Group II as set forth in Section  4.05,  and
evidencing  (i) an interest  designated as a "regular  interest" in REMIC IV for
purposes  of the REMIC  Provisions  and (ii) the right to receive the Basis Risk
Shortfall Carry-Forward Amount from the Reserve Fund.

        Class  A-II  Margin:  With  respect  to  the  Class  A-II  Certificates,
initially 0.39% per annum,  and starting on the second  Distribution  Date after
the first possible Group II Optional Termination Date and thereafter,  0.78% per
annum.

        Class M-I Certificates: Any one of the Class M-I-1, Class M-I-2 or Class
M-I-3 Certificates.

        Class  M-I-1  Certificate:  Any  one of  the  Class  M-I-1  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form  annexed  hereto as  Exhibit  B,  senior to the Class
M-I-2,  Class  M-I-3,  Class SB-I and Class R-IV  Certificates  with  respect to
distributions  and the allocation of Realized  Losses in respect of Loan Group I
as set forth in  Section  4.05,  and  evidencing  an  interest  designated  as a
"regular interest" in REMIC IV for purposes of the REMIC Provisions.

     Class  M-I-1   Interest   Distribution   Amount:   As  defined  in  Section
4.02(c)(ii).

        Class  M-I-1  Principal   Distribution   Amount:  With  respect  to  any
Distribution  Date (i)  prior to the  Group I  Stepdown  Date or on or after the
Group I  Stepdown  Date if a  Group  I  Trigger  Event  is in  effect  for  that
Distribution Date, the remaining Group I Principal  Distribution Amount for that
Distribution  Date after  distribution  of the Class A-I Principal  Distribution
Amount or (ii) on or after the Group I Stepdown  Date if a Group I Trigger Event
is not in effect for that Distribution Date, the lesser of:

               (i) the remaining Group I Principal  Distribution Amount for that
        Distribution  Date  after   distribution  of  the  Class  A-I  Principal
        Distribution Amount; and

               (ii)  the  excess,  if any,  of (A) the sum of (1) the  aggregate
        Certificate  Principal  Balance  of the  Class A-I  Certificates  (after
        taking into account the payment of the Class A-I Principal  Distribution
        Amount for that  Distribution  Date) and (2) the  Certificate  Principal
        Balance  of the  Class  M-I-1  Certificates  immediately  prior  to that
        Distribution  Date  over (B) the  lesser of (x) the  product  of (1) the
        applicable   Subordination  Percentage  and  (2)  the  aggregate  Stated
        Principal   Balance  of  the  Group  I  Loans  after  giving  effect  to
        distributions to be made on that Distribution Date and (y) the aggregate
        Stated  Principal  Balance of the Group I Loans after  giving  effect to
        distributions  to be made on that  Distribution  Date,  less the related
        Overcollateralization Floor.


                                              14

<PAGE>



        Class  M-I-2  Certificate:  Any  one of  the  Class  M-I-2  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form  annexed  hereto as  Exhibit  B,  senior to the Class
M-I-3,  Class SB-I and Class R-IV Certificates with respect to distributions and
the  allocation  of  Realized  Losses in respect of Loan Group I as set forth in
Section 4.05, and evidencing an interest  designated as a "regular  interest" in
REMIC IV for purposes of the REMIC Provisions.

     Class  M-I-2   Interest   Distribution   Amount:   As  defined  in  Section
4.02(c)(iii).

        Class  M-I-2  Principal   Distribution   Amount:  With  respect  to  any
Distribution  Date (i)  prior to the  Group I  Stepdown  Date or on or after the
Group I  Stepdown  Date if a  Group  I  Trigger  Event  is in  effect  for  that
Distribution Date, the remaining Group I Principal  Distribution Amount for that
Distribution  Date after  distribution  of the Class A-I Principal  Distribution
Amount and the Class M- I-1  Principal  Distribution  Amount or (ii) on or after
the Group I Stepdown  Date if a Group I Trigger  Event is not in effect for that
Distribution Date, the lesser of:

               (i) the remaining Group I Principal  Distribution Amount for that
        Distribution  Date  after   distribution  of  the  Class  A-I  Principal
        Distribution Amount and the Class M-I-1 Principal  Distribution  Amount;
        and

               (ii)  the  excess,  if any,  of (A) the sum of (1) the  aggregate
        Certificate  Principal  Balance of the Class A-I  Certificates and Class
        M-I-1  Certificates  (after taking into account the payment of the Class
        A-I  Principal   Distribution  Amount  and  the  Class  M-I-1  Principal
        Distribution  Amount for that Distribution Date) and (2) the Certificate
        Principal Balance of the Class M-I-2  Certificates  immediately prior to
        that Distribution Date over (B) the lesser of (x) the product of (1) the
        applicable   Subordination  Percentage  and  (2)  the  aggregate  Stated
        Principal   Balance  of  the  Group  I  Loans  after  giving  effect  to
        distributions to be made on that Distribution Date and (y) the aggregate
        Stated  Principal  Balance of the Group I Loans after  giving  effect to
        distributions  to be made on that  Distribution  Date,  less the related
        Overcollateralization Floor.

        Class  M-I-3  Certificate:  Any  one of  the  Class  M-I-3  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit B, senior to the Class SB-I
Certificates and Class R-IV  Certificates  with respect to distributions and the
allocation of Realized Losses in respect of Loan Group I as set forth in Section
4.05, and evidencing an interest  designated as a "regular interest" in REMIC IV
for purposes of the REMIC Provisions.

     Class  M-I-3   Interest   Distribution   Amount:   As  defined  in  Section
4.02(c)(iv).

        Class  M-I-3  Principal   Distribution   Amount:  With  respect  to  any
Distribution  Date (i)  prior to the  Group I  Stepdown  Date or on or after the
Group I  Stepdown  Date if a  Group  I  Trigger  Event  is in  effect  for  that
Distribution Date, the remaining Group I Principal  Distribution Amount for that
Distribution  Date after  distribution  of the Class A-I Principal  Distribution
Amount,  the Class  M-I-1  Principal  Distribution  Amount  and the Class  M-I-2
Principal Distribution Amount or (ii) on or after the Group I Stepdown Date if a
Group I Trigger Event is not in effect for that  Distribution  Date,  the lesser
of:


                                              15

<PAGE>



               (i) the remaining Group I Principal  Distribution Amount for that
        Distribution  Date  after   distribution  of  the  Class  A-I  Principal
        Distribution  Amount, the Class M-I-1 Principal  Distribution Amount and
        the Class M-I-2 Principal Distribution Amount; and

               (ii)  the  excess,  if any,  of (A) the sum of (1) the  aggregate
        Certificate Principal Balance of the Class A-I Certificates, Class M-I-1
        Certificates and Class M-I-2 Certificates (after taking into account the
        payment of the Class A-I Principal  Distribution Amount, the Class M-I-1
        Principal Distribution Amount and the Class M-I-2 Principal Distribution
        Amount for that  Distribution  Date) and (2) the  Certificate  Principal
        Balance  of the  Class  M- I-3  Certificates  immediately  prior to that
        Distribution  Date  over (B) the  lesser of (x) the  product  of (1) the
        applicable   Subordination  Percentage  and  (2)  the  aggregate  Stated
        Principal   Balance  of  the  Group  I  Loans  after  giving  effect  to
        distributions to be made on that Distribution Date and (y) the aggregate
        Stated  Principal  Balance of the Group I Loans after  giving  effect to
        distributions  to be made on that  Distribution  Date,  less the related
        Overcollateralization Floor.

     Class R Certificate:  Any one of the Class R-I, Class R-II,  Class R-III or
Class R-IV Certificates.

        Class R-I Certificate: Any one of the Class R-I Certificates executed by
the Trustee and authenticated by the Certificate Registrar  substantially in the
form annexed  hereto as Exhibit D and  evidencing  an interest  designated  as a
"residual interest" in REMIC I for purposes of the REMIC Provisions.

        Class R-II Certificate:  Any one of the Class R-II Certificates executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit D and evidencing an interest  designated as a
"residual interest" in REMIC II for purposes of the REMIC Provisions.

        Class  R-III  Certificate:  Any  one of  the  Class  R-III  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially in the form annexed hereto as Exhibit D and evidencing an interest
designated  as a  "residual  interest"  in REMIC III for  purposes  of the REMIC
Provisions.

        Class R-IV Certificate:  Any one of the Class R-IV Certificates executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit D and evidencing an interest  designated as a
"residual interest" in REMIC IV for purposes of the REMIC Provisions.

     Class  SB  Certificates:  Any  one  of  the  Class  SB-I  and  Class  SB-II
Certificates.

        Class SB-I Certificate:  Any one of the Class SB-I Certificates executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit C,  subordinate to the Class A-I Certificates
with respect to  distributions  and the allocation of Realized Losses in respect
of Loan  Group I as set  forth in  Section  4.05,  and  evidencing  an  interest
designated  as a  "regular  interest"  in REMIC  IV for  purposes  of the  REMIC
Provisions.


                                              16

<PAGE>



        Class  SB-II  Certificate:  Any  one of  the  Class  SB-II  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit C, subordinate to the Class
A-II  Certificates  with respect to distributions and the allocation of Realized
Losses in respect of Loan Group II as set forth in Section 4.05,  and evidencing
an interest  designated as a "regular  interest" in REMIC IV for purposes of the
REMIC Provisions.

        Closing Date: February 27, 2003.

        Code: The Internal Revenue Code of 1986.

        Commission: The Securities and Exchange Commission.
        ----------

        Compensating Interest:  With respect to any Distribution Date, an amount
equal to Prepayment Interest Shortfalls resulting from Principal  Prepayments in
Full or Curtailments during the related Prepayment Period, but not more than the
lesser of (a)  one-twelfth  of 0.125% of the  Stated  Principal  Balance  of the
Mortgage Loans  immediately  preceding such Distribution Date and (b) the sum of
the Servicing Fee, all income and gain on amounts held in the Custodial  Account
and the Certificate Account and payable to the  Certificateholders  with respect
to such  Distribution  Date  and  servicing  compensation  to which  the  Master
Servicer may be entitled  pursuant to Section  3.10(a)(v) and (vi), in each case
with  respect to the related  Loan  Group;  provided  that for  purposes of this
definition  the  amount of the  Servicing  Fee will not be reduced  pursuant  to
Section 7.02 except as may be required  pursuant to the last sentence of Section
7.02(a).

        Corporate Trust Office:  The principal office of the Trustee at which at
any particular  time its corporate trust business with respect to this Agreement
shall  be  administered,  which  office  at the  date of the  execution  of this
instrument is located at 4 New York Plaza,  6th Floor, New York, New York 10004,
Attention:  Institutional  Trust  Services/Structured  Finance  Services,  RAMP,
Series 2003-RS1.

        Corresponding Class: With respect to each REMIC III Regular Interest set
forth below, the Regular Certificate set forth in the table below:



          REMIC III REGULAR INTEREST                 REMIC IV Certificate
                   LT3-AI-1                               Class A-I-1
                   LT3-AI-2                               Class A-I-2
                   LT3-AI-3                               Class A-I-3
                   LT3-AI-4                               Class A-I-4
                   LT3-AI-5                               Class A-I-5
                   LT3-AI-6                               Class A-I-6
                   LT3-MI-1                               Class M-I-1
                   LT3-MI-2                               Class M-I-2



                                      17

<PAGE>




                   LT3-MI-3                               Class M-I-3
                   LT3-AIO-1                             Class A-I-IO
                   LT3-AII-1                              Class A-II

        Corresponding  Interest:  With respect to each REMIC I Regular  Interest
set forth below,  the  corresponding  REMIC III Regular  Interest  Component set
forth below:


                         REMIC III Regular Interest Component
REMIC I REGULAR INTEREST                               Rate Change Date
         LT-A-2                      LT3-IAIO-1            April 2003
         LT-A-3                      LT3-IAIO-2             May 2003
         LT-A-4                      LT3-IAIO-3             June 2003
         LT-A-5                      LT3-IAIO-4             July 2003
         LT-A-6                      LT3-IAIO-5            August 2003
         LT-A-7                      LT3-IAIO-6          September 2003
         LT-A-8                      LT3-IAIO-7           October 2003
         LT-A-9                      LT3-IAIO-8           November 2003
        LT-A-10                      LT3-IAIO-9           December 2003
        LT-A-11                      LT3-IAIO-10          January 2004
        LT-A-12                      LT3-IAIO-11          February 2004
        LT-A-13                      LT3-IAIO-12           March 2004
        LT-A-14                      LT3-IAIO-13           April 2004
        LT-A-15                      LT3-IAIO-14            May 2004
        LT-A-16                      LT3-IAIO-15            June 2004
        LT-A-17                      LT3-IAIO-16            July 2004
        LT-A-18                      LT3-IAIO-17           August 2004
        LT-A-19                      LT3-IAIO-18         September 2004
        LT-A-20                      LT3-IAIO-19          October 2004
        LT-A-21                      LT3-IAIO-20          November 2004
        LT-A-22                      LT3-IAIO-21          December 2004
        LT-A-23                      LT3-IAIO-22          January 2005
        LT-A-24                      LT3-IAIO-23          February 2005
        LT-A-25                      LT3-IAIO-24           March 2005
        LT-A-26                      LT3-IAIO-25           April 2005
        LT-A-27                      LT3-IAIO-26            May 2005
        LT-A-28                      LT3-IAIO-27            June 2005
        LT-A-29                      LT3-IAIO-28            July 2005
        LT-A-30                      LT3-IAIO-29           August 2005
        LT-A-31                      LT3-IAIO-30         September 2005

     Curtailment:  Any Principal  Prepayment  made by a Mortgagor which is not a
Principal Prepayment in Full.

        Custodial  Account:  The  custodial  account  or  accounts  created  and
maintained pursuant to Section 3.07 in the name of a depository institution,  as
custodian  for the  holders of the  Certificates  and for the  Insurer,  for the
holders of certain other interests in mortgage loans serviced or sold by


                                              18

<PAGE>



the Master  Servicer  and for the Master  Servicer,  into which the  amounts set
forth in Section 3.07 shall be deposited directly.  Any such account or accounts
shall be an Eligible Account.

        Custodial  Agreement:  An  agreement  that may be entered into among the
Depositor, the Master Servicer, the Trustee and a Custodian in substantially the
form of Exhibit E hereto.

     Custodian:  A custodian  appointed  pursuant to a Custodial  Agreement  and
reasonably acceptable to the Insurer.

        Cut-off Date: February 1, 2003.

        Cut-off Date  Principal  Balance:  As to any Mortgage  Loan,  the unpaid
principal  balance  thereof  at the  Cut-off  Date  after  giving  effect to all
installments  of principal  due on or prior  thereto (or due during the month of
February 2003), whether or not received.

        Debt Service  Reduction:  With respect to any Mortgage Loan, a reduction
in the scheduled  Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code,  except such a reduction
constituting a Deficient  Valuation or any reduction that results in a permanent
forgiveness of principal.

        Deficiency Amount: With respect to the Class A-II Certificates as of any
Distribution  Date,  (i) any shortfall in amounts  available in the  Certificate
Account to pay Accrued  Certificate  Interest for the related  Interest  Accrual
Period on the Certificate  Principal  Balance of the Class A-II  Certificates at
the  then-applicable  Pass-Through Rate, net of any interest shortfalls relating
to the Relief Act or Prepayment Interest Shortfalls  allocated to the Class A-II
Certificates,  (ii) the principal  portion of any Realized  Losses  allocated to
such Class A-II  Certificates  with respect to such  Distribution Date and (iii)
the Certificate  Principal  Balance of the Class A-II Certificates to the extent
unpaid on the earlier of the  Distribution  Date  occurring in February 2033 and
the Final Distribution Date or earlier termination of the Trust Fund pursuant to
Section  9.01(a) hereof.  The Deficiency  Amount does not include any Basis Risk
Shortfalls or Group I Net WAC Cap Shortfalls.

        Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding  indebtedness  under the Mortgage Loan, or any reduction in
the amount of  principal to be paid in  connection  with any  scheduled  Monthly
Payment that constitutes a permanent  forgiveness of principal,  which valuation
or reduction results from a proceeding under the Bankruptcy Code.

        Definitive Certificate: Any definitive, fully registered Certificate.

     Deleted  Mortgage  Loan: A Mortgage  Loan replaced or to be replaced with a
Qualified Substitute Mortgage Loan.

        Delinquency   Ratio:  With  respect  to  the  Group  II  Loans  and  any
Distribution Date, the percentage  equivalent of a fraction (a) the numerator of
which equals the sum of (i) 100% of the aggregate  Stated  Principal  Balance of
all  Group  II  Loans  that  are 90 or more  days  Delinquent,  (ii)  75% of the
aggregate Stated Principal Balance of all Group II Loans that are in foreclosure
and (iii)


                                              19

<PAGE>



100% of the aggregate  Stated  Principal  Balance of all Group II Loans that are
converted to REO Properties,  in each case as of the last day of the related Due
Period  and (b) the  denominator  of which  is the  aggregate  Stated  Principal
Balance of the Group II Loans as of the last day of such Due Period.

        Delinquent:  As used herein, a Mortgage Loan is considered to be: "30 to
59 days" or "30 or more days" delinquent when a payment due on any scheduled due
date remains  unpaid as of the close of business on the next  following  monthly
scheduled  due  date;  "60 to 89 days" or "60 or more  days"  delinquent  when a
payment due on any scheduled due date remains unpaid as of the close of business
on the second following monthly scheduled due date; and so on. The determination
as to whether a Mortgage  Loan  falls  into these  categories  is made as of the
close of  business  on the last  business  day of each  month.  For  example,  a
Mortgage Loan with a payment due on July 1 that remained  unpaid as of the close
of  business  on  August  31  would  then  be  considered  to be  30 to 59  days
delinquent.  Delinquency  information  as of the Cut-off Date is determined  and
prepared as of the close of business on the last business day immediately  prior
to the Cut-off Date.

        Depository:  The Depository Trust Company,  or any successor  Depository
hereafter  named.  The  nominee  of  the  initial  Depository  for  purposes  of
registering those Certificates that are to be Book-Entry  Certificates is Cede &
Co. The Depository shall at all times be a "clearing  corporation" as defined in
Section  8-102(5) of the Uniform  Commercial Code of the State of New York and a
"clearing  agency"  registered  pursuant to the provisions of Section 17A of the
Exchange Act.

        Depository  Participant:  A  broker,  dealer,  bank or  other  financial
institution  or other  Person  for whom from time to time a  Depository  effects
book-entry transfers and pledges of securities deposited with the Depository.

        Derivative  Contract:  Any  ISDA  Master  Agreement,  together  with the
related Schedule and Confirmation,  entered into by the Trustee and a Derivative
Counterparty in accordance with Section 4.11.

     Derivative  Counterparty:  Any  counterparty  to a  Derivative  Contract as
provided in Section 4.11.

     Destroyed  Mortgage  Note:  A  Mortgage  Note the  original  of  which  was
permanently lost or destroyed and has not been replaced.

        Determination  Date: With respect to any Distribution Date, the 20th day
(or if such  20th  day is not a  Business  Day,  the  Business  Day  immediately
following such 20th day) of the month of the related Distribution Date.

        Disqualified  Organization:  Any organization defined as a "disqualified
organization"  under Section  860E(e)(5) of the Code,  which includes any of the
following:  (i) the United States, any State or political  subdivision  thereof,
any possession of the United States, or any agency or  instrumentality of any of
the foregoing  (other than an  instrumentality  which is a corporation if all of
its activities are subject to tax and, except for Freddie Mac, a majority of its
board of directors is not selected by such  governmental  unit),  (ii) a foreign
government, any international organization,  or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'


                                              20

<PAGE>



cooperatives  described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code  (including  the tax  imposed by Section 511 of
the Code on  unrelated  business  taxable  income) and (iv) rural  electric  and
telephone  cooperatives  described  in  Section  1381(a)(2)(C)  of the  Code.  A
Disqualified  Organization  also includes any "electing large  partnership,"  as
defined in Section  775(a) of the Code and any other Person so designated by the
Trustee  based  upon an  Opinion of  Counsel  that the  holding of an  Ownership
Interest  in a Class R  Certificate  by such  Person  may cause any REMIC or any
Person  having an Ownership  Interest in any Class of  Certificates  (other than
such  Person) to incur a liability  for any  federal tax imposed  under the Code
that  would not  otherwise  be  imposed  but for the  Transfer  of an  Ownership
Interest in a Class R Certificate  to such Person.  The terms  "United  States",
"State" and  "international  organization"  shall have the meanings set forth in
Section 7701 of the Code or successor provisions.

        Distribution  Date:  The 25th day of any  month  beginning  in the month
immediately  following the month of the initial issuance of the Certificates or,
if such 25th day is not a Business Day, the Business Day  immediately  following
such 25th day.

        Due Date: With respect to any  Distribution  Date and any Mortgage Loan,
the day during the related Due Period on which the Monthly Payment is due.

        Due Period: With respect to any Distribution Date, the calendar month of
such Distribution Date.

        Eligible  Account:  An  account  that  is  any  of  the  following:  (i)
maintained with a depository institution the debt obligations of which have been
rated by each Rating Agency in its highest rating available,  or (ii) an account
or accounts in a depository institution in which such accounts are fully insured
to the limits established by the FDIC, provided that any deposits not so insured
shall, to the extent  acceptable to each Rating Agency, as evidenced in writing,
be maintained such that (as evidenced by an Opinion of Counsel  delivered to the
Trustee and each Rating Agency) the registered  Holders of  Certificates  have a
claim with  respect to the funds in such account or a perfected  first  security
interest   against  any   collateral   (which  shall  be  limited  to  Permitted
Investments)  securing  such  funds  that is  superior  to  claims  of any other
depositors or creditors of the depository institution with which such account is
maintained,  or (iii) in the case of the Custodial  Account,  either (A) a trust
account or accounts  maintained in the corporate  trust  department of Bank One,
National Association,  or (B) an account or accounts maintained in the corporate
asset services department of Bank One, National Association as long as its short
term debt obligations are rated P-1 (or the equivalent) or better by each Rating
Agency,  and its long term debt  obligations are rated A2 (or the equivalent) or
better, by each Rating Agency,  or (iv) in the case of the Certificate  Account,
the  Insurance  Account  and the  Reserve  Fund,  a trust  account  or  accounts
maintained in the  corporate  trust  division of JPMorgan  Chase Bank, or (v) an
account or accounts of a depository institution acceptable to each Rating Agency
(as  evidenced in writing by each Rating  Agency that use of any such account as
the  Custodial  Account or the  Certificate  Account  will not reduce the rating
assigned to any Class of  Certificates  by such Rating Agency below the lower of
the  then-current  rating or the rating assigned to such  Certificates as of the
Closing Date by such Rating Agency).

        ERISA: The Employee Retirement Income Security Act of 1974, as amended.
        -----



                                              21

<PAGE>



        Event of Default: As defined in Section 7.01.
        ----------------

        Excess Loss: A Group I Excess Loss or Group II Excess Loss.
        -----------

        Excess Realized Loss: Any Realized Loss on a Group II Loan, other than a
Group II Excess Fraud Loss, Group II Excess Special Hazard Loss, Group II Excess
Bankruptcy Loss or Group II Extraordinary Loss, to the extent that the amount of
such Realized Loss, plus the aggregate  amount of such Realized Losses on all of
the Group II Loans since the Cut-off  Date,  is in excess of 18.00% of the Group
II Cut-off Date Balance.

        Exchange Act: The Securities Exchange Act of 1934, as amended.
        ------------

        Extraordinary  Events: Any of the following conditions with respect to a
Mortgaged  Property or Mortgage Loan causing or resulting in a loss which causes
the liquidation of such Mortgage Loan:

               (a)  losses  that are of the type that  would be  covered  by the
        fidelity bond and the errors and omissions  insurance policy required to
        be  maintained  pursuant  to  Section  3.12(b)  but are in excess of the
        coverage maintained thereunder;

               (b)  nuclear   reaction  or  nuclear   radiation  or  radioactive
        contamination,  all whether controlled or uncontrolled, and whether such
        loss be direct  or  indirect,  proximate  or remote or be in whole or in
        part caused by,  contributed  to or aggravated by a peril covered by the
        definition of the term "Special Hazard Loss";

               (c) hostile or warlike action in time of peace or war,  including
        action  in  hindering,   combatting  or  defending  against  an  actual,
        impending or expected attack;

                      1.  by any  government  or  sovereign  power,  de  jure or
               defacto, or by any authority maintaining or using military, naval
               or air forces; or

                      2. by military, naval or air forces; or

                      3. by an agent of any such government, power, authority or
               forces; or

                      4.  any  weapon  of  war  employing   atomic   fission  or
               radioactive force whether in time of peace or war; or

                      5. insurrection, rebellion, revolution, civil war, usurped
               power or action taken by  governmental  authority  in  hindering,
               combatting or defending  against such an  occurrence,  seizure or
               destruction under quarantine or customs regulations, confiscation
               by order  of any  government  or  public  authority;  or risks of
               contraband or illegal transportation or trade.

        Fannie Mae:  Fannie  Mae, a  federally  chartered  and  privately  owned
corporation   organized  and  existing  under  the  Federal  National   Mortgage
Association Charter Act, or any successor thereto.



                                              22

<PAGE>



     FASIT:  A "financial  asset  securitization  investment  trust"  within the
meaning of Section 860L of the Code.

       FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
        ----

        FHA: The Federal Housing Administration, or its successor.
        ---

        Final  Distribution  Date:  The  Distribution  Date on which  the  final
distribution  in respect of the  Certificates  will be made  pursuant to Section
9.01, which Final  Distribution  Date shall in no event be later than the end of
the 90-day liquidation period described in Section 9.02.

        Final Scheduled  Distribution  Date:  Solely for purposes of the face of
the  Certificates,  as follows:  with  respect to the Class A-I-1  Certificates,
January 25, 2019; with respect to the Class A-I- 2 Certificates, April 25, 2023;
with respect to the Class A-I-3 Certificates,  May 25, 2028; with respect to the
Class A-I-4  Certificates,  March 25,  2031;  with  respect to the Class  A-I-IO
Certificates, August 25, 2005; and with respect to the Class A-I-5, Class A-I-6,
Class A-II and Class M-I  Certificates,  February 25, 2033.  No event of default
under this  Agreement  will arise or become  applicable  solely by reason of the
failure to retire the entire Certificate Principal Balance of any Class of Class
A Certificates on or before its Final Scheduled Distribution Date.

        Fitch: Fitch, Inc.

        Foreclosure   Profits:   As  to  any   Distribution   Date  or   related
Determination  Date and any Mortgage  Loan,  the excess,  if any, of Liquidation
Proceeds,  Insurance Proceeds and REO Proceeds (net of all amounts  reimbursable
therefrom  pursuant to Section  3.10(a)(ii)) in respect of each Mortgage Loan or
REO Property for which a Cash  Liquidation  or REO  Disposition  occurred in the
related  Prepayment  Period over the sum of the unpaid principal balance of such
Mortgage Loan or REO Property (determined, in the case of an REO Disposition, in
accordance  with Section 3.14) plus accrued and unpaid  interest at the Mortgage
Rate on such unpaid  principal  balance from the Due Date to which  interest was
last paid by the Mortgagor to the first day of the month  following the month in
which such Cash Liquidation or REO Disposition occurred.

        Fraud  Losses:  Losses on Mortgage  Loans as to which there was fraud in
the origination of such Mortgage Loan.

        Freddie  Mac: The Federal Home Loan  Mortgage  Corporation,  a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

        Gross  Margin:  As to each  adjustable  rate  Mortgage  Loan,  the fixed
percentage  set forth in the related  Mortgage Note and indicated in Exhibit F-2
hereto as the "NOTE MARGIN,"  which  percentage is added to the related Index on
each  Adjustment  Date to determine  (subject to rounding in accordance with the
related  Mortgage  Note,  the Periodic  Cap, the Maximum  Mortgage  Rate and the
Minimum Mortgage Rate) the interest rate to be borne by such Mortgage Loan until
the next Adjustment Date.



                                              23

<PAGE>



        Group I Adjusted Net WAC Cap Rate: For the March 2003  Distribution Date
through the August  2005  Distribution  Date,  a per annum rate equal to (1) the
Group I Net WAC Cap Rate minus (2) the  Pass-Through  Rate for the Class  A-I-IO
Certificates for such Distribution Date multiplied by a fraction,  the numerator
of which is (x) the Notional Amount of the Class A-I-IO Certificates immediately
prior  to such  Distribution  Date,  and the  denominator  of  which  is (y) the
aggregate Stated Principal  Balance of the Group I Loans determined  immediately
prior to such Distribution Date. For federal income tax purposes,  however,  the
equivalent  of the  foregoing,  expressed as a per annum rate (but not less than
zero)  equal to the  weighted  average  of (x) with  respect  to REMIC I Regular
Interest LT-A-1, the  Uncertificated  REMIC I Pass-Through Rate for such REMIC I
Regular  Interest  for such  Distribution  Date and, (y) with respect to REMIC I
Regular Interest LT-A-2 through REMIC I Regular Interest LT-A-31 the excess,  if
any, of (1) the  Uncertificated  REMIC I Pass-Through  Rate with respect to such
REMIC I Regular Interest for such Distribution Date over (2) in the case of each
such REMIC I Regular  Interest,  (A) from the Closing Date to but not  including
the Rate Change  Date for the  Corresponding  Interest  relating to such REMIC I
Regular Interest, 1.000% per annum and (B) thereafter, 0.00% per annum; weighted
on the basis of the  Uncertificated  Principal  Balance  of each REMIC I Regular
Interest.

        Group I Available  Distribution  Amount: As to any Distribution Date, an
amount  equal to (a) the sum of (i) the amount  relating to the Group I Loans on
deposit in the Custodial  Account as of the close of business on the immediately
preceding  Determination  Date and amounts deposited in the Custodial Account in
connection with the substitution of Qualified Substitute Mortgage Loans that are
Group I Loans, (ii) the amount of any Advance made on the immediately  preceding
Certificate  Account  Deposit Date with respect to the Group I Loans,  (iii) any
amount deposited in the Certificate  Account on the related  Certificate Account
Deposit Date pursuant to Section  3.12(a) in respect of the Group I Loans,  (iv)
any amount  that the Master  Servicer  is not  permitted  to  withdraw  from the
Custodial  Account  pursuant to Section  3.16(e) in respect of the Group I Loans
and (v) any amount  deposited  in the  Certificate  Account  pursuant to Section
4.07, 4.08 or 9.01 in respect of the Group I Loans, reduced by (b) the sum as of
the close of business on the immediately preceding Determination Date of (w) any
payments or  collections  consisting of prepayment  charges on the Group I Loans
that were received during the related Prepayment Period, (x) the Amount Held for
Future  Distribution with respect to the Group I Loans, (y) amounts permitted to
be withdrawn by the Master Servicer from the Custodial Account in respect of the
Group I Loans pursuant to clauses  (ii)-(x),  inclusive,  of Section 3.10(a) and
(z) the  Certificate  Insurer  Premium  payable  with  respect to the Class A-II
Certificates on such Distribution Date.

        Group II Available  Distribution Amount: As to any Distribution Date, an
amount equal to (a) the sum of (i) the amount  relating to the Group II Loans on
deposit in the Custodial  Account as of the close of business on the immediately
preceding  Determination  Date and amounts deposited in the Custodial Account in
connection with the substitution of Qualified Substitute Mortgage Loans that are
Group II Loans, (ii) the amount of any Advance made on the immediately preceding
Certificate  Account Deposit Date with respect to the Group II Loans,  (iii) any
amount deposited in the Certificate  Account on the related  Certificate Account
Deposit Date pursuant to Section 3.12(a) in respect of the Group II Loans,  (iv)
any amount  that the Master  Servicer  is not  permitted  to  withdraw  from the
Custodial  Account  pursuant to Section 3.16(e) in respect of the Group II Loans
and (v) any amount  deposited  in the  Certificate  Account  pursuant to Section
4.07,  4.08 or 9.01 in respect of the Group II Loans,  reduced by (b) the sum as
of the close of business on the immediately


                                              24

<PAGE>



preceding  Determination Date of: (w) any payments or collections  consisting of
prepayment  charges on the Group II Loans that were received  during the related
Prepayment Period,  (x) the Amount Held for Future  Distribution with respect to
the Group II Loans, (y) amounts permitted to be withdrawn by the Master Servicer
from the Custodial  Account in respect of the Group II Loans pursuant to clauses
(ii)-(x),  inclusive,  of Section 3.10(a)and (z) the Certificate Insurer Premium
payable with respect to the Class A-II Certificates on such Distribution Date.

        Group I Bankruptcy  Amount: As of any date of  determination,  an amount
equal to $149,714,  less the sum of any amounts  allocated  through Section 4.05
for Bankruptcy Losses on the Group I Loans up to such date of determination. The
Group  I  Bankruptcy  Amount  may be  further  reduced  by the  Master  Servicer
(including  accelerating the manner in which such coverage is reduced)  provided
that prior to any such  reduction,  the Master Servicer shall (i) obtain written
confirmation  from each Rating Agency that such  reduction  shall not reduce the
rating  assigned to the Class A-I  Certificates  by such Rating Agency below the
lower of the then-current  rating or the rating assigned to such Certificates as
of the  Closing  Date by such  Rating  Agency,  and (ii)  provide a copy of such
written confirmation to the Trustee.

        Group II Bankruptcy  Amount: As of any date of determination,  an amount
equal to $217,150,  less the sum of any amounts  allocated  through Section 4.05
for  Bankruptcy  Losses on the Group II Loans up to such date of  determination.
The Group II  Bankruptcy  Amount may be further  reduced by the Master  Servicer
(including  accelerating the manner in which such coverage is reduced)  provided
that prior to any such  reduction,  the Master Servicer shall (i) obtain written
approval from the Insurer and written  confirmation from each Rating Agency that
such  reduction  shall  not  reduce  the  rating  assigned  to  the  Class  A-II
Certificates  by such Rating Agency below the lower of the then- current  rating
or the rating  assigned  to such  Certificates  as of the  Closing  Date by such
Rating Agency without taking into account the Policy, and (ii) provide a copy of
such written confirmation to the Trustee and the Insurer.

        Group II Cumulative Insurance Payments: As of any time of determination,
the aggregate amount of all Insured Amounts previously paid by the Insurer under
the  Policy  in  respect  of the  Class  A-II  Certificates  (other  than  those
attributable  to Group II Excess Losses) minus (a) the aggregate of all payments
previously made to the Insurer  pursuant to Section  4.02(c)(viii) or 4.02(d)(v)
hereof as reimbursement for such Insured Amounts, plus (b) interest thereon from
the date such amounts became due until paid in full, at a rate of interest equal
to the Late Payment Rate.

        Group I Cut-off Date Balance: $300,000,272.99.

        Group II Cut-off Date Balance: $400,000,593.79.

        Group I Diverted Excess Spread:  Any amount otherwise payable as Accrued
Certificate  Interest on the Class SB-I  Certificate  that,  pursuant to Section
4.02(c),  is used to increase  the Group II  Overcollateralization  Amount or is
used to offset Realized Losses on any Group II Loans. Any reduction in the Group
II  Overcollateralization  Amount shall first reduce the Group I Diverted Excess
Spread until it is reduced to zero. In the event of a distribution in respect of
a  Group  II   Overcollateralization   Reduction   Amount  to  the  Class   SB-I
Certificates, such reduction shall be


                                              25

<PAGE>



deemed to be applied to reduce any Group I Diverted  Excess Spread.  No interest
will accrue on the Group I Diverted Excess Spread.

        Group II Diverted Excess Spread: Any amount otherwise payable as Accrued
Certificate  Interest on the Class SB-II Certificate  that,  pursuant to Section
4.02(d), is used to increase the Group I Overcollateralization Amount or is used
to offset  Realized  Losses on any Group I Loans.  Any  reduction in the Group I
Overcollateralization  Amount  shall first  reduce the Group II Diverted  Excess
Spread until it is reduced to zero. In the event of a distribution in respect of
a Group I Overcollateralization Reduction Amount to the Class SB-II Certificates
such reduction shall be deemed to be applied to reduce any the Group II Diverted
Excess Spread. No interest will accrue on the Group II Diverted Excess Spread.

        Group I Excess  Bankruptcy  Loss: With respect to the Group I Loans, any
Bankruptcy  Loss on the Group I Loans,  or portion  thereof,  which  exceeds the
then-applicable Group I Bankruptcy Amount.

        Group II Excess Bankruptcy Loss: With respect to the Group II Loans, any
Bankruptcy  Loss on the Group II Loans,  or portion  thereof,  which exceeds the
then-applicable Group II Bankruptcy Amount.

        Group I Excess  Cash  Flow:  With  respect  to the Group I Loans and any
Distribution Date, an amount equal to the sum of (A) the excess of (i) the Group
I Available  Distribution Amount for that Distribution Date over (ii) the sum of
(a) the Group I Interest  Distribution Amount for that Distribution Date and (b)
the Group I Principal  Remittance  Amount for that Distribution Date and (B) the
Group I  Overcollateralization  Reduction  Amount, if any, for that Distribution
Date.

        Group II Excess  Cash Flow:  With  respect to the Group II Loans and any
Distribution Date, an amount equal to the sum of (A) the excess of (i) the Group
II Available Distribution Amount for that Distribution Date over (ii) the sum of
(a) the Group II Interest Distribution Amount for that Distribution Date and (b)
the Group II Principal  Remittance Amount for that Distribution Date and (B) the
Group II  Overcollateralization  Reduction Amount, if any, for that Distribution
Date.

        Group I Excess Fraud Loss: With respect to the Group I Loans,  any Fraud
Loss on the Group I Loans, or portion thereof, which exceeds the then-applicable
Group I Fraud Loss Amount.

        Group II Excess  Fraud  Loss:  With  respect to the Group II Loans,  any
Fraud  Loss on the  Group II  Loans,  or  portion  thereof,  which  exceeds  the
then-applicable Group II Fraud Loss Amount.

        Group I Excess Loss:  Any (i) Group I Excess Fraud Loss,  Group I Excess
Special Hazard Loss,  Group I Excess  Bankruptcy  Loss or Group I  Extraordinary
Loss or (ii) any Excess Realized Loss on a Group I Loan.

        Group II  Excess  Loss:  Any (i) Group II Excess  Fraud  Loss,  Group II
Excess  Special  Hazard  Loss,  Group  II  Excess  Bankruptcy  Loss or  Group II
Extraordinary Loss or (ii) any Excess Realized Loss on a Group II Loan.



                                              26

<PAGE>



        Group  I  Excess  Overcollateralization  Amount:  With  respect  to  any
Distribution Date, the excess, if any, of (a) the Group I  Overcollateralization
Amount   on   such   Distribution   Date   over   (b)  the   Group  I   Required
Overcollateralization Amount.

        Group  II  Excess  Overcollateralization  Amount:  With  respect  to any
Distribution Date, the excess, if any, of (a) the Group II Overcollateralization
Amount   on  such   Distribution   Date   over  (b)  the   Group   II   Required
Overcollateralization Amount.

        Group I Excess Special  Hazard Loss:  With respect to the Group I Loans,
any Special Hazard Loss on the Group I Loans, or portion  thereof,  that exceeds
the then-applicable Group I Special Hazard Amount.

        Group II Excess Special Hazard Loss: With respect to the Group II Loans,
any Special Hazard Loss on the Group II Loans, or portion thereof,  that exceeds
the then-applicable Group II Special Hazard Amount.

        Group I Extraordinary Losses: Any loss incurred on a Group I Loan caused
by or resulting from an Extraordinary Event.

        Group II  Extraordinary  Losses:  Any loss  incurred  on a Group II Loan
caused by or resulting from an Extraordinary Event.

        Group I Fraud Loss  Amount:  As of any date of  determination  after the
Cut-off  Date,  an amount  equal to (X) prior to the  first  anniversary  of the
Cut-off Date an amount  equal to 3.00% of the  aggregate  outstanding  principal
balance of all of the Group I Loans as of the Cut-off  Date minus the  aggregate
amount of Fraud Losses on the Group I Loans allocated through Subordination,  in
accordance  with  Section  4.05  since  the  Cut-off  Date  up to  such  date of
determination, (Y) from the first to the second anniversary of the Cut-off Date,
an amount equal to (1) the lesser of (a) the Group I Fraud Loss Amount as of the
most  recent  anniversary  of the  Cut-off  Date and (b) 2.00% of the  aggregate
outstanding  principal balance of all of the Group I Loans as of the most recent
anniversary  of the Cut-off Date minus (2) the Fraud Losses on the Group I Loans
allocated through Subordination,  in accordance with Section 4.05 since the most
recent anniversary of the Cut-off Date up to such date of determination, and (Z)
from the second to the fifth anniversary of the Cut-off Date, an amount equal to
(1) the  lesser  of (a) the  Group I Fraud  Loss  Amount  as of the most  recent
anniversary  of the  Cut-off  Date and (b)  1.00% of the  aggregate  outstanding
principal balance of all of the Group I Loans as of the most recent  anniversary
of the Cut-off  Date minus (2) the Fraud  Losses on the Group I Loans  allocated
through  Subordination,  in  accordance  with Section 4.05 since the most recent
anniversary of the Cut-off Date up to such date of  determination.  On and after
the fifth anniversary of the Cut-off Date the Group I Fraud Loss Amount shall be
zero.

        The Group I Fraud  Loss  Amount  may be  further  reduced  by the Master
Servicer  (including  accelerating the manner in which such coverage is reduced)
provided that prior to any such reduction,  the Master Servicer shall (i) obtain
written  confirmation  from each  Rating  Agency that such  reduction  shall not
reduce the rating  assigned to the Class A-I  Certificates by such Rating Agency
below  the  lower of the  then-current  rating or the  rating  assigned  to such
Certificates as of


                                              27

<PAGE>



the Closing Date by such Rating Agency;  and (ii) provide a copy of such written
confirmation to the Trustee.

        Group II Fraud Loss Amount:  As of any date of  determination  after the
Cut-off  Date,  an amount  equal to (X) prior to the  first  anniversary  of the
Cut-off Date an amount  equal to 3.00% of the  aggregate  outstanding  principal
balance of all of the Group II Loans as of the Cut-off Date minus the  aggregate
amount of Fraud Losses on the Group II Loans allocated through Subordination, in
accordance  with  Section  4.05  since  the  Cut-off  Date  up to  such  date of
determination, (Y) from the first to the second anniversary of the Cut-off Date,
an amount  equal to (1) the lesser of (a) the Group II Fraud  Loss  Amount as of
the most recent  anniversary  of the Cut-off Date and (b) 2.00% of the aggregate
outstanding principal balance of all of the Group II Loans as of the most recent
anniversary of the Cut-off Date minus (2) the Fraud Losses on the Group II Loans
allocated through Subordination,  in accordance with Section 4.05 since the most
recent anniversary of the Cut-off Date up to such date of determination, and (Z)
from the second to the fifth anniversary of the Cut-off Date, an amount equal to
(1) the  lesser of (a) the  Group II Fraud  Loss  Amount  as of the most  recent
anniversary  of the  Cut-off  Date and (b)  1.00% of the  aggregate  outstanding
principal balance of all of the Group II Loans as of the most recent anniversary
of the Cut-off Date minus (2) the Fraud  Losses on the Group II Loans  allocated
through  Subordination,  in  accordance  with Section 4.05 since the most recent
anniversary of the Cut-off Date up to such date of  determination.  On and after
the fifth  anniversary  of the Cut-off Date the Group II Fraud Loss Amount shall
be zero.

        The Group II Fraud  Loss  Amount  may be  further  reduced by the Master
Servicer  (including  accelerating the manner in which such coverage is reduced)
provided that prior to any such reduction,  the Master Servicer shall (i) obtain
written  approval  from the Insurer and obtain  written  confirmation  from each
Rating Agency that such  reduction  shall not reduce the rating  assigned to the
Class  A-II   Certificates  by  such  Rating  Agency  below  the  lower  of  the
then-current  rating  or the  rating  assigned  to such  Certificates  as of the
Closing Date by such Rating Agency without  taking into account the Policy;  and
(ii) provide a copy of such written confirmation to the Trustee and the Insurer.

        Group I Interest  Distribution  Amount:  The sum of the Class A-I, Class
M-I-1, Class M-I-2 and Class M-I-3 Interest Distribution Amounts.

     Group II Interest Distribution Amount: As defined in Section 4.02(d)(i).

     Group I Loan: The Mortgage  Loans  designated on the Mortgage Loan Schedule
attached hereto as Exhibit F-1.

     Group II Loan: The Mortgage Loans  designated on the Mortgage Loan Schedule
attached hereto as Exhibit F-2.

        Group I Marker Rate: With respect to the Class SB-I Certificates and any
Distribution  Date, a per annum rate equal to two (2) multiplied by the weighted
average of the  Pass-Through  Rates for each Group I REMIC III Regular  Interest
(other than REMIC III Regular Interest  LT3-I-AA and LT3-I-AIO),  with the rates
on each such REMIC III Regular Interest subject to a cap equal to the


                                              28

<PAGE>



Pass-Through  Rate for the  Corresponding  Class  for  such  REMIC  III  Regular
Interest,  and the rate on REMIC III Regular Interest LT3-AI-ZZ subject to a cap
of zero for purposes of this calculation.

        Group II Marker Rate: With respect to the Class SB-II  Certificates  and
any  Distribution  Date,  a per annum  rate equal to two (2)  multiplied  by the
weighted average of the  Pass-Through  Rates for each Group II REMIC III Regular
Interest (other than REMIC III Regular  Interest  LT3-II-AA),  with the rates on
each such REMIC III Regular  Interest subject to a cap equal to the Pass-Through
Rate for the Corresponding  Class for such REMIC III Regular  Interest,  and the
rate on REMIC  III  Regular  Interest  LT3-AII-ZZ  subject  to a cap of zero for
purposes of this calculation.

        Group I Net WAC Cap Carry-Forward  Amount: With respect to the Class A-I
Certificates and Class M-I  Certificates  and any  Distribution  Date, an amount
equal to the aggregate amount of Group I Net WAC Cap Shortfall for that class on
that Distribution Date, plus any unpaid Group I Net WAC Cap Shortfall from prior
Distribution Dates, plus interest thereon to the extent previously  unreimbursed
by Group I Excess Cash Flow pursuant to Section  4.02(c)(xvi) or Group II Excess
Cash Flow  pursuant  to Section  4.02(d)(xiv),  at a rate  equal to the  related
Pass-Through Rate.

        Group I Net WAC Cap Rate: With respect to any  Distribution  Date, a per
annum  rate equal to the  weighted  average of the Net  Mortgage  Rates (or,  if
applicable,  the Modified Net Mortgage Rates) on the Group I Loans using the Net
Mortgage  Rates in effect for the Monthly  Payments due on such  Mortgage  Loans
during the related Due Period,  weighted on the basis of the  respective  Stated
Principal  Balances thereof for such  Distribution  Date, and in the case of the
Class A-I-1  Certificates,  multiplied by a fraction  equal to 30 divided by the
actual number of days in the related Interest Accrual Period.

        Group II Net WAC Cap Rate:  With respect to any  Distribution  Date, the
product  of (i) a per  annum  rate  equal  to the  weighted  average  of the Net
Mortgage Rates (or, if applicable, the Modified Net Mortgage Rates) on the Group
II Loans using the Net Mortgage Rates in effect for the Monthly  Payments due on
such Mortgage Loans during the related Due Period,  weighted on the basis of the
respective Stated Principal Balances thereof for such Distribution Date and (ii)
a  fraction  equal to 30 divided  by the  actual  number of days in the  related
Interest Accrual Period.

        Group  I  Net  WAC  Cap  Shortfall:   With  respect  to  the  Class  A-I
Certificates  (other than the Class A-I-2,  Class  A-I-3,  Class A-I-4 and Class
A-I-IO  Certificates)  and Class M-I Certificates and each  Distribution Date on
which the Group I Adjusted  Net WAC Cap Rate or Group I Net WAC Cap Rate is used
to determine the Pass-Through  Rate of those Class A-I Certificates or Class M-I
Certificates,  an amount the excess of (x) Accrued Certificate Interest for that
class of  Certificates  calculated  at a rate  equal to the rate  determined  in
clause (a)(i) or (b), as applicable,  of the definition of Pass-Through Rate for
that class of Class A-I Certificates or Class M-I Certificates  over (y) Accrued
Certificate Interest for that class of Certificates calculated using the Group I
Adjusted Net WAC Cap Rate or Group I Net WAC Cap Rate, as applicable.

        Group I Optional  Termination  Date: Any  Distribution  Date on or after
which the Stated Principal  Balance (before giving effect to distributions to be
made on such Distribution  Date) of the Group I Loans is less than 10.00% of the
Group I Cut-off Date Balance.



                                              29

<PAGE>



        Group II Optional  Termination  Date: Any Distribution  Date on or after
which the Stated Principal  Balance (before giving effect to distributions to be
made on such Distribution Date) of the Group II Loans is less than 10.00% of the
Group II Cut-off Date Balance.

        Group I  Overcollateralization  Amount: With respect to any Distribution
Date, the excess,  if any, of (a) the aggregate Stated Principal  Balance of the
Group I Loans before giving effect to  distributions  of principal to be made on
such Distribution Date over (b) the aggregate  Certificate  Principal Balance of
the Class A-I Certificates (other than the Class A-I-IO  Certificates) and Class
M-I  Certificates as of such date,  before taking into account  distributions of
principal to be made on that Distribution Date.

        Group II Overcollateralization  Amount: With respect to any Distribution
Date, the excess,  if any, of (a) the aggregate Stated Principal  Balance of the
Group II Loans before giving effect to  distributions of principal to be made on
such Distribution  Date over (b) the Certificate  Principal Balance of the Class
A-II Certificates as of such date,  before taking into account  distributions of
principal to be made on that Distribution Date.

        Group I  Overcollateralization  Increase  Amount:  With  respect  to any
Distribution  Date, an amount equal to the lesser of (i) the Group I Excess Cash
Flow for that  Distribution  Date available to make payments pursuant to Section
4.02(c)(x)  plus the  Group II  Excess  Cash  Flow  for such  Distribution  Date
available to make payments pursuant to Section  4.02(d)(vi) and (viii), and (ii)
the excess, if any, of (x) the Group I Required Overcollateralization Amount for
that  Distribution  Date over (y) the Group I  Overcollateralization  Amount for
that Distribution Date.

        Group II  Overcollateralization  Increase  Amount:  With  respect to any
Distribution Date, an amount equal to the lesser of (i) the Group II Excess Cash
Flow for that  Distribution  Date available to make payments pursuant to Section
4.02(d)(vii)  plus the  Group I Excess  Cash  Flow  for such  Distribution  Date
available to make payments  pursuant to Section  4.02(c)(ix)  and (xi), and (ii)
the excess,  if any, of (x) the Group II Required  Overcollateralization  Amount
for that  Distribution Date over (y) the Group II  Overcollateralization  Amount
for that Distribution Date.

        Group I  Overcollateralization  Reduction  Amount:  With  respect to any
Distribution Date for which the Group I Excess  Overcollateralization Amount is,
or would be,  after taking into  account all other  distributions  to be made on
that Distribution  Date, greater than zero, an amount equal to the lesser of (i)
the Group I Excess  Overcollateralization  Amount for that Distribution Date and
(ii) the Group I Principal Remittance Amount for that Distribution Date.

        Group II  Overcollateralization  Reduction  Amount:  With respect to any
Distribution Date for which the Group II Excess Overcollateralization Amount is,
or would be,  after taking into  account all other  distributions  to be made on
that Distribution  Date, greater than zero, an amount equal to the lesser of (i)
the Group II Excess  Overcollateralization Amount for that Distribution Date and
(ii) the Group II Principal Remittance Amount for that Distribution Date.

        Group I Pool Stated Principal Balance:  As to any date of determination,
the aggregate of the Stated Principal  Balances of each Group I Loan that was an
Outstanding  Mortgage Loan on the Due Date immediately  preceding the Due Period
preceding such date of determination.


                                              30

<PAGE>



        Group II Pool Stated Principal Balance: As to any date of determination,
the aggregate of the Stated Principal Balances of each Group II Loan that was an
Outstanding  Mortgage Loan on the Due Date immediately  preceding the Due Period
preceding such date of determination.

        Group I Principal  Distribution Amount: With respect to any Distribution
Date,  the lesser of (a) the sum of (i) the excess of (x) the Group I  Available
Distribution  Amount over (y) the Group I Interest  Distribution Amount and (ii)
any Group II Excess Cash Flow used to pay principal on the Group I  Certificates
pursuant to Section 4.02(d)(iv), (vi) and (viii) and (b) the sum of:

        (i) the principal  portion of each Monthly Payment  received or Advanced
with respect to the related Due Period on each Outstanding Mortgage Loan that is
a Group I Loan;

        (ii) the Stated Principal Balance of any Group I Loan repurchased during
the  related  Prepayment  Period  (or  deemed  to have  been so  repurchased  in
accordance with Section  3.07(b))  pursuant to Section 2.02, 2.03, 2.04, 4.07 or
4.08 and the  amount of any  shortfall  deposited  in the  Custodial  Account in
connection with the  substitution  of a Deleted  Mortgage Loan that is a Group I
Loan pursuant to Section 2.03 or 2.04 during the related Prepayment Period;

        (iii) the principal portion of all other unscheduled  collections on the
Group I Loans (including,  without  limitation,  Principal  Prepayments in Full,
Curtailments,   Insurance  Proceeds,  Liquidation  Proceeds  and  REO  Proceeds)
received  during the  related  Prepayment  Period to the  extent  applied by the
Master  Servicer as  recoveries  of principal  of the Group I Loans  pursuant to
Section 3.14;

        (iv) the  principal  portion of any Realized  Losses (other than Group I
Excess  Losses  or Group II  Excess  Losses)  incurred  (or  deemed to have been
incurred) on any Group I Loans in the calendar month preceding such Distribution
Date to the extent  covered by Group I Excess  Cash Flow or Group II Excess Cash
Flow for such Distribution Date; and

        (v) the amount of any Group I Overcollateralization  Increase Amount for
such  Distribution  Date to the extent  covered  by Group I Excess  Cash Flow or
Group II Excess Cash Flow;

        minus

        (vi) the amount of any related Group I  Overcollateralization  Reduction
Amount for such Distribution Date.

        Group II Principal Distribution Amount: With respect to any Distribution
Date,  the lesser of (a) the sum of (i) the excess of (x) the Group II Available
Distribution Amount over (y) the Group II Interest  Distribution Amount and (ii)
any Group I Excess Cash Flow used to pay principal on the Group II  Certificates
pursuant to Section 4.02(c)(vii), (ix) and (xi) and (b) the sum of:

        (i) the principal  portion of each Monthly Payment  received or Advanced
with respect to the related Due Period on each Outstanding Mortgage Loan that is
a Group II Loan;



                                              31

<PAGE>



        (ii) the  Stated  Principal  Balance  of any  Group II Loan  repurchased
during the related  Prepayment  Period (or deemed to have been so repurchased in
accordance with Section  3.07(b))  pursuant to Section 2.02, 2.03, 2.04, 4.07 or
4.08 and the  amount of any  shortfall  deposited  in the  Custodial  Account in
connection with the  substitution of a Deleted  Mortgage Loan that is a Group II
Loan pursuant to Section 2.03 or 2.04 during the related Prepayment Period;

        (iii) the principal portion of all other unscheduled  collections on the
Group II Loans (including,  without limitation,  Principal  Prepayments in Full,
Curtailments,   Insurance  Proceeds,  Liquidation  Proceeds  and  REO  Proceeds)
received  during the  related  Prepayment  Period to the  extent  applied by the
Master  Servicer as  recoveries  of principal of the Group II Loans  pursuant to
Section 3.14;

        (iv) the  principal  portion of any Realized  Losses (other than Group I
Excess  Losses  or Group II  Excess  Losses)  incurred  (or  deemed to have been
incurred)  on  any  Group  II  Loans  in  the  calendar  month   preceding  such
Distribution  Date to the extent covered by Group I Excess Cash Flow or Group II
Excess Cash Flow for such Distribution Date; and

        (v) the amount of any Group II Overcollateralization Increase Amount for
such  Distribution  Date to the extent  covered  by Group I Excess  Cash Flow or
Group II Excess Cash Flow;

        minus

        (vi) the amount of any related Group II Overcollateralization  Reduction
Amount for such Distribution Date.

        Group I Principal  Remittance  Amount:  With respect to any Distribution
Date,  the sum of the amounts  described in clauses  (i),  (ii) and (iii) of the
definition of Group I Principal Distribution Amount for that Distribution Date.

        Group II Principal  Remittance Amount:  With respect to any Distribution
Date,  the sum of the amounts  described in clauses  (i),  (ii) and (iii) of the
definition of Group II Principal Distribution Amount for that Distribution Date.

        Group I Senior  Enhancement  Percentage:  For any Distribution Date, the
percentage  obtained by dividing  (x) the sum of (i) the  aggregate  Certificate
Principal Balance of the Class M-I-1,  Class M-I-2 and Class M-I-3  Certificates
and (ii) the Group I  Overcollateralization  Amount,  in each case  prior to the
distribution of the Group I Principal  Distribution  Amount on such Distribution
Date, by (y) the aggregate Stated  Principal  Balance of the Group I Loans after
giving effect to distributions to be made on that Distribution Date.

        Group I Special Hazard Amount:  As of any  Distribution  Date, an amount
equal to $3,000,003  minus the sum of (i) the aggregate amount of Special Hazard
Losses  allocated to the Group I Loans through  Subordination in accordance with
Section 4.05 and (ii) the Group I Adjustment  Amount (as defined  below) as most
recently  calculated.  For each  anniversary  of the Cut-off Date,  the "Group I
Adjustment  Amount"  shall be equal to the  amount,  if any, by which the amount
calculated in accordance with the preceding  sentence  (without giving effect to
the deduction of the Group I


                                              32

<PAGE>



Adjustment Amount for such anniversary)  exceeds the greater of (A) the greatest
of (i) twice the outstanding  principal balance of the Group I Loan that has the
largest  outstanding  principal  balance on the  Distribution  Date  immediately
preceding  such  anniversary,  (ii)  the  product  of  1.00%  multiplied  by the
outstanding  principal  balance  of all Group I Loans on the  Distribution  Date
immediately  preceding  such  anniversary  and (iii) the  aggregate  outstanding
principal  balance (as of the immediately  preceding  Distribution  Date) of the
Group I Loans in any single five-digit California zip code area with the largest
amount of Group I Loans by aggregate  principal  balance as of such  anniversary
and (B) the greater of (i) the product of 0.50%  multiplied  by the  outstanding
principal  balance  of all Group I Loans on the  Distribution  Date  immediately
preceding such anniversary  multiplied by a fraction,  the numerator of which is
equal to the  aggregate  outstanding  principal  balance (as of the  immediately
preceding  Distribution  Date) of all of the Group I Loans  secured by Mortgaged
Properties  located  in  the  State  of  California  divided  by  the  aggregate
outstanding  principal  balance (as of the  immediately  preceding  Distribution
Date)  of  all of  the  Group  I  Loans,  expressed  as a  percentage,  and  the
denominator  of  which  is equal  to  13.5%  (which  percentage  is equal to the
percentage of Group I Loans initially secured by Mortgaged Properties located in
the State of California) and (ii) the aggregate  outstanding  principal  balance
(as of the immediately preceding  Distribution Date) of the largest Group I Loan
secured by a Mortgaged Property located in the State of California.  The Group I
Special Hazard Amount may be further reduced by the Master  Servicer  (including
accelerating the manner in which coverage is reduced) provided that prior to any
such reduction,  the Master Servicer shall obtain the written  confirmation from
each Rating Agency that such reduction  shall not reduce the rating  assigned to
the  Class  A-I  Certificates  by such  Rating  Agency  below  the  lower of the
then-current  rating  or the  rating  assigned  to such  Certificates  as of the
Closing Date by such Rating Agency.

        Group II Special Hazard Amount:  As of any Distribution  Date, an amount
equal to $4,000,006  minus the sum of (i) the aggregate amount of Special Hazard
Losses allocated to the Group II Loans through  Subordination in accordance with
Section 4.05 and (ii) the Group II Adjustment  Amount (as defined below) as most
recently  calculated.  For each  anniversary of the Cut- off Date, the "Group II
Adjustment  Amount"  shall be equal to the  amount,  if any, by which the amount
calculated in accordance with the preceding  sentence  (without giving effect to
the deduction of the Group II Adjustment  Amount for such  anniversary)  exceeds
the greater of (A) the greatest of (i) twice the outstanding  principal  balance
of the Group II Loan that has the largest  outstanding  principal balance on the
Distribution Date immediately  preceding such  anniversary,  (ii) the product of
1.00% multiplied by the outstanding  principal  balance of all Group II Loans on
the  Distribution  Date  immediately  preceding such  anniversary  and (iii) the
aggregate  outstanding  principal  balance  (as  of  the  immediately  preceding
Distribution Date) of the Group II Loans in any single five-digit California zip
code  area with the  largest  amount  of Group II Loans by  aggregate  principal
balance as of such  anniversary  and (B) the greater of (i) the product of 0.50%
multiplied  by the  outstanding  principal  balance of all Group II Loans on the
Distribution  Date  immediately  preceding  such  anniversary  multiplied  by  a
fraction, the numerator of which is equal to the aggregate outstanding principal
balance (as of the immediately preceding  Distribution Date) of all of the Group
II Loans  secured by  Mortgaged  Properties  located in the State of  California
divided by the aggregate  outstanding  principal  balance (as of the immediately
preceding  Distribution  Date) of all of the  Group  II  Loans,  expressed  as a
percentage,  and the denominator of which is equal to 16.0% (which percentage is
equal  to the  percentage  of  Group II Loans  initially  secured  by  Mortgaged
Properties   located  in  the  State  of  California)  and  (ii)  the  aggregate
outstanding principal balance (as of the


                                              33

<PAGE>



immediately preceding Distribution Date) of the largest Group II Loan secured by
a Mortgaged  Property  located in the State of California.  The Group II Special
Hazard  Amount  may  be  further  reduced  by  the  Master  Servicer  (including
accelerating the manner in which coverage is reduced) provided that prior to any
such  reduction,  the Master  Servicer shall obtain the written  approval of the
Insurer  and obtain  written  confirmation  from each  Rating  Agency  that such
reduction  shall not reduce the rating  assigned to the Class A-II  Certificates
without  regard  to the  Policy  by such  Rating  Agency  below the lower of the
then-current  rating  or the  rating  assigned  to such  Certificates  as of the
Closing Date by such Rating Agency.

        Group I Stepdown Date: The Distribution Date which is the later to occur
of (i) the  Distribution  Date  occurring  in March  2006  and  (ii)  the  first
Distribution  Date on  which  the  sum of the  aggregate  Certificate  Principal
Balance  of the Class  M-I  Certificates  and the Group I  Overcollateralization
Amount  immediately  prior to that Distribution Date is equal to or greater than
16.50% of the aggregate Stated Principal  Balance of the Group I Loans as of the
end of the preceding Due Period.

        Group II  Stepdown  Date:  The  Distribution  Date which is the later to
occur of (i) the  Distribution  Date  occurring in  September  2005 and (ii) the
first  Distribution  Date on which  the  Group II  Overcollateralization  Amount
immediately  prior to that  Distribution Date is equal to or greater than 14.00%
of the aggregate Stated Principal Balance of the Group II Loans as of the end of
the preceding Due Period.

        Group I Trigger Event: A Group I Trigger Event is in effect with respect
to any  Distribution  Date  (other  than  the  first  Distribution  Date) if the
three-month average (or two month-average in the case of the second Distribution
Date) of the related Sixty-Plus  Delinquency  Percentage,  as determined on that
Distribution  Date and the  immediately  preceding  two  Distribution  Dates (or
immediately  preceding  Distribution Date in the case of the second Distribution
Date),  equals or exceeds the Group I Senior Enhancement  Percentage.  A Group I
Trigger  Event is in effect with respect to the first  Distribution  Date if the
related Sixty-Plus  Delinquency  Percentage,  as determined on that Distribution
Date, equals or exceeds the Group I Senior Enhancement Percentage.

        Group I Uncertificated Regular Interests:  The REMIC I Regular Interests
and the REMIC III Group I Regular Interests.

        Group  II  Uncertificated  Regular  Interests:   The  REMIC  II  Regular
Interests and the REMIC III Group II Regular Interests.

        Hazardous  Materials:  Any  dangerous,  toxic or  hazardous  pollutants,
chemicals,  wastes,  or  substances,  including,  without  limitation,  those so
identified pursuant to the Comprehensive  Environmental  Response,  Compensation
and Liability  Act, 42 U.S.C.  Section 9601 et seq., or any other  environmental
laws now existing, and specifically including, without limitation,  asbestos and
asbestos-containing  materials,  polychlorinated biphenyls, radon gas, petroleum
and petroleum products, urea formaldehyde and any substances classified as being
"in inventory", "usable work in progress" or similar classification which would,
if classified unusable, be included in the foregoing definition.



                                              34

<PAGE>



        Independent:  When used with respect to any specified Person, means such
a Person who (i) is in fact  independent of the Depositor,  the Master  Servicer
and the  Trustee,  or any  Affiliate  thereof,  (ii)  does not  have any  direct
financial interest or any material indirect financial interest in the Depositor,
the Master Servicer or the Trustee or in an Affiliate thereof,  and (iii) is not
connected with the Depositor,  the Master Servicer or the Trustee as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.

        Index:  With respect to any adjustable  rate Mortgage Loan and as to any
Adjustment  Date therefor,  the related index as stated in the related  Mortgage
Note.

        Initial  Certificate  Principal  Balance:  With respect to each Class of
Certificates  (other  than  the  Class  A-I-IO  Certificates  and  the  Class  R
Certificates),  the Certificate  Principal Balance of such Class of Certificates
as of the Cut-off Date as set forth in the Preliminary Statement hereto.

        Insurance  Account:  The  account or  accounts  created  and  maintained
pursuant  to Section  4.10,  which shall be entitled  "JPMorgan  Chase Bank,  as
trustee,  in trust for the  registered  holders of  Residential  Asset  Mortgage
Products,  Inc.,  Mortgage  Asset-Backed   Pass-Through   Certificates,   Series
2003-RS1, Class A-II" and which must be an Eligible Account.

        Insurance Agreement: The Insurance and Indemnity Agreement,  dated as of
February 27, 2003, among the Insurer,  the Trustee,  the Master Servicer and the
Depositor.

        Insurance  Proceeds:  Proceeds  paid in  respect of the  Mortgage  Loans
pursuant to any Primary  Insurance Policy or any other related  insurance policy
covering a  Mortgage  Loan,  to the  extent  such  proceeds  are  payable to the
mortgagee  under the  Mortgage,  any  Subservicer,  the Master  Servicer  or the
Trustee and are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance  with the procedures  that the Master
Servicer would follow in servicing mortgage loans held for its own account.

        Insured Amount:  With respect to the Class A-II Certificates,  as of any
Distribution Date, the Deficiency Amount, if any, for such Distribution Date.

        Insurer:  Ambac  Assurance  Corporation,   a  Wisconsin-domiciled  stock
insurance corporation or its successors in interest.

     Insurer  Account:  An account of the Insurer  maintained at Citibank,  N.A.
(ABA No. 021- 000089), Account No. 40609486,  Attention:  Pamela Dottin, or such
other  account as may be designated by the Insurer to the Trustee in writing not
less than five Business Days prior to the related Distribution Date.

        Insurer Default:  The existence and continuance of any of the following:
(a) a failure  by the  Insurer  to make a payment  required  under the Policy in
accordance  with its terms;  or (b)(i) the  Insurer  (A) files any  petition  or
commences  any  case  or  proceeding  under  any  provision  or  chapter  of the
Bankruptcy  Code  or  any  other  similar  federal  or  state  law  relating  to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (B) makes
a general  assignment  for the benefit of its  creditors or (C) has an order for
relief entered against it under the Bankruptcy Code or any other


                                              35

<PAGE>



similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable;  or (ii) a court
of competent jurisdiction, the Wisconsin insurance department or other competent
regulatory authority enters a final and nonappealable order,  judgment or decree
(A)  appointing a custodian,  trustee,  agent or receiver for the Insurer or for
all or any  material  portion of its property or (B)  authorizing  the taking of
possession  by a  custodian,  trustee,  agent or receiver of the Insurer (or the
taking of  possession  of all or any  material  portion of the  property  of the
Insurer).

        Interest  Accrual  Period:  With  respect to the Class A-I  Certificates
(other than the Class A-I-1 Certificates), Class M-I Certificates and Class SB-I
Certificates and any Distribution  Date, the prior calendar month.  With respect
to the Class A-I-1, Class A-II and Class SB-II Certificates, (i) with respect to
the Distribution  Date in March 2003, the period commencing the Closing Date and
ending on the day preceding the  Distribution  Date in March 2003, and (ii) with
respect to any Distribution  Date after the Distribution Date in March 2003, the
period commencing on the Distribution  Date in the month  immediately  preceding
the month in which such Distribution Date occurs and ending on the day preceding
such Distribution Date.

        Interim Certification: As defined in Section 2.02.
        ---------------------

        Interested Person: As of any date of determination,  the Depositor,  the
Master  Servicer,  the Insurer,  the Trustee,  any  Mortgagor,  any Manager of a
Mortgaged Property,  or any Person known to a Responsible Officer of the Trustee
to be an Affiliate of any of them.

        Late  Collections:  With  respect  to any  Mortgage  Loan,  all  amounts
received during any Due Period,  whether as late payments of Monthly Payments or
as Insurance Proceeds,  Liquidation Proceeds or otherwise,  which represent late
payments or  collections  of Monthly  Payments due but delinquent for a previous
Due Period and not previously recovered.

        Late Payment Rate: As defined in the Insurance Agreement.
        -----------------

        LIBOR: With respect to any Distribution Date, the arithmetic mean of the
London  interbank  offered rate quotations for one-month U.S.  Dollar  deposits,
expressed on a per annum basis, determined in accordance with Section 1.02.

        LIBOR  Business Day: Any day other than (i) a Saturday or Sunday or (ii)
a day  on  which  banking  institutions  in  London,  England  are  required  or
authorized to by law to be closed.

        LIBOR Rate Adjustment Date: With respect to each Distribution  Date, the
second LIBOR Business Day immediately  preceding the commencement of the related
Interest Accrual Period.

     Limited  Repurchase  Right  Holder:  RFC Asset  Holdings II,  Inc.,  or its
successor.

        Liquidation  Proceeds:  Amounts (other than Insurance Proceeds) received
by the Master  Servicer  in  connection  with the taking of an entire  Mortgaged
Property  by  exercise  of the power of  eminent  domain or  condemnation  or in
connection  with the  liquidation  of a defaulted Loan through  trustee's  sale,
foreclosure sale or otherwise, other than REO Proceeds.


                                              36

<PAGE>



        Loan  Group:  With  respect  to the  Class A-I  Certificates,  Class M-I
Certificates and Class SB-I Certificates, the Group I Loans, and with respect to
the Class A-II Certificates and Class SB-II Certificates, the Group II Loans.

        Loan-to-Value  Ratio:  As of any  date,  the  fraction,  expressed  as a
percentage,  the  numerator  of which is the  current  principal  balance of the
related Mortgage Loan at the date of determination  and the denominator of which
is the Appraised Value of the related Mortgaged Property.

        Maturity  Date:  With respect to each Class of  Certificates  of regular
interest or Uncertificated Regular Interest issued by each of REMIC I, REMIC II,
REMIC III and REMIC IV, the latest possible  maturity date,  solely for purposes
of  Section  1.860G-1(a)(4)(iii)  of the  Treasury  Regulations,  by  which  the
Certificate Principal Balance of each such Class of Certificates  representing a
regular  interest in the Trust Fund would be reduced to zero, which is, for each
such regular  interest  other than the Class A-I-IO  Certificates,  February 25,
2033,  which is the  Distribution  Date  following  the last  scheduled  monthly
payment of the Group I Mortgage Loans and the Group II Mortgage Loans, and which
is for the Class A-I-IO Certificates, August 25, 2005.

        Maximum Group II Rate: With respect to the Class A-II  Certificates  and
any Interest Accrual Period, 14.00% per annum.

        Maximum Mortgage Rate: As to any adjustable rate Mortgage Loan, the rate
indicated in Exhibit F-2 hereto as the "NOTE CEILING," which rate is the maximum
interest rate that may be applicable  to such  adjustable  rate Mortgage Loan at
any time during the life of such Mortgage Loan.

        Maximum  Net  Mortgage  Rate:  As to any  Group  II Loan and any date of
determination,  the Maximum  Mortgage Rate minus the sum of (i) the Subservicing
Fee Rate, (ii) the Servicing Fee Rate and (iii) the Certificate  Insurer Premium
Modified Rate as of such date.

     MERS:  Mortgage  Electronic   Registration  Systems,  Inc.,  a  corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.

        MERS(R)  System:   The  system  of  recording   transfers  of  Mortgages
electronically maintained by MERS.

        MIN: The Mortgage  Identification  Number for Mortgage Loans  registered
with MERS on the MERS(R)System.

        Minimum  Mortgage  Rate: As to any  adjustable  rate Mortgage  Loan, the
greater of (i) the Note Margin and (ii) the rate indicated in Exhibit F-2 hereto
as the "NOTE  FLOOR",  which  rate may be  applicable  to such  adjustable  rate
Mortgage Loan at any time during the life of such adjustable rate Mortgage Loan.

        Modified Mortgage Loan: Any Mortgage Loan that has been the subject of a
Servicing Modification.



                                              37

<PAGE>



        Modified Net Mortgage  Rate: As to any Mortgage Loan that is the subject
of a Servicing  Modification,  the Net Mortgage Rate minus the rate per annum by
which the Mortgage Rate on such Mortgage Loan was reduced.

        MOM  Loan:  With  respect  to any  Mortgage  Loan,  MERS  acting  as the
mortgagee of such Mortgage  Loan,  solely as nominee for the  originator of such
Mortgage Loan and its successors and assigns, at the origination thereof.

        Monthly  Payment:  With respect to any Mortgage Loan  (including any REO
Property)  and the Due Date in any Due  Period,  the  payment of  principal  and
interest due thereon in accordance  with the  amortization  schedule at the time
applicable thereto (after adjustment, if any, for Curtailments and for Deficient
Valuations  occurring  prior to such Due Date but before any  adjustment to such
amortization  schedule  by  reason of any  bankruptcy,  other  than a  Deficient
Valuation,  or similar  proceeding or any  moratorium or similar waiver or grace
period and before any Servicing Modification that constitutes a reduction of the
interest rate on such Mortgage Loan).

        Moody's: Moody's Investors Service, Inc., or its successor in interest.

        Mortgage: With respect to each Mortgage Note related to a Mortgage Loan,
the mortgage,  deed of trust or other comparable  instrument creating a first or
junior  lien on an estate in fee simple  interest  in real  property  securing a
Mortgage Note.

        Mortgage File: The mortgage  documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional  documents required to be added
to the Mortgage File pursuant to this Agreement.

        Mortgage Loan Schedule:  The lists of the Mortgage Loans attached hereto
as Exhibit  F-1 and  Exhibit  F-2 (as  amended  from time to time to reflect the
addition of Qualified Substitute Mortgage Loans), which lists shall set forth at
a minimum the following information as to each Mortgage Loan:

        (i) the Mortgage Loan identifying number ("RFC LOAN #");

        (ii) [reserved];

        (iii) the maturity of the Mortgage Note  ("MATURITY  DATE", or "MATURITY
        DT" for Mortgage  Loans and if such Mortgage Loan is a Balloon Loan, the
        amortization term thereof;

        (iv) the Mortgage Rate as of the Cut-off Date ("ORIG RATE")

        (v) the  Mortgage  Rate as of the Cut-off  Date for an  adjustable  rate
        Mortgage Loan ("CURR RATE");

        (vi) the Net Mortgage Rate as of the Cut-off Date ("CURR NET");



                                              38

<PAGE>



        (vii) the scheduled  monthly payment of principal,  if any, and interest
        as of the  Cut-off  Date  ("ORIGINAL  P & I" or  "CURRENT P & I" for the
        adjustable rate Mortgage Loans);

        (viii) the Cut-off Date Principal Balance ("PRINCIPAL BAL");

        (ix) the Loan-to-Value Ratio at origination ("LTV");

        (x) a code "T", "BT" or "CT" under the column "LN  FEATURE,"  indicating
        that the Mortgage Loan is secured by a second or vacation residence (the
        absence of any such code means the Mortgage Loan is secured by a primary
        residence);

        (xi) a code "N"  under  the  column  "OCCP  CODE",  indicating  that the
        Mortgage Loan is secured by a non-owner  occupied residence (the absence
        of any such code means the Mortgage Loan is secured by an owner occupied
        residence);

        (xii) the Maximum  Mortgage Rate for the adjustable  rate Mortgage Loans
        ("NOTE CEILING");

        (xiii) the Maximum Net Mortgage  Rate for the  adjustable  rate Mortgage
        Loans ("NET CEILING");

        (xiv) the Note Margin for the  adjustable  rate  Mortgage  Loans  ("NOTE
        MARGIN");

        (xv) the first Adjustment Date after the Cut-off Date for the adjustable
        rate Mortgage Loans ("NXT INT CHG DT");

        (xvi) the Periodic Cap for the adjustable rate Mortgage Loans ("PERIODIC
        DECR" or "PERIODIC INCR"); and

        (xvii) the  rounding  of the  semi-annual  or annual  adjustment  to the
        Mortgage Rate with respect to the adjustable  rate Mortgage Loans ("NOTE
        METHOD").

        Such  schedules may consist of multiple  reports that  collectively  set
forth all of the information required.

        Mortgage Loans:  Such of the mortgage loans  transferred and assigned to
the Trustee  pursuant to Section 2.01 as from time to time are held or deemed to
be held as a part of the Trust Fund, the Mortgage Loans originally so held being
identified in the initial  Mortgage  Loan  Schedule,  and  Qualified  Substitute
Mortgage Loans held or deemed held as part of the Trust Fund including,  without
limitation,  with respect to each Mortgage  Loan,  each related  Mortgage  Note,
Mortgage and Mortgage File and all rights appertaining thereto.

        Mortgage  Note:  The  originally  executed  note or  other  evidence  of
indebtedness  evidencing the  indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.



                                              39

<PAGE>



        Mortgage  Rate: As to any Mortgage  Loan, the interest rate borne by the
related  Mortgage  Note,  or any  modification  thereto  other than a  Servicing
Modification.  The Mortgage  Rate on the  adjustable  rate  Mortgage  Loans will
adjust on each Adjustment Date to equal the sum (rounded to the nearest multiple
of  one-eighth  of one percent  (0.125%) or up to the nearest  one-eighth of one
percent,  which are indicated by a "U" on Exhibit F-1 or Exhibit F-2 hereto,  as
applicable,  except in the case of the adjustable  rate Mortgage Loans indicated
by an "X" on Exhibit F-1 or Exhibit F-2 hereto under the heading "NOTE METHOD"),
of the  related  Index  plus  the  Note  Margin,  in each  case  subject  to the
applicable Periodic Cap, Maximum Mortgage Rate and Minimum Mortgage Rate.

      Mortgaged Property: The underlying real property securing a Mortgage Loan.

        Mortgagor: The obligor on a Mortgage Note.

     Net  Collections:  With respect to any Corrected  Mortgage  Loan, an amount
equal to all  payments on account of interest  and  principal  on such  Mortgage
Loan.

        Net Mortgage  Rate:  With respect to any Mortgage Loan as of any date of
determination,  a per annum rate equal to the  Mortgage  Rate for such  Mortgage
Loan as of such date minus the sum of (i) the related  Servicing Fee Rate,  (ii)
the related  Subservicing Fee Rate and (iii) with respect to the Group II Loans,
the Certificate Insurer Premium Modified Rate.

        Non-Primary Residence Loans: The Mortgage Loans designated as secured by
second or vacation  residences,  or by  non-owner  occupied  residences,  on the
Mortgage Loan Schedule.

        Non-United States Person: Any Person other than a United States Person.

        Nonrecoverable  Advance:  Any Advance  previously made or proposed to be
made by the Master  Servicer in respect of a Mortgage Loan (other than a Deleted
Mortgage Loan) which,  in the good faith judgment of the Master  Servicer,  will
not, or, in the case of a proposed Advance, would not, be ultimately recoverable
by the Master  Servicer  from  related  Late  Collections,  Insurance  Proceeds,
Liquidation  Proceeds or REO  Proceeds.  To the extent that any Mortgagor is not
obligated under the related  Mortgage  documents to pay or reimburse any portion
of any Advances that are outstanding  with respect to the related  Mortgage Loan
as a result of a  modification  of such  Mortgage  Loan by the Master  Servicer,
which  forgives  unpaid  Monthly  Payments  or other  amounts  which the  Master
Servicer had previously  advanced,  and the Master  Servicer  determines that no
other source of payment or  reimbursement  for such advances is available to it,
such Advances shall be deemed to be nonrecoverable;  provided,  however, that in
connection  with the foregoing,  the Master  Servicer shall provide an Officers'
Certificate as described below. The determination by the Master Servicer that it
has made a  Nonrecoverable  Advance  shall be  evidenced by a  certificate  of a
Servicing  Officer,  Responsible  Officer or Vice President or its equivalent or
senior officer of the Master Servicer,  delivered to the Depositor, the Trustee,
the Insurer and the Master  Servicer  setting  forth such  determination,  which
shall include any other  information or reports  obtained by the Master Servicer
such as property operating  statements,  rent rolls, property inspection reports
and engineering reports, which may support such determinations.  Notwithstanding
the above,  the Trustee shall be entitled to rely upon any  determination by the
Master Servicer that any Advance previously made is a


                                              40

<PAGE>



Nonrecoverable Advance or that any proposed Advance, if made, would constitute a
Nonrecoverable Advance.

        Nonsubserviced  Mortgage  Loan:  Any Mortgage  Loan that, at the time of
reference thereto, is not subject to a Subservicing Agreement.

        Note  Margin:  As to each  adjustable  rate  Mortgage  Loan,  the  fixed
percentage  set forth in the related  Mortgage Note and indicated in Exhibit F-2
hereto  as the "NOTE  MARGIN,"  which  percentage  is added to the Index on each
Adjustment Date to determine (subject to rounding in accordance with the related
Mortgage  Note,  the  Periodic  Cap, the Maximum  Mortgage  Rate and the Minimum
Mortgage  Rate) the interest rate to be borne by such  adjustable  rate Mortgage
Loan until the next Adjustment Date.

        Notice: As defined in Section 4.04.

        Notional  Amount:  With respect to the Class A-I-IO and any distribution
date, the lesser of (a) the aggregate  Stated  Principal  Balance of the Group I
Loans and (b) the amount indicated on the following schedule:

DISTRIBUTION DATE                         NOTIONAL AMOUNT
-----------------                         ---------------
March 2003                                           $300,000,000.00
April 2003                                           $277,600,000.00
May 2003                                             $257,000,000.00
June 2003                                            $237,900,000.00
July 2003                                            $220,200,000.00
August 2003                                          $203,800,000.00
September 2003                                       $188,700,000.00
October 2003                                         $174,600,000.00
November 2003                                        $161,600,000.00
December 2003                                        $149,600,000.00
January 2004                                         $138,500,000.00
February 2004                                        $128,200,000.00
March 2004                                           $118,600,000.00
April 2004                                           $109,800,000.00
May 2004                                             $101,600,000.00
June 2004                                           $  94,100,000.00
July 2004                                           $  87,100,000.00
August 2004                                         $  80,600,000.00
September 2004                                      $  74,600,000.00
October 2004                                        $  69,000,000.00
November 2004                                       $  63,900,000.00
December 2004                                       $  59,100,000.00



                                              41

<PAGE>




January 2005                                        $  54,700,000.00
February 2005                                       $  50,600,000.00
March 2005                                          $  46,900,000.00
April 2005                                          $  43,400,000.00
May 2005                                            $  40,100,000.00
June 2005                                           $  37,100,000.00
July 2005                                           $  34,400,000.00
August 2005                                         $  31,800,000.00
September 2005 and thereafter                $                  0.00

For federal income tax purposes, however, the Class A-I-IO Certificates will not
have a notional amount, but will be accrued Certificate  Interest will be deemed
to be to (i) for any Distribution Date from March 2003 through August 2005, 100%
of the interest payable on REMIC III Regular Interest  LT3-IAIO and (ii) for and
Distribution Date thereafter, 0.00%.

        Officers'  Certificate:  A  certificate  signed by the  Chairman  of the
Board,  the  President or a Vice  President or Assistant  Vice  President,  or a
Director or Managing Director,  and by the Treasurer,  the Secretary,  or one of
the Assistant Treasurers or Assistant Secretaries of the Depositor or the Master
Servicer,  as the case may be, and delivered to the Trustee and the Insurer,  as
required by this Agreement.

        Opinion of  Counsel:  A written  opinion of  counsel  acceptable  to the
Trustee,  the  Insurer  and the  Master  Servicer,  who may be  counsel  for the
Depositor  or the Master  Servicer,  provided  that any  opinion of counsel  (i)
referred to in the definition of "Disqualified Organization" or (ii) relating to
the  qualification  of REMIC I,  REMIC  II,  REMIC  III or REMIC IV as REMICs or
compliance with the REMIC Provisions must,  unless  otherwise  specified,  be an
opinion of Independent counsel.

        Outstanding  Mortgage  Loan:  As to the Due  Date in any Due  Period,  a
Mortgage  Loan  (including  an REO  Property)  that  was  not the  subject  of a
Principal  Prepayment in Full, Cash  Liquidation or REO Disposition and that was
not  purchased,  deleted or  substituted  for prior to such Due Date pursuant to
Section 2.02, 2.03, 2.04, 4.07 or 4.08.

        Overcollateralization Floor: As to either Loan Group, an amount equal to
0.50% of the aggregate Stated Principal Balance of the related Mortgage Loans as
of the Cut-off Date.

        Ownership  Interest:  As to any  Certificate,  any ownership or security
interest in such Certificate,  including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.

        Pass-Through Rate: With respect to the Class A-I-1 Certificates and each
Interest  Accrual  Period a per annum rate equal to the lesser of (i)  One-Month
LIBOR plus the Class  A-I-1  Margin  and (ii) the Group I  Adjusted  Net WAC Cap
Rate;  provided,  however,  that for  federal  income tax  purposes,  the amount
determined under clause (ii) shall be the equivalent of the foregoing, expressed
as the weighted average of the REMIC III  Uncertificated  Pass-Through Rates for
the REMIC III


                                              42

<PAGE>



Group I Regular  Interests  (other  than REMIC III Regular  Interest  LT3-IAIO),
weighted  on the  basis  of the  respective  Uncertificated  Principal  Balances
thereof for such Distribution Date,  multiplied by a fraction,  the numerator of
which is 30, and the  denominator  of which is the actual  number of days in the
related  Interest Accrual Period.  With respect to the Class A-I-2  Certificates
and each Interest  Accrual  Period,  a per annum rate equal to 2.871% per annum.
With respect to the Class A-I-3 Certificates and each Interest Accrual Period, a
per annum  rate  equal to 3.495% per  annum.  With  respect  to the Class  A-I-4
Certificates  and each Interest Accrual Period, a per annum rate equal to 4.496%
per  annum.  With  respect to the Class  A-I-5  Certificates  and each  Interest
Accrual Period (a) on or prior to the 30th  Distribution  Date, a per annum rate
equal to the lesser of (i)  5.692%  per annum and (ii) the Group I Adjusted  Net
WAC Cap Rate;  provided,  however,  that for federal  income tax  purposes,  the
amount  determined  under clause (ii) shall be the  equivalent of the foregoing,
expressed as the weighted average of the REMIC III  Uncertificated  Pass-Through
Rates for the REMIC III Group I Regular  Interests (other than REMIC III Regular
Interest  LT3-IAIO),  weighted  on the  basis of the  respective  Uncertificated
Principal Balances thereof for such Distribution Date and (b) thereafter,  a per
annum rate equal to 5.692% per  annum,  provided,  that,  on or after the second
Distribution  Date after the first possible Group I Optional  Termination  Date,
the  applicable  per annum rate shall be equal to  6.192%.  With  respect to the
Class A-I-6 Certificates and each Interest Accrual Period (a) on or prior to the
30th  Distribution  Date, a per annum rate equal to the lesser of (i) 4.802% per
annum and (ii) the Group I Adjusted Net WAC Cap Rate;  provided,  however,  that
for federal income tax purposes,  the amount  determined under clause (ii) shall
be the  equivalent of the  foregoing,  expressed as the weighted  average of the
REMIC III  Uncertificated  Pass-Through  Rates for the REMIC III Group I Regular
Interests  (other than REMIC III  Regular  Interest  LT3-IAIO),  weighted on the
basis of the  respective  Uncertificated  Principal  Balances  thereof  for such
Distribution  Date and (b)  thereafter,  a per annum  rate  equal to 4.802%  per
annum.  With respect to the Class A-I-IO  Certificates and each Interest Accrual
Period,  (a) on or prior to the 30th Distribution Date, 1.000% per annum and (b)
0.00% per annum thereafter. For federal income tax purposes,  however, the Class
A-I-IO  Certificates  will not have a pass through rate, but will be entitled to
(i) for any  Distribution  Date from March 2003 through August 2005, 100% of the
interest  payable  on REMIC  III  Regular  Interest  LT3-IAIO,  and (ii) for any
Distribution Date thereafter, 0.00%.

        With respect to the Class M-I-1  Certificates  and each Interest Accrual
Period, a per annum rate equal to the lesser of (a) 5.756% per annum and (b) the
Group I Adjusted Net WAC Rate. With respect to the Class M-I-2  Certificates and
each Interest Accrual Period, a per annum rate equal to the lesser of (a) 6.241%
per annum and (b) the Group I Adjusted  Net WAC Rate.  With respect to the Class
M-I-3  Certificates  and each Interest Accrual Period, a per annum rate equal to
the lesser of (a)  6.300%  per annum and (b) the Group I Adjusted  Net WAC Rate.
Provided that, for federal income tax purposes,  the amount  determined (in each
case) under clause (b) shall be the  equivalent of the  foregoing,  expressed as
the weighted average of the REMIC III Uncertificated  Pass-Through Rates for the
REMIC III Group I Regular  Interests  (other  than  REMIC III  Regular  Interest
LT3-IAIO),  weighted  on the basis of the  respective  Uncertificated  Principal
Balances thereof for such Distribution Date.

        With respect to the Class A-II  Certificates  and each Interest  Accrual
Period,  a per annum  rate  equal to the least of (i) LIBOR  plus the Class A-II
Margin,  (ii) the Maximum Group II Rate and (iii) the Group II Net WAC Cap Rate;
provided, however, that for federal income tax purposes, the


                                              43

<PAGE>



amount  determined  under clause (iii) shall be the equivalent of the foregoing,
expressed as the weighted average of the REMIC III  Uncertificated  Pass-Through
Rates for the REMIC III Group II Regular Interests, weighted on the basis of the
respective Uncertificated Principal Balances thereof for such Distribution Date.
With  respect  to the Class  SB-I  Certificates,  a per annum  rate equal to the
percentage equivalent of a fraction,  (x) the numerator of which is the sum, for
each REMIC III Group I Regular  Interest (other than REMIC III Regular  Interest
LT3-IAIO), of the excess of the Uncertificated  Pass-Through Rate for such REMIC
III Group I Regular Interest over the Group I Marker Rate, applied to a notional
amount equal to the  Uncertificated  Principal Balance of such REMIC III Group I
Regular   Interest  and  (y)  the   denominator   of  which  is  the   aggregate
Uncertificated  Principal  Balance  of the REMIC III Group I Regular  Interests.
With  respect  to the Class  SB-II  Certificates,  a per annum rate equal to the
percentage  equivalent  of a fraction,  (x) the  numerator of which the sum, for
each REMIC III Group II Regular  Interest,  of the excess of the  Uncertificated
Pass-Through Rate for such REMIC III Group II Regular Interest over the Group II
Marker Rate, applied to a notional amount equal to the Uncertificated  Principal
Balance of such REMIC III Group II Regular  Interest and (y) the  denominator of
which is the aggregate  Uncertificated  Principal Balance of the REMIC III Group
II Regular Interests.

        Paying  Agent:  JPMorgan  Chase  Bank  or  any  successor  Paying  Agent
appointed by the Trustee.

        Percentage  Interest:  With respect to any Class A Certificate and Class
M-I  Certificate,  the undivided  percentage  ownership  interest in the related
Class evidenced by such Certificate,  which percentage  ownership interest shall
be equal to the Initial  Certificate  Principal  Balance  thereof divided by the
aggregate  Initial  Certificate  Principal Balance of all of the Certificates of
the same Class.  The  Percentage  Interest with respect to a Class SB or Class R
Certificate shall be stated on the face thereof.

        Periodic Cap: With respect to each  adjustable  rate Mortgage  Loan, the
periodic  rate cap that  limits the  increase  or the  decrease  of the  related
Mortgage  Rate on any  Adjustment  Date  pursuant  to the  terms of the  related
Mortgage Note.

        Permitted Investments: One or more of the following:
        ---------------------

        (i)  obligations  of or  guaranteed  as to principal and interest by the
        United  States  or any  agency  or  instrumentality  thereof  when  such
        obligations  are  backed  by the full  faith and  credit  of the  United
        States;

        (ii)  repurchase  agreements  on  obligations  specified  in clause  (i)
        maturing not more than one month from the date of  acquisition  thereof,
        provided  that  the  unsecured  obligations  of the  party  agreeing  to
        repurchase such  obligations are at the time rated by each Rating Agency
        in its highest short-term rating available;

        (iii) federal funds,  certificates  of deposit,  demand  deposits,  time
        deposits  and  bankers'  acceptances  (which shall each have an original
        maturity  of not  more  than  90  days  and,  in the  case  of  bankers'
        acceptances,  shall in no event have an  original  maturity of more than
        365 days or a remaining  maturity of more than 30 days)  denominated  in
        United States dollars of


                                              44

<PAGE>



        any U.S. depository  institution or trust company incorporated under the
        laws of the United States or any state thereof or of any domestic branch
        of a foreign depository institution or trust company;  provided that the
        debt obligations of such depository institution or trust company (or, if
        the  only  Rating  Agency  is  Standard  &  Poor's,  in the  case of the
        principal  depository  institution in a depository  institution  holding
        company, debt obligations of the depository institution holding company)
        at the date of acquisition thereof have been rated by each Rating Agency
        in its highest  short-term rating available;  and provided further that,
        if the only Rating Agency is Standard & Poor's and if the  depository or
        trust company is a principal  subsidiary  of a bank holding  company and
        the debt  obligations of such subsidiary are not separately  rated,  the
        applicable  rating  shall  be that of the  bank  holding  company;  and,
        provided  further  that,  if the  original  maturity of such  short-term
        obligations of a domestic branch of a foreign depository  institution or
        trust  company  shall  exceed 30 days,  the short-  term  rating of such
        institution shall be A-1+ in the case of Standard & Poor's if Standard &
        Poor's is a Rating Agency;

        (iv) commercial  paper and demand notes (having  original  maturities of
        not more than 365 days) of any corporation  incorporated  under the laws
        of the  United  States  or any  state  thereof  which  on  the  date  of
        acquisition  has been rated by each Rating Agency in its highest  short-
        term rating  available;  provided that such commercial  paper and demand
        notes shall have a remaining maturity of not more than 30 days;

        (v) a money  market  fund or a qualified  investment  fund rated by each
        Rating Agency in its highest long-term rating available; and

        (vi) other  obligations or securities that are acceptable to the Insurer
        and each Rating Agency as a Permitted  Investment hereunder and will not
        reduce the rating  assigned to any Class of  Certificates by such Rating
        Agency below the lower of the then-current rating or the rating assigned
        to such  Certificates  as of the Closing Date by such Rating Agency,  as
        evidenced in writing;

provided,  however,  that no  instrument  shall be a Permitted  Investment if it
represents,  either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest  payments derived from  obligations  underlying such instrument and the
principal and interest payments with respect to such instrument  provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations.  References  herein to the highest  rating  available  on unsecured
long-term debt shall mean AAA in the case of Standard & Poor's and Fitch and Aaa
in the case of Moody's, and references herein to the highest rating available on
unsecured  commercial  paper and  short-term  debt  obligations  shall  mean the
following:  A-1 in the case of Standard & Poor's, P-1 in the case of Moody's and
F-1 in the case of Fitch.

        Permitted  Transferee:  Any Transferee of a Class R  Certificate,  other
than a Disqualified Organization or Non-United States Person.

        Person:   Any  individual,   corporation,   limited  liability  company,
partnership,   joint   venture,   association,   joint-stock   company,   trust,
unincorporated organization or government or any agency or political subdivision
thereof.


                                              45

<PAGE>



     Policy:  The Certificate  Guaranty  Insurance Policy No. AB0649BE issued by
the  Insurer  in  respect  of the Class  A-II  Certificates,  a copy of which is
attached hereto as Exhibit Q.

        Prepayment  Assumption:  With  respect to the Class A  Certificates  and
Class M-I Certificates, the prepayment assumption to be used for determining the
accrual of original  issue  discount  and  premium  and market  discount on such
Certificates for federal income tax purposes, which assumes a prepayment rate of
23% HEP with respect to the Group I Loans, and 25% HEP with respect to the Group
II Loans.

        Prepayment  Interest  Shortfall:  As to any  Distribution  Date  and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property)  that was
the subject of (a) a Principal  Prepayment in Full during the related Prepayment
Period, an amount equal to the excess of one month's interest at the related Net
Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified  Mortgage
Loan) on the Stated  Principal  Balance of such Mortgage Loan over the amount of
interest  (adjusted to the related Net  Mortgage  Rate (or Modified Net Mortgage
Rate in the case of a Modified  Mortgage  Loan)) paid by the  Mortgagor for such
Prepayment  Period  to the date of such  Principal  Prepayment  in Full or (b) a
Curtailment  during the prior  calendar  month,  an amount  equal to one month's
interest at the related Net Mortgage  Rate (or Modified Net Mortgage Rate in the
case of a Modified Mortgage Loan) on the amount of such Curtailment.

        Prepayment  Period:  As to any  Distribution  Date,  the calendar  month
preceding the month of distribution.

        Primary  Insurance  Policy:  Each  primary  policy of mortgage  guaranty
insurance  as  indicated  on Exhibit F-1 and Exhibit F-2 with the  exception  of
either code "23" or "96" under the column "MI CO CODE".

        Principal  Prepayment:  Any payment of principal or other  recovery on a
Mortgage Loan,  including a recovery that takes the form of Liquidation Proceeds
or Insurance  Proceeds,  which is received in advance of its  scheduled Due Date
and is not  accompanied  by an  amount  as to  interest  representing  scheduled
interest  on such  payment  due on any  date or dates  in any  month  or  months
subsequent to the month of prepayment.

        Principal  Prepayment  in  Full:  Any  Principal  Prepayment  made  by a
Mortgagor of the entire principal balance of a Mortgage Loan.

        Program  Guide:  The  Residential  Funding  Seller  Guide  for  mortgage
collateral  sellers that participate in Residential  Funding's standard mortgage
programs,  and Residential  Funding's Servicing Guide and any other subservicing
arrangements which Residential Funding has arranged to accommodate the servicing
of the Mortgage Loans.

        Purchase  Price:  With  respect to any Mortgage  Loan (or REO  Property)
required to be or  otherwise  purchased  on any date  pursuant to Section  2.02,
2.03, 2.04, 4.07 or 4.08, an amount equal to the sum of (i) (a) if such Mortgage
Loan (or REO Property) is being purchased  pursuant to Sections 2.02, 2.03, 2.04
or 4.07 of this Agreement, 100% of the Stated Principal Balance thereof plus the
principal portion of any related  unreimbursed  Advances or (b) if such Mortgage
Loan (or


                                              46

<PAGE>



REO Property) is being purchased pursuant to Section 4.08 of this Agreement, the
greater of (1) 100% of the Stated  Principal  Balance thereof plus the principal
portion of any  related  unreimbursed  Advances  on such  Mortgage  Loan (or REO
Property) and (2) the fair market value  thereof plus the  principal  portion of
any  related  unreimbursed  Advances  and (ii)  unpaid  accrued  interest at the
Adjusted Mortgage Rate (or Modified Net Mortgage Rate plus the rate per annum at
which the Servicing Fee and the Certificate  Insurer  Premium  Modified Rate, if
any,  is  calculated  in the case of a  Modified  Mortgage  Loan) (or at the Net
Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified  Mortgage
Loan)) plus the Certificate  Insurer Premium  Modified Rate, if any, in the case
of a purchase  made by the Master  Servicer)  on the  Stated  Principal  Balance
thereof to the first day of the month  following  the month of purchase from the
Due Date to which interest was last paid by the Mortgagor.

        Qualified  Insurer: A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal  place of business and each
state having  jurisdiction  over such insurer in  connection  with the insurance
policy issued by such insurer,  duly  authorized  and licensed in such states to
transact a mortgage guaranty  insurance business in such states and to write the
insurance  provided by the insurance policy issued by it, approved as a FNMA- or
FHLMC-approved  mortgage  insurer or having a claims paying ability rating of at
least "AA" or equivalent rating by a nationally  recognized  statistical  rating
organization.  Any replacement insurer with respect to a Mortgage Loan must have
at least as high a claims paying  ability  rating as the insurer it replaces had
on the Closing Date.

        Qualified  Substitute  Mortgage  Loan: A Mortgage  Loan  substituted  by
Residential  Funding or the Depositor for a Deleted Mortgage Loan which must, on
the  date  of  such  substitution,  as  confirmed  in an  Officers'  Certificate
delivered to the  Trustee,  (i) have an  outstanding  principal  balance,  after
deduction of the  principal  portion of the monthly  payment due in the month of
substitution  (or in the case of a  substitution  of more than one Mortgage Loan
for a Deleted Mortgage Loan, an aggregate outstanding  principal balance,  after
such deduction),  not in excess of the Stated  Principal  Balance of the Deleted
Mortgage  Loan (the  amount of any  shortfall  to be  deposited  by  Residential
Funding,  in the Custodial  Account in the month of  substitution);  (ii) have a
Mortgage  Rate and a Net  Mortgage  Rate no lower  than and not more than 1% per
annum higher than the Mortgage Rate and Net Mortgage Rate, respectively,  of the
Deleted Mortgage Loan as of the date of substitution; (iii) have a Loan-to-Value
Ratio at the time of  substitution  no higher than that of the Deleted  Mortgage
Loan at the time of substitution;  (iv) have a remaining term to stated maturity
not  greater  than (and not more than one year less  than)  that of the  Deleted
Mortgage  Loan;  (v) comply with each  representation  and warranty set forth in
Sections  2.03 and 2.04 hereof and Section 4 of the  Assignment  Agreement;  and
(vi) in the case of the adjustable rate Mortgage Loans, (w) have a Mortgage Rate
that  adjusts with the same  frequency  and based upon the same Index as that of
the  Deleted  Mortgage  Loan,  (x) have a Note  Margin not less than that of the
Deleted Mortgage Loan; (y) have a Periodic Rate Cap that is equal to that of the
Deleted Mortgage Loan; and (z) have a next Adjustment Date no later than that of
the Deleted Mortgage Loan.

        Rate  Change  Date:  With  respect  to  a  REMIC  III  Regular  Interest
Component,  the first month in which the pass-through rate for such component is
equal to 0.00%.



                                              47

<PAGE>



        Rating  Agency:  Standard  & Poor's  and  Moody's.  If any  agency  or a
successor is no longer in existence,  "Rating Agency" shall be such  statistical
credit rating agency,  or other comparable  Person,  designated by the Depositor
and with respect to the Class A-II  Certificates,  the Insurer,  notice of which
designation shall be given to the Trustee and the Master Servicer.

        Realized  Loss:  With respect to each Mortgage Loan (or REO Property) as
to which a Cash Liquidation or REO Disposition has occurred, an amount (not less
than zero) equal to (i) the Stated  Principal  Balance of the Mortgage  Loan (or
REO Property) as of the date of Cash Liquidation or REO  Disposition,  plus (ii)
interest  (and  REO  Imputed  Interest,  if any) at the Net  Mortgage  Rate  (or
Modified  Net  Mortgage  Rate in the case of a Modified  Mortgage  Loan) and the
Certificate Insurer Premium Modified Rate from the Due Date as to which interest
was last paid or advanced to  Certificateholders up to the last day of the month
in which  the Cash  Liquidation  (or REO  Disposition)  occurred  on the  Stated
Principal  Balance of such Mortgage Loan (or REO  Property)  outstanding  during
each Due Period that such  interest  was not paid or  advanced,  minus (iii) the
proceeds,  if any,  received during the month in which such Cash Liquidation (or
REO  Disposition)  occurred,  to the extent applied as recoveries of interest at
the Net Mortgage  Rate (or Modified Net Mortgage  Rate in the case of a Modified
Mortgage  Loan)  and  the  Certificate  Insurer  Premium  Modified  Rate  and to
principal of the Mortgage Loan, net of the portion  thereof  reimbursable to the
Master Servicer or any Subservicer  with respect to related Advances or expenses
as to which the Master  Servicer or  Subservicer  is  entitled to  reimbursement
thereunder but which have not been previously  reimbursed.  With respect to each
Mortgage Loan which is the subject of a Servicing  Modification,  (a) the amount
by which the interest  portion of a Monthly Payment or the principal  balance of
such  Mortgage  Loan was  reduced,  and (b) any such  amount  with  respect to a
Monthly  Payment  that  was or would  have  been  due in the  month  immediately
following  the month in which a Principal  Prepayment  or the Purchase  Price of
such Mortgage Loan is received or is deemed to have been received.  With respect
to each Mortgage Loan which has become the subject of a Deficient Valuation, the
difference  between  the  principal  balance of the  Mortgage  Loan  outstanding
immediately  prior to such Deficient  Valuation and the principal balance of the
Mortgage  Loan as  reduced  by the  Deficient  Valuation.  With  respect to each
Mortgage  Loan  which has become the  object of a Debt  Service  Reduction,  the
amount of such Debt  Service  Reduction.  Notwithstanding  the above,  neither a
Deficient Valuation nor a Debt Service Reduction shall be deemed a Realized Loss
hereunder  so long as the Master  Servicer  has  notified  the  Trustee  and the
Insurer in writing that the Master Servicer is diligently  pursuing any remedies
that may  exist in  connection  with the  representations  and  warranties  made
regarding the related  Mortgage Loan and either (A) the related Mortgage Loan is
not in default with regard to payments due thereunder or (B) delinquent payments
of principal  and interest  under the related  Mortgage Loan and any premiums on
any applicable  primary hazard  insurance policy and any related escrow payments
in respect of such  Mortgage  Loan are being  advanced on a current basis by the
Master  Servicer or a  Subservicer,  in either case without giving effect to any
Debt Service Reduction.

        Record Date:  With respect to each  Distribution  Date and each Class of
Certificates   (other  than  the  Class  A-I-1   Certificates   and  Class  A-II
Certificates),  the close of business on the last Business Day of the month next
preceding the month in which the related  Distribution Date occurs. With respect
to each  Distribution  Date and the Class  A-I-1  Certificates  and  Class  A-II
Certificates, the Business Day prior to such Distribution Date.



                                              48

<PAGE>



     Regular Certificates: The Class A Certificates,  Class M-I Certificates and
Class SB Certificates.

        Regular Interest: Any one of the regular interests in the Trust Fund.

     Relief  Act:  The  Soldiers'  and  Sailors'  Civil  Relief Act of 1940,  as
amended.

     REMIC: A "real estate  mortgage  investment  conduit" within the meaning of
Section 860D of the Code.

        REMIC  Administrator:  Residential Funding  Corporation.  If Residential
Funding  Corporation is found by a court of competent  jurisdiction to no longer
be able to fulfill its obligations as REMIC  Administrator  under this Agreement
the  Master  Servicer  or  Trustee  acting as Master  Servicer  shall  appoint a
successor REMIC Administrator,  acceptable to the Insurer, subject to assumption
of the REMIC Administrator obligations under this Agreement.

        REMIC I: The segregated pool of assets subject hereto  (exclusive of the
Reserve Fund, which is not an asset of any REMIC), constituting a portion of the
primary trust created hereby and to be administered  hereunder,  with respect to
which a separate  REMIC  election is to be made (other than with  respect to the
items in clause (v) and the proceeds  thereof),  consisting  of: (i) the Group I
Loans and the related  Mortgage  Files;  (ii) all payments on and collections in
respect of the Group I Loans due after the  Cut-off  Date  (other  than  Monthly
Payments due in February  2003) as shall be on deposit in the Custodial  Account
or in the  Certificate  Account and  identified  as belonging to the Trust Fund;
(iii)  property which secured a Group I Loan and which has been acquired for the
benefit of the Certificateholders by foreclosure or deed in lieu of foreclosure;
(iv) the hazard insurance  policies and Primary  Insurance Policy  pertaining to
the Group I Loans,  if any;  and (v) all  proceeds of clauses  (i) through  (iv)
above.

        REMIC I Regular  Interests:  REMIC I Regular  Interest  LT-A-1,  REMIC I
Regular  Interest  LT-A-2,  REMIC I  Regular  Interest  LT-A-3,  REMIC I Regular
Interest  LT-A-4,  REMIC I Regular  Interest  LT-A-5,  REMIC I Regular  Interest
LT-A-6,  REMIC I Regular Interest LT-A-7, REMIC I Regular Interest LT-A-8, REMIC
I Regular Interest LT-A-9,  REMIC I Regular  Interest  LT-A-10,  REMIC I Regular
Interest  LT-A-11,  REMIC I Regular Interest  LT-A-12,  REMIC I Regular Interest
LT-A-13,  REMIC I Regular Interest  LT-A-14,  REMIC I Regular Interest  LT-A-15,
REMIC I Regular  Interest  LT-A-16,  REMIC I Regular Interest  LT-A-17,  REMIC I
Regular  Interest  LT-A-18,  REMIC I Regular Interest  LT-A-19,  REMIC I Regular
Interest  LT-A-20,  REMIC I Regular Interest  LT-A-21,  REMIC I Regular Interest
LT-A-22,  REMIC I Regular Interest  LT-A-23,  REMIC I Regular Interest  LT-A-24,
REMIC I Regular  Interest  LT-A-25,  REMIC I Regular Interest  LT-A-26,  REMIC I
Regular  Interest  LT-A-27,  REMIC I Regular Interest  LT-A-28,  REMIC I Regular
Interest LT-A-29,  REMIC I Regular Interest LT-A-30 and REMIC I Regular Interest
LT-A-31.  Each such interest is a regular interest in REMIC I that is held as an
asset of REMIC III, that has an initial  principal  balance equal to the related
Uncertificated   Principal   Balance,   that  bears   interest  at  the  related
Uncertificated  REMIC I Pass-Through  Rate, and that has such other terms as are
described herein.



                                              49

<PAGE>



        REMIC II: The segregated pool of assets subject hereto (exclusive of the
Reserve Fund, which is not an asset of any REMIC), constituting a portion of the
primary trust created hereby and to be administered  hereunder,  with respect to
which a separate  REMIC  election is to be made (other than with  respect to the
items in clause (v) and the proceeds  thereof),  consisting of: (i) the Group II
Loans and the related  Mortgage  Files;  (ii) all payments on and collections in
respect of the Group II Loans due after the Cut-off  Date  (other  than  Monthly
Payments due in February  2003) as shall be on deposit in the Custodial  Account
or in the  Certificate  Account and  identified  as belonging to the Trust Fund;
(iii) property which secured a Group II Loan and which has been acquired for the
benefit of the Certificateholders by foreclosure or deed in lieu of foreclosure;
(iv) the hazard insurance  policies and Primary  Insurance Policy  pertaining to
the Group II Loans, if any; (v) the Policy; and (vi) all proceeds of clauses (i)
through (v) above.

        REMIC II Regular  Interest:  REMIC II Regular  Interest LT-B, which is a
regular  interest in REMIC II that is held as an asset of REMIC III, that has an
initial principal balance equal to the related Uncertificated Principal Balance,
that bears interest at the related  Uncertificated  REMIC II Pass-Through  Rate,
and that has such other terms as are described herein.

        REMIC III: The segregated pool of assets subject hereto,  constituting a
portion of the primary trust created  hereby and to be  administered  hereunder,
with respect to which a separate REMIC election is to be made, consisting of the
REMIC I Regular Interests and the REMIC II Regular Interests.

        REMIC III Group I  Diverted  Excess  Spread:  1% of the Group I Diverted
Excess Spread.

        REMIC III Group II Diverted  Excess Spread:  1% of the Group II Diverted
Excess Spread.

        REMIC III Group I Interest Loss Allocation  Amount:  With respect to any
Distribution  Date,  an amount  equal to (a) the  product  of (i) the  aggregate
Uncertificated Principal Balance of the REMIC III Group I Regular Interests then
outstanding and (ii) the Uncertificated  Pass-Through Rate for REMIC III Regular
Interest LT3-AI-AA minus the Group I Marker Rate, divided by (b) 12.

        REMIC III Group II Interest Loss Allocation Amount:  With respect to any
Distribution  Date,  an amount  equal to (a) the  product  of (i) the  aggregate
Uncertificated  Principal  Balance of the REMIC III Group II  Regular  Interests
then  outstanding and (ii) the  Uncertificated  Pass-Through  Rate for REMIC III
Regular Interest LT3-AII-AA minus the Group II Marker Rate divided by (b) 12.

        REMIC III Group I Overcollateralized Amount: With respect to any date of
determination,  (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC III Group I Regular  Interests  (other  than  REMIC III  Regular  Interest
LT3-IAIO)  minus (ii) the  Uncertificated  Principal  Balances  of the REMIC III
Regular  Interests (other than REMIC III Regular  Interests  LT3-AI-AA and REMIC
III Regular Interest LT3-AI-ZZ), in each case as of such date of determination.

        REMIC III Group II  Overcollateralized  Amount: With respect to any date
of determination,  (i) 1% of the aggregate  Uncertificated Principal Balances of
the REMIC III Group II Regular Interests minus (ii) the Uncertificated Principal
Balances of the REMIC III Regular Interests (other


                                              50

<PAGE>



than REMIC III  Regular  Interests  LT3-AII-AA  and REMIC III  Regular  Interest
LT3-AII-ZZ), in each case as of such date of determination.

        REMIC III Group I Principal Loss Allocation Amount:  With respect to any
Distribution  Date, an amount equal to the product of (i) the  aggregate  Stated
Principal  Balance  of the  Group I Loans  then  outstanding  and (ii) 1 minus a
fraction,  the  numerator  of which is two times  the sum of the  Uncertificated
Principal Balances of REMIC III Regular Interests LT3-AI-1,  LT3-AI-2, LT3-AI-3,
LT3-AI-4,   LT3-AI-5,   LT3-AI-6,   LT3-MI-1,  LT3-MI-2  and  LT3-MI-3  and  the
denominator  of which is the sum of the  Uncertificated  Principal  Balances  of
REMIC III Regular Interests LT3-AI-1,  LT3-AI-2,  LT3-AI-3,  LT3-AI-4, LT3-AI-5,
LT3-AI-6, LT3-MI-1, LT3-MI-2, LT3-MI-3 and LT3-AI-ZZ.

        REMIC III Group II Principal Loss Allocation Amount: With respect to any
Distribution  Date, an amount equal to the product of (i) the  aggregate  Stated
Principal  Balance  of the Group II Loans  then  outstanding  and (ii) 1 minus a
fraction,  the  numerator  of which is two  times the  Uncertificated  Principal
Balance of REMIC III Regular Interest  LT3-AII-1 and the denominator of which is
the sum of the Uncertificated  Principal Balances of REMIC III Regular Interests
LT3-AII-1 and LT3-AII-ZZ.

        REMIC  III  Group  I  Regular  Interests:  REMIC  III  Regular  Interest
LT3-AI-AA,  REMIC III Regular  Interest  LT3-AI-1,  REMIC III  Regular  Interest
LT3-AI-2,  REMIC III  Regular  Interest  LT3-AI-3,  REMIC III  Regular  Interest
LT3-AI-4,  REMIC III  Regular  Interest  LT3-AI-5,  REMIC III  Regular  Interest
LT3-AI-6,  REMIC III  Regular  Interest  LT3-MI-1,  REMIC III  Regular  Interest
LT3-MI-2,  REMIC III  Regular  Interest  LT3-MI-3,  REMIC III  Regular  Interest
LT3-AI-ZZ and REMIC III Regular Interest LT3-IAIO.

        REMIC  III  Group II  Regular  Interests:  REMIC  III  Regular  Interest
LT3-AII-AA,  REMIC III Regular Interest LT3-AII-1 and REMIC III Regular Interest
LT3-AII-ZZ.

        REMIC III Group I Required Overcollateralization Amount: 1% of the Group
I Required Overcollateralization Amount.

        REMIC III Group II Required  Overcollateralized  Amount: 1% of the Group
II Required Overcollateralization Amount.

        REMIC III Regular  Interest  LT3-AI-AA:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-AI-1:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.



                                              51

<PAGE>



        REMIC III Regular  Interest  LT3-AI-2:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-AI-3:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-AI-4:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-AI-5:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-AI-6:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-MI-1:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-MI-2:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-MI-3:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-AI-ZZ:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.



                                              52

<PAGE>



        REMIC III Regular Interest  LT3-AI-ZZ  Maximum Interest Deferral Amount:
With  respect  to any  Distribution  Date,  the  sum of (a)  the  excess  of (i)
Uncertificated  Accrued Interest  calculated with the REMIC III Regular Interest
LT3-A-I-ZZ  Uncertificated  Pass-Through  Rate and an  Uncertificated  Principal
Balance equal to the excess of (x) the Uncertificated Principal Balance of REMIC
III   Regular   Interest   LT3-A-I-ZZ   over   (y)  the   REMIC   III   Group  I
Overcollateralized  Amount, in each case for such  Distribution  Date, over (ii)
the sum of  Uncertificated  Accrued  Interest  on  REMIC  III  Regular  Interest
LT3-AI-1 through REMIC III Regular Interest LT3-MI-3, with the rate on each such
REMIC III Regular Interest  subject to a cap equal to the  Pass-Through  Rate on
the  Corresponding  Class for the purpose of this  calculation and (b) the REMIC
III Group II Diverted Excess Spread.

        REMIC III Regular  Interest  LT3-IAIO:  A Regular  Interest in REMIC III
that is held as an asset of REMIC IV, that has an initial notional balance equal
to the  related  Uncertificated  Notional  Balance,  that bears  interest at the
related Uncertificated Pass-Through Rate and in that has such other terms as are
described  herein.  REMIC III  Regular  Interest  LT3-IAIO  will be deemed to be
composed of thirty components,  LT3-IAIO-1 through LT3-IAIO-30, each of which is
a Corresponding Interest to a REMIC I Regular Interest.

        REMIC III Regular Interest  LT3-AII-AA:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular  Interest  LT3-AII-1:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal the related  Uncertificated  Principal Balance, that bears interest at the
related  Uncertificated  Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular Interest  LT3-AII-ZZ:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated  Pass-Through Rate, and that has such other terms as
are described herein.

        REMIC III Regular Interest  LT3-AII-ZZ Maximum Interest Deferral Amount:
With  respect  to any  Distribution  Date,  the  sum of (a)  the  excess  of (i)
Uncertificated  Accrued Interest  calculated with the REMIC III Regular Interest
LT3-AII-ZZ  Uncertificated  Pass-Through  Rate and an  Uncertificated  Principal
Balance equal to the excess of (x) the Uncertificated Principal Balance of REMIC
III   Regular   Interest   LT3-AII-ZZ   over  (y)  the   REMIC   III   Group  II
Overcollateralized  Amount, in each case for such  Distribution  Date, over (ii)
Uncertificated  Accrued Interest on REMIC III Regular Interest  LT3-AII-1,  with
the rate on REMIC III Regular Interest  LT3-AII-1  subject to a cap equal to the
Pass-Through Rate on the Corresponding Class for the purpose of this calculation
and (b) the REMIC III Group I Diverted Excess Spread.

        REMIC IV: The segregated pool of assets subject  hereto,  constituting a
portion of the primary trust created  hereby and to be  administered  hereunder,
with respect to which a separate REMIC election is to be made, consisting of the
REMIC III Regular Interests.


                                              53

<PAGE>



        REMIC  Provisions:  Provisions of the federal income tax law relating to
real estate mortgage investment conduits,  which appear at Sections 860A through
860G of  Subchapter  M of Chapter 1 of the Code,  and  related  provisions,  and
temporary and final  regulations (or, to the extent not  inconsistent  with such
temporary or final  regulations,  proposed  regulations) and published  rulings,
notices and  announcements  promulgated  thereunder,  as the foregoing may be in
effect from time to time.

        REO Acquisition: The acquisition by the Master Servicer on behalf of the
Trustee for the benefit of the  Certificateholders  of any REO Property pursuant
to Section 3.14.

        REO Disposition:  As to any REO Property,  a determination by the Master
Servicer that it has received substantially all Insurance Proceeds,  Liquidation
Proceeds,  REO Proceeds and other payments and recoveries (including proceeds of
a final sale) which the Master Servicer  expects to be finally  recoverable from
the sale or other disposition of the REO Property.

        REO Imputed Interest: As to any REO Property,  for any period, an amount
equivalent  to interest (at a rate equal to the sum of the Net Mortgage Rate and
the Certificate Insurer Premium Modified Rate that would have been applicable to
the  related  Mortgage  Loan had it been  outstanding)  on the unpaid  principal
balance of the  Mortgage  Loan as of the date of  acquisition  thereof  for such
period.

        REO Proceeds:  Proceeds, net of expenses, received in respect of any REO
Property (including, without limitation, proceeds from the rental of the related
Mortgaged  Property)  which  proceeds  are  required  to be  deposited  into the
Custodial Account only upon the related REO Disposition.

        REO  Property:  A Mortgaged  Property  acquired  by the Master  Servicer
through  foreclosure  or  deed  in  lieu of  foreclosure  in  connection  with a
defaulted Mortgage Loan.

        Repurchase Event: As defined in the Assignment Agreement.
        ----------------

        Repurchase  Price:  With  respect  to any  Deleted  Mortgage  Loan to be
replaced by the substitution of one or more Qualified  Substitute Mortgage Loans
pursuant to Section 2.03, an amount, calculated by the Master Servicer equal to:
(a) the unpaid  principal  balance of such Mortgage Loan (or, in the case of any
REO Property,  the related  Mortgage  Loan) (after  application of all principal
payments (including prepayments) collected and other principal amounts recovered
on such Mortgage Loan) as of the date of receipt of the Repurchase  Price or the
date of substitution,  as the case may be,  hereunder;  plus (b) unpaid interest
accrued on such Mortgage  Loan or Mortgage  Loan related to an REO Property,  as
applicable,  at the related  Mortgage  Rate (after  application  of all interest
payments collected and other amounts recovered (and applied to accrued interest)
on such  Mortgage  Loan) to, but not  including,  the Due Date in the Due Period
during  which the  applicable  purchase  or  substitution  occurs;  plus (c) any
unreimbursed  Servicing  Advances,  all accrued and unpaid interest on Advances,
any unpaid  servicing  compensation  (other than Master Servicer fees),  and any
unpaid or  unreimbursed  expenses of the Trust Fund  allocable to such  Mortgage
Loan or Mortgage Loan related to an REO Property, as applicable,  as of the date
of receipt of such Repurchase Price or the date of substitution, as the case may
be, hereunder; plus (d) in the event that


                                              54

<PAGE>



such Mortgage Loan or Mortgage Loan related to an REO Property,  as  applicable,
is required to be  repurchased  or replaced  pursuant to Section 2.03,  expenses
reasonably  incurred or to be incurred by the Master  Servicer or the Trustee in
respect of the breach or defect  giving rise to the  repurchase  or  replacement
obligation,  including  any  expenses  arising  out  of the  enforcement  of the
repurchase or replacement obligation.

        Request  for  Release:  A request  for  release,  the forms of which are
attached as Exhibit G hereto,  or an electronic  request in a form acceptable to
the Custodian.

        Required  Insurance  Policy:  With  respect to any  Mortgage  Loan,  any
insurance policy which is required to be maintained from time to time under this
Agreement, the Program Guide or the related Subservicing Agreement in respect of
such Mortgage Loan.

        Required  Overcollateralization  Amount: As of any Distribution Date and
the  Group I  Loans,  (a) if such  Distribution  Date is  prior  to the  Group I
Stepdown  Date,  0.75%  of the  Group I  Cut-off  Date  Balance,  or (b) if such
Distribution  Date is on or after the Group I Stepdown  Date, the greater of (i)
1.50% of the then  current  aggregate  Stated  Principal  Balance of the Group I
Loans  as  of  the  end  of  the   related  Due  Period  and  (ii)  the  related
Overcollateralization  Floor; provided, however, that if a Group I Trigger Event
is in effect,  the  Required  Overcollateralization  Amount with  respect to the
Group I Loans will not be reduced.  As of any Distribution Date and the Group II
Loans,  (a) if such  Distribution  Date is prior to the Group II Stepdown  Date,
7.00% of the Group II Cut-off Date Balance,  or (b) if such Distribution Date is
on or after the Group II  Stepdown  Date,  the greater of (i) 14.00% of the then
current  aggregate Stated Principal  Balance of the Group II Loans as of the end
of the  related  Due Period and (ii) the  related  Overcollateralization  Floor;
provided,  that if such  Distribution  Date is on or after the Group II Stepdown
Date and (I) an amount  equal to (A) 2 (two)  times (B) the excess of (x) 37.50%
of the sum of the following:  (1) 100% of the aggregate Stated Principal Balance
of all  Group  II  Loans  that are 90 or more  days  Delinquent,  (2) 75% of the
aggregate Stated Principal Balance of all Group II Loans that are in foreclosure
and (3) 100% of the  aggregate  Stated  Principal  Balance of all Group II Loans
that are  converted  to REO  Properties,  in each case as of the last day of the
related  Due Period,  over (y) 5 (five)  times the Group II Excess Cash Flow for
such Distribution  Date is greater than (II) the amount  determined  pursuant to
clause (b), then the Required  Overcollateralization  Amount with respect to the
Group  II Loans  for  that  Distribution  Date  shall  be equal to the  Required
Overcollateralization  Amount  on the  prior  Distribution  Date.  The  Required
Overcollateralization Amount for the Group I Loans or the Groups II Loans may be
reduced with notification to each of the Rating Agencies and, in the case of the
Group II Loans, the prior written consent of the Insurer.

        Reserve Fund:  An "outside  reserve fund" within the meaning of Treasury
regulation Section 1.860G-2(h), which is not an asset of any REMIC, ownership of
which is evidenced by the Class SB- I Certificates and Class SB-II Certificates,
as applicable, and which is established and maintained pursuant to Section 4.09.

        Reserve Fund Deposit:  With respect to the Reserve Fund, an amount equal
to $5,000,  which the Trustee  shall  deposit into the Reserve Fund  pursuant to
Section 4.09 hereof.



                                              55

<PAGE>



     Reserve Fund Residual Right:  The right to  distributions  from the Reserve
Fund as described in Section 4.09 hereof.

     Residential   Funding:   Residential   Funding   Corporation,   a  Delaware
corporation,  in its capacity as seller of the Mortgage  Loans to the  Depositor
and any successor thereto.

        Responsible Officer:  When used with respect to the Trustee, any officer
of the Institutional  Trust  Services/Structured  Finance Services Department of
the  Trustee,  including  any Senior Vice  President,  any Vice  President,  any
Assistant  Vice  President,  any  Assistant  Secretary,  any  Trust  Officer  or
Assistant  Trust  Officer,  or any other  officer  of the  Trustee  with  direct
responsibility for the administration of this Agreement.

        Rolling Six-Month  Delinquency  Ratio: As of any Distribution  Date, the
fraction,  expressed as a  percentage,  equal to the average of the  Delinquency
Ratio for each of the six (or one, two, three,  four and five in the case of the
first, second, third, fourth and fifth Distribution Dates) immediately preceding
Due Periods.

        Servicing  Accounts:  The  account or accounts  created  and  maintained
pursuant to Section 3.08.

        Servicing  Advances:  All  customary,  reasonable  and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency or
other  unanticipated  event by the Master  Servicer  in the  performance  of its
servicing  obligations,  including,  but not  limited  to,  the  cost of (i) the
preservation,  restoration  and  protection  of a Mortgaged  Property,  (ii) any
enforcement  or judicial  proceedings,  including  foreclosures,  including  any
expenses  incurred  in  relation  to any such  proceedings  that result from the
Mortgage Loan being  registered  on the MERS System,  (iii) the  management  and
liquidation of any REO Property and (iv) compliance  with the obligations  under
Sections 3.01, 3.08, 3.12(a) and 3.14, including,  if the Master Servicer or any
Affiliate  of the Master  Servicer  provides  services  such as  appraisals  and
brokerage services that are customarily provided by Persons other than servicers
of mortgage loans, reasonable compensation for such services.

        Servicing Fee: With respect to any Mortgage Loan and Distribution  Date,
the fee payable  monthly to the Master  Servicer in respect of master  servicing
compensation  that  accrues at an annual  rate equal to the  Servicing  Fee Rate
multiplied  by the  Stated  Principal  Balance of such  Mortgage  Loan as of the
related  Due Date in the related  Due  Period,  as may be  adjusted  pursuant to
Section 3.16(e).

        Servicing Fee Rate:  The per annum rate  designated on the Mortgage Loan
Schedule as the "MSTR SERV FEE" as may be  adjusted  with  respect to  successor
Master Servicers as provided in Section 7.02.

        Servicing  Modification:  Any  reduction of the interest  rate on or the
outstanding  principal  balance of a Mortgage Loan that is in default or, in the
judgment of the Master Servicer, default is reasonably foreseeable pursuant to a
modification of such Mortgage Loan in accordance with Section 3.07(a).



                                              56

<PAGE>



        Servicing  Officer:  Any officer of the Master Servicer  involved in, or
responsible  for, the  administration  and servicing of the Mortgage Loans whose
name and specimen  signature appear on a list of servicing officers furnished to
the Trustee and the Insurer by the Master  Servicer,  as such list may from time
to time be amended.

        Servicing Trigger:  As of any Distribution Date, for purposes of Section
7.05, "Servicing Trigger;  Removal of Master Servicer," the occurrence of any of
the following scenarios:

        (i) the aggregate  Rolling  Six-Month  Delinquency Ratio is greater than
        12.00% for the then-current Distribution Date;

        (ii) the aggregate Rolling  Six-Month  Delinquency Ratio is greater than
        10.00% for the then-current and two preceding Distribution Dates;

        (iii) the aggregate Twelve-Month Loss Amount is greater than or equal to
        2.75% of the aggregate Stated  Principal  Balance of the Group II Loans;
        or

        (iv) the  aggregate  Realized  Losses  on the  Group II Loans  since the
        Cut-off Date exceed (a) with respect to the first 12 Distribution Dates,
        2.25% of the aggregate  Cut-off Date  Principal  Balance of the Group II
        Loans, (b) with respect to the next 12 Distribution  Dates, 3.75% of the
        aggregate Cut-off Date Principal Balance of the Group II Loans, (c) with
        respect  to the  next 12  Distribution  Dates,  5.25%  of the  aggregate
        Cut-off Date Principal  Balance of the Group II Loans,  (d) with respect
        to the next 12 Distribution  Dates,  6.75% of the aggregate Cut-off Date
        Principal  Balance  of the Group II Loans,  and (e) with  respect to all
        Distribution  Dates  thereafter,  8.00% of the  aggregate  Cut-off  Date
        Principal Balance of the Group II Loans.

        Sixty-Plus  Delinquency  Percentage:  With  respect to any  Distribution
Date, the fraction, expressed as a percentage, equal to (x) the aggregate Stated
Principal  Balance of the Group I Loans that are 60 or more days  delinquent  in
payment of principal and interest for that Distribution Date,  including Group I
Loans in foreclosure and REO Properties, over (y) the aggregate Stated Principal
Balance  of all of the Group I Loans  immediately  preceding  that  Distribution
Date.

        Special  Hazard Loss:  Any Realized  Loss not in excess of the lesser of
the cost of repair or the cost of replacement of a Mortgaged  Property  suffered
by such Mortgaged Property on account of direct physical loss,  exclusive of (i)
any  loss of a type  covered  by a hazard  policy  or a flood  insurance  policy
required to be  maintained  in respect of such  Mortgaged  Property  pursuant to
Section 3.12(a), except to the extent of the portion of such loss not covered as
a result of any coinsurance provision and (ii) any Extraordinary Loss.

        Standard & Poor's:  Standard & Poor's,  a  division  of The  McGraw-Hill
Companies, or its successor in interest.

        Startup Date: The day designated as such pursuant to Article X hereof.
        ------------



                                              57

<PAGE>



        Stated Principal  Balance:  With respect to any Mortgage Loan or related
REO Property,  at any given time, (i) the Cut-off Date Principal  Balance of the
Mortgage Loan, minus (ii) the sum of (a) the aggregate of the principal  portion
of the Monthly  Payments due with respect to such  Mortgage Loan or REO Property
during each Due Period commencing on the first Due Period after the Cut-Off Date
and ending  with the Due Period  related to the most  recent  Distribution  Date
which were  received or with  respect to which an Advance was made,  and (b) all
Principal  Prepayments  with respect to such Mortgage Loan or REO Property,  and
all Insurance  Proceeds,  Liquidation  Proceeds and REO Proceeds,  to the extent
applied by the Master  Servicer as recoveries  of principal in  accordance  with
Section 3.14 with respect to such Mortgage  Loan or REO  Property,  in each case
which  were  distributed  pursuant  to  Section  4.02 or  4.03  on any  previous
Distribution  Date,  and (c) any Realized Loss  allocated to  Certificateholders
with respect thereto for any previous Distribution Date.

        Subordination:  The provisions described in Section 4.05 relating to the
allocation  of Realized  Losses (other than any Realized  Losses  covered by the
Policy).

        Subordination  Percentage:  With respect to the Class A-I  Certificates,
83.50%;  with respect to the Class M-I-1  Certificates,  91.50%; with respect to
the  Class  M-I-2   Certificates,   96.50%;  and  respect  to  the  Class  M-I-3
Certificates, 98.50% .

     Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of reference
thereto, is subject to a Subservicing Agreement.

        Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement and who generally satisfied the requirements set forth in
the Program Guide in respect of the  qualification  of a  Subservicer  as of the
date of its approval as a Subservicer by the Master Servicer.

        Subservicer  Advance:  Any  delinquent   installment  of  principal  and
interest on a Mortgage Loan which is advanced by the related Subservicer (net of
its Subservicing Fee) pursuant to the Subservicing Agreement.

        Subservicing  Account:  An  account  established  by  a  Subservicer  in
accordance with Section 3.08.

        Subservicing Agreement: The written contract between the Master Servicer
and any Subservicer relating to servicing and administration of certain Mortgage
Loans as  provided  in  Section  3.02,  generally  in the  form of the  servicer
contract  referred to or contained in the Program Guide or in such other form as
has been approved by the Master Servicer and the Depositor.

        Subservicing  Fee: As to any Mortgage Loan,  the fee payable  monthly to
the related  Subservicer (or, in the case of a Nonsubserviced  Mortgage Loan, to
the Master  Servicer) in respect of  subservicing  and other  compensation  that
accrues  with respect to each  Distribution  Date at an annual rate equal to the
Subservicing  Fee  Rate  multiplied  by the  Stated  Principal  Balance  of such
Mortgage Loan as of the related Due Date in the related Due Period.



                                              58

<PAGE>



     Subservicing  Fee Rate: The per annum rate  designated on the Mortgage Loan
Schedule as the "SUBSERV FEE".

        Tax Returns:  The federal income tax return on Internal  Revenue Service
Form 1066,  U.S.  Real Estate  Mortgage  Investment  Conduit  Income Tax Return,
including  Schedule Q thereto,  Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on  behalf  of  REMIC  I,  REMIC  II,  REMIC  III  and  REMIC  IV due  to  their
classification as REMICs under the REMIC  Provisions,  together with any and all
other  information,  reports or returns  that may be required to be furnished to
the  Certificateholders  or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal,  state
or local tax laws.

        Transfer: Any direct or indirect transfer,  sale, pledge,  hypothecation
or other form of assignment of any Ownership Interest in a Certificate.

     Transferee:  Any Person who is acquiring by Transfer any Ownership Interest
in a Certificate.

     Transferor:  Any Person  who is  disposing  by  Transfer  of any  Ownership
Interest in a Certificate.

     Trust Fund:  Collectively,  the assets of REMIC I, REMIC II,  REMIC III and
REMIC IV, the Reserve Fund and the Reserve Fund Deposit.

        Twelve-Month  Loss Amount:  With respect to any  Distribution  Date,  an
amount  equal to the  aggregate  of all  Realized  Losses  on the Group II Loans
during the 12 preceding Due Periods.

        Uniform Single  Attestation  Program for Mortgage  Bankers:  The Uniform
Single  Attestation  Program for Mortgage Bankers,  as published by the Mortgage
Bankers  Association  of America and  effective  with respect to fiscal  periods
ending on or after December 15, 1995.

        Uncertificated  Accrued  Interest:  With  respect to any  Uncertificated
Regular Interest for any Distribution  Date, one month's interest at the related
Uncertificated  Pass-Through  Rate for such  Distribution  Date,  accrued on the
Uncertificated Principal Balance or Uncertificated Notional Amount,  immediately
prior to such Distribution Date. Uncertificated Accrued Interest for the Group I
Uncertificated   Regular  Interests  (except  for  REMIC  III  Regular  Interest
LT3-AI-1)  shall  accrue  on the basis of a 360-day  year  consisting  of twelve
30-day months.  Uncertificated  Accrued Interest for the Group II Uncertificated
Regular Interests (and for REMIC III Regular Interest  LT3-AI-1) shall accrue on
the basis of a 360-day year and the actual number of days in the related Accrual
Period.  For  purposes  of  calculating  the  amount of  Uncertificated  Accrued
Interest  for the REMIC I  Regular  Interests  for any  Distribution  Date,  any
Prepayment  Interest  Shortfalls  (to the  extent not  covered  by  Compensating
Interest)  relating  to the Group I Loans  for any  Distribution  Date  shall be
allocated  first to REMIC I  Regular  Interest  LT-A-1,  then to REMIC I Regular
Interest LT-A-2 through REMIC I Regular Interest LT-A-31,  sequentially, in each
case to the extent of one  month's  interest at the then  applicable  respective
Uncertificated  REMIC  I  Pass-Through  Rate  on the  respective  Uncertificated
Principal  Balance of each such  Uncertificated  REMIC I Regular  Interest.  For
purposes of calculating the amount of  Uncertificated  Accrued  Interest for the
REMIC II Regular


                                              59

<PAGE>



Interest for any Distribution Date, any Prepayment  Interest  Shortfalls (to the
extent not covered by Compensating  Interest) relating to the Group II Loans for
any  Distribution  Date shall be allocated to REMIC II Regular Interest LT-B, to
the  extent  of  one  month's   interest  at  the  then  applicable   respective
Uncertificated  REMIC  II  Pass-Through  Rate on the  respective  Uncertificated
Principal Balance of such Uncertificated REMIC II Regular Interest. For purposes
of calculating the amount of  Uncertificated  Accrued Interest for the REMIC III
Group I Regular  Interests for any  Distribution  Date, any Prepayment  Interest
Shortfalls (to the extent not covered by Compensating  Interest) relating to the
Group  I  Loans  for  any  Distribution   Date  shall  be  allocated  first,  to
Uncertificated  Accrued Interest payable to REMIC III Regular Interest LT3-AI-AA
and REMIC III Regular Interest  LT3-AI-ZZ up to an aggregate amount equal to the
REMIC III Group I Interest Loss Allocation Amount, 98% and 2%, respectively, and
thereafter  any  remaining  Prepayment  Interest  Shortfalls  (to the extent not
covered  by  Compensating  Interest)  relating  to the  Group  I  Loans  for any
Distribution   Date  shall  be  allocated  among  REMIC  III  Regular  Interests
LT3-AI-AA,  LT3-AI-1 through LT3-MI-3,  LT3-AI-ZZ,  and LT3-IAIO, pro rata based
on, and to the extent of, Uncertificated Accrued Interest, as calculated without
application  of this  sentence.  For  purposes  of  calculating  the  amount  of
Uncertificated Accrued Interest for the REMIC III Group II Regular Interests for
any  Distribution  Date, any Prepayment  Interest  Shortfalls (to the extent not
covered  by  Compensating  Interest)  relating  to the  Group II  Loans  for any
Distribution Date shall be allocated first, to  Uncertificated  Accrued Interest
payable to REMIC III Regular Interest  LT3-AII-AA and REMIC III Regular Interest
LT3-AII-ZZ  up to an  aggregate  amount equal to the REMIC III Group II Interest
Loss Allocation Amount, 98% and 2%,  respectively,  and thereafter any remaining
Prepayment  Interest  Shortfalls  (to the  extent not  covered  by  Compensating
Interest)  relating  to the Group II Loans for any  Distribution  Date  shall be
allocated  among  REMIC  III  Regular   Interests   LT3-AII-AA,   LT3-AII-1  and
LT3-AII-ZZ,  pro rata based on, and to the  extent  of,  Uncertificated  Accrued
Interest, as calculated without application of this sentence.

        Uncertificated  Notional Amount:  With respect to any Distribution  Date
and REMIC III Regular  Interest  LT3-IAIO,  an amount equal to the lesser of (i)
the  aggregate  Stated  Principal  Balance  of the  Group I Loans  and  (ii) the
aggregate Uncertificated Principal Balance of the Uncertificated REMIC I Regular
Interests set forth below for such Distribution Date.



                                                   Corresponding Uncertificated
                    Distribution Date             ---REMIC-I-Regular-Interest
              March 25, 2003                        LT-A-2 through LT-A-31
              April 25, 2003                        LT-A-3 through LT-A-31
              May 25, 2003                          LT-A-4 through LT-A-31
              June 25, 2003                         LT-A-5 through LT-A-31
              July 25, 2003                         LT-A-6 through LT-A-31
              August 25, 2003                       LT-A-7 through LT-A-31
              September 25, 2003                    LT-A-8 through LT-A-31
               October 25, 2003                    LT-A-9 through LT-A-31
              November 25, 2003                    LT-A-10 through LT-A-31
              December 25, 2003                    LT-A-11 through LT-A-31
              January  25, 2004                    LT-A-12 through LT-A-31



                                              60

<PAGE>




              February 25, 2004                     LT-A-13 through LT-A-31
              March 25, 2004                        LT-A-14 through LT-A-31
              April 25, 2004                        LT-A-15 through LT-A-31
              May 25, 2004                          LT-A-16 through LT-A-31
              June 25, 2004                         LT-A-17 through LT-A-31
              July 25, 2004                         LT-A-18 through LT-A-31
              August 25, 2004                       LT-A-19 through LT-A-31
              September 25, 2004                    LT-A-20 through LT-A-31
               October 25, 2004                     LT-A-21 through LT-A-31
              November 25, 2004                     LT-A-22 through LT-A-31
              December 25, 2004                     LT-A-23 through LT-A-31
              January 25, 2005                      LT-A-24 through LT-A-31
              February 25, 2005                     LT-A-25 through LT-A-31
              March 25, 2005                        LT-A-26 through LT-A-31
              April 25, 2005                        LT-A-27 through LT-A-31
              May 25, 2005                          LT-A-28 through LT-A-31
              June 25, 2005                         LT-A-29 through LT-A-31
              July 25, 2005                         LT-A-30 through LT-A-31
              August 25, 2005                       LT-A-31

        Uncertificated   Pass-Through   Rate:   The   Uncertificated   REMIC   I
Pass-Through Rate,  Uncertificated  REMIC II Pass-Through Rate or Uncertificated
REMIC III Pass-Through Rate.

        Uncertificated   Principal   Balance:   The  principal   amount  of  any
Uncertificated Regular Interest (other than REMIC III Regular Interest LT3-IAIO)
outstanding  as of any  date  of  determination.  The  Uncertificated  Principal
Balance  of  each  Uncertificated  Regular  Interest  shall  be  reduced  by all
distributions  of principal made on such  Uncertificated  Regular  Interest,  as
applicable,  on such  Distribution  Date and, if and to the extent necessary and
appropriate,  shall be further  reduced in such  Distribution  Date by  Realized
Losses.  The  Uncertificated  Principal Balance of each  Uncertificated  Regular
Interest shall never be less than zero. REMIC III Regular Interest LT3-IAIO will
not have an Uncertificated Principal Balance.

        Uncertificated  Regular Interests:  The REMIC I Regular  Interests,  the
REMIC II Regular Interests and the REMIC III Regular Interests.

        Uncertificated   REMIC  I  Pass-Through   Rate:   With  respect  to  any
Distribution Date, a per annum rate equal to the Group I Net WAC Cap Rate.

        Uncertificated   REMIC  II  Pass-Through   Rate:  With  respect  to  any
Distribution Date, a per annum rate equal to the Group II Net WAC Cap Rate.

        Uncertificated REMIC III Pass-Through Rate:


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<PAGE>



        (a) With  respect to REMIC III  Regular  Interest  LT3-AI-AA,  REMIC III
Regular  Interest  LT3-AI-1,  REMIC III  Regular  Interest  LT3-AI-2,  REMIC III
Regular  Interest  LT3-AI-3,  REMIC III  Regular  Interest  LT3-AI-4,  REMIC III
Regular  Interest  LT3-AI-5,  REMIC III  Regular  Interest  LT3-AI-6,  REMIC III
Regular  Interest  LT3-MI-1,  REMIC III  Regular  Interest  LT3-MI-2,  REMIC III
Regular Interest LT3-MI-3 and REMIC III Regular Interest LT3-AI-ZZ,  and (i) the
first 30 Distribution  Dates, a per annum rate equal to the Group I Adjusted Net
WAC Cap Rate and (ii) thereafter, a per annum rate equal to the weighted average
of the  Uncertificated  Pass-Through  Rates for the  REMIC I Regular  Interests,
weighted  on the  basis  of the  respective  Uncertificated  Principal  Balances
thereof for such Distribution Date.

        (b) With respect to REMIC III Regular Interest LT3-IAIO and the first 30
Distribution  Dates,  1.00%,  and with  respect  to REMIC III  Regular  Interest
LT3-IAIO and any Distribution Date thereafter, 0.00% per annum.

        (c) With  respect  to REMIC III  Regular  InterestLT3-AII-AA,  REMIC III
Regular  Interest  LT3-AII-1  and REMIC III  Regular  Interest  LT3-AII-ZZ,  the
Uncertificated REMIC II Pass-Through Rate.

        Uninsured  Cause:  Any cause of damage to property subject to a Mortgage
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies.

        United  States  Person:  A citizen or resident of the United  States,  a
corporation,   partnership  or  other  entity   (treated  as  a  corporation  or
partnership for United States federal income tax purposes)  created or organized
in, or under the laws of, the United States, any state thereof,  or the District
of  Columbia  (except in the case of a  partnership,  to the extent  provided in
Treasury  regulations) provided that, for purposes solely of the restrictions on
the transfer of Class R Certificates,  no partnership or other entity treated as
a partnership  for United States federal income tax purposes shall be treated as
a  United  States  Person  unless  all  persons  that  own an  interest  in such
partnership  either directly or through any entity that is not a corporation for
United  States  federal  income tax  purposes  are  required  by the  applicable
operative  agreement to be United States Persons, or an estate that is described
in Section  7701(a)(30)(D)  of the Code, or a trust that is described in Section
7701(a)(30)(E) of the Code.

        VA: The Veterans Administration, or its successor.
        --

        Voting  Rights:  The  portion  of  the  voting  rights  of  all  of  the
Certificates which is allocated to any Certificate.  96.00% of all of the Voting
Rights shall be allocated among Holders of the Class A Certificates,  other than
the Class A-I-IO  Certificates,  in  proportion to the  outstanding  Certificate
Principal  Balances of their  respective  Certificates;  1% of all of the Voting
Rights shall be allocated among Holders of the Class A-I-IO Certificates; 1% and
1% of all of the Voting Rights shall be allocated among the Holders of the Class
SB-I and Class SB-II Certificates,  respectively;  0.25%, 0.25%, 0.25% and 0.25%
of all of the Voting  Rights shall be  allocated  among the Holders of the Class
R-I, Class R-II, Class R-III and Class R-IV Certificates,  respectively; in each
case to be allocated  among the  Certificates  of such Class in accordance  with
their respective Percentage Interest.



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        Section 1.02. Determination of LIBOR.
                      ----------------------

        LIBOR  applicable to the  calculation  of the  Pass-Through  Rate on the
Class A-I-1  Certificates  and Class A-II  Certificates for any Interest Accrual
Period will be determined on each LIBOR Rate Adjustment Date. On each LIBOR Rate
Adjustment  Date,  LIBOR  shall be  established  by the  Trustee  and, as to any
Interest Accrual Period,  will equal the rate for one month United States dollar
deposits that appears on the Telerate Screen Page 3750 as of 11:00 a.m.,  London
time, on such LIBOR Rate Adjustment Date.  "Telerate Screen Page 3750" means the
display  designated as page 3750 on the Telerate  Service (or such other page as
may  replace  page 3750 on that  service for the  purpose of  displaying  London
interbank  offered rates of major  banks).  If such rate does not appear on such
page (or such other page as may replace  that page on that  service,  or if such
service is no longer offered, LIBOR shall be so established by use of such other
service  for  displaying  LIBOR or  comparable  rates as may be  selected by the
Trustee after  consultation with the Master Servicer and the Insurer),  the rate
will be the Reference Bank Rate. The "Reference Bank Rate" will be determined on
the basis of the rates at which  deposits  in U.S.  Dollars  are  offered by the
reference  banks  (which  shall be any three  major  banks  that are  engaged in
transactions  in the London  interbank  market,  selected by the  Trustee  after
consultation  with the Master Servicer and the Insurer) as of 11:00 a.m., London
time, on the LIBOR Rate Adjustment  Date to prime banks in the London  interbank
market for a period of one month in amounts approximately equal to the aggregate
Certificate  Principal  Balance of the Class A-I-1  Certificates  and Class A-II
Certificates  then  outstanding.  The Trustee will request the principal  London
office of each of the reference  banks to provide a quotation of its rate. If at
least two such quotations are provided,  the rate will be the arithmetic mean of
the quotations  rounded up to the next multiple of 1/16%.  If on such date fewer
than two quotations  are provided as requested,  the rate will be the arithmetic
mean of the rates  quoted by one or more major banks in New York City,  selected
by the Trustee after  consultation with the Master Servicer and the Insurer,  as
of 11:00  a.m.,  New York City time,  on such date for loans in U.S.  Dollars to
leading European banks for a period of one month in amounts  approximately equal
to the aggregate  Certificate  Principal Balance of the Class A-I-1 Certificates
and Class A-II  Certificates  then  outstanding.  If no such  quotations  can be
obtained,  the rate will be LIBOR for the prior Distribution Date or in the case
of the first LIBOR Rate Adjustment Date,  1.33750%;  provided however, if, under
the priorities  described above, LIBOR for a Distribution Date would be based on
LIBOR for the previous Distribution Date for the third consecutive  Distribution
Date,  the  Trustee,  after  consultation  with the  Insurer,  shall  select  an
alternative  comparable index (over which the Trustee has no control),  used for
determining one- month Eurodollar lending rates that is calculated and published
(or otherwise made  available) by an independent  party.  The  establishment  of
LIBOR by the  Trustee  on any  LIBOR  Rate  Adjustment  Date  and the  Trustee's
subsequent  calculation of the  Pass-Through  Rate applicable to the Class A-I-1
Certificates  and Class A-II  Certificates  for the  relevant  Interest  Accrual
Period,  in the absence of manifest error,  will be final and binding.  Promptly
following  each LIBOR Rate  Adjustment  Date the Trustee shall supply the Master
Servicer  with  the  results  of  its  determination  of  LIBOR  on  such  date.
Furthermore,  the Trustee  will supply to any  Certificateholder  so calling the
Trustee at 1-800-  275-2048 and  requesting the  Pass-Through  Rate on the Class
A-I-1  Certificates  and  Class  A-II  Certificates  for  the  current  and  the
immediately preceding Interest Accrual Period.




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<PAGE>



                                          ARTICLE II

                                CONVEYANCE OF MORTGAGE LOANS;
                              ORIGINAL ISSUANCE OF CERTIFICATES

        Section 2.01. Conveyance of Mortgage Loans.
                      ----------------------------

        (a) The Depositor,  concurrently with the execution and delivery hereof,
does hereby  assign to the Trustee  without  recourse  all the right,  title and
interest  of the  Depositor  in and to (i) the  Mortgage  Loans,  including  all
interest and principal  received on or with respect to the Mortgage  Loans after
the Cut-off  Date (other than  payments of  principal  and  interest  due on the
Mortgage  Loans in the month of February  2003);  (ii) the Reserve Fund Deposit;
and (iii) all proceeds of the foregoing.

        (b) In connection with such assignment,  and contemporaneously  with the
delivery of this  Agreement,  the Depositor  delivered or caused to be delivered
hereunder to the Trustee the Policy,  and except as set forth in Section 2.01(c)
below,  the Depositor does hereby deliver to, and deposit with, the Trustee,  or
to and with one or more Custodians, as the duly appointed agent or agents of the
Trustee for such purpose,  the  following  documents or  instruments  (or copies
thereof as permitted by this  Section)  with  respect to each  Mortgage  Loan so
assigned:

               (i) The original Mortgage Note,  endorsed without recourse to the
        order of the Trustee and showing an unbroken chain of endorsements  from
        the  originator  thereof to the Person  endorsing it to the Trustee,  or
        with  respect to any  Destroyed  Mortgage  Note,  an original  lost note
        affidavit from the related Seller or  Residential  Funding  stating that
        the original  Mortgage Note was lost,  misplaced or destroyed,  together
        with a copy of the related Mortgage Note;

               (ii) The original Mortgage, noting the presence of the MIN of the
        Mortgage  Loan and language  indicating  that the Mortgage Loan is a MOM
        Loan if the  Mortgage  Loan is a MOM Loan,  with  evidence of  recording
        thereon or, if the original  Mortgage has not yet been returned from the
        public recording  office, a copy of the original  Mortgage with evidence
        of recording indicated thereon;

               (iii)  Unless the  Mortgage  Loan is  registered  on the  MERS(R)
        System,  the  Assignment  (which may be included in one or more  blanket
        assignments  if  permitted  by  applicable  law) of the  Mortgage to the
        Trustee with evidence of recording  indicated  thereon or a copy of such
        assignment with evidence of recording indicated thereon;

               (iv) The  original  recorded  assignment  or  assignments  of the
        Mortgage  showing an unbroken  chain of title from the originator to the
        Person  assigning it to the Trustee (or to MERS, if the Mortgage Loan is
        registered on the MERS(R)  System and noting the presence of a MIN) with
        evidence of recordation noted thereon or attached thereto,  or a copy of
        such  assignment  or  assignments  of  the  Mortgage  with  evidence  of
        recording indicated thereon;



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<PAGE>



               (v) The original of each  modification,  assumption  agreement or
        preferred loan agreement,  if any,  relating to such Mortgage Loan, or a
        copy  of each  modification,  assumption  agreement  or  preferred  loan
        agreement.

        The Depositor  may, in lieu of delivering  the original of the documents
set forth in Section  2.01(b)(ii),  (iii),  (iv) and (v) (or  copies  thereof as
permitted by Section  2.01(b)) to the Trustee or the  Custodian  or  Custodians,
deliver such  documents to the Master  Servicer,  and the Master  Servicer shall
hold such  documents  in trust for the use and benefit of all present and future
Certificateholders until such time as is set forth in the next sentence.  Within
thirty Business Days following the earlier of (i) the receipt of the original of
all of the documents or  instruments  set forth in Section  2.01(b)(ii),  (iii),
(iv) and (v) (or copies  thereof as permitted by such  Section) for any Mortgage
Loan and (ii) a written  request by the Trustee to deliver those  documents with
respect  to any or all of the  Mortgage  Loans  then  being  held by the  Master
Servicer,  the Master Servicer shall deliver a complete set of such documents to
the Trustee or the Custodian or Custodians  that are the duly appointed agent or
agents of the Trustee.

        (c) In  connection  with any  Mortgage  Loan,  if the  Depositor  cannot
deliver the original of the Mortgage, any assignment,  modification,  assumption
agreement or preferred  loan  agreement (or copy thereof as permitted by Section
2.01(b)) with evidence of recording thereon  concurrently with the execution and
delivery of this Agreement because of (i) a delay caused by the public recording
office where such Mortgage,  assignment,  modification,  assumption agreement or
preferred loan agreement as the case may be, has been delivered for recordation,
or (ii) a delay in the receipt of certain  information  necessary to prepare the
related assignments, the Depositor shall deliver or cause to be delivered to the
Trustee  or the  respective  Custodian  a copy  of  such  Mortgage,  assignment,
modification, assumption agreement or preferred loan agreement.

        The Depositor  shall  promptly  cause to be recorded in the  appropriate
public office for real  property  records the  Assignment  referred to in clause
(iii) of Section 2.01(b),  except (a) in states where, in the opinion of counsel
acceptable to the Trustee,  the Insurer and the Master Servicer,  such recording
is not required to protect the  Trustee's  interests in the Mortgage Loan or (b)
if MERS is  identified on the Mortgage or on a properly  recorded  assignment of
the  Mortgage  as the  mortgagee  of record  solely as nominee  for  Residential
Funding and its  successors  and assigns.  If any Assignment is lost or returned
unrecorded to the Depositor  because of any defect therein,  the Depositor shall
prepare a substitute  Assignment  or cure such  defect,  as the case may be, and
cause such  Assignment to be recorded in  accordance  with this  paragraph.  The
Depositor shall promptly  deliver or cause to be delivered to the Trustee or the
respective  Custodian  such Mortgage or Assignment (or copy thereof as permitted
by Section 2.01(b)),  with evidence of recording  indicated thereon upon receipt
thereof from the public recording office or from the related Subservicer.

        If the Depositor  delivers to the Trustee or Custodian any Mortgage Note
or Assignment  of Mortgage in blank,  the  Depositor  shall,  or shall cause the
Custodian to,  complete the  endorsement of the Mortgage Note and the Assignment
of  Mortgage  in the  name  of the  Trustee  in  conjunction  with  the  Interim
Certification issued by the Custodian, as contemplated by Section 2.02.

        Any of the items set forth in Sections 2.01(b)(ii),  (iii), (iv) and (v)
that may be delivered as a copy rather than the original may be delivered to the
Trustee or the Custodian.


                                              65

<PAGE>



        In connection with the assignment of any Mortgage Loan registered on the
MERS(R)  System,  the  Depositor  further  agrees  that  it will  cause,  at the
Depositor's  own  expense,  within 30 days after the Closing  Date,  the MERS(R)
System to indicate that such Mortgage  Loans have been assigned by the Depositor
to the  Trustee  in  accordance  with  this  Agreement  for the  benefit  of the
Certificateholders  by including  (or  deleting,  in the case of Mortgage  Loans
which are  repurchased in accordance with this Agreement) in such computer files
(a) the code in the field which identifies the specific Trustee and (b) the code
in the field "Pool Field" which identifies the series of the Certificates issued
in connection  with such Mortgage  Loans.  The Depositor  further agrees that it
will not, and will not permit the Master  Servicer  to, and the Master  Servicer
agrees  that it will not,  alter the codes  referenced  in this  paragraph  with
respect to any Mortgage Loan during the term of this Agreement  unless and until
such  Mortgage  Loan  is  repurchased  in  accordance  with  the  terms  of this
Agreement.

        (d) It is intended that the  conveyances by the Depositor to the Trustee
of the  Mortgage  Loans as provided  for in this  Section 2.01 be construed as a
sale by the  Depositor to the Trustee of the  Mortgage  Loans for the benefit of
the Certificateholders.  Further, it is not intended that any such conveyance be
deemed to be a pledge of the Mortgage  Loans by the  Depositor to the Trustee to
secure a debt or other obligation of the Depositor.  However,  in the event that
the Mortgage  Loans are held to be property of the  Depositor or of  Residential
Funding,  or if for any  reason  this  Agreement  is held or  deemed to create a
security  interest in the  Mortgage  Loans,  then it is  intended  that (a) this
Agreement shall also be deemed to be a security  agreement within the meaning of
Articles  8 and 9 of the New  York  Uniform  Commercial  Code  and  the  Uniform
Commercial  Code of any  other  applicable  jurisdiction;  (b)  the  conveyances
provided  for in this  Section  2.01  shall be  deemed  to be (1) a grant by the
Depositor to the Trustee of a security  interest in all of the Depositor's right
(including the power to convey title thereto),  title and interest,  whether now
owned or hereafter acquired, in and to (A) the Mortgage Loans, including (i) the
related  Mortgage  Note and Mortgage,  and (ii) any  insurance  policies and all
other documents in the related  Mortgage File, (B) all amounts payable  pursuant
to the Mortgage  Loans in accordance  with the terms thereof and (C) any and all
general  intangibles  consisting  of,  arising  from or  relating  to any of the
foregoing, and all proceeds of the conversion,  voluntary or involuntary, of the
foregoing  into  cash,  instruments,  securities  or other  property,  including
without  limitation  all  amounts  from  time to time  held or  invested  in the
Certificate  Account  or the  Custodial  Account,  whether  in the form of cash,
instruments, securities or other property and (2) an assignment by the Depositor
to the Trustee of any security interest in any and all of Residential  Funding's
right (including the power to convey title thereto), title and interest, whether
now  owned  or  hereafter  acquired,  in and to the  property  described  in the
foregoing  clauses  (1)(A),  (B) and (C) granted by  Residential  Funding to the
Depositor  pursuant  to the  Assignment  Agreement;  (c) the  possession  by the
Trustee,  the  Custodian or any other agent of the Trustee of Mortgage  Notes or
such other  items of  property  as  constitute  instruments,  money,  negotiable
documents  or chattel  paper  shall be deemed to be  "possession  by the secured
party," or  possession  by a purchaser  or a person  designated  by such secured
party, for purposes of perfecting the security  interest pursuant to the Uniform
Commercial  Code as in effect in the  States of New York and  Minnesota  and any
other  applicable  jurisdiction;  and (d)  notifications to persons holding such
property,  and  acknowledgments,  receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries,  bailees or agents (as applicable)
of the  Trustee for the  purpose of  perfecting  such  security  interest  under
applicable law.


                                              66

<PAGE>



        The Depositor and, at the Depositor's direction, Residential Funding and
the Trustee  shall,  to the extent  consistent  with this  Agreement,  take such
reasonable  actions as may be necessary to ensure that, if this  Agreement  were
deemed  to  create a  security  interest  in the  Mortgage  Loans  and the other
property  described  above,  such  security  interest  would be  deemed  to be a
perfected  security  interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.  Without  limiting the
generality  of the  foregoing,  the  Depositor  shall prepare and deliver to the
Trustee  not less than 15 days prior to any filing date and,  the Trustee  shall
forward for filing, or shall cause to be forwarded for filing, at the expense of
the  Depositor,  all filings  necessary  to maintain  the  effectiveness  of any
original filings necessary under the Uniform Commercial Code as in effect in any
jurisdiction  to  perfect  the  Trustee's  security  interest  in or lien on the
Mortgage Loans as evidenced by an Officers' Certificate of the Depositor, with a
copy delivered to the Insurer,  including  without  limitation (x)  continuation
statements, and (y) such other statements as may be occasioned by (1) any change
of name of Residential  Funding,  the Depositor or the Trustee (such preparation
and filing shall be at the expense of the Trustee,  if occasioned by a change in
the Trustee's  name), (2) any change of location of the place of business or the
chief  executive  office of  Residential  Funding  or the  Depositor  or (3) any
transfer of any interest of Residential Funding or the Depositor in any Mortgage
Loan.

        Section 2.02. Acceptance by Trustee.
                      ---------------------

        The Trustee  acknowledges  receipt (or,  with respect to Mortgage  Loans
subject  to  a  Custodial  Agreement,   and  based  solely  upon  a  receipt  or
certification executed by the Custodian,  receipt by the respective Custodian as
the duly appointed agent of the Trustee) of the documents referred to in Section
2.01(b)(i)  above  (except  that for  purposes of such  acknowledgment  only,  a
Mortgage  Note may be endorsed in blank and an  Assignment of Mortgage may be in
blank) and declares  that it, or a Custodian  as its agent,  holds and will hold
such documents and the other documents constituting a part of the Mortgage Files
delivered to it, or a Custodian  as its agent,  in trust for the use and benefit
of all present and future  Certificateholders.  The Trustee or  Custodian  (such
Custodian  being so  obligated  under a  Custodial  Agreement)  agrees,  for the
benefit of  Certificateholders,  to review each  Mortgage  File  delivered to it
pursuant to Section  2.01(b)  within 45 days after the Closing Date to ascertain
that all required documents (specifically as set forth in Section 2.01(b)), have
been executed and received, and that such documents relate to the Mortgage Loans
identified  on the  Mortgage  Loan  Schedule,  as  supplemented,  that have been
conveyed  to it, and to  deliver  to the  Trustee a  certificate  (the  "Interim
Certification")  to the  effect  that all  documents  required  to be  delivered
pursuant to Section  2.01(b) above have been executed and received and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule,
except  for any  exceptions  listed  on  Schedule  A  attached  to such  Interim
Certification.  Upon  delivery of the  Mortgage  Files by the  Depositor  or the
Master  Servicer,  the Trustee  shall  acknowledge  receipt (or, with respect to
Mortgage Loans subject to a Custodial Agreement, and based solely upon a receipt
or certification executed by the Custodian,  receipt by the respective Custodian
as the duly  appointed  agent of the  Trustee) of the  documents  referred to in
Section  2.01(c) above.  If the  Custodian,  as the Trustee's  agent,  finds any
document or documents  constituting  a part of a Mortgage  File to be missing or
defective,  the Trustee  shall  promptly so notify the Master  Servicer  and the
Depositor;  provided, that if the Mortgage Loan related to such Mortgage File is
listed on  Schedule A of the  Assignment  Agreement,  no  notification  shall be
necessary.  Pursuant to Section 2.3 of the  Custodial  Agreement,  the Custodian
will notify the Master Servicer, the Depositor and the Trustee of any such


                                              67

<PAGE>



omission or defect  found by it in respect of any  Mortgage  File held by it. If
such omission or defect  materially  and adversely  affects the interests in the
related  Mortgage  Loan of the  Certificateholders  or the  Insurer,  the Master
Servicer  shall  promptly  notify the related  Subservicer  of such  omission or
defect and request that such Subservicer correct or cure such omission or defect
within 60 days from the date the Master  Servicer was notified of such  omission
or defect and,  if such  Subservicer  does not correct or cure such  omission or
defect  within such period,  that such  Subservicer  purchase such Mortgage Loan
from the Trust Fund at its  Purchase  Price,  in either case within 90 days from
the date the Master  Servicer was notified of such omission or defect;  provided
that if the omission or defect would cause the Mortgage  Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such cure
or  repurchase  must  occur  within  90 days  from  the  date  such  breach  was
discovered; and provided further, that no cure, substitution or repurchase shall
be required if such  omission or defect is in respect of a Mortgage  Loan listed
on  Schedule A of the  Assignment  Agreement.  The  Purchase  Price for any such
Mortgage  Loan  shall be  deposited  or caused  to be  deposited  by the  Master
Servicer in the Custodial Account maintained by it pursuant to Section 3.07 and,
upon receipt by the Trustee of written  notification of such deposit signed by a
Servicing  Officer,  the  Trustee or any  Custodian,  as the case may be,  shall
release to the Master  Servicer the related  Mortgage File and the Trustee shall
execute and deliver such  instruments of transfer or assignment  prepared by the
Master Servicer, in each case without recourse, as shall be necessary to vest in
the Subservicer or its designee,  as the case may be, any Mortgage Loan released
pursuant hereto and thereafter such Mortgage Loan shall not be part of the Trust
Fund. In furtherance of the foregoing, if the Subservicer or Residential Funding
that  repurchases  the Mortgage Loan is not a member of MERS and the Mortgage is
registered on the MERS(R) System,  the Master  Servicer,  at its own expense and
without any right of  reimbursement,  shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from MERS
to such  Subservicer or Residential  Funding and shall cause such Mortgage to be
removed from  registration  on the MERS(R) System in accordance with MERS' rules
and  regulations.  It is  understood  and  agreed  that  the  obligation  of the
Subservicer, to so cure or purchase any Mortgage Loan as to which a material and
adverse defect in or omission of a constituent  document exists shall constitute
the  sole   remedy   respecting   such   defect   or   omission   available   to
Certificateholders  or the Trustee on behalf of  Certificateholders  (except for
the Insurer's rights under the Insurance Agreement).

        Section       2.03.  Representations,  Warranties  and  Covenants of the
                      Master Servicer and the Depositor.

        (a) The Master  Servicer  hereby  represents and warrants to the Trustee
for the benefit of the Certificateholders and the Insurer that:

               (i) The Master Servicer is a corporation duly organized,  validly
        existing and in good standing  under the laws governing its creation and
        existence and is or will be in compliance with the laws of each state in
        which any  Mortgaged  Property  is located to the  extent  necessary  to
        ensure the  enforceability  of each Mortgage Loan in accordance with the
        terms of this Agreement;

               (ii) The execution  and delivery of this  Agreement by the Master
          Servicer and its  performance  and  compliance  with the terms of this
          Agreement  will not  violate  the  Master  Servicer's  Certificate  of
          Incorporation or Bylaws or constitute a material default (or an event


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<PAGE>



        which,  with  notice  or lapse of time,  or  both,  would  constitute  a
        material  default)  under,  or result in the  material  breach  of,  any
        material  contract,  agreement or other  instrument  to which the Master
        Servicer is a party or which may be applicable to the Master Servicer or
        any of its assets;

               (iii) This Agreement,  assuming due authorization,  execution and
        delivery by the Trustee and the  Depositor,  constitutes a valid,  legal
        and binding obligation of the Master Servicer, enforceable against it in
        accordance  with the terms  hereof  subject  to  applicable  bankruptcy,
        insolvency,  reorganization,  moratorium  and other laws  affecting  the
        enforcement of creditors' rights generally and to general  principles of
        equity,  regardless  of whether  such  enforcement  is  considered  in a
        proceeding in equity or at law;

               (iv) The Master  Servicer is not in default  with  respect to any
        order or decree of any court or any order,  regulation  or demand of any
        federal,  state,  municipal or governmental  agency, which default might
        have  consequences  that  would  materially  and  adversely  affect  the
        condition  (financial or other) or operations of the Master  Servicer or
        its  properties  or  might  have   consequences  that  would  materially
        adversely affect its performance hereunder;

                      (v) No litigation is pending or, to the best of the Master
               Servicer's  knowledge,  threatened  against  the Master  Servicer
               which  would   prohibit  its  entering  into  this  Agreement  or
               performing its obligations under this Agreement;

               (vi) The Master Servicer will comply in all material  respects in
        the  performance  of  this  Agreement  with  all  reasonable  rules  and
        requirements of each insurer under each Required Insurance Policy;

                      (vii) No information, certificate of an officer, statement
               furnished in writing or report  delivered to the  Depositor,  any
               Affiliate of the Depositor or the Trustee by the Master  Servicer
               will, to the knowledge of the Master Servicer, contain any untrue
               statement of a material fact or omit a material fact necessary to
               make  the  information,  certificate,  statement  or  report  not
               misleading;

               (viii) The Master  Servicer has examined each existing,  and will
        examine each new, Subservicing Agreement and is or will be familiar with
        the terms thereof. The terms of each existing Subservicing Agreement and
        each  designated  Subservicer  are acceptable to the Master Servicer and
        any new  Subservicing  Agreements  will  comply with the  provisions  of
        Section 3.02; and

               (ix) The Master  Servicer  is a member of MERS in good  standing,
        and will comply in all material  respects with the rules and  procedures
        of MERS in connection  with the servicing of the Mortgage Loans that are
        registered with MERS.

It is understood and agreed that the representations and warranties set forth in
this Section 2.03(a) shall survive delivery of the respective  Mortgage Files to
the Trustee or any Custodian. Upon discovery by either the Depositor, the Master
Servicer,  the  Insurer,  the  Trustee  or  any  Custodian  of a  breach  of any
representation  or warranty set forth in this Section  2.03(a) which  materially
and


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adversely affects the interests of the  Certificateholders or the Insurer in any
Mortgage  Loan,  the party  discovering  such breach  shall give prompt  written
notice to the other parties (any Custodian  being so obligated under a Custodial
Agreement).  Within 90 days of its  discovery  or its  receipt of notice of such
breach,  the Master  Servicer  shall either (i) cure such breach in all material
respects or (ii) to the extent  that such  breach is with  respect to a Mortgage
Loan or a related  document,  purchase such Mortgage Loan from the Trust Fund at
the Purchase Price and in the manner set forth in Section 2.02; provided that if
the  omission  or  defect  would  cause  the  Mortgage  Loan to be other  than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such cure
or  repurchase  must  occur  within  90 days  from  the  date  such  breach  was
discovered.  The obligation of the Master  Servicer to cure such breach or to so
purchase  such Mortgage  Loan shall  constitute  the sole remedy in respect of a
breach  of a  representation  and  warranty  set forth in this  Section  2.03(a)
available   to  the   Certificateholders   or  the  Trustee  on  behalf  of  the
Certificateholders  (except for the  Insurer's  rights under Section 3.03 of the
Insurance Agreement).

        (b) The Depositor hereby  represents and warrants to the Trustee for the
benefit of the  Certificateholders  and the Insurer  that as of the Closing Date
(or,  if  otherwise  specified  below,  as of the  date so  specified):  (i) The
information set forth in Exhibit F-1 and Exhibit F-2 hereto with respect to each
Mortgage Loan or the Mortgage  Loans, as the case may be, is true and correct in
all material  respects at the respective date or dates which such information is
furnished; (ii) Immediately prior to the conveyance of the Mortgage Loans to the
Trustee,  the  Depositor  had good  title to,  and was the sole  owner of,  each
Mortgage  Loan free and  clear of any  pledge,  lien,  encumbrance  or  security
interest  (other than rights to  servicing  and related  compensation)  and such
conveyance validly transfers ownership of the Mortgage Loans to the Trustee free
and clear of any pledge, lien,  encumbrance or security interest; and (iii) Each
Mortgage Loan  constitutes a qualified  mortgage under Section  860G(a)(3)(A) of
the Code and Treasury Regulations Section 1.860G-2(a)(1).

        It is understood and agreed that the  representations and warranties set
forth in this Section 2.03(b) shall survive delivery of the respective  Mortgage
Files to the Trustee or any Custodian.

        Upon  discovery  by any of  the  Depositor,  the  Master  Servicer,  the
Insurer,  the Trustee or any Custodian of a breach of any of the representations
and warranties set forth in this Section 2.03(b) which  materially and adversely
affects the interests of the  Certificateholders  or the Insurer in any Mortgage
Loan, the party  discovering such breach shall give prompt written notice to the
other parties  (including the Insurer) (any Custodian being so obligated under a
Custodial  Agreement);  provided,  however, that in the event of a breach of the
representation  and  warranty  set  forth in  Section  2.03(b)(iii),  the  party
discovering  such breach shall give such notice  within five days of  discovery.
Within  90 days of its  discovery  or its  receipt  of  notice  of  breach,  the
Depositor  shall  either (i) cure such breach in all  material  respects or (ii)
purchase such Mortgage Loan from the Trust Fund at the Purchase Price and in the
manner set forth in Section 2.02;  provided  that the  Depositor  shall have the
option to  substitute  a Qualified  Substitute  Mortgage  Loan or Loans for such
Mortgage Loan if such substitution occurs within two years following the Closing
Date;  provided  that if the omission or defect would cause the Mortgage Loan to
be other than a  "qualified  mortgage" as defined in Section  860G(a)(3)  of the
Code, any such cure,  substitution  or repurchase must occur within 90 days from
the date such breach was discovered.  Any such substitution shall be effected by
the  Depositor  under the same terms and  conditions as provided in Section 2.04
for substitutions by Residential  Funding.  It is understood and agreed that the
obligation of the Depositor to cure such breach or to


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so purchase or  substitute  for any Mortgage  Loan as to which such a breach has
occurred and is continuing  shall  constitute  the sole remedy  respecting  such
breach  available  to the  Certificateholders  (other  than the  Insurer) or the
Trustee  on  behalf  of  the   Certificateholders   (other  than  the  Insurer).
Notwithstanding  the  foregoing,  the  Depositor  shall not be  required to cure
breaches  or  purchase  or  substitute  for  Mortgage  Loans as provided in this
Section  2.03(b) if the  substance of the breach of a  representation  set forth
above also constitutes fraud in the origination of the Mortgage Loan.

        Section 2.04. Representations and Warranties of Residential Funding.
                      -----------------------------------------------------

        The Depositor,  as assignee of Residential  Funding under the Assignment
Agreement,   hereby   assigns   to  the   Trustee   for  the   benefit   of  the
Certificateholders  all of its  right,  title and  interest  in  respect  of the
Assignment  Agreement  applicable to a Mortgage Loan.  Insofar as the Assignment
Agreement  relates to the  representations  and  warranties  made by Residential
Funding in respect of such  Mortgage Loan and any remedies  provided  thereunder
for any breach of such  representations  and warranties,  such right,  title and
interest may be enforced by the Master Servicer on behalf of the Trustee and the
Certificateholders.

        Upon the discovery by the Depositor,  the Master Servicer,  the Trustee,
the  Insurer  or any  Custodian  of a breach of any of the  representations  and
warranties  made in the Assignment  Agreement in respect of any Mortgage Loan or
of any Repurchase Event which materially and adversely  affects the interests of
the  Certificateholders  or  the  Insurer  in  such  Mortgage  Loan,  the  party
discovering  such breach shall give prompt  written  notice to the other parties
(including  the Insurer)  (any  Custodian  being so obligated  under a Custodial
Agreement).  The Master  Servicer shall promptly notify  Residential  Funding of
such breach or Repurchase Event and request that Residential  Funding either (i)
cure such breach or  Repurchase  Event in all material  respects  within 90 days
from the date the Master  Servicer  was  notified of such  breach or  Repurchase
Event or (ii)  purchase  such  Mortgage Loan from the Trust Fund at the Purchase
Price and in the manner set forth in Section 2.02; provided that, in the case of
a breach or Repurchase Event under the Assignment Agreement, Residential Funding
shall have the option to  substitute  a Qualified  Substitute  Mortgage  Loan or
Loans  for such  Mortgage  Loan if such  substitution  occurs  within  two years
following the Closing Date; provided that if the breach would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such cure or substitution  must occur within 90 days from the date
the  breach was  discovered.  In the event that  Residential  Funding  elects to
substitute a Qualified  Substitute Mortgage Loan or Loans for a Deleted Mortgage
Loan  pursuant to this Section  2.04,  Residential  Funding shall deliver to the
Trustee for the benefit of the Certificateholders with respect to such Qualified
Substitute Mortgage Loan or Loans, the original Mortgage Note, the Mortgage,  an
Assignment  of the Mortgage in  recordable  form,  and such other  documents and
agreements as are required by Section  2.01,  with the Mortgage Note endorsed as
required by Section 2.01.  No  substitution  will be made in any calendar  month
after the Determination  Date for such month.  Monthly Payments due with respect
to Qualified Substitute Mortgage Loans in the month of substitution shall not be
part of the Trust Fund and will be retained by the Master  Servicer and remitted
by  the  Master   Servicer  to  Residential   Funding  on  the  next  succeeding
Distribution  Date.  For  the  month  of  substitution,   distributions  to  the
Certificateholders  will include the Monthly  Payment due on a Deleted  Mortgage
Loan for such month and  thereafter  Residential  Funding  shall be  entitled to
retain all amounts received in respect of such Deleted Mortgage Loan. The Master
Servicer shall amend or cause to be amended the Mortgage Loan


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Schedule  for the  benefit of the  Certificateholders  to reflect the removal of
such Deleted  Mortgage Loan and the  substitution  of the  Qualified  Substitute
Mortgage  Loan or Loans  and the  Master  Servicer  shall  deliver  the  amended
Mortgage Loan  Schedule to the Trustee.  Upon such  substitution,  the Qualified
Substitute  Mortgage  Loan or  Loans  shall  be  subject  to the  terms  of this
Agreement  and  the  related  Subservicing   Agreement  in  all  respects,   and
Residential  Funding  shall  be  deemed  to have  made the  representations  and
warranties with respect to the Qualified  Substitute  Mortgage Loan contained in
Section 4 of the Assignment Agreement,  as of the date of substitution,  and the
covenants, representations and warranties set forth in this Section 2.04, and in
Section 2.03 hereof and in Section 4 of the Assignment Agreement, and the Master
Servicer  shall be obligated  to  repurchase  or  substitute  for any  Qualified
Substitute  Mortgage  Loan as to which a  Repurchase  Event (as  defined  in the
Assignment  Agreement)  has  occurred  pursuant  to Section 4 of the  Assignment
Agreement.

        In connection with the substitution of one or more Qualified  Substitute
Mortgage Loans for one or more Deleted  Mortgage Loans, the Master Servicer will
determine  the amount (if any) by which the aggregate  principal  balance of all
such Qualified  Substitute Mortgage Loans as of the date of substitution is less
than the aggregate Stated  Principal  Balance of all such Deleted Mortgage Loans
(in each case after application of the principal portion of the Monthly Payments
due  in  the  month  of   substitution   that  are  to  be  distributed  to  the
Certificateholders  in the month of  substitution).  Residential  Funding  shall
deposit the amount of such  shortfall  into the Custodial  Account on the day of
substitution, without any reimbursement therefor. Residential Funding shall give
notice  in  writing  to the  Trustee  of  such  event,  which  notice  shall  be
accompanied by an Officers'  Certificate as to the calculation of such shortfall
and by an Opinion of Counsel to the effect that such substitution will not cause
(a)  any  federal  tax  to be  imposed  on the  Trust  Fund,  including  without
limitation,  any federal tax imposed on "prohibited  transactions" under Section
860F(a)(1)  of the Code or on  "contributions  after  the  startup  date"  under
Section  860G(d)(1)  of the Code or (b) any portion of REMIC I, REMIC II,  REMIC
III or REMIC IV to fail to qualify  as a REMIC at any time that any  Certificate
is outstanding.

        It is  understood  and agreed  that the  obligation  of the  Residential
Funding to cure such breach or purchase (or in the case of  Residential  Funding
to substitute for) such Mortgage Loan as to which such a breach has occurred and
is continuing shall constitute the sole remedy  respecting such breach available
to the  Certificateholders  (other than the Insurer) or the Trustee on behalf of
the  Certificateholders  (other  than the  Insurer).  If the Master  Servicer is
Residential  Funding,  then the  Trustee  shall  also have the right to give the
notification and require the purchase or substitution provided for in the second
preceding  paragraph  in the  event  of such a  breach  of a  representation  or
warranty made by Residential Funding in the Assignment Agreement.  In connection
with the purchase of or  substitution  for any such Mortgage Loan by Residential
Funding, the Trustee shall assign to Residential Funding all of the right, title
and interest in respect of the Assignment  Agreement applicable to such Mortgage
Loan.

     Section 2.05.  Execution and Authentication of Certificates;  Conveyance of
          Uncertificated REMIC Regular Interests.

        (a) The Trustee  acknowledges the assignment to it of the Mortgage Loans
and the  delivery of the Mortgage  Files to it, or any  Custodian on its behalf,
subject to any exceptions noted,


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together  with the  assignment  to it of all other assets  included in the Trust
Fund, receipt of which is hereby  acknowledged.  Concurrently with such delivery
and in exchange  therefor,  the Trustee,  pursuant to the written request of the
Depositor executed by an officer of the Depositor, has executed and caused to be
authenticated  and  delivered  to  or  upon  the  order  of  the  Depositor  the
Certificates in authorized  denominations which evidence ownership of the entire
Trust Fund.

        (b) The Depositor,  concurrently with the execution and delivery hereof,
does hereby  transfer,  assign,  set over and  otherwise  convey in trust to the
Trustee without  recourse all the right,  title and interest of the Depositor in
and to the REMIC I Regular  Interests and the REMIC II Regular  Interest for the
benefit of the Holders of the REMIC III Regular Interests and the Holders of the
Class  R-III  Certificates.  The  Trustee  acknowledges  receipt  of the REMIC I
Regular  Interests  and  the  REMIC  II  Regular  Interest  (each  of  which  is
uncertificated)  and declares  that it holds and will hold the same in trust for
the exclusive use and benefit of the Holders of the REMIC III Regular  Interests
and Holders of the Class R-III  Certificates.  The  interests  evidenced  by the
Class  R-III  Certificates,  together  with the  REMIC  III  Regular  Interests,
constitute the entire beneficial ownership interest in REMIC III.

        (c) The Depositor,  concurrently with the execution and delivery hereof,
does hereby  transfer,  assign,  set over and  otherwise  convey in trust to the
Trustee without  recourse all the right,  title and interest of the Depositor in
and to the REMIC III  Regular  Interests  for the  benefit of the holders of the
Regular  Certificates and the Class R-IV Certificates.  The Trustee acknowledges
receipt  of the REMIC III  Regular  Interests  (which  are  uncertificated)  and
declares that it holds and will hold the same in trust for the exclusive use and
benefit  of  the  holders  of  the  Regular  Certificates  and  the  Class  R-IV
Certificates.  The interests  evidenced by the Class R-IV Certificate,  together
with the  Regular  Certificates,  constitute  the  entire  beneficial  ownership
interest in REMIC IV.

        (d) In exchange for the REMIC III Regular  Interests  and,  concurrently
with the assignment to the Trustee  thereof,  pursuant to the written request of
the Depositor executed by an officer of the Depositor, the Trustee has executed,
authenticated  and delivered to or upon the order of the Depositor,  the Regular
Certificates  in authorized  denominations  evidencing  (together with the Class
R-IV Certificates) the entire beneficial ownership interest in REMIC IV.




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                                         ARTICLE III

                        ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

        Section 3.01. Master Servicer to Act as Servicer.
                      ----------------------------------

        (a) The Master  Servicer shall service and administer the Mortgage Loans
in  accordance  with the terms of this  Agreement  and the  respective  Mortgage
Loans,  following such  procedures as it would employ in its good faith business
judgment  and  which are  normal  and usual in its  general  mortgage  servicing
activities,  and shall have full power and  authority,  acting  alone or through
Subservicers  as provided in Section 3.02, to do any and all things which it may
deem   necessary  or   desirable  in   connection   with  such   servicing   and
administration.  Without  limiting the generality of the  foregoing,  the Master
Servicer in its own name or in the name of a  Subservicer  is hereby  authorized
and empowered by the Trustee when the Master Servicer or the Subservicer, as the
case may be,  believes  it  appropriate  in its best  judgment,  to execute  and
deliver, on behalf of the Certificateholders and the Trustee or any of them, any
and all  instruments  of  satisfaction  or  cancellation,  or of partial or full
release or discharge,  or of consent to assumption or modification in connection
with a proposed  conveyance,  or of assignment of any Mortgage and Mortgage Note
in connection  with the  repurchase of a Mortgage Loan and all other  comparable
instruments,  or with respect to the  modification or re-recording of a Mortgage
for the purpose of correcting the Mortgage, the subordination of the lien of the
Mortgage in favor of a public utility company or government  agency or unit with
powers of  eminent  domain,  the  taking of a deed in lieu of  foreclosure,  the
completion  of  judicial  or  non-judicial  foreclosure,  the  conveyance  of  a
Mortgaged  Property to the related  insurer,  the  acquisition  of any  property
acquired  by  foreclosure  or deed in lieu of  foreclosure,  or the  management,
marketing and conveyance of any property acquired by foreclosure or deed in lieu
of  foreclosure  with  respect  to the  Mortgage  Loans and with  respect to the
Mortgaged Properties. The Master Servicer further is authorized and empowered by
the Trustee,  on behalf of the  Certificateholders  and the Trustee,  in its own
name  or in the  name  of the  Subservicer,  when  the  Master  Servicer  or the
Subservicer, as the case may be, believes it is appropriate in its best judgment
to register any Mortgage Loan on the MERS(R)  System,  or cause the removal from
the  registration  of any Mortgage  Loan on the MERS(R)  System,  to execute and
deliver, on behalf of the Trustee and the Certificateholders or any of them, any
and all instruments of assignment and other comparable  instruments with respect
to such assignment or re-recording of a Mortgage in the name of MERS,  solely as
nominee for the Trustee and its successors and assigns. Any expenses incurred in
connection with the actions  described in the preceding  sentence shall be borne
by the Master  Servicer in  accordance  with Section  3.16(c),  with no right of
reimbursement;  provided, that if, as a result of MERS discontinuing or becoming
unable to continue  operations in connection with the MERS(R) System, it becomes
necessary to remove any Mortgage Loan from  registration  on the MERS(R)  System
and to arrange for the assignment of the related Mortgages to the Trustee,  then
any  related   expenses   shall  be   reimbursable   to  the  Master   Servicer.
Notwithstanding the foregoing,  subject to Section 3.07(a),  the Master Servicer
shall not permit any  modification  with respect to any Mortgage Loan that would
both  constitute a sale or exchange of such  Mortgage Loan within the meaning of
Section  1001 of the  Code and any  proposed,  temporary  or  final  regulations
promulgated  thereunder (other than in connection with a proposed  conveyance or
assumption of such  Mortgage  Loan that is treated as a Principal  Prepayment in
Full  pursuant  to Section  3.13(d)  hereof) and cause any of REMIC I, REMIC II,
REMIC III or REMIC IV to fail to qualify as a REMIC under the Code.


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The Trustee  shall  furnish the Master  Servicer with any powers of attorney and
other  documents  necessary  or  appropriate  to enable the Master  Servicer  to
service and administer the Mortgage  Loans.  The Trustee shall not be liable for
any action  taken by the Master  Servicer  or any  Subservicer  pursuant to such
powers of attorney.  In servicing and administering any Nonsubserviced  Mortgage
Loan,  the Master  Servicer  shall,  to the extent  not  inconsistent  with this
Agreement,  comply with the Program  Guide as if it were the  originator of such
Mortgage Loan and had retained the servicing  rights and  obligations in respect
thereof.  In connection with servicing and administering the Mortgage Loans, the
Master  Servicer  and any  Affiliate  of the  Master  Servicer  (i) may  perform
services such as appraisals and brokerage services that are customarily provided
by Persons  other than  servicers  of mortgage  loans,  and shall be entitled to
reasonable  compensation  therefor in accordance with Section 3.10 and (ii) may,
at its own discretion and on behalf of the Trustee, obtain credit information in
the form of a "credit score" from a credit repository.

        (b) All costs  incurred  by the Master  Servicer or by  Subservicers  in
effecting the timely payment of taxes and assessments on the properties  subject
to the  Mortgage  Loans  shall  not,  for the  purpose  of  calculating  monthly
distributions to the Certificateholders,  be added to the amount owing under the
related Mortgage Loans,  notwithstanding that the terms of such Mortgage Loan so
permit,  and such costs shall be recoverable to the extent  permitted by Section
3.10(a)(ii).

        (c) The  Master  Servicer  may  enter  into  one or more  agreements  in
connection with the offering of pass-through  certificates  evidencing interests
in one or more of the  Certificates  providing  for the  payment  by the  Master
Servicer of amounts  received by the Master  Servicer as servicing  compensation
hereunder and required to cover certain  Prepayment  Interest  Shortfalls on the
Mortgage Loans, which payment obligation will thereafter be an obligation of the
Master Servicer hereunder.

        Section       3.02.  Subservicing Agreements Between Master Servicer and
                      Subservicers; Enforcement of Subservicers' Obligations.

        (a) The Master Servicer may continue in effect  Subservicing  Agreements
entered into by Residential  Funding and Subservicers prior to the execution and
delivery of this Agreement,  and may enter into new Subservicing Agreements with
Subservicers,  for  the  servicing  and  administration  of all or  some  of the
Mortgage Loans. Each Subservicer shall be either (i) an institution the accounts
of which are  insured by the FDIC or (ii)  another  entity  that  engages in the
business of originating or servicing mortgage loans, and in either case shall be
authorized  to  transact  business  in the state or states in which the  related
Mortgaged  Properties  it is to  service  are  situated,  if and  to the  extent
required by applicable law to enable the  Subservicer to perform its obligations
hereunder and under the  Subservicing  Agreement,  and in either case shall be a
Freddie Mac,  Fannie Mae or HUD approved  mortgage  servicer.  In addition,  any
Subservicer  of a  Mortgage  Loan  insured  by the FHA  must be an  FHA-approved
servicer,  and any Subservicer of a Mortgage Loan guaranteed by the VA must be a
VA-approved  servicer.  Each Subservicer of a Mortgage Loan shall be entitled to
receive and retain,  as provided in the related  Subservicing  Agreement  and in
Section 3.07, the related Subservicing Fee from payments of interest received on
such Mortgage  Loan after payment of all amounts  required to be remitted to the
Master  Servicer in respect of such Mortgage Loan. For any Mortgage Loan that is
a Nonsubserviced Mortgage Loan, the Master Servicer shall be entitled to receive
and retain an amount equal to the  Subservicing  Fee from  payments of interest.
Unless the


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context otherwise requires,  references in this Agreement to actions taken or to
be taken by the Master  Servicer in servicing the Mortgage Loans include actions
taken or to be taken by a  Subservicer  on behalf of the Master  Servicer.  Each
Subservicing  Agreement  will be upon such terms and conditions as are generally
required  by,  permitted  by or  consistent  with the Program  Guide and are not
inconsistent  with this Agreement and as the Master Servicer and the Subservicer
have  agreed.  With the  approval  of the Master  Servicer,  a  Subservicer  may
delegate  its  servicing  obligations  to  third-  party  servicers,   but  such
Subservicer will remain obligated under the related Subservicing Agreement.  The
Master  Servicer  and a  Subservicer  may enter  into  amendments  thereto  or a
different form of Subservicing  Agreement,  and the form referred to or included
in the Program Guide is merely  provided for information and shall not be deemed
to limit in any respect the discretion of the Master Servicer to modify or enter
into  different  Subservicing  Agreements;  provided,  however,  that  any  such
amendments  or  different  forms  shall be  consistent  with and not violate the
provisions of either this Agreement or the Program Guide in a manner which would
materially and adversely affect the interests of the  Certificateholders  or the
Insurer.

        (b) As part of its servicing activities hereunder,  the Master Servicer,
for the benefit of the Trustee,  the Insurer and the  Certificateholders,  shall
use its best reasonable  efforts to enforce the obligations of each  Subservicer
under  the  related  Subservicing   Agreement,  to  the  extent  that  the  non-
performance of any such obligation would have a material and adverse effect on a
Mortgage  Loan,  including,  without  limitation,  the  obligation to purchase a
Mortgage  Loan on account of  defective  documentation,  as described in Section
2.02, or on account of a breach of a representation or warranty, as described in
Section  2.04.  Such  enforcement,  including,  without  limitation,  the  legal
prosecution of claims,  termination of Subservicing Agreements,  as appropriate,
and the pursuit of other appropriate remedies, shall be in such form and carried
out to such an extent and at such time as the Master  Servicer  would  employ in
its good faith  business  judgment and which are normal and usual in its general
mortgage servicing  activities.  The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general  recovery  resulting from such  enforcement to the extent,  if any, that
such recovery exceeds all amounts due in respect of the related Mortgage Loan or
(ii) from a specific  recovery of costs,  expenses or attorneys fees against the
party against whom such enforcement is directed.

        Section 3.03. Successor Subservicers.
                      ----------------------

        The Master  Servicer  shall be entitled to  terminate  any  Subservicing
Agreement  that may exist in  accordance  with the terms and  conditions of such
Subservicing  Agreement and without any limitation by virtue of this  Agreement;
provided,  however,  that  in the  event  of  termination  of  any  Subservicing
Agreement by the Master Servicer or the  Subservicer,  the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Subservicing
Agreement with a successor  Subservicer  which will be bound by the terms of the
related  Subservicing  Agreement.  If the Master  Servicer or any  Affiliate  of
Residential  Funding  acts as  servicer,  it will not assume  liability  for the
representations  and  warranties of the  Subservicer  which it replaces.  If the
Master  Servicer   enters  into  a  Subservicing   Agreement  with  a  successor
Subservicer,  the  Master  Servicer  shall use  reasonable  efforts  to have the
successor  Subservicer assume liability for the  representations  and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the event of any such  assumption  by the successor  Subservicer,  the Master
Servicer may, in the exercise of its business  judgment,  release the terminated
Subservicer from liability for such representations and warranties.


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        Section 3.04. Liability of the Master Servicer.
                      --------------------------------

        Notwithstanding  any  Subservicing  Agreement,  any of the provisions of
this  Agreement  relating  to  agreements  or  arrangements  between  the Master
Servicer or a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Master Servicer shall remain obligated and liable to the Trustee,
the Insurer and  Certificateholders  for the servicing and  administering of the
Mortgage  Loans in  accordance  with the  provisions  of  Section  3.01  without
diminution  of such  obligation  or  liability  by virtue  of such  Subservicing
Agreements or arrangements or by virtue of indemnification  from the Subservicer
or the Depositor and to the same extent and under the same terms and  conditions
as if the Master  Servicer alone were servicing and  administering  the Mortgage
Loans.  The Master Servicer shall be entitled to enter into any agreement with a
Subservicer for  indemnification of the Master Servicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.

     Section 3.05. No Contractual  Relationship  Between Subservicer and Trustee
          or Certificateholders.

        Any  Subservicing  Agreement  that may be  entered  into  and any  other
transactions or services  relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an  originator  shall be deemed to be between
the   Subservicer   and  the  Master   Servicer   alone  and  the   Trustee  and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights,  obligations,  duties or liabilities  with respect to the Subservicer in
its  capacity  as such  except  as set  forth in  Section  3.06.  The  foregoing
provision  shall  not in any way  limit a  Subservicer's  obligation  to cure an
omission or defect or to  repurchase  a Mortgage  Loan as referred to in Section
2.02 hereof.

     Section 3.06.  Assumption  or  Termination  of  Subservicing  Agreements by
          Trustee.

        (a) In the event the Master  Servicer  shall for any reason no longer be
the master servicer  (including by reason of an Event of Default),  the Trustee,
its  designee  or its  successor  shall  thereupon  assume all of the rights and
obligations of the Master  Servicer under each  Subservicing  Agreement that may
have been entered into. The Trustee,  its designee or the successor servicer for
the  Trustee  shall be  deemed  to have  assumed  all of the  Master  Servicer's
interest  therein  and to have  replaced  the Master  Servicer as a party to the
Subservicing  Agreement to the same extent as if the Subservicing  Agreement had
been assigned to the assuming  party except that the Master  Servicer  shall not
thereby be relieved  of any  liability  or  obligations  under the  Subservicing
Agreement.

        (b) The Master  Servicer  shall,  upon request of the Trustee but at the
expense of the Master Servicer,  deliver to the assuming party all documents and
records  relating to each  Subservicing  Agreement  and the Mortgage  Loans then
being  serviced  and an  accounting  of  amounts  collected  and  held by it and
otherwise use its best efforts to effect the orderly and  efficient  transfer of
each Subservicing Agreement to the assuming party.

        (c) Unless an Insurer Default exists, the Master Servicer will, if it is
authorized to do so under the relevant Subservicing  Agreement,  upon request of
the Insurer at a time when the Insurer may remove the Master  Servicer under the
terms hereof, terminate any Subservicing Agreement.



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     Section 3.07.  Collection of Certain  Mortgage Loan  Payments;  Deposits to
          Custodial Account.

        (a) The Master  Servicer  shall make  reasonable  efforts to collect all
payments  called for under the terms and provisions of the Mortgage  Loans,  and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Primary  Insurance  Policy,  follow such
collection procedures as it would employ in its good faith business judgment and
which  are  normal  and  usual in its  general  mortgage  servicing  activities.
Consistent  with the  foregoing,  the Master  Servicer may in its discretion (i)
waive any late payment  charge or any prepayment  charge or penalty  interest in
connection  with the  prepayment of a Mortgage Loan and (ii) extend the Due Date
for  payments  due on a Mortgage  Loan in  accordance  with the  Program  Guide,
provided,  however, that the Master Servicer shall first determine that any such
waiver  or  extension  will not  impair  the  coverage  of any  related  Primary
Insurance  Policy  or  materially  adversely  affect  the  lien  of the  related
Mortgage.  In the event of any such arrangement,  the Master Servicer shall make
timely  advances on the related  Mortgage  Loan during the  scheduled  period in
accordance  with  the  amortization  schedule  of  such  Mortgage  Loan  without
modification  thereof by reason of such arrangements  unless otherwise agreed to
by the  Holders  of the  Classes of  Certificates  affected  thereby;  provided,
however,  that no  such  extension  shall  be made  if any  advance  would  be a
Nonrecoverable Advance.  Consistent with the terms of this Agreement, the Master
Servicer may also waive, modify or vary any term of any Mortgage Loan or consent
to the  postponement  of strict  compliance  with any such term or in any manner
grant indulgence to any Mortgagor if in the Master Servicer's determination such
waiver,  modification,  postponement or indulgence is not materially  adverse to
the interests of the  Certificateholders or the Insurer (taking into account any
estimated  Realized  Loss that  might  result  absent  such  action),  provided,
however,  that the  Master  Servicer  may not  modify  materially  or permit any
Subservicer  to modify any  Mortgage  Loan,  including  without  limitation  any
modification  that would  change the Mortgage  Rate,  forgive the payment of any
principal or interest  (unless in connection with the liquidation of the related
Mortgage Loan or except in connection  with  prepayments to the extent that such
reamortization  is not  inconsistent  with the terms of the Mortgage  Loan),  or
extend the final maturity date of such Mortgage Loan,  unless such Mortgage Loan
is in default  or, in the  judgment  of the  Master  Servicer,  such  default is
reasonably  foreseeable.  In connection with any Curtailment of a Mortgage Loan,
the  Master  Servicer,  to the  extent  not  inconsistent  with the terms of the
Mortgage  Note and local law and  practice,  may permit the Mortgage  Loan to be
re-amortized  such that the Monthly  Payment is  recalculated  as an amount that
will  fully  amortize  the  remaining  Stated  Principal  Amount  thereof by the
original Maturity Date based on the original Mortgage Rate; provided,  that such
reamortization shall not be permitted if it would constitute a reissuance of the
Mortgage Loan for federal income tax purposes.

        (b) The Master Servicer shall establish and maintain a Custodial Account
in which the Master  Servicer  shall deposit or cause to be deposited on a daily
basis, except as otherwise  specifically provided herein, the following payments
and  collections  remitted by  Subservicers  or received by it in respect of the
Mortgage  Loans  subsequent  to the  Cut-off  Date  (other  than in  respect  of
principal and interest on the Mortgage Loans due on or before the Cut-off Date):

        (i)  All  payments  on  account  of   principal,   including   Principal
Prepayments made by Mortgagors on the Mortgage Loans and the principal component
of any Subservicer Advance or of


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<PAGE>



any REO Proceeds  received in  connection  with an REO Property for which an REO
Disposition has occurred;

        (ii) All payments on account of interest at the Adjusted  Mortgage  Rate
on the  Mortgage  Loans,  including  the interest  component of any  Subservicer
Advance or of any REO Proceeds  received in connection  with an REO Property for
which an REO Disposition has occurred;

        (iii) Insurance  Proceeds and  Liquidation  Proceeds (net of any related
expenses of the Subservicer);

        (iv) All proceeds of any Mortgage  Loans  purchased  pursuant to Section
2.02,  2.03,  2.04,  4.07 or 4.08 and all amounts  required to be  deposited  in
connection  with  the  substitution  of a  Qualified  Substitute  Mortgage  Loan
pursuant to Section 2.03 or 2.04; and

        (v) Any amounts required to be deposited pursuant to Section 3.07(c) and
any payments or collections received consisting of prepayment charges.

        The foregoing requirements for deposit in the Custodial Account shall be
exclusive,  it being understood and agreed that, without limiting the generality
of the foregoing, payments on the Mortgage Loans which are not part of the Trust
Fund  (consisting  of  payments  in respect of  principal  and  interest  on the
Mortgage  Loans due on or before the Cut-off  Date) and payments or  collections
consisting  of late  payment  charges  or  assumption  fees  may but need not be
deposited  by the Master  Servicer in the  Custodial  Account.  In the event any
amount not required to be deposited in the  Custodial  Account is so  deposited,
the Master  Servicer  may at any time  withdraw  such amount from the  Custodial
Account,  any provision  herein to the contrary  notwithstanding.  The Custodial
Account  may contain  funds that  belong to one or more trust funds  created for
mortgage  pass-through  certificates of other series and may contain other funds
respecting  payments  on  mortgage  loans  belonging  to the Master  Servicer or
serviced  or master  serviced  by it on behalf of others.  Notwithstanding  such
commingling of funds,  the Master  Servicer  shall keep records that  accurately
reflect the funds on deposit in the Custodial  Account that have been identified
by it as being  attributable  to the Mortgage  Loans.  With respect to Insurance
Proceeds, Liquidation Proceeds, REO Proceeds and the proceeds of the purchase of
any Mortgage Loan pursuant to Sections 2.02,  2.03, 2.04, 4.07 and 4.08 received
in any calendar  month,  the Master  Servicer may elect to treat such amounts as
included in the related  Group I or Group II Available  Distribution  Amount for
the Distribution Date in the month of receipt, but is not obligated to do so. If
the Master Servicer so elects, such amounts will be deemed to have been received
(and any related Realized Loss shall be deemed to have occurred) on the last day
of the month prior to the receipt thereof.

        (c) The  Master  Servicer  shall  use its  best  efforts  to  cause  the
institution  maintaining  the  Custodial  Account  to  invest  the  funds in the
Custodial  Account  attributable to the Mortgage Loans in Permitted  Investments
which shall  mature not later than the  Certificate  Account  Deposit  Date next
following the date of such investment (with the exception of the Amount Held for
Future  Distribution)  and which shall not be sold or disposed of prior to their
maturities.  All income and gain realized from any such investment  shall be for
the benefit of the Master  Servicer as  additional  servicing  compensation  and
shall be subject to its withdrawal or order from time to time. The amount of any
losses  incurred  in  respect  of  any  such  investments  attributable  to  the
investment of


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<PAGE>



amounts in respect of the Mortgage  Loans shall be  deposited  in the  Custodial
Account by the Master Servicer out of its own funds immediately as realized.

        (d) The  Master  Servicer  shall  give  notice  to the  Trustee  and the
Depositor  of any  change  in the  location  of the  Custodial  Account  and the
location of the Certificate Account prior to the use thereof.

        Section 3.08. Subservicing Accounts; Servicing Accounts.
                      -----------------------------------------

        (a) In those  cases where a  Subservicer  is  servicing a Mortgage  Loan
pursuant  to a  Subservicing  Agreement,  the Master  Servicer  shall  cause the
Subservicer,  pursuant to the Subservicing  Agreement, to establish and maintain
one or more Subservicing Accounts which shall be an Eligible Account or, if such
account is not an Eligible Account,  shall generally satisfy the requirements of
the  Program  Guide and be  otherwise  acceptable  to the Master  Servicer,  the
Insurer and each Rating  Agency.  The  Subservicer  will be required  thereby to
deposit into the Subservicing  Account on a daily basis all proceeds of Mortgage
Loans received by the Subservicer,  less its Subservicing  Fees and unreimbursed
advances and expenses, to the extent permitted by the Subservicing Agreement. If
the Subservicing  Account is not an Eligible Account,  the Master Servicer shall
be deemed to have received such monies upon receipt thereof by the  Subservicer.
The  Subservicer  shall not be required to deposit in the  Subservicing  Account
payments or  collections  consisting  of late  charges or  assumption  fees,  or
payments or collections  received consisting of prepayment charges to the extent
that the  Subservicer  is  entitled  to  retain  such  amounts  pursuant  to the
Subservicing  Agreement.  On or before the date  specified in the Program Guide,
but in no event later than the  Determination  Date,  the Master  Servicer shall
cause the Subservicer,  pursuant to the Subservicing  Agreement, to remit to the
Master  Servicer  for  deposit in the  Custodial  Account  all funds held in the
Subservicing  Account  with  respect  to each  Mortgage  Loan  serviced  by such
Subservicer  that are  required  to be  remitted  to the  Master  Servicer.  The
Subservicer will also be required,  pursuant to the Subservicing  Agreement,  to
advance on such  scheduled  date of  remittance  amounts  equal to any scheduled
monthly installments of principal and interest less its Subservicing Fees on any
Mortgage  Loans for which  payment  was not  received by the  Subservicer.  This
obligation to advance with respect to each Mortgage Loan will continue up to and
including  the  first of the  month  following  the date on  which  the  related
Mortgaged  Property  is sold at a  foreclosure  sale or is acquired by the Trust
Fund by deed in lieu of foreclosure or otherwise.  All such advances received by
the Master Servicer shall be deposited promptly by it in the Custodial Account.

        (b) The Subservicer may also be required,  pursuant to the  Subservicing
Agreement,  to remit to the Master Servicer for deposit in the Custodial Account
interest at the Adjusted  Mortgage  Rate (or Modified Net Mortgage Rate plus the
rate per annum at which the Servicing Fee and the  Certificate  Insurer  Premium
Modified Rate, if any,  accrues in the case of a Modified  Mortgage Loan) on any
Curtailment  received by such Subservicer in respect of a Mortgage Loan from the
related  Mortgagor  during any month that is to be applied by the Subservicer to
reduce the unpaid principal balance of the related Mortgage Loan as of the first
day of such month, from the date of application of such Curtailment to the first
day of the following  month.  Any amounts paid by a Subservicer  pursuant to the
preceding sentence shall be for the benefit of the Master Servicer as additional
servicing compensation and shall be subject to its withdrawal or order from time
to time pursuant to Sections 3.10(a)(iv) and (v).


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        (c) In addition to the Custodial  Account and the  Certificate  Account,
the Master Servicer shall for any Nonsubserviced  Mortgage Loan, and shall cause
the Subservicers  for Subserviced  Mortgage Loans to, establish and maintain one
or more Servicing  Accounts and deposit and retain therein all collections  from
the  Mortgagors  (or  advances  from  Subservicers)  for the  payment  of taxes,
assessments,  hazard insurance premiums,  Primary Insurance Policy premiums,  if
applicable,  or  comparable  items  for  the  account  of the  Mortgagors.  Each
Servicing Account shall satisfy the requirements for a Subservicing Account and,
to the extent  permitted by the Program  Guide or as is otherwise  acceptable to
the Master Servicer, may also function as a Subservicing Account. Withdrawals of
amounts  related to the Mortgage  Loans from the Servicing  Accounts may be made
only to effect timely payment of taxes, assessments,  hazard insurance premiums,
Primary  Insurance  Policy  premiums,  if applicable,  or comparable  items,  to
reimburse the Master Servicer or Subservicer out of related  collections for any
payments made  pursuant to Sections 3.11 (with respect to the Primary  Insurance
Policy)  and  3.12(a)  (with  respect  to  hazard  insurance),  to refund to any
Mortgagors  any sums as may be  determined to be overages,  to pay interest,  if
required,  to Mortgagors  on balances in the  Servicing  Account or to clear and
terminate  the  Servicing  Account  at the  termination  of  this  Agreement  in
accordance with Section 9.01 or in accordance with the Program Guide. As part of
its servicing  duties,  the Master Servicer shall,  and the  Subservicers  will,
pursuant to the  Subservicing  Agreements,  be required to pay to the Mortgagors
interest on funds in this account to the extent required by law.

        (d) The Master  Servicer  shall advance the payments  referred to in the
preceding  subsection  that are not timely paid by the Mortgagors or advanced by
the  Subservicers on the date when the tax, premium or other cost for which such
payment is  intended  is due,  but the Master  Servicer  shall be required so to
advance only to the extent that such advances, in the good faith judgment of the
Master  Servicer,  will be recoverable  by the Master  Servicer out of Insurance
Proceeds, Liquidation Proceeds or otherwise.

     Section 3.09. Access to Certain Documentation and Information Regarding the
          Mortgage Loans.

        In the event that compliance with this Section 3.09 shall make any Class
of  Certificates  legal for  investment  by federally  insured  savings and loan
associations,  the Master Servicer shall provide,  or cause the  Subservicers to
provide,  to the Trustee,  the Office of Thrift  Supervision or the FDIC and the
supervisory  agents and examiners thereof access to the documentation  regarding
the Mortgage  Loans  required by applicable  regulations of the Office of Thrift
Supervision,  such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices designated by the Master
Servicer. The Master Servicer shall permit such representatives to photocopy any
such  documentation  and shall  provide  equipment  for that purpose at a charge
reasonably approximating the cost of such photocopying to the Master Servicer.

        Section 3.10. Permitted Withdrawals from the Custodial Account.

        (a) The Master Servicer may, from time to time as provided herein,  make
withdrawals from the Custodial Account of amounts on deposit therein pursuant to
Section  3.07 that are  attributable  to the  Mortgage  Loans for the  following
purposes:



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<PAGE>



               (i) to make deposits into the Certificate  Account in the amounts
        and in the manner provided for in Section 4.01;

               (ii)  to  reimburse   itself  or  the  related   Subservicer  for
        previously  unreimbursed  advances or expenses made pursuant to Sections
        3.01, 3.08, 3.12(a), 3.14 and 4.04 or otherwise reimbursable pursuant to
        the terms of this  Agreement,  such  withdrawal  right being  limited to
        amounts  received on  particular  Mortgage  Loans  (including,  for this
        purpose,  REO Proceeds,  Insurance  Proceeds,  Liquidation  Proceeds and
        proceeds  from the purchase of a Mortgage Loan pursuant to Section 2.02,
        2.03,  2.04,  4.07 or 4.08)  which  represent  (A) Late  Collections  of
        Monthly  Payments  for  which any such  advance  was made in the case of
        Subservicer  Advances or Advances  pursuant to Section 4.04 and (B) late
        recoveries of the payments for which such advances were made in the case
        of Servicing Advances;

               (iii)  to pay  to  itself  or the  related  Subservicer  (if  not
        previously retained by such Subservicer) out of each payment received by
        the  Master  Servicer  on  account of  interest  on a  Mortgage  Loan as
        contemplated  by  Sections  3.14  and  3.16,  an  amount  equal  to that
        remaining  portion of any such payment as to interest (but not in excess
        of the  Servicing  Fee  and  the  Subservicing  Fee,  if not  previously
        retained) which,  when deducted,  will result in the remaining amount of
        such  interest  being  interest  at a rate  per  annum  equal to the Net
        Mortgage  Rate (or Modified Net Mortgage  Rate in the case of a Modified
        Mortgage Loan) plus the Certificate Insurer Premium Modified Rate on the
        amount  specified in the  amortization  schedule of the related Mortgage
        Loan as the  principal  balance  thereof at the  beginning of the period
        respecting  which  such  interest  was paid after  giving  effect to any
        previous Curtailments;

               (iv) to pay to itself as additional  servicing  compensation  any
        interest or investment income earned on funds deposited in the Custodial
        Account that it is entitled to withdraw pursuant to Section 3.07(c);

                             (v)  to  pay  to  itself  as  additional  servicing
                      compensation  any  Foreclosure  Profits,  and any  amounts
                      remitted  by   Subservicers  as  interest  in  respect  of
                      Curtailments pursuant to Section 3.08(b);

               (vi) to pay to itself, a Subservicer,  Residential  Funding,  the
        Depositor  or any other  appropriate  Person,  as the case may be,  with
        respect to each  Mortgage Loan or property  acquired in respect  thereof
        that has been  purchased  or otherwise  transferred  pursuant to Section
        2.02,  2.03,  2.04, 4.07, 4.08 or 9.01, all amounts received thereon and
        not required to be distributed to  Certificateholders  as of the date on
        which  the  related  Stated  Principal  Balance  or  Purchase  Price  is
        determined;

               (vii) to  reimburse  itself or the  related  Subservicer  for any
        Nonrecoverable  Advance  or  Advances  in the  manner  and to the extent
        provided in subsection (c) below,  any Advance made in connection with a
        modification  of a Mortgage  Loan that is in default or, in the judgment
        of the Master Servicer,  default is reasonably  foreseeable  pursuant to
        Section 3.07(a),  to the extent the amount of the Advance has been added
        to the outstanding principal balance of the Mortgage Loan;


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<PAGE>



               (viii) to reimburse itself or the Depositor for expenses incurred
        by and reimbursable to it or the Depositor  pursuant to Section 3.14(c),
        6.03, 10.01 or otherwise;

               (ix) to reimburse  itself for amounts expended by it (a) pursuant
        to Section  3.14 in good faith in  connection  with the  restoration  of
        property  damaged by an Uninsured  Cause, and (b) in connection with the
        liquidation  of a Mortgage Loan or disposition of an REO Property to the
        extent not otherwise reimbursed pursuant to clause (ii) or (viii) above;
        and

               (x) to withdraw  any amount  deposited in the  Custodial  Account
        that was not required to be deposited  therein pursuant to Section 3.07,
        including any payoff fees or penalties or any other  additional  amounts
        payable to the Master  Servicer or Subservicer  pursuant to the terms of
        the Mortgage Note.

        (b) Since,  in  connection  with  withdrawals  pursuant to clauses (ii),
(iii),  (v) and (vi), the Master  Servicer's  entitlement  thereto is limited to
collections  or other  recoveries  on the  related  Mortgage  Loan,  the  Master
Servicer  shall keep and maintain  separate  accounting,  on a Mortgage  Loan by
Mortgage  Loan basis,  for the purpose of  justifying  any  withdrawal  from the
Custodial Account pursuant to such clauses.

        (c) The Master  Servicer  shall be entitled to  reimburse  itself or the
related  Subservicer for any advance made in respect of a Mortgage Loan that the
Master Servicer determines to be a Nonrecoverable Advance by withdrawal from the
Custodial  Account of amounts on deposit  therein  attributable  to the Mortgage
Loans  on any  Certificate  Account  Deposit  Date  succeeding  the date of such
determination.  Such  right of  reimbursement  in  respect  of a  Nonrecoverable
Advance  on any such  Certificate  Account  Deposit  Date shall be limited to an
amount  not   exceeding  the  portion  of  such  advance   previously   paid  to
Certificateholders (and not theretofore reimbursed to the Master Servicer or the
related Subservicer).

        Section 3.11. Maintenance of Primary Insurance Coverage.
                      -----------------------------------------

        (a) The Master  Servicer  shall not take, or permit any  Subservicer  to
take, any action which would result in noncoverage under any applicable  Primary
Insurance  Policy of any loss which,  but for the actions of the Master Servicer
or Subservicer,  would have been covered  thereunder.  To the extent coverage is
available,  the Master Servicer shall keep or cause to be kept in full force and
effect each such Primary  Insurance  Policy until the  principal  balance of the
related Mortgage Loan secured by a Mortgaged  Property is reduced to 80% or less
of the Appraised Value at origination in the case of such a Mortgage Loan having
a  Loan-to-Value  Ratio at  origination  in  excess of 80%,  provided  that such
Primary  Insurance  Policy  was in place as of the  Cut-off  Date and the Master
Servicer had knowledge of such Primary  Insurance  Policy.  The Master  Servicer
shall not cancel or refuse to renew any such Primary Insurance Policy applicable
to a  Nonsubserviced  Mortgage Loan, or consent to any Subservicer  canceling or
refusing to renew any such Primary  Insurance  Policy  applicable  to a Mortgage
Loan subserviced by it, that is in effect at the date of the initial issuance of
the  Certificates  and is  required  to be kept in force  hereunder  unless  the
replacement  Primary Insurance Policy for such canceled or non-renewed policy is
maintained  with an insurer  whose  claims-paying  ability is acceptable to each
Rating Agency for mortgage pass-through certificates


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<PAGE>



having a rating equal to or better than the lower of the then-current  rating or
the rating  assigned to the  Certificates  as of the Closing Date by such Rating
Agency.

        (b) In connection with its activities as  administrator  and servicer of
the  Mortgage  Loans,  the  Master  Servicer  agrees to  present or to cause the
related  Subservicer  to  present,  on  behalf  of  the  Master  Servicer,   the
Subservicer,  if any, the Trustee and Certificateholders,  claims to the insurer
under any Primary Insurance Policies, in a timely manner in accordance with such
policies,  and,  in this  regard,  to take or cause to be taken such  reasonable
action as shall be  necessary  to permit  recovery  under any Primary  Insurance
Policies  respecting  defaulted  Mortgage  Loans.  Pursuant to Section 3.07, any
Insurance  Proceeds  collected by or remitted to the Master  Servicer  under any
Primary Insurance Policies shall be deposited in the Custodial Account,  subject
to withdrawal pursuant to Section 3.10.

     Section 3.12.  Maintenance  of Fire  Insurance  and  Omissions and Fidelity
          Coverage.

        (a) The Master  Servicer  shall cause to be maintained for each Mortgage
Loan fire  insurance  with extended  coverage in an amount which is equal to the
lesser of the principal  balance owing on such Mortgage Loan  (together with the
principal  balance of any mortgage  loan secured by a lien that is senior to the
Mortgage  Loan) or 100  percent  of the  insurable  value  of the  improvements;
provided,  however,  that such coverage may not be less than the minimum  amount
required to fully compensate for any loss or damage on a replacement cost basis.
To the extent it may do so without breaching the related Subservicing Agreement,
the Master  Servicer  shall  replace  any  Subservicer  that does not cause such
insurance, to the extent it is available, to be maintained.  The Master Servicer
shall also cause to be maintained on property acquired upon foreclosure, or deed
in lieu of  foreclosure,  of any Mortgage  Loan,  fire  insurance  with extended
coverage in an amount  which is at least equal to the amount  necessary to avoid
the  application  of any  co-insurance  clause  contained in the related  hazard
insurance policy.  Pursuant to Section 3.07, any amounts collected by the Master
Servicer  under any such  policies  (other  than  amounts  to be  applied to the
restoration  or  repair of the  related  Mortgaged  Property  or  property  thus
acquired or amounts  released to the  Mortgagor  in  accordance  with the Master
Servicer's  normal  servicing  procedures)  shall be deposited in the  Custodial
Account,  subject to withdrawal  pursuant to Section 3.10.  Any cost incurred by
the Master Servicer in maintaining any such insurance shall not, for the purpose
of calculating  monthly  distributions  to  Certificateholders,  be added to the
amount  owing under the  Mortgage  Loan,  notwithstanding  that the terms of the
Mortgage Loan so permit.  Such costs shall be recoverable by the Master Servicer
out of related late payments by the  Mortgagor or out of Insurance  Proceeds and
Liquidation  Proceeds to the extent  permitted by Section 3.10. It is understood
and agreed that no earthquake or other additional insurance is to be required of
any Mortgagor or  maintained on property  acquired in respect of a Mortgage Loan
other than pursuant to such applicable laws and regulations as shall at any time
be in  force  and as shall  require  such  additional  insurance.  Whenever  the
improvements  securing a Mortgage Loan are located at the time of origination of
such Mortgage  Loan in a federally  designated  special  flood hazard area,  the
Master  Servicer  shall cause flood  insurance  (to the extent  available) to be
maintained in respect thereof.  Such flood insurance shall be in an amount equal
to the lesser of (i) the amount required to compensate for any loss or damage to
the Mortgaged  Property on a replacement  cost basis and (ii) the maximum amount
of such  insurance  available  for the  related  Mortgaged  Property  under  the
national flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).In the


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event  that the  Master  Servicer  shall  obtain  and  maintain  a blanket  fire
insurance policy with extended coverage insuring against hazard losses on all of
the  Mortgage  Loans,  it shall  conclusively  be deemed to have  satisfied  its
obligations as set forth in the first sentence of this Section 3.12(a), it being
understood and agreed that such policy may contain a deductible clause, in which
case the Master  Servicer  shall,  in the event  that there  shall not have been
maintained on the related  Mortgaged  Property a policy complying with the first
sentence  of this  Section  3.12(a) and there shall have been a loss which would
have been covered by such policy,  deposit in the Certificate Account the amount
not  otherwise  payable  under the  blanket  policy  because of such  deductible
clause. Any such deposit by the Master Servicer shall be made on the Certificate
Account  Deposit Date next preceding the  Distribution  Date which occurs in the
month  following  the month in which  payments  under any such policy would have
been deposited in the Custodial  Account.  In connection  with its activities as
administrator  and servicer of the Mortgage Loans, the Master Servicer agrees to
present, on behalf of itself, the Trustee and  Certificateholders,  claims under
any such blanket policy.

        (b) The Master Servicer shall obtain and maintain at its own expense and
keep in full force and effect  throughout  the term of this  Agreement a blanket
fidelity bond and an errors and omissions  insurance  policy covering the Master
Servicer's  officers and  employees  and other  persons  acting on behalf of the
Master  Servicer in connection  with its activities  under this  Agreement.  The
amount  of  coverage  shall be at  least  equal to the  coverage  that  would be
required by Fannie Mae or Freddie Mac, whichever is greater, with respect to the
Master  Servicer if the Master  Servicer were  servicing and  administering  the
Mortgage Loans for Fannie Mae or Freddie Mac. In the event that any such bond or
policy  ceases to be in effect,  the Master  Servicer  shall obtain a comparable
replacement  bond or  policy  from an  issuer  or  insurer,  as the case may be,
meeting the  requirements,  if any, of the Program  Guide and  acceptable to the
Depositor. Coverage of the Master Servicer under a policy or bond obtained by an
Affiliate of the Master  Servicer and  providing  the coverage  required by this
Section 3.12(b) shall satisfy the requirements of this Section 3.12(b).

     Section  3.13.   Enforcement   of  Due-on-Sale   Clauses;   Assumption  and
          Modification Agreements; Certain Assignments.

        (a) When any Mortgaged Property is conveyed by the Mortgagor, the Master
Servicer or  Subservicer,  to the extent it has  knowledge  of such  conveyance,
shall enforce any due-on-sale clause contained in any Mortgage Note or Mortgage,
to the extent permitted under applicable law and governmental  regulations,  but
only to the extent that such enforcement will not adversely affect or jeopardize
coverage under any Required Insurance Policy. Notwithstanding the foregoing: (i)
the  Master  Servicer  shall not be deemed to be in default  under this  Section
3.13(a) by reason of any  transfer or  assumption  which the Master  Servicer is
restricted by law from  preventing;  and (ii) if the Master Servicer  determines
that it is reasonably  likely that any Mortgagor will bring, or if any Mortgagor
does bring,  legal action to declare invalid or otherwise avoid enforcement of a
due-on-  sale clause  contained in any  Mortgage  Note or  Mortgage,  the Master
Servicer shall not be required to enforce the  due-on-sale  clause or to contest
such action.

        (b) Subject to the Master  Servicer's  duty to enforce  any  due-on-sale
clause  to the  extent  set  forth in  Section  3.13(a),  in any case in which a
Mortgaged Property is to be conveyed to a Person by a Mortgagor, and such Person
is to enter into an  assumption or  modification  agreement or supplement to the
Mortgage Note or Mortgage which requires the signature of the Trustee, or if an


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instrument of release signed by the Trustee is required  releasing the Mortgagor
from liability on the Mortgage Loan, the Master Servicer is authorized,  subject
to the requirements of the sentence next following,  to execute and deliver,  on
behalf of the  Trustee,  the  assumption  agreement  with the Person to whom the
Mortgaged  Property  is  to be  conveyed  and  such  modification  agreement  or
supplement  to the  Mortgage  Note  or  Mortgage  or  other  instruments  as are
reasonable  or necessary to carry out the terms of the Mortgage Note or Mortgage
or otherwise to comply with any  applicable  laws  regarding  assumptions or the
transfer of the Mortgaged Property to such Person;  provided,  however,  none of
such terms and requirements  shall both constitute a "significant  modification"
effecting an exchange or  reissuance  of such  Mortgage  Loan under the Code (or
final,  temporary or proposed Treasury regulations  promulgated  thereunder) and
cause any of REMIC I,  REMIC II,  REMIC  III or REMIC IV to fail to  qualify  as
REMICs under the Code or the imposition of any tax on "prohibited  transactions"
or "contributions" after the startup date under the REMIC Provisions. The Master
Servicer  shall  execute  and  deliver  such  documents  only  if it  reasonably
determines that (i) its execution and delivery thereof will not conflict with or
violate any terms of this  Agreement or cause the unpaid balance and interest on
the Mortgage  Loan to be  uncollectible  in whole or in part,  (ii) any required
consents of insurers  under any Required  Insurance  Policies have been obtained
and (iii) subsequent to the closing of the transaction  involving the assumption
or  transfer  (A) the  Mortgage  Loan will  continue  to be  secured  by a first
mortgage  lien (or junior  lien of the same  priority  in relation to any senior
mortgage loan,  with respect to any Mortgage Loan secured by a junior  Mortgage)
pursuant to the terms of the Mortgage,  (B) such  transaction will not adversely
affect the coverage under any Required Insurance Policies, (C) the Mortgage Loan
will fully amortize over the remaining term thereof, (D) no material term of the
Mortgage Loan (including the interest rate on the Mortgage Loan) will be altered
nor  will  the  term  of  the   Mortgage   Loan  be  changed   and  (E)  if  the
seller/transferor  of the Mortgaged Property is to be released from liability on
the Mortgage  Loan,  the  buyer/transferee  of the Mortgaged  Property  would be
qualified  to assume the  Mortgage  Loan based on  generally  comparable  credit
quality  and  such  release  will  not  (based  on  the  Master   Servicer's  or
Subservicer's good faith  determination)  adversely affect the collectability of
the Mortgage  Loan.  Upon receipt of  appropriate  instructions  from the Master
Servicer  in  accordance  with the  foregoing,  the  Trustee  shall  execute any
necessary  instruments  for such  assumption  or  substitution  of  liability as
directed  by  the  Master  Servicer.   Upon  the  closing  of  the  transactions
contemplated by such documents, the Master Servicer shall cause the originals or
true and correct  copies of the assumption  agreement,  the release (if any), or
the  modification or supplement to the Mortgage Note or Mortgage to be delivered
to the Trustee or the Custodian  and  deposited  with the Mortgage File for such
Mortgage  Loan.  Any fee  collected  by the  Master  Servicer  or  such  related
Subservicer  for  entering  into an  assumption  or  substitution  of  liability
agreement  will be  retained  by the  Master  Servicer  or such  Subservicer  as
additional servicing compensation.

        (c) The Master Servicer or the related Subservicer,  as the case may be,
shall be entitled to approve a request from a Mortgagor for a partial release of
the related Mortgaged Property,  the granting of an easement thereon in favor of
another Person,  any alteration or demolition of the related Mortgaged  Property
without  any  right  of  reimbursement  or  other  similar  matters  if  it  has
determined, exercising its good faith business judgment in the same manner as it
would if it were the owner of the related  Mortgage Loan, that the security for,
and the timely  and full  collectability  of,  such  Mortgage  Loan would not be
adversely  affected  thereby  and that each of REMIC I,  REMIC II,  REMIC III or
REMIC IV would continue to qualify as a REMIC under the Code as a result thereof
and  that no tax on  "prohibited  transactions"  or  "contributions"  after  the
startup day would


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be  imposed  on any of  REMIC I,  REMIC  II,  REMIC  III or REMIC IV as a result
thereof. Any fee collected by the Master Servicer or the related Subservicer for
processing  such a request  will be  retained  by the  Master  Servicer  or such
Subservicer as additional servicing compensation.

        (d)  Subject  to any  other  applicable  terms  and  conditions  of this
Agreement,  the  Trustee  and Master  Servicer  shall be  entitled to approve an
assignment in lieu of satisfaction  with respect to any Mortgage Loan,  provided
the  obligee  with  respect  to  such  Mortgage  Loan  following  such  proposed
assignment provides the Trustee and Master Servicer with a "Lender Certification
for  Assignment of Mortgage  Loan" in the form attached  hereto as Exhibit M, in
form and substance  satisfactory to the Trustee and Master  Servicer,  providing
the  following:  (i) that the  Mortgage  Loan is secured by  Mortgaged  Property
located in a  jurisdiction  in which an  assignment in lieu of  satisfaction  is
required to preserve lien priority,  minimize or avoid mortgage  recording taxes
or otherwise  comply with, or facilitate a refinancing  under,  the laws of such
jurisdiction;  (ii) that the substance of the  assignment is, and is intended to
be, a refinancing of such Mortgage Loan and that the form of the  transaction is
solely to comply with, or facilitate  the  transaction  under,  such local laws;
(iii) that the Mortgage Loan following the proposed  assignment will have a rate
of  interest at least 0.25  percent  below or above the rate of interest on such
Mortgage Loan prior to such proposed  assignment;  and (iv) that such assignment
is at the request of the borrower under the related Mortgage Loan. Upon approval
of an assignment in lieu of satisfaction  with respect to any Mortgage Loan, the
Master  Servicer  shall receive cash in an amount equal to the unpaid  principal
balance of and accrued  interest on such Mortgage  Loan and the Master  Servicer
shall treat such amount as a Principal  Prepayment  in Full with respect to such
Mortgage Loan for all purposes hereof.

        Section 3.14. Realization Upon Defaulted Mortgage Loans.
                      -----------------------------------------

        (a) The Master  Servicer shall  foreclose  upon or otherwise  comparably
convert  (which may include an REO  Acquisition)  the  ownership  of  properties
securing such of the Mortgage  Loans as come into and continue in default and as
to which no satisfactory  arrangements  can be made for collection of delinquent
payments pursuant to Section 3.07.  Alternatively,  the Master Servicer may take
other  actions in respect of a defaulted  Mortgage  Loan,  which may include (i)
accepting  a short sale (a payoff of the  Mortgage  Loan for an amount less than
the  total  amount  contractually  owed in  order  to  facilitate  a sale of the
Mortgaged Property by the Mortgagor) or permitting a short refinancing (a payoff
of the Mortgage Loan for an amount less than the total amount contractually owed
in order to facilitate refinancing transactions by the Mortgagor not involving a
sale of the Mortgaged  Property),  (ii)  arranging for a repayment plan or (iii)
agreeing to a modification  in accordance  with Section 3.07. In connection with
such  foreclosure  or other  conversion or action,  the Master  Servicer  shall,
consistent  with Section 3.11,  follow such practices and procedures as it shall
deem  necessary  or  advisable,  as shall be  normal  and  usual in its  general
mortgage  servicing  activities  and as shall be  required or  permitted  by the
Program  Guide;  provided  that the Master  Servicer  shall not be liable in any
respect  hereunder if the Master  Servicer is acting in connection with any such
foreclosure  or other  conversion or action in a manner that is consistent  with
the provisions of this Agreement.  The Master  Servicer,  however,  shall not be
required  to  expend  its own  funds  or incur  other  reimbursable  charges  in
connection  with  any  foreclosure,   or  attempted  foreclosure  which  is  not
completed, or towards the correction of any default on a related senior mortgage
loan, or towards the  restoration of any property  unless it shall determine (i)
that  such  restoration   and/or  foreclosure  will  increase  the  proceeds  of
liquidation of the Mortgage Loan to Holders of Certificates of one or


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more Classes or the Insurer after  reimbursement  to itself for such expenses or
charges  and (ii) that such  expenses  and  charges  will be  recoverable  to it
through Liquidation  Proceeds,  Insurance Proceeds,  or REO Proceeds (respecting
which it shall have  priority for  purposes of  withdrawals  from the  Custodial
Account  pursuant to Section 3.10,  whether or not such expenses and charges are
actually  recoverable from related Liquidation  Proceeds,  Insurance Proceeds or
REO  Proceeds).  In the event of such a  determination  by the  Master  Servicer
pursuant  to this  Section  3.14(a),  the Master  Servicer  shall be entitled to
reimbursement  of its funds so expended  pursuant to Section  3.10. In addition,
the Master  Servicer may pursue any remedies that may be available in connection
with a breach of a representation and warranty with respect to any such Mortgage
Loan in accordance with Sections 2.03 and 2.04. However,  the Master Servicer is
not required to continue to pursue both  foreclosure (or similar  remedies) with
respect to the  Mortgage  Loans and  remedies in  connection  with a breach of a
representation and warranty if the Master Servicer  determines in its reasonable
discretion  that one such remedy is more likely to result in a greater  recovery
as to the  Mortgage  Loan.  Upon the  occurrence  of a Cash  Liquidation  or REO
Disposition,  following  the deposit in the  Custodial  Account of all Insurance
Proceeds,  Liquidation Proceeds and other payments and recoveries referred to in
the definition of "Cash Liquidation" or "REO  Disposition," as applicable,  upon
receipt by the  Trustee  of written  notification  of such  deposit  signed by a
Servicing  Officer,  the  Trustee or any  Custodian,  as the case may be,  shall
release to the Master  Servicer the related  Mortgage File and the Trustee shall
execute and deliver such  instruments of transfer or assignment  prepared by the
Master Servicer, in each case without recourse, as shall be necessary to vest in
the Master  Servicer or its designee,  as the case may be, the related  Mortgage
Loan,  and  thereafter  such  Mortgage Loan shall not be part of the Trust Fund.
Notwithstanding  the foregoing or any other provision of this Agreement,  in the
Master Servicer's sole discretion with respect to any defaulted Mortgage Loan or
REO Property as to either of the following provisions, (i) a Cash Liquidation or
REO  Disposition  may be deemed to have  occurred if  substantially  all amounts
expected by the Master  Servicer to be received in  connection  with the related
defaulted  Mortgage  Loan or REO  Property  have  been  received,  and  (ii) for
purposes  of  determining  the  amount of any  Liquidation  Proceeds,  Insurance
Proceeds,  REO Proceeds or other  unscheduled  collections  or the amount of any
Realized  Loss,  the Master  Servicer may take into account  minimal  amounts of
additional  receipts  expected  to  be  received  or  any  estimated  additional
liquidation  expenses  expected to be incurred  in  connection  with the related
defaulted Mortgage Loan or REO Property.

        (b) In the event that title to any Mortgaged Property is acquired by the
Trust Fund as an REO Property by foreclosure or by deed in lieu of  foreclosure,
the deed or certificate of sale shall be issued to the Trustee or to its nominee
on behalf of  Certificateholders.  Notwithstanding any such acquisition of title
and  cancellation of the related  Mortgage Loan, such REO Property shall (except
as otherwise  expressly  provided  herein) be  considered  to be an  Outstanding
Mortgage  Loan held in the Trust Fund until such time as the REO Property  shall
be  sold.  Consistent  with  the  foregoing  for  purposes  of all  calculations
hereunder so long as such REO Property  shall be considered to be an Outstanding
Mortgage Loan it shall be assumed that,  notwithstanding  that the  indebtedness
evidenced by the related Mortgage Note shall have been discharged, such Mortgage
Note and the  related  amortization  schedule  in effect at the time of any such
acquisition  of title  (after  giving  effect to any previous  Curtailments  and
before any adjustment  thereto by reason of any bankruptcy or similar proceeding
or any moratorium or similar waiver or grace period) remain in effect.



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        (c) In the event  that the  Trust  Fund  acquires  any REO  Property  as
aforesaid  or otherwise in  connection  with a default or imminent  default on a
Mortgage Loan, the Master  Servicer on behalf of the Trust Fund shall dispose of
such REO  Property  within  three  full  years  after  the  taxable  year of its
acquisition by the Trust Fund for purposes of Section 860G(a)(8) of the Code (or
such shorter period as may be necessary under  applicable  state  (including any
state in which such  property is located)  law to maintain the status of each of
REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under  applicable  state law
and avoid taxes resulting from such property failing to be foreclosure  property
under applicable state law) or, at the expense of the Trust Fund, request,  more
than 60 days before the day on which such grace period would  otherwise  expire,
an  extension of such grace period  unless the Master  Servicer  obtains for the
Trustee and the Insurer an Opinion of Counsel,  addressed  to the  Trustee,  the
Insurer  and the Master  Servicer,  to the effect  that the holding by the Trust
Fund of such REO  Property  subsequent  to such  period  will not  result in the
imposition of taxes on "prohibited  transactions"  as defined in Section 860F of
the Code or cause  any of REMIC I,  REMIC  II,  REMIC III or REMIC IV to fail to
qualify as a REMIC (for federal (or any  applicable  State or local)  income tax
purposes) at any time that any Certificates  are outstanding,  in which case the
Trust Fund may  continue to hold such REO  Property  (subject to any  conditions
contained in such Opinion of Counsel).  The Master Servicer shall be entitled to
be  reimbursed  from the Custodial  Account for any costs  incurred in obtaining
such Opinion of Counsel, as provided in Section 3.10.  Notwithstanding any other
provision of this Agreement, no REO Property acquired by the Trust Fund shall be
rented (or allowed to continue to be rented) or  otherwise  used by or on behalf
of the Trust Fund in such a manner or pursuant to any terms that would (i) cause
such REO  Property  to fail to  qualify  as  "foreclosure  property"  within the
meaning of Section  860G(a)(8)  of the Code or (ii)  subject  REMIC I, REMIC II,
REMIC  III or REMIC IV to the  imposition  of any  federal  income  taxes on the
income earned from such REO  Property,  including any taxes imposed by reason of
Section 860G(c) of the Code,  unless the Master Servicer has agreed to indemnify
and hold  harmless  the Trust Fund with  respect to the  imposition  of any such
taxes.

        (d) The proceeds of any Cash Liquidation, REO Disposition or purchase or
repurchase of any Mortgage Loan pursuant to the terms of this Agreement, as well
as any recovery resulting from a collection of Liquidation  Proceeds,  Insurance
Proceeds or REO Proceeds,  will be applied in the  following  order of priority:
first, to reimburse the Master Servicer or the related Subservicer in accordance
with Section  3.10(a)(ii);  second, to the  Certificateholders  to the extent of
accrued and unpaid  interest on the Mortgage  Loan,  and any related REO Imputed
Interest,  at the Net Mortgage  Rate (or the  Modified Net Mortgage  Rate in the
case of a Modified  Mortgage  Loan),  to the Due Date in the  related Due Period
prior to the  Distribution  Date on which such  amounts  are to be  distributed;
third, to the Certificateholders as a recovery of principal on the Mortgage Loan
(or REO Property) (provided that if any such Class of Certificates to which such
Realized Loss was allocated is no longer  outstanding,  such subsequent recovery
shall be  distributed  to the  persons  who were the  Holders  of such  Class of
Certificates   when  it  was  retired);   fourth,  to  all  Servicing  Fees  and
Subservicing Fees payable therefrom (and the Master Servicer and the Subservicer
shall have no claims for any deficiencies with respect to such fees which result
from the foregoing allocation);  fifth, to the Insurer for reimbursement for any
payments  made pursuant to the Policy to the extent not  reimbursed  pursuant to
Section 4.02(c)(viii) or 4.02(d)(v); and sixth, to Foreclosure Profits.



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        Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
                      -----------------------------------------------

        (a) Upon becoming  aware of the payment in full of any Mortgage Loan, or
upon the receipt by the Master  Servicer of a notification  that payment in full
will be escrowed in a manner  customary for such purposes,  the Master  Servicer
will  immediately  notify the Trustee (if it holds the related Mortgage File) or
the Custodian by a  certification  of a Servicing  Officer (which  certification
shall  include a  statement  to the effect  that all  amounts  received or to be
received in  connection  with such payment which are required to be deposited in
the  Custodial  Account  pursuant  to  Section  3.07  have  been  or  will be so
deposited),  substantially  in one of the forms  attached  hereto  as  Exhibit G
requesting   delivery  to  it  of  the  Mortgage  File.  Upon  receipt  of  such
certification  and request,  the Trustee shall  promptly  release,  or cause the
Custodian to release,  the related  Mortgage  File to the Master  Servicer.  The
Master  Servicer  is  authorized  to execute and  deliver to the  Mortgagor  the
request for  reconveyance,  deed of  reconveyance  or release or satisfaction of
mortgage or such  instrument  releasing the lien of the Mortgage,  together with
the Mortgage Note with, as appropriate, written evidence of cancellation thereon
and to cause the removal  from the  registration  on the MERS(R)  System of such
Mortgage  and to  execute  and  deliver,  on  behalf  of  the  Trustee  and  the
Certificateholders  or any of them, any and all  instruments of  satisfaction or
cancellation  or of  partial  or full  release,  including  any  applicable  UCC
termination  statements.  No expenses incurred in connection with any instrument
of  satisfaction  or deed of  reconveyance  shall be chargeable to the Custodial
Account or the Certificate Account.

        (b) From time to time as is appropriate for the servicing or foreclosure
of any Mortgage Loan, the Master Servicer shall deliver to the Custodian, with a
copy to the Trustee,  a certificate of a Servicing Officer  substantially in one
of the forms attached as Exhibit G hereto, requesting that possession of all, or
any document  constituting  part of, the Mortgage File be released to the Master
Servicer and  certifying as to the reason for such release and that such release
will not invalidate any insurance  coverage  provided in respect of the Mortgage
Loan under any Required  Insurance  Policy.  Upon receipt of the foregoing,  the
Trustee shall deliver,  or cause the Custodian to deliver,  the Mortgage File or
any document  therein to the Master  Servicer.  The Master  Servicer shall cause
each  Mortgage  File or any  document  therein so released to be returned to the
Trustee, or the Custodian as agent for the Trustee when the need therefor by the
Master  Servicer  no  longer  exists,  unless  (i) the  Mortgage  Loan  has been
liquidated and the Liquidation  Proceeds relating to the Mortgage Loan have been
deposited in the  Custodial  Account or (ii) the Mortgage  File or such document
has been  delivered  directly or through a Subservicer  to an attorney,  or to a
public  trustee or other  public  official as required by law,  for  purposes of
initiating or pursuing legal action or other  proceedings for the foreclosure of
the  Mortgaged  Property  either  judicially or  non-judicially,  and the Master
Servicer  has  delivered  directly  or through a  Subservicer  to the  Trustee a
certificate of a Servicing Officer  certifying as to the name and address of the
Person to which  such  Mortgage  File or such  document  was  delivered  and the
purpose or purposes of such delivery.

        (c) The Trustee or the Master  Servicer on the  Trustee's  behalf  shall
execute and deliver to the Master Servicer,  if necessary,  any court pleadings,
requests for trustee's sale or other  documents  necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment  against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a  deficiency  judgment,  or to  enforce  any  other  remedies  or rights
provided by the Mortgage  Note or Mortgage or  otherwise  available at law or in
equity. Together with such


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documents or pleadings (if signed by the  Trustee),  the Master  Servicer  shall
deliver to the Trustee a certificate of a Servicing Officer requesting that such
pleadings  or  documents  be executed by the  Trustee and  certifying  as to the
reason such  documents or pleadings  are  required  and that the  execution  and
delivery thereof by the Trustee will not invalidate any insurance coverage under
any Required  Insurance Policy or invalidate or otherwise affect the lien of the
Mortgage,  except  for the  termination  of such a lien upon  completion  of the
foreclosure or trustee's sale.

        Section 3.16. Servicing and Other Compensation; Compensating Interest.
                      -------------------------------------------------------

        (a) The Master Servicer,  as compensation for its activities  hereunder,
shall be entitled to receive on each  Distribution Date the amounts provided for
by clauses (iii),  (iv), (v) and (vi) of Section 3.10(a),  subject to clause (e)
below. The amount of servicing  compensation  provided for in such clauses shall
be accounted for on a Mortgage  Loan-by-Mortgage  Loan basis.  In the event that
Liquidation  Proceeds,  Insurance  Proceeds  and REO  Proceeds  (net of  amounts
reimbursable  therefrom  pursuant to Section  3.10(a)(ii))  in respect of a Cash
Liquidation  or REO  Disposition  exceed  the unpaid  principal  balance of such
Mortgage  Loan plus  unpaid  interest  accrued  thereon  (including  REO Imputed
Interest)  at a per annum rate equal to the  related Net  Mortgage  Rate (or the
Modified Net Mortgage Rate in the case of a Modified  Mortgage Loan), the Master
Servicer  shall be entitled to retain  therefrom and to pay to itself and/or the
related   Subservicer,   any  Foreclosure  Profits  and  any  Servicing  Fee  or
Subservicing Fee considered to be accrued but unpaid.

        (b) Additional  servicing  compensation in the form of assumption  fees,
late payment charges,  investment  income on amounts in the Custodial Account or
the Certificate Account or otherwise shall be retained by the Master Servicer or
the Subservicer to the extent provided herein, subject to clause (e) below.

        (c) The Master  Servicer  shall be required to pay, or cause to be paid,
all  expenses  incurred  by it  in  connection  with  its  servicing  activities
hereunder (including payment of premiums for the Primary Insurance Policies,  if
any,  to the extent  such  premiums  are not  required to be paid by the related
Mortgagors,  and the fees and  expenses of the Trustee  and any  Custodian)  and
shall not be entitled to reimbursement  therefor except as specifically provided
in Sections 3.10 and 3.14.

        (d) The Master  Servicer's right to receive  servicing  compensation may
not be transferred in whole or in part except in connection with the transfer of
all of its  responsibilities  and  obligations of the Master Servicer under this
Agreement.

        (e)  Notwithstanding  clauses (a) and (b) above, the amount of servicing
compensation  that the Master  Servicer  shall be  entitled  to receive  for its
activities  hereunder for the period ending on each  Distribution  Date shall be
reduced  (but not below zero) by an amount  equal to  Compensating  Interest (if
any) for such  Distribution  Date.  Such reduction  shall be applied during such
period as follows:  first, to any Servicing Fee or Subservicing Fee to which the
Master Servicer is entitled  pursuant to Section  3.10(a)(iii);  second,  to any
income or gain  realized  from any  investment  of funds  held in the  Custodial
Account or the  Certificate  Account to which the Master  Servicer  is  entitled
pursuant to Sections 3.07(c) or 4.01(b), respectively; and third, to any amounts
of servicing  compensation to which the Master Servicer is entitled  pursuant to
Section 3.10(a)(v) or (vi). In making such reduction,  the Master Servicer shall
not withdraw from the Custodial Account any such


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amount  representing  all or a  portion  of the  Servicing  Fee to  which  it is
entitled  pursuant to Section  3.10(a)(iii);  (ii) shall not  withdraw  from the
Custodial Account or Certificate Account any such amount to which it is entitled
pursuant to Section  3.07(c) or 4.01(b) and (iii)  shall not  withdraw  from the
Custodial  Account  any such  amount of  servicing  compensation  to which it is
entitled   pursuant  to  Section   3.10(a)(v)  or  (vi).  With  respect  to  any
Distribution Date, Compensating Interest derived from Loan Group I shall be used
on such Distribution Date (i) to cover any Prepayment Interest Shortfalls on the
Group I Loans and (ii) to cover any Prepayment  Interest Shortfalls on the Group
II Loans,  but only to the extent not covered by Compensating  Interest  derived
from Loan Group II. With respect to any Distribution Date, Compensating Interest
derived from Loan Group II shall be used on such  Distribution Date (i) to cover
any Prepayment  Interest  Shortfalls on the Group II Loans and (ii) to cover any
Prepayment  Interest Shortfalls on the Group I Loans, but only to the extent not
covered by Compensating Interest derived from Loan Group I.

        Section 3.17. Reports to the Trustee and the Depositor.
                      ----------------------------------------

        Not later than fifteen  days after each  Distribution  Date,  the Master
Servicer  shall forward to the Trustee and the Depositor a statement,  certified
by a Servicing Officer,  setting forth the status of the Custodial Account as of
the close of business on such  Distribution  Date as it relates to the  Mortgage
Loans and showing,  for the period covered by such  statement,  the aggregate of
deposits in or withdrawals from the Custodial Account in respect of the Mortgage
Loans for each  category of deposit  specified in Section 3.07 and each category
of withdrawal specified in Section 3.10.

        Section 3.18. Annual Statement as to Compliance.
                      ---------------------------------

        The Master  Servicer will deliver to the Depositor,  the Trustee and the
Insurer on or before the  earlier of (a) March 31 of each year,  beginning  with
the first March 31 that occurs at least six months  after the Cut-off  Date,  or
(b) with respect to any calendar year during which the Depositor's annual report
on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and  regulations  of the  Commission,  the date on which  the  Depositor's
annual  report  on Form  10-K is  required  to be filed in  accordance  with the
Exchange Act and the rules and  regulations of the Commission (or, in each case,
if such day is not a Business Day, the immediately  preceding  Business Day), an
Officers'  Certificate stating, as to each signer thereof,  that (i) a review of
the activities of the Master Servicer during the preceding calendar year related
to its servicing of mortgage loans and of its performance  under the pooling and
servicing  agreements,  including  this  Agreement,  has been  made  under  such
officers'  supervision,  (ii) to the best of such officers' knowledge,  based on
such review,  the Master Servicer has complied in all material respects with the
minimum servicing  standards set forth in the Uniform Single Attestation Program
for Mortgage  Bankers and has fulfilled all of its material  obligations  in all
material  respects  throughout  such  year,  or,  if  there  has  been  material
noncompliance  with such servicing  standards or a default in the fulfillment in
all material  respects of any such obligation  relating to this Agreement,  such
statement shall include a description of such noncompliance or specify each such
default,  as the case may be,  known to such  officer  and the nature and status
thereof and (iii) to the best of such officers' knowledge,  each Subservicer has
complied in all material respects with the minimum servicing standards set forth
in the Uniform Single Attestation Program for Mortgage Bankers and has fulfilled
all of its material obligations under its Subservicing Agreement in all material
respects throughout such year, or if there has been material  noncompliance with
such servicing standards or a material default in the fulfillment of such


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obligations relating to this Agreement,  specifying such statement shall include
a description of such  noncompliance  or specify each such default,  as the case
may be, known to such officer and the nature and status thereof.

        Section 3.19. Annual Independent Public Accountants' Servicing Report.
                      -------------------------------------------------------

        On or before the  earlier of (a) March 31 of each year,  beginning  with
the first March 31 that occurs at least six months  after the Cut-off  Date,  or
(b) with respect to any calendar year during which the Depositor's annual report
on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and  regulations  of the  Commission,  the date on which  the  Depositor's
annual  report  on Form  10-K is  required  to be filed in  accordance  with the
Exchange Act and the rules and  regulations of the Commission (or, in each case,
if such day is not a Business Day, the immediately  preceding Business Day), the
Master  Servicer  at its  expense  shall  cause  a firm  of  independent  public
accountants which shall be members of the American Institute of Certified Public
Accountants  to furnish a report to the  Depositor,  the Insurer and the Trustee
stating its opinion that, on the basis of an examination  conducted by such firm
substantially in accordance with standards established by the American Institute
of Certified  Public  Accountants,  the assertions made pursuant to Section 3.18
regarding  compliance  with the  minimum  servicing  standards  set forth in the
Uniform  Single  Attestation  Program for Mortgage  Bankers during the preceding
calendar  year are  fairly  stated in all  material  respects,  subject  to such
exceptions  and other  qualifications  that,  in the opinion of such firm,  such
accounting  standards  require it to report.  In rendering such statement,  such
firm may rely, as to matters  relating to the direct servicing of mortgage loans
by  Subservicers,  upon  comparable  statements  for  examinations  conducted by
independent  public  accountants  substantially  in  accordance  with  standards
established by the American Institute of Certified Public Accountants  (rendered
within one year of such statement) with respect to such Subservicers.

        Section 3.20. Right of the Depositor in Respect of the Master Servicer.
                      --------------------------------------------------------

        The Master Servicer shall afford the Depositor,  upon reasonable notice,
during  normal  business  hours access to all records  maintained  by the Master
Servicer  in  respect  of its rights  and  obligations  hereunder  and access to
officers of the Master Servicer responsible for such obligations.  Upon request,
the Master  Servicer shall furnish the Depositor with its most recent  financial
statements and such other information as the Master Servicer possesses regarding
its business,  affairs,  property and  condition,  financial or  otherwise.  The
Master   Servicer  shall  also  cooperate  with  all  reasonable   requests  for
information  including,  but not limited to, notices, tapes and copies of files,
regarding  itself,  the Mortgage  Loans or the  Certificates  from any Person or
Persons identified by the Depositor or Residential  Funding.  The Insurer hereby
is so identified. The Depositor may, but is not obligated to perform, or cause a
designee to perform,  any defaulted  obligation of the Master Servicer hereunder
or  exercise  the rights of the Master  Servicer  hereunder;  provided  that the
Master  Servicer  shall not be relieved of any of its  obligations  hereunder by
virtue of such performance by the Depositor or its designee. The Depositor shall
not have the responsibility or liability for any action or failure to act by the
Master  Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.




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                                          ARTICLE IV

                                PAYMENTS TO CERTIFICATEHOLDERS

        Section 4.01. Certificate Account.
                      -------------------

        (a) The Master  Servicer  acting as agent of the Trustee shall establish
and maintain a Certificate  Account in which the Master  Servicer shall cause to
be  deposited  on behalf of the Trustee on or before 2:00 P.M.  New York time on
each Certificate Account Deposit Date by wire transfer of immediately  available
funds  an  amount  equal  to the sum of (i)  any  Advance  for  the  immediately
succeeding  Distribution  Date,  (ii) any amount required to be deposited in the
Certificate Account pursuant to Section 3.12(a), (iii) any amount required to be
deposited in the Certificate  Account pursuant to Section 3.16(e),  Section 4.07
or Section 4.08, (iv) any amount to be deposited in the Reserve Fund pursuant to
Section 4.09, (v) any amount  required to be paid pursuant to Section 9.01, (vi)
any  prepayment  charges on the  Mortgage  Loans  received  during  the  related
Prepayment  Period,  (vii) an amount equal to the  Certificate  Insurer  Premium
payable on such Distribution Date and (viii) all other amounts  constituting the
Group I or Group II Available Distribution Amount for the immediately succeeding
Distribution  Date.  In  addition,  as and to the extent  required  pursuant  to
Section  4.10(b),  the Trustee shall  withdraw  from the  Insurance  Account and
deposit  into the  Certificate  Account the amount  necessary to pay the Insured
Amount on each Distribution Date to the extent received from the Insurer.

        (b) On each Distribution  Date, prior to making any other  distributions
referred  to in  Section  4.02  herein,  the  Trustee  shall  withdraw  from the
Certificate  Account and pay to the  Insurer,  by wire  transfer of  immediately
available funds to the Insurer Account, the Certificate Insurer Premium for such
Distribution  Date.  The Trustee  shall  deposit any amounts  received  from the
Insurer pursuant to the Policy into the Insurance Account.  The amount necessary
to pay any Insured  Amount shall be  distributed  on the  immediately  following
Distribution Date as part of the Group II Available Distribution Amount.

        (c) The Trustee shall,  upon written  request from the Master  Servicer,
invest or cause the institution  maintaining  the Certificate  Account to invest
the funds in the Certificate Account in Permitted Investments  designated in the
name of the Trustee for the benefit of the  Certificateholders  and the Insurer,
which  shall  mature  not  later  than  the  Business  Day  next  preceding  the
Distribution  Date next following the date of such  investment  (except that (i)
any  investment  in the  institution  with  which  the  Certificate  Account  is
maintained may mature on such  Distribution  Date and (ii) any other  investment
may mature on such  Distribution Date if the Trustee shall advance funds on such
Distribution  Date to the  Certificate  Account  in the  amount  payable on such
investment on such  Distribution  Date,  pending  receipt  thereof to the extent
necessary to make  distributions on the  Certificates)  and shall not be sold or
disposed  of prior to  maturity.  All  income  and gain  realized  from any such
investment  shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time. The amount of any losses  incurred
in respect of any such investments shall be deposited in the Certificate Account
by the Master Servicer out of its own funds immediately as realized.



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        Section 4.02. Distributions.
                      -------------

        (a) On each  Distribution  Date,  the  Trustee  (or the Paying  Agent on
behalf of the  Trustee)  shall  allocate  and  distribute  the Group I Principal
Distribution Amount and Group II Principal  Distribution Amount to the extent on
deposit in the  Certificate  Account  for such date to the  interests  issued in
respect  of REMIC I,  REMIC  II,  REMIC III and  REMIC IV as  specified  in this
Section.

        (b)  (1)On  each  Distribution  Date,  the  following  amounts,  in  the
following  order of priority,  shall be  distributed  by REMIC I to REMIC III on
account of the REMIC I Regular Interests:

               (i) to the extent of the Group I Available  Distribution Amounts,
        first,  to the  Holders  of REMIC I  Regular  Interests  LT-A-2  through
        LT-A-31, in an amount equal to

                      (A)  the   Uncertificated   Accrued   Interest   for  such
                      Distribution Date, plus

                      (B) any amounts in respect thereof  remaining  unpaid from
                      previous Distribution Dates and

          second,  to  Holders of REMIC I Regular  Interest  LT-A-1 in an amount
          equal to

                      (A)  the   Uncertificated   Accrued   Interest   for  such
                      Distribution Date, plus

                      (B) any amounts in respect thereof  remaining  unpaid from
                      previous Distribution Dates; and

               (ii) to the  Holders of REMIC I Regular  Interests,  in an amount
        equal to the remainder of the Group I Available  Distribution Amount for
        such Distribution  Date after the distributions  made pursuant to clause
        (i) above, allocated in the following order of priority:

                      (A) to the  Holders  of REMIC I Regular  Interest  LT-A-1,
                      until  the  Uncertificated  Principal  Balance  of REMIC I
                      Regular Interest LT-A-1 is reduced to zero;

                      (B) to the  Holders  of REMIC I Regular  Interests  LT-A-2
                      through LT-A- 31,  sequentially,  until the Uncertificated
                      Principal Balance of each such REMIC I Regular Interest is
                      reduced to zero; and

                      (C) any  remaining  amount to the Holders of the Class R-I
                      Certificates.

               (2) On each  Distribution  Date,  the following  amounts,  in the
following  order of priority,  shall be  distributed by REMIC II to REMIC III on
account of the REMIC II Regular Interests:

               (i) to the extent of the Group II Available Distribution Amounts,
        to the Holders of REMIC II Regular  Interest LT-B, in an amount equal to
        (A) the related Uncertificated


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        Accrued  Interest for such  Distribution  Date,  plus (B) any amounts in
        respect thereof remaining unpaid from previous Distribution Dates; and

               (ii) to the  Holders of REMIC II  Regular  Interest  LT-B,  in an
        amount equal to the  remainder  of the Group II  Available  Distribution
        Amount for such Distribution Date after the distributions  made pursuant
        to clause (i) above, allocated in the following order of priority:

                      (A) to the Holders REMIC II Regular  Interest LT-B,  until
                      the  Uncertificated  Principal Balance of REMIC II Regular
                      Interest LT-B is reduced to zero; and

                      (B) any remaining  amount to the Holders of the Class R-II
Certificates.

               (3) On each  Distribution  Date,  the following  amounts,  in the
following  order of priority,  shall be  distributed by REMIC III to REMIC IV on
account of the REMIC III Regular Interests:

               (i) to the extent of the Group I Available  Distribution  Amount,
        first,  to the Holders of REMIC III  Regular  Interest  LT3-IAIO,  in an
        amount equal to (A) the related Uncertificated Accrued Interest for such
        Distribution  Date,  plus (B) any amounts in respect  thereof  remaining
        unpaid from previous  Distribution  Dates, and second, to the Holders of
        REMIC  III  Regular  Interest  LT3-AI-AA,  REMIC  III  Regular  Interest
        LT3-AI-1,  REMIC  III  Regular  Interest  LT3-AI-2,  REMIC  III  Regular
        Interest  LT3-AI-3,  REMIC  III  Regular  Interest  LT3-AI-4,  REMIC III
        Regular Interest  LT3-AI-5,  REMIC III Regular Interest LT3- AI-6, REMIC
        III Regular  Interest  LT3-MI-1,  REMIC III Regular  Interest  LT3-MI-2,
        REMIC III  Regular  Interest  LT3-MI-3  and REMIC III  Regular  Interest
        LT3-AI-ZZ,   pro  rata,   in  an  amount   equal  to  (A)  the   related
        Uncertificated Accrued Interest for such Distribution Date, plus (B) any
        amounts in respect thereof  remaining unpaid from previous  Distribution
        Dates. Amounts payable as Uncertificated  Accrued Interest in respect of
        REMIC III Regular Interest LT3-AI-ZZ shall be reduced when the REMIC III
        Group I Overcollateralization  Amount is less than the REMIC III Group I
        Required  Overcollateralization  Amount, by the lesser of (x) the amount
        of such  difference  and (y) the  REMIC  III  Group I  Regular  Interest
        LT3-AI-ZZ  Maximum  Interest  Deferral  Amount,  and such amount will be
        payable to the Holders of REMIC III Regular Interest LT3-AI-1, REMIC III
        Regular Interest LT3-AI-2,  REMIC III Regular Interest  LT3-AI-3,  REMIC
        III Regular  Interest  LT3-AI-4,  REMIC III Regular  Interest  LT3-AI-5,
        REMIC III Regular  Interest  LT3-AI-6,  REMIC III Regular  Interest LT3-
        MI-1, REMIC III Regular Interest LT3-MI-2 and REMIC III Regular Interest
        LT3-MI-3  in the same  proportion  as the Group I  Overcollateralization
        Increase  Amount is  allocated  to the Class A-I-1  Certificates,  Class
        A-I-2 Certificates,  Class A-I-3 Certificates, Class A-I-4 Certificates,
        Class  A-I-5  Certificates,   Class  A-I-6  Certificates,   Class  M-I-1
        Certificates,  Class M-I-2  Certificates  and Class M-I-3  Certificates,
        respectively; and

               (ii) on each Distribution Date, to the Holders of REMIC III Group
        I Regular Interests (other than REMIC III Regular Interest  LT3-IAIO) in
        an amount equal to the  remainder of the Group I Available  Distribution
        Amount after the distributions made


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<PAGE>



        pursuant to clause (i) above,  allocated as follows  (except as provided
        below): (A) to the Holders of the REMIC III Regular Interest  LT3-AI-AA,
        98.00% of such remainder until the  Uncertificated  Principal Balance of
        such REMIC III Regular  Interest is reduced to zero;  (B) to the Holders
        of  the  REMIC  III  Regular  Interest  LT3-AI-1,   LT3-AI-2,  LT3-AI-3,
        LT3-AI-4,  LT3-AI-5, LT3-AI-6, LT3-MI-1, LT3-MI-2 and LT3-MI-3, 1.00% of
        such  remainder,  in the  same  proportion  as  principal  payments  are
        allocated to the Class A-I-1  Certificates,  Class A- I-2  Certificates,
        Class  A-I-3  Certificates,   Class  A-I-4  Certificates,   Class  A-I-5
        Certificates,  Class A-I-6 Certificates, Class M-I-1 Certificates, Class
        M-I-2 Certificates and Class M-I-3 Certificates, respectively, until the
        Uncertificated  Principal  Balance of such REMIC III Regular Interest is
        reduced to zero;  (C) to the Holders of the REMIC III  Regular  Interest
        LT3-AI-ZZ,  1.00% of such remainder until the  Uncertificated  Principal
        Balance of such REMIC III Regular  Interest is reduced to zero;  and (D)
        any  remaining  amounts to the Holders of the Class R-III  Certificates;
        provided,  however, that 98.00% and 2.00% of any principal payments that
        are  attributable to a Group I  Overcollateralization  Reduction  Amount
        shall  be  allocated  to  Holders  of the  REMIC  III  Regular  Interest
        LT3-AI-AA and REMIC III Regular Interest LT3-AI-ZZ, respectively.

               (iii)  to the  extent  of the  Group  II  Available  Distribution
        Amount, to the Holders of REMIC III Regular Interest  LT3-AII-AA,  REMIC
        III  Regular   Interest   LT3-AII-1  and  REMIC  III  Regular   Interest
        LT3-AII-ZZ,   pro  rata,   in  an  amount   equal  to  (A)  the  related
        Uncertificated Accrued Interest for such Distribution Date, plus (B) any
        amounts in respect thereof  remaining unpaid from previous  Distribution
        Dates. Amounts payable as Uncertificated  Accrued Interest in respect of
        REMIC III Regular  Interest  LT3-AII-ZZ  shall be reduced when the REMIC
        III  Group II  Overcollateralization  Amount  is less than the REMIC III
        Group II Required Overcollateralization Amount, by the lesser of (x) the
        amount  of such  difference  and (y) the  REMIC  III  Group  II  Regular
        Interest  LT3-AII-ZZ  Maximum Interest Deferral Amount,  and such amount
        will be payable to the Holders of REMIC III Regular  Interest  LT3-AII-1
        in an amount equal to 1% of the amount of Group II Overcollateralization
        Increase Amount allocated to the Class A-II Certificates; and

        (iv) on each  Distribution  Date,  to the  Holders of REMIC III Group II
        Regular  Interests,  in an amount equal to the remainder of the Group II
        Available  Distribution  Amount after the distributions made pursuant to
        clause (iii) above, allocated as follows (except as provided below): (A)
        to the Holders of the REMIC III Regular  Interest  LT3-AII-AA  98.00% of
        such remainder until the Uncertificated  Principal Balance of such REMIC
        III Regular Interest is reduced to zero; (B) to the Holders of the REMIC
        III Regular  Interest  LT3-AII-1,  1.00% of such remainder,  in the same
        proportion  as  principal  payments  are  allocated to the Class A-II- 1
        Certificates,  (C) to the  Holders  of the  REMIC III  Regular  Interest
        LT3-AII-ZZ,  1.00% of such remainder;  and (D) any remaining  amounts to
        the Holders of the Class R-III  Certificates;  provided,  however,  that
        98.00% and 2.00% of any  principal  payments  that are  attributable  to
        Group II  Overcollateralization  Reduction  Amount shall be allocated to
        Holders  of the  REMIC III  Regular  Interest  LT3-AII-AA  and REMIC III
        Regular Interest LT3-AII-ZZ, respectively.



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<PAGE>



               (4)  Notwithstanding  the  distributions  on  the  REMIC  Regular
Interests  described in this  Section  4.02(b),  distribution  of funds from the
Certificate  Account shall be made only in accordance  with Section  4.02(c) and
(d).

        (c) On each  Distribution  Date (x) the Master Servicer on behalf of the
Trustee or (y) the Paying Agent  appointed by the Trustee,  shall  distribute to
each  Certificateholder  of record on the next preceding Record Date (other than
as  provided  in  Section  9.01  respecting  the final  distribution)  either in
immediately  available  funds (by wire  transfer or otherwise) to the account of
such  Certificateholder at a bank or other entity having appropriate  facilities
therefor,  if such  Certificateholder has so notified the Master Servicer or the
Paying  Agent,  as the case may be,  or,  if such  Certificateholder  has not so
notified the Master  Servicer or the Paying  Agent by the Record Date,  by check
mailed to such  Certificateholder at the address of such Holder appearing in the
Certificate Register such Certificateholder's share (which share with respect to
each Class of  Certificates,  shall be based on the aggregate of the  Percentage
Interests  represented  by  Certificates  of the  applicable  Class held by such
Holder of the following amounts, in the following order of priority,  subject to
the  provisions  of Section  4.02(e) and (f)), in each case to the extent of the
Group I Available Distribution Amount on deposit in the Certificate Account (or,
with respect to clause  (xvii)  below,  to the extent of  prepayment  charges on
deposit in the Certificate Account):

               (i) to the  Class  A-I  Certificateholders,  Accrued  Certificate
        Interest payable on such  Certificates with respect to such Distribution
        Date, plus any Accrued  Certificate  Interest  remaining unpaid from any
        prior Distribution Date, less any Prepayment  Interest Shortfalls on the
        Group I Loans,  to the  extent  not  covered  by  Compensating  Interest
        pursuant to Section 3.16, allocated to the Class A-I  Certificateholders
        as  described in Section  4.02(h) (the "Class A-I Interest  Distribution
        Amount"),   with   such   amount   allocated   among   the   Class   A-I
        Certificateholders on a pro rata basis;

               (ii) to the Class M-I-1  Certificateholders  from the amount,  if
        any, of the Group I Available  Distribution  Amount  remaining after the
        foregoing  distributions,  Accrued Certificate  Interest payable on such
        Certificates  with respect to such  Distribution  Date, plus any Accrued
        Certificate  Interest remaining unpaid from any prior Distribution Date,
        less any  Prepayment  Interest  Shortfalls on the Group I Loans,  to the
        extent not covered by  Compensating  Interest  pursuant to Section 3.16,
        allocated  to the Class  M-I-1  Certificates  as  described  in  Section
        4.02(h) (the "Class M-I-1 Interest Distribution Amount");

               (iii) to the Class M-I-2  Certificateholders  from the amount, if
        any, of the Group I Available  Distribution  Amount  remaining after the
        foregoing  distributions,  Accrued Certificate  Interest payable on such
        Certificates  with respect to such  Distribution  Date, plus any Accrued
        Certificate  Interest remaining unpaid from any prior Distribution Date,
        less any  Prepayment  Interest  Shortfalls on the Group I Loans,  to the
        extent not covered by  Compensating  Interest  pursuant to Section 3.16,
        allocated  to the Class  M-I-2  Certificates  as  described  in  Section
        4.02(h) (the "Class M-I-2 Interest Distribution Amount");

               (iv) to the Class M-I-3  Certificateholders  from the amount,  if
        any, of the Group I Available  Distribution  Amount  remaining after the
        foregoing  distributions,  Accrued Certificate  Interest payable on such
        Certificates with respect to such Distribution Date, plus


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<PAGE>



        any  Accrued  Certificate  Interest  remaining  unpaid  from  any  prior
        Distribution Date, less any Prepayment  Interest Shortfalls on the Group
        I Loans, to the extent not covered by Compensating  Interest pursuant to
        Section 3.16,  allocated to the Class M-I-3 Certificates as described in
        Section 4.02(h) (the "Class M-I-3 Interest Distribution Amount");

               (v)  to  the   Class   A-I   Certificateholders   and  Class  M-I
        Certificateholders (other than the Class A-I-IO Certificateholders), the
        Group I Principal  Distribution  Amount (other than clauses (iv) and (v)
        of the definition  thereof),  in the order described in Section 4.02(e),
        until the Certificate  Principal  Balances of the Class A-I Certificates
        and Class M-I Certificates have been reduced to zero;

               (vi) to the Class A-I  Certificateholders  (other  than the Class
        A-I-IO  Certificateholders) and the Class M-I  Certificateholders,  from
        the Group I Excess Cash Flow,  an amount  equal to the  Realized  Losses
        (other  than  Group I Excess  Losses)  on the Group I Loans  during  the
        immediately  preceding Due Period, which amount shall be included in the
        Group I  Principal  Distribution  Amount  and  paid in  accordance  with
        Section 4.02(e) hereof, until the Certificate  Principal Balances of the
        Class A-I Certificates and the Class M-I Certificates  have been reduced
        to zero;

               (vii) to the Class A-II  Certificateholders,  from the amount, if
        any, of the Group I Available  Distribution  Amount  remaining after the
        foregoing  distributions,  an amount equal to the Realized Losses (other
        than  Group  II  Excess  Losses)  on  the  Group  II  Loans  during  the
        immediately  preceding Due Period to the extent not covered by the Group
        II Excess  Cash Flow,  which  amount  shall be  included in the Group II
        Principal   Distribution   Amount   and   paid   to   the   Class   A-II
        Certificateholders,  until the  Certificate  Principal  Balances  of the
        Class A-II Certificates have been reduced to zero;

               (viii) to the  Insurer,  from the amount,  if any, of the Group I
        Available    Distribution   Amount   remaining   after   the   foregoing
        distributions, in respect of any Group II Cumulative Insurance Payments,
        to the extent not covered by the Group II Excess Cash Flow;

               (ix) to the Class A-II  Certificateholders,  from the amount,  if
        any, of the Group I Available  Distribution  Amount  remaining after the
        foregoing  distributions,  the Group II  Overcollateralization  Increase
        Amount for such Distribution Date, which amount shall be included in the
        Group  II  Principal  Distribution  Amount  and paid to the  Class  A-II
        Certificateholders, until the Certificate Principal Balance of the Class
        A-II  Certificates  has been reduced to zero, but only to the extent the
        Certificate   Principal   Balance  of  the  Class  A-  II   Certificates
        immediately  prior to such  Distribution  Date  exceeded  the  aggregate
        Stated  Principal  Balance  of the  Group  II  Loans  at the  end of the
        immediately  preceding  Due Period and to the extent not  covered by the
        Group II Excess Cash Flow;

               (x) to the Class  A-I  Certificateholders  (other  than the Class
        A-I-IO  Certificateholders) and Class M-I  Certificateholders,  from the
        amount, if any, of the Group I Available  Distribution  Amount remaining
        after the  foregoing  distributions,  the Group I  Overcollateralization
        Increase  Amount  for such  Distribution  Date,  which  amount  shall be
        included  in the  Group I  Principal  Distribution  Amount  and  paid in
        accordance with Section


                                              99

<PAGE>



        4.02(e) hereof,  until the Certificate  Principal Balances of such Class
        A-I Certificates and Class M-I Certificates have been reduced to zero;

               (xi) to the Class A-II  Certificateholders,  from the amount,  if
        any, of the Group I Available  Distribution  Amount  remaining after the
        foregoing  distributions,  the Group II  Overcollateralization  Increase
        Amount for such Distribution Date to the extent not covered by the Group
        II Excess Cash Flow for such  Distribution  Date,  which amount shall be
        included in the Group II Principal  Distribution  Amount and paid to the
        Class A-II  Certificateholders,  until the Certificate Principal Balance
        of such Class A-II Certificates has been reduced to zero;

               (xii)  to  the  Class  A-I   Certificateholders   and  Class  M-I
        Certificateholders  from the  amount,  if any,  of the Group I Available
        Distribution  Amount  remaining after the foregoing  distributions,  the
        amount of any  Prepayment  Interest  Shortfalls  allocated  thereto with
        respect to the Group I Loans,  to the extent not covered by Compensating
        Interest on such Distribution Date;

               (xiii) to the Class A-II  Certificateholders  from the amount, if
        any, of the Group I Available  Distribution  Amount  remaining after the
        foregoing   distributions,   the  amount  of  any  Prepayment   Interest
        Shortfalls  allocated thereto with respect to the Group II Loans, to the
        extent not covered by Compensating Interest and any Group II Excess Cash
        Flow on such Distribution Date;

               (xiv)  to  the  Class  A-I   Certificateholders   and  Class  M-I
        Certificateholders  from the  amount,  if any,  of the Group I Available
        Distribution  Amount  remaining after the foregoing  distributions,  the
        amount of any Prepayment Interest Shortfalls allocated thereto remaining
        unpaid from prior Distribution Dates together with interest thereon;

               (xv) to the Class A-II  Certificateholders  from the  amount,  if
        any, of the Group I Available  Distribution  Amount  remaining after the
        foregoing   distributions,   the  amount  of  any  Prepayment   Interest
        Shortfalls  allocated thereto  remaining unpaid from prior  Distribution
        Dates together with interest  thereon,  to the extent not covered by any
        Group II Excess Cash Flow on such Distribution Date;

               (xvi) to make  payments,  from amounts  otherwise  payable to the
        Class SB-I  Certificates,  (i) first,  to the Reserve Fund to pay to the
        Class A-I Certificates and Class M-I Certificates,  other than the Class
        A-I-2, Class A-I-3, Class A-I-4 and Class A-IO Certificates,  the amount
        of any Group I Net WAC Cap  Carry-Forward  Amount,  and (ii) second,  to
        maintain  a  balance  in the  Reserve  Fund  equal to the  Reserve  Fund
        Deposit;

               (xvii) to make payments,  from amounts  otherwise  payable to the
        Class  SB-I  Certificates  (but  in  no  event  more  than  the  Accrued
        Certificate  Interest on such Class),  (i) first, to the Reserve Fund to
        pay to the  Class  A-II  Certificates  the  amount  of  any  Basis  Risk
        Shortfall  Carry-Forward  Amount on such  Certificate  to the extent not
        covered by payments pursuant to Section 4.02(d)(xiii),  and (ii) second,
        to  maintain a balance in the  Reserve  Fund equal to the  Reserve  Fund
        Deposit;


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<PAGE>



               (xviii)to the Class SB-II Certificateholders, from the amount, if
        any, of the Group I Available  Distribution  Amount  remaining after the
        foregoing distributions, the amount of any Group I Overcollateralization
        Reduction Amount for such  Distribution  Date to the extent of any Group
        II Diverted Excess Spread;

               (xix) to the Class SB-I Certificates, from the amount, if any, of
        the Group I Available  Distribution Amount remaining after the foregoing
        distributions,  Accrued Certificate  Interest thereon, the amount of any
        Group I  Overcollateralization  Reduction  Amount for such  Distribution
        Date (to the extent not distributed to the Class SB-II Certificates);

               (xx) to the Class SB-I  Certificates,  the amount of any payments
        or collections  consisting of prepayment charges received on the Group I
        Loans  (which  amounts  shall not be  included  in the Group I Available
        Distribution Amount) and for any Distribution Date after the Certificate
        Principal  Balance of each  Class A-I  Certificate  has been  reduced to
        zero, the Group I Overcollateralization Amount; and

               (xxi) to the Class R-IV Certificateholders,  the balance, if any,
        of the Group I Available Distribution Amount.

        (d) On each  Distribution  Date (x) the Master Servicer on behalf of the
Trustee or (y) the Paying Agent  appointed by the Trustee,  shall  distribute to
each  Certificateholder  of record on the next preceding Record Date (other than
as  provided  in  Section  9.01  respecting  the final  distribution)  either in
immediately  available  funds (by wire  transfer or otherwise) to the account of
such  Certificateholder at a bank or other entity having appropriate  facilities
therefor,  if such  Certificateholder has so notified the Master Servicer or the
Paying  Agent,  as the case may be,  or,  if such  Certificateholder  has not so
notified the Master  Servicer or the Paying  Agent by the Record Date,  by check
mailed to such  Certificateholder at the address of such Holder appearing in the
Certificate Register such Certificateholder's share (which share with respect to
each Class of  Certificates,  shall be based on the aggregate of the  Percentage
Interests  represented  by  Certificates  of the  applicable  Class held by such
Holder of the following amounts, in the following order of priority,  subject to
the  provisions  of Section  4.02(e) and (f)), in each case to the extent of the
Group II Available  Distribution  Amount on deposit in the  Certificate  Account
(or, with respect to clause (xvii) below, to the extent of prepayment charges on
deposit in the Certificate Account):

               (i) to the Class  A-II  Certificateholders,  Accrued  Certificate
        Interest payable on such  Certificates with respect to such Distribution
        Date, plus any Accrued  Certificate  Interest  remaining unpaid from any
        prior Distribution Date, less any Prepayment  Interest Shortfalls on the
        Group II Loans,  to the extent  not  covered  by  Compensating  Interest
        pursuant to Section 3.16, allocated to the Class A-II Certificateholders
        as  described in Section  4.02(h)  (the "Group II Interest  Distribution
        Amount");

               (ii) to the Class A-II Certificateholders, the Group II Principal
        Distribution  Amount (other than clauses (iv) and (v) of the  definition
        thereof),  until the  Certificate  Principal  Balance  of the Class A-II
        Certificates has been reduced to zero;



                                             101

<PAGE>



               (iii) to the  Class  A-II  Certificateholders,  from the Group II
        Excess  Cash Flow an amount  equal to the  Realized  Losses  (other than
        Group II Excess  Losses) on the Group II Loans  during  the  immediately
        preceding  Due Period,  which  amount  shall be included in the Group II
        Principal   Distribution   Amount   and   paid   to   the   Class   A-II
        Certificateholders, until the Certificate Principal Balance of the Class
        A-II Certificates has been reduced to zero;

               (iv) to the Class A-I  Certificateholders  (other  than the Class
        A-I-IO  Certificateholders) and Class M-I  Certificateholders,  from the
        amount, if any, of the Group II Available  Distribution Amount remaining
        after the foregoing distributions an amount equal to the Realized Losses
        (other  than  Group I Excess  Losses)  on the Group I Loans  during  the
        immediately  preceding Due Period to the extent not covered by the Group
        I Excess  Cash  Flow,  which  amount  shall be  included  in the Group I
        Principal  Distribution  Amount  and  paid in  accordance  with  Section
        4.02(e) hereof,  until the Certificate  Principal  Balances of the Class
        A-I Certificates have been reduced to zero;

               (v) to the  Insurer,  from the  amount,  if any,  of the Group II
        Available    Distribution   Amount   remaining   after   the   foregoing
        distributions, in respect of any Group II Cumulative Insurance Payments;

               (vi) to the Class A-I  Certificateholders  (other  than the Class
        A-I-IO  Certificateholders) and Class M-I  Certificateholders,  from the
        amount, if any, of the Group II Available  Distribution Amount remaining
        after the  foregoing  distributions,  the Group I  Overcollateralization
        Increase  Amount  for such  Distribution  Date,  which  amount  shall be
        included  in the  Group I  Principal  Distribution  Amount  and  paid in
        accordance with Section 4.02(e) hereof, until the Certificate  Principal
        Balances of the Class A-I  Certificates  have been reduced to zero,  but
        only to the extent the aggregate  Certificate  Principal Balance of such
        Class  A-I  Certificates  immediately  prior to such  Distribution  Date
        exceeded the aggregate Stated Principal  Balance of the Group I Loans at
        the end of the  immediately  preceding  Due Period and to the extent not
        covered  by the Group I Excess  Cash  Flow,  in the order  described  in
        Section 4.02(e);

               (vii) to the Class A-II  Certificateholders,  from the amount, if
        any, of the Group II Available  Distribution  Amount remaining after the
        foregoing  distributions,  the Group II  Overcollateralization  Increase
        Amount for such Distribution Date, which amount shall be included in the
        Group  II  Principal  Distribution  Amount  and paid to the  Class  A-II
        Certificateholders, until the Certificate Principal Balance of the Class
        A-II Certificates has been reduced to zero;

               (viii) to the Class A-I Certificateholders  (other than the Class
        A-I-IO) and Class M- I  Certificateholders,  from the amount, if any, of
        the Group II Available Distribution Amount remaining after the foregoing
        distributions,  the Group I  Overcollateralization  Increase  Amount for
        such  Distribution  Date to the extent not covered by the Group I Excess
        Cash Flow for such Distribution  Date, which amount shall be included in
        the Group I Principal  Distribution  Amount and paid in accordance  with
        Section 4.02(e) hereof, until the Certificate Principal Balances of such
        Class A-I Certificates have been reduced to zero;



                                             102

<PAGE>



               (ix) to the Class A-II  Certificateholders  from the  amount,  if
        any, of the Group II Available  Distribution  Amount remaining after the
        foregoing   distributions,   the  amount  of  any  Prepayment   Interest
        Shortfalls  allocated thereto with respect to the Group II Loans, to the
        extent not covered by Compensating Interest on such Distribution Date;

               (x)  to  the   Class   A-I   Certificateholders   and  Class  M-I
        Certificateholders  from the amount,  if any, of the Group II  Available
        Distribution  Amount  remaining after the foregoing  distributions,  the
        amount of any  Prepayment  Interest  Shortfalls  allocated  thereto with
        respect to the Group I Loans,  to the extent not covered by Compensating
        Interest and any Group I Excess Cash Flow on such Distribution Date;

               (xi) to the Class A-II  Certificateholders  from the  amount,  if
        any, of the Group II Available  Distribution  Amount remaining after the
        foregoing   distributions,   the  amount  of  any  Prepayment   Interest
        Shortfalls  allocated thereto  remaining unpaid from prior  Distribution
        Dates together with interest thereon;

               (xii)  to  the  Class  A-I   Certificateholders   and  Class  M-I
        Certificateholders  from the amount,  if any, of the Group II  Available
        Distribution  Amount  remaining after the foregoing  distributions,  the
        amount of any Prepayment Interest Shortfalls allocated thereto remaining
        unpaid from prior Distribution Dates together with interest thereon,  to
        the  extent  not  covered  by any  Group  I  Excess  Cash  Flow  on such
        Distribution Date;

               (xiii) to make payments,  from amounts  otherwise  payable to the
        Class  SB-II  Certificates  (but  in no  event  more  than  the  Accrued
        Certificate  Interest on such Class),  (i) first, to the Reserve Fund to
        pay to the  Class  A-II  Certificates,  the  amount  of any  Basis  Risk
        Shortfall Carry-Forward Amount on such Certificates, and (ii) second, to
        maintain  a  balance  in the  Reserve  Fund  equal to the  Reserve  Fund
        Deposit;

               (xiv) to make  payments,  from amounts  otherwise  payable to the
        Class SB-II  Certificates,  (i) first, to the Reserve Fund to pay to the
        Class A-I Certificates and Class M-I Certificates,  other than the Class
        A-I-2, Class A-I-3, Class A-I-4 and Class A-IO Certificates,  the amount
        of any Group I Net WAC Cap  Carry-Forward  Amount,  and (ii) second,  to
        maintain  a  balance  in the  Reserve  Fund  equal to the  Reserve  Fund
        Deposit;

               (xv) to the Class SB-I  Certificateholders,  from the amount,  if
        any, of the Group II Available  Distribution  Amount remaining after the
        foregoing    distributions,    the    amount    of    any    Group    II
        Overcollateralization Reduction Amount for such Distribution Date to the
        extent of any Group I Diverted Excess Spread;

               (xvi) to the Class SB-II  Certificates,  from the amount, if any,
        of the  Group II  Available  Distribution  Amount  remaining  after  the
        foregoing  distributions,  the sum of (A) Accrued  Certificate  Interest
        thereon  and  (B)  the  amount  of any  Group  II  Overcollateralization
        Reduction  Amount  for  such   Distribution  Date  (to  the  extent  not
        distributed to the Class SB-I Certificates);



                                             103

<PAGE>



               (xvii)  to  the  Class  SB-II  Certificates,  the  amount  of any
        payments or collections consisting of prepayment charges received on the
        Group II Loans  (which  amounts  shall not be  included  in the Group II
        Available  Distribution  Amount) and for any Distribution Date after the
        Certificate  Principal  Balance of each Class A-II  Certificate has been
        reduced to zero, the Group II Overcollateralization Amount; and

               (xviii)to the Class R-IV Certificateholders, the balance, if any,
        of the Group II Available Distribution Amount.

        (e) On each Distribution Date, the Group I Principal Distribution Amount
will be paid as follows:

               (i)  the  Class  A-I  Principal   Distribution  Amount  shall  be
distributed as follows:

                      (A)    first, to the to the Class A-I-6  Certificates,  an
                             amount   equal   to   the   Class   A-I-6   Lockout
                             Distribution  Amount  for that  Distribution  Date,
                             until  the  Certificate  Principal  Balance  of the
                             Class A-I-6  Certificates has been reduced to zero;
                             and

                      (B)    second,  to the Class  A-I-1,  Class  A-I-2,  Class
                             A-I-3,  Class  A-I-4,  Class  A-I-5 and Class A-I-6
                             Certificates, in that order, in each case until the
                             Certificate  Principal  Balance  thereof  has  been
                             reduced to zero.

               (ii) the  Class  M-I-1  Principal  Distribution  Amount  shall be
        distributed  to the Class  M-I-1  Certificates,  until  the  Certificate
        Principal Balance thereof has been reduced to zero;

               (iii) the Class  M-I-2  Principal  Distribution  Amount  shall be
        distributed  to the Class  M-I-2  Certificates,  until  the  Certificate
        Principal Balance thereof has been reduced to zero; and

               (iv) the  Class  M-I-3  Principal  Distribution  Amount  shall be
        distributed  to the Class  M-I-3  Certificates,  until  the  Certificate
        Principal Balance thereof has been reduced to zero.

        (f) Within five Business Days before the related  Distribution Date, the
Master Servicer shall notify the Trustee of the amounts,  if any, payable to the
Insurer pursuant to Section 4.02(c)(v) and (vi) and (d)(v) and (vi).

        (g)  Notwithstanding  the  foregoing  clauses  (c)  and  (d),  upon  the
reduction  of  the  Certificate   Principal  Balance  of  a  Class  of  Class  A
Certificates and Class M-I Certificates to zero, such Class of Certificates will
not be entitled to further  distributions  pursuant to Section 4.02,  including,
without limitation,  the payment of current and unreimbursed Prepayment Interest
Shortfalls  pursuant to clauses  (c)(ix)  through  (c)(xii) and (d)(ix)  through
(d)(xii) and the Basis Risk Shortfall  Carry-Forward  Amount pursuant to clauses
(c)(xiii) and (d)(xiii).


                                             104

<PAGE>



        (h) Any  Prepayment  Interest  Shortfalls on the Group I Loans which are
not  covered by  Compensating  Interest  as  described  in Section  3.16 will be
allocated among the Class A-I  Certificates  and Class M-I Certificates pro rata
in accordance  with the amount of Accrued  Certificate  Interest that would have
accrued  on  that  Certificate  absent  these  shortfalls.  Any  such  uncovered
Prepayment   Interest  Shortfalls  will  be  paid  solely  pursuant  to  Section
4.02(c)(xii)  and (xiv) and (d)(x) and (xii),  to the extent funds are available
therefor. Any Prepayment Interest Shortfalls on the Group II Loans which are not
covered by Compensating  Interest as described in Section 3.16 will be allocated
to  the  Class  A-II  Certificates.   Any  such  uncovered  Prepayment  Interest
Shortfalls  will be paid solely pursuant to Section  4.02(c)(xiii)  and (xv) and
(d)(ix) and (xi), to the extent funds are available therefor.

        (i) In  addition to the  foregoing  distributions,  with  respect to any
Mortgage Loan that was  previously  the subject of a Cash  Liquidation or an REO
Disposition that resulted in a Realized Loss, in the event that within two years
of the date on which such  Realized  Loss was  determined  to have  occurred the
Master Servicer receives amounts which the Master Servicer  reasonably  believes
to represent subsequent recoveries (net of any related liquidation expenses), or
determines that it holds surplus amounts previously  reserved to cover estimated
expenses specifically related to such Mortgage Loan (including,  but not limited
to,  recoveries  (net of any  related  liquidation  expenses)  in respect of the
representations  and  warranties  made by the  related  Seller  pursuant  to the
applicable  Seller's  Agreement),  the Master  Servicer  shall  distribute  such
amounts to the Class or Classes to which such Realized Loss was allocated  (with
the amounts to be distributed  allocated  among such  Classes),  and within each
such Class to the Certificateholders of record as of the Record Date immediately
preceding the date of such  distribution (or if such Class of Certificates is no
longer outstanding,  to the  Certificateholders  of record at the time that such
Realized Loss was allocated); provided that no such distribution to any Class of
Certificates of subsequent  recoveries  related to a Mortgage Loan shall exceed,
either individually or in the aggregate and together with any other amounts paid
in  reimbursement  therefor,  the amount of the related  Realized  Loss that was
allocated  to such  Class of  Certificates.  For the  purposes  of this  Section
4.02(i)  any  allocation  of a Realized  Loss to Group I or Group II Excess Cash
Flow  will be  treated  as an  allocation  of a  Realized  Loss to the Class A-I
Certificates  and  Class  M-I  Certificates  or  Class  A-II  Certificates,   as
applicable.  Notwithstanding  the  foregoing,  to the  extent  that  the  Master
Servicer  receives  recoveries  with  respect  to  Realized  Losses  which  were
allocated  to the Class A-II  Certificates  and which  were paid by the  Insurer
pursuant  to the  Policy  and not  previously  reimbursed  pursuant  to  Section
4.02(c)(v) and (vi) or (d)(v) and (vi), such  recoveries  shall be paid directly
to the Insurer and applied to reduce the Group II Cumulative  Insurance Payments
then due to the  Insurer  prior to any  payment of such  amounts to any  current
Certificateholder  or  any  previous  Certificateholder.  Any  amounts  to be so
distributed  shall not be remitted to or  distributed  from the Trust Fund,  and
shall constitute  subsequent  recoveries with respect to Mortgage Loans that are
no longer assets of the Trust Fund.

        (j) To the  extent  on any  Distribution  Date the  Group  II  Available
Distribution  Amount on deposit in the Certificate  Account is less than Accrued
Certificate  Interest on the Class A-II Certificates on such Distribution  Date,
such excess shall result in a reduction in Accrued  Certificate  Interest on the
Class A-II Certificates and an increase in the Certificate  Principal Balance of
the Class A-II Certificates.



                                             105

<PAGE>



        (k) Each distribution with respect to a Book-Entry  Certificate shall be
paid  to the  Depository,  as  Holder  thereof,  and  the  Depository  shall  be
responsible for crediting the amount of such distribution to the accounts of its
Depository   Participants  in  accordance  with  its  normal  procedures.   Each
Depository  Participant shall be responsible for disbursing such distribution to
the  Certificate  Owners that it represents  and to each indirect  participating
brokerage firm (a "brokerage firm" or "indirect  participating  firm") for which
it acts as agent.  Each brokerage firm shall be responsible for disbursing funds
to  the  Certificate  Owners  that  it  represents.  None  of the  Trustee,  the
Certificate  Registrar,  the  Depositor  or the Master  Servicer  shall have any
responsibility  therefor  except as  otherwise  provided  by this  Agreement  or
applicable law.

        (l) Except as otherwise provided in Section 9.01, if the Master Servicer
anticipates that a final  distribution with respect to any Class of Certificates
will be made on the next Distribution  Date, the Master Servicer shall, no later
than the Determination Date in the month of such final distribution,  notify the
Trustee and the Trustee  shall,  no later than two (2) Business  Days after such
Determination  Date,  mail  on  such  date  to each  Holder  of  such  Class  of
Certificates a notice to the effect that: (i) the Trustee  anticipates  that the
final  distribution  with respect to such Class of Certificates  will be made on
such  Distribution  Date  but  only  upon  presentation  and  surrender  of such
Certificates at the office of the Trustee or as otherwise specified therein, and
(ii) no interest shall accrue on such Certificates from and after the end of the
prior calendar month. In the event that Certificateholders required to surrender
their   Certificates   pursuant  to  Section  9.01(c)  do  not  surrender  their
Certificates for final cancellation, the Trustee shall cause funds distributable
with respect to such  Certificates to be withdrawn from the Certificate  Account
and   credited   to  a  separate   escrow   account  for  the  benefit  of  such
Certificateholders as provided in Section 9.01(d).

        Section 4.03. Statements to Certificateholders; Exchange Act Reporting.
                      --------------------------------------------------------

        (a)  Concurrently  with each  distribution  charged  to the  Certificate
Account and with respect to each  Distribution  Date the Master  Servicer  shall
forward to the Trustee and the Trustee shall  forward by mail or otherwise  make
available   electronically  on  its  website  (which  may  be  obtained  by  any
Certificateholder  by telephoning the Trustee at (877) 722-1095) to each Holder,
the  Insurer  and  the  Depositor  a  statement   setting  forth  the  following
information  as to  each  Class  of  Certificates,  in each  case to the  extent
applicable:

               (i) (A)the amount of such distribution to the  Certificateholders
        of such  Class  applied  to reduce  the  Certificate  Principal  Balance
        thereof,  and (B) the aggregate  amount  included  therein  representing
        Principal Prepayments;

               (ii) the amount of such  distribution to Holders of such Class of
        Certificates allocable to interest;

               (iii)  if the  distribution  to the  Holders  of  such  Class  of
        Certificates is less than the full amount that would be distributable to
        such Holders if there were  sufficient  funds  available  therefor,  the
        amount of the shortfall;

               (iv) the  amount  of any  Advance  by the  Master  Servicer  with
        respect  to the  Group I Loans and Group II Loans  pursuant  to  Section
        4.04;


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               (v) the  number  of Group I and  Group II  Loans  and the  Stated
        Principal  Balance after giving effect to the  distribution of principal
        on such Distribution Date;

               (vi) the  aggregate  Certificate  Principal  Balance or  Notional
        Amount, as applicable,  of each Class of the Certificates,  after giving
        effect to the amounts distributed on such Distribution Date,  separately
        identifying  any  reduction  thereof due to Realized  Losses  other than
        pursuant to an actual distribution of principal;

               (vii) on the basis of the most recent reports  furnished to it by
        Subservicers,  the number and  aggregate  principal  balances of Group I
        Loans and Group II Loans  that are  Delinquent  (A) one  month,  (B) two
        months  and (C)  three  or more  months  and the  number  and  aggregate
        principal  balance  of Group I Loans  and  Group  II  Loans  that are in
        foreclosure;

               (viii) the number,  aggregate principal balance and book value of
        any REO Properties;

               (ix) the aggregate Accrued Certificate Interest remaining unpaid,
        if any,  for each  Class of  Certificates,  after  giving  effect to the
        distribution made on such Distribution Date;

               (x) the aggregate amount of Realized Losses for such Distribution
        Date and the  aggregate  amount of Realized  Losses on the Group I Loans
        and Group II Loans incurred since the Cut-off Date;

               (xi) the Group I and Group II Special Hazard Amount,  Group I and
        Group II Fraud Loss Amount and Group I and Group II Bankruptcy Amount as
        of the close of business on such  Distribution Date and a description of
        any change in the calculation of such amounts;

               (xii) the amount of any Insured Amount paid on such  Distribution
        Date,  the amount of any  reimbursement  payment  made to the Insurer on
        such Distribution Date pursuant to Section  4.02(c)(viii) and 4.02(d)(v)
        and the amount of Group II Cumulative  Insurance  Payments  after giving
        effect to any such Insured Amount or any such  reimbursement  payment to
        the Insurer;

               (xiii) the Pass-Through  Rate on each Class of Certificates,  the
        Group I Net WAC Cap  Rate,  Group I  Adjusted  Net WAC Cap  Rate and the
        Group II Net WAC Cap Rate;

               (xiv) the weighted  average of the Maximum Net Mortgage  Rates on
        the Group I Loans and Group II Loans;

               (xv) the Basis Risk Shortfall, Basis Risk Shortfall Carry-Forward
        Amount, Group I Net WAC Cap Shortfall, Group I Net WAC Cap Carry-Forward
        Amount, and Group I and Group II Prepayment Interest Shortfalls;

               (xvi) the Group I and Group II  Overcollateralization  Amount and
        the Group I and Group II Required Overcollateralization Amount following
        such Distribution Date;


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               (xvii)  the  number and  aggregate  principal  balance of Group I
        Loans and Group II Loans repurchased under Section 4.07 or Section 4.08;

               (xviii)the  aggregate  amount  of any  recoveries  on  previously
        foreclosed   loans  from   Residential   Funding  due  to  a  breach  of
        representation or warranty;

               (xix) the  weighted  average  remaining  term to  maturity of the
        Group I Loans  and Group II Loans  after  giving  effect to the  amounts
        distributed on such Distribution Date;

               (xx) the weighted average Mortgage Rates of the Group I Loans and
        Group II Loans after giving  effect to the amounts  distributed  on such
        Distribution Date; and

               (xxi) the aggregate of any deposits to and  withdrawals  from the
        Reserve  Fund for such  Distribution  Date and the  remaining  amount on
        deposit in the Reserve Fund after such deposits and withdrawals.

        In the case of  information  furnished  pursuant to clauses (i) and (ii)
above,  the amounts shall be expressed as a dollar amount per Certificate with a
$1,000 denomination. In addition to the statement provided to the Trustee as set
forth in this Section 4.03(a),  the Master Servicer shall provide to any manager
of a trust fund consisting of some or all of the  Certificates,  upon reasonable
request,  such additional  information as is reasonably obtainable by the Master
Servicer at no additional expense to the Master Servicer.

        (b) Within a  reasonable  period of time after the end of each  calendar
year,  the Master  Servicer  shall  prepare,  or cause to be  prepared,  and the
Trustee shall forward, or cause to be forwarded,  to each Person who at any time
during the calendar year was the Holder of a  Certificate,  other than a Class R
Certificate, a statement containing the information set forth in clauses (i) and
(ii) of  subsection  (a) above  aggregated  for such calendar year or applicable
portion  thereof  during  which  such  Person  was  a  Certificateholder.   Such
obligation  of the  Master  Servicer  and  Trustee  shall be deemed to have been
satisfied  to the extent  that  substantially  comparable  information  shall be
provided by the Master Servicer and Trustee  pursuant to any requirements of the
Code.

        (c) As soon as reasonably  practicable,  upon the written request of any
Certificateholder,   the  Master   Servicer   shall   provide   the   requesting
Certificateholder with such information as is necessary and appropriate,  in the
Master  Servicer's  sole  discretion,  for  purposes  of  satisfying  applicable
reporting requirements under Rule 144A.

        (d) The Master Servicer shall, on behalf of the Depositor and in respect
of the Trust Fund,  sign and cause to be filed with the  Commission any periodic
reports  required to be filed under the  provisions of the Exchange Act, and the
rules and  regulations  of the  Commission  thereunder.  In connection  with the
preparation  and filing of such  periodic  reports,  the  Trustee  shall  timely
provide to the Master Servicer (I) a list of  Certificateholders as shown on the
Certificate  Register as of the end of each  calendar  year,  (II) copies of all
pleadings,  other legal process and any other documents  relating to any claims,
charges or complaints involving the Trustee, as trustee hereunder,  or the Trust
Fund that are received by the Trustee,  (III) notice of all matters that, to the
actual knowledge of a Responsible Officer of the Trustee, have been submitted to
a vote of the Certificateholders, other


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than those matters that have been submitted to a vote of the  Certificateholders
at the request of the Depositor or the Master  Servicer,  and (IV) notice of any
failure of the Trustee to make any  distribution  to the  Certificateholders  as
required pursuant to this Agreement. Neither the Master Servicer nor the Trustee
shall  have any  liability  with  respect to the  Master  Servicer's  failure to
properly prepare or file such periodic reports resulting from or relating to the
Master  Servicer's  inability or failure to obtain any information not resulting
from the Master Servicer's own negligence or willful  misconduct.  Any Form 10-K
filed with the  Commission  in  connection  with this clause (d) shall include a
certification, signed by the senior officer in charge of the servicing functions
of the Master Servicer, in the form attached as Exhibit R-1 hereto or such other
form  as may  be  required  or  permitted  by the  Commission  (the  "Form  10-K
Certification"),  in  compliance  with Rule 13a-14 and 15d-14 under the Exchange
Act and any additional directives of the Commission. In connection with the Form
10-K Certification, the Trustee shall provide the Master Servicer with a back-up
certification  substantially  in the form  attached  hereto as Exhibit R-2. This
Section  4.03(d) may be amended in accordance  with this  Agreement  without the
consent of the Certificateholders.

        Section       4.04.  Distribution  of  Reports  to the  Trustee  and the
                      Depositor; Advances by the Master Servicer.

        (a) Prior to the close of business on the Business  Day next  succeeding
each  Determination  Date, the Master Servicer shall furnish a written statement
(which may be in a mutually  agreeable  electronic  format) to the Trustee,  the
Insurer,  any Paying Agent and the Depositor (the  information in such statement
to be made available to  Certificateholders  by the Master  Servicer on request)
(provided  that the Master  Servicer  will use its best  efforts to deliver such
written statement not later than 12:00 p.m. New York time on the second Business
Day prior to the  Distribution  Date)  setting forth (i) the Group I or Group II
Available  Distribution  Amounts, (ii) the amounts required to be withdrawn from
the  Custodial  Account  and  deposited  into  the  Certificate  Account  on the
immediately succeeding Certificate Account Deposit Date pursuant to clause (iii)
of  Section  4.01(a),  (iii)  the  amounts  required  to be  withdrawn  from and
deposited into the Reserve Fund pursuant to Section 4.09,  (iv) the  Certificate
Insurer Premium and, if the Master Servicer  determines that a Deficiency Amount
exists for such  Distribution  Date, the amount necessary to complete the notice
in the form of  Exhibit  A to the  Policy  (the  "Notice"),  (v) the  amount  of
Prepayment  Interest  Shortfalls,  Basis Risk  Shortfalls,  Basis Risk Shortfall
Carry-Forward  Amounts,  Group I Net WAC Cap  Shortfalls and Group I Net WAC Cap
Carry-Forward Amounts, (vi) the amount payable by the Derivative  Counterparties
to the Trustee under the  Derivative  Contracts as provided in Section 4.11, and
(vii) to the extent required,  a report detailing the Stated Principal  Balance,
Mortgage Rate,  Modified  Mortgage Rate,  remaining term to maturity and Monthly
Payment  for  any  Modified   Mortgage  Loan  pursuant  to  Section  3.13.   The
determination  by the Master  Servicer of such amounts shall,  in the absence of
obvious error, be presumptively  deemed to be correct for all purposes hereunder
and the  Trustee  shall be  protected  in  relying  upon the  same  without  any
independent check or verification.

        (b) On or before  2:00 P.M.  New York time on each  Certificate  Account
Deposit Date, the Master  Servicer  shall either (i) deposit in the  Certificate
Account from its own funds, or funds received therefor from the Subservicers, an
amount equal to the Advances to be made by the Master Servicer in respect of the
related  Distribution  Date,  which shall be in an aggregate amount equal to the
sum of (A) the aggregate  amount of Monthly Payments other than Balloon Payments
(with each


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interest  portion thereof adjusted to a per annum rate equal to the Net Mortgage
Rate plus the Certificate  Insurer Premium  Modified Rate, if applicable),  less
the amount of any related Servicing  Modifications,  Debt Service  Reductions or
reductions in the amount of interest  collectable from the Mortgagor pursuant to
the Relief Act or similar  legislation  or  regulations  then in effect,  on the
Outstanding Mortgage Loans as of the related Due Date in the related Due Period,
which  Monthly  Payments were due during the related Due Period and not received
as of the close of business as of the related  Determination Date; provided that
no Advance  shall be made if it would be a  Nonrecoverable  Advance and (B) with
respect to each Balloon Loan  delinquent in respect of its Balloon Payment as of
the close of business on the related  Determination Date, an amount equal to the
excess,  if any, of interest on the unpaid principal  balance thereof (with each
interest  portion thereof adjusted to a per annum rate equal to the Net Mortgage
Rate plus the Certificate  Insurer Premium  Modified Rate, if applicable),  over
any payments of interest (with each interest  portion thereof  adjusted to a per
annum rate equal to the Net Mortgage Rate)  received from the related  Mortgagor
as of the close of business on the related  Determination  Date and allocable to
the Due Date during the  related  Due Period for each month  until such  Balloon
Loan is  finally  liquidated,  (ii)  withdraw  from  amounts  on  deposit in the
Custodial Account and deposit in the Certificate Account all or a portion of the
Amount Held for Future  Distribution in discharge of any such Advance,  or (iii)
make advances in the form of any  combination  of (i) and (ii)  aggregating  the
amount of such Advance.  Any portion of the Amount Held for Future  Distribution
so used shall be replaced by the Master  Servicer by deposit in the  Certificate
Account on or before 11:00 A.M. New York time on any future Certificate  Account
Deposit Date to the extent that funds  attributable  to the Mortgage  Loans that
are available in the Custodial Account for deposit in the Certificate Account on
such   Certificate   Account  Deposit  Date  shall  be  less  than  payments  to
Certificateholders  required to be made on the following  Distribution Date. The
Master  Servicer  shall be entitled to use any Advance made by a Subservicer  as
described in Section 3.07(b) that has been deposited in the Custodial Account on
or before  such  Distribution  Date as part of the  Advance  made by the  Master
Servicer pursuant to this Section 4.04.The  determination by the Master Servicer
that it has made a Nonrecoverable Advance or that any proposed Advance, if made,
would constitute a Nonrecoverable  Advance,  shall be evidenced by a certificate
of a Servicing Officer delivered to the Depositor,  the Insurer and the Trustee.
In the  event  that  the  Master  Servicer  determines  as of the  Business  Day
preceding any Certificate Account Deposit Date that it will be unable to deposit
in the  Certificate  Account an amount equal to the Advance  required to be made
for the immediately  succeeding  Distribution  Date, it shall give notice to the
Trustee and the Insurer of its inability to advance (such notice may be given by
telecopy),  not later  than 3:00  P.M.,  New York time,  on such  Business  Day,
specifying  the portion of such  amount  that it will be unable to deposit.  Not
later than 3:00 P.M., New York time, on the Certificate Account Deposit Date the
Trustee  shall,  unless by 12:00  Noon,  New York time,  on such day the Trustee
shall have been notified in writing (by telecopy) that the Master Servicer shall
have directly or indirectly deposited in the Certificate Account such portion of
the  amount of the  Advance  as to which the  Master  Servicer  shall have given
notice  pursuant  to the  preceding  sentence,  pursuant  to Section  7.01,  (a)
terminate all of the rights and  obligations  of the Master  Servicer under this
Agreement  in  accordance  with  Section  7.01 and (b)  assume  the  rights  and
obligations  of the Master  Servicer  hereunder,  including  the  obligation  to
deposit  in the  Certificate  Account  an amount  equal to the  Advance  for the
immediately  succeeding  Distribution  Date.  In  connection  with the preceding
sentence,  the Trustee  shall  deposit  all funds it  receives  pursuant to this
Section 4.04 into the Certificate Account.



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        Section 4.05. Allocation of Realized Losses.
                      -----------------------------

        (a)           Prior to each Distribution Date, the Master Servicer shall
                      determine  the total  amount of Realized  Losses,  if any,
                      that  resulted  from  any  Cash   Liquidation,   Servicing
                      Modifications, Debt Service Reduction, Deficient Valuation
                      or  REO  Disposition  that  occurred  during  the  related
                      Prepayment   Period  or,  in  the  case  of  a   Servicing
                      Modification  that constitutes a reduction of the interest
                      rate on a Mortgage  Loan,  the amount of the  reduction in
                      the  interest  portion of the  Monthly  Payment due in the
                      month in which such Distribution  Date occurs.  The amount
                      of each  Realized  Loss shall be evidenced by an Officers'
                      Certificate.

        (1)           (A) All  Realized  Losses on the Group I Loans (other than
                      Group I Excess Losses) shall be allocated as follows:

                      first,  to Group I Excess Cash Flow as provided in Section
                      4.02(c)(vi), to the extent of the Group I Excess Cash Flow
                      for such Distribution Date;

                      second,  to the Group II Excess  Cash Flow as  provided in
                      Section 4.02(d)(iv),  to the extent of the Group II Excess
                      Cash  Flow  for such  Distribution  Date  remaining  after
                      distributions pursuant to Section 4.02(d)(iii);

                      third,  in reduction of the Group I  Overcollateralization
                      Amount,  until the  earlier  of: (1) such  amount has been
                      reduced to zero or (2) the aggregate Certificate Principal
                      Balance  of  the  Class  A  Certificates   and  Class  M-I
                      Certificates equals the aggregate Stated Principal Balance
                      of the Group I Loans and Group II Loans;

                      fourth, in reduction of the Group II Overcollateralization
                      Amount until such amount is reduced to zero, meaning, that
                      no additional  Realized Losses will be allocated under any
                      subsequent   clause   until  the   aggregate   Certificate
                      Principal  Balance of the Class A  Certificates  and Class
                      M-I  Certificates  equals the aggregate  Stated  Principal
                      Balance of the Group I Loans and Group II Loans; and

                      fifth,  to Class M-I-3  Certificates,  until the aggregate
                      Certificate  Principal Balance thereof has been reduced to
                      zero;

                      sixth,  to Class M-I-2  Certificates,  until the aggregate
                      Certificate  Principal Balance thereof has been reduced to
                      zero;

                      seventh, to Class M-I-1 Certificates,  until the aggregate
                      Certificate  Principal Balance thereof has been reduced to
                      zero; and

                      eighth,  to the Class A-I  Certificates,  with such amount
                      allocated among each Class of Class A-I  Certificates on a
                      pro rata basis,  based on the same proportion as the Group
                      I Principal Distribution Amount was allocated to


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                      such  Class of  Certificates  on that  Distribution  Date,
                      until the Certificate Principal Balance of each such Class
                      has been reduced to zero.

               (B)  Any Group I Excess  Losses  on the  Mortgage  Loans  will be
                    allocated to the Class A-I Certificates,  in each case in an
                    amount equal to the product of (a) the Group I Excess Losses
                    and  (b)  the  fraction,  expressed  as  a  percentage,  the
                    numerator  of  which  is  (x)  the   aggregate   Certificate
                    Principal  Balance  of the Class A-I  Certificates,  and the
                    denominator of which is (y) the aggregate  Stated  Principal
                    Balance  of the  Group I Loans,  and the  remainder  of such
                    losses    shall    be    allocated    to   the    Group    I
                    Overcollateralization  Amount  in  reduction  of the  amount
                    thereof.

        (2)           (A) All Realized  Losses on the Group II Loans (other than
                      Group II Excess Losses) shall be allocated as follows:

                      first,  to the Group II Excess  Cash Flow as  provided  in
                      Section 4.02(d)(iii), to the extent of the Group II Excess
                      Cash Flow for such Distribution Date;

                      second,  to the Group I Excess  Cash Flow as  provided  in
                      Section 4.02(c)(vii),  to the extent of the Group I Excess
                      Cash  Flow  for such  Distribution  Date  remaining  after
                      distributions pursuant to Section 4.02(c)(vi);

                      third, in reduction of the Group II  Overcollateralization
                      Amount,  until the  earliest  of: (1) such amount has been
                      reduced to zero or (2) the aggregate Certificate Principal
                      Balance  of  the  Class  A  Certificates   and  Class  M-I
                      Certificates equals the aggregate Stated Principal Balance
                      of the Group I Loans and Group II Loans;

                      fourth, in reduction of the Group I  Overcollateralization
                      Amount,  meaning,  that no additional Realized Losses will
                      be  allocated  to any  Class  of  Certificates  until  the
                      aggregate  Certificate  Principal  Balance  of the Class A
                      Certificates  and  Class  M-I   Certificates   equals  the
                      aggregate  Stated  Principal  Balance of the Group I Loans
                      and Group II Loans; and

                      fifth,  to the extent not  covered by the  Policy,  to the
                      Class A-II Certificates,  until the Certificate  Principal
                      Balance of such Class has been reduced to zero.

               (B)  Any Group II Excess  Losses on the  Mortgage  Loans,  to the
                    extent not covered by the Policy,  will be  allocated to the
                    Class A-II  Certificates,  in an amount equal to the product
                    of (a) the  Group II  Excess  Losses  and (b) the  fraction,
                    expressed as a percentage, the numerator of which is (x) the
                    Certificate Principal Balance of the Class A-II Certificates
                    and the  denominator  of which is (y) the  aggregate  Stated
                    Principal  Balance of the Group II Loans,  and the remainder
                    of  such  losses   shall  be   allocated  to  the  Group  II
                    Overcollateralization  Amount  in  reduction  of the  amount
                    thereof.



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        (b) Any  allocation of the principal  portion of Realized  Losses (other
than  Debt  Service  Reductions)  to the  Class  A  Certificates  or  Class  M-I
Certificates shall be made by reducing the Certificate Principal Balance thereof
by the amount so allocated, which allocation shall be deemed to have occurred on
such Distribution Date.  Allocations of the interest portions of Realized Losses
shall be made by operation of the definition of "Accrued  Certificate  Interest"
and by  operation  of the  provisions  of Section  4.02(c) and (d). All Realized
Losses and all other losses allocated to a Class of Certificates  hereunder will
be  allocated  among  the  Certificates  of  such  Class  in  proportion  to the
Percentage Interests evidenced thereby.

        (c) All Realized  Losses on the Group I Loans shall be allocated on each
Distribution  Date to REMIC I Regular  Interest LT-A-1 until the  Uncertificated
Principal  Balance  thereof has been  reduced to zero and then  sequentially  to
REMIC I  Regular  Interest  LT-A-2  through  LT-A-31  until  the  Uncertificated
Principal  Balances of each has been reduced to zero. All Realized Losses on the
Group II Loans shall be allocated on each  Distribution Date to REMIC II Regular
Interest  LT-B  until the  Uncertificated  Principal  Balance  thereof  has been
reduced to zero.

        (d) All Realized  Losses on the Group I Loans shall be allocated on each
Distribution  Date to the following REMIC III Group I Regular  Interests  (other
than REMIC III Regular  Interest  LT3-AIO-1)  in the specified  percentages,  as
follows:  first, to  Uncertificated  Accrued  Interest  payable to the REMIC III
Regular Interests LT3-AI-AA and LT3-AI-ZZ up to an aggregate amount equal to the
excess of (a) the REMIC III Group I Interest  Loss  Allocation  Amount  over (b)
Prepayment  Interest  Shortfalls  (to the  extent not  covered  by  Compensating
Interest)  relating to the Group I Loans for such Distribution Date, 98% and 2%,
respectively;  second, to the Uncertificated Principal Balances of the REMIC III
Regular Interests LT3-AI-AA and LT3-AI-ZZ up to an aggregate amount equal to the
REMIC III Group I Principal Loss Allocation  Amount,  98% and 2%,  respectively;
third, to the  Uncertificated  Principal Balances of REMIC III Regular Interests
LT3-AI-AA, 98%, LT3-AI-1,  LT3-AI-2,  LT3-AI-3,  LT3-AI-4,  LT3-AI-5,  LT3-AI-6,
LT3-MI-1,  LT3-MI-2 and LT3- MI-3,  1% pro rata,  and  LT3-AI-ZZ,  1%, until the
Uncertificated  Balance  of  each  of  REMIC  III  Regular  Interests  LT3-AI-1,
LT3-AI-2,  LT3-AI-3,  LT3-AI-4,  LT3-AI-5,  LT3-AI-6,  LT3-MI-1,  LT3-  MI-2 and
LT3-MI-3 have been reduced to zero.

        (ii) All  Realized  Losses on the Group II Loans shall be  allocated  on
each  Distribution Date to the following REMIC III Group II Regular Interests in
the specified percentages, as follows: first, to Uncertificated Accrued Interest
payable to the REMIC III Regular  Interests  LT3-AII-AA  and LT3-AII-ZZ up to an
aggregate amount equal to the excess of (a) the REMIC III Group II Interest Loss
Allocation  Amount over (b)  Prepayment  Interest  Shortfalls (to the extent not
covered  by  Compensating  Interest)  relating  to the  Group II Loans  for such
Distribution  Date,  98% and 2%,  respectively;  second,  to the  Uncertificated
Principal Balances of the REMIC III Regular Interests  LT3-AII-AA and LT3-AII-ZZ
up to an  aggregate  amount  equal to the  REMIC  III  Group II  Principal  Loss
Allocation  Amount,  98%  and 2%,  respectively;  third,  to the  Uncertificated
Principal  Balances of REMIC III Regular  Interests  LT3-AII-AA,  LT3-AII-1  and
LT3-AII-ZZ,  98%, 1% and 1%,  respectively,  until the Uncertificated  Principal
Balances of REMIC III Regular Interests LT3-AII-1 has been reduced to zero.

               Section  4.06.   Reports  of  Foreclosures   and  Abandonment  of
                    Mortgaged Property.



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        The Master Servicer or the Subservicers  shall file information  returns
with  respect  to the  receipt  of  mortgage  interest  received  in a trade  or
business, the reports of foreclosures and abandonments of any Mortgaged Property
and the  informational  returns relating to cancellation of indebtedness  income
with respect to any Mortgaged  Property  required by Sections  6050H,  6050J and
6050P of the  Code,  respectively,  and  deliver  to the  Trustee  an  Officers'
Certificate  on or before  March 31 of each year  stating that such reports have
been filed.  Such reports shall be in form and substance  sufficient to meet the
reporting  requirements  imposed by such Sections 6050H,  6050J and 6050P of the
Code.

        Section 4.07. Optional Purchase of Defaulted Mortgage Loans.
                      ---------------------------------------------

        As to any  Mortgage  Loan which is  delinquent  in payment by 90 days or
more, the Master  Servicer may, at its option,  purchase such Mortgage Loan from
the Trustee at the Purchase Price  therefor.  If at any time the Master Servicer
makes a payment to the Certificate  Account  covering the amount of the Purchase
Price for such a Mortgage Loan, and the Master Servicer  provides to the Trustee
a  certification  signed by a Servicing  Officer stating that the amount of such
payment has been deposited in the  Certificate  Account,  then the Trustee shall
execute  the  assignment  of such  Mortgage  Loan at the  request  of the Master
Servicer  without recourse to the Master Servicer which shall succeed to all the
Trustee's  right,  title and  interest  in and to such  Mortgage  Loan,  and all
security and documents relative thereto.  Such assignment shall be an assignment
outright and not for  security.  The Master  Servicer  will  thereupon  own such
Mortgage, and all such security and documents, free of any further obligation to
the Trustee or the Certificateholders with respect thereto.

        Section 4.08. Limited Mortgage Loan Repurchase Right.
                      --------------------------------------

        The Limited  Repurchase Right Holder will have the irrevocable option at
any time to purchase any of the Mortgage  Loans from the Trustee at the Purchase
Price,  up to a maximum of five Mortgage Loans. In the event that this option is
exercised  as to any five  Mortgage  Loans in the  aggregate,  this  option will
thereupon terminate.  If at any time the Limited Repurchase Right Holder makes a
payment to the Certificate Account covering the amount of the Purchase Price for
such a Mortgage Loan, and the Limited  Repurchase  Right Holder  provides to the
Trustee a certification signed by a Servicing Officer stating that the amount of
such payment has been  deposited in the  Certificate  Account,  then the Trustee
shall execute the assignment of such Mortgage Loan at the request of the Limited
Repurchase Right Holder without recourse to the Limited  Repurchase Right Holder
which shall  succeed to all the  Trustee's  right,  title and interest in and to
such  Mortgage  Loan,  and all security and  documents  relative  thereto.  Such
assignment  shall be an assignment  outright and not for  security.  The Limited
Repurchase Right Holder will thereupon own such Mortgage,  and all such security
and  documents,   free  of  any  further   obligation  to  the  Trustee  or  the
Certificateholders  with respect thereto.  Any tax on "prohibited  transactions"
(as defined in Section  860F(a)(2) of the Code) imposed on any REMIC relating to
the  exercise of the option  provided in this  Section 4.08 shall in no event be
payable by the Trustee.

        Section       4.09.  Distribution of Basis Risk Shortfall  Carry-Forward
                      Amount  and  Group  I Net WAC  Cap  Carry-Forward  Amount;
                      Reserve Fund.



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        (a) On the Closing Date, the Trustee shall establish and maintain in its
name,  in trust for the benefit of the Class A-I-1,  Class  A-I-5,  Class A-I-6,
Class A-II Certificates, the Reserve Fund. In addition, on the Closing Date, the
Trustee  shall  deposit  into the Reserve  Fund the Reserve  Fund Deposit to the
extent received by the Trustee from the Depositor.  On each  Distribution  Date,
the Trustee shall transfer from the Certificate  Account to the Reserve Fund the
amounts specified  pursuant to Sections  4.02(c)(xvi) and 4.02(d)(xiv).  On each
Distribution  Date, to the extent  required,  the Trustee shall make withdrawals
from  the  Reserve  Fund  and  use  the  amounts  in the  Reserve  Fund  to make
distributions to the Class A-II  Certificates,  in an amount equal to the amount
of any  Basis  Risk  Shortfall  Carry-Forward  Amount  or  Group  I Net  WAC Cap
Carry-Forward  Amount,  as  applicable,  on such  Certificate.  Any such amounts
transferred shall be treated for federal tax purposes as amounts  distributed by
REMIC  IV to  either  the  Class  SB-I  or  Class  SB-II  Certificateholders  as
transferee thereof. On each Distribution Date, to the extent that the balance of
deposits  in the  Reserve  Fund is in excess of $5,000  after the  distributions
described in the second preceding  sentence,  the Trustee shall,  based upon the
information provided by the Master Servicer,  withdraw from the Reserve Fund (to
the extent of funds  available  on deposit  therein)  such  amounts in excess of
$5,000,  if any, and distribute  them to the holder of the Reserve Fund Residual
Right.

        (b) The Reserve Fund shall be an Eligible  Account.  Amounts held in the
Reserve Fund from time to time shall continue to constitute  assets of the Trust
Fund,  but not of the REMICs,  until  released from the Reserve Fund pursuant to
this Section 4.09. The Reserve Fund constitutes an "outside reserve fund" within
the meaning of Treasury  Regulation  Section  1.860G-2(h) and is not an asset of
the  REMICs.  The Class  SB-I and Class  SB-II  Certificateholders  shall be the
owners  of  the  Reserve  Fund,  and  for  all  federal  tax  purposes,  amounts
transferred  by the  REMICs to the  Reserve  Fund  shall be  treated  as amounts
distributed  by the REMICs to either the Class  SB-I  Certificateholders  or the
Class SB-II Certificateholders as designated in Section 4.02(b)(4).  The Trustee
shall keep records that  accurately  reflect the funds on deposit in the Reserve
Fund. The Trustee shall, at the direction of the Master Servicer, invest amounts
on deposit in the  Reserve  Fund in  Permitted  Investments.  In the  absence of
written  direction  to the Trustee  from the Master  Servicer,  all funds in the
Reserve Fund shall remain  uninvested.  On each  Distribution  Date, the Trustee
shall  distribute  any interest on the Reserve Fund to the holder of the Reserve
Fund Residual Right.

        (c) The holder of the Reserve  Fund  Residual  Right with respect to the
Reserve Fund shall initially be Residential  Funding as holder of the Class SB-I
Certificates and Class SB-II Certificates,  and such Reserve Fund Residual Right
shall at all times be owned by and  allocated  to Class  SB-I  Certificates  and
Class  SB-II  Certificateholders  on a pro rata  basis.  So long as  Residential
Funding  is  the  holder  of  the  Class  SB-I   Certificates  and  Class  SB-II
Certificates, any amounts payable pursuant to this Section 4.09 shall be payable
to  Residential  Funding.  In the event of a transfer of the ownership in any of
the Class SB-I Certificates and Class SB-II Certificates by Residential Funding,
the Reserve Fund Residual Right will be  transferred  along with such Class SB-I
Certificates and Class SB-II Certificates.

        Section 4.10. The Policy.
                      ----------

        (a) If pursuant to Section  4.04(a)(iv),  the Master Servicer determines
and notifies the Trustee that a Deficiency  Amount exists for such  Distribution
Date, the Trustee shall complete the Notice and submit such Notice in accordance
with the Policy to the Insurer no later than 12:00 P.M.,


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New York City time, on the Business Day immediately  preceding each Distribution
Date, as a claim for an Insured  Amount  (provided that the Trustee shall submit
such notice on the second Business Day immediately  preceding such  Distribution
Date if it is able to do so) in an amount equal to such Deficiency Amount.

        (b) The Trustee shall  establish  and maintain the Insurance  Account on
behalf of the Holders of the Class A-II Certificates. Upon receipt of an Insured
Amount  from the  Insurer  on behalf of the Class A-II  Certificateholders,  the
Trustee shall deposit such Insured Amount in the Insurance Account.  All amounts
on  deposit  in  the  Insurance  Account  shall  remain   uninvested.   On  each
Distribution Date, the Trustee shall transfer any Insured Amount then on deposit
in  the  Insurance  Account  to  the  Certificate  Account.  The  Trustee  shall
distribute on each Distribution Date the Deficiency Amount for such Distribution
Date from the Certificate  Account,  together with the  distributions due to the
Class A-II Certificateholders on such Distribution Date.

        (c) The Trustee shall (i) receive as attorney-in-fact of each Class A-II
Certificateholder  any Insured Amount from the Insurer and (ii)  distribute such
Insured Amount to such Class A-II  Certificateholders as set forth in subsection
(b) above.  Insured Amounts disbursed by the Trustee from proceeds of the Policy
shall not be considered payment by the Trust Fund with respect to the Class A-II
Certificates,  nor shall such disbursement of such Insured Amounts discharge the
obligations  of the Trust Fund with  respect  to the  amounts  thereof,  and the
Insurer shall become owner of such amounts to the extent covered by such Insured
Amounts  as the deemed  assignee  of such  Class  A-II  Certificateholders.  The
Trustee hereby agrees on behalf of each Class A-II  Certificateholder  (and each
Class A-II Certificateholder,  by its acceptance of its Class A-II Certificates,
hereby  agrees) for the benefit of the Insurer that the Trustee shall  recognize
that to the  extent  the  Insurer  pays  Insured  Amounts,  either  directly  or
indirectly   (as  by  paying   through   the   Trustee),   to  the  Class   A-II
Certificateholders,  the Insurer will be entitled to be subrogated to the rights
of the Class A-II Certificateholders to the extent of such payments.

        Section 4.11. Derivative Contracts.
                      --------------------

        (a) The Trustee  shall,  at the  direction  of the Master  Servicer,  on
behalf the Trust Fund, enter into Derivative  Contracts,  solely for the benefit
of the Class SB  Certificates.  Any such Derivative  Contract shall constitute a
fully  prepaid  agreement.  The Master  Servicer  shall  determine,  in its sole
discretion,  whether any Derivative  Contract  conforms to the  requirements  of
Section  4.11(b) and (c).  Any  acquisition  of a Derivative  Contract  shall be
accompanied by an appropriate amendment to this Agreement,  including an Opinion
of Counsel,  as provided in Section 11.01. All  collections,  proceeds and other
amounts  in  respect  of the  Derivative  Contracts  payable  by the  Derivative
Counterparty   shall  be  distributed  to  the  Class  SB  Certificates  on  the
Distribution  Date following  receipt thereof by the Trustee.  In no event shall
such  an  instrument  constitute  a part  of any  REMIC  created  hereunder.  In
addition, in the event any such instrument is deposited, the Trust Fund shall be
deemed to be divided into two separate  and discrete  sub-Trusts.  The assets of
one such  sub-Trust  shall consist of all the assets of the Trust other than the
instrument  and the assets of the other  sub-Trust  shall consist solely of such
instrument.

        (b) Any Derivative  Contract that provides for any payment obligation on
the part of the Trust  Fund must (i) be  without  recourse  to the assets of the
Trust Fund, (ii) contain a non-petition


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covenant provision from the Derivative  Counterparty,  (iii) limit payment dates
thereunder to Distribution  Dates and (iv) contain a provision limiting any cash
payments due to the  Derivative  Counterparty  on any day under such  Derivative
Contract solely to funds available therefor in the Certificate Account available
to  make  payments  to  the  Holders  of  the  Class  SB  Certificates  on  such
Distribution Date.

        (c) Each Derivative  Contract must (i) provide for the direct payment of
any amounts by the Derivative Counterparty thereunder to the Certificate Account
at least one Business Day prior to the related  Distribution  Date, (ii) contain
an assignment  of all of the Trust Fund's  rights (but none of its  obligations)
under  such  Derivative   Contract  to  the  Trustee  on  behalf  the  Class  SB
Certificateholders  and shall  include  an  express  consent  to the  Derivative
Counterparty  to  such  assignment,  (iii)  provide  that  in the  event  of the
occurrence of an Event of Default, such Derivative Contract shall terminate upon
the direction of a majority  Percentage  Interest of the Class SB  Certificates,
and (iv) prohibit the Derivative  Counterparty  from  "setting-off' or "netting"
other  obligations of the Trust Fund and its Affiliates  against such Derivative
Counterparty's payment obligations thereunder.


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<PAGE>



                                          ARTICLE V

                                       THE CERTIFICATES

        Section 5.01. The Certificates.
                      ----------------

        (a) The Class A, Class M-I, Class SB and Class R  Certificates  shall be
substantially in the forms set forth in Exhibits A, B and D,  respectively,  and
shall,  on original  issue,  be  executed  and  delivered  by the Trustee to the
Certificate  Registrar for  authentication  and delivery to or upon the order of
the  Depositor  upon  receipt by the  Trustee or one or more  Custodians  of the
documents  specified in Section 2.01. The Class A  Certificates  and Class M-I-1
Certificates  shall be issuable in minimum dollar  denominations  of $25,000 and
integral  multiples  of $1 in excess  thereof.  The Class  M-I-2 and Class M-I-3
Certificates  shall be issuable in minimum dollar  denominations of $250,000 and
integral  multiples of $1 in excess thereof.  The Class SB Certificates shall be
issuable in registered,  certificated  form in minimum  percentage  interests of
5.00% and integral  multiples of 0.01% in excess thereof.  Each Class of Class R
Certificates  shall  be  issued  in  registered,  certificated  form in  minimum
percentage  interests  of  20.00%  and  integral  multiples  of 0.01% in  excess
thereof;  provided,  however, that one Class R Certificate of each Class will be
issuable to the REMIC  Administrator as "tax matters person" pursuant to Section
10.01(c) in a minimum  denomination  representing  a Percentage  Interest of not
less than  0.01%.The  Certificates  shall be  executed  by  manual or  facsimile
signature  on behalf  of an  authorized  officer  of the  Trustee.  Certificates
bearing the manual or facsimile  signatures of individuals  who were at any time
the proper officers of the Trustee shall bind the Trustee,  notwithstanding that
such  individuals  or any of them have ceased to hold such offices  prior to the
authentication  and delivery of such Certificate or did not hold such offices at
the date of such  Certificates.  No Certificate shall be entitled to any benefit
under this Agreement,  or be valid for any purpose, unless there appears on such
Certificate a certificate of  authentication  substantially in the form provided
for herein executed by the Certificate  Registrar by manual signature,  and such
certificate  upon any  Certificate  shall be conclusive  evidence,  and the only
evidence,  that such  Certificate  has been  duly  authenticated  and  delivered
hereunder. All Certificates shall be dated the date of their authentication.

        (b) The Class A Certificates and Class M-I Certificates  shall initially
be issued as one or more  Certificates  registered in the name of the Depository
or its nominee and, except as provided below,  registration of such Certificates
may not be transferred by the Trustee except to another  Depository  that agrees
to hold such Certificates for the respective  Certificate  Owners with Ownership
Interests therein.  The Certificate Owners shall hold their respective Ownership
Interests  in and to  each  such  Class A  Certificate  through  the  book-entry
facilities  of the  Depository  and,  except  as  provided  below,  shall not be
entitled to Definitive Certificates in respect of such Ownership Interests.  All
transfers by Certificate Owners of their respective  Ownership  Interests in the
Book-Entry  Certificates  shall  be  made  in  accordance  with  the  procedures
established by the Depository  Participant or brokerage firm  representing  such
Certificate  Owner.  Each  Depository  Participant  shall transfer the Ownership
Interests  only  in  the  Book-Entry   Certificates  of  Certificate  Owners  it
represents or of brokerage  firms for which it acts as agent in accordance  with
the Depository's normal procedures.



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        The Trustee,  the Master Servicer and the Depositor may for all purposes
(including  the making of payments due on the  respective  Classes of Book-Entry
Certificates)  deal with the Depository as the authorized  representative of the
Certificate  Owners  with  respect  to  the  respective  Classes  of  Book-Entry
Certificates  for the purposes of  exercising  the rights of  Certificateholders
hereunder.  The rights of  Certificate  Owners  with  respect to the  respective
Classes of Book-Entry  Certificates shall be limited to those established by law
and agreements between such Certificate  Owners and the Depository  Participants
and brokerage firms representing such Certificate Owners.  Multiple requests and
directions  from,  and votes of, the  Depository as Holder of any Class of Book-
Entry  Certificates  with respect to any  particular  matter shall not be deemed
inconsistent if they are made with respect to different  Certificate Owners. The
Trustee may establish a reasonable record date in connection with  solicitations
of consents  from or voting by  Certificateholders  and shall give notice to the
Depository of such record date.  If (i)(A) the Depositor  advises the Trustee in
writing that the Depository is no longer  willing or able to properly  discharge
its  responsibilities  as Depository and (B) the Depositor is unable to locate a
qualified  successor or (ii) the Depositor at its option  advises the Trustee in
writing  that  it  elects  to  terminate  the  book-entry   system  through  the
Depository,  the  Trustee  shall  notify all  Certificate  Owners,  through  the
Depository,  of the  occurrence  of any such  event and of the  availability  of
Definitive   Certificates  to  Certificate  Owners  requesting  the  same.  Upon
surrender  to the  Trustee of the  Book-Entry  Certificates  by the  Depository,
accompanied by registration instructions from the Depository for registration of
transfer,  the Trustee  shall  issue the  Definitive  Certificates.  Neither the
Depositor,  the Master  Servicer nor the Trustee shall be liable for any actions
taken by the Depository or its nominee, including, without limitation, any delay
in  delivery of such  instructions  and may  conclusively  rely on, and shall be
protected  in relying on, such  instructions.  Upon the  issuance of  Definitive
Certificates  all  references  herein  to  obligations  imposed  upon  or  to be
performed by the  Depositor in  connection  with the issuance of the  Definitive
Certificates  pursuant to this  Section  5.01 shall be deemed to be imposed upon
and  performed by the  Trustee,  and the Trustee and the Master  Servicer  shall
recognize  the  Holders of the  Definitive  Certificates  as  Certificateholders
hereunder.

        (c) Each of the Certificates is intended to be a "security"  governed by
Article 8 of the Uniform  Commercial  Code as in effect in the State of New York
and any other applicable  jurisdiction,  to the extent that any of such laws may
be applicable.

        Section 5.02. Registration of Transfer and Exchange of Certificates.
                      -----------------------------------------------------

        (a) The Trustee shall cause to be kept at one of the offices or agencies
to be appointed by the Trustee in accordance with the provisions of Section 8.11
a Certificate  Register in which,  subject to such reasonable  regulations as it
may prescribe,  the Trustee shall provide for the  registration  of Certificates
and of transfers and exchanges of Certificates as herein  provided.  The Trustee
is initially  appointed  Certificate  Registrar  for the purpose of  registering
Certificates and transfers and exchanges of Certificates as herein provided. The
Certificate Registrar,  or the Trustee, shall provide the Master Servicer with a
certified list of Certificateholders as of each Record Date prior to the related
Determination Date.

        (b) Upon surrender for  registration  of transfer of any  Certificate at
any office or agency of the  Trustee  maintained  for such  purpose  pursuant to
Section  8.11 and, in the case of any Class M, Class SB or Class R  Certificate,
upon satisfaction of the conditions set forth below, the Trustee shall


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<PAGE>



execute and the Certificate  Registrar shall  authenticate  and deliver,  in the
name of the designated  transferee or transferees,  one or more new Certificates
of a like Class and aggregate Percentage Interest.

        (c)  At  the  option  of  the  Certificateholders,  Certificates  may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate  Percentage  Interest,  upon  surrender  of  the  Certificates  to  be
exchanged  at any such  office  or  agency.  Whenever  any  Certificates  are so
surrendered for exchange the Trustee shall execute and the Certificate Registrar
shall  authenticate  and  deliver  the  Certificates  of such  Class  which  the
Certificateholder  making the exchange is entitled to receive. Every Certificate
presented or  surrendered  for transfer or exchange shall (if so required by the
Trustee or the Certificate  Registrar) be duly endorsed by, or be accompanied by
a written  instrument  of transfer in form  satisfactory  to the Trustee and the
Certificate  Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.

        (d) No  transfer,  sale,  pledge or other  disposition  of a Class SB or
Class R Certificate  shall be made unless such transfer,  sale,  pledge or other
disposition is exempt from the  registration  requirements of the Securities Act
of 1933, as amended (the "1933 Act"),  and any applicable  state securities laws
or is made in accordance with said Act and laws. Except as otherwise provided in
this  Section  5.02(d),  in the event that a  transfer  of a Class SB or Class R
Certificate  is to be  made,  (i)  unless  the  Depositor  directs  the  Trustee
otherwise,  the Trustee shall require a written Opinion of Counsel acceptable to
and in form and substance  satisfactory  to the Trustee and the  Depositor  that
such transfer may be made pursuant to an exemption,  describing  the  applicable
exemption  and the  basis  therefor,  from  said Act and  laws or is being  made
pursuant to said Act and laws,  which Opinion of Counsel shall not be an expense
of the Trustee,  the Trust Fund, the Depositor or the Master Servicer,  and (ii)
the Trustee shall require the  transferee  to execute a  representation  letter,
substantially in the form of Exhibit I hereto, and the Trustee shall require the
transferor  to execute a  representation  letter,  substantially  in the form of
Exhibit J hereto,  each acceptable to and in form and substance  satisfactory to
the  Depositor  and the Trustee  certifying to the Depositor and the Trustee the
facts surrounding such transfer,  which  representation  letters shall not be an
expense of the Trustee, the Trust Fund, the Depositor or the Master Servicer. In
lieu of the requirements set forth in the preceding sentence, transfers of Class
SB or Class R Certificates  may be made in accordance  with this Section 5.02(d)
if the prospective transferee of such a Certificate provides the Trustee and the
Master Servicer with an investment letter substantially in the form of Exhibit N
attached hereto, which investment letter shall not be an expense of the Trustee,
the Depositor,  or the Master Servicer, and which investment letter states that,
among other things, such transferee (i) is a "qualified  institutional buyer" as
defined  under Rule 144A,  acting for its own  account or the  accounts of other
"qualified  institutional  buyers" as defined under Rule 144A, and (ii) is aware
that the proposed  transferor intends to rely on the exemption from registration
requirements  under the 1933 Act provided by Rule 144A. The Holder of a Class SB
or Class R Certificate  desiring to effect any transfer,  sale,  pledge or other
disposition  shall,  and does  hereby  agree  to,  indemnify  the  Trustee,  the
Depositor,  the  Master  Servicer  and the  Certificate  Registrar  against  any
liability that may result if the transfer,  sale, pledge or other disposition is
not so exempt or is not made in accordance  with such federal and state laws and
this Agreement.

        (e) In the  case of any  Class  M-I,  Class  SB or  Class R  Certificate
presented  for  registration  in the name of any Person,  either (i) the Trustee
shall require an Opinion of Counsel


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<PAGE>



addressed to and  acceptable  to and in form and substance  satisfactory  to the
Trustee,  the Depositor and the Master  Servicer to the effect that the purchase
or  holding  of such  Class  SB or  Class R  Certificate  is  permissible  under
applicable  law,  will not  constitute  or result in any  non-exempt  prohibited
transaction  under  Section  406 of  ERISA,  or  Section  4975 of the  Code  (or
comparable  provisions of any subsequent  enactments),  and will not subject the
Trustee,  the  Depositor or the Master  Servicer to any  obligation or liability
(including  obligations or liabilities  under ERISA or Section 4975 of the Code)
in addition to those  undertaken  in this  Agreement,  which  Opinion of Counsel
shall not be an expense of the Trustee,  the Depositor or the Master Servicer or
(ii) the prospective  transferee  shall be required to provide the Trustee,  the
Depositor and the Master Servicer with a  certification  to the effect set forth
in Exhibit P-1 (with respect to a Class M-I  Certificate)  (which  certification
shall be deemed to have been given by a Class M-I Certificateholder who acquires
a Book-Entry Certificate),  Exhibit P-2 (with respect to a Class SB Certificate)
or in paragraph fourteen of Exhibit H-1 (with respect to a Class R Certificate),
which the Trustee may rely upon without  further  inquiry or  investigation,  or
such other  certifications  as the Trustee may deem  desirable  or  necessary in
order to  establish  that  such  transferee  or the  Person  in whose  name such
registration  is requested  either (a) is not an employee  benefit plan or other
plan subject to the prohibited  transaction  provisions of ERISA or Section 4975
of the Code, or any Person (including an insurance company investing its general
accounts,  an  investment  manager,  a named  fiduciary or a trustee of any such
plan) who is using "plan assets" of any such plan to effect such  acquisition or
(b) in the  case  of a Class  M-I  Certificate,  the  following  conditions  are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company  general  account" (as defined in U.S.  Department  of Labor  Prohibited
Transaction  Class Exemption  ("PTCE") 95-60, and (iii) the conditions set forth
in  Sections I and III of PTCE  95-60  have been  satisfied  (each  entity  that
satisfies this clause (b), a "Complying Insurance Company").

        (f) (i)Each  Person who has or who acquires any Ownership  Interest in a
Class R Certificate  shall be deemed by the  acceptance or  acquisition  of such
Ownership Interest to have agreed to be bound by the following provisions and to
have  irrevocably  authorized the Trustee or its designee under clause  (iii)(A)
below to deliver  payments to a Person  other than such Person and to  negotiate
the terms of any mandatory  sale under clause  (iii)(B) below and to execute all
instruments of transfer and to do all other things  necessary in connection with
any such sale. The rights of each Person  acquiring any Ownership  Interest in a
Class R Certificate are expressly subject to the following provisions:

               (A) Each Person holding or acquiring any Ownership  Interest in a
        Class R Certificate  shall be a Permitted  Transferee and shall promptly
        notify the Trustee of any change or impending  change in its status as a
        Permitted Transferee.

               (B) In  connection  with any proposed  Transfer of any  Ownership
        Interest in a Class R Certificate, the Trustee shall require delivery to
        it, and shall not register the Transfer of any Class R Certificate until
        its receipt of,

                      (I) an affidavit and agreement (a "Transfer  Affidavit and
                      Agreement,"  in the form  attached  hereto as Exhibit H-1)
                      from  the  proposed  Transferee,  in  form  and  substance
                      satisfactory to the Master Servicer, representing and


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<PAGE>



                      warranting,  among  other  things,  that it is a Permitted
                      Transferee,   that  it  is  not  acquiring  its  Ownership
                      Interest in the Class R Certificate that is the subject of
                      the proposed  Transfer as a nominee,  trustee or agent for
                      any Person who is not a Permitted Transferee,  that for so
                      long as it retains  its  Ownership  Interest  in a Class R
                      Certificate,  it  will  endeavor  to  remain  a  Permitted
                      Transferee,  and that it has  reviewed the  provisions  of
                      this Section 5.02(f) and agrees to be bound by them, and

                      (II) a certificate, in the form attached hereto as Exhibit
                      H-2,  from the  Holder  wishing  to  transfer  the Class R
                      Certificate,  in form and  substance  satisfactory  to the
                      Master Servicer,  representing and warranting, among other
                      things,  that no purpose of the  proposed  Transfer  is to
                      impede the assessment or collection of tax.

               (C)  Notwithstanding  the  delivery of a Transfer  Affidavit  and
        Agreement  by  a  proposed  Transferee  under  clause  (B)  above,  if a
        Responsible Officer of the Trustee who is assigned to this Agreement has
        actual  knowledge  that  the  proposed  Transferee  is  not a  Permitted
        Transferee,   no  Transfer  of  an  Ownership  Interest  in  a  Class  R
        Certificate to such proposed Transferee shall be effected.

               (D) Each Person holding or acquiring any Ownership  Interest in a
        Class R Certificate shall agree (x) to require a Transfer  Affidavit and
        Agreement from any other Person to whom such Person attempts to transfer
        its Ownership  Interest in a Class R Certificate and (y) not to transfer
        its Ownership  Interest  unless it provides a certificate to the Trustee
        in the form attached hereto as Exhibit H-2.

               (E) Each Person  holding or acquiring an Ownership  Interest in a
        Class  R  Certificate,  by  purchasing  an  Ownership  Interest  in such
        Certificate,  agrees to give the  Trustee  written  notice  that it is a
        "pass-through  interest holder" within the meaning of Temporary Treasury
        Regulations  Section  1.67-3T(a)(2)(i)(A)  immediately upon acquiring an
        Ownership Interest in a Class R Certificate,  if it is, or is holding an
        Ownership   Interest  in  a  Class  R   Certificate   on  behalf  of,  a
        "pass-through interest holder."

        (ii) The Trustee will  register the Transfer of any Class R  Certificate
only  if it  shall  have  received  the  Transfer  Affidavit  and  Agreement,  a
certificate of the Holder  requesting  such transfer in the form attached hereto
as Exhibit  H-2 and all of such other  documents  as shall have been  reasonably
required by the Trustee as a condition  to such  registration.  Transfers of the
Class R Certificates to Non-United States Persons and Disqualified Organizations
(as defined in Section 860E(e)(5) of the Code) are prohibited.

               (A) If any Disqualified  Organization  shall become a holder of a
        Class R Certificate,  then the last preceding Permitted Transferee shall
        be  restored,  to  the  extent  permitted  by  law,  to all  rights  and
        obligations as Holder thereof retroactive to the date of registration of
        such Transfer of such Class R Certificate. If a Non-United States Person
        shall become a holder of a Class R Certificate,  then the last preceding
        United States Person shall be restored,  to the extent permitted by law,
        to all rights and obligations as Holder thereof


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        retroactive to the date of registration of such Transfer of such Class R
        Certificate.  If a  transfer  of a Class R  Certificate  is  disregarded
        pursuant to the provisions of Treasury  Regulations  Section 1.860E-1 or
        Section 1.860G-3,  then the last preceding Permitted Transferee shall be
        restored,  to the extent permitted by law, to all rights and obligations
        as  Holder  thereof  retroactive  to the  date of  registration  of such
        Transfer  of such Class R  Certificate.  The  Trustee  shall be under no
        liability  to any Person for any  registration  of Transfer of a Class R
        Certificate that is in fact not permitted by this Section 5.02(f) or for
        making any payments due on such Certificate to the holder thereof or for
        taking any other action with respect to such holder under the provisions
        of this Agreement.

               (B) If any purported  Transferee shall become a Holder of a Class
        R Certificate in violation of the  restrictions  in this Section 5.02(f)
        and to the extent that the retroactive  restoration of the rights of the
        Holder of such Class R Certificate as described in clause (iii)(A) above
        shall be invalid,  illegal or  unenforceable,  then the Master  Servicer
        shall have the right,  without  notice to the holder or any prior holder
        of such  Class R  Certificate,  to sell such  Class R  Certificate  to a
        purchaser  selected  by the Master  Servicer on such terms as the Master
        Servicer may choose.  Such purported  Transferee  shall promptly endorse
        and deliver each Class R Certificate in accordance with the instructions
        of the Master Servicer. Such purchaser may be the Master Servicer itself
        or any Affiliate of the Master Servicer.  The proceeds of such sale, net
        of the commissions (which may include  commissions payable to the Master
        Servicer or its  Affiliates),  expenses  and taxes due, if any,  will be
        remitted by the Master Servicer to such purported Transferee.  The terms
        and  conditions  of  any  sale  under  this  clause  (iii)(B)  shall  be
        determined in the sole discretion of the Master Servicer, and the Master
        Servicer shall not be liable to any Person having an Ownership  Interest
        in a Class R Certificate as a result of its exercise of such discretion.

        (iv)  The  Master  Servicer,  on  behalf  of  the  Trustee,  shall  make
available,  upon written request from the Trustee, all information  necessary to
compute any tax imposed

               (A) as a result of the  Transfer  of an  Ownership  Interest in a
               Class  R  Certificate   to  any  Person  who  is  a  Disqualified
               Organization,   including  the  information   regarding   "excess
               inclusions" of such Class R Certificates  required to be provided
               to the Internal  Revenue Service and certain Persons as described
               in   Treasury    Regulations    Sections    1.860D-1(b)(5)    and
               1.860E-2(a)(5), and

               (B) as a result of any regulated investment company,  real estate
               investment trust, common trust fund,  partnership,  trust, estate
               or organization  described in Section 1381 of the Code that holds
               an Ownership  Interest in a Class R  Certificate  having as among
               its record  holders at any time any Person who is a  Disqualified
               Organization.   Reasonable   compensation   for  providing   such
               information  may be  required  by the Master  Servicer  from such
               Person.

        (v) The  provisions  of this  Section  5.02(f)  set forth  prior to this
clause (v) may be modified,  added to or  eliminated,  provided that there shall
have been delivered to the Trustee the following:



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               (A) Written consent of the Insurer and written  notification from
               each Rating Agency to the effect that the modification,  addition
               to or elimination of such  provisions  will not cause such Rating
               Agency to  downgrade  its  then-current  ratings,  if any, of the
               Class A Certificates and Class M-I  Certificates  below the lower
               of  the  then-current  rating  or the  rating  assigned  to  such
               Certificates as of the Closing Date by such Rating Agency; and

               (B) a certificate of the Master Servicer  stating that the Master
               Servicer  has  received  an  Opinion  of  Counsel,  in  form  and
               substance satisfactory to the Master Servicer, to the effect that
               such modification, addition to or absence of such provisions will
               not  cause  any of REMIC I,  REMIC  II,  REMIC III or REMIC IV to
               cease to  qualify  as a REMIC and will not cause (x) any of REMIC
               I,  REMIC  II,  REMIC  III  or  REMIC  IV  to  be  subject  to an
               entity-level   tax  caused  by  the   Transfer  of  any  Class  R
               Certificate  to a Person that is a Disqualified  Organization  or
               (y) a  Certificateholder  or  another  Person to be  subject to a
               REMIC-related tax caused by the Transfer of a Class R Certificate
               to a Person that is not a Permitted Transferee.

        (g) No service  charge  shall be made for any  transfer  or  exchange of
Certificates  of any  Class,  but  the  Trustee  may  require  payment  of a sum
sufficient  to cover  any tax or  governmental  charge  that may be  imposed  in
connection with any transfer or exchange of Certificates.

        (h) All  Certificates  surrendered  for transfer  and exchange  shall be
destroyed by the Certificate Registrar.

        Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
                      -------------------------------------------------

        If (i) any  mutilated  Certificate  is  surrendered  to the  Certificate
Registrar,  or the Trustee and the  Certificate  Registrar  receive  evidence to
their  satisfaction of the destruction,  loss or theft of any  Certificate,  and
(ii) there is  delivered  to the  Trustee  and the  Certificate  Registrar  such
security or indemnity as may be required by them to save each of them  harmless,
then, in the absence of notice to the Trustee or the Certificate  Registrar that
such  Certificate has been acquired by a bona fide purchaser,  the Trustee shall
execute  and the  Certificate  Registrar  shall  authenticate  and  deliver,  in
exchange  for or in lieu  of any  such  mutilated,  destroyed,  lost  or  stolen
Certificate,  a new Certificate of like tenor, Class and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate  under this  Section,  the  Trustee may require the payment of a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
relation thereto and any other expenses  (including the fees and expenses of the
Trustee  and the  Certificate  Registrar)  connected  therewith.  Any  duplicate
Certificate  issued  pursuant to this  Section  shall  constitute  complete  and
indefeasible  evidence of ownership in the Trust Fund, as if originally  issued,
whether or not the lost,  stolen or destroyed  Certificate shall be found at any
time.

        Section 5.04. Persons Deemed Owners.
                      ---------------------

        Prior to due presentation of a Certificate for registration of transfer,
the Depositor,  the Master Servicer,  the Insurer,  the Trustee, the Certificate
Registrar and any agent of the Depositor,  the Master Servicer, the Insurer, the
Trustee or the Certificate Registrar may treat the Person in whose name any


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Certificate  is registered as the owner of such  Certificate  for the purpose of
receiving  distributions  pursuant  to Section  4.02 and for all other  purposes
whatsoever,  except  as  and  to  the  extent  provided  in  the  definition  of
"Certificateholder"and  in Section 4.09, and neither the  Depositor,  the Master
Servicer, the Trustee, the Certificate Registrar nor any agent of the Depositor,
the Master Servicer, the Insurer, the Trustee or the Certificate Registrar shall
be affected by notice to the contrary except as provided in Section 5.02(f).

        Section 5.05. Appointment of Paying Agent.
                      ---------------------------

        The Trustee may,  with the consent of the Insurer (so long as no Insurer
Default  exists),  which consent shall not be unreasonably  withheld,  appoint a
Paying  Agent for the  purpose  of making  distributions  to  Certificateholders
pursuant to Section 4.02. In the event of any such  appointment,  on or prior to
each  Distribution  Date the  Master  Servicer  on behalf of the  Trustee  shall
deposit or cause to be deposited  with the Paying Agent a sum sufficient to make
the payments to Certificateholders in the amounts and in the manner provided for
in  Section   4.02,   such  sum  to  be  held  in  trust  for  the   benefit  of
Certificateholders.  The Trustee  shall  cause each Paying  Agent to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee that such Paying Agent will hold all sums held by it for the payment
to  Certificateholders  in  trust  for  the  benefit  of the  Certificateholders
entitled thereto until such sums shall be paid to such  Certificateholders.  Any
sums so held by such Paying Agent shall be held only in Eligible Accounts to the
extent such sums are not  distributed to the  Certificateholders  on the date of
receipt by such Paying Agent.





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                                          ARTICLE VI

                            THE DEPOSITOR AND THE MASTER SERVICER

               Section 6.01.  Respective  Liabilities  of the  Depositor and the
                    Master Servicer.

        The Depositor and the Master Servicer shall each be liable in accordance
herewith only to the extent of the  obligations  specifically  and  respectively
imposed upon and undertaken by the Depositor and the Master Servicer herein.  By
way of  illustration  and not  limitation,  the  Depositor is not liable for the
servicing  and  administration  of the  Mortgage  Loans,  nor is it obligated by
Section  7.01 or 10.01 to assume any  obligations  of the Master  Servicer or to
appoint a designee  to assume such  obligations,  nor is it liable for any other
obligation  hereunder  that it may, but is not  obligated  to,  assume unless it
elects to assume such obligation in accordance herewith.

        Section       6.02.  Merger or  Consolidation  of the  Depositor  or the
                      Master  Servicer;  Assignment of Rights and  Delegation of
                      Duties by Master Servicer.

        (a) The Depositor and the Master  Servicer will each keep in full effect
its  existence,  rights and  franchises as a  corporation  under the laws of the
state of its incorporation,  and will each obtain and preserve its qualification
to do  business  as a foreign  corporation  in each  jurisdiction  in which such
qualification   is  or  shall  be   necessary   to  protect  the   validity  and
enforceability of this Agreement,  the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

        (b) Any Person into which the  Depositor  or the Master  Servicer may be
merged  or  consolidated,  or any  corporation  resulting  from  any  merger  or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person  succeeding to the business of the Depositor or the Master  Servicer,
shall be the successor of the Depositor or the Master Servicer,  as the case may
be,  hereunder,  without the execution or filing of any paper or any further act
on the  part of any of the  parties  hereto,  anything  herein  to the  contrary
notwithstanding;  provided,  however,  that the successor or surviving Person to
the Master  Servicer  shall be qualified to service  mortgage loans on behalf of
Fannie Mae or Freddie  Mac;  and  provided  further  that each  Rating  Agency's
ratings,  if any, of the Class A  Certificates  without  taking into account the
Policy in effect  immediately prior to such merger or consolidation  will not be
qualified, reduced or withdrawn as a result thereof (as evidenced by a letter to
such effect from each Rating Agency).

        (c) Notwithstanding  anything else in this Section 6.02 and Section 6.04
to the  contrary,  the Master  Servicer  may assign its rights and  delegate its
duties and obligations under this Agreement;  provided that the Person accepting
such  assignment or  delegation  shall be a Person which is qualified to service
mortgage   loans  on  behalf  of  Fannie  Mae  or  Freddie  Mac,  is  reasonably
satisfactory  to the  Trustee,  the  Insurer  and the  Depositor,  is willing to
service the  Mortgage  Loans and executes  and  delivers to the  Depositor,  the
Insurer  and  the  Trustee  an  agreement,  in  form  and  substance  reasonably
satisfactory  to the Depositor,  the Insurer and the Trustee,  which contains an
assumption by such Person of the due and punctual  performance and observance of
each covenant and  condition to be performed or observed by the Master  Servicer
under this Agreement;  provided  further that each Rating Agency's rating of the
Classes of Certificates (without taking into account


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<PAGE>



the Policy) that have been rated in effect  immediately prior to such assignment
and delegation  will not be qualified,  reduced or withdrawn as a result of such
assignment  and  delegation  (as  evidenced by a letter to such effect from each
Rating Agency).  In the case of any such  assignment and delegation,  the Master
Servicer shall be released from its  obligations  under this  Agreement,  except
that the Master Servicer shall remain liable for all liabilities and obligations
incurred by it as Master  Servicer  hereunder  prior to the  satisfaction of the
conditions to such  assignment  and  delegation  set forth in the next preceding
sentence.

        Section  6.03.  Limitation  on  Liability of the  Depositor,  the Master
Servicer and Others.

        Neither the  Depositor,  the Master  Servicer nor any of the  directors,
officers,  employees or agents of the Depositor or the Master  Servicer shall be
under any liability to the Trust Fund or the  Certificateholders  for any action
taken or for refraining  from the taking of any action in good faith pursuant to
this  Agreement,  or for  errors  in  judgment;  provided,  however,  that  this
provision  shall not  protect  the  Depositor,  the Master  Servicer or any such
Person  against any breach of warranties or  representations  made herein or any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross  negligence in the performance of duties or by reason of reckless
disregard  of  obligations  and  duties  hereunder.  The  Depositor,  the Master
Servicer and any  director,  officer,  employee or agent of the Depositor or the
Master  Servicer  may rely in good faith on any document of any kind prima facie
properly  executed and submitted by any Person  respecting  any matters  arising
hereunder.  The  Depositor,  the  Master  Servicer  and any  director,  officer,
employee or agent of the Depositor or the Master  Servicer  shall be indemnified
by the Trust  Fund and held  harmless  against  any loss,  liability  or expense
incurred in connection  with any legal action  relating to this Agreement or the
Certificates,  other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage  Loans (except as any such loss,  liability or expense
shall be  otherwise  reimbursable  pursuant  to this  Agreement)  and any  loss,
liability  or expense  incurred by reason of willful  misfeasance,  bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of  obligations  and duties  hereunder.  Neither the Depositor nor the
Master Servicer shall be under any obligation to appear in,  prosecute or defend
any legal or administrative action,  proceeding,  hearing or examination that is
not  incidental to its  respective  duties under this Agreement and which in its
opinion may involve it in any expense or liability;  provided, however, that the
Depositor  or the  Master  Servicer  may in its  discretion  undertake  any such
action,  proceeding,  hearing  or  examination  that it may  deem  necessary  or
desirable in respect to this  Agreement and the rights and duties of the parties
hereto and the interests of the Certificateholders hereunder. In such event, the
legal expenses and costs of such action, proceeding,  hearing or examination and
any liability  resulting  therefrom shall be expenses,  costs and liabilities of
the Trust Fund,  and the Depositor and the Master  Servicer shall be entitled to
be  reimbursed  therefor out of amounts  attributable  to the Mortgage  Loans on
deposit  in the  Custodial  Account as  provided  by  Section  3.10 and,  on the
Distribution  Date(s)  following  such  reimbursement,  the  aggregate  of  such
expenses and costs shall be  allocated  in reduction of the Accrued  Certificate
Interest on each Class  entitled  thereto in the same manner as if such expenses
and costs constituted a Prepayment Interest Shortfall.

        Section 6.04. Depositor and Master Servicer Not to Resign.
                      -------------------------------------------



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<PAGE>



        Subject to the provisions of Section 6.02, neither the Depositor nor the
Master  Servicer shall resign from its respective  obligations and duties hereby
imposed on it except upon  determination that its duties hereunder are no longer
permissible  under  applicable  law.  Any  such  determination   permitting  the
resignation  of the  Depositor or the Master  Servicer  shall be evidenced by an
Opinion  of  Counsel  (at the  expense of the  resigning  party) to such  effect
delivered  to the Trustee and the  Insurer.  No such  resignation  by the Master
Servicer shall become effective until the Trustee or a successor  servicer shall
have  assumed  the  Master  Servicer's   responsibilities   and  obligations  in
accordance with Section 7.02.




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                                         ARTICLE VII

                                           DEFAULT

        Section 7.01. Events of Default.
                      -----------------

        Event of Default,  wherever used herein,  means any one of the following
events  (whatever  reason  for such  Event of  Default  and  whether it shall be
voluntary or  involuntary  or be effected by operation of law or pursuant to any
judgment,  decree or order of any court or any order,  rule or regulation of any
administrative or governmental body):

        (i)  the  Master  Servicer  shall  fail to  distribute  or  cause  to be
distributed to Holders of Certificates of any Class any distribution required to
be made under the terms of the  Certificates  of such  Class and this  Agreement
and, in either case,  such failure shall  continue  unremedied for a period of 5
days after the date upon which written  notice of such failure,  requiring  such
failure to be  remedied,  shall have been  given to the Master  Servicer  by the
Trustee,  the Insurer or the Depositor or to the Master Servicer,  the Depositor
and  the  Trustee  by the  Holders  of  Certificates  of such  Class  evidencing
Percentage Interests aggregating not less than 25%; or

        (ii) the  Master  Servicer  shall  fail to  observe  or  perform  in any
material  respect any other of the  covenants or  agreements  on the part of the
Master Servicer  contained in the Certificates of any Class or in this Agreement
and such failure shall continue  unremedied for a period of 30 days (except that
such  number of days shall be 15 in the case of a failure to pay the premium for
any Required  Insurance  Policy) after the date on which written  notice of such
failure,  requiring the same to be remedied, shall have been given to the Master
Servicer  by the  Trustee,  the  Insurer  or  the  Depositor,  or to the  Master
Servicer,  the Depositor and the Trustee by the Holders of  Certificates  of any
Class evidencing,  as to such Class,  Percentage Interests  aggregating not less
than 25%; or

        (iii) a decree or order of a court or agency  or  supervisory  authority
having  jurisdiction in the premises in an involuntary case under any present or
future  federal or state  bankruptcy,  insolvency or similar law or appointing a
conservator or receiver or liquidator in any  insolvency,  readjustment of debt,
marshalling  of  assets  and  liabilities  or  similar  proceedings,  or for the
winding- up or liquidation of its affairs,  shall have been entered  against the
Master  Servicer  and  such  decree  or  order  shall  have  remained  in  force
undischarged or unstayed for a period of 60 days; or

        (iv)  the  Master  Servicer  shall  consent  to  the  appointment  of  a
conservator or receiver or liquidator in any  insolvency,  readjustment of debt,
marshalling of assets and  liabilities,  or similar  proceedings of, or relating
to, the Master Servicer or of, or relating to, all or  substantially  all of the
property of the Master Servicer; or

        (v) the Master  Servicer shall admit in writing its inability to pay its
debts  generally as they become due,  file a petition to take  advantage  of, or
commence a voluntary  case under,  any applicable  insolvency or  reorganization
statute,  make an assignment  for the benefit of its  creditors,  or voluntarily
suspend payment of its obligations; or



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<PAGE>



        (vi) the Master  Servicer  shall notify the Trustee  pursuant to Section
4.04(b) that it is unable to deposit in the Certificate  Account an amount equal
to the Advance.

        If an Event of  Default  described  in clauses  (i)-(v) of this  Section
shall  occur,  then,  and in each and every such case,  so long as such Event of
Default shall not have been remedied,  either the Depositor or the Trustee shall
at the direction of the Insurer  (unless an Insurance  Default is continuing) or
at the  direction  of Holders of  Certificates  entitled  to at least 51% of the
Voting Rights (which Voting Rights of the Class A  Certificateholders  and Class
M-I  Certificateholders  may be exercised by the Insurer  without the consent of
such Holders and may only be  exercised  by such Holders with the prior  written
consent of the  Insurer so long as there does not exist a failure by the Insurer
to make a required payment under the Policy), by notice in writing to the Master
Servicer (and to the Depositor and the Insurer if given by the Trustee or to the
Trustee and the Insurer if given by the Depositor),  terminate all of the rights
and  obligations  of the Master  Servicer under this Agreement and in and to the
Mortgage  Loans  and  the  proceeds   thereof,   other  than  its  rights  as  a
Certificateholder  hereunder;  provided, however, that unless an Insurer Default
is continuing the successor to the Master Servicer appointed pursuant to Section
7.02 shall be  acceptable  to the Insurer and shall have  accepted the duties of
Master  Servicer  effective upon the resignation of the Master  Servicer.  If an
Event of Default  described in clause (vi) hereof shall occur,  the Trustee with
the consent of the Insurer shall, by notice to the Master Servicer,  the Insurer
and the Depositor,  immediately  terminate all of the rights and  obligations of
the Master  Servicer  under this  Agreement and in and to the Mortgage Loans and
the proceeds thereof, other than its rights as a Certificateholder  hereunder as
provided in Section  4.04(b).  On or after the receipt by the Master Servicer of
such written  notice,  all authority and power of the Master Servicer under this
Agreement,  whether  with  respect to the  Certificates  (other than as a Holder
thereof) or the Mortgage Loans or otherwise,  shall subject to Section 7.02 pass
to and be vested in the Trustee or the Trustee's  designee appointed pursuant to
Section 7.02;  and,  without  limitation,  the Trustee is hereby  authorized and
empowered  to  execute  and  deliver,  on  behalf  of the  Master  Servicer,  as
attorney-in-fact or otherwise, any and all documents and other instruments,  and
to do or accomplish all other acts or things  necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement  or  assignment  of the  Mortgage  Loans and related  documents,  or
otherwise. The Master Servicer agrees to cooperate with the Trustee in effecting
the termination of the Master Servicer's  responsibilities and rights hereunder,
including,  without limitation,  the transfer to the Trustee or its designee for
administration  by it of all cash amounts which shall at the time be credited to
the Custodial Account or the Certificate  Account or thereafter be received with
respect to the Mortgage  Loans.  No such  termination  shall  release the Master
Servicer for any liability that it would otherwise have hereunder for any act or
omission prior to the effective time of such  termination.  Notwithstanding  any
termination of the  activities of Residential  Funding in its capacity as Master
Servicer hereunder, Residential Funding shall be entitled to receive, out of any
late  collection of a Monthly  Payment on a Mortgage Loan which was due prior to
the notice  terminating  Residential  Funding's rights and obligations as Master
Servicer  hereunder  and  received  after  such  notice,  that  portion to which
Residential  Funding would have been entitled pursuant to Sections  3.10(a)(ii),
(vi) and (vii) as well as its  Servicing Fee in respect  thereof,  and any other
amounts payable to Residential  Funding hereunder the entitlement to which arose
prior to the  termination of its activities  hereunder.  Upon the termination of
Residential  Funding as Master Servicer hereunder the Depositor shall deliver to
the Trustee a copy of the Program  Guide and upon the request of the Insurer,  a
copy of the Program Guide to the Insurer.


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<PAGE>



        Section 7.02. Trustee or Depositor to Act; Appointment of Successor.
                      -----------------------------------------------------

        (a) On and  after  the time the  Master  Servicer  receives  a notice of
termination pursuant to Section 7.01 or resigns in accordance with Section 6.04,
the Insurer may appoint a successor  Master Servicer and if the Insurer fails to
do so within 30 days,  the  Trustee  or,  upon  notice  to the  Insurer  and the
Depositor and with the Depositor's and the Insurer's consent (which shall not be
unreasonably withheld) a designee (which meets the standards set forth below) of
the Trustee,  shall be the  successor in all respects to the Master  Servicer in
its capacity as servicer under this Agreement and the  transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities  relating  thereto  placed on the Master  Servicer  (except  for the
responsibilities, duties and liabilities contained in Sections 2.02 and 2.03(a),
excluding the duty to notify related Subservicers as set forth in such Sections,
and its  obligations to deposit  amounts in respect of losses  incurred prior to
such notice or termination  on the investment of funds in the Custodial  Account
or the Certificate Account pursuant to Sections 3.07(c) and 4.01(c) by the terms
and  provisions  hereof);  provided,  however,  that any failure to perform such
duties or responsibilities  caused by the preceding Master Servicer's failure to
provide  information  required by Section 4.04 shall not be considered a default
by the  Trustee  hereunder.  As  compensation  therefor,  the  Trustee  shall be
entitled to all funds relating to the Mortgage  Loans which the Master  Servicer
would have been entitled to charge to the Custodial  Account or the  Certificate
Account if the Master  Servicer had continued to act hereunder and, in addition,
shall be entitled to the income from any Permitted Investments made with amounts
attributable  to the  Mortgage  Loans  held  in  the  Custodial  Account  or the
Certificate  Account.  If the  Trustee  has become the  successor  to the Master
Servicer in accordance with Section 6.04 or Section 7.01,  then  notwithstanding
the above,  the  Insurer  may appoint a  successor  Master  Servicer  and if the
Insurer fails to do so within 30 days, the Trustee may, if it shall be unwilling
to so act, or shall, if it is unable to so act, appoint,  or petition a court of
competent  jurisdiction  to appoint,  any  established  housing and home finance
institution,  which  is  also a  Fannie  Mae or  Freddie  Mac-approved  mortgage
servicing  institution,  having a net worth of not less than  $10,000,000 as the
successor to the Master Servicer  hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall become  successor to the Master Servicer and shall act in such capacity as
hereinabove  provided.  In connection with such appointment and assumption,  the
Trustee may make such arrangements for the compensation of such successor out of
payments on  Mortgage  Loans as it and such  successor  shall  agree;  provided,
however,  that no such  compensation  shall be in excess of that  permitted  the
initial Master Servicer hereunder. The Depositor, the Trustee, the Custodian and
such successor shall take such action,  consistent with this Agreement, as shall
be  necessary to  effectuate  any such  succession.  The  Servicing  Fee for any
successor  Master  Servicer  appointed  pursuant  to this  Section  7.02 will be
lowered with respect to those Mortgage Loans, if any, where the Subservicing Fee
accrues at a rate of less than  0.50% per annum in the event that the  successor
Master  Servicer  is  not  servicing  such  Mortgage  Loans  directly  and it is
necessary to raise the related  Subservicing Fee to a rate of 0.50% per annum in
order to hire a Subservicer with respect to such Mortgage Loans.

        (b) In connection  with the  termination  or  resignation  of the Master
Servicer  hereunder,  either (i) the successor  Master  Servicer,  including the
Trustee if the Trustee is acting as successor Master  Servicer,  shall represent
and  warrant  that it is a member of MERS in good  standing  and shall  agree to
comply  in all  material  respects  with the  rules  and  procedures  of MERS in
connection with


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the servicing of the Mortgage Loans that are registered with MERS, in which case
the  predecessor  Master  Servicer  shall  cooperate  with the successor  Master
Servicer  in causing  MERS to revise its  records to  reflect  the  transfer  of
servicing to the successor  Master  Servicer as necessary  under MERS' rules and
regulations,  or (ii) the  predecessor  Master Servicer shall cooperate with the
successor  Master  Servicer in causing MERS to execute and deliver an assignment
of Mortgage in recordable form to transfer the Mortgage from MERS to the Trustee
and to execute and deliver such other notices,  documents and other  instruments
as may be necessary or desirable to effect a transfer of such  Mortgage  Loan or
servicing of such  Mortgage Loan on the MERS(R)  System to the successor  Master
Servicer.  The  predecessor  Master Servicer shall file or cause to be filed any
such  assignment in the appropriate  recording  office.  The predecessor  Master
Servicer shall bear any and all fees of MERS, costs of preparing any assignments
of Mortgage,  and fees and costs of filing any  assignments of Mortgage that may
be required under this subsection (b). The successor Master Servicer shall cause
such  assignment to be delivered to the Trustee or the  Custodian  promptly upon
receipt of the original with evidence of recording  thereon or a copy  certified
by the public recording office in which such assignment was recorded.

        Section 7.03. Notification to Certificateholders.
                      ----------------------------------

        (a) Upon any such  termination  or  appointment  of a  successor  to the
Master  Servicer,  the Trustee shall give prompt  written  notice thereof to the
Insurer and to the Certificateholders at their respective addresses appearing in
the Certificate Register.

        (b) Within 60 days after the  occurrence  of any Event of  Default,  the
Trustee shall  transmit by mail to all Holders of  Certificates  and the Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default  shall have been cured or waived as  provided  in Section  7.04
hereof.

        Section 7.04. Waiver of Events of Default.
                      ---------------------------

        The  Insurer  or the  Holders  representing  at least 66% of the  Voting
Rights of Certificates  affected by a default or Event of Default  hereunder may
waive any default or Event of Default,  with the written consent of the Insurer,
which consent shall not be unreasonably withheld;  provided, however, that (a) a
default or Event of Default  under clause (i) of Section 7.01 may be waived with
the written  consent of the Insurer,  only by all of the Holders of Certificates
affected by such default or Event of Default (which Voting Rights of the Class A
Certificateholders  may be exercised by the Insurer  without the consent of such
Holders and may only be exercised by such Holders with the prior written consent
of the  Insurer so long as there does not exist a failure by the Insurer to make
a required  payment under the Policy) and (b) no waiver pursuant to this Section
7.04 shall affect the Holders of Certificates in the manner set forth in Section
11.01(b)(i),  (ii) or  (iii).  Upon any such  waiver  of a  default  or Event of
Default by the Insurer or the Holders  representing the requisite  percentage of
Voting Rights of Certificates  affected by such default or Event of Default with
the consent of the Insurer,  which consent shall not be  unreasonably  withheld,
such  default  or Event of Default  shall  cease to exist and shall be deemed to
have been remedied for every purpose  hereunder.  No such waiver shall extend to
any  subsequent  or other  default  or Event of  Default  or  impair  any  right
consequent thereon except to the extent expressly so waived.



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        Section 7.05. Servicing Trigger; Removal of Master Servicer.
                      ---------------------------------------------

        (a) Upon  determination  by the  Insurer  that a  Servicing  Trigger has
occurred,  the Insurer shall give notice of such Servicing Trigger to the Master
Servicer, the Depositor, the Trustee and to each Rating Agency.

        (b) At any time after such  determination  and while a Servicing Trigger
is continuing,  the Insurer may direct the Trustee to remove the Master Servicer
if the Insurer makes a determination  that the manner of master  servicing was a
factor  contributing to the size of the  delinquencies or losses incurred in the
Trust Fund.

        (c) Upon receipt of directions to remove the Master Servicer pursuant to
the preceding  clause (b), the Trustee shall notify the Master  Servicer that it
has been  terminated  and the Master  Servicer  shall be  terminated in the same
manner as specified in Sections 7.01 and 7.02.

        (d) After notice of occurrence of a Servicing Trigger has been given and
while a Servicing  Trigger is continuing,  until and unless the Master  Servicer
has been removed as provided in clause (b), the Master  Servicer  covenants  and
agrees  to act as the  Master  Servicer  for a term from the  occurrence  of the
Servicing  Trigger to the end of the  calendar  quarter in which such  Servicing
Trigger occurs, which term may at the Insurer's discretion be extended by notice
to the Trustee for successive terms of three (3) calendar months each, until the
termination  of the Trust Fund. The Master  Servicer  will,  upon the receipt of
each such notice of  extension (a "Master  Servicer  Extension  Notice")  become
bound for the  duration of the term  covered by such Master  Servicer  Extension
Notice to continue as Master  Servicer  subject to and in  accordance  with this
Agreement.  If, as of the fifteenth (15th) day prior to the last day of any term
as the Master Servicer,  the Trustee shall not have received any Master Servicer
Extension  Notice  from the  Insurer,  the Trustee  shall,  within five (5) days
thereafter, give written notice of such nonreceipt to the Insurer and the Master
Servicer.  If any such term expires without a Master Servicer  Extension  Notice
then the Trustee shall act as Master Servicer as provided in Section 7.02.

        (e) No  provision of this Section 7.05 shall have the effect of limiting
the rights of the Depositor,  the Trustee, the Certificateholders or the Insurer
under Section 7.01.






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                                         ARTICLE VIII

                                    CONCERNING THE TRUSTEE

        Section 8.01. Duties of Trustee.
                      -----------------

        (a) The  Trustee,  prior to the  occurrence  of an Event of Default  and
after the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are  specifically  set forth in this
Agreement. In case an Event of Default has occurred (which has not been cured or
waived),  the Trustee shall  exercise such of the rights and powers vested in it
by this  Agreement,  and use the same degree of care and skill in their exercise
as a prudent  investor  would  exercise  or use under the  circumstances  in the
conduct of such investor's own affairs.

        (b)  The  Trustee,  upon  receipt  of  all  resolutions,   certificates,
statements,  opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically  required to be furnished  pursuant to any
provision  of this  Agreement,  shall  examine  them to  determine  whether they
conform to the  requirements  of this  Agreement.  The Trustee  shall notify the
Insurer and the Certificateholders of any such documents which do not materially
conform to the  requirements  of this  Agreement  in the event that the Trustee,
after so requesting,  does not receive satisfactorily  corrected documents.  The
Trustee shall forward or cause to be forwarded in a timely  fashion the notices,
reports and  statements  required  to be  forwarded  by the Trustee  pursuant to
Sections 4.03, 7.03, and 10.01. The Trustee shall furnish in a timely fashion to
the Master  Servicer  such  information  as the Master  Servicer may  reasonably
request  from time to time for the Master  Servicer to fulfill its duties as set
forth in this Agreement and the Trustee shall furnish in a timely fashion to the
Insurer such information as the Insurer may reasonably request from time to time
for the Insurer to protect  its  interests  and to fulfill its duties  under the
Policy.  The Trustee  covenants and agrees that it shall perform its obligations
hereunder in a manner so as to maintain the status of each of REMIC I, REMIC II,
REMIC III and REMIC IV as a REMIC under the REMIC  Provisions and to prevent the
imposition of any federal, state or local income, prohibited transaction (except
as provided in Section 2.04 herein), contribution or other tax on the Trust Fund
to the  extent  that  maintaining  such  status  and  avoiding  such  taxes  are
reasonably within the control of the Trustee and are reasonably within the scope
of its duties under this Agreement.

        (c) No  provision  of this  Agreement  shall be construed to relieve the
Trustee from liability for its own negligent  action,  its own negligent failure
to act or its own willful misconduct; provided, however, that:

               (i) Prior to the occurrence of an Event of Default, and after the
        curing or waiver of all such Events of Default which may have  occurred,
        the duties and obligations of the Trustee shall be determined  solely by
        the express  provisions  of this  Agreement,  the  Trustee  shall not be
        liable except for the  performance of such duties and obligations as are
        specifically  set  forth in this  Agreement,  no  implied  covenants  or
        obligations  shall be read into this Agreement  against the Trustee and,
        in the absence of bad faith on the part of the Trustee,  the Trustee may
        conclusively rely, as to the truth of the statements and the correctness
        of the opinions  expressed  therein,  upon any  certificates or opinions
        furnished to


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<PAGE>



          the Trustee by the Depositor or the Master Servicer and which on their
          face, do not contradict the requirements of this Agreement;

               (ii) The Trustee shall not be  personally  liable for an error of
        judgment  made in good faith by a  Responsible  Officer  or  Responsible
        Officers of the Trustee,  unless it shall be proved that the Trustee was
        negligent in ascertaining the pertinent facts;

               (iii) The Trustee shall not be personally  liable with respect to
        any action taken, suffered or omitted to be taken by it in good faith in
        accordance  with the direction of the Insurer or the  Certificateholders
        holding Certificates which evidence,  Percentage  Interests  aggregating
        not less than 25% of the  affected  classes  as to the time,  method and
        place of  conducting  any  proceeding  for any remedy  available  to the
        Trustee,  or exercising  any trust or power  conferred upon the Trustee,
        under this Agreement;

               (iv) The  Trustee  shall not be  charged  with  knowledge  of any
        default  (other than a default in payment to the  Trustee)  specified in
        clauses  (i) and  (ii) of  Section  7.01 or an Event  of  Default  under
        clauses (iii), (iv) and (v) of Section 7.01 unless a Responsible Officer
        of the Trustee  assigned to and working in the  Corporate  Trust  Office
        obtains  actual  knowledge  of such  failure  or  event  or the  Trustee
        receives  written notice of such failure or event at its Corporate Trust
        Office from the Master  Servicer,  the  Insurer,  the  Depositor  or any
        Certificateholder; and

               (v) Except to the extent  provided in Section  7.02, no provision
        in this  Agreement  shall  require the Trustee to expend or risk its own
        funds  (including,  without  limitation,  the making of any  Advance) or
        otherwise incur any personal  financial  liability in the performance of
        any of its duties as Trustee hereunder, or in the exercise of any of its
        rights or powers,  if the  Trustee  shall have  reasonable  grounds  for
        believing  that  repayment of funds or adequate  indemnity  against such
        risk or liability is not reasonably assured to it.

        (d) The Trustee shall timely pay, from its own funds,  the amount of any
and all federal,  state and local taxes  imposed on the Trust Fund or its assets
or transactions  including,  without  limitation,  (A) "prohibited  transaction"
penalty  taxes as defined in Section 860F of the Code,  if, when and as the same
shall be due and  payable,  (B) any tax on  contributions  to a REMIC  after the
Closing  Date  imposed  by  Section  860G(d) of the Code and (C) any tax on "net
income from foreclosure property" as defined in Section 860G(c) of the Code, but
only if such  taxes  arise out of a breach  by the  Trustee  of its  obligations
hereunder,  which breach  constitutes  negligence  or willful  misconduct of the
Trustee.

        Section 8.02. Certain Matters Affecting the Trustee.
                      -------------------------------------

        (a) Except as otherwise provided in Section 8.01:

               (i) The  Trustee  may rely and  shall be  protected  in acting or
        refraining  from  acting  upon any  resolution,  Officers'  Certificate,
        certificate of auditors or any other certificate, statement, instrument,
        opinion, report, notice, request, consent, order, appraisal, bond or


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<PAGE>



          other paper or document  believed by it to be genuine and to have been
          signed or presented by the proper party or parties;

               (ii) The  Trustee  may  consult  with  counsel and any Opinion of
        Counsel  shall be full and  complete  authorization  and  protection  in
        respect of any action  taken or suffered or omitted by it  hereunder  in
        good faith and in accordance with such Opinion of Counsel;

               (iii) The Trustee shall be under no obligation to exercise any of
        the trusts or powers  vested in it by this  Agreement  or to  institute,
        conduct or defend any litigation  hereunder or in relation hereto at the
        request,  order or  direction  of any of the  Certificateholders  or the
        Insurer,  pursuant  to the  provisions  of this  Agreement,  unless such
        Certificateholders  or the  Insurer  shall have  offered to the  Trustee
        reasonable  security  or  indemnity  against  the  costs,  expenses  and
        liabilities which may be incurred therein or thereby and the Insurer has
        given its consent;  nothing contained herein shall, however, relieve the
        Trustee of the  obligation,  upon the  occurrence of an Event of Default
        (which has not been  cured),  to exercise  such of the rights and powers
        vested in it by this  Agreement,  and to use the same degree of care and
        skill in their  exercise  as a prudent  investor  would  exercise or use
        under the circumstances in the conduct of such investor's own affairs;

               (iv) The Trustee  shall not be  personally  liable for any action
        taken,  suffered or omitted by it in good faith and believed by it to be
        authorized or within the  discretion or rights or powers  conferred upon
        it by this Agreement;

               (v) Prior to the occurrence of an Event of Default  hereunder and
        after the curing of all Events of Default which may have  occurred,  the
        Trustee shall not be bound to make any  investigation  into the facts or
        matters stated in any resolution,  certificate,  statement,  instrument,
        opinion,  report, notice,  request,  consent,  order, approval,  bond or
        other  paper or  document,  unless  requested  in  writing  to do by the
        Insurer or by the Holders of Certificates of any Class evidencing, as to
        such Class, Percentage Interests,  aggregating not less than 50%with the
        written consent of the Insurer;  provided,  however, that if the payment
        within a  reasonable  time to the  Trustee  of the  costs,  expenses  or
        liabilities  likely  to  be  incurred  by  it  in  the  making  of  such
        investigation is, in the opinion of the Trustee,  not reasonably assured
        to the  Trustee  by the  security  afforded  to it by the  terms of this
        Agreement,  the Trustee may require  reasonable  indemnity  against such
        expense or  liability as a condition to so  proceeding.  The  reasonable
        expense of every such examination  shall be paid by the Master Servicer,
        if an Event of  Default  shall  have  occurred  and is  continuing,  and
        otherwise  by  the  Certificateholder  or  the  Insurer  requesting  the
        investigation;

               (vi)  The  Trustee  may  execute  any of  the  trusts  or  powers
        hereunder  or perform  any duties  hereunder  either  directly  or by or
        through  agents or  attorneys  provided  that the Trustee  shall  remain
        liable for any acts of such agents or attorneys; and

               (vii) To the extent authorized under the Code and the regulations
        promulgated  thereunder,  each  Holder of a Class R  Certificate  hereby
        irrevocably   appoints   and   authorizes   the   Trustee   to  be   its
        attorney-in-fact  for purposes of signing any Tax Returns required to be
        filed on behalf of the Trust Fund.  The Trustee  shall sign on behalf of
        the Trust Fund and


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<PAGE>



        deliver  to the  Master  Servicer  in a timely  manner  any Tax  Returns
        prepared  by or on behalf of the  Master  Servicer  that the  Trustee is
        required  to sign as  determined  by the  Master  Servicer  pursuant  to
        applicable  federal,  state or local tax laws,  provided that the Master
        Servicer  shall  indemnify  the Trustee for signing any such Tax Returns
        that contain errors or omissions.

        (b) Following the issuance of the  Certificates  (and except as provided
for in Section 2.04), the Trustee shall not accept any contribution of assets to
the Trust Fund unless it shall have obtained or been  furnished  with an Opinion
of Counsel to the effect that such  contribution will not (i) cause any of REMIC
I,  REMIC II,  REMIC III or REMIC IV to fail to  qualify  as a REMIC at any time
that any Certificates are outstanding or (ii) cause the Trust Fund to be subject
to any federal tax as a result of such contribution (including the imposition of
any federal tax on "prohibited  transactions"  imposed under Section  860F(a) of
the Code).

        Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
                      -----------------------------------------------------

        The recitals  contained herein and in the  Certificates  (other than the
execution of the  Certificates and relating to the acceptance and receipt of the
Mortgage  Loans) shall be taken as the statements of the Depositor or the Master
Servicer as the case may be, and the Trustee assumes no responsibility for their
correctness.  The  Trustee  makes  no  representations  as to  the  validity  or
sufficiency  of  this  Agreement  or  of  the  Certificates   (except  that  the
Certificates  shall be duly and  validly  executed  and  authenticated  by it as
Certificate  Registrar) or of any Mortgage Loan or related document,  or of MERS
or the MERS(R) System.  Except as otherwise  provided herein,  the Trustee shall
not be  accountable  for the use or  application  by the Depositor or the Master
Servicer of any of the Certificates or of the proceeds of such Certificates,  or
for the use or  application  of any funds  paid to the  Depositor  or the Master
Servicer in respect of the Mortgage  Loans or deposited in or withdrawn from the
Custodial  Account or the  Certificate  Account by the  Depositor  or the Master
Servicer.

        Section 8.04. Trustee May Own Certificates.
                      ----------------------------

        The Trustee in its individual or any other capacity may become the owner
or pledgee  of  Certificates  with the same  rights it would have if it were not
Trustee.

        Section  8.05.  Master  Servicer  to Pay  Trustee's  Fees and  Expenses;
Indemnification.

        (a) The Master  Servicer  covenants and agrees to pay to the Trustee and
any co-trustee  from time to time,  and the Trustee and any co-trustee  shall be
entitled  to,  reasonable  compensation  (which  shall  not  be  limited  by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services  rendered by each of them in the execution of the trusts hereby
created  and in the  exercise  and  performance  of any of the powers and duties
hereunder of the Trustee and any co-trustee, and the Master Servicer will pay or
reimburse  the  Trustee  and any  co-trustee  upon  request  for all  reasonable
expenses,  disbursements  and  advances  incurred  or made by the Trustee or any
co-trustee in accordance with any of the provisions of this Agreement (including
the reasonable  compensation  and the expenses and  disbursements of its counsel
and of all persons not regularly in its employ, and the expenses incurred by the
Trustee or any co-trustee in connection with the


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<PAGE>



appointment  of an office or agency  pursuant to Section  8.12)  except any such
expense, disbursement or advance as may arise from its negligence or bad faith.

        (b) The Master Servicer agrees to indemnify the Trustee for, and to hold
the Trustee harmless  against,  any loss,  liability or expense incurred without
negligence or willful  misconduct on its part,  arising out of, or in connection
with, the acceptance and  administration of the Trust Fund,  including the costs
and expenses (including  reasonable legal fees and expenses) of defending itself
against any claim in connection  with the exercise or  performance of any of its
powers or duties under this Agreement, provided that:

               (i) with respect to any such claim,  the Trustee shall have given
        the Master  Servicer  written notice thereof  promptly after the Trustee
        shall have actual knowledge thereof;

               (ii) while maintaining control over its own defense,  the Trustee
        shall  cooperate and consult fully with the Master Servicer in preparing
        such defense; and

               (iii) notwithstanding anything in this Agreement to the contrary,
        the Master  Servicer  shall not be liable for settlement of any claim by
        the  Trustee  entered  into  without  the prior  consent  of the  Master
        Servicer  which  consent  shall  not  be   unreasonably   withheld.   No
        termination of this Agreement  shall affect the  obligations  created by
        this Section  8.05(b) of the Master  Servicer to  indemnify  the Trustee
        under the conditions and to the extent set forth herein. Notwithstanding
        the foregoing,  the  indemnification  provided by the Master Servicer in
        this Section 8.05(b) shall not pertain to any loss, liability or expense
        of the Trustee,  including  the costs and  expenses of defending  itself
        against any claim,  incurred in connection with any actions taken by the
        Trustee at the direction of Certificateholders  pursuant to the terms of
        this Agreement.

        Section 8.06. Eligibility Requirements for Trustee.
                      ------------------------------------

        The  Trustee  hereunder  shall  at  all  times  be  a  national  banking
association or a New York banking  corporation  having its principal office in a
state and city  acceptable  to the  Depositor  and the Insurer and organized and
doing  business  under the laws of such state or the United  States of  America,
authorized under such laws to exercise corporate trust powers, having a combined
capital  and  surplus of at least  $50,000,000  and  subject to  supervision  or
examination  by federal or state  authority.  If such  corporation  or  national
banking association  publishes reports of condition at least annually,  pursuant
to  law  or to  the  requirements  of the  aforesaid  supervising  or  examining
authority,  then for the  purposes  of this  Section  the  combined  capital and
surplus  of such  corporation  shall be deemed to be its  combined  capital  and
surplus as set forth in its most recent  report of  condition so  published.  In
case at any time the Trustee shall cease to be eligible in  accordance  with the
provisions of this Section,  the Trustee shall resign  immediately in the manner
and with the effect specified in Section 8.07.



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<PAGE>



        Section 8.07. Resignation and Removal of the Trustee.
                      --------------------------------------

        (a) The Trustee may at any time resign and be discharged from the trusts
hereby created by giving  written  notice  thereof to the Depositor,  the Master
Servicer  and the  Insurer.  Upon  receiving  such  notice of  resignation,  the
Depositor shall promptly appoint a successor  trustee  acceptable to the Insurer
by written  instrument,  in  duplicate,  one copy of which  instrument  shall be
delivered to the resigning Trustee and one copy to the successor trustee.  If no
successor  trustee shall have been so appointed  and have  accepted  appointment
within 30 days after the giving of such notice of  resignation  then the Insurer
may  appoint a successor  trustee  and if the  Insurer  fails to do so within 30
days, the resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor trustee.

        (b) If at any time the Trustee  shall cease to be eligible in accordance
with the  provisions  of  Section  8.06 and shall fail to resign  after  written
request  therefor  by the  Insurer  or the  Depositor  with the  consent  of the
Insurer,  or if at any time the Trustee  shall become  incapable  of acting,  or
shall be adjudged bankrupt or insolvent,  or a receiver of the Trustee or of its
property shall be appointed,  or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of  rehabilitation,
conservation or liquidation,  then the Insurer or the Depositor with the consent
of the Insurer may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor  trustee.  In addition,  in the
event that the Insurer or the Depositor  determines  that the Trustee has failed
(i) to distribute or cause to be  distributed to  Certificateholders  any amount
required to be distributed  hereunder,  if such amount is held by the Trustee or
its  Paying  Agent  (other  than  the  Master  Servicer  or the  Depositor)  for
distribution or (ii) to otherwise observe or perform in any material respect any
of its covenants,  agreements or obligations  hereunder,  and such failure shall
continue  unremedied  for a period of 5 days (in respect of clause (i) above) or
30 days (in respect of clause (ii) above) after the date on which written notice
of such failure,  requiring that the same be remedied,  shall have been given to
the Trustee by the Depositor or the Insurer, then the Depositor with the consent
of the Insurer, which consent shall not be unreasonably withheld, may remove the
Trustee and  appoint a  successor  trustee by written  instrument  delivered  as
provided in the preceding  sentence.  In connection  with the  appointment  of a
successor trustee pursuant to the preceding sentence, the Depositor shall, on or
before the date on which any such  appointment  becomes  effective,  obtain from
each  Rating  Agency  written  confirmation  that  the  appointment  of any such
successor  trustee will not result in the  reduction of the ratings on any class
of the Certificates  below the lesser of the then current or original ratings on
such Certificates without taking into account the Policy.

        (c)  During  the  continuance  of an  Insurer  Default,  the  Holders of
Certificates  entitled  to at least  51% of the  Voting  Rights  may at any time
remove the  Trustee and appoint a  successor  trustee by written  instrument  or
instruments,  in triplicate,  signed by such Holders or their attorneys- in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor,  one  complete  set to the Trustee so removed and one complete set to
the successor so appointed.

        (d) Any  resignation  or removal of the  Trustee  and  appointment  of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08.


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<PAGE>



        Section 8.08. Successor Trustee.
                      -----------------

        (a) Any  successor  trustee  appointed as provided in Section 8.07 shall
execute,  acknowledge  and deliver to the  Depositor  and the Insurer and to its
predecessor  trustee an instrument  accepting such  appointment  hereunder,  and
thereupon the  resignation  or removal of the  predecessor  trustee shall become
effective and such successor  trustee shall become  effective and such successor
trustee, without any further act, deed or conveyance,  shall become fully vested
with  all  the  rights,  powers,  duties  and  obligations  of  its  predecessor
hereunder,  with the like effect as if originally  named as trustee herein.  The
predecessor  trustee shall deliver to the successor  trustee all Mortgage  Files
and  related  documents  and  statements  held by it  hereunder  (other than any
Mortgage Files at the time held by a Custodian,  which shall become the agent of
any successor trustee hereunder), and the Depositor, the Master Servicer and the
predecessor trustee shall execute and deliver such instruments and do such other
things as may  reasonably be required for more fully and  certainly  vesting and
confirming  in the  successor  trustee  all  such  rights,  powers,  duties  and
obligations.

        (b) No successor  trustee shall accept  appointment  as provided in this
Section unless at the time of such  acceptance  such successor  trustee shall be
eligible under the provisions of Section 8.06.

        (c) Upon acceptance of appointment by a successor trustee as provided in
this Section,  the Depositor shall mail notice of the succession of such trustee
hereunder  to all Holders of  Certificates  at their  addresses  as shown in the
Certificate  Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee,  the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.

        Section 8.09. Merger or Consolidation of Trustee.
                      ----------------------------------

        Any corporation or national  banking  association into which the Trustee
may be  merged  or  converted  or  with  which  it may  be  consolidated  or any
corporation  or  national  banking   association   resulting  from  any  merger,
conversion  or  consolidation  to which  the  Trustee  shall be a party,  or any
corporation or national  banking  association  succeeding to the business of the
Trustee,  shall  be  the  successor  of the  Trustee  hereunder,  provided  such
corporation  or  national  banking  association  shall  be  eligible  under  the
provisions of Section 8.06,  without the execution or filing of any paper or any
further act on the part of any of the  parties  hereto,  anything  herein to the
contrary  notwithstanding.  The Trustee  shall mail notice of any such merger or
consolidation  to the  Certificateholders  at  their  address  as  shown  in the
Certificate Register.

        Section 8.10. Appointment of Co-Trustee or Separate Trustee.
                      ---------------------------------------------

        (a)  Notwithstanding  any other provisions  hereof, at any time, for the
purpose of meeting any legal  requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located,  the
Master  Servicer and the Trustee  acting  jointly shall have the power and shall
execute and deliver all  instruments to appoint one or more Persons  approved by
the Trustee to act as co-trustee or  co-trustees,  jointly with the Trustee,  or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or  Persons,  in such  capacity,  such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section


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8.10, such powers, duties, obligations, rights and trusts as the Master Servicer
and the Trustee may consider  necessary  or  desirable.  If the Master  Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment.  No
co-trustee or separate trustee  hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice to
Holders  of  Certificates  of  the  appointment  of  co-trustee(s)  or  separate
trustee(s) shall be required under Section 8.08 hereof.

        (b) In the case of any  appointment of a co-trustee or separate  trustee
pursuant  to this  Section  8.10 all  rights,  powers,  duties  and  obligations
conferred  or imposed  upon the Trustee  shall be  conferred or imposed upon and
exercised or performed by the Trustee,  and such separate  trustee or co-trustee
jointly,  except to the extent that under any law of any  jurisdiction  in which
any particular act or acts are to be performed  (whether as Trustee hereunder or
as successor to the Master Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,  powers,
duties and obligations  (including the holding of title to the Trust Fund or any
portion  thereof in any such  jurisdiction)  shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.

        (c) Any notice,  request or other  writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as  effectively  as if given to each of them.  Every  instrument  appointing any
separate  trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee,  upon its acceptance
of the trusts conferred,  shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided  therein,  subject to all the  provisions of this  Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording  protection to, the Trustee.  Every
such instrument shall be filed with the Trustee.

        (d) Any separate trustee or co-trustee may, at any time,  constitute the
Trustee,  its agent or attorney-in-fact,  with full power and authority,  to the
extent not  prohibited  by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name.  If any separate  trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties,  rights,  remedies  and trusts shall vest in and be exercised by the
Trustee,  to the extent  permitted by law,  without the  appointment of a new or
successor trustee.

        Section 8.11. Appointment of Custodians.
                      -------------------------

        The Trustee may,  with the consent of the Master  Servicer,  the Insurer
and the Depositor,  appoint one or more Custodians who are not Affiliates of the
Depositor or the Master  Servicer to hold all or a portion of the Mortgage Files
as agent for the Trustee,  by entering  into a Custodial  Agreement.  Subject to
Article  VIII,  the Trustee  agrees to comply  with the terms of each  Custodial
Agreement and to enforce the terms and provisions  thereof against the Custodian
for the benefit of the Certificateholders.  Each Custodian shall be a depository
institution  subject to supervision by federal or state authority,  shall have a
combined  capital and surplus of at least  $15,000,000 and shall be qualified to
do  business  in the  jurisdiction  in which it holds any  Mortgage  File.  Each
Custodial  Agreement  may be amended  only as  provided  in Section  11.01.  The
Trustee shall notify the


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Certificateholders of the appointment of any Custodian (other than the Custodian
appointed as of the Closing  Date)  pursuant to this Section  8.11.  The Trustee
will maintain an office or agency in the City of New York where Certificates may
be surrendered for registration of transfer or exchange.  The Trustee  initially
designates  its offices  located at 4 New York Plaza,  6th Floor,  New York, New
York 10004,  for the purpose of keeping the  Certificate  Register.  The Trustee
will maintain an office at the address stated in Section  11.05(c)  hereof where
notices and demands to or upon the Trustee in respect of this  Agreement  may be
served.




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                                          ARTICLE IX

                                         TERMINATION

               Section 9.01. Termination Upon Purchase by the Master Servicer or
                    Liquidation of All Mortgage Loans.

        (a)  Subject  to  Section   9.02,   the   respective   obligations   and
responsibilities  of the Depositor,  the Master Servicer and the Trustee created
hereby in respect of the Certificates  (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to Certificateholders
and the obligation of the Depositor to send certain  notices as hereinafter  set
forth) shall  terminate upon the last action required to be taken by the Trustee
on the Final Distribution Date pursuant to this Article IX following the earlier
of:

               (i) the later of the final payment or other  liquidation  (or any
        Advance with respect thereto) of the last Mortgage Loan remaining in the
        Trust Fund or the disposition of all property  acquired upon foreclosure
        or deed in lieu of foreclosure of any Mortgage Loan, or

               (ii) the purchase by the Master Servicer of all Group I Loans and
        all  property  acquired in respect of any Group I Loan  remaining in the
        Trust Fund and the purchase by the Master Servicer of all Group II Loans
        and all property  acquired in respect of any Group II Loan  remaining in
        the Trust Fund (other than the Policy),  in each case,  at a price equal
        to 100% of the unpaid  principal  balance of each  Mortgage Loan (or, if
        less than such unpaid  principal  balance,  the fair market value of the
        related  underlying  property  of such  Mortgage  Loan with  respect  to
        Mortgage  Loans as to which title has been  acquired if such fair market
        value  is  less  than  such  unpaid  principal   balance)  (net  of  any
        unreimbursed   Advances   attributable  to  principal)  on  the  day  of
        repurchase,  plus accrued  interest thereon at the Net Mortgage Rate (or
        Modified Net Mortgage Rate in the case of any Modified  Mortgage  Loan),
        plus,  with  respect  to the Group II  Loans,  the  Certificate  Insurer
        Premium Modified Rate to, but not including,  the first day of the month
        in which such repurchase price is distributed,  including the payment of
        any amounts due to the Insurer under the Insurance Agreement;  provided,
        however, that in no event shall the trust created hereby continue beyond
        the  expiration  of 21 years from the death of the last  survivor of the
        descendants  of Joseph P.  Kennedy,  the late  ambassador  of the United
        States to the Court of St.  James,  living on the date hereof;  provided
        further,  that, if the amount due under any  Certificate  shall not have
        been reduced to zero prior to the  Maturity  Date,  the Master  Servicer
        shall be required to terminate  this  Agreement in accordance  with this
        clause (ii);  and provided  further,  that the purchase  price set forth
        above shall be increased as is  necessary,  as  determined by the Master
        Servicer,  to avoid  disqualification of any of REMIC I, REMIC II, REMIC
        III or REMIC IV as a REMIC.

        The right of the Master  Servicer  or the  Company to  purchase  all the
assets of the Trust Fund relating to the Group I Loans,  pursuant to clause (ii)
above is  conditioned  upon the date of such purchase  occurring on or after the
Group I  Optional  Termination  Date.  The right of the Master  Servicer  or the
Company to  purchase  all the assets of the Trust Fund  relating to the Group II
Loans,


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<PAGE>



pursuant  to clause  (ii) above is  conditioned  upon the date of such  purchase
occurring on or after the Group II Optional  Termination  Date. If such right is
exercised by the Master  Servicer,  the Master  Servicer shall be deemed to have
been  reimbursed for the full amount of any  unreimbursed  Advances  theretofore
made by it with respect to the Mortgage Loans being purchased.  In addition, the
Master  Servicer  shall  provide to the  Trustee the  certification  required by
Section 3.15 and the Trustee and any Custodian shall, promptly following payment
of the  purchase  price,  release  to the Master  Servicer  the  Mortgage  Files
pertaining to the Mortgage Loans being purchased. No purchase pursuant to clause
(ii) of this  Section  9.01(a)  is  permitted  if it would  result in, or if the
Insurer can show a reasonable probability that it would result in, a draw on the
Policy unless the Insurer consents in writing.

        In addition to the foregoing,  on any Distribution  Date on or after the
Group I Optional  Termination Date, the Master Servicer shall have the right, at
its option, to purchase the Class A-I Certificates and Class M-I Certificates in
whole,  but not in part, at a price equal to aggregate  outstanding  Certificate
Principal  Balance of the Class A-I  Certificates  (other than the Class  A-I-IO
Certificates) and Class M-I Certificates,  plus one month's Accrued  Certificate
Interest  on  the  Class  A-I  Certificates  and  Class  M-I  Certificates,  any
previously  unpaid  Accrued  Certificate  Interest,  and any  unpaid  Prepayment
Interest Shortfall  previously  allocated thereto;  provided,  however,  that no
early  termination of REMIC I will be permitted if it would result in, or if the
Insurer can show a reasonable  probability that it would result in, a draw under
the  Policy.  On any  Distribution  Date  on or  after  the  Group  II  Optional
Termination  Date, the Master Servicer shall have the right,  at its option,  to
purchase the Class A-II Certificates in whole, but not in part, at a price equal
to  aggregate  outstanding  Certificate  Principal  Balance  of the  Class  A-II
Certificates,  plus one month's Accrued  Certificate  Interest on the Class A-II
Certificates, any previously unpaid Accrued Certificate Interest, and any unpaid
Prepayment  Interest  Shortfall  previously  allocated  thereto,  including  the
payment  of any  amounts  due to the  Insurer  under  the  Insurance  Agreement;
provided, however, that no early termination of REMIC II will be permitted if it
would  result in a draw under the  Policy  unless the  Insurer  consents  to the
termination.  If the  Master  Servicer  exercises  this  right to  purchase  the
outstanding  Class  A-I  Certificates,  Class  M-I  Certificates  or Class  A-II
Certificates,  the  Master  Servicer  will  promptly  terminate  the  respective
obligations and responsibilities created hereby in respect of these Certificates
pursuant to this Article IX.

        (b) The Master  Servicer shall give the Trustee and the Insurer not less
than 60 days' prior notice of the Distribution Date on which the Master Servicer
anticipates  that  the  final  distribution  will be made to  Certificateholders
(whether  as a result of the  exercise  by the Master  Servicer  of its right to
purchase the assets of the Trust Fund or otherwise).  Notice of any termination,
specifying the anticipated  Final  Distribution Date (which shall be a date that
would otherwise be a Distribution  Date) upon which the  Certificateholders  may
surrender   their   Certificates  to  the  Trustee  for  payment  of  the  final
distribution  and  cancellation,  shall be given promptly by the Master Servicer
(if it is exercising its right to purchase the assets of the Trust Fund),  or by
the  Trustee  (in any other  case) by letter to  Certificateholders  mailed  not
earlier  than the 15th day and not  later  than the 25th day of the  month  next
preceding the month of such final distribution specifying:

               (i) the  anticipated  Final  Distribution  Date upon which  final
        payment of the Certificates is anticipated to be made upon  presentation
        and  surrender  of  Certificates  at the office or agency of the Trustee
        therein designated,


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<PAGE>



               (ii) the amount of any such final payment, if known, and

               (iii)  that  the  Record  Date   otherwise   applicable  to  such
        Distribution Date is not applicable,  and that payment will be made only
        upon  presentation  and surrender of the  Certificates  at the office or
        agency of the Trustee therein specified.

        If the Master Servicer is obligated to give notice to Certificateholders
as aforesaid, it shall give such notice to the Certificate Registrar at the time
such notice is given to Certificateholders. In the event such notice is given by
the  Master  Servicer,  the Master  Servicer  shall  deposit in the  Certificate
Account before the Final  Distribution  Date in immediately  available  funds an
amount equal to the purchase  price for the assets of the Trust Fund computed as
above  provided.  The  Master  Servicer  shall  provide to the  Trustee  written
notification of any change to the anticipated Final Distribution Date as soon as
practicable.  If the  Trust  Fund is not  terminated  on the  anticipated  Final
Distribution  Date,  for any reason,  the  Trustee  shall  promptly  mail notice
thereof to each affected Certificateholder.

        (c)  Upon   presentation  and  surrender  of  the  Certificates  by  the
Certificateholders,  the Trustee shall distribute to the  Certificateholders and
the Insurer (i) the amount otherwise distributable on such Distribution Date, if
not in connection with the Master Servicer's election to repurchase,  or (ii) if
the Master Servicer elected to so repurchase,  an amount  determined as follows:
(A) with respect to the Class A  Certificates  and Class M-I  Certificates,  the
outstanding  Certificate  Principal  Balance thereof,  plus Accrued  Certificate
Interest  thereon for the related  Interest  Accrual  Period and any  previously
unpaid Accrued Certificate  Interest,  and (B) with respect to the Insurer,  any
amounts owed to it pursuant to the Insurance Agreement.

        (d) In the event that any  Certificateholders  shall not surrender their
Certificates  for  final  payment  and  cancellation  on  or  before  the  Final
Distribution  Date,  the  Trustee  shall on such  date  cause  all  funds in the
Certificate Account not distributed in final distribution to  Certificateholders
to be withdrawn  therefrom and credited to the remaining  Certificateholders  by
depositing  such  funds in a separate  escrow  account  for the  benefit of such
Certificateholders,  and the  Master  Servicer  (if it  exercised  its  right to
purchase the assets of the Trust Fund), or the Trustee (in any other case) shall
give a second  written notice to the remaining  Certificateholders  to surrender
their  Certificates  for cancellation  and receive the final  distribution  with
respect  thereto.  If within six months after the second notice any  Certificate
shall not have  been  surrendered  for  cancellation,  the  Trustee  shall  take
appropriate  steps as directed by the Master  Servicer to contact the  remaining
Certificateholders  concerning  surrender of their  Certificates.  The costs and
expenses of maintaining the escrow account and of contacting  Certificateholders
shall be paid out of the assets  which remain in the escrow  account.  If within
nine  months  after  the  second  notice  any  Certificates  shall not have been
surrendered for  cancellation,  the Trustee shall pay to the Master Servicer all
amounts  distributable  to the  holders  thereof and the Master  Servicer  shall
thereafter  hold such amounts until  distributed  to such  holders.  No interest
shall  accrue or be payable to any  Certificateholder  on any amount held in the
escrow account or by the Master Servicer as a result of such Certificateholder's
failure to surrender its  Certificate(s) for final payment thereof in accordance
with this Section 9.01 and the Certificateholders  shall look only to the Master
Servicer for such payment.



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<PAGE>



        Section 9.02. Additional Termination Requirements.
                      -----------------------------------

        (a) Each of REMIC I,  REMIC II,  REMIC III and REMIC IV, as the case may
be,  shall  be   terminated  in   accordance   with  the  following   additional
requirements,  unless the  Trustee  and the Master  Servicer  have  received  an
Opinion of  Counsel  (which  Opinion  of Counsel  shall not be an expense of the
Trustee) to the effect  that the failure of any of REMIC I, REMIC II,  REMIC III
and  REMIC  IV, as the case may be,  to  comply  with the  requirements  of this
Section 9.02 will not (i) result in the imposition on the Trust Fund of taxes on
"prohibited  transactions,"  as described  in Section 860F of the Code,  or (ii)
cause any of REMIC I,  REMIC II,  REMIC III or REMIC IV to fail to  qualify as a
REMIC at any time that any Certificate is outstanding:

               (i) The Master  Servicer  shall  establish  a 90-day  liquidation
        period  for each of REMIC I,  REMIC II,  REMIC  III and  REMIC  IV,  and
        specify  the first day of such  period in a  statement  attached  to the
        Trust Fund's final Tax Return pursuant to Treasury  regulations  Section
        1.860F-1. The Master Servicer also shall satisfy all of the requirements
        of a qualified  liquidation for each of REMIC I, REMIC II, REMIC III and
        REMIC IV, under Section 860F of the Code and the regulations thereunder;

               (ii)  The  Master  Servicer  shall  notify  the  Trustee  at  the
        commencement of such 90-day  liquidation  period and, at or prior to the
        time of making of the final  payment on the  Certificates,  the  Trustee
        shall sell or otherwise  dispose of all of the  remaining  assets of the
        Trust Fund in accordance with the terms hereof; and

               (iii) If the Master  Servicer is exercising its right to purchase
        the assets of the Trust  Fund,  the Master  Servicer  shall,  during the
        90-day  liquidation  period  and at or prior to the  Final  Distribution
        Date, purchase all of the assets of the Trust Fund for cash;

provided,  however,  that in the event  that a calendar  quarter  ends after the
commencement  of  the  90-  day  liquidation  period  but  prior  to  the  Final
Distribution  Date, the Master  Servicer shall not purchase any of the assets of
the Trust Fund prior to the close of that calendar quarter.

        (b) Each  Holder of a  Certificate  and the Trustee  hereby  irrevocably
approves  and appoints the Master  Servicer as its  attorney-in-fact  to adopt a
plan of complete  liquidation for each of REMIC I, REMIC II, REMIC III and REMIC
IV at the expense of the Trust Fund in accordance  with the terms and conditions
of this Agreement.




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                                          ARTICLE X

                                       REMIC PROVISIONS

        Section 10.01.REMIC Administration.

        (a) The REMIC  Administrator  shall  make an  election  to treat each of
REMIC I,  REMIC II,  REMIC III and  REMIC IV as a REMIC  under the Code and,  if
necessary,  under  applicable state law. Such election will be made on Form 1066
or other appropriate  federal tax or information return (including Form 8811) or
any appropriate  state return for the taxable year ending on the last day of the
calendar  year in  which  the  Certificates  are  issued.  The  REMIC I  Regular
Interests  shall be  designated  as the  "regular  interests"  and the Class R-I
Certificates  shall be designated  as the sole class of "residual  interests" in
REMIC I. The REMIC II Regular  Interests  shall be  designated  as the  "regular
interests" and the Class R-II Certificates shall be designated as the sole class
of "residual  interests" in REMIC II. The REMIC III Regular  Interests  shall be
designated as the "regular  interests" and the Class R-III Certificates shall be
designated  as the sole class of  "residual  interests"  in REMIC III. The Class
A-I, Class A-II, Class SB-I and Class SB-II  Certificates shall be designated as
the "regular  interests"  in REMIC IV and the Class R-IV  Certificates  shall be
designated  the sole  class of  "residual  interests"  in REMIC  IV.  The  REMIC
Administrator  and the Trustee shall not permit the creation of any  "interests"
(within  the  meaning of Section  860G of the Code) in the REMIC  other than the
Certificates.

        (b) The Closing Date is hereby  designated  as the "startup day" of each
of REMIC I,  REMIC II,  REMIC III and REMIC IV within  the  meaning  of  Section
860G(a)(9) of the Code.

        (c) The REMIC  Administrator  shall hold a Class R  Certificate  in each
REMIC  representing a 0.01%  Percentage  Interest of the Class R Certificates in
each REMIC and shall be designated  as the "tax matters  person" with respect to
each of REMIC I, REMIC II, REMIC III and REMIC IV in the manner  provided  under
Treasury  regulations  section  1.860F-4(d)  and  Treasury  regulations  section
301.6231(a)(7)-1.  The REMIC Administrator, as tax matters person, shall (i) act
on behalf of each of REMIC I, REMIC II,  REMIC III and REMIC IV in  relation  to
any tax matter or  controversy  involving the Trust Fund and (ii)  represent the
Trust  Fund  in  any  administrative  or  judicial  proceeding  relating  to  an
examination or audit by any governmental  taxing authority with respect thereto.
The legal  expenses,  including  without  limitation  attorneys' or accountants'
fees,  and costs of any such  proceeding and any liability  resulting  therefrom
shall be  expenses  of the  Trust  Fund  and the  REMIC  Administrator  shall be
entitled to reimbursement  therefor out of amounts  attributable to the Mortgage
Loans on deposit in the  Custodial  Account as provided  by Section  3.10 unless
such  legal   expenses   and  costs  are   incurred   by  reason  of  the  REMIC
Administrator's willful misfeasance, bad faith or gross negligence. If the REMIC
Administrator  is no longer the  Master  Servicer  hereunder,  at its option the
REMIC  Administrator may continue its duties as REMIC Administrator and shall be
paid  reasonable  compensation  not to exceed  $3,000 per year by any  successor
Master Servicer hereunder for so acting as the REMIC Administrator.

        (d) The REMIC Administrator shall prepare or cause to be prepared all of
the Tax Returns  that it  determines  are  required  with  respect to each REMIC
created hereunder and deliver such Tax Returns in a timely manner to the Trustee
and the Trustee shall sign and file such Tax


                                             147

<PAGE>



Returns in a timely  manner.  The  expenses of preparing  such returns  shall be
borne by the REMIC  Administrator  without any right of reimbursement  therefor.
The REMIC  Administrator  agrees to indemnify and hold harmless the Trustee with
respect  to any tax or  liability  arising  from the  Trustee's  signing  of Tax
Returns that contain errors or omissions.  The Trustee and Master Servicer shall
promptly  provide the REMIC  Administrator  with such  information  as the REMIC
Administrator  may from time to time  request for the  purpose of  enabling  the
REMIC Administrator to prepare Tax Returns.

        (e) The REMIC  Administrator  shall  provide (i) to any  Transferor of a
Class R Certificate  such information as is necessary for the application of any
tax relating to the transfer of a Class R Certificate to any Person who is not a
Permitted  Transferee,  (ii) to the Trustee and the Trustee shall forward to the
Certificateholders  such  information  or reports as are required by the Code or
the REMIC  Provisions  including  reports  relating to interest,  original issue
discount,  if  any,  and  market  discount  or  premium  (using  the  Prepayment
Assumption) and (iii) to the Internal Revenue Service the name,  title,  address
and telephone number of the person who will serve as the  representative of each
REMIC created hereunder.

        (f) The  Master  Servicer  and the REMIC  Administrator  shall take such
actions and shall cause each REMIC created hereunder to take such actions as are
reasonably within the Master Servicer's or the REMIC Administrator's control and
the scope of its duties more specifically set forth herein as shall be necessary
or  desirable  to  maintain  the  status  thereof  as a REMIC  under  the  REMIC
Provisions  (and the  Trustee  shall  assist the Master  Servicer  and the REMIC
Administrator, to the extent reasonably requested by the Master Servicer and the
REMIC  Administrator to do so). In performing their duties as more  specifically
set forth  herein,  the Master  Servicer and the REMIC  Administrator  shall not
knowingly  or  intentionally  take any action,  cause the Trust Fund to take any
action  or fail to take (or fail to cause to be  taken)  any  action  reasonably
within their  respective  control and the scope of duties more  specifically set
forth herein,  that, under the REMIC  Provisions,  if taken or not taken, as the
case may be,  could (i)  endanger  the status of any of REMIC I, REMIC II, REMIC
III or REMIC  IV as a REMIC  or (ii)  with the  exception  of  actions  taken in
connection with Section 4.08 hereof,  result in the imposition of a tax upon any
of REMIC I, REMIC II,  REMIC III or REMIC IV  (including  but not limited to the
tax on  prohibited  transactions  as defined in Section  860F(a)(2)  of the Code
(except as provided in Section 2.04) and the tax on contributions to a REMIC set
forth in Section  860G(d) of the Code) (either such event,  in the absence of an
Opinion of Counsel  or the  indemnification  referred  to in this  sentence,  an
"Adverse REMIC Event") unless the Master Servicer or the REMIC Administrator, as
applicable,  has  received  an Opinion of Counsel  (at the  expense of the party
seeking to take such action or, if such party fails to pay such expense, and the
Master  Servicer or the REMIC  Administrator,  as  applicable,  determines  that
taking  such  action  is in  the  best  interest  of  the  Trust  Fund  and  the
Certificateholders  and is not adverse to the  interest of the  Insurer,  at the
expense  of the  Trust  Fund,  but in no  event  at the  expense  of the  Master
Servicer,  the  REMIC  Administrator  or the  Trustee)  to the  effect  that the
contemplated  action will not, with respect to the Trust Fund created hereunder,
endanger such status or, unless the Master  Servicer or the REMIC  Administrator
or both, as applicable,  determine in its or their sole  discretion to indemnify
the Trust Fund against the imposition of such a tax, result in the imposition of
such a tax.  Wherever in this Agreement a  contemplated  action may not be taken
because the timing of such action might result in the imposition of a tax on the
Trust Fund,  or may only be taken  pursuant  to an Opinion of Counsel  that such
action would not impose a tax on the Trust Fund, such action may


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nonetheless be taken provided that the indemnity given in the preceding sentence
with respect to any taxes that might be imposed on the Trust Fund has been given
and  that all  other  preconditions  to the  taking  of such  action  have  been
satisfied. The Trustee shall not take or fail to take any action (whether or not
authorized   hereunder)   as  to  which  the  Master   Servicer   or  the  REMIC
Administrator,  as applicable, has advised it in writing that it has received an
Opinion of Counsel to the effect  that an Adverse  REMIC  Event could occur with
respect to such action or inaction,  as the case may be. In  addition,  prior to
taking any action with  respect to the Trust Fund or its assets,  or causing the
Trust Fund to take any action,  which is not expressly permitted under the terms
of this  Agreement,  the Trustee will  consult  with the Master  Servicer or the
REMIC Administrator, as applicable, or its designee, in writing, with respect to
whether such action could cause an Adverse  REMIC Event to occur with respect to
the Trust Fund and the Trustee shall not take any such action or cause the Trust
Fund to take any such  action  as to which  the  Master  Servicer  or the  REMIC
Administrator,  as  applicable,  has advised it in writing that an Adverse REMIC
Event  could  occur.  The  Master  Servicer  or  the  REMIC  Administrator,   as
applicable,  may consult with counsel to make such written advice,  and the cost
of same shall be borne by the party  seeking  to take the  action not  expressly
permitted  by this  Agreement,  but in no event  at the  expense  of the  Master
Servicer  or the REMIC  Administrator.  At all times as may be  required  by the
Code, the Master Servicer or the REMIC Administrator, as applicable, will to the
extent  within its  control and the scope of its duties  more  specifically  set
forth  herein,  maintain  substantially  all  of the  assets  of  the  REMIC  as
"qualified  mortgages"  as  defined  in  Section  860G(a)(3)  of  the  Code  and
"permitted investments" as defined in Section 860G(a)(5) of the Code.

        (g) In the event that any tax is imposed on "prohibited transactions" of
any REMIC  created  hereunder as defined in Section  860F(a)(2)  of the Code, on
"net  income  from  foreclosure  property"  of any REMIC as  defined  in Section
860G(c) of the Code,  on any  contributions  to any REMIC  after the startup day
therefor  pursuant to Section  860G(d) of the Code,  or any other tax imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Master Servicer, if such tax arises out of or results from
a breach by the Master Servicer of any of its  obligations  under this Agreement
or the Master  Servicer has in its sole  discretion  determined to indemnify the
Trust Fund against such tax,  (ii) to the Trustee,  if such tax arises out of or
results  from a breach  by the  Trustee  of any of its  obligations  under  this
Article X, or (iii)  otherwise  against  amounts  on  deposit  in the  Custodial
Account as provided by Section 3.10 and on the  Distribution  Date(s)  following
such  reimbursement  the aggregate of such taxes shall be allocated in reduction
of the Accrued  Certificate  Interest on each Class entitled thereto in the same
manner as if such taxes constituted a Prepayment Interest Shortfall.

        (h) The Trustee and the Master  Servicer  shall,  for federal income tax
purposes,  maintain  books and records  with respect to each REMIC on a calendar
year and on an  accrual  basis or as  otherwise  may be  required  by the  REMIC
Provisions.

        (i)  Following  the startup  day,  neither the Master  Servicer  nor the
Trustee shall accept any contributions of assets to any REMIC unless (subject to
Section  10.01(f))  the Master  Servicer and the Trustee  shall have received an
Opinion  of  Counsel  (at  the  expense  of  the  party  seeking  to  make  such
contribution)  to the effect that the inclusion of such assets in any REMIC will
not cause any of REMIC I, REMIC II,  REMIC III or REMIC IV to fail to qualify as
a REMIC at any time that


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any  Certificates are outstanding or subject any such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal,  state and local law
or ordinances.

        (j)  Neither  the Master  Servicer  nor the  Trustee  shall  (subject to
Section  10.01(f)) enter into any arrangement by which any of REMIC I, REMIC II,
REMIC III or REMIC IV will receive a fee or other  compensation for services nor
permit  any of REMIC I, REMIC II,  REMIC III or REMIC IV to  receive  any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or  "permitted  investments"  as defined in Section  860G(a)(5)  of the
Code.

        (k)  Solely  for the  purposes  of  Section  1.860G-1(a)(4)(iii)  of the
Treasury Regulations, the "latest possible maturity date" by which the principal
balance  of each  regular  interest  in each  REMIC  would be reduced to zero is
February 25, 2033.

        (l) Within 30 days after the Closing Date, the REMIC Administrator shall
prepare  and file with the  Internal  Revenue  Service  Form 8811,  "Information
Return for Real  Estate  Mortgage  Investment  Conduits  (REMIC)  and Issuers of
Collateralized Debt Obligations" for the Trust Fund.

        (m) Neither the Trustee nor the Master  Servicer shall sell,  dispose of
or substitute for any of the Mortgage  Loans (except in connection  with (i) the
default,  imminent default or foreclosure of a Mortgage Loan,  including but not
limited to, the acquisition or sale of a Mortgaged  Property acquired by deed in
lieu  of  foreclosure,  (ii)  the  bankruptcy  of  the  Trust  Fund,  (iii)  the
termination  of any REMIC  pursuant  to Article IX of this  Agreement  or (iv) a
purchase of Mortgage Loans  pursuant to Article II or III of this  Agreement) or
acquire  any assets for any REMIC or sell or dispose of any  investments  in the
Custodial   Account  or  the  Certificate   Account  for  gain,  or  accept  any
contributions  to any REMIC  after the Closing  Date  unless it has  received an
Opinion of Counsel that such sale, disposition, substitution or acquisition will
not (a) affect  adversely  the status of any of REMIC I, REMIC II,  REMIC III or
REMIC IV as a REMIC or (b) unless the Master Servicer has determined in its sole
discretion to indemnify  the Trust Fund against such tax,  cause any REMIC to be
subject to a tax on "prohibited transactions" or "contributions" pursuant to the
REMIC Provisions. The Trustee shall treat the Reserve Fund as an outside reserve
fund within the meaning of Treasury  Regulation  1.860G-2(h).  The Reserve  Fund
shall be owned by the Class SB-II Certificateholders, and is not an asset of the
REMICs. The Trustee shall treat the rights of the Class A-II  Certificateholders
to receive  payments  from the Reserve  Fund as rights in an  interest  rate cap
contract  written by the Class  SB-II  Certificateholders  in favor of the Class
A-I-1, Class A-I -5, Class A-I-6 and Class A-II  Certificateholders.  Thus, each
Class  A-I-1,  Class A-I -5,  Class  A-I-6 and Class A-II  Certificate  shall be
treated as representing  ownership of not only REMIC III regular interests,  but
also ownership of an interest in an interest rate cap contract.  For purposes of
determining  the issue  price of the REMIC III  regular  interests,  the Trustee
shall  assume that the  interest  rate cap  contract  with  respect to the Class
A-I-1,  Class A-I -5, Class A-I-6 and Class A-II  Certificates  has a de minimis
value.

               Section 10.02.Master  Servicer,  REMIC  Administrator and Trustee
                    Indemnification.

        (a) The Trustee  agrees to indemnify  the Trust Fund,  the Insurer,  the
Depositor,  the REMIC  Administrator  and the Master  Servicer for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Insurer, the Depositor


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or the Master Servicer,  as a result of a breach of the Trustee's  covenants set
forth in Article VIII or this Article X. In the event that  Residential  Funding
is no longer  the Master  Servicer,  the  Trustee  shall  indemnify  Residential
Funding for any taxes and costs including,  without  limitation,  any reasonable
attorneys  fees imposed on or incurred by  Residential  Funding as a result of a
breach of the Trustee's covenants set forth in Article VIII or this Article X.

        (b) The REMIC  Administrator  agrees to  indemnify  the Trust Fund,  the
Insurer,  the Depositor,  the Master  Servicer and the Trustee for any taxes and
costs (including, without limitation, any reasonable attorneys' fees) imposed on
or incurred by the Trust Fund, the Insurer,  the Depositor,  the Master Servicer
or the Trustee, as a result of a breach of the REMIC  Administrator's  covenants
set  forth  in  this  Article  X with  respect  to  compliance  with  the  REMIC
Provisions,  including  without  limitation,  any  penalties  arising  from  the
Trustee's  execution  of Tax Returns  prepared by the REMIC  Administrator  that
contain errors or omissions;  provided, however, that such liability will not be
imposed  to the  extent  such  breach  is a result  of an error or  omission  in
information  provided to the REMIC Administrator by the Master Servicer in which
case Section 10.02(c) will apply.

        (c) The Master Servicer agrees to indemnify the Trust Fund, the Insurer,
the Depositor,  the REMIC  Administrator and the Trustee for any taxes and costs
(including,  without limitation,  any reasonable  attorneys' fees) imposed on or
incurred by the Trust Fund,  the Insurer,  the  Depositor  or the Trustee,  as a
result of a breach of the Master Servicer's  covenants set forth in this Article
X or in  Article  III with  respect  to  compliance  with the REMIC  Provisions,
including without limitation, any penalties arising from the Trustee's execution
of Tax Returns prepared by the Master Servicer that contain errors or omissions.




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                                          ARTICLE XI

                                   MISCELLANEOUS PROVISIONS

        Section 11.01.Amendment.

        (a) This  Agreement or any Custodial  Agreement may be amended from time
to time by the Depositor,  the Master Servicer and the Trustee, with the consent
of the Insurer and without the consent of any of the Certificateholders:

               (i) to cure any ambiguity,

               (ii) to correct or supplement any  provisions  herein or therein,
        which may be inconsistent with any other provisions herein or therein or
        to correct any error,

               (iii) to modify,  eliminate  or add to any of its  provisions  to
        such  extent  as  shall  be  necessary  or  desirable  to  maintain  the
        qualification  of REMIC I, REMIC II,  REMIC III or REMIC IV as REMICs at
        all times that any  Certificate  is  outstanding or to avoid or minimize
        the risk of the  imposition of any tax on the Trust Fund pursuant to the
        Code that would be a claim  against  the Trust Fund,  provided  that the
        Trustee  has  received an Opinion of Counsel to the effect that (A) such
        action is necessary or desirable to maintain  such  qualification  or to
        avoid or  minimize  the risk of the  imposition  of any such tax and (B)
        such  action  will not  adversely  affect in any  material  respect  the
        interests of any Certificateholder,

               (iv) to change  the timing  and/or  nature of  deposits  into the
        Custodial  Account or the  Certificate  Account or to change the name in
        which  the  Custodial  Account  is  maintained,  provided  that  (A) the
        Certificate  Account  Deposit  Date  shall in no event be later than the
        related Distribution Date, (B) such change shall not, as evidenced by an
        Opinion  of  Counsel,  adversely  affect  in any  material  respect  the
        interests of any  Certificateholder and (C) such change shall not result
        in a reduction of the rating assigned to any Class of Certificates below
        the lower of the  then-current  rating or the  rating  assigned  to such
        Certificates  as of the Closing  Date  (without  taking into account the
        Policy),  as  evidenced  by a letter  from  each  Rating  Agency to such
        effect,

               (v) to  modify,  eliminate  or add to the  provisions  of Section
        5.02(f) or any other provision hereof restricting  transfer of the Class
        R Certificates by virtue of their being the "residual  interests" in the
        Trust Fund  provided  that (A) such change shall not result in reduction
        of the rating assigned to any such Class of Certificates below the lower
        of the then- current rating or the rating assigned to such  Certificates
        as of the Closing Date, as evidenced by a letter from each Rating Agency
        to such  effect,  and (B) such  change  shall not,  as  evidenced  by an
        Opinion of Counsel  (at the  expense of the party  seeking so to modify,
        eliminate  or add such  provisions),  cause the Trust Fund or any of the
        Certificateholders  (other  than  the  transferor)  to be  subject  to a
        federal  tax caused by a transfer  to a Person  that is not a  Permitted
        Transferee, or



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               (vi) to make any other  provisions  with  respect  to  matters or
        questions arising under this Agreement or such Custodial Agreement which
        shall  not be  materially  inconsistent  with  the  provisions  of  this
        Agreement,  provided  that such  action  shall not, as  evidenced  by an
        Opinion  of  Counsel,  adversely  affect  in any  material  respect  the
        interests of any  Certificateholder and is authorized or permitted under
        Section 11.09(d).

        (b) This  Agreement or any Custodial  Agreement may also be amended from
time to time with the  consent  of the  Insurer  by the  Depositor,  the  Master
Servicer,  the  Trustee  and  the  Holders  of  Certificates  evidencing  in the
aggregate  not  less  than  66% of the  Percentage  Interests  of each  Class of
Certificates  affected  thereby for the purpose of adding any  provisions  to or
changing in any manner or eliminating any of the provisions of this Agreement or
such Custodial Agreement or of modifying in any manner the rights of the Holders
of Certificates of such Class; provided, however, that no such amendment shall:

               (i)  reduce in any  manner the amount of, or delay the timing of,
        payments which are required to be distributed on any Certificate without
        the consent of the Holder of such Certificate,

               (ii) adversely affect in any material respect the interest of the
        Holders of Certificates of any Class in a manner other than as described
        in clause (i) hereof without the consent of Holders of  Certificates  of
        such  Class  evidencing,   as  to  such  Class,   Percentage   Interests
        aggregating not less than 66%, or

               (iii) reduce the  aforesaid  percentage  of  Certificates  of any
        Class  the  Holders  of  which  are  required  to  consent  to any  such
        amendment,  in any such case  without  the consent of the Holders of all
        Certificates of such Class then outstanding.

        (c)  Notwithstanding  any  contrary  provision  of this  Agreement,  the
Trustee  shall not consent to any  amendment to this  Agreement  unless it shall
have first  received an Opinion of Counsel (at the expense of the party  seeking
such  amendment) to the effect that such  amendment or the exercise of any power
granted to the Master Servicer,  the Depositor or the Trustee in accordance with
such  amendment  will not result in the imposition of a federal tax on the Trust
Fund or cause  REMIC I,  REMIC II,  REMIC III or REMIC IV to fail to  qualify as
REMICs at any time that any  Certificate  is  outstanding.  The  Trustee may but
shall not be obligated to enter into any amendment pursuant to this Section that
affects its rights,  duties and  immunities  and this  agreement  or  otherwise;
provided however, such consent shall not be unreasonably withheld.

        (d) Promptly after the execution of any such amendment the Trustee shall
furnish  written  notification  of the  substance  of  such  amendment  to  each
Certificateholder.   It   shall   not  be   necessary   for   the   consent   of
Certificateholders  under this Section 11.01 to approve the  particular  form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance  thereof.  The manner of obtaining such consents and of evidencing
the  authorization  of the  execution  thereof  by  Certificateholders  shall be
subject to such reasonable regulations as the Trustee may prescribe.

        (e) The  Depositor  shall have the option,  in its sole  discretion,  to
obtain and deliver to the Trustee any corporate  guaranty,  payment  obligation,
irrevocable letter of credit, surety bond,


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insurance policy or similar  instrument or a reserve fund, or any combination of
the  foregoing,  for the  purpose  of  protecting  the  Holders  of the  Class R
Certificates  against any or all Realized Losses or other  shortfalls.  Any such
instrument  or fund shall be held by the  Trustee for the benefit of the Class R
Certificateholders,  but  shall  not be and  shall not be deemed to be under any
circumstances  included in the REMIC.  To the extent that any such instrument or
fund constitutes a reserve fund for federal income tax purposes, (i) any reserve
fund so  established  shall be an outside  reserve  fund and not an asset of the
REMIC,  (ii) any such  reserve fund shall be owned by the  Depositor,  and (iii)
amounts  transferred  by the REMIC to any such  reserve fund shall be treated as
amounts  distributed by the REMIC to the Depositor or any successor,  all within
the meaning of Treasury regulations Section 1.860G-2(h).  In connection with the
provision of any such  instrument  or fund,  this  Agreement  and any  provision
hereof may be modified,  added to,  deleted or  otherwise  amended in any manner
that is related or incidental to such instrument or fund or the establishment or
administration thereof, such amendment to be made by written instrument executed
or  consented  to by the  Depositor  and such  related  insurer  but without the
consent of any  Certificateholder and without the consent of the Master Servicer
or the  Trustee  being  required  unless  any such  amendment  would  impose any
additional  obligation  on, or otherwise  adversely  affect the interests of the
Certificateholders,  the Master Servicer or the Trustee, as applicable; provided
that the Depositor  obtains an Opinion of Counsel  (which need not be an opinion
of Independent counsel) to the effect that any such amendment will not cause (a)
any federal tax to be imposed on the Trust Fund,  including without  limitation,
any federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of
the Code or on "contributions  after the startup date" under Section  860G(d)(1)
of the Code and (b) any of REMIC I,  REMIC II,  REMIC III or REMIC IV to fail to
qualify as a REMIC at any time that any Certificate is outstanding. In the event
that the  Depositor  elects to provide  such  coverage  in the form of a limited
guaranty  provided by General Motors Acceptance  Corporation,  the Depositor may
elect that the text of such amendment to this Agreement  shall be  substantially
in the form attached  hereto as Exhibit K (in which case  Residential  Funding's
Subordinate  Certificate  Loss  Obligation as described in such exhibit shall be
established by  Residential  Funding's  consent to such  amendment) and that the
limited  guaranty  shall be executed in the form  attached  hereto as Exhibit L,
with such  changes  as the  Depositor  shall  deem to be  appropriate;  it being
understood  that the Trustee has reviewed and approved the content of such forms
and that the Trustee's consent or approval to the use thereof is not required.

        (f) In addition to the foregoing,  any amendment of Section 4.08 of this
Agreement  shall require the consent of the Limited  Repurchase  Right Holder as
third-party beneficiary.

        Section 11.02.Recordation of Agreement; Counterparts.
                      --------------------------------------

        (a) To the extent permitted by applicable law, this Agreement is subject
to recordation in all  appropriate  public offices for real property  records in
all the counties or other  comparable  jurisdictions  in which any or all of the
properties  subject to the Mortgages are situated,  and in any other appropriate
public  recording  office or elsewhere,  such  recordation to be effected by the
Master Servicer and at its expense on direction by the Trustee  (pursuant to the
request of the Insurer or the Holders of  Certificates  entitled to at least 25%
of the Voting  Rights),  but only upon  direction  accompanied  by an Opinion of
Counsel to the effect that such recordation  materially and beneficially affects
the interests of the Certificateholders.



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        (b) For the purpose of facilitating the recordation of this Agreement as
herein  provided  and  for  other  purposes,  this  Agreement  may  be  executed
simultaneously in any number of counterparts,  each of which  counterparts shall
be deemed to be an original,  and such counterparts shall constitute but one and
the same instrument.

        Section 11.03.Limitation on Rights of Certificateholders.

        (a) The death or incapacity of any  Certificateholder  shall not operate
to   terminate   this   Agreement   or  the  Trust  Fund,   nor   entitle   such
Certificateholder's  legal representatives or heirs to claim an accounting or to
take any action or  proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights,  obligations and liabilities of any
of the parties hereto.

        (b) No  Certificateholder  shall  have  any  right  to vote  (except  as
expressly  provided herein) or in any manner otherwise control the operation and
management  of the Trust Fund, or the  obligations  of the parties  hereto,  nor
shall anything herein set forth, or contained in the terms of the  Certificates,
be construed so as to  constitute  the  Certificateholders  from time to time as
partners or members of an association;  nor shall any Certificateholder be under
any  liability  to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.

        (c) No Certificateholder shall have any right by virtue of any provision
of this  Agreement to institute  any suit,  action or proceeding in equity or at
law  upon or  under  or with  respect  to this  Agreement,  unless  such  Holder
previously  shall have given to the Trustee and the Insurer a written  notice of
default and of the continuance  thereof,  as hereinbefore  provided,  and unless
also the Holders of  Certificates  of any Class  evidencing in the aggregate not
less than 25% of the related Percentage Interests of such Class, shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee  hereunder  and shall have  offered to the Trustee  such
reasonable  indemnity  as  it  may  require  against  the  costs,  expenses  and
liabilities to be incurred therein or thereby,  and the Insurer shall have given
its  written  consent  and the  Trustee,  for 60 days after its  receipt of such
notice,  request  and offer of  indemnity,  shall have  neglected  or refused to
institute any such action,  suit or proceeding it being understood and intended,
and being  expressly  covenanted  by each  Certificateholder  with  every  other
Certificateholder  and the Trustee,  that no one or more Holders of Certificates
of any  Class  shall  have any  right in any  manner  whatever  by virtue of any
provision of this  Agreement to affect,  disturb or prejudice  the rights of the
Holders of any other of such  Certificates  of such Class or any other Class, or
to  obtain or seek to  obtain  priority  over or  preference  to any other  such
Holder,  or to  enforce  any right  under this  Agreement,  except in the manner
herein provided and for the common benefit of  Certificateholders  of such Class
or all Classes,  as the case may be. For the protection  and  enforcement of the
provisions  of this  Section  11.03,  each and every  Certificateholder  and the
Trustee  shall be entitled  to such  relief as can be given  either at law or in
equity.

        Section 11.04.Governing Law.

        This agreement and the  Certificates  shall be governed by and construed
in accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties  hereunder  shall be determined  in accordance  with
such laws.


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        Section 11.05. Notices.
                       -------

        All  demands  and  notices  hereunder  shall be in writing  and shall be
deemed  to have  been  duly  given  if  personally  delivered  at or  mailed  by
registered mail,  postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of the
Depositor,  8400 Normandale Lake Boulevard,  Suite 250,  Minneapolis,  Minnesota
55437,  Attention:  President  (RAMP), or such other address as may hereafter be
furnished to the Master  Servicer  and the Trustee in writing by the  Depositor;
(b) in the case of the Master  Servicer,  2255 North  Ontario  Street,  Burbank,
California 91504-3120,  Attention:  Bond Administration or such other address as
may be  hereafter  furnished  to the  Depositor  and the  Trustee  by the Master
Servicer  in writing;  (c) in the case of the  Trustee,  4 New York  Plaza,  6th
Floor,   New   York,   New   York   10004,   Attention:    Institutional   Trust
Services/Structured Finance Services, RAMP 2003-RS1 or such other address as may
hereafter be furnished to the  Depositor  and the Master  Servicer in writing by
the Trustee;  (d) in the case of Standard & Poor's,  55 Water Street,  New York,
New York 10041 Attention:  Mortgage Surveillance or such other address as may be
hereafter furnished to the Depositor,  Trustee and Master Servicer by Standard &
Poor's; (e) in the case of Moody's,  99 Church Street, New York, New York 10007,
Attention: ABS Monitoring Department,  or such other address as may be hereafter
furnished to the  Depositor,  the Trustee and the Master  Servicer in writing by
Moody's; and (f) in the case of the Insurer,  Ambac Assurance  Corporation,  One
State Street Plaza, New York, New York 10004,  Attention:  Consumer Asset-Backed
Securities  Group or such other  address as may be  hereafter  furnished  to the
Depositor,  the Trustee and the Master  Servicer in writing by the Insurer.  Any
notice required or permitted to be mailed to a Certificateholder  shall be given
by first class mail, postage prepaid,  at the address of such holder as shown in
the  Certificate  Register.  Any notice so mailed within the time  prescribed in
this Agreement shall be conclusively  presumed to have been duly given,  whether
or not the Certificateholder receives such notice.

        Section 11.06.Notices to Rating Agencies and the Insurer.

        The Depositor, the Master Servicer or the Trustee, as applicable,  shall
notify each Rating Agency,  the Insurer and each  Subservicer at such time as it
is  otherwise  required  pursuant  to  this  Agreement  to  give  notice  of the
occurrence  of, any of the events  described in clause (a),  (b), (c), (d), (g),
(h), (i) or (j) below or provide a copy to each Rating Agency and the Insurer at
such time as otherwise  required to be delivered  pursuant to this  Agreement of
any of the statements described in clauses (e) and (f) below:

        (a) a material change or amendment to this Agreement,

        (b) the occurrence of an Event of Default,

        (c) the  termination or appointment  of a successor  Master  Servicer or
Trustee or a change in the majority ownership of the Trustee,

        (d) the filing of any claim under the Master Servicer's blanket fidelity
bond and the errors and omissions  insurance  policy required by Section 3.12 or
the cancellation or modification of coverage under 152 any such instrument,



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        (e) the statement  required to be delivered to the Holders of each Class
of Certificates pursuant to Section 4.03,

        (f) the  statements  required to be delivered  pursuant to Sections 3.18
and 3.19,

        (g) a change in the location of the Custodial Account or the Certificate
Account,

        (h) the  occurrence of any monthly cash flow shortfall to the Holders of
any Class of  Certificates  resulting from the failure by the Master Servicer to
make an Advance pursuant to Section 4.04,

        (i) the occurrence of the Final Distribution Date, and

        (j) the repurchase of or substitution  for any Mortgage Loan,  provided,
however,  that with respect to notice of the occurrence of the events  described
in clauses (d),  (g) or (h) above,  the Master  Servicer  shall  provide  prompt
written  notice to each Rating  Agency,  the Insurer and the  Subservicer of any
such event  known to the Master  Servicer.  In  addition  to the above  delivery
requirements,  the Depositor, the Master Servicer or the Trustee, as applicable,
shall provide a copy to the Insurer, at such time as it otherwise is required to
deliver pursuant to this Agreement,  of any other written confirmation,  written
notice or legal opinion.

        Section 11.07.Severability of Provisions.

        If any one or more of the covenants, agreements,  provisions or terms of
this  Agreement  shall be for any  reason  whatsoever  held  invalid,  then such
covenants,  agreements,  provisions or terms shall be deemed  severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or  enforceability of the other provisions of this
Agreement  or of the  Certificates  or the rights of the Holders  thereof or the
Insurer.

        Section 11.08.Supplemental Provisions for Resecuritization.
                      --------------------------------------------

        (a) This  Agreement  may be  supplemented  by means of the addition of a
separate  Article  hereto  (a   "Supplemental   Article")  for  the  purpose  of
resecuritizing  any of the Certificates  issued  hereunder,  under the following
circumstances.  With  respect  to any Class or Classes  of  Certificates  issued
hereunder, or any portion of any such Class, as to which the Depositor or any of
its  Affiliates  (or  any  designee  thereof)  is  the  registered  Holder  (the
"Resecuritized  Certificates"),  the  Depositor  may deposit such  Resecuritized
Certificates into a new REMIC, grantor trust, FASIT or custodial  arrangement (a
"Restructuring  Vehicle") to be held by the Trustee  pursuant to a  Supplemental
Article.  The instrument adopting such Supplemental Article shall be executed by
the Depositor,  the Master Servicer and the Trustee;  provided, that neither the
Master  Servicer nor the Trustee shall withhold  their consent  thereto if their
respective  interests would not be materially adversely affected thereby. To the
extent that the terms of the  Supplemental  Article do not in any way affect any
provisions  of this  Agreement as to any of the  Certificates  initially  issued
hereunder,  the adoption of the  Supplemental  Article  shall not  constitute an
"amendment" of this  Agreement.  Each  Supplemental  Article shall set forth all
necessary  provisions relating to the holding of the Resecuritized  Certificates
by the Trustee,  the establishment of the Restructuring  Vehicle, the issuing of
various classes of new


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certificates  by the  Restructuring  Vehicle  and the  distributions  to be made
thereon,  and  any  other  provisions  necessary  to the  purposes  thereof.  In
connection with each  Supplemental  Article,  the Depositor shall deliver to the
Trustee an Opinion of Counsel to the effect that (i) the  Restructuring  Vehicle
will  qualify as a REMIC,  grantor  trust,  FASIT or other entity not subject to
taxation  for  federal  income  tax  purposes  and  (ii)  the  adoption  of  the
Supplemental  Article  will not endanger the status of any of REMIC I, REMIC II,
REMIC III or REMIC IV as a REMIC or result in the  imposition  of a tax upon the
Trust Fund  (including  but not limited to the tax on prohibited  transaction as
defined  in Section  860F(a)(2)  of the Code and the tax on  contributions  to a
REMIC as set forth in Section 860G(d) of the Code.

        Section 11.09.Rights of the Insurer.

        (a) The Insurer is an express third-party beneficiary of this Agreement.

        (b) On each  Distribution  Date the Trustee shall make  available to the
Insurer a copy of the reports made  available to the Class A  Certificateholders
and the Depositor on such Distribution Date.

        (c) The  Trustee  shall  provide to the  Insurer  copies of any  report,
notice,  Opinion of  counsel,  Officers'  Certificate,  request  for  consent or
request for amendment to any document related hereto promptly upon the Trustee's
production or receipt thereof.

        (d) Unless an Insurer  Default  exists,  the Trustee  and the  Depositor
shall not agree to any amendment to this Agreement without first having obtained
the  prior  written  consent  of  the  Insurer,   which  consent  shall  not  be
unreasonably withheld.

        (e) So long as there does not exist a failure  by the  Insurer to make a
required payment under the Policy,  the Insurer shall have the right to exercise
all rights of the Holders of the Class A-II  Certificates  under this  Agreement
without any consent of such  Holders,  and such Holders may exercise such rights
only with the prior written consent of the Insurer, except as provided herein.

        (f) The Insurer  shall not be  entitled  to  exercise  any of its rights
hereunder  so long as there  exists a failure by the  Insurer to make a required
payment under the Policy.

        Section 11.10.Third Party Beneficiary.

        The  Limited   Repurchase   Right  Holder  is  an  express   third-party
beneficiary  of  Section  4.08 of this  Agreement,  and shall  have the right to
enforce the related provisions of Section 4.08 of this Agreement as if it were a
party hereto.


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               IN WITNESS  WHEREOF,  the  Company,  the Master  Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto  duly  authorized and their  respective  seals,  duly attested,  to be
hereunto affixed, all as of the day and year first above written.


[Seal]                                          RESIDENTIAL    ASSET    MORTGAGE
                                                PRODUCTS, INC.

Attest: /s/ Diane Wold                          By: /s/ Michael Mead
        Name:  Diane Wold                               Name: Michael Mead
        Title: Vice President                           Title:  Vice President



[Seal]
                                                RESIDENTIAL FUNDING CORPORATION

Attest: /s/ Michael Mead                        By: /s/ Mark White
        Name:  Michael Mead                             Name: Mark White
        Title: Director                                 Title:  Director



[Seal]                                                            JPMORGAN CHASE
                                                                  BANK        as
                                                                  Trustee

Attest: /s/ Sora Jun
        Name:  Sora Jun                         By: /s/ Mark McDermott
        Title: Trust Officer                            Name: Mark McDermott
                                                        Title:   Vice President




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<PAGE>




STATE OF MINNESOTA              )
                                ) ss.:
COUNTY OF HENNEPIN              )

               On the 27th day of February,  2003 before me, a notary  public in
and for said State,  personally  appeared Michael Mead, known to me to be a Vice
President of Residential Asset Mortgage Products,  Inc., one of the corporations
that executed the within  instrument,  and also known to me to be the person who
executed  it on behalf of said  corporation,  and  acknowledged  to me that such
corporation executed the within instrument.

               IN WITNESS  WHEREOF,  I have  hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                    Notary Public

                                                    -----------------

[Notarial Seal]


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<PAGE>




STATE OF MINNESOTA              )
                                ) ss.:
COUNTY OF HENNEPIN              )

               On the 27th day of February,  2003 before me, a notary  public in
and for said State, personally appeared Mark White, known to me to be a Director
of Residential  Funding  Corporation,  one of the corporations that executed the
within  instrument,  and also known to me to be the person  who  executed  it on
behalf  of  said  corporation,  and  acknowledged  to me that  such  corporation
executed the within instrument.

               IN WITNESS  WHEREOF,  I have  hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.


                                                    Notary Public

                                                    ------------------

[Notarial Seal]


                                             161

<PAGE>



STATE OF NEW YORK               )
                                ) ss.:
COUNTY OF NEW YORK              )

               On the 27th day of February,  2003 before me, a notary  public in
and for said State, personally appeared Mark McDermott, known to me to be a Vice
President of JPMorgan Chase Bank, a New York banking  corporation  that executed
the within instrument,  and also known to me to be the person who executed it on
behalf of said  banking  corporation  and  acknowledged  to me that such banking
corporation executed the within instrument.

               IN WITNESS  WHEREOF,  I have  hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.


                                                    Notary Public

                                                    -------------------


[Notarial Seal]


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