<PAGE>

                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                    Depositor

                          HOMEQ SERVICING CORPORATION,
                                    Servicer

                                       and

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                                     Trustee

                     --------------------------------------

                         POOLING AND SERVICING AGREEMENT
                          Dated as of February 1, 2003

                     --------------------------------------

                     Merrill Lynch Mortgage Investors Trust
            Mortgage Loan Asset-Backed Certificates, Series 2003-WMC1

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                            PAGE
<S>                                                                                                         <C>
ARTICLE I    DEFINITIONS............................................................................          1

ARTICLE II   CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES...........................         31

         SECTION 2.01.  Conveyance of Mortgage Loans................................................         32
         SECTION 2.02.  Acceptance by Trustee of the Mortgage Loans.................................         35
         SECTION 2.03.  Representations, Warranties and Covenants of the Depositor..................         36
         SECTION 2.04.  Representations and Warranties of the Servicer..............................         40
         SECTION 2.05.  Substitutions and Repurchases of Mortgage Loans which are not
                        "Qualified Mortgages".......................................................         41
         SECTION 2.06.  Authentication and Delivery of Certificates.................................         41
         SECTION 2.07.  REMIC Elections.............................................................         41
         SECTION 2.08.  Covenants of the Servicer...................................................         44
         SECTION 2.09.  [RESERVED]..................................................................         44
         SECTION 2.10.  [RESERVED]..................................................................         44
         SECTION 2.11.  Permitted Activities of the Trust...........................................         44
         SECTION 2.12.  Qualifying Special Purpose Entity...........................................         44

ARTICLE III  ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.........................................         44

         SECTION 3.01.  Servicer to Service Mortgage Loans..........................................         44
         SECTION 3.02.  Servicing and Subservicing; Enforcement of the Obligations of Servicer......         45
         SECTION 3.03.  Rights of the Depositor and the Trustee in Respect of the Servicer..........         46
         SECTION 3.04.  Trustee to Act as Servicer..................................................         46
         SECTION 3.05.  Collection of Mortgage Loan Payments; Collection Account; Certificate
                        Account.....................................................................         47
         SECTION 3.06.  Collection of Taxes, Assessments and Similar Items; Escrow Accounts.........         49
         SECTION 3.07.  Access to Certain Documentation and Information Regarding the
                        Mortgage Loans..............................................................         50
         SECTION 3.08.  Permitted Withdrawals from the Collection Account and Certificate Account...         50
         SECTION 3.09.  [RESERVED]..................................................................         52
         SECTION 3.10.  Maintenance of Hazard Insurance.............................................         52
         SECTION 3.11.  Enforcement of Due-On-Sale Clauses; Assumption Agreements...................         52
         SECTION 3.12.  Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds.         53
         SECTION 3.13.  Trustee to Cooperate; Release of Mortgage Files.............................         55
         SECTION 3.14.  Documents, Records and Funds in Possession of Servicer to be
                        Held for the Trustee........................................................         57
         SECTION 3.15.  Servicing Compensation......................................................         57
         SECTION 3.16.  Access to Certain Documentation.............................................         57
         SECTION 3.17.  Annual Statement as to Compliance...........................................         58
         SECTION 3.18.  Annual Independent Public Accountants' Servicing Statement;
                        Financial Statements........................................................         58
         SECTION 3.19.  Rights of the NIMs Insurer..................................................         58
</TABLE>


                                       i
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                            PAGE
<S>                                                                                                         <C>
         SECTION 3.20.  Periodic Filings............................................................         58
         SECTION 3.21.  Annual Certificate by Trustee...............................................         59
         SECTION 3.22.  Annual Certificate by Servicer..............................................         59
         SECTION 3.23.  Prepayment Penalty Reporting Requirements...................................         60
         SECTION 3.24.  Statements to Trustee.......................................................         61
         SECTION 3.25.  Indemnification.............................................................         61
         SECTION 3.26.  Nonsoliciation..............................................................         61

ARTICLE IV   DISTRIBUTIONS..........................................................................         62

         SECTION 4.01.  Advances....................................................................         62
         SECTION 4.02.  Reduction of Servicing Compensation in Connection with
                        Prepayment Interest Shortfalls..............................................         62
         SECTION 4.03.  Distributions on the REMIC Interests........................................         63
         SECTION 4.04.  Distributions...............................................................         63
         SECTION 4.05.  Monthly Statements to Certificateholders....................................         66

ARTICLE V    THE CERTIFICATES.......................................................................         69

         SECTION 5.01.  The Certificates............................................................         69
         SECTION 5.02.  Certificate Register; Registration of Transfer and Exchange of Certificates.         70
         SECTION 5.03.  Mutilated, Destroyed, Lost or Stolen Certificates...........................         73
         SECTION 5.04.  Persons Deemed Owners.......................................................         74
         SECTION 5.05.  Access to List of Certificateholders' Names and Addresses...................         74
         SECTION 5.06.  Book-Entry Certificates.....................................................         74
         SECTION 5.07.  Notices to Depository.......................................................         75
         SECTION 5.08.  Definitive Certificates.....................................................         75
         SECTION 5.09.  Maintenance of Office or Agency.............................................         76
         SECTION 5.10.  [RESERVED]..................................................................         76

ARTICLE VI   THE DEPOSITOR AND THE SERVICER.........................................................         76

         SECTION 6.01.  Respective Liabilities of the Depositor and the Servicer....................         76
         SECTION 6.02.  Merger or Consolidation of the Depositor or the Servicer....................         76
         SECTION 6.03.  Limitation on Liability of the Depositor, the Servicer and Others...........         76
         SECTION 6.04.  Limitation on Resignation of Servicer.......................................         77
         SECTION 6.05.  Errors and Omissions Insurance; Fidelity Bonds..............................         77

ARTICLE VII  DEFAULT; TERMINATION OF SERVICER.......................................................         77

         SECTION 7.01.  Events of Default...........................................................         77
         SECTION 7.02.  Trustee to Act; Appointment of Successor....................................         79
         SECTION 7.03.  Notification to Certificateholders..........................................         80

ARTICLE VIII CONCERNING THE TRUSTEE.................................................................         80

         SECTION 8.01.  Duties of Trustee...........................................................         80
         SECTION 8.02.  Certain Matters Affecting the Trustee.......................................         81
         SECTION 8.03.  Trustee Not Liable for Mortgage Loans.......................................         82
         SECTION 8.04.  Trustee May Own Certificates................................................         82
         SECTION 8.05.  Trustee's Fees and Expenses.................................................         82
</TABLE>


                                       ii
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                            PAGE
<S>                                                                                                         <C>
         SECTION 8.06.  Indemnification of Trustee..................................................         82
         SECTION 8.07.  Eligibility Requirements for Trustee........................................         83
         SECTION 8.08.  Resignation and Removal of Trustee..........................................         83
         SECTION 8.09.  Successor Trustee...........................................................         84
         SECTION 8.10.  Merger or Consolidation of Trustee..........................................         84
         SECTION 8.11.  Appointment of Co-Trustee or Separate Trustee...............................         85
         SECTION 8.12.  Tax Matters.................................................................         86

ARTICLE IX   TERMINATION............................................................................         88

         SECTION 9.01.  Termination upon Liquidation or Repurchase of all Mortgage Loans............         88
         SECTION 9.02.  Final Distribution on the Certificates......................................         88
         SECTION 9.03.  Additional Termination Requirements.........................................         89

ARTICLE X    MISCELLANEOUS PROVISIONS...............................................................         90

         SECTION 10.01. Amendment...................................................................         90
         SECTION 10.02. Counterparts................................................................         92
         SECTION 10.03. Governing Law...............................................................         92
         SECTION 10.04. Intention of Parties........................................................         92
         SECTION 10.05. Notices.....................................................................         92
         SECTION 10.06. Severability of Provisions..................................................         93
         SECTION 10.07. Assignment..................................................................         93
         SECTION 10.08. Limitation on Rights of Certificateholders..................................         94
         SECTION 10.09. Inspection and Audit Rights.................................................         94
         SECTION 10.10. Certificates Nonassessable and Fully Paid...................................         94
         SECTION 10.11. Third Party Rights..........................................................         95
         SECTION 10.12. Additional Rights of the NIMs Insurer.......................................         95
</TABLE>

EXHIBIT A      FORMS OF OFFERED CERTIFICATES
EXHIBIT B-1    MORTGAGE LOAN SCHEDULE
EXHIBIT B-2    GROUP A MORTGAGE LOAN SCHEDULE
EXHIBIT B-3    GROUP B MORTGAGE LOAN SCHEDULE
EXHIBIT C      [Reserved]
EXHIBIT D      FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1    FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2    FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F      FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G      FORM OF INVESTMENT LETTER
EXHIBIT H      FORM OF RULE 144A LETTER
EXHIBIT I      REQUEST FOR RELEASE
EXHIBIT J      [RESERVED]
EXHIBIT K      FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L      FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M      FORM OF TRANSFEREE LETTER
EXHIBIT N      FORM OF CAP CONTRACT


                                      iii
<PAGE>

      POOLING AND SERVICING AGREEMENT, dated as of February 1, 2003, among
MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor
(the "Depositor"), HOMEQ SERVICING CORPORATION, a New Jersey corporation, as
servicer (the "Servicer") and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
a national banking association, as trustee (the "Trustee").

      The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. The Trust Fund for federal income
tax purposes will consist of (i) three real estate mortgage investment conduits,
(ii) the right to receive (x) proceeds from prepayment penalties on the Mortgage
Loans, (y) amounts paid by the Servicer or the Transferor in respect of
prepayment charges pursuant to this Agreement and (z) amounts received in
respect of any indemnification paid as a result of a prepayment charge being
unenforceable in breach of the representations and warranties set forth in the
Transfer Agreement, (iii) the Cap Contract and the Cap Contract Account and (iv)
the grantor trusts described in Section 2.07 hereof. The Lower Tier REMIC will
consist of all of the assets constituting the Trust Fund (other than the assets
described in clauses (ii), (iii) and (iv) above, the Lower Tier REMIC Regular
Interests and the Middle Tier REMIC Regular Interests) and will be evidenced by
the Lower Tier REMIC Regular Interests (which will be uncertificated and will
represent the "regular interests" in the Lower Tier REMIC) and the Class LTR
Interest as the single "residual interest" in the Lower Tier REMIC. The Trustee
will hold the Lower Tier REMIC Regular Interests. The Middle Tier REMIC will
consist of the Lower Tier REMIC Regular Interests and will be evidenced by the
Middle Tier REMIC Regular Interests (which will represent the "regular
interests" in the Middle Tier REMIC) and the Class MTR Interest as the single
"residual interest" in the Middle Tier REMIC. The Trustee will hold the Middle
Tier REMIC Regular Interests. The Upper Tier REMIC will consist of the Middle
Tier REMIC Regular Interests and will be evidenced by the Upper Tier REMIC
Regular Interests (which will represent the "regular interests" in the Upper
Tier REMIC) and the Residual Interest as the single "residual interest" in the
Upper Tier REMIC. The Class R Certificate will represent beneficial ownership of
the Class LTR Interest, the Class MTR Interest and the Residual Interest. The
"latest possible maturity date" for federal income tax purposes of all interests
created hereby will be the Latest Possible Maturity Date.

      All covenants and agreements made by the Seller in the Sale Agreement and
by the Depositor and the Trustee herein with respect to the Mortgage Loans and
the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates and, to the extent provided
herein, the NIMs Insurer.

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

                                    ARTICLE I
                                   DEFINITIONS

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

      Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions which service for their own account mortgage loans of the
same type as the Mortgages Loans in the jurisdictions in which the related
Mortgaged Properties (or Underlying Mortgaged Properties, in the case of Co-op
Loans) are located.

      Accrual Period: With respect to the Certificates and any Distribution
Date, the period commencing on the immediately preceding Distribution Date (or,
in the case of the first Distribution Date, the Closing Date) and ending on the
day immediately preceding such Distribution Date. All

<PAGE>

calculations of interest on the Certificates will be made on the basis of the
actual number of days elapsed in the related Accrual Period and a 360 day year.

      Adjustable Rate Certificate Carryover: With respect to each class of
Offered Certificates and each Distribution Date, the excess of (1) the sum of
(A) the excess of Current Interest for such Certificate on such Distribution
Date over the Adjusted Current Interest for such Certificate on such
Distribution Date and (B) the excess of Current Interest for such Certificate
for each prior Distribution Date over the Adjusted Current Interest for such
Certificate on each such Distribution Date over (2) any amounts previously
distributed to such class of Certificates in respect of Adjustable Rate
Certificate Carryovers.

      Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is adjustable.

      Adjusted Available Funds Cap: With respect to any Distribution Date, the
per annum rate equal to (1) 12 times the quotient of (A) the total scheduled
interest on the Mortgage Loans based on the Net Mortgage Rates in effect on the
related Due Date divided by (B) the aggregate principal balance of the Offered
Certificates as of the first day of the related Accrual Period multiplied by 30
and divided by the actual number of days in the related Accrual Period less (2)
the Pass-Through Rate on the Class S Certificates on such Distribution Date.

      Adjusted Current Interest: With respect to each class of Offered
Certificates and each Distribution Date, the interest accrued at the applicable
Pass-Through Rate (substituting "Adjusted Available Funds Cap" for "Available
Funds Cap" in the definition of Pass-Through Rate) for the applicable Accrual
Period on the Certificate Principal balance of such class as of the first day of
such Accrual Period (after giving effect to all distributions of principal made
or deemed to be made as of such first day) plus any amount previously
distributed with respect to Adjusted Current Interest for such class that is
recovered as a voidable preference by a trustee in bankruptcy less any
Prepayment Interest Shortfalls allocated to such class on such Distribution
Date.

      Adjusted Interest Carryforward Amount: With respect to each Class of the
Offered Certificates and each Distribution Date, the sum of (1) the excess of
(A) Adjusted Current Interest for such class with respect to prior Distribution
Dates (excluding any Interest Carryover Amount for such class, if applicable)
over (B) the amount actually distributed to such class with respect to Adjusted
Current Interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the applicable
Pass-Through Rate (substituting "Adjusted Available Funds Cap" for "Available
Funds Cap" in the definition of Pass-Through Rate) for the related Accrual
Period.

      Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.

      Advance: The aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date pursuant to Section 4.01, the amount of
any such advances being equal to the sum of the aggregate of payments of
principal and interest (net of the Servicing Fee Rate) on the Mortgage Loans
that were due during the applicable Due Period and not received as of the close
of business on the related Determination Date, less the aggregate amount of any
such Delinquent payments that the Servicer has determined would constitute a
Non-Recoverable Advance were an advance to be made with respect thereto.

      Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of


                                      -2-
<PAGE>

voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

      Aggregate Certificate Principal Balance: For any date of determination,
the sum of the Class A-1 Certificate Principal Balance, the Class A-2
Certificate Principal Balance, the Class R Certificate Principal Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance, Class B-1 Certificate Principal Balance and the Class B-2 Certificate
Principal Balance, in each case as of such date of determination.

      Agreement: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.

      Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which, the Aggregate Certificate Principal Balance after
distributions of principal on such Distribution Date exceeds the aggregate
Stated Principal Balance of the Mortgage Loans as of such Distribution Date.

      Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgaged Property (or the related residential
dwelling unit in the Underlying Mortgaged Property in the case of a Co-op Loan),
the "Appraised Value" of a Mortgaged Property (or the related residential
dwelling unit in the Underlying Mortgaged Property, in the case of a Co-op Loan)
is the lesser of (1) the appraised value based on an appraisal made for the
Seller by an independent fee appraiser at the time of the origination of the
related Mortgage Loan, and (2) the sales price of such Mortgaged Property (or
the related residential dwelling unit in the Underlying Mortgaged Property, in
the case of a Co-op Loan) at such time of origination. With respect to a
Mortgage Loan the proceeds of which were used to refinance an existing mortgage
loan, the "Appraised Value" is the appraised value of the Mortgaged Property (or
the residential dwelling unit in the Underlying Mortgaged Property, in the case
of a Co-op Loan) based upon the appraisal obtained at the time of refinancing.

      Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
(or UCC-3 assignment (or equivalent instrument) with respect to each Co-op Loan)
or equivalent instrument, in recordable form (except in the case of a Co-op
Loan), sufficient under the laws of the jurisdiction where the related Mortgaged
Property (or Underlying Mortgaged Property, in the case of a Co-op Loan) is
located to reflect of record the sale and assignment of the Mortgage Loan to the
Trustee, which assignment, notice of transfer or equivalent instrument may, if
permitted by law, be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county.

      Available Funds Cap: As of any Distribution Date with respect to the
Certificates, a per annum rate equal to (1) 12 times the quotient of (i) the
total scheduled interest on the Mortgage Loans based on the Net Mortgage Rates
as of the related Due Date plus any amounts received on the Cap Contract divided
by (ii) the Aggregate Certificate Principal Balance as of the first day of the
applicable Accrual Period multiplied by 30 and divided by the actual number of
days in the related Accrual Period less (2) the Pass-Through Rate on the Class S
Certificates on such Distribution Date.

      Balloon Loan: A Mortgage Loan having an original term to stated maturity
of approximately 15 years which provides for level monthly payments of principal
and interest based on a 30-year amortization schedule, with a balloon payment of
the remaining outstanding principal balance due on such Mortgage Loan at its
stated maturity.

      Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the


                                      -3-
<PAGE>

books of a Person maintaining an account with the Depository (directly, as a
"Depository Participant", or indirectly, as an indirect participant in
accordance with the rules of the Depository and as described in Section 5.06).
As of the Closing Date, each of the Class A, Class M-1, Class M-2, Class B-1 and
Class B-2 Certificates constitutes a Class of Book-Entry Certificates.

      Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of California, State of Maryland,
State of Minnesota, Commonwealth of Pennsylvania and in the City of New York,
New York are authorized or obligated by law or executive order to be closed.

      Cap Contract: The amended confirmation and agreement and any related
confirmation thereto, between the Trustee and Bear Stearns Financial Products,
Inc. (in the form of Exhibit N hereto).

      Cap Contract Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(k) in the name of the Trustee for the
benefit of the Trust Fund and designated "Wells Fargo Bank Minnesota, National
Association, as trustee, in trust for registered holders of Merrill Lynch
Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series
2003-WMC1." Funds in the Cap Contract Account shall be held in trust for the
Trust Fund for the uses and purposes set forth in this Agreement.


                                      -4-
<PAGE>

      Cap Contract Notional Balance: With respect to any Distribution Date, the
Cap Contract Notional Balance set forth below for such Distribution Date:

                           ONE MONTH LIBOR CAP TABLES

<TABLE>
<CAPTION>
            BEGINNING    ENDING     1ML SET     PAYMENT      NOTIONAL      1ML LOWER        1ML UPPER
             ACCRUAL    ACCRUAL       DATE        DATE        BALANCE      COLLAR (1)       COLLAR (1)
             -------    -------       ----        ----        -------      ----------       ----------
<S>                     <C>         <C>         <C>        <C>             <C>              <C>
             3/11/03    3/25/03      3/9/03     3/23/03    $793,727,928      8.850            8.850

             3/25/03    4/25/03     3/23/03     4/23/03    $774,632,369      7.020            8.850

             4/25/03    5/25/03     4/23/03     5/23/03    $755,751,731      7.275            8.850

             5/25/03    6/25/03     5/23/03     6/23/03    $737,075,459      7.035            8.850

             6/25/03    7/25/03     6/23/03     7/23/03    $718,594,949      7.289            8.850

             7/25/03    8/25/03     7/23/03     8/23/03    $700,303,084      7.047            8.850

             8/25/03    9/25/03     8/23/03     9/23/03    $682,195,112      7.053            8.850

             9/25/03   10/25/03     9/23/03    10/23/03    $664,508,935      7.308            8.850

            10/25/03   11/25/03    10/23/03    11/23/03    $647,286,217      7.065            8.850

            11/25/03   12/25/03    11/23/03    12/23/03    $630,514,702      7.321            8.850

            12/25/03    1/25/04    12/23/03     1/23/04    $614,182,573      7.078            8.850

             1/25/04    2/25/04     1/23/04     2/23/04    $598,278,098      7.085            8.850

             2/25/04    3/25/04     2/23/04     3/23/04    $582,789,974      7.608            8.850

             3/25/04    4/25/04     3/23/04     4/23/04    $567,707,199      7.098            8.850

             4/25/04    5/25/04     4/23/04     5/23/04    $553,019,062      7.355            8.850

             5/25/04    6/25/04     5/23/04     6/23/04    $538,715,140      7.113            8.850

             6/25/04    7/25/04     6/23/04     7/23/04    $524,785,369      7.370            8.850

             7/25/04    8/25/04     7/23/04     8/23/04    $511,219,784      7.127            8.850

             8/25/04    9/25/04     8/23/04     9/23/04    $498,008,771      7.134            8.850

             9/25/04   10/25/04     9/23/04    10/23/04    $485,142,972      7.393            8.850

            10/25/04   11/25/04    10/23/04    11/23/04    $472,613,276      8.127            8.850

            11/25/04   12/25/04    11/23/04    12/23/04    $460,471,884      8.419            8.850
</TABLE>


                                      -5-
<PAGE>

<TABLE>
<S>                     <C>        <C>          <C>        <C>               <C>              <C>
            12/25/04    1/25/05    12/23/04     1/23/05    $448,646,045      8.142            8.850

             1/25/05    2/25/05     1/23/05     2/23/05    $437,127,390      8.148            8.850

             2/25/05    3/25/05     2/23/05     3/23/05    $425,907,856      8.850            8.850

             3/25/05    4/25/05     3/23/05     4/23/05    $414,979,594      8.163            8.850

             4/25/05    5/25/05     4/23/05     5/23/05    $404,334,961      8.850            8.850

             5/25/05    6/25/05     5/23/05     6/23/05    $393,995,190      8.825            8.850

             6/25/05    7/25/05     6/23/05     7/23/05    $383,922,981      8.850            8.850

             7/25/05    8/25/05     7/23/05     8/23/05    $374,111,276      8.839            8.850

             8/25/05    9/25/05     8/23/05     9/23/05    $364,553,265      8.847            8.850
</TABLE>

            (1)   With respect to any Distribution Date, if One-Month LIBOR
                  exceeds the lower collar, the Trust Fund will receive payments
                  pursuant to the Cap Contract.

      Cap Contract Termination Date: The Distribution Date in September 2005.

      Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibits A.

      Certificate Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(f) in the name of the Trustee for the
benefit of the Certificateholders and designated "Wells Fargo Bank Minnesota,
National Association, as trustee, in trust for registered holders of Merrill
Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series
2003-WMC1." Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.

      Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.

      Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(i).

      Certificate Register: The register maintained pursuant to Section 5.02
hereof.

      Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates


                                      -6-
<PAGE>

shall be deemed to be Outstanding for purposes of any provision hereof that
requires the consent of the Holders of Certificates of a particular Class as a
condition to the taking of any action hereunder. The Trustee and the NIMs
Insurer are entitled to rely conclusively on a certification of the Depositor or
any Affiliate of the Depositor in determining which Certificates are registered
in the name of an Affiliate of the Depositor.

      Class: All Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.

      Class A Certificate Principal Balance: For any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class R Certificate
Principal Balance and the Class A-2 Certificate Principal Balance.

      Class A Certificates: Any of the Class A-1 Certificates or Class A-2
Certificates.

      Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Trigger
Event exists, 100% of the Principal Distribution Amount for such Distribution
Date and (2) on or after the Stepdown Date where a Trigger Event does not exist,
the excess of (A) the Class A Certificate Principal Balance immediately prior to
such Distribution Date over (B) the lesser of (i) 62.00% of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period and (ii) the excess of the Stated Principal Balance of the Mortgage Loans
as of the end of the immediately preceding Due Period over $3,960,302.71;
provided, however, that in no event will the Class A Principal Distribution
Amount with respect to any Distribution Date exceed the aggregate Certificate
Principal Balance of the Class A and Class R Certificates.

      Class A-1 Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class A-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1 Certificates.

      Class A-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1 Pass-Through Rate on
the Class A-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class A-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class A-1 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1 Current Interest with respect to
prior Distribution Dates (excluding any Class A-1 Interest Carryover Amount)
over (B) the amount actually distributed to the Class A-1 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class A-1 Pass-Through
Rate for the related Accrual Period.

      Class A-1 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class A-1
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-1 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-1 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over


                                      -7-
<PAGE>

(B) the amount of interest payable on the Class A-1 Certificates at the
Available Funds Cap, up to but not exceeding the Weighted Maximum Rate Cap for
such Distribution Date and (2) the Class A-1 Interest Carryover Amount for all
previous Distribution Dates not previously paid pursuant to Section
4.04(f)(vii), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class A-1 Margin for such Distribution Date.

      Class A-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.40% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.80% per annum.

      Class A-1 Pass-Through Rate: For the first Distribution Date, 1.72063% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class A-2 Certificate: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class A-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2 Certificates.

      Class A-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2 Pass-Through Rate on
the Class A-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class A-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class A-2 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2 Current Interest with respect to
prior Distribution Dates (excluding any Class A-2 Interest Carryover Amount)
over (B) the amount actually distributed to the Class A-2 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class A-2 Pass-Through
Rate for the related Accrual Period.

      Class A-2 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class A-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-2 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
A-2 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class A-2
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(vii), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class A-2 Margin for such
Distribution Date.

      Class A-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.36% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.72% per annum.


                                      -8-
<PAGE>

      Class A-2 Pass-Through Rate: For the first Distribution Date, 1.68063% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.

      Class B-1 Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class B-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1 Certificates.

      Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class B-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class B-1 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates (excluding any Class B-1 Interest Carryover Amount)
over (B) the amount actually distributed to the Class B-1 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class B-1 Pass-Through
Rate for the related Accrual Period.

      Class B-1 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class B-1
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class B-1 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class B-1 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
B-1 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class B-1
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(vii), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class B-1 Margin for such
Distribution Date.

      Class B-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 3.00% per annum and, as of any
Distribution Date after the Optional Termination Date, 4.50% per annum.

      Class B-1 Pass-Through Rate: For the first Distribution Date, 4.32063% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance and Class M-2 Certificate


                                      -9-
<PAGE>

Principal Balance have been reduced to zero and a Trigger Event exists, or as
long as a Trigger Event does not exist, the excess of (1) the sum of (A) the
Class A Certificate Principal Balance (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date), and (D) the Class B-1 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 93.80% of
the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period over $3,960,302.71. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates and Class M Certificates has been
reduced to zero, the Class B-1 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class B-1
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A, Class M-1 and Class M-2 Certificates and (II)
in no event will the Class B-1 Principal Distribution Amount with respect to any
Distribution Date exceed the Class B-1 Certificate Principal Balance.

      Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class B-1 Applied Realized Loss Amounts on all
previous Distribution Dates.

      Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.

      Class B-2 Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class B-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2 Certificates.

      Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class B-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class B-2 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates (excluding any Class B-2 Interest Carryover Amount)
over (B) the amount actually distributed to the Class B-2 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class B-2 Pass-Through
Rate for the related Accrual Period.

      Class B-2 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class B-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class B-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the


                                      -10-
<PAGE>

applicable Class B-2 Margin for such Distribution Date, up to the Weighted
Maximum Rate Cap, over (B) the amount of interest payable on the Class B-1
Certificates at the Available Funds Cap, up to but not exceeding the Weighted
Maximum Rate Cap for such Distribution Date and (2) the Class B-2 Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(vii), together with interest thereon at a rate equal
to the sum of One-Month LIBOR and the applicable Class B-2 Margin for such
Distribution Date.

      Class B-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 3.00% per annum and, as of any
Distribution Date after the Optional Termination Date, 4.50% per annum.

      Class B-2 Pass-Through Rate: For the first Distribution Date, 4.32063% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-2 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance and the Class B-1 Certificate Principal Balance have been reduced to
zero and a Trigger Event exists, or as long as a Trigger Event does not exist,
the excess of (1) the sum of (A) the Class A Certificate Principal Balance
(after taking into account distributions of the Class A Principal Distribution
Amount on such Distribution Date), (B) the Class M-1 Certificate Principal
Balance (after taking into account distributions of the Class M-1 Principal
Distribution Amount on such Distribution Date), (C) the Class M-2 Certificate
Principal Balance (after taking into account distributions of the Class M-2
Principal Distribution Amount on such Distribution Date), (D) the Class B-1
Certificate Principal Balance (after taking into account distributions of the
Class B-1 Principal Distribution Amount on such Distribution Date) and (E) the
Class B-2 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 96.80% of the Stated Principal Balances of the
Mortgage Loans as of the end of the immediately preceding Due Period and (B) the
excess of the Stated Principal Balances of the Mortgage Loans as of the end of
the immediately preceding Due Period over $3,960,302.71; provided, however, that
after the Class A Certificate Principal Balance, the Class M-1 Certificate
Principal Balance, the Class M-2 Certificate Principal Balance and the Class B-1
Certificate Principal Balance have been reduced to zero, the Class B-2 Principal
Distribution Amount for such Distribution Date will equal 100% of the Principal
Distribution Amount remaining after any distributions on such Class A, Class
M-1, Class M-2 and Class B-1 Certificates; and provided further, however, that
in no event will the Class B-2 Principal Distribution Amount with respect to any
Distribution Date exceed the Certificate Principal Balance of the Class B-2
Certificates.

      Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class B-2 Applied Realized Loss Amounts on all
previous Distribution Dates.

      Class C Certificate: Any Certificate designated as a "Class C Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

      Class C Applied Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with respect to the Mortgage Loans which
have been applied to the reduction of the Certificate Principal Balance of the
Class C Certificates.

      Class C Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class C Certificates.


                                      -11-
<PAGE>

      Class C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class C Distributable Interest
Rate on a notional amount equal to the aggregate of the Principal Balance of the
Mortgage Loans outstanding as of the beginning of such Accrual Period (such
amount of interest representing 100 percent of the interest payments on the MTC
Interest), plus the interest portion of any previous distributions on such Class
that is recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class C Certificates.

      Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
over (b) two times the weighted average of the interest rates on the Lower Tier
REMIC Regular Interests (treating for purposes of this clause (b) the interest
rate on each of the Lower Tier REMIC Marker Classes as being capped at the
interest rate of the Corresponding Middle Tier Interest and treating the Class
LTX Interest as being capped at zero). The averages described in the preceding
sentence shall be weighted on the basis of the respective principal balances of
the Lower Tier REMIC Regular Interests immediately prior to any date of
determination.

      Class C Interest Carryforward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class C Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class C
Certificates with respect to interest on such prior Distribution Dates and (2)
interest on such excess (to the extent permitted by applicable law) at the Net
Rate.

      Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class C Applied Realized Loss Amount on all
previous Distribution Dates.

      Class LTA-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Middle Tier Interests and an interest rate equal to
the Net Rate.

      Class LTA-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Middle Tier Interest and an interest rate equal to
the Net Rate.

      Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Middle Tier Interest and an interest rate equal to
the Net Rate.

      Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Middle Tier Interest and an interest rate equal to
the Net Rate.

      Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Middle Tier Interest and an interest rate equal to
the Net Rate.

      Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Corresponding Middle Tier Interest and an interest rate equal to
the Net Rate.

      Class LTR Interest: The sole class of "residual interest" in the Lower
Tier REMIC.


                                      -12-
<PAGE>

      Class LTX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) the aggregate
principal balances of the Mortgage Loans over (ii) the aggregate principal
balances of the Lower Tier REMIC Marker Classes and an interest rate equal to
the Net Rate.

      Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.

      Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1 Certificates.

      Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class M-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class M-1 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates (excluding any Class M-1 Interest Carryover Amount)
over (B) the amount actually distributed to the Class M-1 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class M-1 Pass-Through
Rate for the related Accrual Period.

      Class M-1 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class M-1
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class M-1 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class M-1 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
M-1 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class M-1
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(vii), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class M-1 Margin for such
Distribution Date.

      Class M-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.85% per annum and, as of any
Distribution Date after the Optional Termination Date, 1.275% per annum.

      Class M-1 Pass-Through Rate: For the first Distribution Date, 2.17063% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A


                                      -13-
<PAGE>

Certificate Principal Balance has been reduced to zero and a Trigger Event
exists, or as long as a Trigger Event does not exist, the excess of (1) the sum
of (A) the Class A Certificate Principal Balance (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date) and (B) the Class M-1 Certificate Principal Balance immediately prior to
such Distribution Date over (2) the lesser of (A) 76.26% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances for the Mortgage
Loans as of the end of the immediately preceding Due Period over $3,960,302.71.
Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of Class
A Certificates has been reduced to zero, the Class M-1 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class M-1 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A Certificates and (II)
in no event will the Class M-1 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-1 Certificate Principal Balance.

      Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class M-1 Applied Realized Loss Amounts on all
previous Distribution Dates.

      Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.

      Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-2 Certificates.

      Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class M-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class M-2 Interest Carryforward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates (excluding any Class M-2 Interest Carryover Amount)
over (B) the amount actually distributed to the Class M-2 Certificates with
respect to interest on such prior Distribution Dates and (2) interest on such
excess (to the extent permitted by applicable law) at the Class M-2 Pass-Through
Rate for the related Accrual Period.

      Class M-2 Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class M-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class M-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class M-2 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
M-2 Certificates at the Available Funds Cap, up to but not exceeding the
Weighted Maximum Rate Cap for such Distribution Date and (2) the Class M-2
Interest Carryover Amount for all previous Distribution Dates not previously
paid pursuant to Section 4.04(f)(vii),


                                      -14-
<PAGE>

together with interest thereon at a rate equal to the sum of One-Month LIBOR and
the applicable Class M-2 Margin for such Distribution Date.

      Class M-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 1.95% per annum and, as of any
Distribution Date after the Optional Termination Date, 2.925% per annum.

      Class M-2 Pass-Through Rate: For the first Distribution Date, 3.27063% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

      Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance and the
Class M-1 Certificate Principal Balance have been reduced to zero and a Trigger
Event exists, or as long as a Trigger Event does not exist, the excess of (1)
the sum of (A) the Class A Certificate Principal Balance (after taking into
account distributions of the Class A Principal Distribution Amount on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance (after
taking into account distributions of the Class M-1 Principal Distribution Amount
on such Distribution Date) and (C) the Class M-2 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 86.16% of
the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period over $3,960,302.71. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates and the Class M-1 Certificates has
been reduced to zero, the Class M-2 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class M-2
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A and Class M-1 Certificates and (II) in no
event will the Class M-2 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-2 Certificate Principal Balance.

      Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class M-2 Applied Realized Loss Amounts on all
previous Distribution Dates.

      Class MTA-1 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class A-1 Margin and (y) 1.32063%
plus the Class A-1 Margin and (ii) the Net Rate. For the first Distribution
Date, the percentage described in clause (i) of the preceding sentence will
equal 1.72063%

      Class MTA-2 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class A-2 Margin and (y) 1.32063%
plus the Class A-2 Margin and (ii) the Net Rate. For the first Distribution
Date, the percentage described in clause (i) of the preceding sentence will
equal 1.68063%.

      Class MTB-1 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class B-1 Margin and (y) 1.32063%
plus the Class B-1 Margin and (ii) the Net Rate. For the first Distribution
Date, the percentage described in clause (i) of the preceding sentence will
equal 4.32063%.


                                      -15-
<PAGE>

      Class MTB-2 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class B-2 Margin and (y) 1.32063%
plus the Class B-2 Margin and (ii) the Net Rate. For the first Distribution
Date, the percentage described in clause (i) of the preceding sentence will
equal 4.32063%.

      Class MTC Interest: An uncertificated regular interest in the Middle Tier
REMIC with an initial principal balance equal to the excess of the principal
balance of the Mortgage Loans over the aggregate Certificate Principal Balance
of the Class A-1 Certificates, Class A-2 Certificates, Class B-1 Certificates,
Class B-2 Certificates, Class M-1 Certificates, Class M-2 Certificates and Class
R Certificates and bearing interest on a notional amount equal to the aggregate
of the Principal Balances of the Mortgage Loans outstanding as of the beginning
of the related Accrual Period at a rate equal to the Class MTC Interest Rate.

      Class MTC Interest Rate: The excess, if any, of (a) the weighted average
of the interest rates on the Lower Tier REMIC Regular Interests over (b) two
times the weighted average of the interest rates on the Lower Tier REMIC Regular
Interests (treating for purposes of this clause (b) the interest rate on each of
the Lower Tier REMIC Marker Classes as being capped at the interest rate on the
Corresponding Middle Tier Interest and treating the Class LTX Interest as being
capped at zero. The averages described in the preceding sentence shall be
weighted on the basis of the respective principal balances of the Lower Tier
REMIC Regular Interests immediately prior to any date of determination.

      Class MTM-1 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class M-1 Margin and (y) 1.32063%
plus the Class M-1 Margin and (ii) the Net Rate. For the first Distribution
Date, the percentage described in clause (i) of the preceding sentence will
equal 2.17063%.

      Class MTM-2 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class M-2 Margin and (y) 1.32063%
plus the Class M-2 Margin and (ii) the Net Rate. For the first Distribution
Date, the percentage described in clause (i) of the preceding sentence will
equal 3.27063%.

      Class MTR Interest: The sole class of "residual interest" in the Middle
Tier REMIC, as described in the Preliminary Statement and Section 2.07.

      Class P Certificate: Any Certificate designated as a Class P Certificate
on the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.

      Class R Certificate: The Class R Certificate executed by the Trustee and
authenticated by the Trustee in substantially the form set forth in Exhibit A.

      Class R Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class R Certificate.

      Class R Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class R Pass-Through Rate on
the Class R Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is


                                      -16-
<PAGE>

recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class R Certificate. For purposes of calculating interest, principal
distributions on a Distribution Date will be deemed to have been made on the
first day of the Accrual Period in which such Distribution Date occurs.

      Class R Interest Carryforward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates (excluding any Class R Interest Carryover Amount) over (B)
the amount actually distributed to the Class R Certificate with respect to
interest on such prior Distribution Dates and (2) interest on such excess (to
the extent permitted by applicable law) at the Class R Pass-Through Rate for the
related Accrual Period.

      Class R Interest Carryover Amount: As of any Distribution Date, the sum of
(1) if on such Distribution Date the Pass-Through Rate for the Class R
Certificate is based upon the Available Funds Cap, the excess of (1) the amount
of interest the Class R Certificate would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class R Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (2) the amount of interest payable on the Class
R Certificate at the Available Funds Cap, up to but not exceeding the Weighted
Maximum Rate Cap for such Distribution Date and (2) the Class R Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(vii), together with interest thereon at a rate equal
to the sum of One-Month LIBOR and the applicable Class R Margin for such
Distribution Date.

      Class R Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.40% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.80% per annum.

      Class R Pass-Through Rate: For the first Distribution Date, 1.72063% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Weighted Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

      Class S Certificate: Any Certificate designated as a "Class S Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

      Class S Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class S Pass-Through Rate on
the Class S Notional Balance as of the first day of such Accrual Period (after
giving effect to all distributions of principal made or deemed to be made as of
such first day) plus the interest portion of any previous distributions on such
Class that is recovered as a voidable preference by a trustee in bankruptcy,
less any Non-Supported Interest Shortfall allocated on such Distribution Date to
the Class S Certificates. For purposes of calculating interest, principal
distributions on a Distribution Date will be deemed to have been made on the
first day of the Accrual Period in which such Distribution Date occurs.

      Class S Notional Amount: For any Distribution Date, the aggregate
Certificate Principal Balance of the Class A-1, Class A-2, Class M-1, Class M-2,
Class B-1, Class B-2 and Class R Certificates immediately prior to such
Distribution Date.

      Class S Pass-Through Rate: As of any Distribution Date, the greater of (1)
1.32063% minus One-Month LIBOR and (2) 0.00%.

      Closing Date: March 11, 2003.

      Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.


                                      -17-
<PAGE>

      Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(b) in the name of the
Trustee for the benefit of the Certificateholders and designated "HomEq
Servicing Corporation, in trust for registered holders of Merrill Lynch Mortgage
Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2003-WMC1".
Funds in the Collection Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.

      Combined Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of which is the
sum of (1) the original principal balance of the related Mortgage Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on which are
senior to the lien on such related Mortgage Loan (such sum calculated at the
date of origination of such related Mortgage Loan) and the denominator of which
is the lesser of (A) the Appraised Value of the related Mortgaged Property (or
applicable dwelling unit, in the case of a Co-op Loan) and (B) the sales price
of the related Mortgaged Property (or applicable dwelling unit, in the case of a
Co-op Loan) at time of origination.

      Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.

      Co-op Lease: With respect to a Co-op Loan, the lease with respect to a
dwelling unit occupied by the Mortgagor and relating to the stock allocated to
the related dwelling unit.

      Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated to a
dwelling unit in a residential cooperative housing corporation and a collateral
assignment of the related Co-op Lease.

      Corresponding Middle Tier Interests: With respect to the Class LTA-1
Interest, the Class MTA-1 Interest. With respect to the Class LTA-2 Interest,
the Class MTA-2 Interest. With respect to the Class LTM-1 Interest, the Class
MTM-1 Interest. With respect to the Class LTM-2 Interest, the Class MTM-2
Interest. With respect to the Class LTB-1 Interest, the Class MTB-1 Interest.
With respect to the Class LTB-2 Interest, the Class MTB-2 Interest.

      Credit Risk Manager: The Murrayhill Company, a Colorado corporation, or
its successor in interest.

      Credit Risk Manager Fee: The fee payable on each Distribution Date to the
Credit Risk Manager as compensation for all services rendered by it in exercise
and performance of any of the powers and duties of the Credit Risk Manager under
the Credit Risk Manager Agreement, which amount shall equal one-twelfth of the
product of (1) the Credit Risk Manager Fee Rate and (2) the Stated Principal
Balance of the Mortgage Loans as of the first day of the related Due Period.

      Credit Risk Manager Fee Rate: 0.0155% per annum.

      Current Interest: Any of the Class A-1 Current Interest, the Class A-2
Current Interest, the Class R Current Interest, the Class M-1 Current Interest,
the Class M-2 Current Interest, Class B-1 Current Interest, the Class B-2
Current Interest and the Class S Current Interest.

      Cut-off Date: February 1, 2003.

      Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal


                                      -18-
<PAGE>

Prepayments received prior to the Cut-off Date, but without giving effect to any
installments of principal received in respect of Due Dates on and after the
Cut-off Date.

      Definitive Certificates: As defined in Section 5.06.

      Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

      Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.

      Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate."

      Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
or its successor in interest.

      Depository: The initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.

      Depository Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.

      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.

      Designated Transaction: For Certificates transferred on or after August
23, 2000, a transaction in which the assets underlying the Certificates consist
of single-family residential, multi-family residential, home equity,
manufactured housing and/or commercial mortgage obligations that are secured by
single-family residential, multi-family residential, commercial real property or
leasehold interests therein.

      Determination Date: With respect to any Distribution Date, the 15th day of
the month of such Distribution Date or, if such 15th day is not a Business Day,
the immediately preceding Business Day.

      Disqualified Organization: (1) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (2) any organization
(other than a cooperative described in Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such organization is
subject to the tax imposed by Section 511 of the Code and (3) any organization
described in Section 1381(a)(2)(C) of the Code.


                                      -19-
<PAGE>

      Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such 25th day is not a Business Day, the
next succeeding Business Day, commencing in March 2003.

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

      Due Period: With respect to any Distribution Date, the period beginning on
the second day of the calendar month preceding the calendar month in which such
Distribution Date occurs (or, in the case of the first Distribution Date,
beginning on the Cut-off Date) and ending on the first day of the month in which
such Distribution Date occurs.

      Eligible Account: An account that is (1) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (2) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee,
the NIMs Insurer and each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account and 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 (v) maintained at an eligible institution whose commercial paper,
short-term debt or other short-term deposits are rated at least A-1+ by S&P and
F-1+ by Fitch, or (vi) maintained with a federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable
limits and the short-term unsecured debt obligations of which (or, in the case
of a depository institution that is a subsidiary of a holding company, the
short-term unsecured debt obligations of such holding company) are rated A-1 by
S&P or Prime-1 by Moody's at the time any deposits are held on deposit therein,
or (vii) otherwise acceptable to each Rating Agency, as evidenced by a letter
from each Rating Agency to the Trustee and the NIMs Insurer.

      ERISA: The Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.

      ERISA Restricted Certificate: The Class C, Class P and Class R Certificate
and any other Certificate, unless such other Certificate shall have received a
rating from a Rating Agency at the time of a transfer of such other Certificate
that is in one of the three (or in the case of Designated Transactions, four)
highest generic rating categories.

      Event of Default: As defined in Section 7.01 hereof.

      Excess Interest: On any Distribution Date, for the Class A-1 Certificates,
Class A-2 Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates, Class B-1 Certificates and Class B-2 Certificates, the excess, if
any, of (1) the amount of interest such Class of Certificates is entitled to
receive on such Distribution Date at its Pass-Through Rate over (2) the amount
of interest such Class of Certificates would have been entitled to receive on
such Distribution Date had the Pass-Through Rate for such Class been the REMIC
Pass-Through Rate.


                                      -20-
<PAGE>

      Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.

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

      Extra Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to the Stepdown Date, the excess of (A) the sum of (i) the
Aggregate Certificate Principal Balance immediately preceding such Distribution
Date reduced by the Principal Funds with respect to such Distribution Date and
(ii) $12,672,968.68 over (B) the Pool Stated Principal Balance of the Mortgage
Loans as of such Distribution Date and (2) on and after the Stepdown Date, (A)
the sum of (i) the Aggregate Certificate Principal Balance immediately preceding
such Distribution Date, reduced by the Principal Funds with respect to such
Distribution Date and (ii) the greater of (a) 3.20% of the Pool Stated Principal
Balances of the Mortgage Loans and (b) $3,960,302.71 less (B) the Pool Stated
Principal Balance of the Mortgage Loans as of such Distribution Date; provided,
however, that if on any Distribution Date a Trigger Event is in effect, the
Extra Principal Distribution Amount will not be reduced to the applicable
percentage of the then-current Pool Stated Principal Balance of the Mortgage
Loans as of the Due Date immediately prior to the Trigger Event until the next
Distribution Date on which the Trigger Event is not in effect.

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

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

      Freddie Mac: 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.

      Fitch: Fitch, Inc., or its successor in interest.

      Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate which is fixed.

      Grantor Trusts: The grantor trusts described in Section 2.07 hereof.

      Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.

      Group A Mortgage Loan: Any Mortgage Loan identified in the Group A
Mortgage Loan Schedule attached hereto as Exhibit B-2.

      Group A Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the Certificate Principal Balance
of the Class A-1 Certificates and the Certificate Principal Balance of the Class
R Certificate and (2) the Group A Principal Distribution Percentage of the Class
A Principal Distribution Amount; provided, however, that (I) with respect to the
Distribution Date on which the Class A-2 Certificate Principal Balance is
reduced to zero (so long as the Class A-1 Certificates are outstanding), the
Group B Principal Distribution Percentage of the Class A Principal Distribution
Amount in excess of the amount necessary to reduce the Certificate Principal
Balance of the


                                      -21-
<PAGE>

Class A-2 Certificates to zero will be applied to increase the Group A Principal
Distribution Amount and (II) with respect to any Distribution Date thereafter,
the Group A Principal Distribution Amount shall equal the Class A Principal
Distribution Amount.

      Group A Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds with respect to such Distribution Date received
with respect to Group A Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date.

      Group B Mortgage Loan: Any Mortgage Loan identified in the Group B
Mortgage Loan Schedule attached hereto as Exhibit B-3.

      Group B Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the Certificate Principal Balance
of the Class A-2 Certificates and the and (2) the Group B Principal Distribution
Percentage of the Class A Principal Distribution Amount; provided, however, that
(A) with respect to the Distribution Date on which the Class A-1 Certificate
Principal Balance is reduced to zero (so long as the Class A-2 Certificates are
outstanding), the Group B Principal Distribution Percentage of the Class A
Principal Distribution Amount in excess of the amount necessary to reduce the
Certificate Principal Balance of the Class A-1 Certificates to zero will be
applied to increase the Group A Principal Distribution Amount and (II) with
respect to any Distribution Date thereafter, the Group B Principal Distribution
Amount shall equal the Class A Principal Distribution Amount.

      Group B Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds with respect to such Distribution Date received
with respect to Group B Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date.

      Indenture: An indenture relating to the issuance of notes guaranteed by
the NIMs Insurer.

      Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first Adjustment Date following the origination of such Mortgage Loan.

      Initial Certificate Principal Balance: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date as set forth in Section 5.01 hereof.

      Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.

      Insurance Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all riders and endorsements thereto in
effect with respect to such Mortgage Loan, including any replacement policy or
policies for any insurance policies.

      Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property (or the Underlying
Mortgaged Property, in the case of a Co-op Loan) or released to the Mortgagor in
accordance with the procedures that the Servicer would follow in servicing
mortgage loans held for its own account, in each case other than any amount
included in such Insurance Proceeds in respect of Insured Expenses.


                                      -22-
<PAGE>

      Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.

      Interest Carryforward Amount: Any of the Class A-1 Interest Carryforward
Amount, the Class A-2 Interest Carryforward Amount, the Class R Interest
Carryforward Amount, the Class M-1 Interest Carryforward Amount, the Class M-2
Interest Carryforward Amount, the Class B-1 Interest Carryforward Amount or the
Class B-2 Interest Carryforward Amount, as the case may be.

      Interest Carryover Amount: Any of the Class A-1 Interest Carryover Amount,
the Class A-2 Interest Carryover Amount, the Class R Interest Carryover Amount,
the Class M-1 Interest Carryover Amount, the Class M-2 Interest Carryover
Amount, the Class B-1 Interest Carryover Amount, the Class B-2 Interest
Carryover Amount, as the case may be.

      Interest Determination Date: With respect to the Certificates, (i) for any
Accrual Period other than the first Accrual Period, the second LIBOR Business
Day preceding the commencement of such Accrual Period and (ii) for the first
Accrual Period, March 11, 2003.

      Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee, the Trustee Fee and
the Credit Risk Manager Fee, (2) all Advances relating to interest with respect
to the Mortgage Loans, (3) all Compensating Interest with respect to the
Mortgage Loans, (4) Liquidation Proceeds with respect to the Mortgage Loans (to
the extent such Liquidation Proceeds relate to interest) collected during the
related Prepayment Period, (5) proceeds of any purchase pursuant to Sections
2.02, 2.03 or 9.01 (to the extent such proceeds relate to interest) and (6)
prepayment penalties received with respect to the Mortgage Loans during the
related Prepayment Period, less (A) all Non-Recoverable Advances relating to
interest and (B) other amounts reimbursable to the Servicer and the Trustee
pursuant to this Agreement and allocable to interest.

      Latest Possible Maturity Date: The first Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.

      LIBOR Business Day: Any day on which banks in the City of London, England
and New York City, U.S.A. are open and conducting transactions in foreign
currency and exchange.

      Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Servicer has certified (in accordance with
Section 3.12) in the related Prepayment Period that it has received all amounts
it expects to receive in connection with such liquidation.

      Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of Mortgage Loans, whether
through trustee's sale, foreclosure sale, sale by the Servicer pursuant to this
Agreement or otherwise or amounts received in connection with any condemnation
or partial release of a Mortgaged Property (or applicable dwelling unit, in the
case of a Co-op Loan)/(or Underlying Mortgaged Property, in the case of a Co-op
Loan) and any other proceeds received in connection with an REO Property, less
the sum of related unreimbursed Advances, Servicing Fees, Servicing Advances and
any other expenses related to such Mortgage Loan.


                                      -23-
<PAGE>

      Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (X) the Appraised Value of the related Mortgaged Property (or applicable
dwelling unit, in the case of a Co-op Loan) and (Y) the sales price of the
related Mortgaged Property (or applicable dwelling unit, in the case of a Co-op
Loan) at the time of origination.

      Losses: Any losses, claims, damages, liabilities or expenses collectively.

      Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.

      Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the Class
LTA-2 Interest, the Class LTM-1 Interest, the Class LTM-2 Interest, the Class
LTB-1 Interest, the Class LTB-2 Interest, the Class LTX Interest and the Class
LTR Interest.

      Lower Tier REMIC Marker Classes: Each of the classes of Lower Tier REMIC
Regular Interests other than the Class LTX Interests.

      Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.

      Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the maximum rate of interest set forth as such in the related Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest set forth in
the related Mortgage Note.

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

      MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.

      MERS System: The system of recording transfers of mortgage electronically
maintained by MERS.

      Middle Tier REMIC: As described in the Preliminary Statement and Section
2.07.

      Middle Tier REMIC Interests: Each of the Class MTA-1 Interest, the Class
MTA-2 Interest, the Class MTM-1 Interest, the Class MTM-2 Interest, the Class
MTB-1 Interest, the Class MTB-2 Interest, the Class MTC Interest and the Class
MTR Interest.

      Middle Tier REMIC Regular Interests: Each of the Middle Tier REMIC
Interests other than the Class MTR Interest.

      MIN: The loan number for any MERS Loan.

      Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the minimum rate of interest set forth as such in the related Mortgage Note.

      Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.

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

      MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.


                                      -24-
<PAGE>

      Mortgage: With respect to a Mortgage Loan that is not a Co-op Loan, the
mortgage, deed of trust or other instrument creating a first or second lien or a
first or second priority ownership interest in an estate in fee simple in real
property securing a Mortgage Note. With respect to a Co-op Loan, the security
agreement creating a security interest in the stock allocated to a dwelling unit
in a residential cooperative housing corporation and pledged to secure such
Co-op Loan and the related Co-op Lease.

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

      Mortgage Loans: Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.

      Mortgage Loan Schedule: The lists of Mortgage Loans (as from time to time
amended by the Trustee to reflect the deletion of Deleted Mortgage Loans and the
addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund and from time to
time subject to this Agreement, attached hereto as Exhibits B-2 and B-3, setting
forth the following information with respect to each Mortgage Loan:

      (i)     the loan number;

      (ii)    the unpaid principal balance of the Mortgage Loans;

      (iii)   the Initial Mortgage Rate;

      (iv)    the maturity date and the months remaining before maturity date;

      (v)     the original principal balance;

      (vi)    the Cut-off Date Principal Balance;

      (vii)   the first payment date of the Mortgage Loan;

      (viii)  the Loan-to-Value Ratio at origination with respect to a first
              lien Mortgage Loan, or the Combined Loan-to-Value Ratio with
              respect to a second lien Mortgage Loan;

      (ix)    a code indicating whether the residential dwelling at the time of
              origination was represented to be owner-occupied;

      (x)     a code indicating the property type;

      (xi)    with respect to each Adjustable Rate Mortgage Loan;

              (a)   the frequency of each Adjustment Date;

              (b)   the next Adjustment Date;


                                      -25-
<PAGE>

              (c)   the Maximum Mortgage Rate;

              (d)   the Minimum Mortgage Rate;

              (e)   the Mortgage Rate as of the Cut-off Date;

              (f)   the related Periodic Rate Cap;

              (g)   the Gross Margin;

      (xii)   location of the related Mortgaged Property (or Underlying
              Mortgaged Property, in the case of a Co-op Loan);

      (xiii)  a code indicating whether a prepayment penalty is applicable and,
              if so, the term of such prepayment penalty; and

      (xiv)   the Credit Score and date obtained.

      Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all amendments, modifications and attachments thereto.

      Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.

      Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time.

      Mortgaged Property: The underlying property securing a Mortgage Loan.

      Mortgagor: The obligor on a Mortgage Note.

      Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the then current Mortgage Rate less the sum of (1) the
Servicing Fee Rate, (2) the Trustee Fee Rate and (3) the Credit Risk Manager Fee
Rate.

      Net Rate: With respect to any Distribution Date, the weighted average Net
Mortgage Rate for Mortgage Loans calculated based on the Net Mortgage Rates and
the Stated Principal Balance of such Mortgage Loans as of the related Due
Period.

      NIM Notes: The notes to be issued pursuant to the Indenture.

      NIMs Insurer: Any of the one or more insurers that is guaranteeing certain
payments under any NIM Notes.

      NIMs Insurer Default: A default by each of the NIMs Insurers as such
default is defined in the Indenture.

      Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise with respect to the related Mortgage Loan.

      Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the


                                      -26-
<PAGE>

case of a current Servicing Advance, would not, be ultimately recoverable by the
Servicer from the related Mortgagor, related Liquidation Proceeds or otherwise
with respect to the related Mortgage Loan.

      Non-Supported Interest Shortfall: As defined in Section 4.02.

      Offered Certificates: The Class A-1, Class A-2, Class S, Class M-1, Class
M-2, Class B-1, Class B-2 and Class R Certificate.

      Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (2), if provided for
in this Agreement, signed by a Servicing Officer, as the case may be, and
delivered to the Depositor, the Servicer or the Trustee, as the case may be, as
required by this Agreement.

      One-Month LIBOR: With respect to any Accrual Period, the rate determined
by the Trustee on the related Interest Determination Date on the basis of (a)
the offered rates for one-month United States dollar deposits, as such rates
appear on Telerate page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date or (b) if such rate does not appear on Telerate Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference Banks for
one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest Determination Date, One-Month LIBOR for the related Accrual Period will
be established by the Trustee as follows:

                        (i)   If on such Interest Determination Date two or more
                              Reference Banks provide such offered quotations,
                              One-Month LIBOR for the related Accrual Period
                              shall be the arithmetic mean of such offered
                              quotations (rounded upwards if necessary to the
                              nearest whole multiple of 0.03125%).

                        (ii)  If on such Interest Determination Date fewer than
                              two Reference Banks provide such offered
                              quotations, One-Month LIBOR for the related
                              Accrual Period shall be the higher of (i)
                              One-Month LIBOR as determined on the previous
                              Interest Determination Date and (ii) the Reserve
                              Interest Rate.

      Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably acceptable to each addressee of such
opinion; provided, however, that with respect to Section 6.04 or 10.01, or the
interpretation or application of the REMIC Provisions, such counsel must (1) in
fact be independent of the Depositor and the Servicer, (2) not have any direct
financial interest in the Depositor or the Servicer or in any affiliate of
either, and (3) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.

      Optional Termination: The termination of the trust hereunder pursuant to
clause (a) of Section 9.01 hereof.


                                      -27-
<PAGE>

      Optional Termination Amount: The repurchase price received by the Trustee
in connection with any repurchase of all of the Mortgage Loans pursuant to
Section 9.01.

      Optional Termination Date: The Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage Loans is equal to or less than 10% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.

      Optional Termination Price: (1) in the case of an Optional Termination
effected by the Trustee, as of any Distribution Date on or after the Optional
Termination Date, an amount equal to the sum of (A) aggregate Outstanding
Principal Balance of the Certificates, plus accrued interest thereon, (B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee or the
Servicer and any unreimbursed Servicing Fees, Advances, Servicing Advances and
Trustee Fees and (C) all interest accrued on, as well as amounts necessary to
retire the principal balance of, the notes guaranteed by the NIMs Insurer and
any and all amounts owed to the NIMs Insurer at the time the option is
exercised; (2) in the case of an Optional Termination effected by the NIMs
Insurer, an amount equal to the greater of (A) aggregate Outstanding Principal
Balance of the Offered Certificates, plus accrued interest thereon, any
unreimbursed out-of-pocket costs and expenses owed to the Trustee or the
Servicer and any unreimbursed Servicing Fees, Advances, Servicing Advances and
Trustee Fees and (B) 100% of the Stated Principal Balance of each Mortgage Loan
(other than in respect of REO Property), accrued interest thereon at the
applicable Mortgage Rate, the appraised value of any REO Property (up to the
Stated Principal Balance of the related Mortgage Loan), such appraisal to be
conducted by an appraiser mutually agreed upon by the Depositor and the NIMs
Insurer and any unreimbursed out-of-pocket costs and expenses owed to the
Servicer and the Trustee and any unreimbursed Servicing Fees, Advances,
Servicing Advances and Trustee Fees.

      OTS: The Office of Thrift Supervision.

      Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.

      Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.

      Overcollateralization Amount: As of any date of determination, the excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).

      Ownership Interest: As to any Certificate, any ownership 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.

      Pass-Through Rate: With respect to the Class A-1 Certificates, the Class
A-1 Pass-Through Rate; with respect to the Class A-2 Certificates, the Class A-2
Pass-Through Rate; with respect to the Class M-1 Certificates, the Class M-1
Pass-Through Rate; with respect to the Class M-2 Certificates, the Class M-2
Pass-Through Rate, with respect to the Class B-1 Certificates, the Class B-1
Pass-Through Rate; with respect to the Class B-2 Certificates, the Class B-2
Pass-Through Rate, with respect to the Class S


                                      -28-
<PAGE>

Certificates, the Class S Pass-Through Rate and with respect to the Class R
Certificate, the Class R Pass-Through Rate.

      Percentage Interest: With respect to:

                  (i)   any Class, the percentage interest in the undivided
                        beneficial ownership interest evidenced by such Class
                        which shall be equal to the Class Certificate Principal
                        Balance of such Class divided by the Class Principal
                        Balance of all Classes; and

                  (ii)  any Certificate, the Percentage Interest evidenced
                        thereby of the related Class shall equal the percentage
                        obtained by dividing the Denomination of such
                        Certificate by the aggregate of the Denominations of all
                        Certificates of such Class; except that in the case of
                        any Class P Certificates, the Percentage Interest with
                        respect to such Certificate shown on the face of such
                        Certificate.

      Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related Mortgage Note, the provision therein that limits permissible increases
and decreases in the Mortgage Rate on any Adjustment Date.

      Permitted Activities: The primary activities of the trust created pursuant
to this Agreement which shall be:

                  (i)   holding Mortgage Loans transferred from the Depositor
                        and other assets of the Trust Fund, including the Cap
                        Contract and any credit enhancement and passive
                        derivative financial instruments that pertain to
                        beneficial interests issued or sold to parties other
                        than the Depositor, its Affiliates, or its agents;

                  (ii)  issuing Certificates and other interests in the assets
                        of the Trust Fund;

                  (iii) receiving collections on the Mortgage Loans and the Cap
                        Contract and making payments on such Certificates and
                        interests in accordance with the terms of this
                        Agreement; and

                  (iv)  engaging in other activities that are necessary or
                        incidental to accomplish these limited purposes, which
                        activities cannot be contrary to the status of the Trust
                        Fund as a qualified special purpose entity under
                        existing accounting literature.

      Permitted Investments: At any time, any one or more of the following
obligations and securities:

                  (i)   obligations of the United States or any agency thereof,
                        provided such obligations are backed by the full faith
                        and credit of the United States;

                  (ii)  general obligations of or obligations guaranteed by any
                        state of the United States or the District of Columbia
                        receiving the highest long-term debt rating of each
                        Rating Agency rating the Certificates;


                                      -29-
<PAGE>

                  (iii) commercial or finance company paper, other than
                        commercial or finance company paper issued by the
                        Depositor, the Trustee or any of its Affiliates, which
                        is then receiving the highest commercial or finance
                        company paper rating of each such Rating Agency;

                  (iv)  certificates of deposit, demand or time deposits, or
                        bankers' acceptances (other than banker's acceptances
                        issued by the Trustee or any of its Affiliates) issued
                        by any depository institution or trust company
                        incorporated under the laws of the United States or of
                        any state thereof and subject to supervision and
                        examination by federal and/or state banking authorities,
                        provided that the commercial paper and/or long term
                        unsecured debt obligations of such depository
                        institution or trust company are then rated one of the
                        two highest long-term and the highest short-term ratings
                        of each such Rating Agency for such securities;

                  (v)   demand or time deposits or certificates of deposit
                        issued by any bank or trust company or savings
                        institution to the extent that such deposits are fully
                        insured by the FDIC;

                  (vi)  guaranteed reinvestment agreements issued by any bank,
                        insurance company or other corporation rated in the two
                        highest long-term or the highest short-term ratings of
                        each Rating Agency containing, at the time of the
                        issuance of such agreements, such terms and conditions
                        as will not result in the downgrading or withdrawal of
                        the rating then assigned to the Certificates by any such
                        Rating Agency as evidenced by a letter from each Rating
                        Agency;

                  (vii) repurchase obligations with respect to any security
                        described in clauses (i) and (ii) above, in either case
                        entered into with a depository institution or trust
                        company (acting as principal) described in clause (v)
                        above;

                 (viii) securities (other than stripped bonds, stripped coupons
                        or instruments sold at a purchase price in excess of
                        115% of the face amount thereof) bearing interest or
                        sold at a discount issued by any corporation, other than
                        the Trustee or any of its Affiliates, incorporated under
                        the laws of the United States or any state thereof
                        which, at the time of such investment, have one of the
                        two highest long term ratings of each Rating Agency;

                  (ix)  interests in any money market fund (including those
                        managed or advised by the Trustee or its affiliates)
                        which at the date of acquisition of the interests in
                        such fund and throughout the time such interests are
                        held in such fund has the highest applicable long term
                        rating by each such Rating Agency; and

                  (x)   short term investment funds sponsored by any trust
                        company or national banking association incorporated
                        under the laws of the United States or any state
                        thereof, other than the Trustee or any of its
                        Affiliates, which on the date of acquisition has been
                        rated by each such Rating Agency in their respective
                        highest applicable rating category;


                                      -30-
<PAGE>

provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer shall receive an Opinion of Counsel, at the
expense of the party requesting that such investment be made, to the effect that
such investment will not adversely affect the status of the any REMIC provided
for herein as a REMIC under the Code or result in imposition of a tax on the
Trust Fund or any REMIC provided for herein and (II) any such investment must be
a "permitted investment" within the meaning of Section 860G(a)(5) of the Code.
Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.

      Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to the
Class R Certificate, (iv) rural electric and telephone cooperatives described in
section 1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or
resident of the United States, a corporation or 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 or any
State thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor, the Trustee with a duly completed Internal
Revenue Service Form W-8ECI or applicable successor form. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code. A corporation will not be treated as an
instrumentality of the United States or of any State thereof for these purposes
if all of its activities are subject to tax and, with the exception of the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
not selected by such government unit.

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

      Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances, as of such Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.

      Prepayment Assumption: A rate of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Certificates.


                                      -31-
<PAGE>

      Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a partial Principal Prepayment or a
Principal Prepayment in full (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03 or
9.01 hereof), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the preceding Distribution Date or in the case of a partial Principal
Prepayment on the amount of such prepayment exceeds (ii) the amount of interest
paid or collected in connection with such Principal Prepayment.

      Prepayment Period: As to any Distribution Date, the period beginning with
the opening of business on the first day of the calendar month preceding the
month in which such Distribution Date occurs and ending on the close of business
on the last day of such month.

      Principal Distribution Amount: With respect to each Distribution Date, the
sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.

      Principal Funds: With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1) the scheduled principal due during
the related Due Period and received before the related Servicer Remittance Date
or advanced on or before the related Servicer Remittance Date, (2) prepayments
collected in the related Prepayment Period, (3) the Stated Principal Balance of
each Mortgage Loan that was purchased by the Depositor or the Servicer during
the related Prepayment Period or, in the case of a purchase pursuant to Section
9.01, on the Business Day prior to such Distribution Date, (4) the amount, if
any, by which the aggregate unpaid principal balance of any Replacement Mortgage
Loan is less than the aggregate unpaid principal of the related Deleted Mortgage
Loans delivered by the Seller in connection with a substitution of a Mortgage
Loan pursuant to Section 2.03(c), (5) all Liquidation Proceeds collected during
the related Prepayment Period (to the extent such Liquidation Proceeds related
to principal) and (6) all other collections and recoveries in respect of
principal during the related Prepayment Period less (A) all Non-Recoverable
Advances relating to principal with respect to the Mortgage Loans and (B) other
amounts reimbursable to the Servicer and the Trustee pursuant to this Agreement
and allocable to principal.

      Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.

      Prospectus Supplement: The Prospectus Supplement dated March 7, 2003
relating to the public offering of the Class A-1, Class A-2, Class S, Class M-1,
Class M-2, Class R, Class B-1 and Class B-2 Certificates.

      PUD: A Planned Unit Development.

      Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller or the applicable Transferor, pursuant to Section 2.02
or 2.03 hereof, an amount equal to the sum of (i) 100% of the unpaid principal
balance of the Mortgage Loan as of the date of such purchase together with any
unreimbursed Servicing Advances and (ii) accrued interest thereon at the
applicable Mortgage Rate from (a) the date through which interest was last paid
by the Mortgagor to (b) the Due Date in the month in which the Purchase Price is
to be distributed to Certificateholders.


                                      -32-
<PAGE>

      Rating Agency: Any of Moody's, S&P and Fitch. If any such organization or
its successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.

      Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer with respect
thereto (net of reimbursement of Advances and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to a Mortgage
Loan which is not a Liquidated Loan, any amount of principal that the Mortgagor
is no longer legally required to pay (except for the extinguishment of debt that
results from the exercise of remedies due to default by the Mortgagor).

      Record Date: With respect to any Distribution Date, the close of business
on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs (or, in the case of the first Distribution
Date, March 24, 2003).

      Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, Citibank, N.A.,
Wells Fargo Bank Minnesota, National Association and NatWest, N.A.; provided
that if any of the foregoing banks are not suitable to serve as a Reference
Bank, then any leading banks selected by the Trustee with the consent of the
NIMs Insurer which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, England and (ii) whose quotations appear on the Reuters Screen LIBO Page
on the relevant Interest Determination Date.

      Regular Certificate: Any one of the Class A-1, Class A-2, Class M-1, Class
M-2, Class B-1 and Class B-2 Certificates.

      Related Certificates: With respect to the Class MTA-1 Interest, the Class
A-1 and Class R Certificates. With respect to the Class MTA-2 Interest, the
Class A-2 Certificates. With respect to the Class MTB-1 Interest, the Class B-1
Certificates. With respect to the Class MTB-2 Interest, the Class B-2
Certificates. With respect to the Class MTM-1 Interest, the Class M-1
Certificates. With respect to the Class MTM-2 Interest, the Class M-2
Certificates.

      REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein to "the REMICs" or "a REMIC" shall
mean any of or, as the context requires, all of) the Lower Tier REMIC, the
Middle Tier REMIC and the Upper Tier REMIC.

      REMIC Pass-Through Rate: The Pass-Through Rate for a Class of Related
Certificates calculated by replacing "Available Funds Cap" in such definition
with "Net Rate."

      REMIC Regular Interests: (i) any of the rights under any of the
Certificates (other than the Class P Certificates, the Class R Certificate and
the Class C Certificates) other than the rights in interest rate cap contracts
described in Section 2.07, and (ii) the Uncertificated Class C Interest.

      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
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.


                                      -33-
<PAGE>

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

      Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor
for a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or
Combined Loan-to-Value Ratio, in the case of the Mortgage Loans in a second lien
position) no higher than that of the Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan; and (9) comply
with each representation and warranty set forth in Section 2.03 hereof.

      Request for Release: The Request for Release of Documents submitted by the
Servicer to the Trustee, substantially in the form of Exhibit I hereto.

      Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement including.

      Required Loss Percentage: For any Distribution Date, the applicable
percentage for such Distribution Date set forth in the following table:

<TABLE>
<CAPTION>
               DISTRIBUTION DATE OCCURRING IN         REQUIRED LOSS PERCENTAGE
               ------------------------------         ------------------------
<S>                                                   <C>
               March 2006 - February 2007             2.75% with respect to March 2006,
                                                      plus an additional 1/12th of 1.75% for
                                                      each month thereafter

               March 2007 - February 2008             4.50% with respect to March
                                                      2007, plus an additional 1/12th of
                                                      1.25% for each month thereafter

               March 2008 - February 2009             5.75% with respect to March 2008,
                                                      plus an additional 1/12th of 0.75% for
                                                      each month thereafter

               March 2009 - February 2010             6.50% with respect to March 2009,
                                                      plus an additional 1/12th of 0.25% for
                                                      each month thereafter
</TABLE>


                                      -34-
<PAGE>

<TABLE>
<S>                                                   <C>
               March 2010 and thereafter              6.75%
</TABLE>

      Required Percentage: As of any Distribution Date following a Stepdown
Date, the quotient of (1) the excess of (A) the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date, over (B) the Certificate Principal
Balance of the most senior Class of Certificates outstanding, prior to giving
effect to distributions to be made on such Distribution Date and (2) the Stated
Principal Balance of the Mortgage Loans as of such Distribution Date.

      Reserve Interest Rate: With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.

      Residual Interest: An interest in the Upper Tier REMIC that is entitled to
all distributions of principal and interest (attributable to an interest rate on
the Class R Certificate that does not exceed the Net Rate) on the Class R
Certificate and is entitled to all distributions on the Class R Certificate
other than distributions in respect of the Class LTR Interest and the Class MTR
Interest.

      Responsible Officer: When used with respect to the Trustee or Servicer,
any officer of the Trustee or Servicer with direct responsibility for the
administration of this Agreement and also means any other officer to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.

      Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.

      S&P: Standard & Poor's, A Division of The McGraw-Hill Companies, Inc., or
its successor in interest.

      Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated as
of February 28, 2003 between the Depositor and the Seller.

      Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such Mortgage Loan.

      Section 302 Requirements: Any rules or regulations promulgated pursuant to
the Sarbanes-Oxley Act of 2002 (as such may be amended from time to time).

      Securities Act: The Securities Act of 1933, as amended.

      Seller: Merrill Lynch Mortgage Capital Inc., a Delaware corporation, or
its successor in interest.

      Servicer: HomEq Servicing Corporation, a New Jersey corporation, or its
successor in interest.

      Servicer Advance Date: As to any Distribution Date, the related Servicer
Remittance Date.


                                      -35-
<PAGE>

      Servicer Remittance Date: With respect to any Distribution Date, the 18th
day (or if such day is not a Business Day, the next succeeding Business Day) of
the month in which the related Distribution Date occurs.

      Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (1)
the preservation, restoration and protection of a Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan), including without
limitation advances in respect of real estate taxes and assessments, (2) any
collection, enforcement or judicial proceedings, including without limitation
foreclosures, collections and liquidations, (3) the conservation, management,
sale and liquidation of any REO Property and (4) compliance with the obligations
under Section 3.10.

      Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.

      Servicing Fee Rate: 0.5000% per annum.

      Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
facsimile signature appear on a list of servicing officers furnished to the
Trustee by the Servicer on the Closing Date pursuant to this Agreement, as such
lists may from time to time be amended.

      Servicing Transfer Costs: In the event that the Servicer does not
reimburse the Trustee under the this Agreement, all costs associated with the
transfer of servicing from the predecessor Servicer, including, without
limitation, any costs or expenses associated with the termination of the
predecessor Servicer, the appointment of a successor servicer, the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Trustee or any successor servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Trustee or successor servicer to service the Mortgage Loans property
and effectively.

      SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.

      Startup Date: As defined in Section 2.07 hereof.

      Stated Principal Balance: With respect to any Mortgage Loan or related REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x) due with
respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date and (y) that were received by the Servicer as of the close of
business on the Determination Date related to such Distribution Date or with
respect to which Advances were made on the Servicer Advance Date prior to such
Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the


                                      -36-
<PAGE>

related Due Period. Notwithstanding the foregoing, the Stated Principal Balance
of a Liquidated Loan shall be deemed to be zero.

      Stepdown Date: The later to occur of (1) the Distribution Date in March
2006 or (2) the first Distribution Date on which (A) the Class A Certificate
Principal Balance (reduced by the Principal Funds with respect to such
Distribution Date) is less than or equal to (B) 62.00% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date.

      Subordinated Certificates: The Class M-1, Class M-2, Class B-1 and Class
B-2 Certificates.

      Subservicing Agreement: As defined in Section 3.02(a).

      Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(c).

      Tax Matters Person: The Person designated as "tax matters person" in the
manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.

      Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.

      Transfer Agreement: The Master Mortgage Loan Purchase and Interim
Servicing Agreement dated as of October 1, 2002 between Merrill Lynch Mortgage
Capital Inc., as purchaser and WMC Mortgage Corporation, as seller and interim
servicer, as supplemented by that certain letter agreement dated as of March 11,
2003.

      Transferor: WMC.

      Trigger Event: With respect to the Certificates after the Stepdown Date, a
Distribution Date on which (1) the quotient of (A) the aggregate Stated
Principal Balance of all Mortgage Loans which are 60 or more days Delinquent
measured on a rolling three month basis (including, for the purposes of this
calculation, Mortgage Loans in foreclosure and REO Properties) and (B) the
Stated Principal Balance of the Mortgage Loans as of the preceding Servicer
Advance Date, equals or exceeds the product of (i) 40.00% and (ii) Required
Percentage or (2) the quotient (expressed as a percentage) of (A) the aggregate
Realized Losses incurred from the Cut-off Date through the last day of the
calendar month preceding such Distribution Date and (B) the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date exceeds the Required Loss
Percentage.

      Trust Fund: The corpus of the trust (the "Merrill Lynch Mortgage Investors
Trust, Series 2003-WMC1") created hereunder consisting of (i) the Mortgage Loans
and all interest and principal received on or with respect thereto on and after
the Cut-off Date to the extent not applied in computing the Cut-off Date
Principal Balance thereof, exclusive of interest not required to be deposited in
the Collection Account; (ii) the Collection Account and the Certificate Account
and all amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loans; (v) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid property; and (vi) the Cap Contract and Cap Contract
Account.

      Trustee: Wells Fargo Bank Minnesota, National Association, a national
banking association, not in its individual capacity, but solely in its capacity
as trustee for the benefit of the Certificateholders under this Agreement, and
any successor thereto, and any corporation or national banking association
resulting


                                      -37-
<PAGE>

from or surviving any consolidation or merger to which it or its successors may
be a party and any successor trustee as may from time to time be serving as
successor trustee hereunder.

      Trustee Fee: With respect to any Mortgage Loan and any Distribution Date,
the fee payable to the Trustee pursuant to Section 8.05 equal to the product of
(a) 1/12th of the Trustee Fee Rate and (b) the Stated Principal Balance of such
Mortgage Loan as of the immediately preceding Distribution Date.

      Trustee Fee Rate: 0.005% per annum.

      Uncertificated Class C Interest: An uncertificated interest having (i) the
same rights to payments as the Class C Certificates, other than the rights to
payments of amounts with respect to the Cap Contract, and (ii) the rights to the
payments treated as distributed to the Class C Certificates under Section
2.07(d), provided, however, that such interest shall have no obligation to make
any payments treated as paid by the Class C Certificates pursuant to interest
rate cap agreements under Section 2.07(d).

      Underlying Mortgaged Property: With respect to each Co-op Loan, the
underlying real property owned by the related residential cooperative housing
corporation.

      USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.

      Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 95% to the Offered Certificates, 5% to the Class C and Class
P Certificates, with the allocation among the Offered Certificates to be in
proportion to the Class Certificate Principal Balance of each Class relative to
the Class Certificate Principal Balance of all other Classes. Voting Rights will
be allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.

      Weighted Maximum Rate Cap: As of any Distribution Date, a rate equal to
(i) the weighted average of the Maximum Mortgage Rates on the Mortgage Loans
(calculated based upon the Stated Principal Balance of such Mortgage Loans as of
the preceding Distribution Date) on such Distribution Date minus (ii) the
Servicing Fee Rate, the Trustee Fee Rate and the Credit Risk Manager Fee Rate.

      WMC: WMC Mortgage Corporation, a New Jersey corporation, or its successor
in interest.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

      SECTION 2.01. Conveyance of Mortgage Loans

      The Depositor, concurrently with the execution and delivery hereof, does
hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).

      In connection with such assignment, the Depositor does hereby deliver to,
and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned which is not a Co-op Loan:


                                      -38-
<PAGE>

            (A) The Original Mortgage Note endorsed, "Pay to the order of Wells
      Fargo Bank Minnesota, National Association, as trustee, without recourse."
      The Mortgage Note shall include all intervening endorsements showing a
      complete chain of the title from the originator to the Transferor.

            (B) Except as provided below and for each Mortgage Loan that is not
      a MERS Loan, the original recorded Mortgage, with evidence of recording
      thereon, or, if the original Mortgage has not yet been returned from the
      recording office, a copy of the original Mortgage certified by the
      Transferor to be true copy of the original of the Mortgage that has been
      delivered for recording in the appropriate recording office of the
      jurisdiction in which the Mortgaged Property is located and in the case of
      each MERS Loan, the original Mortgage, noting the presence of the MIN of
      the Loan and either language indicating that the Mortgage Loan is a MOM
      Loan or if the Mortgage Loan was not a MOM Loan at origination, the
      original Mortgage and the assignment thereof to MERS, with evidence of
      recording indicated thereon, or a copy of the Mortgage certified by the
      public recording office in which such Mortgage has been recorded.

            (C) In the case of each Mortgage Loan that is not a MERS Loan, the
      original Assignment of each Mortgage, to "Wells Fargo Bank Minnesota,
      National Association, as trustee."

            (D) The original policy of title insurance (or a preliminary title
      report, commitment or binder if the original title insurance policy has
      not been received from the title insurance company).

            (E) Originals of any intervening  assignments of the Mortgage,  with
      evidence of recording thereon or, if the original  intervening  assignment
      has not yet  been  returned  from  the  recording  office,  a copy of such
      assignment  certified to be a true copy of the original of the  assignment
      which has been sent for recording in the appropriate jurisdiction in which
      the Mortgaged Property is located.

            (F) Originals of all assumption and modification agreements, if any.

            In connection with such assignment, the Depositor does hereby
      deliver to, and deposit with, the Trustee the following documents or
      instruments with respect to each Mortgage Loan so assigned which is a
      Co-op Loan:

            (A) (i) The Original Mortgage Note (or a lost note affidavit
      (including a copy of the original Mortgage Note)) or (ii) original
      consolidation, extension and modification agreement (or a lost note
      affidavit (including a copy of the original consolidation, extension and
      modification agreement)), in either case endorsed, "Pay to the order of
      Wells Fargo Bank Minnesota, National Association, as trustee, without
      recourse."

            (B) The original Mortgage entered into by the Mortgagor with respect
      to such Co-Op Loan.

            (C) The original Assignment of Mortgage to "Wells Fargo Bank
      Minnesota, National Association, as trustee."

            (D) Original assignments of Mortgage showing a complete chain of
      assignment from the originator of the related Co-Op Loan to the last
      endorsee on the Mortgage Note.


                                      -39-
<PAGE>

            (E) Original Form UCC-1 and any continuation statements with
      evidence of filing thereon entered into by the Mortgagor with respect to
      such Co-Op Loan (or a recorded copy thereof).

            (F) Form UCC-3 (or copy thereof) by the Transferor or its agent
      assigning the security interest covered by such Form UCC-1 to "Wells Fargo
      Bank Minnesota, National Association, as trustee," together with all Forms
      UCC-3 (or copies thereof) showing a complete chain of assignment from the
      originator of the related Co-op Loan to the Transferor, with evidence of
      recording thereon.

            (G) Original stock certificate representing the stock allocated to
      the related dwelling unit in the related residential cooperative housing
      corporation and pledged by the related Mortgagor to the originator of such
      Co-op Loan with a stock power in blank attached.

            (H) Original proprietary lease.

            (I) Original assignment of proprietary lease or a copy thereof, to
      the Trustee or in blank, and all intervening assignments thereof.

            (J) Original recognition agreement or a copy thereof of the
      interests of the mortgagee with respect to the Co-op Loan by the
      residential cooperative housing corporation, the stock of which was
      pledged by the related Mortgagor to the originator of such Co-op Loan.

            (K) Originals of any assumption, consolidation or modification
      agreements relating to any of the items specified in (A) through (F) above
      with respect to such Co-op Loan.

      If in connection with any Mortgage Loan which is not a Co-op Loan, the
Depositor cannot deliver the Mortgage, Assignments of Mortgage or assumption,
consolidation or modification, as the case may be, with evidence of recording
thereon, if applicable, concurrently with the execution and delivery of this
Agreement solely because of a delay caused by the public recording office where
such Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered for recordation, the
Depositor shall deliver or cause to be delivered to the Trustee written notice
stating that such Mortgage or assumption, consolidation or modification, as the
case may be, has been delivered to the appropriate public recording office for
recordation. Thereafter, the Depositor shall deliver or cause to be delivered to
the Trustee such Mortgage, Assignments of Mortgage or assumption, consolidation
or modification, as the case may be, with evidence of recording indicated
thereon, if applicable, upon receipt thereof from the public recording office.
To the extent any required endorsement is not contained on a Mortgage Note or an
Assignment of Mortgage, the Depositor shall make or cause such endorsement to be
made.

      With respect to any Mortgage Loan which is not a Co-op Loan, none of the
Depositor, the Servicer or the Trustee shall be obligated to cause to be
recorded the Assignment of Mortgage refereed to in this Section 2.01. With
respect to any Co-op Loan, none of the Depositor, the Servicer or the Trustee
shall be obligated to cause to be filed the Form UCC-3 referred to in this
Section 2.01.

      The ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the Trustee. Neither the Depositor nor the
Servicer shall take any action inconsistent with such ownership and shall not
claim any ownership interest therein. The Depositor and the Servicer shall
respond to any third party inquiries with respect to ownership of the Mortgage
Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans not
delivered to the Trustee are and shall be held in trust by the Servicer, for the


                                      -40-
<PAGE>

benefit of the Trustee as the owner thereof, and the Servicer's possession of
the contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Servicer is in a custodial capacity only. The Depositor agrees to take no action
inconsistent with the Trustee's ownership of the Mortgage Loans, to promptly
indicate to all inquiring parties that the Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage Loans.

      It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.

      In addition to the conveyance made in the first paragraph of this Section
2.01, the Depositor does hereby convey, assign and set over to the Trustee for
the benefit of the Certificateholders its rights and interests under the Sale
Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement and the benefit
of the repurchase obligations and the obligation of the Seller contained in the
Sale Agreement to take, at the request of the Depositor or the Trustee, all
action on its part which is reasonably necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be
entitled to exercise all rights of the Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor. The foregoing sale, transfer,
assignment, set-over, deposit and conveyance does not and is not intended to
result in creation or assumption by the Trustee of any obligation of the
Depositor, the Seller, or any other Person in connection with the Mortgage Loans
or any other agreement or instrument relating thereto except as specifically set
forth herein.

      SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.

      Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Seller to repurchase
any Mortgage Loan to which a material exception was taken in the Exception
Report unless such exception is cured to the satisfaction of the Trustee within
45 Business Days of the Closing Date.


                                      -41-
<PAGE>

      The Trustee acknowledges receipt of the Cap Contract (a form of which is
attached hereto), Transfer Agreement and the Sale Agreement.

      The Trustee agrees, for the benefit of Certificateholders, the NIMs
Insurer, to review each Mortgage File delivered to it within 60 days after the
Closing Date to ascertain and to certify, within 70 days of the Closing Date, to
the NIMs Insurer, the Depositor and the Servicer that all documents required by
Section 2.01 have been executed and received, and that such documents relate to
the Mortgage Loans identified in Exhibit B-1 that have been conveyed to it. If
the Trustee finds any document or documents constituting a part of a Mortgage
File to be missing or defective (that is, mutilated, damaged, defaced or
unexecuted) in any material respect, the Trustee shall promptly (and in any
event within no more than five Business Days) after such finding so notify the
Servicer, the Seller, the Depositor and the NIMs Insurer. In addition, the
Trustee shall also notify the Servicer, the Seller, the Depositor and the NIMs
Insurer, if the original Mortgage with evidence of recording thereon with
respect to a Mortgage Loan is not received within 60 days of the Closing Date;
if it has not been received because of a delay caused by the public recording
office where such Mortgage has been delivered for recordation, the Depositor
shall deliver or cause to be delivered to the Trustee written notice stating
that such Mortgage has been delivered to the appropriate public recording
officer for recordation and thereafter the Depositor shall deliver or cause to
be delivered such Mortgage with evidence of recording thereon upon receipt
thereof from the public recording office. The Trustee shall request that the
Seller correct or cure such omission, defect or other irregularity, or
substitute a Mortgage Loan pursuant to the provisions of Section 2.03(c), within
90 days from the date the Seller was notified of such omission or defect and, if
the Seller does not correct or cure such omission or defect within such period,
that the Seller purchase such Mortgage Loan from the Trust Fund within 90 days
from the date the Trustee notified the Seller of such omission, defect or other
irregularity at the Purchase Price of such Mortgage Loan. The Purchase Price for
any Mortgage Loan purchased pursuant to this Section 2.02 shall be paid to the
Servicer and deposited by the Servicer in the Collection Account promptly upon
receipt, and, upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer, the Trustee, upon receipt of a Request
for Release, shall promptly release to the Seller the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, without recourse, as shall be necessary to vest in the Seller or its
designee, as the case may be, any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility with regard to such Mortgage
Loan. It is understood and agreed that the obligation of the Seller to purchase,
cure or substitute any Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders and the NIMs Insurer. The preceding sentence shall not,
however, limit any remedies available to the Certificateholders, the Depositor,
the Trustee or the NIMs Insurer pursuant to the Sale Agreement and the Transfer
Agreement. The Trustee shall be under no duty or obligation to inspect, review
and examine such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable or appropriate to the represented
purpose, or that they have actually been recorded, or that they are other than
what they purport to be on their face. The Trustee shall keep confidential the
name of each Mortgagor and the Trustee shall not solicit any such Mortgagor for
the purpose of refinancing the related Mortgage Loan. It is understood and
agreed that all rights and benefits relating to the solicitation of any
Mortgagors and the attendant rights, title and interest in and to the list of
Mortgagors and data relating to their Mortgages shall be retained by the
Servicer.

      Within 70 days of the Closing Date, the Trustee shall deliver to the
Depositor, the Servicer and the NIMs Insurer the Trustee's Certification,
substantially in the form of Exhibit D attached hereto, evidencing the
completeness of the Mortgage Files, with any exceptions noted thereto.


                                      -42-
<PAGE>

      SECTION 2.03. Representations, Warranties and Covenants of the Depositor.

      (a) The Depositor hereby represents and warrants to the Servicer, the
Trustee and the NIMs Insurer as follows, as of the date hereof:

            (i) The Depositor is duly organized and is validly existing as a
      corporation in good standing under the laws of the State of Delaware and
      has full power and authority (corporate and other) necessary to own or
      hold its properties and to conduct its business as now conducted by it and
      to enter into and perform its obligations under this Agreement and the
      Sale Agreement.

            (ii) The Depositor has the full corporate power and authority to
      execute, deliver and perform, and to enter into and consummate the
      transactions contemplated by, this Agreement and the Sale Agreement and
      has duly authorized, by all necessary corporate action on its part, the
      execution, delivery and performance of this Agreement and the Sale
      Agreement; and this Agreement and the Sale Agreement, assuming the due
      authorization, execution and delivery hereof by the other parties hereto,
      constitutes a legal, valid and binding obligation of the Depositor,
      enforceable against the Depositor in accordance with its terms, subject,
      as to enforceability, to (i) bankruptcy, insolvency, reorganization,
      moratorium and other similar laws affecting creditors' rights generally
      and (ii) general principles of equity, regardless of whether enforcement
      is sought in a proceeding in equity or at law.

            (iii) The execution and delivery of this Agreement and the Sale
      Agreement by the Depositor, the consummation of the transactions
      contemplated by this Agreement and the Sale Agreement, and the fulfillment
      of or compliance with the terms hereof are in the ordinary course of
      business of the Depositor and will not (A) result in a material breach of
      any term or provision of the charter or by-laws of the Depositor or (B)
      materially conflict with, result in a violation or acceleration of, or
      result in a material default under, the terms of any other material
      agreement or instrument to which the Depositor is a party or by which it
      may be bound or (C) constitute a material violation of any statute, order
      or regulation applicable to the Depositor of any court, regulatory body,
      administrative agency or governmental body having jurisdiction over the
      Depositor; and the Depositor is not in breach or violation of any material
      indenture or other material agreement or instrument, or in violation of
      any statute, order or regulation of any court, regulatory body,
      administrative agency or governmental body having jurisdiction over it
      which breach or violation may materially impair the Depositor's ability to
      perform or meet any of its obligations under this Agreement.

            (iv) No litigation is pending, or, to the best of the Depositor's
      knowledge, threatened, against the Depositor that would materially and
      adversely affect the execution, delivery or enforceability of this
      Agreement and the Sale Agreement or the ability of the Depositor to
      perform its obligations under this Agreement and the Sale Agreement in
      accordance with the terms hereof.

            (v) No consent, approval, authorization or order of any court or
      governmental agency or body is required for the execution, delivery and
      performance by the Depositor of, or compliance by the Depositor with, this
      Agreement and the Sale Agreement or the consummation of the transactions
      contemplated hereby, or if any such consent, approval, authorization or
      order is required, the Depositor has obtained the same. The Depositor
      hereby represents and warrants to the Trustee with respect to each
      Mortgage Loan as of the Closing Date, and following the transfer of the
      Mortgage Loans to it by the Seller, the Depositor had good title to the
      Mortgage Loans and the Mortgage Notes were subject to no offsets, claims,
      liens, mortgage, pledge, charge, security interest, defenses or
      counterclaims.


                                      -43-
<PAGE>

      (b) The representations and warranties of each Transferor with respect to
the related Mortgage Loans in the applicable Transfer Agreement, which have been
assigned to the Trustee hereunder, were made as of the date specified in the
applicable Transfer Agreement (or underlying agreement, if such Transfer
Agreement is in the form of an assignment of a prior agreement). To the extent
that any fact, condition or event with respect to a Mortgage Loan constitutes a
breach of both (i) a representation or warranty of the applicable Transferor
under the applicable Transfer Agreement and (ii) a representation or warranty of
the Seller under the Sale Agreement, the only right or remedy of the Trustee,
the NIMs Insurer or of any Certificateholder shall be the Trustee's right to
enforce the obligations of the applicable Transferor under any applicable
representation or warranty made by it. The Trustee acknowledges that the Seller
shall have no obligation or liability with respect to any breach of a
representation or warranty made by it with respect to the Mortgage Loans if the
fact, condition or event constituting such breach also constitutes a breach of a
representation or warranty made by the applicable Transferor in the applicable
Transfer Agreement, without regard to whether such Transferor fulfills its
contractual obligations in respect of such representation or warranty. The
Trustee further acknowledges that the Depositor shall have no obligation or
liability with respect to any breach of any representation or warranty with
respect to the Mortgage Loans (except as set forth in Section 2.03(a)(v)) under
any circumstances.

      (c) Upon discovery by any of the Depositor, the NIMs Insurer, or the
Trustee of a breach of any of such representations and warranties that adversely
and materially affects the value of the related Mortgage Loan, prepayment
charges or the interests of the Certificateholders, the party discovering such
breach shall give prompt written notice to the other parties. Within 90 days of
the discovery of a breach of any representation or warranty given to the Trustee
by the Depositor, any Transferor, the Seller and assigned to the Trustee, the
Depositor, such Transferor or the Seller, as applicable, shall either (a) cure
such breach in all material respects, (b) repurchase such Mortgage Loan or any
property acquired in respect thereof from the Trustee at the Purchase Price or
(c) within the two year period following the Closing Date, substitute a
Replacement Mortgage Loan for the affected Mortgage Loan. In the event of
discovery of a breach of any representation and warranty of any Transferor or
the Depositor, the Trustee shall enforce its rights under the applicable
Transfer Agreement and the Sale Agreement for the benefit of Certificateholders
and the NIMs Insurer. If a breach of the representations and warranties set
forth in the Transfer Agreement hereof exists solely due to the unenforceability
of a prepayment charge, the Trustee shall notify the NIMs Insurer thereof and
not seek to enforce the repurchase remedy provided for herein unless directed in
writing to do so by the NIMs Insurer. In the event of a breach of the
representations and warranties with respect to the Mortgage Loans set forth in a
Transfer Agreement, the Trustee shall at the request of the NIMs Insurer enforce
the right of the Trust Fund and the NIMs Insurer to be indemnified for such
breach of representation and warranty. In the event that such breach relates
solely to the unenforceability of a prepayment charge, amounts received in
respect of such indemnity up to the amount of such prepayment charge shall be
distributed pursuant to Section 4.04(b)(i)(B). As provided in the Sale
Agreement, if the Transferor substitutes for a Mortgage Loan for which there is
a breach of any representations and warranties in the related Transfer Agreement
which adversely and materially affects the value of such Mortgage Loan and such
substitute mortgage loan is not a Replacement Mortgage Loan, under the terms of
the Sale Agreement, the Seller will, in exchange for such substitute Mortgage
Loan, (i) provide the applicable Purchase Price for the affected Mortgage Loan
or (ii) within two years of the Closing Date, substitute such affected Mortgage
Loan with a Replacement Mortgage Loan. Any such substitution shall not be
effected prior to the additional delivery to the Trustee of a Request for
Release substantially in the form of Exhibit I and shall not be effected unless
it is within two years of the Startup Date. As provided in the Sale Agreement,
the Seller indemnifies and holds the Trust Fund, the Trustee, the Depositor, the
NIMs Insurer, the Servicer and each Certificateholder harmless against any and
all taxes, claims, losses, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Trust Fund, the Trustee, the Depositor, the NIMs Insurer, the


                                      -44-
<PAGE>

Servicer and any Certificateholder may sustain in connection with any actions of
the Seller relating to a repurchase of a Mortgage Loan other than in compliance
with the terms of this Section 2.03 and the Sale Agreement, to the extent that
any such action causes (i) any federal or state tax to be imposed on the Trust
Fund or any REMIC provided for herein, 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 860(d)(1) of the Code,
or (ii) any REMIC created hereunder to fail to qualify as a REMIC at any time
that any Certificate is outstanding.

      With respect to any Mortgage Loan repurchased by the Depositor pursuant to
this Agreement, by the Seller pursuant to the Sale Agreement or by any
Transferor pursuant to the applicable Transfer Agreement, the principal portion
of the funds received by the Trustee in respect of such repurchase of a Mortgage
Loan will be considered a Principal Prepayment and shall be deposited in the
Certificate Account pursuant to Section 3.05. The Trustee, upon receipt of the
full amount of the Purchase Price for a Deleted Mortgage Loan, or upon receipt
of the Mortgage File for a Replacement Mortgage Loan substituted for a Deleted
Mortgage Loan, shall release or cause to be released and reassign to the
Depositor, the Seller or the applicable Transferor, as applicable, the related
Mortgage File for the Deleted Mortgage Loan and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be necessary to vest in such party or its
designee or assignee title to any Deleted Mortgage Loan released pursuant
hereto, free and clear of all security interests, liens and other encumbrances
created by this Agreement, which instruments shall be prepared by the Trustee,
and the Trustee shall not have any further responsibility with respect to the
Mortgage File relating to such Deleted Mortgage Loan.

      With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor, the applicable Transferor or the Seller, as
applicable, must deliver to the Trustee the Mortgage File for the Replacement
Mortgage Loan containing the documents set forth in Section 2.01 along with a
written certification certifying as to the delivery of such Mortgage File and
containing the granting language set forth in Section 2.01; and (ii) the
Depositor will be deemed to have made, with respect to such Replacement Mortgage
Loan, each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. The Trustee shall review the Mortgage File with
respect to each Replacement Mortgage Loan and certify to the NIMs Insurer and
the Depositor that all documents required by Section 2.01 have been executed and
received.

      For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment penalties with respect to such Replacement Mortgage Loans is less
than the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment penalties of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall be deposited into the Certificate
Account by the Seller on the Determination Date for the Distribution Date
relating to the Prepayment Period during which the related Mortgage Loan became
required to be purchased or replaced hereunder.

      Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee and the NIMs Insurer have
received an Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of any REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in any such REMIC, or (B)
cause any such


                                      -45-
<PAGE>

REMIC to engage in a "prohibited transaction" or prohibited contribution
pursuant to the REMIC Provisions.

      The Trustee shall cause the Mortgage Loan Schedule to be amended in
accordance with the terms of this Agreement.

      The Seller shall give or cause to be given written notice to the
Certificateholders and the NIMS Insurer that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Replacement Mortgage Loan or Replacement Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the NIMS Insurer and the Trustee. Upon
such substitution by the Seller, such Replacement Mortgage Loan or Replacement
Mortgage Loans shall constitute part of the Mortgage Pool and shall be subject
in all respects to the terms of this Agreement and the Sale Agreement, including
all applicable representations and warranties thereof included in the Sale
Agreement as of the date of substitution.

      In addition, the Seller shall obtain at its own expense and deliver to the
Trustee and the NIMS Insurer an Opinion of Counsel to the effect that such
substitution will not (a) cause any federal tax to be imposed on the Trust Fund
or any REMIC provided for herein, 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) adversely affect the status of any REMIC provided for herein as a REMIC. If
any such Opinion of Counsel can not be delivered, then such substitution may
only be effected at such time as the required Opinion of Counsel can be given.

      (d) It is understood and agreed that the representations, warranties and
indemnification (i) set forth in Section 2.03, (ii) of the Seller and the
Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder and (iii) of each Transferor, assigned by the Seller to the
Depositor pursuant to the Sale Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.

      SECTION 2.04. Representations and Warranties of the Servicer.

      The Servicer hereby represents and warrants to the Depositor and the
Trustee as follows, as of the date hereof:

            (i) The Servicer is a duly organized corporation and is validly
      existing and in good standing under the laws of the state of its
      incorporation and is duly authorized and qualified to transact any and all
      business contemplated by this Agreement to be conducted by the Servicer in
      any state in which a Mortgaged Property (or Underlying Mortgaged Property,
      in the case of a Co-op Loan) is located or is otherwise not required under
      applicable law to effect such qualification and, in any event, is in
      compliance with the doing business laws of any such state, to the extent
      necessary to ensure its ability to enforce each Mortgage Loan, to service
      the Mortgage Loans in accordance with the terms of this Agreement and to
      perform any of its other obligations under this Agreement in accordance
      with the terms hereof.

            (ii) The Servicer has the full corporate power and authority and to
      service each Mortgage Loan, and to execute, deliver and perform, and to
      enter into and consummate the transactions contemplated by this Agreement
      and has duly authorized by all necessary corporate action on the part of
      the Servicer the execution, delivery and performance of this Agreement;
      and this Agreement, assuming the due authorization, execution and delivery
      hereof by the other


                                      -46-
<PAGE>

      parties hereto, constitutes a legal, valid and binding obligation of the
      Servicer, enforceable against the Servicer in accordance with its terms,
      except that (a) the enforceability hereof may be limited by bankruptcy,
      insolvency, moratorium, receivership and other similar laws relating to
      creditors' rights generally and (b) the remedy of specific performance and
      injunctive and other forms of equitable relief may be subject to equitable
      defenses and to the discretion of the court before which any proceeding
      therefor may be brought.

            (iii) The execution and delivery of this Agreement by the Servicer,
      the servicing of the Mortgage Loans under this Agreement, the consummation
      of any other of the transactions contemplated by this Agreement, and the
      fulfillment of or compliance with the terms hereof are in the ordinary
      course of business of the Servicer and will not (A) result in a material
      breach of any term or provision of the charter or by-laws of the Servicer
      or (B) materially conflict with, result in a material breach, violation or
      acceleration of, or result in a material default under, the terms of any
      other material agreement or instrument to which the Servicer is a party or
      by which it may be bound, or (C) constitute a material violation of any
      statute, order or regulation applicable to the Servicer of any court,
      regulatory body, administrative agency or governmental body having
      jurisdiction over the Servicer; and the Servicer is not in breach or
      violation of any material indenture or other material agreement or
      instrument, or in violation of any statute, order or regulation of any
      court, regulatory body, administrative agency or governmental body having
      jurisdiction over it which breach or violation may materially impair the
      Servicer's ability to perform or meet any of its obligations under this
      Agreement.

            (iv) The Servicer is an approved servicer of conventional mortgage
      loans for Fannie Mae or Freddie Mac.

            (v) No litigation is pending or, to the best of the Servicer's
      knowledge, threatened, against the Servicer that would materially and
      adversely affect the execution, delivery or enforceability of this
      Agreement or the ability of the Servicer to service the Mortgage Loans or
      to perform any of its other obligations under this Agreement in accordance
      with the terms hereof.

            (vi) No consent, approval, authorization or order of any court or
      governmental agency or body is required for the execution, delivery and
      performance by the Servicer of, or compliance by the Servicer with, this
      Agreement or the consummation of the transactions contemplated hereby, or
      if any such consent, approval, authorization or order is required, the
      Servicer has obtained the same.

            (vii) The Servicer has fully furnished and will fully furnish (for
      the period it serviced the Mortgage Loans), in accordance with the Fair
      Credit Reporting Act and its implementing regulations, accurate and
      complete information (e.g., favorable and unfavorable) on its borrower
      credit files to Equifax, Experian and Trans Union Credit Information
      Company on a monthly basis.

            (viii) Notwithstanding any state or federal law to the contrary, the
      Servicer shall not impose a prepayment premium in any instance when the
      mortgage debt is accelerated as the result of the Mortgagor's default in
      making the Mortgage Loan payments.

      SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are
not "Qualified Mortgages".

      Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party


                                      -47-
<PAGE>

discovering such fact shall promptly (and in any event within 5 Business Days of
discovery) give written notice thereof to the other parties. In connection
therewith, the Depositor shall, at the Depositor's option, either (i)
substitute, if the conditions in Section 2.03(c) with respect to substitutions
are satisfied, a Replacement Mortgage Loan for the affected Mortgage Loan, or
(ii) repurchase the affected Mortgage Loan within 90 days of such discovery in
the same manner as it would a Mortgage Loan for a breach of representation or
warranty contained in Section 2.03. The Trustee shall reconvey to the Depositor
the Mortgage Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would a Mortgage Loan repurchased for breach of
a representation or warranty contained in Section 2.03.

      SECTION 2.06. Authentication and Delivery of Certificates.

      The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the Trustee
in authorized denominations evidencing ownership of the entire Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates and to
perform the duties set forth in this Agreement to the best of its ability, to
the end that the interests of the Holders of the Certificates may be adequately
and effectively protected.

      SECTION 2.07. REMIC Elections.

      (a) The Depositor hereby instructs and authorizes the Trustee to make an
appropriate election to treat each of the Upper Tier REMIC, the Middle Tier
REMIC and the Lower Tier REMIC as a REMIC. The Trustee shall sign the returns
providing for such elections and such other tax or information returns which are
required to be signed by the Trustee under applicable law. This Agreement shall
be construed so as to carry out the intention of the parties that each of the
Upper Tier REMIC, the Middle Tier REMIC and the Lower Tier REMIC be treated as a
REMIC at all times prior to the date on which the Trust Fund is terminated.

      (b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Date" for purposes of the REMIC Provisions shall be the
Closing Date. Each REMIC's fiscal year shall be the calendar year.

      The Lower Tier REMIC shall consist of all of the assets of the Trust Fund
(other than (i) any proceeds of prepayment penalties, (ii) amounts paid by the
Servicer or the Transferor in respect of prepayment charges pursuant to this
Agreement, (iii) amounts received in respect of any indemnification paid as a
result of a prepayment charge being unenforceable in breach of the
representations and warranties set forth in the Transfer Agreement, (iv) the
interests issued by the Lower Tier REMIC and the Middle Tier REMIC, (v) the
grantor trusts described in Section 2.07 hereof and (vi) the Cap Contract and
Cap Contract Account). The Lower Tier REMIC shall issue the Class LTA-1
Interest, Class LTA-2 Interest, Class LTB-1 Interest, Class LTB-2 Interest,
Class LTM-1 Interest, Class LTM-2 Interest and Class LTX Interest which shall be
designated as regular interests of such REMIC and shall issue the Class LTR
Interest that shall be designated as the sole class of residual interest in the
Lower Tier REMIC. Each of the Lower Tier REMIC Regular Interests shall have the
characteristics set forth in its definition.

      The assets of the Middle Tier REMIC shall be the Lower Tier REMIC Regular
Interests. The Middle Tier REMIC Regular Interests shall be designated as the
regular interests in the Middle Tier REMIC and the Class MTR Interest shall be
designated as the sole class of residual interests in the Middle Tier REMIC.
Each of the Middle Tier REMIC Regular Interests shall have the characteristics
set forth in its definition.


                                      -48-
<PAGE>

      The assets of the Upper Tier REMIC shall be the Middle Tier REMIC Regular
Interests. The REMIC Regular Interests shall be designated as the regular
interests in the Upper Tier REMIC and the Residual Interest shall be designated
as the sole class of residual interest in the Upper Tier REMIC. For federal
income tax purposes, the Pass-Through Rate on each REMIC Regular Interest and on
the sole class of residual interest in the Upper Tier REMIC shall be subject to
a cap equal to the Net Rate.

      The beneficial ownership of the Class LTR Interest, the Class MTR Interest
and the Residual Interest shall be represented by the Class R Certificate. The
Class LTR Interest shall not have a principal balance or bear interest. The
Class MTR Interest not have a principal balance or bear interest.

      (c) The "tax matters person" with respect to each REMIC for purposes of
the REMIC Provisions shall be the beneficial owner of the Class R Certificate;
provided, however, that the Holder of a Class R Certificate, by its acceptance
thereof, irrevocably appoints the Trustee as its agent and attorney-in-fact to
act as "tax matters person" with respect to each REMIC for purposes of the REMIC
Provisions. If there is more than one beneficial owner of the Class R
Certificate, the "tax matters person" shall be the Person with the greatest
percentage interest in the Class R Certificate and, if there is more than one
such Person, shall be determined under Treasury regulation Section 1.860F-4(d)
and Treasury regulation Section 301.6231(a)(7)-1.

      (d) It is intended that the rights of the Class A-1 Certificates, Class
A-2 Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates, Class B-1 Certificates and Class B-2 Certificates to receive
payments in respect of Excess Interest, including all payments in respect of
Interest Carryover Amounts, shall be treated as a right in interest rate cap
contracts written by the Class C Certificateholders in favor of the holders of
the Class A-1 Certificates, Class A-2 Certificates, Class R Certificate, Class
M-1 Certificates, Class M-2 Certificates, Class B-1 Certificates and Class B-2
Certificates, and such shall be accounted for as property held separate and
apart from the regular interests in the Upper Tier REMIC held by the holders of
the Class A-1 Certificates, Class A-2 Certificates, M-1 Certificates, Class M-2
Certificates, Class B-1 Certificates and Class B-2 Certificates and the residual
interest in the Upper Tier REMIC held by the holder of the Class R Certificate.
This provision is intended to satisfy the requirements of Treasury Regulations
Section 1.860G-2(i) for the treatment of property rights coupled with REMIC
interests to be separately respected and shall be interpreted consistently with
such regulation. On each Distribution Date, to the extent that any of the Class
A-1 Certificates, Class A-2 Certificates, Class R Certificate, M-1 Certificates,
Class M-2 Certificates, Class B-1 Certificates and Class B-2 Certificates
receive payments of Excess Interest, such amounts, to the extent not derived
from payments received on the Cap Contract, will be treated as distributed by
the Upper-Tier REMIC to the Class C Certificates pro rata in payment of the
amounts specified in Section 4.04(g) and then paid to the relevant Class of
Certificates pursuant to the related interest cap agreement.

      (e) The parties intend that the portion of the Trust Fund consisting of
the Uncertificated Class C Interest, the Cap Contract, the Cap Contract Account
and the obligation of the holders of the Class C Certificates to pay amounts of
Excess Interest and in respect of Interest Carryover Amounts to the holders of
the Class A-1 Certificates, Class A-2 Certificates, Class R Certificate, Class
M-1 Certificates, Class M-2 Certificates, Class B-1 Certificates and Class B-2
Certificates shall be treated as a "grantor trust" under the Code, and the
provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class C Certificates information regarding their
allocable share, if any, of the income with respect to such grantor trust, (ii)
file or cause to be filed with the Internal Revenue Service Form 1041 (together
with any necessary attachments) and such other forms as may be applicable and
(iii) comply with such information reporting obligations with respect to
payments from such grantor trust to the holders of Class A-1 Certificates, Class
A-2 Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates, Class B-1 Certificates, Class B-2 and Class C Certificates as may
be applicable under the Code.


                                      -49-
<PAGE>

      (f) The parties intend that the portion of the Trust Fund consisting of
the right to receive proceeds from prepayment penalties collected on the
Mortgage Loans, amounts paid by the Servicer or Transferor in respect of
prepayment charges pursuant to this Agreement and amounts received with respect
to any amounts in respect of any indemnification paid as a result of a
prepayment charge being unenforceable in breach of the representations and
warranties set forth in the Transfer Agreement shall be treated as a "grantor
trust" under the Code, and the provisions hereof shall be interpreted
consistently with this intention. In furtherance of such intention, the Trustee
shall (i) furnish or cause to be furnished to the holders of the Class P
Certificates information regarding their allocable share of the income with
respect to such grantor trust and (ii) file or cause to be filed with the
Internal Revenue Service Form 1041 (together with any necessary attachments) and
such other forms as may be applicable.

      (g) The parties intend that the portion of the Trust Fund consisting of
the Class R Certificate and the right of the Class C Certificates to receive the
amounts described in the last paragraph of Section 9.01 hereof shall be treated
as a "grantor trust" under the Code and the provisions hereof shall be
interpreted consistent with this intention. In furtherance of this intention,
the Trustee shall (i) furnish or cause to be furnished to the holders of the
Class R Certificate and the Class C Certificates information regarding their
allocable share of the income with respect to such grantor trust, (ii) file or
cause to be filed with the Internal Revenue Service Form 1041 (together with any
necessary attachments) and such other forms as may be applicable and (iii)
comply with such information reporting obligations with respect to payments from
such grantor trust as may be applicable under the Code.

      All payments of principal and interest at the Net Mortgage Rate on each of
the Mortgage Loans (other than prepayment penalties, amounts paid by the
Servicer in respect of prepayment charges pursuant to this Agreement and amounts
received with respect to any amounts in respect of any indemnification paid by
the Servicer as a result of a prepayment charge being unenforceable in breach of
the representations and warranties set forth in the Transfer Agreement) received
from the Mortgage Loans shall be paid to the Lower Tier REMIC Regular Interests
until the principal balance of all such interests have been reduced to zero and
any losses allocated to such interests have been reimbursed. Any excess amounts
shall be distributed to the Class LTR Interest. On each Distribution Date, an
amount equal to 50% of the increase in the Overcollateralization Amount shall be
payable as a reduction of the principal amounts of the Lower Tier REMIC Marker
Classes (with such amount allocated among the Lower Tier REMIC Marker Classes so
that each Lower Tier REMIC Marker Class will have its principal reduced by an
amount equal to 50% of any increase in the Overcollateralization Amount that
results in a reduction in the principal balance of its Corresponding Middle Tier
REMIC Interests) and will be accrued and added to the principal balance of the
Class LTX Interest. All payments of scheduled principal and prepayments of
principal on the Mortgage Loans shall be allocated 50% to the Class LTX Interest
and 50% to the Lower Tier REMIC Marker Classes (with principal payments
allocated to each of the Lower Tier REMIC Marker Classes in an amount equal to
50% of the principal amounts distributed to the Corresponding Middle Tier
Interests in reduction of their principal amounts). Notwithstanding the
preceding sentence, an amount equal to the principal payments that result in a
reduction in the Overcollateralization Amount shall be treated as payable
entirely to the Class LTX Interest. Realized Losses shall be applied to the
Lower Tier REMIC Marker Classes and the Class LTX Interest so that after all
distributions have been made on each Distribution Date (i) the principal balance
of each of the Lower Tier REMIC Marker Classes is equal to 50% of the principal
balance of the Corresponding Middle Tier Interests and (ii) the principal
balance of the Class LTX Interest is equal to the sum of (x) 50% of the
aggregate Stated Principal Balance of the Mortgage Loans and (y) 50% of the
Overcollateralization Amount. Each Lower Tier REMIC Marker Class shall be
entitled to receive an amount equal to 50% of all amounts distributed to the
Corresponding Middle Tier Interest in respect of unreimbursed amounts of
Realized Losses. The Class LTX Interest shall be entitled to receive all other
amounts distributed to the Certificates in respect of unreimbursed amounts of
Realized Losses.


                                      -50-
<PAGE>

      All payments of scheduled principal and prepayments on the Mortgage Loans,
and Realized Losses on the Mortgage Loans, shall be allocated among the Middle
Tier REMIC Regular Interests in the same manner as such payments or Realized
Losses are allocated to the Related Certificates (treating the Class S
Certificates as Related Certificates with respect to each of the Class MTA-1,
Class MTA-2, Class MTM-1, Class MTM-2, Class MTB-1 and Class MTB-2 Interests in
proportion to their respective principal balances and treating the Class C
Certificate as a Related Certificate with respect to the Class MTC Interest).
Each Middle Tier REMIC Regular Interest shall be entitled to receive all amounts
distributed to the Certificates in respect of unreimbursed amounts of Realized
Losses (treating the Class S Certificates as Related Certificates with respect
to each of the Class MTA-1, Class MTA-2, Class MTM-1, Class MTM-2, Class MTB-1
and Class MTB-2 Interests in proportion to their respective principal balances
and treating the Class C Certificate as a Related Certificate with respect to
the Class MTC Interest).

      In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status prohibited contribution under the REMIC Provisions due
to the negligent performance by the Servicer of its duties and obligations set
forth herein, the Servicer shall indemnify the NIMS Insurer, the Trustee and the
Trust Fund against any and all Losses resulting from such negligence; provided,
however, that the Servicer shall not be liable for any such Losses attributable
to the action or inaction of the Trustee, the Depositor or the Holder of such
Class R Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Class R Certificate on which the
Servicer has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of such Class R Certificate now or hereafter
existing at law or in equity. Notwithstanding the foregoing, however, in no
event shall the Servicer have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than arising out of a negligent performance by the Servicer of its duties
and obligations set forth herein, and (3) for any special or consequential
damages to Certificateholders (in addition to payment of principal and interest
on the Certificates).

      In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the NIMS Insurer and
the Trust Fund against any and all Losses resulting from such negligence;
provided, however, that the Trustee shall not be liable for any such Losses
attributable to the action or inaction of the Servicer, the Depositor or the
Holder of such Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Class R Certificate
on which the Trustee has relied. The foregoing shall not be deeded to limit or
restrict the rights and remedies of the Holder of such Class R Certificate now
or hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Trustee have any liability (1) for any action or
omission that is taken in accordance with and in compliance with the express
terms of, or which is expressly permitted by the terms of, this Agreement, (2)
for any Losses other than arising out of a negligent performance by the Trustee
of its duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).

      SECTION 2.08. Covenants of the Servicer.

      The Servicer hereby covenants to each of the other parties to this
Agreement as follows:

      (a) the Servicer shall comply in the performance of its obligations under
this Agreement with all reasonable rules and requirements of the insurer under
each Required Insurance Policy;


                                      -51-
<PAGE>

      (b) no written information, certificate of an officer, statement furnished
in writing or written report delivered to the Depositor, the Trustee or the NIMs
Insurer, any affiliate of the Depositor, the Trustee or the NIMs Insurer and
prepared by the Servicer pursuant to this Agreement will be inaccurate in any
material respect, provided, however, that the Servicer shall not be responsible
for inaccurate information provided to it by third parties.

      SECTION 2.09. [RESERVED]

      SECTION 2.10. [RESERVED]

      SECTION 2.11. Permitted Activities of the Trust. The Trust is created for
the object and purpose of engaging in the Permitted Activities. In furtherance
of the foregoing, the Trustee is hereby authorized and directed to execute and
deliver on behalf of the Trust, and to perform the duties and obligations of the
Trustee under, the Cap Contract, an insurance and indemnity agreement with a
NIMs Insurer and any other agreement or instrument related thereto, in each case
in such form as the Depositor shall direct or shall approve, the execution and
delivery of any such agreement by the Depositor to be conclusive evidence of its
approval thereof.

      SECTION 2.12. Qualifying Special Purpose Entity. For purposes of SFAS 140,
the parties hereto intend that the Trust Fund shall be treated as a "qualifying
special purpose entity" as such term is used in SFAS 140 and any successor rule
thereto and its power and authority as stated in Section 2.11 of this Agreement
shall be limited in accordance with paragraph 35 thereof.

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

      SECTION 3.01. Servicer to Service Mortgage Loans.

            For and on behalf of the Certificateholders, the Servicer shall
service and administer the Mortgage Loans in accordance with Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property (or the stock allocated to a dwelling unit related to a Co-op Loan) and
assumptions of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement), (iii) to collect any Insurance Proceeds and other
Liquidation Proceeds and (iv) subject to Section 3.12(a), to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property (or
the stock allocated to a dwelling unit related to a Co-op Loan) securing any
Mortgage Loan; provided that, subject to Section 6.03, the Servicer shall not
take any action that is inconsistent with or prejudices the interests of the
Trust Fund or the Certificateholders in any Mortgage Loan serviced by it under
this Agreement or the rights and interests of the other parties to this
Agreement except as otherwise required by this Agreement or by law. The Servicer
shall represent and protect the interest of the Trust Fund in the same manner as
it currently protects its own interest in mortgage loans in its own portfolio in
any claim, proceeding or litigation regarding a Mortgage Loan and shall not make
or permit any modification, waiver or amendment of any term of any Mortgage Loan
which would cause any of the REMICs provided for herein to fail to qualify as a
REMIC or result in the imposition of any tax under Section 860G(a) or 860G(d) of
the Code, but in any case not in any manner that is a lesser standard


                                      -52-
<PAGE>

than that provided in the first sentence of this Section 3.01. Without limiting
the generality of the foregoing, the Servicer, in its own name or in the name of
the Depositor and the Trustee, is hereby authorized and empowered by the
Depositor and the Trustee, when the Servicer believes it appropriate in its
reasonable judgment, to execute and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Mortgage Loans, and with
respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Servicer shall prepare and deliver to the Depositor
and/or the Trustee such documents requiring execution and delivery by any or all
of them as are necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans, including without limitation, any powers of
attorney. Upon receipt of such documents, the Depositor and/or the Trustee shall
execute such documents and deliver them to the Servicer.

      In accordance with the standards of the preceding paragraph, the Servicer
shall advance or cause to be advanced funds as necessary for the purpose of
effecting the payment of taxes and assessments on the Mortgaged Properties,
which advances shall be reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. All costs incurred by the Servicer, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balance under the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.

      The Servicer shall deliver a list of Servicing Officers to the Trustee by
the Closing Date.

      The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 97-02 and that for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.

      SECTION 3.02.  Servicing and Subservicing;  Enforcement of the Obligations
of Servicer.

      (a) The Servicer may arrange for the subservicing of any Mortgage Loan by
a subservicer, which may be an affiliate (each, a "subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided, however,
that (i) such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such agreement would not result in a withdrawal or downgrading by any Rating
Agency of the ratings of any Certificates or any of the NIM Notes evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor and the
NIMs Insurer and (iii) the NIMs Insurer shall have consented to such
subservicing agreement. Notwithstanding the provisions of any subservicing
agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a subservicer or reference to actions
taken through a subservicer or otherwise, the Servicer shall remain obligated
and liable to the Depositor, the Trustee and the Certificateholders for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements or arrangements or by virtue of
indemnification from the subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. Every subservicing agreement entered into by the Servicer
shall contain a provision giving any successor Servicer the option to terminate
such agreement with the consent of the NIMs Insurer in the event a successor
Servicer is appointed. All actions of the each subservicer performed pursuant to
the related subservicing agreement shall be performed as an agent of the
Servicer with the same force and effect as if performed directly by the
Servicer. The Servicer shall deliver to the NIMs Insurer and the Trustee copies
of all subservicing agreements.


                                      -53-
<PAGE>

      (b) For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the Mortgage
Loans that are received by a subservicer regardless of whether such payments are
remitted by the subservicer to the Servicer.

      SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.

      Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.

      SECTION 3.04. Trustee to Act as Servicer.

      In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its designee shall, within a period of time not to exceed ninety (90) days from
the date of notice of termination or resignation, thereupon assume all of the
rights and obligations of the Servicer hereunder arising thereafter (except that
the Trustee shall not be (i) liable for losses of the Servicer pursuant to
Section 3.10 hereof or any acts or omissions of such predecessor Servicer
hereunder, (ii) obligated to make Advances if it is prohibited from doing so by
applicable law, (iii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder, including pursuant to Section 2.02 or 2.03 hereof,
(iv) responsible for any expenses of the Servicer pursuant to Section 2.03 or
(v) deemed to have made any representations and warranties hereunder, including
pursuant to Section 2.03 or the first paragraph of Section 6.02 hereof;
provided, however that the Trustee or its designee, in its capacity as the
successor servicer, shall immediately assume the terminated or resigning
Servicer's obligation to make Advances and Servicing Advances. No such
termination shall affect any obligation of the Servicer to pay amounts owed
under this Agreement and to perform its duties under this Agreement until its
successor assumes all of its rights and obligations hereunder. If the Servicer
shall for any reason no longer be the Servicer (including by reason of any Event
of Default), the Trustee (or any other successor servicer) may, at its option,
succeed to any rights and obligations of the Servicer under any subservicing
agreement in accordance with the terms thereof; provided, however, that the
Trustee (or any other successor servicer) shall not incur any liability or have
any obligations in its capacity as servicer under a subservicing agreement
arising prior to the date of such succession unless it expressly elects to
succeed to the rights and obligations of the Servicer thereunder; and the
Servicer shall not thereby be relieved of any liability or obligations under the
subservicing agreement arising prior to the date of such succession. To the
extent any servicing costs or expenses are not paid by the Servicer pursuant to
this Agreement, such amounts shall be payable out of the Certificate Account;
provided that the terminated Servicer shall reimburse the Trust Fund for any
such expense incurred by the Trust Fund upon receipt of a reasonably detailed
invoice evidencing such expenses. If the Trustee is unwilling or unable to act
as servicer, or if the NIMs Insurer so directs the Trustee, the Trustee shall
seek to appoint a successor servicer that is eligible in accordance with the
criteria specified this Agreement and reasonably acceptable to the NIMs Insurer.

      The Servicer shall, upon request of the Trustee, but at the expense of the
Servicer, deliver to the assuming party all documents and records relating to
each subservicing agreement and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.

      SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.

      (a) The Servicer shall make reasonable efforts in accordance with Accepted
Servicing Practices to collect all payments called for under the terms and
provisions of the Mortgage Loans to the


                                      -54-
<PAGE>

extent such procedures shall be consistent with this Agreement and the terms and
provisions of any related Required Insurance Policy. Consistent with the
foregoing, the Servicer may in its discretion (i) waive any late payment charge
or, if applicable, any penalty interest, or (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below; provided, further, that the
NIMs Insurer's prior written consent shall be required for any modification,
waiver or amendment since the Cut-off Date if the aggregate number of
outstanding Mortgage Loans which have been modified, waived or amended exceeds
5% of the number of Mortgage Loans as of the Cut-Off Date. In the event of any
such arrangement pursuant to clause (ii) above, subject to Section 4.01, the
Servicer shall make any 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.
Notwithstanding the foregoing, in the event that any Mortgage Loan is in default
or, in the judgment of the Servicer, such default is reasonably foreseeable, the
Servicer, consistent with the standards set forth in Section 3.01, may also
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor (any and all such waivers, modifications, variances,
forgiveness of principal or interest, postponements, or indulgences collectively
referred to herein as "forbearance"), provided, however, that in no event shall
the Servicer grant any such forbearance (other than as permitted by the second
sentence of this Section) with respect to any one Mortgage Loan more than once
in any 12 month period or more than three times over the life of such Mortgage
Loan, and provided, further, that in determining which course of action
permitted by this sentence it shall pursue, the Servicer shall adhere to the
standards of Section 3.01. The Servicer's analysis supporting any forbearance
and the conclusion that any forbearance meets the standards of Section 3.01
shall be reflected in writing in the Mortgage File.

      (b) The Servicer will not waive any prepayment penalty or portion thereof
unless, (i) the enforceability thereof shall have been limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the prepayment of the
Mortgage Loan is made in connection with the voluntary sale of the related
Mortgaged Property, or (iv) in the Servicer's reasonable judgment as described
in Section 3.01 hereof, (x) such waiver relates to a default or a reasonably
foreseeable default, (y) such waiver would maximize recovery of total proceeds
taking into account the value of such Prepayment Penalty and related Mortgage
Loan and (z) doing so is standard and customary in servicing similar Mortgage
Loans (including any waiver of a prepayment penalty in connection with a
refinancing of a Mortgage Loan that is related to a default or a reasonably
foreseeable default). Except as provided in the preceding sentence, in no event
will the Servicer waive a prepayment penalty in connection with a refinancing of
a Mortgage Loan that is not related to a default or a reasonably foreseeable
default. If the Servicer waives or does not collect all or a portion of a
prepayment penalty relating to a Principal Prepayment in full or in part due to
any action or omission of the Servicer, other than as provided above, the
Servicer shall deposit the amount of such prepayment penalty (or such portion
thereof as had been waived for deposit) into the Certificate Account for
distribution in accordance with the terms of this Agreement.

      (c) The Servicer shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, Mortgage
Note or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that


                                      -55-
<PAGE>

enforcing the provision of the Mortgage or other instrument pursuant to which
such payment is required is prohibited by applicable law.

      (d) The Servicer shall establish and initially maintain, on behalf of the
Certificateholders, the Collection Account. The Servicer shall deposit into the
Collection Account daily, within two Business Days of receipt thereof, in
immediately available funds, the following payments and collections received or
made by it on and after the Cut-Off Date with respect to the Mortgage Loans:

            (i) all payments on account of principal, including Principal
      Prepayments, on the Mortgage Loans, other than principal due on the
      Mortgage Loans on or prior to the Cut-off Date;

            (ii) all payments on account of interest on the Mortgage Loans net
      of the related Servicing Fee permitted under Section 3.15, other than
      interest due on the Mortgage Loans on or prior to the Cut-off Date;

            (iii) all Liquidation Proceeds, other than proceeds to be applied to
      the restoration or repair of the Mortgaged Property (or Underlying
      Mortgaged Property, in the case of a Co-op Loan) or released to the
      Mortgagor in accordance with the Servicer's normal servicing procedures;

            (iv) all Compensating Interest;

            (v) any amount required to be deposited by the Servicer pursuant to
      Section 3.05(g) in connection with any losses on Permitted Investments;

            (vi) any amounts required to be deposited by the Servicer pursuant
      to Section 3.10 hereof;

            (vii) the Purchase Price and any Substitution Adjustment Amount;

            (viii) all Advances made by the Servicer pursuant to Section 4.01;

            (ix) all prepayment penalties; and

            (x) any other amounts required to be deposited hereunder.

      The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property or stock allocated to a dwelling unit in the case of
a Co-op Loan) and other similar ancillary fees (other than prepayment penalties)
if collected, need not be remitted by the Servicer. In the event that the
Servicer shall remit any amount not required to be remitted and not otherwise
subject to withdrawal pursuant to Section 3.08 hereof, it may at any time
withdraw or direct the Trustee, or such other institution maintaining the
Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.


                                      -56-
<PAGE>

      The Servicer shall give notice to the NIMs Insurer and the Trustee of the
location of the Collection Account maintained by it when established and prior
to any change thereof. Not later than twenty days after each Distribution Date,
the Servicer shall forward to the NIMS Insurer and, upon request, to the Trustee
and the Depositor the most current available bank statement for the Collection
Account. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Servicer to the Trustee.

      (e) [RESERVED].

      (f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:

            (i) the aggregate amount withdrawn by the Servicer from the
      Collection Account and required to be deposited in the Certificate
      Account;

            (ii) any amount required to be deposited by the Trustee pursuant to
      Section 3.05(g) in connection with any losses on Permitted Investments;
      and

            (iii) the Optional Termination Amount paid by the Trustee or the
      NIMs Insurer pursuant to Section 9.01.

      Any amounts received by the Trustee prior to 3:00 p.m. New York City time
(or such earlier deadline for investment in the Permitted Investments designated
by the Trustee) which are required to be deposited in the Certificate Account by
the Servicer shall be invested in Permitted Investments on the Business Day on
which they were received. The foregoing requirements for remittance by the
Servicer and deposit by the Servicer into the Certificate Account shall be
exclusive. In the event that the Servicer shall remit any amount not required to
be remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time withdraw such amount from the Certificate Account,
any provision herein to the contrary notwithstanding. All funds deposited in the
Certificate Account shall be held by the Trustee in trust for the
Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Certificate Account at the direction of the
Servicer. The Trustee shall give notice to the NIMs Insurer and the Servicer of
the location of the Certificate Account maintained by it when established and
prior to any change thereof.

      (g) Each institution that maintains the Collection Account or the
Certificate Account shall invest the funds in each such account, as directed by
the Servicer or the Trustee, as applicable, in writing, in Permitted
Investments, which shall mature not later than (i) in the case of the Collection
Account the Business Day preceding the related Servicer Remittance Date (except
that if such Permitted Investment is an obligation of the institution that
maintains such Collection Account or is otherwise immediately available, then
such Permitted Investment shall mature not later than the Servicer Remittance
Date) and (ii) in the case of the Certificate Account, the Business Day
immediately preceding the first Distribution Date that follows the date of such
investment (except that if such Permitted Investment is an obligation of the
institution that maintains such Certificate Account or is otherwise immediately
available, then such Permitted Investment shall mature not later than such
Distribution Date) and, in each case, shall not be sold or disposed of prior to
its maturity. All such Permitted Investments shall be made in the name of the
Servicer or the Trustee, as applicable, for the benefit of the
Certificateholders. All income and gain net of any losses realized from amounts
on deposit in the Collection Account shall be for the benefit of the Servicer as
servicing compensation and shall be remitted to it monthly as provided herein.
The amount of


                                      -57-
<PAGE>

any losses incurred in the Collection Account in respect of any such investments
shall be deposited by the Servicer in the Collection Account out of the
Servicer's own funds immediately as realized. All income and gain net of any
losses realized from amounts on deposit in the Certificate Account shall be for
the benefit of the Trustee and shall be remitted to or withdrawn by it monthly
as provided herein. The amount of any losses incurred in the Certificate Account
in respect of any such investments shall be deposited by the Trustee, in the
Certificate Account out of the Trustee's own funds immediately as realized.

      SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.

      To the extent required by the related Mortgage Note, the Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Servicer to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.

      Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the
Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes and assessments and insurance premiums) and
3.10 hereof (with respect to hazard insurance), to refund to any Mortgagors any
sums as may be determined to be overages, to pay interest, if required by law or
the terms of the related Mortgage or Mortgage Note, to Mortgagors on balances in
the Escrow Account or to clear and terminate the Escrow Account at the
termination of this Agreement in accordance with Section 9.01 hereof. The Escrow
Accounts shall not be a part of the Trust Fund.

      SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.

      Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.

      SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.

      (a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:

            (i) to pay to the Servicer (to the extent not previously paid to or
      withheld by the Servicer), as servicing compensation in accordance with
      Section 3.15, that portion of any payment of interest that equals the
      Servicing Fee for the period with respect to which such interest payment
      was made, and, as additional servicing compensation, those other amounts
      set forth in Section 3.15;

            (ii) to reimburse the Servicer for Advances made by it with respect
      to the Mortgage Loans, such right of reimbursement pursuant to this
      subclause (ii) being limited to amounts received on particular Mortgage
      Loan(s) (including, for this purpose, Liquidation Proceeds) that


                                      -58-
<PAGE>

      represent late recoveries of payments of principal and/or interest on such
      particular Mortgage Loan(s) in respect of which any such Advance was made;

            (iii) to reimburse the Servicer for any Non-Recoverable Advance
      previously made and, to the extent that such Non-Recoverable Servicing
      Advances would constitute "unanticipated expenses" within the meaning of
      Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the
      REMICs provided for herein, any Non-Recoverable Servicing Advance;

            (iv) to pay to the Servicer earnings on or investment income with
      respect to funds in or credited to the Collection Account;

            (v) to reimburse the Servicer from Insurance Proceeds for Insured
      Expenses covered by the related Insurance Policy;

            (vi) pay the Servicer any unpaid Servicing Fees and to reimburse it
      for any unreimbursed Servicing Advances, the Servicer's right to
      reimbursement of Servicing Advances pursuant to this subclause (vi) with
      respect to any Mortgage Loan being limited to amounts received on
      particular Mortgage Loan(s)(including, for this purpose, Liquidation
      Proceeds and purchase and repurchase proceeds) that represent late
      recoveries of the payments for which such advances were made pursuant to
      Section 3.01 or Section 3.06;

            (vii) to pay to the Depositor or the Servicer, as applicable, with
      respect to each Mortgage Loan or property acquired in respect thereof that
      has been purchased pursuant to Section 2.02, 2.03 or 3.12, all amounts
      received thereon and not taken into account in determining the related
      Stated Principal Balance of such repurchased Mortgage Loan;

            (viii) to reimburse the Servicer or the Depositor for expenses
      incurred by any of them in connection with the Mortgage Loans or
      Certificates and reimbursable pursuant to Section 3.25 or Section 6.03
      hereof;

            (ix) to reimburse the Trustee for enforcement expenses reasonably
      incurred in respect of a breach of defect giving rise to the purchase
      obligation in Section 2.03 that were incurred in the Purchase Price of the
      Mortgage Loans including any expenses arising out of the enforcement of
      the purchase obligation; provided that any such expenses will be
      reimbursable under this subclause (ix) only to the that such expenses
      would constitute "unanticipated expenses" within the meaning of Treasury
      Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the REMICs
      provided for herein;

            (x) to withdraw pursuant to Section 3.05 any amount deposited in the
      Collection Account and not required to be deposited therein; and

            (xi) to clear and terminate the Collection Account upon termination
      of this Agreement pursuant to Section 9.01 hereof.

      In addition, no later than 12:00 noon Eastern Standard Time on the
Servicer Remittance Date, the Servicer shall cause to be withdrawn from the
Collection Account Interest Funds and the Principal Funds, to the extent on
deposit, and such amount shall be deposited in the Certificate Account.

      The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account.


                                      -59-
<PAGE>

      The Servicer shall provide written notification to the Trustee and the
NIMs Insurer on or prior to the next succeeding Servicer Remittance Date upon
making any withdrawals from the Collection Account pursuant to subclauses (iii)
and (viii) above.

      In the event of any failure by the Servicer to remit to the Trustee for
deposit into the Certificate Account any amounts (including any P&I Advance)
required to be so remitted by the Servicer on the Servicer Remittance Date, the
Servicer shall pay to the Trustee, for its own account, interest on such amounts
at the "prime rate" (as specified in the New York edition of the Wall Street
Journal) until such failure is remedied.

      Unless otherwise specified, any amounts reimbursable to the Servicer or
the Trustee from amounts on deposit in the Collection Account or the Certificate
Accounts shall be deemed to come from first, Interest Funds, and thereafter,
Principal Funds for the related Distribution Date.

      (b) The Trustee shall withdraw funds from the Certificate Account for
distribution to the Certificateholders in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn, the amount of any taxes that it
is authorized to retain pursuant to this Agreement). In addition, the Trustee
may from time to time make withdrawals from the Certificate Account for the
following purposes:

            (i) to withdraw pursuant to Section 3.05 any amount deposited in the
      Certificate Account and not required to be deposited therein;

            (ii) to clear and terminate the Certificate Account upon termination
      of the Agreement pursuant to Section 9.01 hereof;

            (iii) to reimburse the Trustee for expenses incurred by the Trustee
      and reimbursable pursuant to Section 8.06 hereof;

            (iv) to pay to the Trustee earnings on or investment income with
      respect to funds in or credited to the Certificate Account;

            (v) to pay the Trustee the Trustee Fee;

            (vi) to pay to the Credit Risk Manager, the Credit Risk Manager Fee.

      SECTION 3.09. [RESERVED].

      SECTION 3.10. Maintenance of Hazard Insurance.

      The Servicer shall cause to be maintained, for each Mortgage Loan (other
than a Co-op Loan), hazard insurance with extended coverage in an amount that is
at least equal to the lesser of (i) the replacement value of the improvements
that are part of such Mortgaged Property and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds of such policy shall be sufficient to prevent the related Mortgagor
and/or mortgagee from becoming a co-insurer. Each such policy of standard hazard
insurance shall contain, or have an accompanying endorsement that contains, a
standard mortgagee clause. The Servicer shall also cause flood insurance to be
maintained on property acquired upon foreclosure or deed in lieu of foreclosure
of any Mortgage Loan, to the extent described below. Pursuant to Section 3.05
hereof, any amounts collected by the Servicer under any such policies (other
than the 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 Servicer's normal servicing procedures) shall
be deposited in the Collection Account. Any cost incurred


                                      -60-
<PAGE>

by the Servicer in maintaining any such insurance shall not, for the purpose of
calculating monthly distributions to the Certificateholders or remittances to
the Trustee for their benefit, be added to the principal balance of the Mortgage
Loan, notwithstanding that the terms of the Mortgage Loan so permit. Such costs
shall be recoverable by the Servicer out of late payments by the related
Mortgagor or out of Liquidation Proceeds to the extent and as otherwise
permitted by Section 3.08 hereof. 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 other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property is located at the
time of origination of the Mortgage Loan in a federally designated special flood
hazard area and such area is participating in the national flood insurance
program, the Servicer shall cause flood insurance to be maintained with respect
to such Mortgage Loan. Such flood insurance shall be in an amount equal to the
lesser of (i) the original principal balance of the related Mortgage Loan, (ii)
the replacement value of the improvements that are part of such Mortgaged
Property, or (iii) the maximum amount of such insurance available for the
related Mortgaged Property under the Flood Disaster Protection Act of 1973, as
amended.

      In the event that the Servicer shall obtain and maintain a blanket policy
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 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the 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 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.

      SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.

      (a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Servicer shall to the extent that it has knowledge of such
conveyance, 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, the Servicer is not required to exercise such
rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) has been conveyed or is proposed to be conveyed satisfies the terms
and conditions contained in the Mortgage Note and Mortgage related thereto and
the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Servicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Servicer is authorized, subject to Section 3.11(b), to
take or enter into an assumption and modification agreement from or with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Servicer
enters such agreement) by the applicable Required Insurance Policies. The
Servicer, subject to Section 3.11(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes


                                      -61-
<PAGE>

liable under the Mortgage Note. Notwithstanding the foregoing, the Servicer
shall not be deemed to be in default under this Section 3.11(a) by reason of any
transfer or assumption that the Servicer reasonably believes it is restricted by
law from preventing.

      (b) Subject to the Servicer's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.11(a) hereof, in any case in which a Mortgaged
Property (or stock allocated to a dwelling unit, in the case of Co-op Loan) has
been conveyed to a Person by a Mortgagor, and such Person is to enter into an
assumption agreement or modification agreement or supplement to the Mortgage
Note or Mortgage that requires the signature of the Trustee, or if an instrument
of release signed by the Trustee is required releasing the Mortgagor from
liability on the Mortgage Loan, the Servicer shall prepare and deliver or cause
to be prepared and delivered to the Trustee for signature and shall direct, in
writing, the Trustee to execute the assumption agreement with the Person to whom
the Mortgaged Property (or the stock allocated to a dwelling unit, in the case
of a Co-op Loan) 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 (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) to such Person. In connection with any such assumption, no material
term of the Mortgage Note (including, but not limited to, the Mortgage Rate, the
amount of the Scheduled Payment, the Maximum Rate, the Minimum Rate, the Gross
Margin, the Periodic Rate Cap, the Adjustment Date, any prepayment penalty and
any other term affecting the amount or timing of payment on the Mortgage Loan)
may be changed. The Servicer shall notify the Trustee and the NIMs Insurer that
any such substitution or assumption agreement has been completed by forwarding
to the Trustee (with a copy to the NIMs Insurer) the original of such
substitution or assumption agreement, which in the case of the original shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Servicer as additional servicing compensation.

      SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds.

      (a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert 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. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
increase the proceeds of liquidation of the Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Collection Account pursuant to Section 3.08
hereof). The Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property (or stock allocated to a dwelling unit, in the case
of a Co-op Loan), as contemplated in Section 3.08 hereof. If the Servicer has
knowledge that a Mortgaged Property (or Underlying Mortgaged Property, in the
case of a Co-op Loan) that the Servicer is contemplating acquiring in
foreclosure or by deed-in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Servicer, the Servicer will, prior to acquiring the



                                      -62-
<PAGE>

Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan), consider such risks and only take action in accordance with
Accepted Servicing Practices.

      With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee or its nominee. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Servicer and the Certificateholders for the
period prior to the sale of such REO Property. The Servicer shall prepare a
statement with respect to each REO Property that has been rented showing the
aggregate rental income received and all expenses incurred in connection with
the management and maintenance of such REO Property at such times as is
necessary to enable the Servicer to comply with the reporting requirements of
the REMIC Provisions. The net monthly rental income, if any, from such REO
Property shall be deposited in the Collection Account no later than the close of
business on each Determination Date. The Servicer shall perform the tax
reporting and withholding related to foreclosures, abandonments and cancellation
of indebtedness income as specified by Sections 1445, 6050J and 6050P of the
Code by preparing and filing such tax and information returns, as may be
required.

      In the event that the Trust Fund acquires any Mortgaged Property (or stock
allocated to a dwelling unit, in the case of a Co-op Loan) as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall dispose of such Mortgaged Property (or stock allocated to a
dwelling unit, in the case of a Co-op Loan) prior to the expiration of three
years from the end of the year of its acquisition by the Trust Fund or, at the
expense of the Trust Fund, request more than 60 days prior to the day on which
such three-year period would otherwise expire, an extension of the three-year
grace period unless the Trustee and the NIMs Insurer shall have been supplied
with an Opinion of Counsel (such Opinion of Counsel not to be an expense of the
Trustee or the NIMs Insurer) to the effect that the holding by the Trust Fund of
such Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) subsequent to such three-year period will not result in the
imposition of taxes on "prohibited transactions" of the Trust Fund or any of the
REMICs provided for herein as defined in section 860F of the Code or cause any
of the REMICs provided for herein to fail to qualify as a REMIC at any time that
any Certificates are outstanding, in which case the Trust Fund may continue to
hold such Mortgaged Property (or stock allocated to a dwelling unit, in the case
of Co-op Loan) (subject to any conditions contained in such Opinion of Counsel).
Notwithstanding any other provision of this Agreement, no Mortgaged Property (or
stock allocated to a dwelling unit, in the case of Co-op Loan) acquired by the
Trust Fund shall be rented (or allowed to continue to be rented) or otherwise
used for the production of income by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would (i) cause such Mortgaged Property(or
stock allocated to a dwelling unit, in the case of Co-op Loan) to fail to
qualify as "foreclosure property" within the meaning of section 860G(a)(8) of
the Code or (ii) subject the Trust Fund or any REMIC provided for herein to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property (or stock allocated to a dwelling unit, in the case of
Co-op Loan) under section 860G(c) of the Code or otherwise, unless the Servicer
or the Depositor has agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes.

      The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid


                                      -63-
<PAGE>

with respect to the management of such Mortgaged Property (or stock allocated to
a dwelling unit, in the case of Co-op Loan), shall be applied to the payment of
principal of, and interest on, the related defaulted Mortgage Loans (with
interest accruing as though such Mortgage Loans were still current) and all such
income shall be deemed, for all purposes in this Agreement, to be payments on
account of principal and interest on the related Mortgage Notes and shall be
deposited into the Collection Account. To the extent the income received during
a Prepayment Period is in excess of the amount attributable to amortizing
principal and accrued interest at the related Mortgage Rate on the related
Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.

      The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.

      The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to
reimburse the Servicer for any unreimbursed Advances, pursuant to Section
3.08(a)(ii) or this Section 3.12; third, to any prepayment penalties and then to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan or related REO Property, at the Net Mortgage Rate
to the Due Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan.

      (b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.

      SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.

      Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of two copies of such request, the Trustee or its
designee shall promptly release the related Mortgage File to the Servicer, and
the Trustee or its designee shall at the Servicer's written direction execute
and deliver to the Servicer the request for reconveyance, deed of reconveyance
or release or satisfaction of mortgage or such instrument releasing the lien of
the Mortgage in each case provided by the Servicer, together with the Mortgage
Note with written evidence of cancellation thereon. No expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account, the Certificate Account or the related
subservicing account. From time to time and as shall be appropriate for the
servicing or foreclosure of any Mortgage Loan, including for such purpose,
collection under any policy of flood insurance, any fidelity bond or errors or
omissions policy, or for the purposes of effecting a partial release of any
Mortgaged Property (or stock allocated to a dwelling unit, in the case of Co-op
Loan) from the lien of the Mortgage or the making of any corrections to the
Mortgage Note or the Mortgage or any of the other documents included in the
Mortgage File, the Trustee or its designee shall, upon delivery to the Trustee
or its designee of a Request for Release in the form of Exhibit I signed by a
Servicing Officer, release the Mortgage File to the Servicer. Subject to the
further limitations set forth below, the Servicer shall cause the Mortgage File
or documents so released to be returned to the Trustee or its designee when the
need therefor by the Servicer no longer exists, unless the Mortgage Loan is
liquidated and the proceeds thereof are deposited in the Collection Account, in
which case the Trustee or its designee shall deliver the Request for Release to
the Servicer.


                                      -64-
<PAGE>

      Each Request for Release may be delivered to the Trustee or its designee
(i) via mail or courier, (ii) via facsimile or (iii) by such other means,
including, without limitation, electronic or computer readable medium, as the
Servicer and the Trustee or its designee shall mutually agree. The Trustee or
its designee shall promptly release the related Mortgage File(s) within five (5)
Business Days of receipt of a properly completed Request for Release pursuant to
clauses (i), (ii) or (iii) above. Receipt of a properly completed Request for
Release shall be authorization to the Trustee or its designee to release such
Mortgage Files, provided the Trustee or its designee has determined that such
Request for Release has been executed, with respect to clauses (i) or (ii)
above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or its designee's negligent
failure to execute and release documents in a timely manner, the Trustee or its
designee, shall be liable for such penalties or damages respectively caused by
it.

      On each day that the Servicer remits to the Trustee or its designee
Requests for Releases pursuant to clauses (ii) or (iii) above, the Servicer
shall also submit to the Trustee or its designee a summary of the total amount
of such Requests for Releases requested on such day by the same method as
described in such clauses (ii) and (iii) above.

      If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property (or stock allocated to a dwelling unit, in the
case of Co-op Loan) as authorized by this Agreement, the Servicer shall deliver
or cause to be delivered to the Trustee or its designee, for signature, as
appropriate, any court pleadings, requests for trustee's sale or other documents
necessary to effectuate such foreclosure or any legal action brought to obtain
judgment against the Mortgagor on the Mortgage Note or the Mortgage or to obtain
a deficiency judgment or to enforce any other remedies or rights provided by the
Mortgage Note or the Mortgage or otherwise available at law or in equity.
Notwithstanding the foregoing, the Servicer shall cause possession of any
Mortgage File or of the documents therein that shall have been released by the
Trustee or its designee to be returned to the Trustee promptly after possession
thereof shall have been released by the Trustee or its designee unless (i) the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Collection Account, and the Servicer
shall have delivered to the Trustee or its designee a Request for Release in the
form of Exhibit I or (ii) the Mortgage File or document shall have been
delivered 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 (or stock allocated to
a dwelling unit, in the case of Co-op Loan) and the Servicer shall have
delivered to the Trustee or its designee an Officer's Certificate of a Servicing
Officer certifying as to the name and address of the Person to which the
Mortgage File or the documents therein were delivered and the purpose or
purposes of such delivery.

      SECTION 3.14. Documents, Records and Funds in Possession of Servicer to be
Held for the Trustee.

      All Mortgage Files and funds collected or held by, or under the control
of, the Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds, including but
not limited to, any funds on deposit in the Collection Account, shall be held by
the Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions of
this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Collection
Account or Certificate Account or in any Escrow Account, or any funds that
otherwise are or may become


                                      -65-
<PAGE>

due or payable to the Trustee for the benefit of the Certificateholders, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of set
off against any Mortgage File or any funds collected on, or in connection with,
a Mortgage Loan, except, however, that the Servicer shall be entitled to set off
against and deduct from any such funds any amounts that are properly due and
payable to the Servicer under this Agreement.

      SECTION 3.15. Servicing Compensation.

      As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.

      Additional servicing compensation in the form of any Excess Proceeds, late
payment fees, assumption fees (i.e. fees related to the assumption of a Mortgage
Loan upon the purchase of the related Mortgaged Property (or stock allocated to
a dwelling unit, in the case of Co-op Loan)) and similar fees payable by the
Mortgagor, and all income and gain net of any losses realized from Permitted
Investments in the Collection Account shall be retained by the Servicer to the
extent not required to be deposited in the Collection Account pursuant to
Sections 3.05, or 3.12(a) hereof. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including payment of any premiums for hazard insurance, as required by Section
3.10 hereof and maintenance of the other forms of insurance coverage required by
Section 3.10 hereof) and shall not be entitled to reimbursement therefor except
as specifically provided in Sections 3.08 and 3.12 hereof.

      SECTION 3.16. Access to Certain Documentation.

      The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices of the Servicer designated by it provided, that
the Servicer shall be entitled to be reimbursed by each such Certificateholder
for actual expenses incurred by the Servicer in providing such reports and
access. Nothing in this Section shall limit the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.

      SECTION 3.17. Annual Statement as to Compliance.

      Pursuant to this Agreement, the Servicer shall deliver to the Depositor,
the Trustee and the NIMs Insurer each year within 15 days prior to the date on
which a Form 10-K is required to be filed, beginning in 2004 or such other date
in order to remain in compliance with the Section 302 Requirements, an Officer's
Certificate stating, as to each signatory thereof, that (i) a review of the
activities of the Servicer during the preceding calendar year and of performance
under this Agreement has been made under such officer's supervision, and (ii) to
the best of such officers' knowledge, based on such review, the Servicer has
fulfilled all of its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status
thereof. The Trustee shall forward a copy of each such statement to each Rating
Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon written request at the Certificateholder's expense,
provided such statement has been delivered by the Servicer to the Trustee.


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      SECTION 3.18. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.

      On or before March 15 of each year, beginning in 2004 or such other date
in order to remain in compliance with the Section 302 Requirements, the Servicer
at its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Servicer or any Affiliate
thereof) that is a member of the American Institute of Certified Public
Accountants to furnish a USAP Report to the Trustee and the Depositor. Copies of
the USAP Report shall be provided by the Trustee to any Certificateholder upon
request at the Certificateholder's expense, provided such report has been
delivered by the Servicer to the Trustee. The Trustee shall deliver to the NIMs
Insurer upon written request: (i) a copy of such USAP Report, and (ii) the
Servicer's annual officer's certificate as to compliance with this Agreement
provided by the Servicer to the Trustee pursuant to Section 3.17. In addition,
at the NIMs Insurer's written request, the Servicer shall deliver copies of
evidence of the Servicer's fidelity bond or errors and omissions insurance
coverage to the NIMs Insurer.

      SECTION 3.19. Rights of the NIMs Insurer. Each of the rights of the NIMs
Insurer set forth in this agreement shall exist so long as the notes issued
pursuant to the Indenture remain outstanding or the NIMs Insurer is owed amounts
in respect of its guarantee of payment on such notes.

      SECTION 3.20. Periodic Filings.

      (a) Promptly upon receipt of any report of the independent public
accountants required pursuant to Section 3.18, the Trustee shall review such
report. As part of the Form 10-K required to be filed pursuant to the terms of
this Agreement, the Trustee shall include such accountants report as well as the
Officer's Certificate delivered by the Servicer pursuant to Section 3.17
relating to the Servicer's performance of its obligations under this Agreement
and any significant deficiencies relating to the Servicer's compliance set forth
in the report of the Servicer's certified independent accountants described
above.

      (b) The Trustee shall prepare for filing, and execute (other than the Form
10-Ks and the Certification), on behalf of the Trust Fund, and file with the
Securities and Exchange Commission, (i) within 15 days after each Distribution
Date in each month, each Monthly Statement on Form 8-K under the Exchange Act
executed by the Trustee, (ii) on or before March 31 of each year beginning in
2004 or such other date in order to remain in compliance with the Section 302
Requirements, a Form 10-K under the Exchange Act executed by the Depositor,
including any certification (the "Certification") required by the Section 302
Requirements, and (iii) any and all reports, statements and information
respecting the Trust Fund and/or the Certificates required to be filed on behalf
of the Trust Fund under the Exchange Act executed by the Trustee. The
Certification shall be executed by a senior officer of the Depositor. Upon such
filing with the Securities and Exchange Commission, the Trustee shall promptly
deliver to the Depositor a copy of any such executed report, statement or
information. Prior to making any such filings and certifications, the Trustee
shall comply with the provisions set forth in this Section. If permitted by
applicable law and unless the Depositor otherwise directs, the Trustee shall
file a Form 15 under the Exchange Act as soon as it is able to do so. The
Depositor hereby grants to the Trustee a limited power of attorney to execute
(other than the Form 10-Ks and the Certification) and file each such document on
behalf of the Depositor. Such power of attorney shall continue until either the
earlier of (i) receipt by the Trustee from the Depositor of written termination
of such power of attorney and (ii) the termination of the Trust Fund. The
Depositor agrees to promptly furnish to the Trustee, from time to time upon
request, such further information, reports, and financial statements within its
control related to this Agreement and the Mortgage Loans as the Trustee
reasonably deems appropriate to prepare and file all necessary reports with the
Commission. The Trustee shall have no responsibility to file any items other
than those specified in this section.


                                      -67-
<PAGE>

      (c) [Reserved].

      (d) The obligations set forth in paragraphs (a) through (c) of this
Section shall only apply with respect to periods for which the Trustee is
obligated to file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section.
In the event a Form 15 is properly filed pursuant to paragraph (b) of this
Section, there shall be no further obligations under paragraphs (a) through (c)
of this Section commencing with the fiscal year in which the Form 15 is filed
(other than the obligations in paragraphs (a) and (b) of this Section to be
performed in such fiscal year that relate back to the prior fiscal year).

      SECTION 3.21. Annual Certificate by Trustee

      (a) Within 15 days prior to the date on which a Form 10-K is to be filed
with a Certification by the Depositor, an officer of the Trustee shall execute
and deliver an Officer's Certificate, signed by the senior officer in charge of
the Trustee or any officer to whom that officer reports, to the Depositor for
the benefit of such Depositor and its officers, directors and affiliates,
certifying as to the matters described in the Officer's Certificate attached
hereto as Exhibit K.

      (b) The Trustee shall indemnify and hold harmless the Depositor and its
officers, directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.21 any material misstatement or omission in the
Officer's Certificate required under this Section or the negligence, bad faith
or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Trustee agrees that it shall contribute to the
amount paid or payable by the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault of the Trustee on the one had and the Depositor on
the other in connection with a breach of the Trustee's obligations under this
Section 3.21, any material misstatement or omission in the Officer's Certificate
required under this Section or the Trustee's negligence, bad faith or willful
misconduct in connection therewith.

      SECTION 3.22. Annual Certificate by Servicer

      (a) Within 15 days prior to the date on which a Form 8-K is required to be
filed with a Certification by the Depositor, the Servicer shall execute and
deliver an Officer's Certificate in the form of Exhibit L attached hereto,
signed by the senior officer in charge of servicing of the Servicer or any
officer to whom that officer reports, to the Trustee and Depositor for the
benefit of the Trustee and Depositor and their respective officers, directors
and affiliates, certifying as to the following matters:

            (i) I have reviewed the information required to be delivered to the
      Trustee pursuant to the Servicing Agreement (the "Servicing Information").

            (ii) Based on my knowledge, the information in the Annual Statement
      of Compliance, and all servicing reports, officer's certificates and other
      information relating to the servicing of the Mortgage Loans submitted to
      the Trustee by the Servicer taken as a whole, does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading as of the last day of the period
      covered by the Annual Statement of Compliance;

            (iii) Based on my knowledge, the Servicing Information required to
      be provided to the Trustee by the Servicer under this Agreement has been
      provided to the Trustee; and


                                      -68-
<PAGE>

            (iv) I am responsible for reviewing the activities performed by the
      Servicer under this Agreement and based upon the review required
      hereunder, and except as disclosed in the Annual Statement of Compliance,
      the Annual Independent Certified Public Accountant's Servicing Report and
      all servicing reports, officer's certificates and other information
      relating to the servicing of the Mortgage Loans submitted to the Trustee
      by the Servicer, the Servicer has, as of the last day of the period
      covered by the Annual Statement of Compliance fulfilled its obligations
      under this Agreement.

      (b) The Servicer shall indemnify and hold harmless the Depositor and their
respective officers, directors, agents and affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 3.22, any material misstatement
or omission in the Officer's Certificate required under this Section or the
negligence, bad faith or willful misconduct of the Servicer in connection
therewith. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Depositor, then the Servicer agrees that it
shall contribute to the amount paid or payable by the Trustee and the Depositor
as a result of the losses, claims, damages or liabilities of the Depositor in
such proportion as is appropriate to reflect the relative fault of the Depositor
on the one hand and the Servicer on the other in connection with a breach of the
Servicer's obligations under this Section 3.22, any material misstatement or
omission in the Officer's Certificate required under this Section or the
Servicer's negligence, bad faith or willful misconduct in connection therewith.

      SECTION 3.23. Prepayment Penalty Reporting Requirements

      (a) Promptly after each Distribution Date, the Servicer shall provide to
the Depositor and the NIMs Insurer the following information with regard to each
Mortgage Loan that has prepaid during the related Prepayment Period:

            (i) loan number;

            (ii) current Mortgage Rate;

            (iii) current principal balance;

            (iv) original principal balance;

            (v) prepayment penalty amount due;

            (vi) prepayment penalty amount collected;

            (vii) amount of prepayment penalty paid; and

            (viii) reason why full prepayment penalty amount was not collected,
      if applicable.

      SECTION 3.24. Statements to Trustee

      (a) Not later than the tenth calendar day of each month, the Servicer
shall furnish to the Trustee and the NIMs Insurer an electronic file providing
loan level accounting data for the period ending on the last Business Day of the
preceding month in the format mutually agreed upon between the Servicer and the
Trustee, including but not limited to information described in Section 4.05(a).


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<PAGE>

      SECTION 3.25. Indemnification

      (a) The Servicer shall indemnify the Seller, the Trust Fund, Trustee, the
Depositor and the NIMs Insurer and hold each of them harmless against any and
all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgements, and any other costs, fees
and expenses that any of such parties may sustain in any way related to the
failure of the Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement. The Servicer immediately shall
notify the Seller, the Trustee, the Depositor and the NIMs Insurer or any other
relevant party if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgement or
decree which may be entered against it or any of such parties in respect of such
claim. The Servicer shall follow any written instructions received from the
Trustee and the NIMs Insurer in connection with such claim. The Servicer shall
provide the Trustee, the Depositor and the NIMs Insurer with a written report of
all expenses and advances incurred by the Servicer pursuant to this Section
3.25, and the Servicer from the assets of the Trust Fund in the Collection
Account promptly shall reimburse itself for all amounts advanced by it pursuant
to the preceding sentence except when the claim in any way relates to the
failure of the Servicer to service and administer the Mortgage Loans in material
compliance with the terms of this Agreement or the gross negligence, bad faith
or willful misconduct of the Servicer. The provisions of this paragraph shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.

      SECTION 3.26. Nonsolicitation

      (a) For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents, will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
3.26.

                                   ARTICLE IV

                                  DISTRIBUTIONS

      SECTION 4.01. Advances.

      Subject to the conditions of this Article IV, the Servicer, as required
below, shall make an Advance and deposit such Advance in the Collection Account.
Each such Advance shall be remitted to the Collection Account no later than 1:00
p.m. Eastern Standard time on the Servicer Advance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, the NIMs Insurer, each
Rating Agency and the Trustee an Officer's Certificate setting forth the basis
for such determination. The Servicer may, in its sole discretion, make an
Advance with respect to the principal portion of the final Scheduled Payment on
a Balloon Loan, but the Servicer is under no obligation to do so; provided,
however, that nothing in this sentence shall affect the Servicer's obligation
under this Section 4.01 to Advance the interest portion of the final Scheduled
Payment with respect to a Balloon Loan as if such Balloon Loan were a fully
amortizing Mortgage Loan.


                                      -70-
<PAGE>

If a Mortgagor does not pay its final Scheduled Payment on a Balloon Loan when
due, the Servicer shall Advance (unless it determines in its good faith judgment
that such amounts would constitute a Non-Recoverable Advance) a full month of
interest (net of the Servicing Fee) on the Stated Principal Balance thereof each
month until its Stated Principal Balance is reduced to zero.

      In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any Amount Held for Future Distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Certificate Account.
Any funds so applied and transferred shall be replaced by the Servicer by
deposit in the Collection Account no later than the close of business on the
Servicer Advance Date on which such funds are required to be distributed
pursuant to this Agreement. The Servicer shall be entitled to be reimbursed from
the Collection Account for all Advances of its own funds made pursuant to this
Section as provided in Section 3.08. The obligation to make Advances with
respect to any Mortgage Loan shall continue until such Mortgage Loan is paid in
full or the related Mortgaged Property (or stock allocated to a dwelling unit,
in the case of Co-op Loan) or related REO Property has been liquidated or until
the purchase or repurchase thereof (or substitution therefor) from the Trust
Fund pursuant to any applicable provision of this Agreement, except as otherwise
provided in this Section 4.01.

      SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.

      In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Servicer shall, from amounts in respect of the Servicing
Fee for such Distribution Date, deposit into the Collection Account, as a
reduction of the Servicing Fee (but not below zero) for such Distribution Date,
no later than the Servicer Advance Date immediately preceding such Distribution
Date, an amount up to the Prepayment Interest Shortfall; and in case of such
deposit, the Servicer shall not be entitled to any recovery or reimbursement
from the Depositor, the Trustee, the Trust Fund or the Certificateholders. With
respect to any Distribution Date, to the extent that the Prepayment Interest
Shortfall exceeds Compensating Interest (such excess, a "Non-Supported Interest
Shortfall"), such Non-Supported Interest Shortfall shall reduce the Current
Interest with respect to each Class of Offered Certificates, pro rata based upon
the amount of interest each such Class would otherwise be entitled to receive on
such Distribution Date.

      SECTION 4.03. Distributions on the REMIC Interests.

      On each Distribution Date, amounts on deposit in the Certificate Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in both the Lower Tier REMIC and the Middle Tier REMIC in an
amount sufficient to make the distributions on the respective Certificates on
such Distribution Date in accordance with the provisions of Section 4.04.

      SECTION 4.04. Distributions.

      (a) [Reserved].

      (b) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Interest
Funds in the following order of priority:

            (i) to the Class P Certificates, an amount equal to any prepayment
      penalties collected on the Mortgage Loans and any amounts paid by the
      Transferor (A) in respect of prepayment charges pursuant to this Agreement
      or (B) any amounts received in respect of any


                                      -71-
<PAGE>

      indemnification paid by the Servicer as a result of a prepayment charge
      being unenforceable in breach of the representations and warranties set
      forth in the Transfer Agreement received during the related Prepayment
      Period;

            (ii) to each Class of R Certificate, Class A Certificates and Class
      S Certificates, the Adjusted Current Interest and any Adjusted Interest
      Carryforward Amount with respect to such Class; provided, however, if such
      amount is not sufficient to make a full distribution of the Adjusted
      Current Interest and any Adjusted Interest Carryforward Amount with
      respect to all the Class of R Certificate, Class A Certificates and Class
      S Certificates, such amount will be distributed pro rata among each Class
      of the Class of R Certificate, Class A Certificates and Class S
      Certificates based on the ratio of (x) the Adjusted Current Interest and
      Adjusted Interest Carryforward Amount for each Class of the Class of R
      Certificate, Class A Certificates and Class S Certificates to (y) the
      total amount of Adjusted Current Interest and any Adjusted Interest
      Carryforward Amount for the Class of R Certificate, Class A Certificates
      and Class S Certificates;

            (iii) to the Class M-1 Certificates, the Class M-1 Adjusted Current
      Interest and any Class M-1 Adjusted Interest Carryforward Amount;

            (iv) to the Class M-2 Certificates, the Class M-2 Adjusted Current
      Interest and any Class M-2 Adjusted Interest Carryforward Amount;

            (v) to the Class B-1 Certificates, the Class B-1 Adjusted Current
      Interest and any Class B-1 Adjusted Interest Carryforward Amount;

            (vi) to the Class B-2 Certificates, the Class B-2 Adjusted Current
      Interest and any Class B-2 Adjusted Interest Carryforward Amount; and

            (vii) any remainder pursuant to Section 4.04(f) hereof.

      (c) All amounts representing prepayment charges in respect of the Mortgage
Loans, and amounts paid by the Servicer in respect of prepayment charges
pursuant to this Agreement will be distributed by the Trustee to the Holders of
the Class P Certificates pursuant to Section 4.04(b).

      (d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b) above shall have been made until such amount shall have been fully
distributed for such Distribution Date:

            (i) (A) to the Class R Certificate and the Class A-1 Certificates,
      sequentially, the Group A Principal Distribution Amount and (B) to the
      Class A-2 Certificates, the Group B Principal Distribution Amount, until
      the Certificate Principal Balances thereof have been reduced to zero;

            (ii) to the Class M-1 Certificates, the Class M-1 Principal
      Distribution Amount;

            (iii) to the Class M-2 Certificates, the Class M-2 Principal
      Distribution Amount;

            (iv) to the Class B-1 Certificates, the Class B-1 Principal
      Distribution Amount;

            (v) to the Class B-2 Certificates, the Class B-2 Principal
      Distribution Amount; and


                                      -72-
<PAGE>

            (vi) any remainder pursuant to Section 4.04(f) hereof.

      (e) [Reserved].

      (f) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(vii) and (d)(vi) hereof and, to the
extent required to make the distributions set forth below in clauses (i) through
(iv) of this Section 4.04(f), and each such distribution shall be made only
after all distributions pursuant to Sections 4.04(b) and (d) above shall have
been made until such remainders shall have been fully distributed for such
Distribution Date:

            (i) for distribution as part of the Principal Distribution Amount,
      the Extra Principal Distribution Amount;

            (ii) to the Class M-1 Certificates, the Class M-1 Unpaid Realized
      Loss Amount;

            (iii) to the Class M-2 Certificates, the Class M-2 Unpaid Realized
      Loss Amount;

            (iv) to the Class B-1 Certificates, the Class M-1 Unpaid Realized
      Loss Amount;

            (v) to the Class B-2 Certificates, the Class B-2 Unpaid Realized
      Loss Amount;

            (vi) to the extent required to make the allocations set forth below,
      in the following order of priority (however, that to the extent the
      amounts to be allocated pursuant to clauses (A) and (B) are insufficient
      to make all payments of Current Interest and Interest Carryforward Amounts
      for such Class A Certificates and the Class R Certificate, the
      distributions made pursuant to clauses (A) and (B) shall be made on a pro
      rata basis and not sequentially):

                  (A)   to the Class A-1 Certificates, the Class A-1 Adjusted
                        Current Interest and the Class A-1 Adjusted Interest
                        Carryforward Amount, and to the Class R Certificate, the
                        Class R Adjusted Current Interest and the Class R
                        Adjusted Interest Carryforward Amount;

                  (B)   to the Class A-2 Certificates, the Class A-2 Adjusted
                        Current Interest and the Class A-2 Adjusted Interest
                        Carryforward Amount;

                  (C)   to the Class M-1 Certificates, the Class M-1 Adjusted
                        Current Interest, the Class M-1 Adjusted Interest
                        Carryforward Amount;

                  (D)   to the Class M-2 Certificates, the Class M-2 Adjusted
                        Current Interest, the Class M-2 Adjusted Interest
                        Carryforward Amount;

                  (E)   to the Class B-1 Certificates, the Class B-1 Adjusted
                        Current Interest, the Class B-1 Adjusted Interest
                        Carryforward Amount; and

                  (F)   to the Class B-2 Certificates, the Class B-2 Adjusted
                        Current Interest, the Class B-2 Adjusted Interest
                        Carryforward Amount;

            (vii) to the (i) Class R Certificate, the Class R Interest Carryover
      Amount, (ii) Class A-1 Certificates, the Class A-1 Interest Carryover
      Amount, (iii) Class A-2 Certificates, the Class A-2 Interest Carryover
      Amount, (iv) Class M-1 Certificates, the Class M-1 Interest Carryover
      Amount, (v) Class M-2 Certificates, the Class M-2 Interest Carryover
      Amount, (vi) Class B-1 Certificates, the Class B-1 Interest Carryover
      Amount and (vii) Class B-2 Certificates, the Class B-2 Interest Carryover
      Amount, on a pro rata basis based upon the amount of unreimbursed


                                      -73-
<PAGE>

      Certificate Interest Carryover Amount for each Class, in each case until
      the Certificate Principal Balance of such Certificates has been reduced to
      zero; and

            (viii) the remainder pursuant to Section 4.04(g) hereof.

      (g) on each Distribution Date, the Trustee shall allocate the remainders
pursuant to Section 4.01(f)(viii) as follows:

            (i) to the Class C Certificates in the following order of priority,
      (I) the Class C Current Interest, (II) the Class C Interest Carryforward
      Amount, (III) as principal on the Class C Certificate until the
      Certificate Principal Balance of the Class C Certificates has been reduced
      to zero and (IV) the Class C Unpaid Realized Loss Amount; and

            (ii) the remainder pursuant to Section 4.04(h) hereof.

      (h) On each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(g)(ii) hereof, (i) to the Trustee to reimburse amounts
or pay indemnification amounts owing to the Trustee from the Trust Fund pursuant
to Section 8.05 to the extent such amounts shall have exceeded the cap set forth
in Section 8.06(c), and (ii) thereafter, to the Class R Certificate and such
distributions shall be made only after all preceding distributions shall have
been made until such remainder shall have been fully distributed.

      (i) On each Distribution Date, after giving effect to distributions on
such Distribution Date, the Trustee shall allocate the Applied Realized Loss
Amount for the Certificates to reduce the Certificate Principal Balances of the
Class C and Subordinated Certificates in the following order of priority:

            (i) to the Class C Certificates until the Class C Certificate
      Principal Balance is reduced to zero;

            (ii) to the Class B-2 Certificates until the Class B-2 Certificate
      Principal Balance is reduced to zero;

            (iii) to the Class B-1 Certificates until the Class B-1 Certificate
      Principal Balance is reduced to zero

            (iv) to the Class M-2 Certificates until the Class M-2 Certificate
      Principal Balance is reduced to zero; and

            (v) to the Class M-1 Certificates until the Class M-1 Certificate
      Principal Balance is reduced to zero.

      (j) Subject to Section 9.02 hereof respecting the final distribution, on
each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.


                                      -74-
<PAGE>

      In accordance with this Agreement, the Servicer shall prepare and deliver
a report to the Trustee and the NIMs Insurer in the form of a computer readable
magnetic tape (or by such other means as the Servicer, the Trustee and the NIMs
Insurer may agree from time to time) containing such data and information such
as to permit the Trustee to prepare the Monthly Statement to Certificateholders
and make the required distributions for the related Distribution Date (the
"Remittance Report").

      The Trustee shall promptly notify the NIMs Insurer of any proceeding or
the institution of any action, of which a Responsible Officer of the Trustee has
actual knowledge, seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class C Certificates or the
Class P Certificates. Each Holder of the Class C Certificates or the Class P
Certificates, by its purchase of such Certificates and the Trustee hereby agree
that the NIMs Insurer may at any time during the continuation of any proceeding
relating to a Preference Claim direct all matters relating to such Preference
Claim, including, without limitation, (i) the direction of any appeal of any
order relating to such Preference Claim and (ii) the posting of any surety,
supersedes or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the NIMs Insurer shall be subrogated to the rights
of the Trustee and each Holder of the Class C Certificates and the Class P
Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim;
provided, however, that the NIMs Insurer will not have any rights with respect
to any Preference Claim set forth in this paragraph unless the indenture trustee
with respect to the NIM Notes or the holder of any NIMs Notes has been required
to relinquish a distribution made on the Class C Certificates, the Class P
Certificates or the NIM Notes, as applicable, and the NIMs Insurer made a
payment in respect of such relinquished amount.

      (k) Any payments received under the terms of the Cap Contract will be
available to pay the holders of the Offered Certificates (other than the Class S
Certificates) up to the amount of any Adjustable Rate Certificate Carryover. Any
amounts received under the terms of the Cap Contract on a Distribution Date that
are not used to pay the Adjustable Rate Certificate Carryover will be
distributed to the holder of the Class C Certificates. Payments in respect of
the Adjustable Rate Certificate Carryover shall be paid to the Offered
Certificates, pro rata based upon the Adjustable Rate Certificate Carryover for
each class of Offered Certificates.

            (i) On or prior to the Cap Contract Termination Date, amounts, if
      any, received by the Trustee for the benefit of the Trust Fund in respect
      of the Cap Contract shall be deposited by the Trustee into the Cap
      Contract Account and will be used to pay Adjustable Rate Certificate
      Carryover on the Offered Certificates (other than the Class S
      Certificates). Any amounts that are received on the Cap Contract that are
      not used to pay Adjustable Rate Certificate Carryover on the Offered
      Certificates (other than the Class S Certificates), will be distributed to
      the holder of the Class C Certificates, unless the Cap Contract is subject
      to early termination as described below. With respect to any Distribution
      Date on or prior to the Cap Contract Termination Date, the amount, if any,
      payable by the Cap Contract Counterparty under the Cap Contract will equal
      the product of (i) the excess of (x) One-Month LIBOR (as determined by the
      Cap Contract Counterparty and subject to a cap equal to 8.850%), over (y)
      the rate with respect to such Distribution Date as shown under the heading
      "1ML Lower Collar" in the Cap Table, (ii) an amount equal to the Cap
      Contract Notional Balances and (iii) the number of days in such Accrual
      Period, divided by 360. If a payment is made to the Trust Fund under the
      Cap Contract and the Trustee intends to distribute excess amounts to the
      holders of the Class C Certificates as described above, the Trustee shall
      send a notice on the Business Day prior to the related Distribution Date
      stating the amount received on the Cap Contract, the amount paid with
      respect to Adjustable Rate Certificate Carryover and the amount due to the
      holders of the Class C


                                      -75-
<PAGE>

      Certificates. Such notice shall be sent by the Trustee via facsimile to
      the holders of the Class C Certificates.

            (ii) Amounts on deposit in the Cap Contract Account will remain
      uninvested pending distribution to Certificateholders.

            (iii) The Cap Contract is scheduled to remain in effect until the
      Cap Contract Termination Date and will be subject to early termination
      only in limited circumstances. Such circumstances include certain
      insolvency or bankruptcy events in relation to the Cap Contract
      Counterparty (after a grace period of three Local Business Days, as
      defined in the Cap Contract, after notice of such failure is received by
      the Cap Contract Counterparty) to make a payment due under the Cap
      Contract, the failure by the Cap Contract Counterparty or the Trustee
      (after a cure period of 20 days after notice of such failure is received)
      to perform any other agreement made by it under the Cap Contract, the
      termination of the Trust Fund and the Cap Contract becoming illegal or
      subject to certain kinds of taxation.

      SECTION 4.05. Monthly Statements to Certificateholders.

      (a) Not later than each Distribution Date based on information provided by
the Servicer, the Trustee shall prepare and make available on its website
located at www.ctslink.com to each Holder of a Class of Certificates of the
Trust Fund, the Servicer, the NIMs Insurer, the Rating Agencies and the
Depositor a statement setting forth for the Certificates:

            (i) the amount of the related distribution to Holders of each Class
      allocable to principal, separately identifying (A) the aggregate amount of
      any Principal Prepayments included therein, (B) the aggregate of all
      scheduled payments of principal included therein, (C) the Extra Principal
      Distribution Amount, if any, and (D) the aggregate amount of prepayment
      penalties, if any;

            (ii) the amount of such distribution to Holders of each Class
      allocable to interest, together with any Non-Supported Interest Shortfalls
      allocated to each Class, in the aggregate and with respect to the Group A
      Mortgage Loans and the Group B Mortgage Loans;

            (iii) any Interest  Carryforward  Amount and the  Adjusted  Interest
      Carryfoward Amount for each Class of the Offered Certificates;

            (iv) the Class Certificate Principal Balance of each Class after
      giving effect (i) to all distributions allocable to principal on such
      Distribution Date and (ii) the allocation of any Applied Realized Loss
      Amounts for such Distribution Date;

            (v) the Pool Stated Principal Balance for such Distribution Date;

            (vi) the related amount of the Servicing Fee paid to or retained by
      the Servicer;

            (vii) the Pass-Through Rate for each Class of Certificates for such
      Distribution Date;

            (viii) the amount of Advances included in the distribution on such
      Distribution Date;

            (ix) the cumulative amount of (A) Realized Losses and (B) Applied
      Realized Loss Amounts to date, in the aggregate and with respect to the
      Mortgage Loans serviced by the Servicer;


                                      -76-
<PAGE>

            (x) the amount of (A) Realized Losses and (B) Applied Realized Loss
      Amounts with respect to such Distribution Date, in the aggregate and with
      respect to the Mortgage Loans serviced by the Servicer;

            (xi) the number and aggregate principal amounts of Mortgage Loans
      (A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 31 to 60
      days, (2) 61 to 90 days and (3) 91 or more days, and (B) in foreclosure
      and Delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
      days, in each case as of the close of business on the last day of the
      calendar month preceding such Distribution Date, in the aggregate and with
      respect to the Mortgage Loans serviced by the Servicer;

            (xii) with respect to any Mortgage Loan that became an REO Property
      during the preceding calendar month, the loan number and Stated Principal
      Balance of such Mortgage Loan as of the close of business on the last day
      of the calendar month preceding such Distribution Date and the date of
      acquisition thereof, in the aggregate and with respect to the Mortgage
      Loans serviced by the Servicer;

            (xiii) the total number and principal balance of any REO Properties
      as of the close of business on the last day of the calendar month
      preceding such Distribution Date, in the aggregate and with respect to the
      Mortgage Loans serviced by the Servicer;

            (xiv) the aggregate Stated Principal Balance of all Liquidated Loans
      as of the preceding Distribution Date, in the aggregate and with respect
      to the Mortgage Loans serviced by the Servicer;

            (xv) whether a Trigger Event has occurred;

            (xvi) with respect to each Class of Certificates, any Interest
      Carryforward Amount with respect to such Distribution Date for each such
      Class, any Interest Carryforward Amount paid for each such Class and any
      remaining Interest Carryforward Amount for each such Class;

            (xvii) with respect to each Class Certificates any Interest
      Carryover Amount with respect to such Distribution Date for each such
      Class, any Interest Carryover Amount paid for each such Class and any
      remaining Interest Carryover Amount for each such Class;

            (xviii) the number and Stated Principal Balance (as of the preceding
      Distribution Date) of any Mortgage Loans which were purchased or
      repurchased during the preceding Due Period and since the Cut-off Date;

            (xix) the number of Mortgage Loans for which prepayment penalties
      were received during the related Prepayment Period and, for each such
      Mortgage Loan, the amount of prepayment penalties received during the
      related Prepayment Period and in the aggregate of such amounts for all
      such Mortgage Loans since the Cut-off Date;

            (xx) the related amount of the Credit Risk Manager Fee paid to the
      Credit Risk Manager;

            (xxi) the amount and purpose of any withdrawal from the Certificate
      Account pursuant to Section 3.08(a)(v);

            (xxii) the amount of any payments to each Class of Certificates that
      are treated as payments received in respect of a REMIC Regular Interest
      and the amount of any payments to


                                      -77-
<PAGE>

      each Class of Certificates that are not treated as payments received in
      respect of a REMIC Regular Interest.

            (xxiii) as of each Distribution Date, the amount, if any, to be
      deposited in the Certificate Account pursuant to the Cap Contract as
      described in Section 4.04(k) and the amount thereof to be paid to the
      Offered Certificates (other than the Class S Certificates) as described in
      Section 4.04(k) hereof.

      (b) The Servicer shall deliver to the NIMs Insurer a copy of any report
delivered by the Servicer to the Trustee.

      (c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to the NIMs Insurer and each
Person who at any time during the calendar year was a Certificateholder, a
statement containing the information set forth in clauses (a)(i) and (a)(ii) of
this Section 4.02 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.

      (d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificate and the NIMs Insurer the Form
1066 and each Form 1066Q and shall respond promptly to written requests made not
more frequently than quarterly by any Holder of Class R Certificate with respect
to the following matters:

            (i) The original projected principal and interest cash flows on the
      Closing Date on each Class of regular and residual interests created
      hereunder and on the Mortgage Loans, based on the Prepayment Assumption;

            (ii) The projected remaining principal and interest cash flows as of
      the end of any calendar quarter with respect to each Class of regular and
      residual interests created hereunder and the Mortgage Loans, based on the
      Prepayment Assumption;

            (iii) The Prepayment Assumption and any interest rate assumptions
      used in determining the projected principal and interest cash flows
      described above;

            (iv) The original issue discount (or, in the case of the Mortgage
      Loans, market discount) or premium accrued or amortized through the end of
      such calendar quarter with respect to each Class of regular or residual
      interests created hereunder and to the Mortgage Loans, together with each
      constant yield to maturity used in computing the same;

            (v) The treatment of losses realized with respect to the Mortgage
      Loans or the regular interests created hereunder, including the timing and
      amount of any cancellation of indebtedness income of the REMICs with
      respect to such regular interests or bad debt deductions claimed with
      respect to the Mortgage Loans;

            (vi) The amount and timing of any non-interest expenses of the
      REMICs; and

            (vii) Any taxes (including penalties and interest) imposed on the
      REMICs, including, without limitation, taxes on "prohibited transactions,"
      "contributions" or "net income from foreclosure property" or state or
      local income or franchise taxes.


                                      -78-
<PAGE>

      The information pursuant to clauses (i), (ii), (iii) and (iv) above shall
be provided by the Depositor pursuant to Section 8.11.

                                   ARTICLE V

                                THE CERTIFICATES

      SECTION 5.01. The Certificates.

      The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:

<TABLE>
<CAPTION>
                                                                                Original Certificate
                               Minimum             Integral Multiples in        Principal Balance or
      Class                 Denomination             Excess of Minimum            Notional Balance
      -----                 ------------             -----------------            ----------------
<S>                        <C>                     <C>  <C>                     <C>
      A-1                     $25,000.00                   $1.00                  $298,080,000.00
      A-2                     $25,000.00                   $1.00                  $343,195,000.00
      S                    $1,000,000.00                   $1.00                  $779,387,100.00
      M-1                     $25,000.00                   $1.00                   $56,592,000.00
      M-2                     $25,000.00                   $1.00                   $39,289,000.00
      B-1                     $25,000.00                   $1.00                   $30,325,000.00
      B-2                     $25,000.00                   $1.00                   $11,906,000.00
      C                      $250,000.00               $1,000.00                   $12,673,442.37
      R                          $100.00                     N/A                          $100.00
      P                               (1)                     (1)                              (1)
</TABLE>

----------
(1)   The Class P Certificates shall not have minimum dollar denominations or
      Certificate Principal Balances and shall be issued in a minimum percentage
      interest of 25%.

      The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. 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 set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
authentication 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. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.


                                      -79-
<PAGE>

      SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.

      (a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.09 hereof, a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and 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. Upon surrender for registration of Transfer of any
Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.

      At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of a Trustee. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute and the Trustee shall
authenticate and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to a Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.

      No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but 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 may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.

      (b) No Transfer of a Class C or Class P Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall (except with
respect to the initial transfer of a Class C or Class P Certificate by Merrill
Lynch & Co.) each certify to each Trustee in writing the facts surrounding the
Transfer in substantially the forms set forth in Exhibit F (the "Transferor
Certificate") and (i) deliver a letter in substantially the form of either
Exhibit G (the "Investment Letter") or Exhibit H (the "Rule 144A Letter") or
(ii) there shall be delivered to each Trustee an Opinion of Counsel that such
Transfer may be made pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be an expense of the Depositor or the Trustee. The
Depositor shall provide to any Holder of a Class C or Class P Certificate and
any prospective transferee designated by any such Holder, information regarding
the related Certificates and the Mortgage Loans and such other information as
shall be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for Transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information in the possession of the Trustee regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Class C or Class P Certificate desiring to
effect such Transfer shall, and does hereby agree to, indemnify the Depositor
and the Trustee against any liability that may result if the Transfer is not so
exempt or is not made in accordance with such federal and state laws.


                                      -80-
<PAGE>

      No Transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee and the NIMs Insurer, to the effect that such transferee is not an
employee benefit plan subject to Title I of ERISA or a plan subject to Section
4975 of the Code or a plan subject to any applicable Federal, state or local law
materially similar to the foregoing provisions of ERISA and the Code ("Similar
Law"), or a Person acting on behalf of any such plan or using the assets of any
such plan, (ii) except in the case of a Class R Certificate which may not be
transferred to a transferee that does not provide the representation described
in clause (i), if such transferee is an insurance company, a representation that
the transferee is an insurance company that is purchasing such Certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60, 60 Fed.
Reg. 35925 (July 12, 1995) ("PTCE 95-60")) and that the purchase and holding of
such Certificates is covered under Sections I and III of PTCE 95-60, or (iii) in
the case of any such ERISA Restricted Certificate, other than a Class R
Certificate, presented for registration in the name of an employee benefit plan
subject to ERISA, a plan subject to Section 4975 of the Code, or a plan subject
to Similar Law (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other person acting on behalf of any such plan,
an Opinion of Counsel satisfactory to the Trustee and the NIMs Insurer to the
effect that the purchase and holding of such ERISA Restricted Certificate will
not result in a prohibited transaction under ERISA or the Code or Similar Law
and will not subject the NIMs Insurer or the Trustee to any obligation in
addition to those expressly undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the NIMs Insurer or the Trustee. For purposes
of clause (i) of the preceding sentence, such representation shall be deemed to
have been made to the Trustee by the transferee's acceptance of an ERISA
Restricted Certificate (or the acceptance by a Certificate Owner of the
beneficial interest in any Class of ERISA Restricted Certificates) unless the
Trustee shall have received from the transferee an alternative representation
acceptable in form and substance to the Trustee. Notwithstanding anything else
to the contrary herein, any purported transfer of an ERISA Restricted
Certificate to or on behalf of an employee benefit plan subject to Title I of
ERISA, a plan subject to Section 4975 of the Code, or a plan subject to Similar
Law without the delivery to the Trustee and the NIMs Insurer of an Opinion of
Counsel satisfactory to the Trustee as described above shall be void and of no
effect. The Trustee shall be under no liability to any Person for any
registration of transfer of any ERISA Restricted Certificate that is in fact not
permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements. The
Trustee shall be entitled, but not obligated, to recover from any Holder of any
ERISA Restricted Certificate that was in fact an employee benefit plan subject
to Title I of ERISA, a plan subject to Section 4975 of the Code, or a plan
subject to Similar Law or a Person acting on behalf of any such plan at the time
it became a Holder or, at such subsequent time as it became such a plan or
Person acting on behalf of such a plan, all payments made on such ERISA
Restricted Certificate at and after either such time. Any such payments so
recovered by the Trustee shall be paid and delivered by the Trustee to the last
preceding Holder of such Certificate that is not such a plan or Person acting on
behalf of a plan.

      No Transfer of a Class C Certificate may be made to a person that is
either (i) not a "United States person" (as defined for purposes of Section 7701
of the Code) or (ii) a Disqualified Organization or a Person acquiring such
Certificate on behalf (as a broker, agent, nominee or otherwise) of a
Disqualified Organization. The Trustee shall not register any Transfer of a
Class C Certificate unless the Trustee shall have been furnished with a
Transferee Letter in the form attached as Exhibit N (except with respect to the
transfer of a Class C Certificate to any trust which issues NIM Notes). Any
Transfer of a Class C Certificate in violation of the provisions of this Section
5.02(b) shall be absolutely null and void and shall absolutely have no rights in
the purported Transferee.


                                      -81-
<PAGE>

      (c) 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 the rights
of each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:

            (i) 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.

            (ii) No Ownership Interest in a Class R Certificate may be
      purchased, transferred or sold, directly or indirectly, without the
      express written consent of the Trustee. No Ownership Interest in a Class R
      Certificate may be registered on the Closing Date or thereafter
      transferred, and the Trustee shall not register the Transfer of any Class
      R Certificate unless, in addition to the certificates required to be
      delivered to the Trustee under subparagraph (b) above, the Trustee shall
      have been furnished with an affidavit (a "Transfer Affidavit") of the
      initial owner or the proposed transferee in the form attached hereto as
      Exhibit E-1 and an affidavit of the proposed transferor in the form
      attached hereto as Exhibit E-2. In the absence of a contrary instruction
      from the transferor of a Class R Certificate, declaration (11) in Appendix
      A of the Transfer Affidavit may be left blank. If the transferor requests
      by written notice to the Trustee prior to the date of the proposed
      transfer that one of the two other forms of declaration (11) in Appendix A
      of the Transfer Affidavit be used, then the requirements of this Section
      5.02(c)(ii) shall not have been satisfied unless the Transfer Affidavit
      includes such other form of declaration.

            (iii) Each Person holding or acquiring any Ownership Interest in a
      Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
      any other Person to whom such Person attempts to Transfer its Ownership
      Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit from
      any Person for whom such Person is acting as nominee, trustee or agent in
      connection with any Transfer of a Class R Certificate and (C) not to
      Transfer its Ownership Interest in a Class R Certificate or to cause the
      Transfer of an Ownership Interest in a Class R Certificate to any other
      Person if it has actual knowledge that such Person is not a Permitted
      Transferee. Further, no transfer, sale or other disposition of any
      Ownership Interest in a Class R Certificate may be made to a person who is
      not a U.S. Person (within the meaning of section 7701 of the Code) unless
      such person furnishes the transferor and the Trustee with a duly completed
      and effective Internal Revenue Service Form W-8ECI (or any successor
      thereto) and the Trustee consents to such transfer, sale or other
      disposition in writing.

            (iv) Any attempted or purported Transfer of any Ownership Interest
      in a Class R Certificate in violation of the provisions of this Section
      5.02(c) shall be absolutely null and void and shall vest no rights in the
      purported Transferee. If any purported transferee shall become a Holder of
      a Class R Certificate in violation of the provisions of this Section
      5.02(c), then the last preceding Permitted Transferee shall be restored to
      all rights as Holder thereof retroactive to the date of registration of
      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 Section 5.02(b) and this
      Section 5.02(c) or for making any payments due on such Certificate to the
      Holder thereof or taking any other action with respect to such Holder
      under the provisions of this Agreement so long as the Transfer was
      registered after receipt of the related Transfer Affidavit. The Trustee
      shall be entitled but not obligated to recover from any Holder of a Class
      R Certificate that was in fact not a Permitted Transferee at the time it
      became a Holder or, at such subsequent time as it became other than a
      Permitted Transferee, all payments made on such Class R Certificate at and
      after either such time. Any such payments so recovered by the Trustee
      shall


                                      -82-
<PAGE>

      be paid and delivered by the Trustee to the last preceding Permitted
      Transferee of such Certificate.

            (v) At the option of the Holder of the Class R Certificate, the
      Class LTR Interest, the Class MTR Interest and the residual interest in
      the Upper Tier REMIC may be severed and represented by separate
      certificates; provided, however, that such separate certification may not
      occur until the NIMs Insurer and the Trustee receive an Opinion of Counsel
      to the effect that separate certification in the form and manner proposed
      would not result in the imposition of federal tax upon the Trust Fund or
      any of the REMICs provided for herein or cause any of the REMICs provided
      for herein to fail to qualify as a REMIC; and provided further, that the
      provisions of Sections 5.02(b) and (c) will apply to each such separate
      certificate as if the separate certificate were a Class R Certificate. If,
      as evidenced by an Opinion of Counsel, it is necessary to preserve the
      REMIC status of any of the REMICs provided for herein, the Class LTR
      Interest, the Class MTR Interest and the residual interest in the Upper
      Tier REMIC shall be severed and represented by separate Certificates.

      The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee and the NIMs Insurer of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee or the
Depositor, to the effect that the elimination of such restrictions will not
cause any of the REMICs provided for herein to fail to qualify as a REMIC at any
time that the Certificates are outstanding or result in the imposition of any
tax on the Trust Fund, any REMIC provided for herein, a Certificateholder or
another Person. Each Person holding or acquiring any Ownership Interest in a
Class R Certificate hereby consents to any amendment of this Agreement that,
based on an Opinion of Counsel furnished to the Trustee, is reasonably necessary
(a) to ensure that the record ownership of, or any beneficial interest in, a
Class R Certificate is not transferred, directly or indirectly, to a Person that
is not a Permitted Transferee and (b) to provide for a means to compel the
Transfer of a Class R Certificate that is held by a Person that is not a
Permitted Transferee to a Holder that is a Permitted Transferee.

      (d) The transferor of the Class R Certificate shall notify the Trustee in
writing upon the transfer of the Class R Certificate.

      (e) The preparation and delivery of all certificates, opinions and other
writings referred to above in this Section 5.02 shall not be an expense of the
Trust Fund, the Depositor or the Trustee.

      SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.

      If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee and the NIMs Insurer 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 that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, 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) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 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. All
Certificates


                                      -83-
<PAGE>

surrendered to the Trustee under the terms of this Section 5.03 shall be
canceled and destroyed by the Trustee in accordance with its standard procedures
without liability on its part.

SECTION 5.04. Persons Deemed Owners.

      The NIMs Insurer, the Trustee and any agent of the NIMs Insurer or the
Trustee may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions as provided
in this Agreement and for all other purposes whatsoever, and neither the NIMs
Insurer nor the Trustee, nor any agent of the NIMs Insurer or the Trustee shall
be affected by any notice to the contrary.

SECTION 5.05. Access to List of Certificateholders' Names and Addresses.

      If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the NIMs
Insurer or the Depositor shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the NIMs Insurer, the Depositor or such Certificateholders
at such recipients' expense the most recent list of the Certificateholders of
the Trust Fund held by the Trustee, if any. The Depositor and every
Certificateholder, by receiving and holding a Certificate, agree that the
Trustee shall not be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.

SECTION 5.06. Book-Entry Certificates.

      The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:

      (a) the provisions of this Section shall be in full force and effect;

      (b) the Depositor, the Trustee and the NIMs Insurer may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;

      (c) registration of the Book-Entry Certificates may not be transferred by
the Trustee except to another Depository;

      (d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;


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<PAGE>

      (e) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants;

      (f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and

      (g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.

      For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.

      SECTION 5.07. Notices to Depository.

      Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners and the Trustee shall give all such
notices and communications to the Depository.

      SECTION 5.08. Definitive Certificates.

      If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Trustee and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Trustee shall notify all Certificate Owners of such Book-Entry Certificates and
the NIMs Insurer, through the Depository, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners of such
Class requesting the same. The Depositor shall provide the Trustee with an
adequate inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon surrender to the Trustee of any such Certificates
by the Depository, accompanied by registration instructions from the Depository
for registration, the Trustee shall authenticate and deliver such Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and each may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.


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<PAGE>

      SECTION 5.09. Maintenance of Office or Agency.

      The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
offices at Sixth and Marquette Avenue, Minneapolis, Minnesota 55479, Attention:
Corporate Trust Services - Merrill Lynch Mortgage Investors Inc., Series
2003-WMC1 as offices for such purposes. The Trustee will give prompt written
notice to the Certificateholders of any change in such location of any such
office or agency.

      SECTION 5.10. [RESERVED]

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

      SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.

      The Depositor and the Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.

      SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.

      Except as provided in the next paragraph, the Depositor and the Servicer
will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof 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, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

      Any Person into which the Depositor or Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or Servicer shall be a party, or any Person succeeding to the
business of the Depositor or Servicer, shall be the successor of the Depositor
or 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 (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
Fannie Mae or Freddie Mac.

      SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.

      None of the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the 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 Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the 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 Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense, incurred in


                                      -86-
<PAGE>

connection with the performance of their duties under this agreement or incurred
in connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement or
the Certificates, other than any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. None of the Depositor nor the Servicer shall be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
respective duties hereunder and that in its opinion may involve it in any
expense or liability; provided, however, that any of the Depositor or the
Servicer may, in its discretion undertake any such action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto and interests of the Servicer and the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be, expenses, costs and liabilities of the
Trust Fund, and the Depositor and the Servicer shall be entitled to be
reimbursed therefor out of the Collection Account as provided by Section 3.08
hereof.

      SECTION 6.04. Limitation on Resignation of Servicer.

      The Servicer shall not resign from the 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 Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the NIMs Insurer. No such resignation shall
become effective until the Trustee or a successor servicer reasonably acceptable
to the Trustee and the NIMs Insurer is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Section 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer.

      SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.

      The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of Fannie Mae or Freddie Mac for Persons
performing servicing for mortgage loans purchased by Fannie Mae or Freddie Mac.
The Servicer shall provide the Trustee and the NIMs Insurer, upon request, with
copies of such policies and fidelity bond or a certification from the insurance
provider evidencing such policies and fidelity bond. In the event that any such
policy or bond ceases to be in effect, the Servicer shall use its reasonable
best efforts to obtain a comparable replacement policy or bond from an insurer
or issuer meeting the requirements set forth above as of the date of such
replacement. Any such policy or fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee and the NIMs
Insurer.

                                  ARTICLE VII

                        DEFAULT; TERMINATION OF SERVICER

      SECTION 7.01. Events of Default.

      "Event of Default," wherever used herein, means any one of the following
events:

            (i) any failure by the Servicer to make any Advance to deposit in
      the Collection Account or the Certificate Account or remit to the Trustee
      any payment (excluding a payment required to be made under Section 4.01
      hereof) required to be made under the terms of this


                                      -87-
<PAGE>

      Agreement, which failure shall continue unremedied for three calendar days
      and, with respect to a payment required to be made under Section 4.01
      hereof, for one calendar day, after the date on which written notice of
      such failure shall have been given to the Servicer by the Trustee or the
      Depositor, or to the Trustee and the Servicer by the NIMs Insurer or the
      Holders of Certificates evidencing not less than 25% of the Voting Rights
      evidenced by the Certificates; or

            (ii) any failure by the Servicer to observe or perform in any
      material respect any other of the covenants or agreements on the part of
      the Servicer contained in this Agreement or any representation or warranty
      shall prove to be untrue, which failure or breach shall continue
      unremedied for a period of 60 days after the date on which written notice
      of such failure shall have been given to the Servicer by the Trustee or
      the Depositor, or to the Trustee by the NIMs Insurer or the Holders of
      Certificates evidencing not less than 25% of the Voting Rights evidenced
      by the Certificates; or

            (iii) a decree or order of a court or agency or supervisory
      authority having jurisdiction for the appointment of a receiver or
      liquidator in any insolvency, readjustment of debt, marshaling of assets
      and liabilities or similar proceedings, or for the winding-up or
      liquidation of its affairs, shall have been entered against the Servicer
      and such decree or order shall have remained in force undischarged or
      unstayed for a period of 60 consecutive days; or

            (iv) consent by the Servicer to the appointment of a receiver or
      liquidator in any insolvency, readjustment of debt, marshaling of assets
      and liabilities or similar proceedings of or relating to the Servicer or
      all or substantially all of the property of the Servicer; or

            (v) admission by a Servicer in writing of 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.

      If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00 p.m. on the Servicer Remittance Date, the Trustee may
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), or at the direction of the NIMs Insurer or the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), shall, by notice in writing to the Servicer (with a copy to each
Rating Agency), terminate all of the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder. On or after the receipt
by the Servicer of such written notice, all authority and power of the Servicer
hereunder, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee. To the extent the Event of Default resulted
from the failure of the Servicer to make a required Advance, the Trustee shall
thereupon make any Advance described in Section 4.01 hereof subject to Section
3.04 hereof. The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the 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. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Servicer to pay amounts owed pursuant to Article VIII. The Servicer
agrees to cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee of all cash amounts which shall at the time be
credited to the Collection Account, or thereafter be received with respect to
the Mortgage Loans. The Servicer and the


                                      -88-
<PAGE>

Trustee shall promptly notify the Rating Agencies of the occurrence of an Event
of Default or an event that, with notice, passage of time, other action or any
combination of the foregoing would be an Event of Default, such notice to be
provided in any event within two Business Days of such occurrence.

      Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder. Notwithstanding anything herein
to the contrary, upon termination of the Servicer hereunder, any liabilities of
the Servicer which accrued prior to such termination shall survive such
termination.

      SECTION 7.02. Trustee to Act; Appointment of Successor.

      On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the 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 Servicer by the terms and provisions hereof and applicable law
including the obligation to make advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, the
Trustee shall be entitled to all fees, costs and expenses relating to the
Mortgage Loans that the Servicer would have been entitled to if the Servicer had
continued to act hereunder. Notwithstanding the foregoing, if the Trustee has
become the successor to the Servicer in accordance with Section 7.01 hereof, the
Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
by applicable law from making Advances pursuant to Section 4.01 hereof or if it
is otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which successor shall be approved by the NIMs Insurer and which
does not adversely affect the then current rating of the Certificates by each
Rating Agency as the successor to the Servicer hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Any successor Servicer shall be an institution that is acceptable to
the NIMs Insurer and is a Fannie Mae and Freddie Mac approved seller/servicer in
good standing, that has a net worth of at least $15,000,000, and that is willing
to service the Mortgage Loans and executes and delivers to the Depositor and the
Trustee an agreement accepting such delegation and assignment, that contains an
assumption by such Person of the rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer (other than liabilities of the
Servicer under Section 6.03 hereof incurred prior to termination of the Servicer
under Section 7.01), with like effect as if originally named as a party to this
Agreement; and provided further that each Rating Agency acknowledges that its
rating of the Certificates in effect immediately prior to such assignment and
delegation will not be qualified or reduced as a result of such assignment and
delegation. No appointment of a successor to the Servicer hereunder shall be
effective until the Trustee and the NIMs Insurer shall have consented thereto,
prior written consent of the NIMs Insurer is obtained and written notice of such
proposed appointment shall have been provided by the Trustee to each
Certificateholder. The Trustee shall not resign as servicer until a successor
servicer has been appointed and has accepted such appointment. Pending
appointment of a successor to the Servicer hereunder, the Trustee, unless the
Trustee is prohibited by law from so acting, shall, subject to Section 3.04
hereof, 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 Servicer hereunder. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Neither the Trustee nor any other successor
servicer shall be deemed to be in default hereunder by reason of any failure to
make, or any delay in making, any distribution hereunder or any portion thereof
or any failure to perform, or any


                                      -89-
<PAGE>

delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.

      Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.

      SECTION 7.03. Notification to Certificateholders.

      (a) Upon any termination of or appointment of a successor to the Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders, the
NIMs Insurer and to each Rating Agency.

      (b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the NIMs Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

      SECTION 8.01. Duties of Trustee.

      The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, 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 person would exercise or use under the circumstances in the conduct of
such person's own affairs. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the majority of the Certificateholders or the NIMS
Insurer, or may, proceed to protect and enforce its rights and the rights of the
Certificateholders or the NIMS Insurer under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, and subject to the foregoing, shall deem most effectual to protect and
enforce any of the rights of the Trustee, the NIMS Insurer and the
Certificateholders.

      The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that 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. If any such instrument is found not to conform
to the requirements of this Agreement in a material manner, the Trustee shall
take action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the NIMs Insurer and the Certificateholders and take
such further action as directed by the NIMs Insurer and the Certificateholders.

      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 misconduct, its negligent failure to perform its


                                      -90-
<PAGE>

obligations in compliance with this Agreement, or any liability that would be
imposed by reason of its willful misfeasance or bad faith; provided, however,
that:

            (i) prior to the occurrence of an Event of Default, and after the
      curing of all such Events of Default that 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,
      individually or as Trustee, 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 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 the Trustee and conforming to the
      requirements of this Agreement that it reasonably believed in good faith
      to be genuine and to have been duly executed by the proper authorities
      respecting any matters arising hereunder;

            (ii) the Trustee shall not be liable, individually or as Trustee,
      for an error of judgment made in good faith by a Responsible Officer or
      Responsible Officers of the Trustee, unless the Trustee was negligent or
      acted in bad faith or with willful misfeasance;

            (iii) the Trustee shall not be liable, individually or as Trustee,
      with respect to any action taken, suffered or omitted to be taken by it in
      good faith in accordance with the direction of the NIMs Insurer or the
      Holders of each Class of Certificates evidencing not less than 25% of the
      Voting Rights of such Class relating 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; and

            (iv) except as otherwise expressly provided in this Agreement, if
      any default occurs in the making of a payment due under any Permitted
      Investment, or if a default occurs in any other performance required under
      any Permitted Investment, the Trustee may and, subject to Section 8.01 and
      Section 8.02, upon the request of the NIMs Insurer or the Holders of the
      Certificates representing more than 50% of the Voting Rights allocated to
      any Class of Certificates, shall take such action as may be appropriate to
      enforce such payment or performance, including the institution and
      prosecution of appropriate proceedings.

      SECTION 8.02. Certain Matters Affecting the Trustee.

      (a) Except as otherwise provided in Section 8.01:

            (i) the Trustee may request and rely upon and shall be protected in
      acting or refraining from acting upon any resolution, Officer's
      Certificate, certificate of auditors or any other certificate, statement,
      instrument, opinion, report, notice, request, consent, order, appraisal,
      bond or 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 of its choice 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 not be liable, individually or as Trustee,
      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;


                                      -91-
<PAGE>

            (iv) prior to the occurrence of an Event of Default hereunder and
      after the curing of all Events of Default that 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 so to do by the NIMs
      Insurer or the Holders of each Class of Certificates evidencing not less
      than 25% of the Voting Rights of such Class;

            (v) the Trustee may execute any of the trusts or powers hereunder or
      perform any duties hereunder either directly or by or through agents,
      accountants or attorneys;

            (vi) the Trustee shall not be required to expend its own funds or
      otherwise incur any financial liability in the performance of any of its
      duties hereunder if it shall have reasonable grounds for believing that
      repayment of such funds or adequate indemnity against such liability is
      not assured to it;

            (vii) the Trustee shall not be liable, individually or as Trustee,
      for any loss on any investment of funds pursuant to this Agreement (other
      than as issuer of the investment security);

            (viii) the Trustee shall not be deemed to have knowledge of an Event
      of Default until a Responsible Officer of the Trustee shall have received
      written notice thereof;

            (ix) the Trustee shall be under no obligation to exercise any of the
      trusts or powers vested in it by this Agreement or to make any
      investigation of matters arising hereunder or to institute, conduct or
      defend any litigation hereunder or in relation hereto at the request,
      order or direction of any of the NIMs Insurer or the Certificateholders,
      pursuant to the provisions of this Agreement, unless the NIMs Insurer or
      such Certificateholders shall have offered to the Trustee reasonable
      security or indemnity against the costs, expenses and liabilities that may
      be incurred therein or thereby; and

            (x) if requested by the Servicer, the Trustee may appoint the
      Servicer as the trustee's attorney-in-fact in order to carry out and
      perform certain activities that are necessary or appropriate for the
      servicing and administration of the Mortgage Loans pursuant to this
      Agreement. Such appointment shall be evidenced by a power of attorney in
      such form as may be agreed to by the Trustee and the Servicer.

      (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.

      SECTION 8.03. Trustee Not Liable for Mortgage Loans.

      The recitals contained herein shall be taken as the statements of the
Depositor or the 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, of any Mortgage Loan, of any
guarantee of a NIMs Insurer or related document other than with respect to the
Trustee's execution and authentication of the Certificates. The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any funds paid to the Depositor or the Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Collection Account or Certificate
Account by the Depositor or the Servicer.


                                      -92-
<PAGE>

      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 as it would have if it were not
the Trustee.

      SECTION 8.05. Trustee's Fees and Expenses.

      The Trustee shall be entitled to be paid the Trustee Fee out of the
Certificate Account.

      SECTION 8.06. Indemnification of Trustee.

      (a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Trust Fund for any loss,
liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:

            (i) with respect to any such claim, the Trustee shall have given the
      Depositor and the Holders written notice thereof promptly after the
      Trustee shall have knowledge thereof; provided that failure to so notify
      shall not relieve the Trust Fund of the obligation to indemnify the
      Trustee; however, any reasonable delay by the Trustee to provide written
      notice to the Depositor and the Holders promptly after the Trustee shall
      have obtained knowledge of a claim shall not relieve the Trust Fund of the
      obligation to indemnify the Trustee under this Section 8.06;

            (ii) while maintaining control over its own defense, the Trustee
      shall cooperate and consult fully with the Depositor in preparing such
      defense;

            (iii) notwithstanding anything to the contrary in this Section 8.06,
      the Trust Fund shall not be liable for settlement of any such claim by the
      Trustee entered into without the prior consent of the Depositor, which
      consent shall not be unreasonably withheld; and

            (iv) any such loss, liability or expense to be indemnified by the
      Trust Fund must constitute an "unanticipated expense" of the Trust Fund
      within the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii).

      The provisions of this Section 8.06 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.

      (b) The Trustee shall be entitled to all reasonable expenses,
disbursements and advancements incurred or made by the Trustee in accordance
with this Agreement (including fees and expenses of its counsel and all persons
not regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).

      (c) The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $300,000, excluding any Servicing Transfer Costs, in the
aggregate in any calendar year; provided, however, that such cap shall cease to
apply after the date on which any NIM Notes are paid in full and all amounts
which the NIMs Insurer is entitled to be paid or reimbursed shall have been paid
or reimbursed.


                                      -93-
<PAGE>

Any amounts not in excess of this cap may be withdrawn by the Trustee from the
Certificate Account at any time.

      SECTION 8.07. Eligibility Requirements for Trustee.

      The Trustee hereunder shall, at all times, be a corporation or association
organized and doing business under the laws of a 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, subject to supervision or
examination by federal or state authority and with a credit rating that would
not cause any of the Rating Agencies to reduce their respective ratings of any
Class of Certificates below the ratings issued on the Closing Date (or having
provided such security from time to time as is sufficient to avoid such
reduction) and reasonably acceptable to the NIMs Insurer. If such corporation or
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 8.07 the combined capital and surplus of such
corporation or association 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 8.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.08 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor and the NIMs Insurer and their respective
Affiliates; provided, however, that such corporation cannot be an Affiliate of
the Servicer other than the Trustee in its role as successor to the Servicer.

      SECTION 8.08. Resignation and Removal of Trustee.

      The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor and
the NIMs Insurer and by mailing notice of resignation by first class mail,
postage prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the
date specified in such notice when, subject to Section 8.09, such resignation is
to take effect, and (2) acceptance of appointment by a successor trustee
acceptable to the NIMs Insurer in accordance with Section 8.09 and meeting the
qualifications set forth in Section 8.07. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice or resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.

      If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or the NIMs Insurer, (ii) the Trustee
shall become incapable of acting, or shall be adjudged as 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, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor or the NIMs
Insurer may remove the Trustee and the Depositor with the consent of the NIMs
Insurer shall promptly appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Servicer and one copy of which shall be
delivered to the successor trustee.

      The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates, with the consent of the NIMs Insurer, or the NIMs Insurer upon
failure of the Trustee to perform its obligations hereunder may at any time
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly


                                      -94-
<PAGE>

authorized (or by the NIMs Insurer), one complete set of which instruments shall
be delivered by the successor Trustee to the Servicer, one complete set to the
Trustee so removed and one complete set to the successor so appointed. Notice of
any removal of the Trustee shall be given to the NIMs Insurer and each Rating
Agency by the Successor Trustee.

      Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.

      SECTION 8.09. Successor Trustee.

      Any successor trustee appointed as provided in Section 8.08 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, the NIMs Insurer and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor 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.

      No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.

      Upon acceptance of appointment by a successor trustee as provided in this
Section 8.09, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If the Depositor fails to mail such
notice within ten 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 8.10. Merger or Consolidation of Trustee.

      Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).

      SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.

      Notwithstanding any other provisions of this Agreement, 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 any Mortgage Note may at the time be
located, the 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 and the NIMs Insurer 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 and for the benefit of the Certificateholders, such title to the Trust
Fund or any part thereof, whichever is applicable, and, subject to the other
provisions of this Section 8.11, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable. Any
such co-trustee or separate trustee shall be subject to the written approval of
the Servicer and the NIMs Insurer. The Trustee shall not be liable for the
actions of any co-trustee; provided, the appointment of a


                                      -95-
<PAGE>

co-trustee shall not relieve the Trustee of its obligations hereunder. If the
Servicer and the NIMs Insurer shall not have joined in such appointment within
15 days after the receipt by it of a request to do so, or in the 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 8.07 and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required under Section 8.09.

      Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

            (i) All rights, powers, duties and obligations conferred or imposed
      upon the Trustee, except for the obligation of the Trustee under this
      Agreement to advance funds on behalf of the Servicer, shall be conferred
      or imposed upon and exercised or performed by the Trustee and such
      separate trustee or co-trustee jointly (it being understood that such
      separate trustee or co-trustee is not authorized to act separately without
      the Trustee joining in such act), 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 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
      singly by such separate trustee or co-trustee, but solely at the direction
      of the Trustee;

            (ii) No trustee hereunder shall be held personally liable by reason
      of any act or omission of any other trustee hereunder; and

            (iii) The Trustee with the consent of the NIMs Insurer may at any
      time accept the resignation of or remove any separate trustee or
      co-trustee.

      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 and a copy thereof given to the
Servicer, the NIMs Insurer and the Depositor.

      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 8.12. Tax Matters.

      (a) It is intended that each of the REMICs provided for herein REMIC shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such REMIC to qualify as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is


                                      -96-
<PAGE>

hereby appointed to act as agent) on behalf of each of the REMICs provided for
herein and that in such capacity it shall: (a) prepare and file, or cause to be
prepared and filed, in a timely manner, a U.S. Real Estate Mortgage Investment
Conduit Income Tax Return (Form 1066 or any successor form adopted by the
Internal Revenue Service) and prepare and file or cause to be prepared and filed
with the Internal Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year with respect to each of
the REMICs provided for herein, containing such information and at the times and
in the manner as may be required by the Code or state or local tax laws,
regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) within thirty days of the Closing
Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms
8811 or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code for each of the REMICs provided for
herein; (c) make or cause to be made elections, on behalf of each of the REMICs
provided for herein to be treated as a REMIC on the federal tax return of such
REMICs for their first taxable years (and, if necessary, under applicable state
law); (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the Prepayment
Assumption; (e) provide information necessary for the computation of tax imposed
on the transfer of a Class R Certificate to a Person that is not a Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Person that is not a Permitted Transferee, or a pass-through entity in which a
Person that is not a Permitted Transferee is the record holder of an interest
(the reasonable cost of computing and furnishing such information may be charged
to the Person liable for such tax); (f) to the extent that they are under its
control conduct the affairs of each of the REMICs provided for herein at all
times that any Certificates are outstanding so as to maintain the status of each
of the REMICs provided for herein as a REMIC under the REMIC Provisions; (g) not
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of any of the REMICs provided for
herein or result in the imposition of tax upon any such REMIC; (h) pay, from the
sources specified in the last paragraph of this Section 8.12, the amount of any
federal, state and local taxes, including prohibited transaction taxes as
described below, imposed on each of the REMICs provided for herein prior to the
termination of the Trust Fund when and as the same shall be due and payable (but
such obligation shall not prevent the Trustee or any other appropriate Person
from contesting any such tax in appropriate proceedings and shall not prevent
the Trustee from withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings); (i) sign or cause to be signed federal, state
or local income tax or information returns; (j) maintain records relating to
each of the REMICs provided for herein, including but not limited to the income,
expenses, assets and liabilities of each of the REMICs provided for herein, and
the fair market value and adjusted basis of the Trust Fund property determined
at such intervals as may be required by the Code, as may be necessary to prepare
the foregoing returns, schedules, statements or information; and (k) as and when
necessary and appropriate, represent each of the REMICs provided for herein in
any administrative or judicial proceedings relating to an examination or audit
by any governmental taxing authority, request an administrative adjustment as to
any taxable year of any of the REMICs provided for herein, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any of the REMICs provided for herein,
and otherwise act on behalf of each of the REMICs provided for herein in
relation to any tax matter involving any of such REMICs or any controversy
involving the Trust Fund.

      In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within 10
days after the Closing Date all information or data that


                                      -97-
<PAGE>

the Trustee requests in writing and determines to be relevant for tax purposes
to the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby agrees to indemnify the Trustee for any losses, liabilities, damages,
claims or expenses of the Trustee arising from any errors or miscalculations of
the Trustee that result from any failure of the Depositor to provide, or to
cause to be provided, accurate information or data to the Trustee on a timely
basis.

      In the event that any tax is imposed on "prohibited transactions" of any
of the REMICs provided for herein as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of the any of such REMICs as
defined in Section 860G(c) of the Code, on any contribution to the Trust Fund
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax
is imposed, if not paid as otherwise provided for herein, such tax shall be paid
by (i) the Trustee, if any such other tax arises out of or results from a breach
by the Trustee of any of its obligations under this Agreement or as a result of
the location of the Trustee, (ii) any party hereto (other than the Trustee) to
the extent any such other tax arises out of or results from a breach by such
other party of any of its obligations under this Agreement or as a result of the
location of such other party or (iii) in all other cases, or in the event that
any liable party here fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts otherwise to be
distributed to the Class R Certificateholders (pro rata) pursuant to Section
4.04, and second with amounts (other than amounts derived by the Trust Fund from
a payment on the Cap Contract) otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class C
Certificates (pro rata), second to the Class B-2 Certificates (pro rata), third,
to the Class B-1 Certificates (pro rata), fourth to the Class M-2 Certificates
(pro rata), fifth, to the Class M-1 Certificates (pro rata) and sixth to the
Class A Certificates and Class R Certificate (pro rata). Notwithstanding
anything to the contrary contained herein, to the extent that such tax is
payable by the Class R Certificate, the Trustee is hereby authorized pursuant to
such instruction to retain on any Distribution Date, from the Holders of the
Class R Certificate (and, if necessary, from the Holders of all other
Certificates in the priority specified in the preceding sentence), funds
otherwise distributable to such Holders in an amount sufficient to pay such tax.
The Trustee agrees to promptly notify in writing the party liable for any such
tax of the amount thereof and the due date for the payment thereof.

      (b) Each of the Depositor and the Trustee agrees not to knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of a tax upon any of the REMICs provided for herein.

                                   ARTICLE IX

                                   TERMINATION

      SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.

      Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the exercise by the Trustee or the
NIMs Insurer of an Optional Termination; and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last


                                      -98-
<PAGE>

survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the
United States to the Court of St. James's, living on the date hereof and (ii)
the Latest Possible Maturity Date.

      Any termination pursuant to clause (a) above shall be effected by the
auction by the Trustee of all of the Mortgage Loans and REO Properties via a
solicitation of bids from at least three (3) bidders, each of whom shall be a
nationally recognized participant in mortgage finance. The Trustee shall accept
the highest such bid, provided that such bid equals or exceeds the amount
described in clause (i) of the definition of "Optional Termination Price." If
the Trustee elects not to exercise its right to effect an Optional Termination,
the NIMs Insurer may, at its option, terminate the Trust Fund by purchasing all
of the Mortgage Loans and REO Properties at the price equal to the amount
described in clause (ii) of the definition of "Optional Termination Price."
Notwithstanding anything to the contrary herein, the Optional Termination Amount
paid by either the Trustee or the NIMs Insurer shall be deposited by the Trustee
directly into the Certificate Account immediately upon Optional Termination. Any
Optional Termination Amount to be paid by the NIMs Insurer may be paid by the
NIMs Insurer to the Trustee for deposit into the Certificate Account.

      The right of the Trustee or the NIMs Insurer to effect an Optional
Termination pursuant to clause (a) above shall be conditioned upon the aggregate
Stated Principal Balance of the Mortgage Loans, at the time of any such
repurchase, aggregating ten (10) percent or less of the Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date.

      The Class R Certificateholder hereby assigns to the Class C
Certificateholders that portion of any amount received by the Class R
Certificate upon an Optional Termination of the trust created hereunder that is
attributable to clause (i)(C) of the definition of Optional Termination Price
and required to cover what would otherwise be a shortfall in the amounts
described in clause (i)(C) of the definition of Optional Termination Price.

      SECTION 9.02. Final Distribution on the Certificates.

      If on any Determination Date, (i) the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder and the NIMs Insurer or
(ii) the Trustee determines that a Class of Certificates shall be retired after
a final distribution on such Class, the Trustee shall notify the
Certificateholders within seven (7) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the Certificates at the office of the
Trustee. If the Trustee elects to terminate the Trust Fund pursuant to clause
(a) of Section 9.01, at least 10 days prior to the date notice is to be mailed
to the affected Certificateholders, the Trustee shall notify the Depositor and
the Servicer of the date such electing party intends to terminate the Trust Fund
and of the applicable repurchase price of the Mortgage Loans and REO Properties.

      Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed not earlier than the 10th day and no
later than the 15th day of the month immediately preceding the month of such
final distribution. Any such notice shall specify (a) the Distribution Date upon
which final distribution on the Certificates will be made upon presentation and
surrender of Certificates at the office therein designated, (b) the location of
the office or agency at which such presentation and surrender must be made, and
(c) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will


                                      -99-
<PAGE>

give such notice to the NIMs Insurer and each Rating Agency at the time such
notice is given to Certificateholders.

      In the event such notice is given, the Servicer shall cause all funds in
the Collection Account to be deposited in the Certificate Account on the
Business Day prior to the applicable Distribution Date in an amount equal to the
final distribution in respect of the Certificates. Upon such final deposit with
respect to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the Trustee or the NIMs
Insurer, as applicable, the Mortgage Files for the Mortgage Loans.

      Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.

      In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee 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 all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholders of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.

      SECTION 9.03. Additional Termination Requirements.

      (a) In the event the Trustee or the NIMs Insurer exercises its option to
effect an Optional Termination as provided in Section 9.01, the Trust Fund shall
be terminated in accordance with the following additional requirements, unless
the Trustee has been supplied with an Opinion of Counsel, at the expense of the
Trustee or the NIMs Insurer, as applicable, to the effect that the failure of
the Trust Fund to comply with the requirements of this Section 9.03 will not (i)
result in the imposition of taxes on "prohibited transactions" of any of the
REMICs provided for herein as defined in section 860F of the Code, or (ii) cause
any of the REMICs provided for herein to fail to qualify as a REMIC at any time
that any Certificates are outstanding:

            (i) The Depositor shall establish a 90-day liquidation period and
      notify the Trustee thereof, which shall in turn specify the first day of
      such period in a statement attached to the final tax returns of each of
      the REMICs provided for herein pursuant to Treasury Regulation Section
      1.860F-1. The Depositor shall satisfy all the requirements of a qualified
      liquidation under Section 860F of the Code and any regulations thereunder,
      as evidenced by an Opinion of Counsel obtained at the expense of the
      Trustee or the NIMs Insurer, as applicable;

            (ii) During such 90-day liquidation period, and at or prior to the
      time of making the final payment on the Certificates, the Depositor as
      agent of the Trustee shall sell all of the assets of the Trust Fund for
      cash; and


                                     -100-
<PAGE>

            (iii) At the time of the making of the final payment on the
      Certificates, the Trustee shall distribute or credit, or cause to be
      distributed or credited, to the Class R Certificateholders all cash on
      hand (other than cash retained to meet outstanding claims known to the
      Trustee), and the Trust Fund shall terminate at that time, whereupon the
      Trustee shall have no further duties or obligations with respect to sums
      distributed or credited to the Class R Certificateholders.

      (b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.

      (c) The Trustee as agent for each REMIC hereby agrees to adopt and sign
such a plan of complete liquidation upon the written request of the Depositor,
and the receipt of the Opinion of Counsel referred to in Section 9.03(b)(i) and
to take such other action in connection therewith as may be reasonably requested
by the Depositor.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

      SECTION 10.01. Amendment.

      This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, with the consent of the NIMs Insurer and without the
consent of any of the Certificateholders to cure any ambiguity, to correct or
supplement any provisions herein, or to make such other provisions with respect
to matters or questions arising under this Agreement, as shall not be
inconsistent with any other provisions herein if such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder; provided, however, that any such amendment
shall be deemed not to adversely affect in any material respect the interests of
the Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates, it being understood
and agreed that any such letter in and of itself will not represent a
determination as to the materiality of any such amendment and will represent a
determination only as to the credit issues affecting any such rating.

      Notwithstanding the foregoing, without the consent of the
Certificateholders but with the consent of the NIMs Insurer, the Depositor, the
Servicer and the Trustee may at any time and from time to time amend this
Agreement to modify, eliminate or add to any of its provisions to such extent as
shall be necessary or appropriate to maintain the qualification of any of the
REMICs provided for herein as REMICs under the Code or to avoid or minimize the
risk of the imposition of any tax on the Trust Fund or any of the REMICs
provided for herein pursuant to the Code that would be a claim against the Trust
Fund at any time prior to the final redemption of the Certificates, provided
that the Trustee and the NIMs Insurer have been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such amendment but in
any case shall not be an expense of the Trustee, to the effect that such action
is necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.

      This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Trustee and the Holders of each Class of Certificates affected
thereby evidencing not less than 66 2/3% of the Voting Rights of such Class,
with the consent of the NIMs Insurer, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such


                                     -101-
<PAGE>

amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments required to be distributed on any Certificate without the consent of
the Holder of such Certificate, (ii) adversely affect in any material respect
the interests of the Holders of any Class of Certificates in a manner other than
as described in (i), without the consent of the Holders of Certificates of such
Class evidencing 66 2/3% or more of the Voting Rights of such Class or (iii)
reduce the aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment without the consent of the Holders of
all such Certificates then outstanding.

      Notwithstanding anything to the contrary in this Agreement, this Agreement
may be amended from time to time by the Depositor, the Servicer and the Trustee
with the consent of the NIMs Insurer and Certificateholders evidencing not less
than 66 2/3% of the Voting Rights of each Class of Certificates (excluding the
Voting Rights of the Depositor, its Affiliates or its agents) for the purpose of
significantly changing the Permitted Activities of the Trust.

      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, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of any
tax on the Trust Fund, any of the REMICs provided for herein or the
Certificateholders or cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding. A copy of
such Opinion of Counsel shall be provided to the NIMs Insurer.

      Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder, the NIMs Insurer and
each Rating Agency.

      It shall not be necessary for the consent of Certificateholders under this
Section 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.

      Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.

      The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.

      SECTION 10.02. Counterparts.

      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.


                                     -102-
<PAGE>

      SECTION 10.03. Governing Law.

      THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.

      SECTION 10.04. Intention of Parties.

      It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.

      The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, 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 the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.

      SECTION 10.05. Notices.

      (a) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency and the NIMs Insurer with respect to each of the following of
which it has actual knowledge:

            (i) Any material change or amendment to this Agreement;

            (ii) The occurrence of any Event of Default that has not been cured;

            (iii) The resignation or termination of the Trustee or the Servicer
      and the appointment of any successor;

            (iv) The repurchase or substitution of Mortgage Loans pursuant to
      Sections 2.02, 2.03 and 3.12;

            (v) The final payment to Certificateholders; and

            (vi) Any change in the location of the Certificate Account or the
      Certificate Account.


                                     -103-
<PAGE>

      The Trustee shall promptly furnish or make available to each Rating Agency
copies of the following:

            (i) Each report to Certificateholders described in Section 4.05;

            (ii) Each annual statement as to compliance described in Section
      3.17; and

            (iii) Each annual independent public accountants' servicing report
      described in Section 3.18.

      (b) All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor, Merrill Lynch Mortgage Investors, Inc. 250 Vesey Street, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Trustee, Wells Fargo Bank Minnesota, National
Association, P.O. Box 98, Columbia, Maryland, 21046, Attention: Client Manger -
MLMI Series 2003-WMC1, with a copy to Wells Fargo Bank Minnesota, National
Association, 9062 Old Annapolis Road, Columbia, Maryland 21045, Attention:
Client Manager - MLMI Series 2003-WMC1; (c) in the case of the Trustee, Wells
Fargo Bank Minnesota, National Association, P.O. Box 98, Columbia, Maryland,
21046, Attention: Client Manger - MLMI Series 2003-WMC1, with a copy to Wells
Fargo Bank Minnesota, National Association, 9062 Old Annapolis Road, Columbia,
Maryland 21045, Attention: Client Manager - MLMI Series 2003-WMC1; (d) in the
case of the Rating Agencies, (i) Standard & Poor's Ratings Services, A Division
of The McGraw-Hill Companies, Inc., 55 Water Street, New York, New York 10041;
(ii) Fitch, Inc. 1 State Street Plaza, New York, New York 10004; (e) in the case
of NIMs Insurer, Radian Insurance Inc., 1601 Market Street, Philadelphia,
Pennsylvania 19103, Attention: General Counsel; (f) in the case of the Credit
Risk Manager, The Murrayhill Company, 1670 Broadway, Suite 3450, Denver,
Colorado 80202; (g) in the case of the Servicer, HomEq Servicing Corporation,
4837 Watt Avenue, North Highlands, California 95660-5108, Attention Sales and
Acquisitions and HomEq Servicing Corporation, 1620 East Roseville Parkway,
Roseville, California 95661, Attention: Legal Department; and in the case of any
of the foregoing persons, such other addresses as may hereafter be furnished by
any such persons to the other parties to this Agreement. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.

      SECTION 10.06. 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.

      SECTION 10.07. Assignment.

      Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.

      SECTION 10.08. Limitation on Rights of Certificateholders.

      The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or


                                     -104-
<PAGE>

to take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.

      No Certificateholder shall have any right to vote (except as 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
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.

      No Certificateholder shall have any right by virtue or by availing itself
of any provisions 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 a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to 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 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
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates and/or the NIMs
Insurer, or to obtain or seek to obtain priority over or preference to any other
such Holder and/or the NIMs Insurer or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 10.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.

      SECTION 10.09. Inspection and Audit Rights.

      The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the NIMs Insurer, the Depositor or the Trustee during the
Servicer's normal business hours, to examine all the books of account, records,
reports and other papers of the Servicer relating to the Mortgage Loans, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants selected by the NIMs Insurer, Depositor or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees, agents, counsel and independent
public accountants (and by this provision the Servicer hereby authorizes such
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the NIMs
Insurer, Depositor or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall be
borne by the Servicer.

      SECTION 10.10. Certificates Nonassessable and Fully Paid.

      It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.


                                     -105-
<PAGE>

      SECTION 10.11. Third Party Rights.

      The NIMs Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement.

      SECTION 10.12. Additional Rights of the NIMs Insurer.

      (a) Each party to this Agreement, any agent thereof and any successor
thereto shall furnish to the NIMs Insurer a copy of any notice, direction,
demand, opinion, schedule, list, certificate, report, statement, filing,
information, data or other communication provided by it or on its behalf to any
other Person pursuant to this Agreement at the same time, in the same form and
in the same manner as such communication is so provided and shall address or
cause such communication to be addressed to the NIMs Insurer in addition to any
other addressee thereof. The Servicer shall cause the NIMs Insurer to be an
addressee of any report furnished pursuant to this Agreement.

      (b) Wherever in this Agreement there shall be a requirement that there be
no downgrade, reduction, withdrawal or qualification of or other effect on the
rating of any Class of Certificates by any Rating Agency as of any date, there
also shall be deemed to be a requirement that there be no such effect on any
class of notes issued pursuant to the Indenture and guaranteed by the NIMs
Insurer as of such date. In addition, unless there exists a continuance of any
failure by the NIMs Insurer to make a required payment under the policy insuring
the NIM Notes (such event, a "NIMs Insurer Default"), wherever in this Agreement
there shall be a requirement that any Person or any communication, object or
other matter be acceptable or satisfactory to or otherwise receive the consent
or other approval of any other Person (whether as a condition to the eligibility
of such Person to act in any capacity, as a condition to any circumstance or
state of affairs related to such matter, or otherwise), there also shall be
deemed to be a requirement that such Person or matter be approved in writing by
the NIMs Insurer, which approval shall not be unreasonably withheld or delayed.

      SECTION 10.13. Credit Risk Manager

      (a) For and on behalf of the Depositor, the Credit Risk Manager will
provide reports and recommendations concerning certain delinquent and defaulted
Mortgage Loans, and as to the collection of any Prepayment Charges with respect
to the Mortgage Loans. Upon their request, the Depositor shall forward copies of
such reports to the Trustee and the NIMs Insurer. Such reports and
recommendations will be based upon information provided to the Credit Risk
Manager pursuant to the Credit Risk Management Agreement, and the Credit Risk
Manager shall look solely to the related Servicer for all information and data
(including loss and delinquency information and data) relating to the servicing
of the Mortgage Loans. Upon any termination of the Credit Risk Manager or the
appointment of a successor Credit Risk Manager, the Depositor shall give written
notice thereof to the Servicer, the Trustee, and each Rating Agency.
Notwithstanding the foregoing, the termination of the Credit Risk Manager
pursuant to this Section shall not become effective until the appointment of a
successor Credit Risk Manager.

      (b) Neither the Credit Risk Manager, nor any of its directors, officers,
employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement, in
reliance upon information provided by the Servicer under the applicable Credit
Risk Management Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Credit Risk Manager or any such person
against liability that would otherwise be imposed by reason of willful
malfeasance or bad faith in its performance of its duties. The Credit Risk
Manager and any director, officer, employee, or agent of the Credit Risk Manager
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, and may
rely in


                                     -106-
<PAGE>

good faith upon the accuracy of information furnished by the Servicer pursuant
to the applicable Credit Risk Management Agreement in the performance of its
duties thereunder and hereunder.

      (c) The Credit Risk Manager may be removed as Credit Risk Manager by
Certificateholders holding not less than 66 2/3% of the Voting Rights in the
Trust, in the exercise of its or their sole discretion. The Certificateholders
shall provide written notice of the Credit Risk Manager's removal to the
Trustee. Upon receipt of such notice, the Trustee shall provide written notice
to the Credit Risk Manager of its removal, which shall be effective upon receipt
of such notice by the Credit Risk Manager.


                                     -107-
<PAGE>

      IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.

                               MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                  as Depositor

                               By:
                                   ---------------------------------------------
                               Name: Matthew Whalen
                               Title: President


                               HOMEQ SERVICING CORPORATION,
                                  as Servicer

                               By:
                                   ---------------------------------------------
                               Name: Arthur Q. Lyon
                               Title:  President


                               WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                                  not in its individual capacity,
                                  but solely as Trustee

                               By:
                                   ---------------------------------------------
                               Name: Amy Doyle
                               Title: Vice President

<PAGE>

Solely for purposes of Section 10.13,
accepted and agreed to by:

THE MURRAYHILL COMPANY


By:
   ------------------------------------
   Name:
   Title:

<PAGE>

                                    EXHIBIT A

                            SPECIMENS OF CERTIFICATES

                              INTENTIONALLY OMITTED


                                      A-1
<PAGE>

                                   EXHIBIT B-1

                             MORTGAGE LOAN SCHEDULE

                              INTENTIONALLY OMITTED


                                     B-1-1
<PAGE>

                                   EXHIBIT B-2

                         GROUP A MORTGAGE LOAN SCHEDULE

                              INTENTIONALLY OMITTED


                                     B-2-1
<PAGE>

                                   EXHIBIT B-3

                         GROUP B MORTGAGE LOAN SCHEDULE

                              INTENTIONALLY OMITTED


                                     B-4-1
<PAGE>

                                    EXHIBIT C

                                   [RESERVED]


                                      C-1
<PAGE>

                                    EXHIBIT D

                          FORM OF TRUSTEE CERTIFICATION

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Radian Guaranty Inc.
1601 Market Street
Philadelphia, Pennsylvania 19103

HomEq Servicing Corporation
1620 East Roseville Parkway
Roseville, California 95661

Re:   Pooling and Servicing Agreement dated as of February 1, 2003 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, HomEq Servicing Corporation,
      as servicer and Wells Fargo Bank Minnesota, National Association, as
      trustee, Merrill Lynch Mortgage Investors Trust, Mortgage Loan
      Asset-Backed Certificates, Series 2003-WMC1

Ladies and Gentlemen:

      In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:

      (i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;

      (ii) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and

      (iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.

      The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that the Mortgage Loan number and
the name of the Mortgagor in each Mortgage File conform to the respective
Mortgage Loan number and name listed on the Mortgage Loan Schedule and (ii) the
existence in each Mortgage File of each of the documents listed in subparagraphs


                                      D-1
<PAGE>

(i)(A) through (G), inclusive, of Section 2.01 in the Agreement. The Trustee
makes no representations or warranties as to the validity, legality,
recordability, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage Loan or the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan.

      Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                               WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                               as Trustee


                               By: __________________________________
                               Name: ________________________________
                               Title: _______________________________


                                      D-2
<PAGE>

                                    EXHIBIT E

                           FORM OF TRANSFEREE'S LETTER
        MERRILL LYNCH MORTGAGE INVESTORS, INC. MORTGAGE LOAN ASSET-BACKED
                         CERTIFICATES, SERIES 2003-WMC1

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland   21045
Attention: Corporate Trust Services - MLMI 2003-WMC1

Ladies and Gentlemen:

      We propose to purchase Merrill Lynch Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2003-WMC1, Class R, described in the
Prospectus Supplement, dated March 7, 2003, and Prospectus, dated January 29,
2003.

      1. We certify that (a) we are not a disqualified organization and (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.

      2. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class R Certificate, we may incur tax liabilities in excess of any
cash flows generated by the Class R Certificate, and (d) we intend to pay any
taxes associated with holding the Class R Certificate as they become due and (e)
we will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.

      3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:(1)

----------
(1)   Check appropriate box and if necessary fill in the name of the
      Transferee's nominee.

<PAGE>

            ______      The Class R Certificate will be registered in our name.

            ______      The Class R Certificate will be held in the name of our
                        nominee, _________________, which is not a disqualified
                        organization.

      4. We certify that we are not an employee benefit plan subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
a plan within the meaning of Section 4975 of the Code or a plan subject to
federal, state or local law materially similar to the foregoing provisions of
ERISA and the Code (each, a "Plan"), and are not directly or indirectly
purchasing the Class R Certificate on behalf of, as investment manager of, as
named fiduciary of, as trustee of or with the assets of a Plan or directly or
indirectly purchasing the Class R Certificate with the assets of any insurance
company separate account or general account containing any "plan assets" or of
any Plan.

      5. We certify that (i) we are a U.S. person or (ii) we will hold the Class
R Certificate in connection with the conduct of a trade or business within the
United States and have furnished the transferor, the Trustee and the Trustee
with a duly completed and effective Internal Revenue Service Form W-8ECI or
successor form at the time and in the manner required by the Code; for this
purpose the term "U.S. person" means a citizen or resident of the United States,
a corporation, or partnership (unless, in the case of a partnership, Treasury
regulations are adopted that provide otherwise) created or organized in or under
the laws of the United States, any State thereof or the District of Columbia,
including an entity treated as a corporation or partnership for federal income
tax purposes, an estate whose income is subject to United States federal income
tax regardless of the source of its income, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more such U.S. persons have the authority to control all
substantial decisions of the trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons. We agree that any breach by us
of this certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.

      6. We agree that in the event that at some future time we wish to transfer
any interest in the Class R Certificate, we will transfer such interest in the
Class R Certificate only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in the Class R Certificate on
behalf of a disqualified organization, (ii) is a U.S. person or will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and will furnish us, the Trustee and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code and (iii) has delivered to
the Trustee and the Trustee a letter in the form of this letter (including the
affidavit appended hereto) and, we will provide the Trustee and the Trustee a
written statement substantially in the form of Exhibit E-2 to the Agreement.

      7. We hereby designate _______________________ as our fiduciary to act as
the tax matters person for each of the REMICs provided for in the Agreement.

                                     Very truly yours,

                                     [PURCHASER]


                                      D-2
<PAGE>


                                     By:___________________________________
                                        Name:
                                        Title:

Accepted as of __________ __, 200__

MERRILL LYNCH MORTGAGE INVESTORS, INC.


By:_____________________________
   Name:
   Title:


                                      D-3
<PAGE>

                                   APPENDIX A

                                        Affidavit pursuant to (i) Section
                                        860E(e)(4) of the Internal Revenue Code
                                        of 1986, as amended, and (ii) certain
                                        provisions of the Pooling and Servicing
                                        Agreement

Under penalties of perjury, the undersigned declares that the following is true:

(1)   He or she is an officer of _________________________ (the "Transferee"),

(2)   the Transferee's Employer Identification number is __________,

(3)   the Transferee is not a "disqualified organization" (as defined below),
      has no plan or intention of becoming a disqualified organization, and is
      not acquiring any of its interest in the Merrill Lynch Mortgage Investors
      Trust, Mortgage Loan Asset-Backed Certificates, Series 2003-WMC1, Class R
      on behalf of a disqualified organization or any other entity,

(4)   unless Merrill Lynch Mortgage Investors, ("MLMI") has consented to the
      transfer to the Transferee by executing the form of Consent affixed as
      Appendix B to the Transferee's Letter to which this Certificate is affixed
      as Appendix A, the Transferee is a "U.S. person" (as defined below),

(5)   that no purpose of the transfer is to avoid or impede the assessment or
      collection of tax,

(6)   the Transferee has historically paid its debts as they became due,

(7)   the Transferee intends, and believes that it will be able, to continue to
      pay its debts as they become due in the future,

(8)   the Transferee understands that, as beneficial owner of the Class R
      Certificate, it may incur tax liabilities in excess of any cash flows
      generated by the Class R Certificate,

(9)   the Transferee intends to pay any taxes associated with holding the Class
      R Certificate as they become due,

(10)  the Transferee consents to any amendment of the Pooling and Servicing
      Agreement that shall be deemed necessary by MLMI (upon advice of counsel)
      to constitute a reasonable arrangement to ensure that the Class R
      Certificate will not be owned directly or indirectly by a disqualified
      organization, and

(11)  IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the transfer
      is not a direct or indirect transfer of the Class R Certificate to a
      foreign permanent establishment or fixed base (within the meaning of an
      applicable income tax treaty) of the Transferee, and as to each of the
      residual interests represented by the Class R Certificate, the present
      value of the anticipated tax liabilities associated with holding such
      residual interest does not exceed the sum of:


                                      D-4
<PAGE>

      (A)   the present value of any consideration given to the Transferee to
            acquire such residual interest;

      (B)   the present value of the expected future distributions on such
            residual interest; and

      (C)   the present value of the anticipated tax savings associated with
            holding such residual interest as the related REMIC generates
            losses.

      For purposes of this declaration, (i) the Transferee is assumed to pay tax
      at a rate equal to the highest rate of tax specified in Section 11(b)(1)
      of the Code, but the tax rate specified in Section 55(b)(1)(B) of the Code
      may be used in lieu of the highest rate specified in Section 11(b)(1) of
      the Code if the Transferee has been subject to the alternative minimum tax
      under Section 55 of the Code in the preceding two years and will compute
      its taxable income in the current taxable year using the alternative
      minimum tax rate, and (ii) present values are computed using a discount
      rate equal to the Federal short-term rate prescribed by Section 1274(d) of
      the Code for the month of the transfer and the compounding period used by
      the Transferee;]

[(11) (A)   at the time of the transfer, and at the close of each of the
            Transferee's two fiscal years preceding the Transferee's fiscal year
            of transfer, the Transferee's gross assets for financial reporting
            purposes exceed $100 million and its net assets for financial
            reporting purposes exceed $10 million; and

      (B)   the Transferee is an eligible corporation as defined in Treasury
            regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
            any subsequent transfer of the Class R Certificate will be to
            another eligible corporation in a transaction that satisfies
            Treasury regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
            1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and such transfer will not be
            a direct or indirect transfer to a foreign permanent establishment
            (within the meaning of an applicable income tax treaty) of a
            domestic corporation.

For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]

(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another U.S.
taxpayer.

For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary


                                      D-5
<PAGE>

supervision over the administration of such trust, and one or more such U.S.
Persons have the authority to control all substantial decisions of such trust,
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons).

__________________________________


By: ______________________________

__________________________________

      Address of Investor for receipt of distribution:

      Address of Investor for receipt of tax information:

      (Corporate Seal)

      Attest:


__________________________________
__________________________________, Secretary


                                      D-6
<PAGE>

      Personally appeared before me the above-named ______________, known or
      proved to me to be the same person who executed the foregoing instrument
      and to be the _______ of the Investor, and acknowledged to me that he
      executed the same as his free act and deed and the free act and deed of
      the Investor.

      Subscribed and sworn before me this day of

               , 200_ .

__________________________________
         Notary Public

       County of ____________________
       State of _____________________
       My commission expires the ________ day of ____________


                                               By: __________________________
                                                   Name:   __________________
                                                   Title:  __________________

Dated: _____________


                                      D-7
<PAGE>

                                   EXHIBIT E-2

                         FORM OF TRANSFEROR'S AFFIDAVIT
        MERRILL LYNCH MORTGAGE INVESTORS, INC. MORTGAGE LOAN ASSET-BACKED
                         CERTIFICATES, SERIES 2003-WMC1

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - MLMI 2003-WMC1

Re:   Merrill Lynch Mortgage Investors Trust Mortgage Loan Asset-Backed
      Certificates, Series 2003-WMC1

            _______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true, and has no reason to believe that the
Transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to the
Class R Certificate referred to in the attached affidavit. In addition, the
Transferor has conducted a reasonable investigation at the time of the transfer
and found that the Transferee had historically paid its debts as they came due
and found no significant evidence to indicate that the Transferee will not
continue to pay its debts as they become due.

                                     Very truly yours,


                                     ______________________________

                                     Name:

                                     Title:


                                      E-1
<PAGE>

                                    EXHIBIT F

                       FORM OF TRANSFEROR CERTIFICATE FOR
                        CLASS P AND CLASS C CERTIFICATES

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - MLMI 2003-WMC1

RE:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2003-WMC1

Ladies and Gentlemen:

      In connection with our disposition of the Class [C or P] Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act and
(c) if we are disposing of a Class [C or P] Certificate, we have no knowledge
the Transferee is not a Permitted Transferee. All capitalized terms used herein
but not defined herein shall have the meanings assigned to them in the Pooling
and Servicing Agreement dated as of February 1, 2003, among Merrill Lynch
Mortgage, Inc., as depositor, HomEq Servicing Corporation, as servicer and Wells
Fargo Bank Minnesota, National Association, as trustee.

                                            Very truly yours,


                                            _______________________________
                                            Name of Transferor


                                            By: ___________________________
                                            Name:
                                            Title


                                      F-1
<PAGE>

                                    EXHIBIT G

                            FORM OF INVESTMENT LETTER
                              (ACCREDITED INVESTOR)

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - MLMI 2003-WMC1

Re:   Pooling and Servicing Agreement dated as of February 1, 2003 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, HomEq Servicing Corporation,
      as servicer and Wells Fargo Bank Minnesota, National Association, as
      trustee, Merrill Lynch Mortgage Investors Trust, Mortgage Loan
      Asset-Backed Certificates, Series 2003-WMC1 [CLASS C OR P]

Ladies and Gentlemen:

      ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Mortgage Loan Asset-Backed Certificates, Series 2003-WMC1,
[CLASS C OR P] (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of February 1, 2003 (the "Pooling and Servicing Agreement"),
among Merrill Lynch Mortgage Investors, Inc., as depositor (the "Depositor"),
HomEq Servicing Corporation, as servicer (the "Servicer") and Wells Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"). [THE PURCHASER
INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF
____________________, AS NOMINEE FOR _________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.

      For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

      1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.

      2. The Certificates will bear a legend to the following effect:

      THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
      (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT,
      DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE


                                      G-1
<PAGE>

      TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO
      REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
      SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER PROVISIONS
      OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF
      THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE RECEIVED, IN
      FORM AND SUBSTANCE SATISFACTORY TO THE SERVICER (A) AN INVESTMENT LETTER
      FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS FROM THE TRANSFEROR
      REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.

      NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
      HAVE RECEIVED EITHER (I) A REPRESENTATION LETTER FROM THE TRANSFEREE OF
      THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN
      EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
      SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE CODE OR
      ANY APPLICABLE FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") (EACH, A
      "PLAN") MATERIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA AND THE
      CODE, AND IS NOT DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON
      BEHALF OF, AS INVESTMENT MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF
      OR WITH ASSETS OF A PLAN OR, IN THE CASE OF AN INSURANCE COMPANY, THE
      ASSETS OF ANY SEPARATE ACCOUNTS CONTAINING ANY "PLAN ASSETS" PURSUANT TO
      THE DEPARTMENT OF LABOR REGULATIONS SET FORTH IN 29 CFR Section 2510.3-101
      TO EFFECT SUCH ACQUISITION OR (B) IF THE TRANSFEREE IS AN INSURANCE
      COMPANY, A REPRESENTATION LETTER THAT THE TRANSFEREE IS AN INSURANCE
      COMPANY THAT IS PURCHASING THE CERTIFICATE WITH FUNDS CONTAINED IN AN
      "INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION
      V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60
      FED. REG. 35925 (JULY 12, 1995), AND THE PURCHASE AND HOLDING OF THE
      CERTIFICATE IS COVERED UNDER SECTIONS I AND III OF PTCE 95-60, OR (II) AN
      OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE AND HOLDING OF THE
      CERTIFICATE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER ERISA, THE
      CODE OR SIMILAR LAW AND WILL NOT SUBJECT THE TRUSTEE, THE NIMS INSURER OR
      THE TRUSTEE TO ANY OBLIGATION IN ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN
      THE POOLING AND SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE
      AN EXPENSE OF THE TRUSTEE, THE NIMS INSURER OR THE TRUSTEE.

      3. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY]**/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.

      4. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Securities Act.


                                      G-2
<PAGE>

      5. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.

----------
**/   Not required of a broker/dealer purchaser.


                                      G-3
<PAGE>

      6. The Purchaser either (A) is not an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or a plan within the meaning of Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code") or a plan subject to federal state or
local law materially similar to the foregoing provisions of ERISA and the Code
("Similar Law") (each, a "Plan"), and is not directly or indirectly purchasing
any Certificate on behalf of, as investment manager of, as named fiduciary of,
as trustee of or with assets of a Plan or directly or indirectly purchasing any
certificates with the assets of any insurance company separate account
containing any "plan assets" or of any Plan, (B) is an insurance company that is
purchasing the Certificate with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12, 1995), and
the purchase and holding of the Certificate is covered under Sections I and III
of PTCE 95-60, or (C) herewith delivers to the Trustee an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the purchase and holding of the Certificate by the
Purchaser will not result in a prohibited transaction under ERISA, the Code or
Similar Law and will not subject the Trustee, the NIMs Insurer or the Trustee to
any obligation in addition to those expressly undertaken in the Pooling and
Servicing Agreement, which Opinion of Counsel shall not be an expense of the
Trustee, the NIMs Insurer or the Trustee.

      7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit [H] to the Pooling and Servicing Agreement.

      8. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.

                                         Very truly yours,

                                         [PURCHASER]


                                         By:_______________________________
                                              Name:
                                              Title:


                                      G-4
<PAGE>

                                    EXHIBIT H

                       FORM OF RULE 144A INVESTMENT LETTER
                         (QUALIFIED INSTITUTIONAL BUYER)

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - MLMI 2003-WMC1

Re:   Pooling and Servicing Agreement dated as of February 1, 2003 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, HomEq Servicing Corporation,
      as servicer and Wells Fargo Bank Minnesota, National Association, as
      trustee, Merrill Lynch Mortgage Investors Trust, Mortgage Loan
      Asset-Backed Certificates, Series 2003-WMC1 [CLASS C OR P]

Ladies and Gentlemen:

      ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Mortgage Loan Asset-Backed Certificates, Series 2003-WMC1,
[CLASS C OR P] (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of February 1, 2003 (the "Pooling and Servicing Agreement"),
among Merrill Lynch Mortgage Investors, Inc., as depositor (the "Depositor"),
HomEq Servicing Corporation, as servicer (the "Servicer"), and Wells Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"). [THE PURCHASER
INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF
____________________, AS NOMINEE FOR __________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.

      For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

      In connection with our acquisition of the above Transferred Certificates
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d) we either (i) are not an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") or a
plan subject to federal, state or local law materially similar to the foregoing
provisions of ERISA and the Code ("Similar Law") (each, a "Plan"), nor are we
directly or indirectly purchasing any Certificate on behalf of, as investment
manager of, as named fiduciary of, as


                                      H-1
<PAGE>

trustee of or with assets of a Plan or directly or indirectly purchasing any
certificates with the assets of any insurance company separate account
containing any "plan assets" or of any Plan, (ii) are an insurance company that
is purchasing the Transferred Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12,
1995), and the purchase and holding of the Certificates is covered under
Sections I and III of PTCE 95-60, or (iii) herewith have delivered to the
Trustee an Opinion of Counsel satisfactory to the Trustee, and upon which the
Trustee shall be entitled to rely, to the effect that the purchase and holding
of the Transferred Certificates by the Purchaser will not result in a prohibited
transaction under ERISA, the Code or Similar Law and will not subject the
Trustee, the NIMs Insurer or the Trustee to any obligation in addition to those
expressly undertaken in the Pooling and Servicing Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the NIMs Insurer or the Trustee,
(e) we have not, nor has anyone acting on our behalf offered, transferred,
pledged, sold or otherwise disposed of the Certificates, any interest in the
Certificates or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Certificates, any interest
in the Certificates or any other similar security from, or otherwise approached
or negotiated with respect to the Certificates, any interest in the Certificates
or any other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Certificates
under the Securities Act or that would render the disposition of the
Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(f) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act and have completed one of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale of the Transferred Certificates to us is being made in reliance on
Rule 144A. We are acquiring the Transferred Certificates for our own account or
for resale pursuant to Rule 144A and further understand that such Certificates
may be resold, pledged or transferred only (i) to a person reasonably believed
by us, based upon certifications of such purchaser or information we have in our
possession, to be a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer to whom notice is
given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the
Securities Act.

      We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.

                                       Very truly yours,

                                       [PURCHASER]


                                       By:______________________________
                                            Name:
                                            Title:


                                      H-2
<PAGE>

                                                                         ANNEX 1

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]

      The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

      1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.

      2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________*/ in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.

            ____        Corporation, etc. The Buyer is a corporation (other than
                        a bank, savings and loan association or similar
                        institution), Massachusetts or similar business trust,
                        partnership, or charitable organization described in
                        Section 501(c)(3) of the Internal Revenue Code of 1986,
                        as amended.

            ____        Bank. The Buyer (a) is a national bank or banking
                        institution organized under the laws of any State,
                        territory or the District of Columbia, the business of
                        which is substantially confined to banking and is
                        supervised by Federal, State or territorial banking
                        commission or similar official or is a foreign bank or
                        equivalent institution, and (b) has an audited net worth
                        of at least $25,000,000 as demonstrated in its latest
                        annual financial statements, a copy of which is attached
                        hereto.

----------
*     Buyer must own and/or invest on a discretionary basis at least
      $100,000,000 in securities unless Buyer is a dealer, and, in that case,
      Buyer must own and/or invest on a discretionary basis at least $10,000,000
      in securities.

      ____ Savings and Loan. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association or
similar institution, which is supervised and examined by a State or Federal
authority having supervision over such institution or is a foreign savings and
loan association or equivalent institution and (b) has an audited net worth of
at least $25,000,000 as demonstrated in its latest annual financial statements,
a copy of which is attached hereto.

            ____        Broker-dealer. The Buyer is a dealer registered pursuant
                        to Section 15 of the Securities Exchange Act of 1934, as
                        amended.

            ____        Insurance Company. The Buyer is an insurance company
                        whose primary and predominant business activity is the
                        writing of insurance or the reinsuring of risks


                                      H-3
<PAGE>

                        underwritten by insurance companies and which is subject
                        to supervision by the insurance commissioner or a
                        similar official or agency of the State, territory or
                        the District of Columbia.

            ____        State or Local Plan. The Buyer is a plan established and
                        maintained by a State, its political subdivisions, or
                        any agency or instrumentality of the State or its
                        political subdivisions, for the benefit of its
                        employees.

            ____        ERISA Plan. The Buyer is an employee benefit plan
                        subject to Title I of the Employee Retirement Income
                        Security Act of 1974, as amended.

            ____        Investment Advisor. The Buyer is an investment advisor
                        registered under the Investment Advisors Act of 1940, as
                        amended.

            ____        Small Business Investment Company. Buyer is a small
                        business investment company licensed by the U.S. Small
                        Business Administration under Section 301(c) or (d) of
                        the Small Business Investment Act of 1958, as amended.

            ____        Business Development Company. Buyer is a business
                        development company as defined in Section 202(a)(22) of
                        the Investment Advisors Act of 1940, as amended.

      3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.

      4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

      5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

      6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as


                                      H-4
<PAGE>

provided above, the Buyer agrees that it will furnish to such parties updated
annual financial statements promptly after they become available.


                                   By:______________________________
                                      Name:
                                      Title:

                                   Date:____________________________


                                      H-5
<PAGE>

                                                                         ANNEX 2

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]

      The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

      1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.

      2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

            ____        The Buyer owned $___________ in securities (other than
                        the excluded securities referred to below) as of the end
                        of the Buyer's most recent fiscal year (such amount
                        being calculated in accordance with Rule 144A).

            ____        The Buyer is part of a Family of Investment Companies
                        which owned in the aggregate $__________ in securities
                        (other than the excluded securities referred to below)
                        as of the end of the Buyer's most recent fiscal year
                        (such amount being calculated in accordance with Rule
                        144A).

      3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

      4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

      5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.


                                      H-6
<PAGE>

      6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.


                                           By:__________________________________
                                                Name:
                                                Title:

                                           IF AN ADVISER:

                                           _____________________________________
                                           Print Name of Buyer

                                           Date:________________________________


                                      H-7
<PAGE>

                                    EXHIBIT I

                        REQUEST FOR RELEASE OF DOCUMENTS

To:   Wells Fargo Bank Minnesota, National Association
      1015  10th Avenue S.E.
      Minneapolis, Minnesota  55414-0031
      Attention: Inventory Control
      [and/or its designee]

Re:   Pooling and Servicing Agreement dated as of February 1, 2003 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, HomEq Servicing Corporation,
      as servicer and Wells Fargo Bank Minnesota, National Association, as
      trustee, Merrill Lynch Mortgage Investors Trust, Mortgage Loan
      Asset-Backed Certificates, Series 2003-WMC1

      In connection with the administration of the Mortgage Loans held by you,
as Trustee, pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt, of the Mortgage File for
the Mortgage Loan described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents (check one):

_______ 1.   Mortgage Paid in Full

_______ 2.   Foreclosure

_______ 3.   Substitution

_______ 4.   Other Liquidation (Repurchases, etc.)

_______ 5.   Nonliquidation              Reason:  ________________________

Address to which the Trustee should deliver the Mortgage File:


                                         By:______________________________
                                                  (authorized signer)

                                         Address:_________________________

                                         Date:____________________________


                                      I-1
<PAGE>

If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.

If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.

Trustee

Wells Fargo Bank Minnesota, National Association

Please acknowledge the execution of the above request by your signature and date
below:


_________________________________       ______________________________
Signature                               Date

Documents returned to Trustee:


_________________________________       ______________________________
Trustee                                 Date


                                      I-2
<PAGE>
                                  EXHIBIT J

                                  [RESERVED]












































                                     J-1
<PAGE>

                                    EXHIBIT K

                        OFFICER'S CERTIFICATE OF TRUSTEE

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Re:   Pooling and Servicing Agreement (the "Agreement") dated as of February 1,
      2003 among Merrill Lynch Mortgage Investors, Inc., as depositor, HomEq
      Servicing Corporation, as servicer and Wells Fargo Bank Minnesota,
      National Association, as trustee, Merrill Lynch Mortgage Investors Trust,
      Mortgage Loan Asset-Backed Certificates, Series 2003-WMC1

I, [identify the certifying individual], a [title] of the Trustee hereby certify
to the Depositor, and its officers, directors and affiliates, and with the
knowledge and intent that they will rely upon this certification, that:

1.    I have reviewed the Monthly Statements delivered pursuant to the Agreement
      since the last Officer's Certificate executed pursuant to Section 4.02 of
      the Agreement [or in the case of the first certification, since the
      Cut-off Date] (the "Trustee Information").

2.    Based on my knowledge, the information in the Monthly Statement, taken as
      a whole, does not contain any untrue statement of a material fact or omit
      to state a material fact necessary to make the statements made, in light
      of the circumstances under which such statements were made, not misleading
      as of the date hereof;

3.    Based on my knowledge, the Monthly Statements required to be prepared by
      the Trustee under the Agreement has been prepared and provided in
      accordance with the Agreement; and

4.    I am responsible for reviewing the activities performed by the Trustee
      under the Agreement and the Trustee has, as of the date hereof fulfilled
      its obligations under the Agreement and there are no significant
      deficiencies relating to the Trustee's compliance with this Agreement.

Date:

                               Wells Fargo Bank Minnesota, National Association,
                               as Trustee

                               By:    __________________________________________
                               Name:  __________________________________________
                               Title: __________________________________________



                                      L-1
<PAGE>

                                    EXHIBIT L

                        OFFICER'S CERTIFICATE OF SERVICER

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wells Fargo Bank Minnesota, N.A.
9062 Old Annapolis Road, 47th Floor
Columbia, Maryland 21045
Attention: Client Manager - MLMI Series 2003-WMC1

Re:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2003-WMC1

Reference is made to the Pooling and Servicing Agreement, dated as of February
1, 2003 (the "Agreement"), by and among Merrill Lynch Mortgage Investors, Inc.,
as depositor, HomEq Servicing Corporation, as servicer (the "Servicer") and
Wells Fargo Bank Minnesota, National Association, as trustee. I, [identify the
certifying individual], an authorized representative of the Servicer hereby
certify to the Trustee and the Depositor, and its officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:

1.    I have reviewed the information required to be delivered to the Trustee
      pursuant to the Servicing Agreement (the "Servicing Information").

2.    Based on my knowledge, the information in the Annual Statement of
      Compliance, and all servicing reports, officer's certificates and other
      information relating to the servicing of the Mortgage Loans submitted to
      the Trustee by the Servicer taken as a whole, does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading as of the last day of the period
      covered by the Annual Statement of Compliance;

3.    Based on my knowledge, the Servicing Information required to be provided
      to the Trustee by the Servicer under this Agreement has been provided to
      the Trustee; and


                                      L-1
<PAGE>

4.    I am responsible for reviewing the activities performed by the Servicer
      under this Agreement and based upon the review required hereunder, and
      except as disclosed in the Annual Statement of Compliance, the Annual
      Independent Certified Public Accountant's Servicing Report and all
      servicing reports, officer's certificates and other information relating
      to the servicing of the Mortgage Loans submitted to the Trustee by the
      Servicer, the Servicer has, as of the last day of the period covered by
      the Annual Statement of Compliance fulfilled its obligations under this
      Agreement.

Date:

                                      HomEq Servicing Corporation, as Servicer


                                      By:   __________________________________

                                      Name: __________________________________

                                      Title:__________________________________


                                      L-2
<PAGE>

                                    EXHIBIT M

                               TRANSFEREE'S LETTER




                              INTENTIONALLY OMITTED









































                                      L-3
<PAGE>

                                    EXHIBIT N

                              FORM OF CAP CONTRACT




                             INTENTIONALLY OMITTED























































                                      N-4