EXHIBIT 1
<PAGE>

                   STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,
                                     SELLER

                              JPMORGAN CHASE BANK,
                                     TRUSTEE

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                  MASTER SERVICER AND SECURITIES ADMINISTRATOR

                                       and

                            EMC MORTGAGE CORPORATION

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

                         POOLING AND SERVICING AGREEMENT

                          Dated as of February 1, 2003

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

                   Structured Asset Mortgage Investments Inc.
           Bear Stearns ARM Trust, Mortgage Pass-Through Certificates

                                  Series 2003-1

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                                TABLE OF CONTENTS

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                                                                                                                  Page
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                                                      ARTICLE I
                                                     Definitions

                                                      ARTICLE II
                                            Conveyance of Mortgage Loans;
                                          Original Issuance of Certificates

Section 2.01      Conveyance of Mortgage Loans to Trustee ......................................................    44
Section 2.02      Acceptance of Mortgage Loans by Trustee ......................................................    46
Section 2.03      Assignment of Interest in the Mortgage Loan Purchase Agreement ...............................    48
Section 2.04      Substitution of Mortgage Loans ...............................................................    49
Section 2.05      Issuance of Certificates .....................................................................    50
Section 2.06      Representations and Warranties Concerning the Seller .........................................    50

                                                      ARTICLE III
                                    Administration and Servicing of Mortgage Loans

Section 3.01      Master Servicer ..............................................................................    52
Section 3.02      REMIC-Related Covenants ......................................................................    53
Section 3.03      Monitoring of Servicers ......................................................................    53
Section 3.04      Fidelity Bond ................................................................................    54
Section 3.05      Power to Act; Procedures .....................................................................    54
Section 3.06      Due-on-Sale Clauses; Assumption Agreements ...................................................    55
Section 3.07      Release of Mortgage Files ....................................................................    55
Section 3.08      Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee .........    56
Section 3.09      Standard Hazard Insurance and Flood Insurance Policies .......................................    57
Section 3.10      Presentment of Claims and Collection of Proceeds .............................................    57
Section 3.11      Maintenance of the Primary Mortgage Insurance Policies .......................................    58
Section 3.12      Trustee to Retain Possession of Certain Insurance Policies and Documents .....................    58
Section 3.13      Realization Upon Defaulted Mortgage Loans ....................................................    59
Section 3.14      Compensation for the Master Servicer .........................................................    59
Section 3.15      REO Property .................................................................................    59
Section 3.16      Annual Officer's Certificate as to Compliance ................................................    60
Section 3.17      Annual Independent Accountant's Servicing Report .............................................    60
Section 3.18      Reports Filed with Securities and Exchange Commission ........................................    61
Section 3.19      EMC ..........................................................................................    62
Section 3.20      UCC ..........................................................................................    62
Section 3.21      Optional Purchase of Defaulted Mortgage Loans ................................................    62
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                                                      ARTICLE IV
                                                       Accounts

Section 4.01      Protected Accounts ...........................................................................    63
Section 4.02      Master Servicer Collection Account ...........................................................    64
Section 4.03      Permitted Withdrawals and Transfers from the Master Servicer Collection Account ..............    65
Section 4.04      Distribution Account .........................................................................    66
Section 4.05      Permitted Withdrawals and Transfers from the Distribution Account ............................    66

                                                       ARTICLE V
                                                     Certificates

Section 5.01      Certificates .................................................................................    69
Section 5.02      Registration of Transfer and Exchange of Certificates ........................................    78
Section 5.03      Mutilated, Destroyed, Lost or Stolen Certificates ............................................    81
Section 5.04      Persons Deemed Owners ........................................................................    82
Section 5.05      Transfer Restrictions on Residual Certificates ...............................................    82
Section 5.06      Restrictions on Transferability of Certificates ..............................................    83
Section 5.07      ERISA Restrictions ...........................................................................    83
Section 5.08      Rule 144A Information ........................................................................    85

                                                      ARTICLE VI
                                            Payments to Certificateholders

Section 6.01      Distributions on the Certificates ............................................................    86
Section 6.02      Allocation of Losses .........................................................................    91
Section 6.03      Payments .....................................................................................    93
Section 6.04      Statements to Certificateholders .............................................................    93
Section 6.05      Monthly Advances .............................................................................    96
Section 6.06      Compensating Interest Payments ...............................................................    96

                                                      ARTICLE VII
                                                  The Master Servicer

Section 7.01      Liabilities of the Master Servicer ...........................................................    97
Section 7.02      Merger or Consolidation of the Master Servicer ...............................................    97
Section 7.03      Indemnification of the Trustee, the Master Servicer and the Securities Administrator .........    97
Section 7.04      Limitations on Liability of the Master Servicer and Others ...................................    98
Section 7.05      Master Servicer Not to Resign ................................................................    99
Section 7.06      Successor Master Servicer ....................................................................    99
Section 7.07      Sale and Assignment of Master Servicing ......................................................    99

                                                     ARTICLE VIII
                                                        Default

Section 8.01      Events of Default ............................................................................   101
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Section 8.02      Trustee to Act; Appointment of Successor .....................................................   102
Section 8.03      Notification to Certificateholders ...........................................................   103
Section 8.04      Waiver of Defaults ...........................................................................   103
Section 8.05      List of Certificateholders ...................................................................   104

                                                      ARTICLE IX
                                Concerning the Trustee and the Securities Administrator

Section 9.01      Duties of Trustee ............................................................................   105
Section 9.02      Certain Matters Affecting the Trustee and the Securities Administrator .......................   107
Section 9.03      Trustee and Securities Administrator Not Liable for Certificates or Mortgage Loans ...........   109
Section 9.04      Trustee and Securities Administrator May Own Certificates ....................................   109
Section 9.05      Trustee's and Securities Administrator's Fees and Expenses ...................................   109
Section 9.06      Eligibility Requirements for Trustee and Securities Administrator ............................   110
Section 9.07      Insurance ....................................................................................   110
Section 9.08      Resignation and Removal of the Trustee and Securities Administrator ..........................   110
Section 9.09      Successor Trustee and Successor Securities Administrator .....................................   111
Section 9.10      Merger or Consolidation of Trustee or Securities Administrator ...............................   112
Section 9.11      Appointment of Co-Trustee or Separate Trustee ................................................   112
Section 9.12      Federal Information Returns and Reports to Certificateholders; REMIC Administration ..........   113

                                                       ARTICLE X
                                                      Termination

Section 10.01     Termination Upon Repurchase by the Seller or its Designee or Liquidation of the Mortgage Loans   116
Section 10.02     Additional Termination Requirements ..........................................................   119

                                                      ARTICLE XI
                                               Miscellaneous Provisions

Section 11.01     Intent of Parties ............................................................................   120
Section 11.02     Amendment ....................................................................................   120
Section 11.03     Recordation of Agreement .....................................................................   121
Section 11.04     Limitation on Rights of Certificateholders ...................................................   121
Section 11.05     Acts of Certificateholders ...................................................................   122
Section 11.06     Governing Law ................................................................................   123
Section 11.07     Notices ......................................................................................   123
Section 11.08     Severability of Provisions ...................................................................   123
Section 11.09     Successors and Assigns .......................................................................   124
Section 11.10     Article and Section Headings .................................................................   124
Section 11.11     Counterparts .................................................................................   124
Section 11.12     Notice to Rating Agencies ....................................................................   124
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                                     -iii-
<PAGE>

                                    EXHIBITS

Exhibit A-1            -    Form of Class [_-A-_] Certificates
Exhibit A-2            -    Form of Class [B-_][M] Certificates
Exhibit A-3            -    Form of Class R Certificates
Exhibit B              -    Mortgage Loan Schedule
Exhibit C              -    [Reserved]
Exhibit D              -    Request for Release of Documents
Exhibit E              -    Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1            -    Form of Investment Letter
Exhibit F-2            -    Form of Rule 144A and Related Matters Certificate
Exhibit G              -    Form of Custodial Agreement
Exhibit H-1 to H-8     -    Servicing Agreements
Exhibit I              -    Assignment Agreements
Exhibit J              -    Mortgage Loan Purchase Agreement


                                      -iv-
<PAGE>

                         POOLING AND SERVICING AGREEMENT

      Pooling and Servicing Agreement dated as of February 1, 2003, among
Structured Asset Mortgage Investments Inc., a Delaware corporation, as seller
(the "Seller"), JPMorgan Chase Bank, a New York banking corporation, not in its
individual capacity but solely as trustee (the "Trustee"), Wells Fargo Bank
Minnesota, National Association, as master servicer (in such capacity, the
"Master Servicer") and as securities administrator (in such capacity, the
"Securities Administrator"), and EMC Mortgage Corporation ("EMC").

                              PRELIMINARY STATEMENT

      On or prior to the Closing Date, the Seller acquired the Mortgage Loans
from EMC. On the Closing Date, the Seller will sell the Mortgage Loans and
certain other property to the Trust Fund and receive in consideration therefor
Certificates evidencing the entire beneficial ownership interest in the Trust
Fund.

      The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC I to be treated for federal income tax purposes as a REMIC.
On the Startup Day, the REMIC I Regular Interests will be designated "regular
interests" in such REMIC and the Class R-I Certificate will be designated the
"residual interest" in such REMIC.

      The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC II to be treated for federal income tax purposes as a REMIC.
On the Startup Day, the REMIC II Regular Interests will be designated "regular
interests" in such REMIC and the Class R-II Certificate will be designated the
"residual interest" in such REMIC.

      The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC III to be treated for federal income tax purposes as a REMIC.
On the Startup Day, the REMIC III Regular Certificates will be designated
"regular interests" in such REMIC and the Class R-III Certificate will be
designated the "residual interest" in such REMIC.

      The Mortgage Loans will have an Outstanding Principal Balance as of the
Cut-off Date, after deducting all Scheduled Principal due on or before the
Cut-off Date, of approximately $1,173,972,520. The initial principal amount of
the Certificates will not exceed such Outstanding Principal Balance.

      In consideration of the mutual agreements herein contained, the Seller,
the Master Servicer, the Securities Administrator, EMC and the Trustee agree as
follows:
<PAGE>

                                    ARTICLE I
                                   Definitions

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

      Accepted Master Servicing Practices: With respect to any Mortgage Loan, as
applicable, either (x) those customary mortgage servicing practices of prudent
mortgage servicing institutions that master service mortgage loans of the same
type and quality as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located, to the extent applicable to the Trustee or the
Master Servicer (except in its capacity as successor to a Servicer), or (y) as
provided in the applicable Servicing Agreement, to the extent applicable to any
Servicer, but in no event below the standard set forth in clause (x).

      Account: The Master Servicer Collection Account and the Protected Account
as the context may require.

      Accrued Certificate Interest: For any Certificate for any Distribution
Date, the interest accrued during the related Interest Accrual Period at the
applicable Pass-Through Rate on the Current Principal Amount, or in the case of
the Interest Only Certificates, the Notional Amount of such Certificate
immediately prior to such Distribution Date, on the basis of a 360-day year
consisting of twelve 30-day months, less (i) in the case of a Senior
Certificate, such Certificate's share of any Net Interest Shortfall from the
related Mortgage Loans and, after the Cross-Over Date, the interest portion of
any Realized Losses on the related Mortgage Loans allocated thereto in
accordance with Section 6.02(g) and (ii) in the case of a Senior Mezzanine
Certificate or Subordinate Certificate, such Certificate's share of any Net
Interest Shortfall from the Mortgage Loans and the interest portion of any
Realized Losses on the Mortgage Loans allocated thereto in accordance with
Section 6.02(g).

      Additional Collateral: As defined in the Cendant Servicing Agreements.

      Affiliate: As to any Person, any other Person controlling, controlled by
or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.

      Aggregate Expense Rate: With respect to any Mortgage Loan, the sum of the
Servicing Fee Rate and the Lender-Paid PMI Rate (if applicable).

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

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      Alliance: Alliance Mortgage Company, or its successor in interest.

      Alliance Servicing Agreement: With respect to the Mortgage Loans
originated by E-Loan, the Subservicing Agreement dated as of August 1, 2002
between EMC and Alliance, as attached hereto as Exhibit H-1.

      Allocable Share: With respect to each Class of Senior Mezzanine and
Subordinate Certificates:

      (a) as to any Distribution Date and amounts distributable pursuant to
clauses (i) and (iii) of the definition of Senior Mezzanine and Subordinate
Optimal Principal Amount, the fraction, expressed as a percentage, the numerator
of which is the Current Principal Amount of such Class and the denominator of
which is the aggregate Current Principal Amount of all Classes of the Senior
Mezzanine and Subordinate Certificates; and

      (b) as to any Distribution Date and amounts distributable pursuant to
clauses (ii), (iv) and (v) of the definition of Senior Mezzanine and Subordinate
Optimal Principal Amount,

            (1) for any Distribution Date on which the Senior Mezzanine Loss and
            Delinquency Test has been satisfied, as to each Class of Senior
            Mezzanine and Subordinate Certificates (other than the Senior
            Mezzanine Certificates, or if the Current Principal Amount of the
            Senior Mezzanine Certificates has been reduced to zero, the Class of
            Subordinate Certificates having the lowest numerical designation as
            to which the Class Prepayment Distribution Trigger shall not be
            applicable) for which (x) the related Class Prepayment Distribution
            Trigger has been satisfied on such Distribution Date, the fraction,
            expressed as a percentage, the numerator of which is the Current
            Principal Amount of such Class and the denominator of which is the
            aggregate Current Principal Amount of all such Classes of Senior
            Mezzanine and Subordinate Certificates for which the related Class
            Prepayment Distribution Trigger has been satisfied and (y) the
            related Class Prepayment Distribution Trigger has not been satisfied
            on such Distribution Date, 0%; provided that if on a Distribution
            Date, the Current Principal Amount of any Class of Senior Mezzanine
            or Subordinate Certificates for which the related Class Prepayment
            Distribution Trigger was satisfied on such Distribution Date is
            reduced to zero, any amounts distributed pursuant to this clause
            (b)(1), to the extent of such Class's remaining Allocable Share,
            shall be distributed to the Senior Mezzanine Certificates, or if the
            Current Principal Amount of the Senior Mezzanine Certificates has
            been reduced to zero, the Class of Subordinate Certificates having
            the lowest numerical designation and to the Subordinate Certificates
            which satisfy the related Class Prepayment Distribution Trigger in
            reduction of their respective Current Principal Amounts, for to the
            Senior Mezzanine Certificates and then to the Subordinate
            Certificates in the order of their numerical Class designations; and


                                      -3-
<PAGE>

            (2) for any Distribution Date on which the Senior Mezzanine Loss and
            Delinquency Test has not been satisfied, as to the Senior Mezzanine
            Certificates, 100%, and as to the Subordinate Certificates, 0%;
            provided that if on a Distribution Date, the Current Principal
            Amount of the Senior Mezzanine Certificates is reduced to zero, any
            remaining amounts distributed pursuant to this clause (b)(2) shall
            be distributed to the Classes of Subordinate Certificates which
            satisfy the related Class Prepayment Distribution Trigger and to the
            Class of Subordinate Certificates having the lowest numerical
            designation in reduction of their respective Current Principal
            Amounts in the order of their numerical Class designations.

      Applicable Credit Rating: For any long-term deposit or security, a credit
rating of AAA in the case of S&P or Fitch or Aaa in the case of Moody's. For any
short-term deposit or security, or a rating of A-l+ in the case of S&P or Fitch
or P-1 in the case of Moody's.

      Applicable State Law: For purposes of Section 9.12(d), the Applicable
State Law shall be (a) the law of the State of New York and (b) such other state
law whose applicability shall have been brought to the attention of the
Securities Administrator and the Trustee by either (i) an Opinion of Counsel
reasonably acceptable to the Securities Administrator and the Trustee delivered
to it by the Master Servicer or the Seller, or (ii) written notice from the
appropriate taxing authority as to the applicability of such state law.

      Appraised Value: For any Mortgaged Property related to a Mortgage Loan,
the amount set forth as the appraised value of such Mortgaged Property in an
appraisal made for the mortgage originator in connection with its origination of
the related Mortgage Loan.

      Assignment Agreements: The agreements attached hereto as Exhibit I,
whereby the Servicing Agreements were assigned to the Trustee for the benefit of
the Certificateholders.

      Assumed Final Distribution Date: April 25, 2033, or if such day is not a
Business Day, the next succeeding Business Day.

      Available Funds: With respect to any Distribution Date, the sum of the
Group 1, Group 2, Group 3, Group 4, Group 5, Group 6, Group 7 and Group 8
Available Funds for such Distribution Date.

      Average Loss Severity: With respect to any period and each Loan Group, the
fraction obtained by dividing (x) the aggregate amount of Realized Losses for
the related Mortgage Loans for such period by (y) the number of related Mortgage
Loans which had Realized Losses for such period.

      Bankruptcy Code: The United States Bankruptcy Code, as amended as codified
in 11 U.S.C. ss.ss. 101-1330.

      Bankruptcy Loss: With respect to any Mortgage Loan, any Deficient
Valuation or Debt Service Reduction related to such Mortgage Loan as reported by
the applicable Servicer to the Master Servicer.


                                      -4-
<PAGE>

      Book-Entry Certificates: Initially, all Classes of Certificates other than
the Private Certificates and the Residual Certificates.

      Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which the New York Stock Exchange or Federal Reserve is closed or on which
banking institutions in the jurisdiction in which the Trustee, the Master
Servicer, any Servicer or the Securities Administrator are authorized or
obligated by law or executive order to be closed.

      Calendar Quarter: January 1 to March 31, April 1 to June 30, July 1 to
September 30, or October 1 to December 31, as applicable.

      Cendant: Cendant Mortgage Corporation, or its successor in interest.

      Cendant Servicing Agreements: The Mortgage Loan Flow Purchase, Sale and
Servicing Agreement dated as of April 26, 2001, among EMC (as purchaser),
Cendant and Bishop's Gate Residential Mortgage Trust (formerly known as Cendant
Residential Mortgage Trust) (as sellers) and, with respect to the Mortgage Loans
secured by Additional Collateral, Additional Collateral Assignment and Servicing
Agreement, dated as of April 26, 2001 between Cendant and EMC (whereby MLCC
retained its rights to service the Additional Collateral in accordance thereto),
and with respect to certain of the Mortgage Loans, the Mortgage Loan Flow
Purchase, Sale & Servicing Agreement, dated as of February 11, 2000, among
E*TRADE Bank, EMC and Bishop's Gate; the Purchase, Warranties and Servicing
Agreement, dated as of May 1, 1998, between EMC and BSMCC Bear Stearns Mortgage
Capital Corporation ("BSMCC"), assigned to E*TRADE Global Asset Management, Inc.
(f/k/a Telebank Capital Markets) ("E*TGAM") pursuant to the Purchase,
Assignment, Assumption and Recognition Agreement, dated November 30, 1998, among
the EMC, BSMCC and E*TGAM, and further assigned by E*TGAM to the Assignor
pursuant to the Assignment and Assumption Agreement, dated as of December 5,
2002, between the Assignor and E*TGAM, each as attached hereto as Exhibit H-2.

      Certificate: Any mortgage pass-through certificate evidencing a beneficial
ownership interest in the Trust Fund signed and countersigned by the Trustee in
substantially the forms annexed hereto as Exhibits A-1, A-2 and A-3, with the
blanks therein appropriately completed.

      Certificate Group: The Group 1 Senior Certificates, Group 2 Senior
Certificates, Group 3 Senior Certificates, Group 4 Senior Certificates, Group 5
Senior Certificates, Group 6 Senior Certificates, Group 7 Senior Certificates
and Group 8 Senior Certificates, as applicable, the Senior Mezzanine
Certificates and the Subordinate Certificates to the extent such Certificates
represent an interest in such groups of Certificates.

      Certificate Owner: Any Person who is the beneficial owner of a Certificate
registered in the name of the Depository or its nominee.

      Certificate Register: The register maintained pursuant to Section 5.02.


                                      -5-
<PAGE>

      Certificateholder: A Holder of a Certificate.

      Chevy Chase: Chevy Chase Bank F.S.B., or its successor in interest.

      Chevy Chase Servicing Agreement: The Purchase, Warranties and Servicing
Agreement, dated as of July 1, 2001, between EMC Mortgage Corporation and Chevy
Chase Bank, F.S.B., attached hereto as Exhibit H-3.

      Class: With respect to the Certificates, I-A-1, II-A-1, III-A-1, IV-A-1,
V-A-1, VI-A-1, VII-A- 1, VII-A-X, VIII-A-1, VIII-A-X, M, R-I, R-II, R-III, B-1,
B-2, B-3, B-4, B-5 and B-6.

      Class Prepayment Distribution Trigger: For a Class of Senior Mezzanine or
Subordinate Certificates for any Distribution Date, the Class Prepayment
Distribution Trigger is satisfied if the fraction (expressed as a percentage),
the numerator of which is the aggregate Current Principal Amount of such Class
and each Class of Senior Mezzanine or Subordinate Certificates subordinate
thereto, if any, and the denominator of which is the Scheduled Principal Balance
of all of the Mortgage Loans as of the related Due Date, equals or exceeds such
percentage calculated as of the Closing Date.

      Class R Certificates: The Class R-I, Class R-II and Class R-III
Certificates.

      Closing Date: February 28, 2003.

      Code: The Internal Revenue Code of 1986, as amended.

      Compensating Interest Payment: As defined in Section 6.06.

      Corresponding Class: With respect to (i) REMIC II Regular Interest I-A-1,
(ii) REMIC II Regular Interest II-A-1, (iii) REMIC II Regular Interest III-A-1,
(iv) REMIC II Regular Interest IV-A-1, (v) REMIC II Regular Interest V-A-1, (vi)
REMIC II Regular Interest VI-A-1, (vii) REMIC II Regular Interest VII-A-1,
(viii) REMIC II Regular Interest VIII-A-1, (ix) REMIC II Regular Interest M, (x)
REMIC II Regular Interest B-1, (xi) REMIC II Regular Interest B-2, (xii) REMIC
II Regular Interest B-3, (xiii) REMIC II Regular Interest B-4, (xiv) REMIC II
Regular Interest B-5, (xv) REMIC II Regular Interest B-6, and (xvi) REMIC II
Regular Interest MT-R, (i) the Class I-A-1 Certificates, (ii) the Class II-A-1
Certificates, (iii) the Class III-A-1 Certificates, (iv) the Class IV-A- 1
Certificates, (v) the Class V-A-1 Certificates, (vi) the Class VI-A-1
Certificates, (vii) the Class VII- A-1 Certificates, (viii) the Class VIII-A-1
Certificates, (ix) the Class M Certificates, (x) the Class B-1 Certificates,
(xi) the Class B-2 Certificates, (xii) the Class B-3 Certificates, (xiii) the
Class B-4 Certificates, (xiv) the Class B-5 Certificates, (xv) the Class B-6
Certificates and (xvi) the Class R-III Certificates, respectively.

      Corporate Trust Office: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at 4 New York Plaza, 6th
Floor, New York, New York 10004, Attention: Institutional Trust
Services/Structured Finance Services, BART Series 2003-1. For purposes of
registration and transfer and exchange only, the


                                      -6-
<PAGE>

Corporate Trust Office shall be located at 2001 Bryan Street, 8th Floor, Dallas,
Texas 75201, Attn: ITS Transfer Dept. - BART Series 2003-1.

      Countrywide: Countrywide Home Loans, Inc., or its successor in interest.

      Countrywide Servicing Agreements: The Seller's Warranties and Servicing
Agreement, dated as of September 1, 2002, between EMC Mortgage Corporation and
Countrywide Home Loans, Inc., attached hereto as Exhibit H-4.

      Cross-Over Date: The first Distribution Date on which the aggregate
Current Principal Amount of the Senior Mezzanine Certificates and Subordinate
Certificates has been reduced to zero (giving effect to all distributions on
such Distribution Date).

      Current Principal Amount: With respect to any Certificate (other than an
Interest Only Certificate) as of any Distribution Date, the initial principal
amount of such Certificate, and reduced by (i) all amounts distributed on
previous Distribution Dates on such Certificate with respect to principal, (ii)
the principal portion of all Realized Losses allocated prior to such
Distribution Date to such Certificate, taking account of the Loss Allocation
Limitation, (iii) in the case of a Senior Mezzanine Certificate, such
Certificate's pro rata share, if any, of the applicable Senior Mezzanine
Certificate Writedown Amount for previous Distribution Dates and (iv) in the
case of a Subordinate Certificate, such Certificate's pro rata share, if any, of
the applicable Subordinate Certificate Writedown Amount for previous
Distribution Dates. With respect to any Class of Certificates (other than the
Interest Only Certificates), the Current Principal Amount thereof will equal the
sum of the Current Principal Amounts of all Certificates in such Class.
Notwithstanding the foregoing, solely for purposes of giving consents,
directions, waivers, approvals, requests and notices, the Class R-I, Class R-II
and Class R-III Certificates after the Distribution Date on which they each
receive the distribution of the last dollar of their respective original
principal amount shall be deemed to have Current Principal Amounts equal to
their respective Current Principal Amounts on the day immediately preceding such
Distribution Date.

      Custodial Agreement: An agreement, dated as of the Closing Date among the
Seller, the Master Servicer, the Trustee and the Custodian in substantially the
form of Exhibit G hereto.

      Custodian: Wells Fargo Bank Minnesota, National Association, or any
successor custodian appointed pursuant to the provisions hereof and of the
Custodial Agreement.

      Cut-off Date: February 1, 2003.

      Cut-off Date Balance: $1,173,972,520.

      Debt Service Reduction: Any reduction of the Scheduled Payments which a
Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.


                                      -7-
<PAGE>

      Deficient Valuation: With respect to any Mortgage Loan, a valuation of the
Mortgaged Property by a court of competent jurisdiction in an amount less than
the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.

      Depository: The Depository Trust Company, the nominee of which is Cede &
Co., or any successor thereto.

      Depository Agreement: The meaning specified in Subsection 5.01(a) hereof.

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

      Designated Depository Institution: A depository institution (commercial
bank, federal savings bank, mutual savings bank or savings and loan association)
or trust company (which may include the Trustee), the deposits of which are
fully insured by the FDIC to the extent provided by law.

      Determination Date: With respect to each Mortgage Loan, the Determination
Date as defined in the related Servicing Agreement.

      Disqualified Organization: Any of the following: (i) the United States,
any State or political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the Freddie Mac or any successor thereto, a majority of its
board of directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code or (v) any
other Person so designated by the Trustee based upon an Opinion of Counsel that
the holding of an ownership interest in a Residual Certificate by such Person
may cause any REMIC contained in the Trust or any Person having an ownership
interest in the Residual Certificate (other than such Person) to incur a
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in a Residual Certificate
to such Person. The terms "United States," "State" and "international
organization" shall have the meanings set forth in Section 7701 of the Code or
successor provisions.

      Distribution Account: The trust account or accounts created and maintained
pursuant to Section 4.04, which shall be denominated "JPMorgan Chase Bank, as
Trustee f/b/o holders of Structured Asset Mortgage Investments Inc., Bear
Stearns ARM Trust, Mortgage Pass-Through Certificates, Series 2003-1 -
Distribution Account." The Distribution Account shall be an Eligible Account.


                                      -8-
<PAGE>

      Distribution Account Deposit Date: The Business Day prior to each
Distribution Date.

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

      DTC Custodian: JPMorgan Chase Bank, or its successors in interest as
custodian for the Depository.

      Due Date: With respect to each Mortgage Loan, the date in each month on
which its Scheduled Payment is due if such due date is the first day of a month
and otherwise is deemed to be the first day of the following month or such other
date specified in the related Servicing Agreement.

      Due Period: With respect to any Distribution Date and each Mortgage Loan,
the period commencing on the second day of the month preceding the month in
which the Distribution Date occurs and ending at the close of business on the
first day of the month in which the Distribution Date occurs.

      Eligible Account: Any of (i) a segregated account maintained with a
federal or state chartered depository institution (A) the short-term obligations
of which are rated A-1 or better by Standard & Poor's and P-1 by Moody's at the
time of any deposit therein or (B) insured by the FDIC (to the limits
established by such Corporation), the uninsured deposits in which account are
otherwise secured such that, as evidenced by an Opinion of Counsel (obtained by
the Person requesting that the account be held pursuant to this clause (i))
delivered to the Trustee prior to the establishment of such account, the
Certificateholders will have a claim with respect to the funds in such account
and a perfected first priority security interest against any collateral (which
shall be limited to Permitted Investments, each of which shall mature not later
than the Business Day immediately preceding the Distribution Date next following
the date of investment in such collateral or the Distribution Date if such
Permitted Investment is an obligation of the institution that maintains the
Distribution Account) securing such funds that is superior to claims of any
other depositors or general creditors of the depository institution with which
such account is maintained, (ii) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company with trust powers acting in its fiduciary capacity or (iii) a segregated
account or accounts of a depository institution acceptable to the Rating
Agencies (as evidenced in writing by the Rating Agencies that use of any such
account as the Distribution Account will not have an adverse effect on the then-
current ratings assigned to the Classes of the Certificates then rated by the
Rating Agencies). Eligible Accounts may bear interest.

      EMC: EMC Mortgage Corporation.

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

      Event of Default: An event of default described in Section 8.01.


                                      -9-
<PAGE>

      Excess Liquidation Proceeds: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last day
of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.

      E*TRADE: E*TRADE Bank, or its successor in interest.

      E-Loan: E-Loan, Inc., or its successor in interest.

      Fannie Mae: Federal National Mortgage Association or any successor
thereto.

      FDIC: Federal Deposit Insurance Corporation or any successor thereto.

      Final Certification: The certification substantially in the form of
Exhibit Three to the Custodial Agreement.

      Fitch: Fitch, Inc.

      Fractional Undivided Interest: With respect to any Class of Certificates,
the fractional undivided interest evidenced by any Certificate of such Class the
numerator of which is the Current Principal Amount, or Notional Amount in the
case of the Interest Only Certificates, of such Certificate and the denominator
of which is the Current Principal Amount, or Notional Amount in the case of the
Interest Only Certificates, of such Class. With respect to the Certificates in
the aggregate, the fractional undivided interest evidenced by (i) a Residual
Certificate will be deemed to equal 0.25% multiplied by the percentage interest
of such Residual Certificate, and (ii) an Interest Only Certificate will be
deemed to equal 1.0% multiplied by a fraction, the numerator of which is the
Notional Amount of such Certificate and denominator of which is the aggregate
Notional Amount of such respective Class and (iii) a Certificate of any other
Class will be deemed to equal 97.25% multiplied by a fraction, the numerator of
which is the Current Principal Amount of such Certificate and the denominator of
which is the aggregate Current Principal Amount of all the Certificates.

      Freddie Mac: Freddie Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.

      Global Certificate: Any Private Certificate registered in the name of the
Depository or its nominee, beneficial interests in which are reflected on the
books of the Depository or on the books of a Person maintaining an account with
such Depository (directly or as an indirect participant in accordance with the
rules of such depository).

      GMAC: GMAC Mortgage Corporation, or its successor in interest.


                                      -10-
<PAGE>

      GMAC Servicing Agreements: The Servicing Agreement, dated as of May 1,
2001, as between EMC and GMAC, as amended, attached hereto as Exhibit H-8.

      Gross Margin: As to each Mortgage Loan, the fixed percentage set forth in
the related Mortgage Note and indicated on the Mortgage Loan Schedule which
percentage is added to the related Index on each Interest Adjustment Date to
determine (subject to rounding, the minimum and maximum Mortgage Interest Rate
and the Periodic Rate Cap) the Mortgage Interest Rate until the next Interest
Adjustment Date.

      Group 1 Available Funds, Group 2 Available Funds, Group 3 Available Funds,
Group 4 Available Funds, Group 5 Available Funds, Group 6 Available Funds, Group
7 Available Funds or Group 8 Available Funds: With respect to any Distribution
Date, an amount equal to the aggregate of the following amounts with respect to
the Mortgage Loans in the related Loan Group: (a) all previously undistributed
payments on account of principal (including the principal portion of Scheduled
Payments, Principal Prepayments and the principal portion of Net Liquidation
Proceeds) and all previously undistributed payments on account of interest
received after the Cut-off Date and on or prior to the related Determination
Date, (b) any Monthly Advances and Compensating Interest Payments by the
Servicers or the Master Servicer with respect to such Distribution Date and (c)
any reimbursed amount in connection with losses on investments of deposits in an
account, except:

            (i) all payments that were due on or before the Cut-off Date;

            (ii) all Principal Prepayments and Liquidation Proceeds received
      after the applicable Prepayment Period;

            (iii) all payments, other than Principal Prepayments, that represent
      early receipt of Scheduled Payments due on a date or dates subsequent to
      the related Due Date;

            (iv) amounts received on particular Mortgage Loans as late payments
      of principal or interest and respecting which, and to the extent that,
      there are any unreimbursed Monthly Advances;

            (v) amounts representing Monthly Advances determined to be
      Nonrecoverable Advances;

            (vi) any investment earnings on amounts on deposit in the Master
      Servicer Collection Account and the Distribution Account and amounts
      permitted to be withdrawn from the Master Servicer Collection Account and
      the Distribution Account pursuant to this Agreement;

            (vii) to pay the Servicing Fees or to reimburse any Servicer or the
      Master Servicer for such amounts as are due under the applicable Servicing
      Agreement and the Agreement and have not been retained by or paid to such
      Servicer or the Master Servicer;


                                      -11-
<PAGE>

            (viii) to pay any fees with respect to any lender-paid primary
      mortgage insurance policy; and

            (ix) any expenses or other amounts reimbursable to the Trustee, the
      Securities Administrator and the Custodian pursuant to Section 7.04(c) or
      Section 9.05.

      Group 1 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

      Group 2 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

      Group 3 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

      Group 4 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

      Group 5 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

      Group 6 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

      Group 7 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

      Group 8 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.

      Group 1 Senior Certificates: The Class I-A-1, Class R-I, Class R-II and
Class R-III Certificates.

      Group 2 Senior Certificates: The Class II-A-1 Certificates.

      Group 3 Senior Certificates: The Class III-A-1 Certificates.

      Group 4 Senior Certificates: The Class IV-A-1 Certificates.

      Group 5 Senior Certificates: The Class V-A-1 Certificates.

      Group 6 Senior Certificates: The Class VI-A-1 Certificates.

      Group 7 Senior Certificates: The Class VII-A-1 Certificates and Class
VII-A-X Certificates.

      Group 8 Senior Certificates: The Class VIII-A-1 Certificates and Class
VIII-A-X Certificates.

      Group 1 Senior Mezzanine and Subordinate Percentage: On any Distribution
Date, 100% minus the Group 1 Senior Percentage.

      Group 2 Senior Mezzanine and Subordinate Percentage: On any Distribution
Date, 100% minus the Group 2 Senior Percentage.


                                      -12-
<PAGE>

      Group 3 Senior Mezzanine and Subordinate Percentage: On any Distribution
Date, 100% minus the Group 3 Senior Percentage.

      Group 4 Senior Mezzanine and Subordinate Percentage: On any Distribution
Date, 100% minus the Group 4 Senior Percentage.

      Group 5 Senior Mezzanine and Subordinate Percentage: On any Distribution
Date, 100% minus the Group 5 Senior Percentage.

      Group 6 Senior Mezzanine and Subordinate Percentage: On any Distribution
Date, 100% minus the Group 6 Senior Percentage.

      Group 7 Senior Mezzanine and Subordinate Percentage: On any Distribution
Date, 100% minus the Group 7 Senior Percentage.

      Group 8 Senior Mezzanine and Subordinate Percentage: On any Distribution
Date, 100% minus the Group 8 Senior Percentage.

      Group 1 Senior Mezzanine and Subordinate Prepayment Percentage: With
respect to the Group 1 Mortgage Loans, on any Distribution Date, 100% minus the
Group 1 Senior Prepayment Percentage, except that on any Distribution Date after
the Current Principal Amounts of the Group 1 Senior Certificates have each been
reduced to zero, the Group 1 Subordinate Prepayment Percentage will equal 100%.

      Group 2 Senior Mezzanine and Subordinate Prepayment Percentage: With
respect to the Group 2 Mortgage Loans, on any Distribution Date, 100% minus the
Group 2 Senior Prepayment Percentage, except that on any Distribution Date after
the Current Principal Amounts of the Group 2 Senior Certificates have each been
reduced to zero, the Group 2 Subordinate Prepayment Percentage will equal 100%.

      Group 3 Senior Mezzanine and Subordinate Prepayment Percentage: With
respect to the Group 3 Mortgage Loans, on any Distribution Date, 100% minus the
Group 3 Senior Prepayment Percentage, except that on any Distribution Date after
the Current Principal Amounts of the Group 3 Senior Certificates have each been
reduced to zero, the Group 3 Subordinate Prepayment Percentage will equal 100%.

      Group 4 Senior Mezzanine and Subordinate Prepayment Percentage: With
respect to the Group 4 Mortgage Loans, on any Distribution Date, 100% minus the
Group 4 Senior Prepayment Percentage, except that on any Distribution Date after
the Current Principal Amounts of the Group 4 Senior Certificates have each been
reduced to zero, the Group 4 Subordinate Prepayment Percentage will equal 100%.

      Group 5 Senior Mezzanine and Subordinate Prepayment Percentage: With
respect to the Group 5 Mortgage Loans, on any Distribution Date, 100% minus the
Group 5 Senior Prepayment Percentage, except that on any Distribution Date after
the Current Principal Amounts of the Group 5 Senior Certificates have each been
reduced to zero, the Group 5 Subordinate Prepayment Percentage will equal 100%.


                                      -13-
<PAGE>

      Group 6 Senior Mezzanine and Subordinate Prepayment Percentage: With
respect to the Group 6 Mortgage Loans, on any Distribution Date, 100% minus the
Group 6 Senior Prepayment Percentage, except that on any Distribution Date after
the Current Principal Amounts of the Group 6 Senior Certificates have each been
reduced to zero, the Group 6 Subordinate Prepayment Percentage will equal 100%.

      Group 7 Senior Mezzanine and Subordinate Prepayment Percentage: With
respect to the Group 7 Mortgage Loans, on any Distribution Date, 100% minus the
Group 7 Senior Prepayment Percentage, except that on any Distribution Date after
the Current Principal Amounts of the Group 7 Senior Certificates have each been
reduced to zero, the Group 7 Subordinate Prepayment Percentage will equal 100%.

      Group 8 Senior Mezzanine and Subordinate Prepayment Percentage: With
respect to the Group 8 Mortgage Loans, on any Distribution Date, 100% minus the
Group 8 Senior Prepayment Percentage, except that on any Distribution Date after
the Current Principal Amounts of the Group 8 Senior Certificates have each been
reduced to zero, the Group 8 Subordinate Prepayment Percentage will equal 100%.

      Group 1 Senior Optimal Principal Amount, Group 2 Senior Optimal Principal
Amount, Group 3 Senior Optimal Principal Amount, Group 4 Senior Optimal
Principal Amount, Group 5 Senior Optimal Principal Amount, Group 6 Senior
Optimal Principal Amount, Group 7 Senior Optimal Principal Amount and Group 8
Senior Optimal Principal Amount: With respect to each Distribution Date, an
amount equal to the sum, without duplication, of the following (but in no event
greater than the aggregate Current Principal Amounts of the Group 1, Group 2,
Group 3, Group 4, Group 5, Group 6, Group 7 or Group 8 Senior Certificates, as
applicable, immediately prior to such Distribution Date):

            (i) the applicable Senior Percentage of all scheduled payments of
      principal allocated to the Scheduled Principal Balance due on each
      Outstanding Mortgage Loan in the related Loan Group on the related Due
      Date as specified in the amortization schedule at the time applicable
      thereto (after adjustments for previous Principal Prepayments but before
      any adjustment to such amortization schedule by reason of any bankruptcy
      or similar proceeding or any moratorium or similar waiver or grace
      period);

            (ii) the applicable Senior Prepayment Percentage of the Scheduled
      Principal Balance of each Mortgage Loan in the related Loan Group which
      was the subject of a Principal Prepayment in full received by the Master
      Servicer during the related Prepayment Period;

            (iii) the applicable Senior Prepayment Percentage of all Principal
      Prepayments in part received by the Master Servicer during the related
      Prepayment Period with respect to each Mortgage Loan in the related Loan
      Group;

            (iv) the lesser of (a) the applicable Senior Prepayment Percentage
      of the sum of (A) all Net Liquidation Proceeds allocable to principal
      received in respect of each Mortgage Loan in the related Loan Group which
      became a Liquidated Mortgage Loan during the related Prepayment Period
      (other than Mortgage Loans described in the immediately following clause
      (B)) and (B) the Scheduled Principal Balance of each such Mortgage Loan in
      the related Loan Group purchased


                                      -14-
<PAGE>

      by an insurer from the Trustee during the related Prepayment Period
      pursuant to the related Primary Mortgage Insurance Policy, if any, or
      otherwise; and (b) the applicable Senior Percentage of the sum of (A) the
      Scheduled Principal Balance of each Mortgage Loan in the related Loan
      Group which became a Liquidated Mortgage Loan during the related
      Prepayment Period (other than the Mortgage Loans described in the
      immediately following clause (B)) and (B) the Scheduled Principal Balance
      of each such Mortgage Loan in the related Loan Group that was purchased by
      an insurer from the Trustee during the related Prepayment Period pursuant
      to the related Primary Mortgage Insurance Policy, if any or otherwise; and

            (v) the applicable Senior Prepayment Percentage of the sum of (a)
      the Scheduled Principal Balance of each Mortgage Loan in the related Loan
      Group which was repurchased by the Mortgage Loan Seller in connection with
      such Distribution Date and (b) the excess, if any, of the Scheduled
      Principal Balance of a Mortgage Loan in the related Loan Group that has
      been replaced by the Mortgage Loan Seller with a substitute Mortgage Loan
      pursuant to the Mortgage Loan Purchase Agreement in connection with such
      Distribution Date over the Scheduled Principal Balance of such substitute
      Mortgage Loan.

      Group 1 Senior Percentage: Initially, 93.00%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amount of the Group 1
Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group 1 Mortgage Loans as of the
beginning of the related Due Period.

      Group 2 Senior Percentage: Initially, 93.00%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amount of the Group 2
Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group 2 Mortgage Loans as of the
beginning of the related Due Period.

      Group 3 Senior Percentage: Initially, 93.00%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amount of the Group 3
Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group 3 Mortgage Loans as of the
beginning of the related Due Period.

      Group 4 Senior Percentage: Initially, 93.00%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amount of the Group 4
Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group 4 Mortgage Loans as of the
beginning of the related Due Period.

      Group 5 Senior Percentage: Initially, 93.00%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amount of the Group 5
Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group 5 Mortgage Loans as of the
beginning of the related Due Period.


                                      -15-
<PAGE>

      Group 6 Senior Percentage: Initially, 93.00%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amount of the Group 6
Senior Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balance of the Group 6 Mortgage Loans as of the
beginning of the related Due Period.

      Group 7 Senior Percentage: Initially, 93.00%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amount of the Group 7
Senior Certificates (other than the Class VII-A-X Certificates) immediately
preceding such Distribution Date by the aggregate Scheduled Principal Balance of
the Group 7 Mortgage Loans as of the beginning of the related Due Period.

      Group 8 Senior Percentage: Initially, 93.00%. On any Distribution Date,
the lesser of (i) 100% and (ii) the percentage (carried to six places rounded
up) obtained by dividing the aggregate Current Principal Amount of the Group 8
Senior Certificates (other than the Class VIII-A-X Certificates) immediately
preceding such Distribution Date by the aggregate Scheduled Principal Balance of
the Group 8 Mortgage Loans as of the beginning of the related Due Period.

      Group 1 Senior Prepayment Percentage: On any Distribution Date occurring
during the periods set forth below, as follows:

<TABLE>
<CAPTION>
Period (dates inclusive)                              Group 1 Senior Prepayment Percentage
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>
March 25, 2003 - February 25, 2010                    100%

March 25, 2010 - February 25, 2011                    Group 1 Senior Percentage plus 70% of the Group
                                                      1 Senior Mezzanine and Subordinate Percentage

March 25, 2011 - February 25, 2012                    Group 1 Senior Percentage plus 60% of the Group
                                                      1 Senior Mezzanine and Subordinate Percentage

March 25, 2012 - February 25, 2013                    Group 1 Senior Percentage plus 40% of the Group
                                                      1 Senior Mezzanine and Subordinate Percentage

March 25, 2013 - February 25, 2014                    Group 1 Senior Percentage plus 20% of the Group
                                                      1 Senior Mezzanine and Subordinate Percentage

March 25, 2014 and thereafter                         Group 1 Senior Percentage
</TABLE>

      In addition, no reduction of the Group 1 Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Senior Mezzanine and Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2010 and February 2011, (b)
35% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2011 and February 2012,


                                      -16-
<PAGE>

(c) 40% of the Original Senior Mezzanine and Subordinate Principal Balance if
such Distribution Date occurs between and including March 2012 and February
2013, (d) 45% of the Original Senior Mezzanine and Subordinate Principal Balance
if such Distribution Date occurs between and including March 2013 and February
2014, and (e) 50% of the Original Senior Mezzanine and Subordinate Principal
Balance if such Distribution Date occurs during or after March 2014.

      In addition, if the current weighted average Senior Mezzanine and
Subordinate Percentage is equal to or greater than two times the initial
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates, and (a) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Senior Mezzanine Certificates and Subordinate Certificates does not exceed
50% and (b)(i) on or prior to the Distribution Date in February 2006 cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the Original Senior
Mezzanine and Subordinate Principal Balance and (ii) after the Distribution Date
in February 2006 cumulative Realized Losses on the Mortgage Loans do not exceed
30% of the Original Senior Mezzanine and Subordinate Principal Balance, then, in
each case, the Group 1 Senior Prepayment Percentage for such Distribution Date
will equal the Group 1 Senior Percentage; provided, however, if the current
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates is equal to or greater than two times the initial weighted average
Senior Mezzanine and Subordinate Percentage for the Certificates prior to March
25, 2006 and the above delinquency and loss tests are met, then the Group 1
Senior Prepayment Percentage for such Distribution Date will equal the Group 1
Senior Percentage plus 50% of the Group 1 Senior Mezzanine and Subordinate
Percentage.

      Notwithstanding the foregoing, if on any Distribution Date the Group 1
Senior Percentage exceeds the Group 1 Senior Percentage as of the Cut-Off Date,
the Group 1 Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts of the
Group 1 Senior Certificates are reduced to zero, the Group 1 Senior Prepayment
Percentage shall be the minimum percentage sufficient to effect such reduction
and thereafter shall be zero.

      Group 2 Senior Prepayment Percentage: On any Distribution Date occurring
during the periods set forth below, as follows:

<TABLE>
<CAPTION>
Period (dates inclusive)                              Group 2 Senior Prepayment Percentage
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>
March 25, 2003 - February 25, 2010                    100%

March 25, 2010 - February 25, 2011                    Group 2 Senior Percentage plus 70% of the Group
                                                      2 Senior Mezzanine and Subordinate Percentage

March 25, 2011 - February 25, 2012                    Group 2 Senior Percentage plus 60% of the Group
                                                      2 Senior Mezzanine and Subordinate Percentage

March 25, 2012 - February 25, 2013                    Group 2 Senior Percentage plus 40% of the Group
                                                      2 Senior Mezzanine and Subordinate Percentage

March 25, 2013 - February 25, 2014                    Group 2 Senior Percentage plus 20% of the Group
                                                      2 Senior Mezzanine and Subordinate Percentage

March 25, 2014 and thereafter                         Group 2 Senior Percentage
</TABLE>


                                      -17-
<PAGE>

      In addition, no reduction of the Group 2 Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Senior Mezzanine and Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2010 and February 2011, (b)
35% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2011 and February 2012, (c)
40% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2012 and February 2013, (d)
45% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2013 and February 2014, and
(e) 50% of the Original Senior Mezzanine and Subordinate Principal Balance if
such Distribution Date occurs during or after March 2014.

      In addition, if the current weighted average Senior Mezzanine and
Subordinate Percentage is equal to or greater than two times the initial
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates, and (a) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Senior Mezzanine Certificates and Subordinate Certificates does not exceed
50% and (b)(i) on or prior to the Distribution Date in February 2006 cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the Original Senior
Mezzanine and Subordinate Principal Balance and (ii) after the Distribution Date
in February 2006 cumulative Realized Losses on the Mortgage Loans do not exceed
30% of the Original Senior Mezzanine and Subordinate Principal Balance, then, in
each case, the Group 2 Senior Prepayment Percentage for such Distribution Date
will equal the Group 2 Senior Percentage; provided, however, if the current
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates is equal to or greater than two times the initial weighted average
Senior Mezzanine and Subordinate Percentage for the Certificates prior to March
25, 2006 and the above delinquency and loss tests are met, then the Group 2
Senior Prepayment Percentage for such Distribution Date will equal the Group 2
Senior Percentage plus 50% of the Group 2 Senior Mezzanine and Subordinate
Percentage.

      Notwithstanding the foregoing, if on any Distribution Date the Group 2
Senior Percentage exceeds the Group 2 Senior Percentage as of the Cut-Off Date,
the Group 2 Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts


                                      -18-
<PAGE>

of the Group 2 Senior Certificates are reduced to zero, the Group 2 Senior
Prepayment Percentage shall be the minimum percentage sufficient to effect such
reduction and thereafter shall be zero.

      Group 3 Senior Prepayment Percentage: On any Distribution Date occurring
during the periods set forth below, as follows:

<TABLE>
<CAPTION>
Period (dates inclusive)                              Group 3 Senior Prepayment Percentage
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>
March 25, 2003 - February 25, 2010                    100%

March 25, 2010 - February 25, 2011                    Group 3 Senior Percentage plus 70% of the Group
                                                      3 Senior Mezzanine and Subordinate Percentage

March 25, 2011 - February 25, 2012                    Group 3 Senior Percentage plus 60% of the Group
                                                      3 Senior Mezzanine and Subordinate Percentage

March 25, 2012 - February 25, 2013                    Group 3 Senior Percentage plus 40% of the Group
                                                      3 Senior Mezzanine and Subordinate Percentage

March 25, 2013 - February 25, 2014                    Group 3 Senior Percentage plus 20% of the Group
                                                      3 Senior Mezzanine and Subordinate Percentage

March 25, 2014 and thereafter                         Group 3 Senior Percentage
</TABLE>

      In addition, no reduction of the Group 3 Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Senior Mezzanine and Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2010 and February 2011, (b)
35% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2011 and February 2012, (c)
40% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2012 and February 2013, (d)
45% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2013 and February 2014, and
(e) 50% of the Original Senior Mezzanine and Subordinate Principal Balance if
such Distribution Date occurs during or after March 2014.

      In addition, if the current weighted average Senior Mezzanine and
Subordinate Percentage is equal to or greater than two times the initial
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates, and (a) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Senior Mezzanine Certificates and Subordinate Certificates does not exceed
50% and (b)(i) on or prior to the Distribution Date in February 2006 cumulative
Realized Losses on the Mortgage Loans do not exceed


                                      -19-
<PAGE>

20% of the Original Senior Mezzanine and Subordinate Principal Balance and (ii)
after the Distribution Date in February 2006 cumulative Realized Losses on the
Mortgage Loans do not exceed 30% of the Original Senior Mezzanine and
Subordinate Principal Balance, then, in each case, the Group 3 Senior Prepayment
Percentage for such Distribution Date will equal the Group 3 Senior Percentage;
provided, however, if the current weighted average Senior Mezzanine and
Subordinate Percentage for the Certificates is equal to or greater than two
times the initial weighted average Senior Mezzanine and Subordinate Percentage
for the Certificates prior to March 25, 2006 and the above delinquency and loss
tests are met, then the Group 3 Senior Prepayment Percentage for such
Distribution Date will equal the Group 3 Senior Percentage plus 50% of the Group
3 Senior Mezzanine and Subordinate Percentage.

      Notwithstanding the foregoing, if on any Distribution Date the Group 3
Senior Percentage exceeds the Group 3 Senior Percentage as of the Cut-Off Date,
the Group 3 Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts of the
Group 3 Senior Certificates are reduced to zero, the Group 3 Senior Prepayment
Percentage shall be the minimum percentage sufficient to effect such reduction
and thereafter shall be zero.

      Group 4 Senior Prepayment Percentage: On any Distribution Date occurring
during the periods set forth below, as follows:

<TABLE>
<CAPTION>
Period (dates inclusive)                              Group 4 Senior Prepayment Percentage
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>
March 25, 2003 - February 25, 2010                    100%

March 25, 2010 - February 25, 2011                    Group 4 Senior Percentage plus 70% of the Group
                                                      4 Senior Mezzanine and Subordinate Percentage

March 25, 2011 - February 25, 2012                    Group 4 Senior Percentage plus 60% of the Group
                                                      4 Senior Mezzanine and Subordinate Percentage

March 25, 2012 - February 25, 2013                    Group 4 Senior Percentage plus 40% of the Group
                                                      4 Senior Mezzanine and Subordinate Percentage

March 25, 2013 - February 25, 2014                    Group 4 Senior Percentage plus 20% of the Group
                                                      4 Senior Mezzanine and Subordinate Percentage

March 25, 2014 and thereafter                         Group 4 Senior Percentage
</TABLE>

      In addition, no reduction of the Group 4 Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Senior Mezzanine and Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2010 and February 2011, (b)
35% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2011 and February 2012, (c)
40% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date


                                      -20-
<PAGE>

occurs between and including March 2012 and February 2013, (d) 45% of the
Original Senior Mezzanine and Subordinate Principal Balance if such Distribution
Date occurs between and including March 2013 and February 2014, and (e) 50% of
the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs during or after March 2014.

      In addition, if the current weighted average Senior Mezzanine and
Subordinate Percentage is equal to or greater than two times the initial
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates, and (a) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Senior Mezzanine Certificates and Subordinate Certificates does not exceed
50% and (b)(i) on or prior to the Distribution Date in February 2006 cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the Original Senior
Mezzanine and Subordinate Principal Balance and (ii) after the Distribution Date
in February 2006 cumulative Realized Losses on the Mortgage Loans do not exceed
30% of the Original Senior Mezzanine and Subordinate Principal Balance, then, in
each case, the Group 4 Senior Prepayment Percentage for such Distribution Date
will equal the Group 4 Senior Percentage; provided, however, if the current
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates is equal to or greater than two times the initial weighted average
Senior Mezzanine and Subordinate Percentage for the Certificates prior to March
25, 2006 and the above delinquency and loss tests are met, then the Group 4
Senior Prepayment Percentage for such Distribution Date will equal the Group 4
Senior Percentage plus 50% of the Group 4 Senior Mezzanine and Subordinate
Percentage.

      Notwithstanding the foregoing, if on any Distribution Date the Group 4
Senior Percentage exceeds the Group 4 Senior Percentage as of the Cut-Off Date,
the Group 4 Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts of the
Group 4 Senior Certificates are reduced to zero, the Group 4 Senior Prepayment
Percentage shall be the minimum percentage sufficient to effect such reduction
and thereafter shall be zero.

      Group 5 Senior Prepayment Percentage: On any Distribution Date occurring
during the periods set forth below, as follows:

<TABLE>
<CAPTION>
Period (dates inclusive)                              Group 5 Senior Prepayment Percentage
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>
March 25, 2003 - February 25, 2010                    100%

March 25, 2010 - February 25, 2011                    Group 5 Senior Percentage plus 70% of the Group
                                                      5 Senior Mezzanine and Subordinate Percentage

March 25, 2011 - February 25, 2012                    Group 5 Senior Percentage plus 60% of the Group
                                                      5 Senior Mezzanine and Subordinate Percentage

March 25, 2012 - February 25, 2013                    Group 5 Senior Percentage plus 40% of the Group
                                                      5 Senior Mezzanine and Subordinate Percentage

March 25, 2013 - February 25, 2014                    Group 5 Senior Percentage plus 20% of the Group
                                                      5 Senior Mezzanine and Subordinate Percentage

March 25, 2014 and thereafter                         Group 5 Senior Percentage
</TABLE>


                                      -21-
<PAGE>

      In addition, no reduction of the Group 5 Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Senior Mezzanine and Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2010 and February 2011, (b)
35% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2011 and February 2012, (c)
40% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2012 and February 2013, (d)
45% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2013 and February 2014, and
(e) 50% of the Original Senior Mezzanine and Subordinate Principal Balance if
such Distribution Date occurs during or after March 2014.

      In addition, if the current weighted average Senior Mezzanine and
Subordinate Percentage is equal to or greater than two times the initial
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates, and (a) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Senior Mezzanine Certificates and Subordinate Certificates does not exceed
50% and (b)(i) on or prior to the Distribution Date in February 2006 cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the Original Senior
Mezzanine and Subordinate Principal Balance and (ii) after the Distribution Date
in February 2006 cumulative Realized Losses on the Mortgage Loans do not exceed
30% of the Original Senior Mezzanine and Subordinate Principal Balance, then, in
each case, the Group 5 Senior Prepayment Percentage for such Distribution Date
will equal the Group 5 Senior Percentage; provided, however, if the current
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates is equal to or greater than two times the initial weighted average
Senior Mezzanine and Subordinate Percentage for the Certificates prior to March
25, 2006 and the above delinquency and loss tests are met, then the Group 5
Senior Prepayment Percentage for such Distribution Date will equal the Group 5
Senior Percentage plus 50% of the Group 5 Senior Mezzanine and Subordinate
Percentage.

      Notwithstanding the foregoing, if on any Distribution Date the Group 5
Senior Percentage exceeds the Group 5 Senior Percentage as of the Cut-Off Date,
the Group 5 Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts of the
Group 5 Senior Certificates are reduced to zero, the Group 5 Senior Prepayment
Percentage shall be the minimum percentage sufficient to effect such reduction
and thereafter shall be zero.


                                      -22-
<PAGE>

      Group 6 Senior Prepayment Percentage: On any Distribution Date occurring
during the periods set forth below, as follows:

<TABLE>
<CAPTION>
Period (dates inclusive)                              Group 6 Senior Prepayment Percentage
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>
March 25, 2003 - February 25, 2010                    100%

March 25, 2010 - February 25, 2011                    Group 6 Senior Percentage plus 70% of the Group
                                                      6 Senior Mezzanine and Subordinate Percentage

March 25, 2011 - February 25, 2012                    Group 6 Senior Percentage plus 60% of the Group
                                                      6 Senior Mezzanine and Subordinate Percentage

March 25, 2012 - February 25, 2013                    Group 6 Senior Percentage plus 40% of the Group
                                                      6 Senior Mezzanine and Subordinate Percentage

March 25, 2013 - February 25, 2014                    Group 6 Senior Percentage plus 20% of the Group
                                                      6 Senior Mezzanine and Subordinate Percentage

March 25, 2014 and thereafter                         Group 6 Senior Percentage
</TABLE>

      In addition, no reduction of the Group 6 Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Senior Mezzanine and Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2010 and February 2011, (b)
35% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2011 and February 2012, (c)
40% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2012 and February 2013, (d)
45% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2013 and February 2014, and
(e) 50% of the Original Senior Mezzanine and Subordinate Principal Balance if
such Distribution Date occurs during or after March 2014.

      In addition, if the current weighted average Senior Mezzanine and
Subordinate Percentage is equal to or greater than two times the initial
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates, and (a) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Senior Mezzanine Certificates and Subordinate Certificates does not exceed
50% and (b)(i) on or prior to the Distribution Date in February 2006 cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the Original Senior
Mezzanine and Subordinate Principal Balance and (ii) after the Distribution Date
in February 2006 cumulative Realized Losses on the Mortgage Loans do not exceed
30% of the Original Senior Mezzanine and Subordinate Principal Balance, then, in
each case, the Group 6 Senior Prepayment


                                      -23-
<PAGE>

Percentage for such Distribution Date will equal the Group 6 Senior Percentage;
provided, however, if the current weighted average Senior Mezzanine and
Subordinate Percentage for the Certificates is equal to or greater than two
times the initial weighted average Senior Mezzanine and Subordinate Percentage
for the Certificates prior to March 25, 2006 and the above delinquency and loss
tests are met, then the Group 6 Senior Prepayment Percentage for such
Distribution Date will equal the Group 6 Senior Percentage plus 50% of the Group
6 Senior Mezzanine and Subordinate Percentage.

      Notwithstanding the foregoing, if on any Distribution Date the Group 6
Senior Percentage exceeds the Group 6 Senior Percentage as of the Cut-Off Date,
the Group 6 Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts of the
Group 6 Senior Certificates are reduced to zero, the Group 6 Senior Prepayment
Percentage shall be the minimum percentage sufficient to effect such reduction
and thereafter shall be zero.

      Group 7 Senior Prepayment Percentage: On any Distribution Date occurring
during the periods set forth below, as follows:

<TABLE>
<CAPTION>
Period (dates inclusive)                              Group 7 Senior Prepayment Percentage
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>
March 25, 2003 - February 25, 2010                    100%

March 25, 2010 - February 25, 2011                    Group 7 Senior Percentage plus 70% of the Group
                                                      7 Senior Mezzanine and Subordinate Percentage

March 25, 2011 - February 25, 2012                    Group 7 Senior Percentage plus 60% of the Group
                                                      7 Senior Mezzanine and Subordinate Percentage

March 25, 2012 - February 25, 2013                    Group 7 Senior Percentage plus 40% of the Group
                                                      7 Senior Mezzanine and Subordinate Percentage

March 25, 2013 - February 25, 2014                    Group 7 Senior Percentage plus 20% of the Group
                                                      7 Senior Mezzanine and Subordinate Percentage

March 25, 2014 and thereafter                         Group 7 Senior Percentage
</TABLE>

      In addition, no reduction of the Group 7 Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Senior Mezzanine and Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2010 and February 2011, (b)
35% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2011 and February 2012, (c)
40% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2012 and February 2013, (d)
45% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2013 and


                                      -24-
<PAGE>

February 2014, and (e) 50% of the Original Senior Mezzanine and Subordinate
Principal Balance if such Distribution Date occurs during or after March 2014.

      In addition, if the current weighted average Senior Mezzanine and
Subordinate Percentage is equal to or greater than two times the initial
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates, and (a) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Senior Mezzanine Certificates and Subordinate Certificates does not exceed
50% and (b)(i) on or prior to the Distribution Date in February 2006 cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the Original Senior
Mezzanine and Subordinate Principal Balance and (ii) after the Distribution Date
in February 2006 cumulative Realized Losses on the Mortgage Loans do not exceed
30% of the Original Senior Mezzanine and Subordinate Principal Balance, then, in
each case, the Group 7 Senior Prepayment Percentage for such Distribution Date
will equal the Group 7 Senior Percentage; provided, however, if the current
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates is equal to or greater than two times the initial weighted average
Senior Mezzanine and Subordinate Percentage for the Certificates prior to March
25, 2006 and the above delinquency and loss tests are met, then the Group 7
Senior Prepayment Percentage for such Distribution Date will equal the Group 7
Senior Percentage plus 50% of the Group 7 Senior Mezzanine and Subordinate
Percentage.

      Notwithstanding the foregoing, if on any Distribution Date the Group 7
Senior Percentage exceeds the Group 7 Senior Percentage as of the Cut-Off Date,
the Group 7 Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts of the
Group 7 Senior Certificates (other than the Class VII-A-X Certificates) are
reduced to zero, the Group 7 Senior Prepayment Percentage shall be the minimum
percentage sufficient to effect such reduction and thereafter shall be zero.

      Group 8 Senior Prepayment Percentage: On any Distribution Date occurring
during the periods set forth below, as follows:

<TABLE>
<CAPTION>
Period (dates inclusive)                              Group 8 Senior Prepayment Percentage
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>
March 25, 2003 - February 25, 2010                    100%

March 25, 2010 - February 25, 2011                    Group 8 Senior Percentage plus 70% of the Group
                                                      8 Senior Mezzanine and Subordinate Percentage

March 25, 2011 - February 25, 2012                    Group 8 Senior Percentage plus 60% of the Group
                                                      8 Senior Mezzanine and Subordinate Percentage

March 25, 2012 - February 25, 2013                    Group 8 Senior Percentage plus 40% of the Group
                                                      8 Senior Mezzanine and Subordinate Percentage

March 25, 2013 - February 25, 2014                    Group 8 Senior Percentage plus 20% of the Group
                                                      8 Senior Mezzanine and Subordinate Percentage

March 25, 2014 and thereafter                         Group 8 Senior Percentage
</TABLE>


                                      -25-
<PAGE>

      In addition, no reduction of the Group 8 Senior Prepayment Percentage
shall occur on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date, (A) the aggregate Scheduled Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose any
such Mortgage Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the sum of the aggregate Current Principal
Amount of the Senior Mezzanine and Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Mortgage Loans do not exceed (a) 30%
of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2010 and February 2011, (b)
35% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2011 and February 2012, (c)
40% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2012 and February 2013, (d)
45% of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2013 and February 2014, and
(e) 50% of the Original Senior Mezzanine and Subordinate Principal Balance if
such Distribution Date occurs during or after March 2014.

      In addition, if the current weighted average Senior Mezzanine and
Subordinate Percentage is equal to or greater than two times the initial
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates, and (a) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Senior Mezzanine Certificates and Subordinate Certificates does not exceed
50% and (b)(i) on or prior to the Distribution Date in February 2006 cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the Original Senior
Mezzanine and Subordinate Principal Balance and (ii) after the Distribution Date
in February 2006 cumulative Realized Losses on the Mortgage Loans do not exceed
30% of the Original Senior Mezzanine and Subordinate Principal Balance, then, in
each case, the Group 8 Senior Prepayment Percentage for such Distribution Date
will equal the Group 8 Senior Percentage; provided, however, if the current
weighted average Senior Mezzanine and Subordinate Percentage for the
Certificates is equal to or greater than two times the initial weighted average
Senior Mezzanine and Subordinate Percentage for the Certificates prior to March
25, 2006 and the above delinquency and loss tests are met, then the Group 8
Senior Prepayment Percentage for such Distribution Date will equal the Group 8
Senior Percentage plus 50% of the Group 8 Senior Mezzanine and Subordinate
Percentage.

      Notwithstanding the foregoing, if on any Distribution Date the Group 8
Senior Percentage exceeds the Group 8 Senior Percentage as of the Cut-Off Date,
the Group 8 Senior Prepayment Percentage for such Distribution Date will equal
100%. On the Distribution Date on which the Current Principal Amounts of the
Group 8 Senior Certificates (other than the Class VIII-A-X Certificates) are
reduced to zero, the Group 8 Senior Prepayment Percentage shall be the minimum
percentage sufficient to effect such reduction and thereafter shall be zero.

      Holder: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsections 12.02(b) and 12.05(e),
solely for the purpose of giving any consent pursuant to this


                                      -26-
<PAGE>

Agreement, any Certificate registered in the name of the Seller, the Master
Servicer or the Trustee or any Affiliate thereof shall be deemed not to be
outstanding and the Fractional Undivided Interest evidenced thereby shall not be
taken into account in determining whether the requisite percentage of Fractional
Undivided Interests necessary to effect any such consent has been obtained.

      Indemnified Persons: The Trustee, the Master Servicer, the Custodian and
the Securities Administrator and their officers, directors, agents and employees
and, with respect to the Trustee, any separate co-trustee and its officers,
directors, agents and employees.

      Independent: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Seller or the Master
Servicer and of any Affiliate of the Seller or the Master Servicer, (b) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer or any Affiliate of the Seller or the
Master Servicer and (c) is not connected with the Seller or the Master Servicer
or any Affiliate as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.

      Index: The index, if any, specified in a Mortgage Note by reference to
which the related Mortgage Interest Rate will be adjusted from time to time.

      Individual Certificate: Any Private Certificate registered in the name of
the Holder other than the Depository or its nominee.

      Initial Certification: The certification substantially in the form of
Exhibit One to the Custodial Agreement.

      Institutional Accredited Investor: Any Person meeting the requirements of
Rule 501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act or any
entity all of the equity holders in which come within such paragraphs.

      Insurance Policy: With respect to any Mortgage Loan, any standard hazard
insurance policy, flood insurance policy or title insurance policy.

      Insurance Proceeds: Amounts paid by the insurer under any Insurance Policy
covering any Mortgage Loan or Mortgaged Property other than amounts required to
be paid over to the Mortgagor pursuant to law or the related Mortgage Note or
Security Instrument and other than amounts used to repair or restore the
Mortgaged Property or to reimburse insured expenses.

      Interest Accrual Period: With respect to each Distribution Date, for each
Class of Certificates, the calendar month preceding the month in which such
Distribution Date occurs.

      Interest Adjustment Date: With respect to a Mortgage Loan, the date, if
any, specified in the related Mortgage Note on which the Mortgage Interest Rate
is subject to adjustment.


                                      -27-
<PAGE>

      Interest Only Certificates: The Class VII-A-X Certificates and Class
VIII-A-X Certificates.

      Interest Shortfall: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Principal Prepayment or constitutes a Relief Act Mortgage Loan, an amount
determined as follows:

      (a) Partial principal prepayments received during the relevant Prepayment
Period: The difference between (i) one month's interest at the applicable Net
Rate on the amount of such prepayment and (ii) the amount of interest for the
calendar month of such prepayment (adjusted to the applicable Net Rate) received
at the time of such prepayment;

      (b) Principal prepayments in full received during the relevant Prepayment
Period: The difference between (i) one month's interest at the applicable Net
Rate on the Scheduled Principal Balance of such Mortgage Loan immediately prior
to such prepayment and (ii) the amount of interest for the calendar month of
such prepayment (adjusted to the applicable Net Rate) received at the time of
such prepayment; and

      (c) Relief Act Mortgage Loans: As to any Relief Act Mortgage Loan, the
excess of (i) 30 days' interest (or, in the case of a principal prepayment in
full, interest to the date of prepayment) on the Scheduled Principal Balance
thereof (or, in the case of a principal prepayment in part, on the amount so
prepaid) at the related Net Rate over (ii) 30 days' interest (or, in the case of
a principal prepayment in full, interest to the date of prepayment) on such
Scheduled Principal Balance (or, in the case of a Principal Prepayment in part,
on the amount so prepaid) at the Net Rate required to be paid by the Mortgagor
as limited by application of the Relief Act.

      Interim Certification: The certification substantially in the form of
Exhibit Two to the Custodial Agreement.

      Investment Letter: The letter to be furnished by each Institutional
Accredited Investor which purchases any of the Private Certificates in
connection with such purchase, substantially in the form set forth as Exhibit
F-1 hereto.

      Lender-Paid PMI Rate: With respect to each Mortgage Loan covered by a
lender-paid primary mortgage insurance policy, the amount payable to the related
insurer, as stated in the Mortgage Loan Schedule.

      Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
related Servicer or the Master Servicer has determined that all amounts it
expects to recover from or on account of such Mortgage Loan have been recovered.

      Liquidation Date: With respect to any Liquidated Mortgage Loan, the date
on which the Master Servicer or the related Servicer has certified that such
Mortgage Loan has become a Liquidated Mortgage Loan.


                                      -28-
<PAGE>

      Liquidation Expenses: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer or the related Servicers in connection with the liquidation of such
Mortgage Loan and the related Mortgage Property, such expenses including (a)
property protection expenses, (b) property sales expenses, (c) foreclosure and
sale costs, including court costs and reasonable attorneys' fees, and (d)
similar expenses reasonably paid or incurred in connection with liquidation.

      Liquidation Proceeds: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale,
Insurance Proceeds, condemnation proceeds or otherwise.

      Loan Group: Loan Group 1, Loan Group 2, Loan Group 3, Loan Group 4, Loan
Group 5, Loan Group 6, Loan Group 7 or Loan Group 8, as applicable.

      Loan Group 1: The group of Mortgage Loans designated as belonging to Loan
Group 1 on the Mortgage Loan Schedule.

      Loan Group 2: The group of Mortgage Loans designated as belonging to Loan
Group 2 on the Mortgage Loan Schedule.

      Loan Group 3: The group of Mortgage Loans designated as belonging to Loan
Group 3 on the Mortgage Loan Schedule.

      Loan Group 4: The group of Mortgage Loans designated as belonging to Loan
Group 4 on the Mortgage Loan Schedule.

      Loan Group 5: The group of Mortgage Loans designated as belonging to Loan
Group 5 on the Mortgage Loan Schedule.

      Loan Group 6: The group of Mortgage Loans designated as belonging to Loan
Group 6 on the Mortgage Loan Schedule.

      Loan Group 7: The group of Mortgage Loans designated as belonging to Loan
Group 7 on the Mortgage Loan Schedule.

      Loan Group 8: The group of Mortgage Loans designated as belonging to Loan
Group 8 on the Mortgage Loan Schedule.

      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
Original Value of the related Mortgaged Property.

      Loss Allocation Limitation: The meaning specified in Section 6.02(c)
hereof.


                                      -29-
<PAGE>

      Lost Notes: The original Mortgage Notes that have been lost, as indicated
on the Mortgage Loan Schedule.

      Master Servicer: As of the Closing Date, Wells Fargo Bank Minnesota,
National Association and, thereafter, its respective successors in interest who
meet the qualifications of the Servicing Agreements and this Agreement.

      Master Servicer Collection Account: The trust account or accounts created
and maintained pursuant to Section 4.02, which shall be denominated "JPMorgan
Chase Bank, as Trustee f/b/o holders of Structured Asset Mortgage Investments
Inc., Bear Stearns ARM Trust, Mortgage Pass- Through Certificates, Series 2003-1
- Master Servicer Collection Account." The Master Servicer Collection Account
shall be an Eligible Account.

      Master Servicing Compensation: The meaning specified in Section 3.14(a).

      Maximum Lifetime Mortgage Rate: The maximum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.

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

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

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

      Minimum Lifetime Mortgage Rate: The minimum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.

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

      Monthly Advance: An advance of principal or interest required to be made
by the applicable Servicer pursuant to the related Servicing Agreement or the
Master Servicer pursuant to Section 6.05.

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

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


                                      -30-
<PAGE>

      Mortgage Interest Rate: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note, which
rate is equal to the "Mortgage Interest Rate" set forth with respect thereto on
the Mortgage Loan Schedule.

      Mortgage Loan: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO Property.

      Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement
dated as of February 28, 2003, between EMC, as seller, and Structured Asset
Mortgage Investments Inc., as purchaser, and all amendments thereof and
supplements thereto, attached as Exhibit J.

      Mortgage Loan Schedule: The schedule, attached hereto as Exhibit B with
respect to the Mortgage Loans and as amended from time to time to reflect the
repurchase or substitution of Mortgage Loans pursuant to this Agreement.

      Mortgage Loan Seller: EMC Mortgage Corporation, as mortgage loan seller
under the Mortgage Loan Purchase Agreement.

      Mortgage Note: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.

      Mortgaged Property: Land and improvements securing the indebtedness of a
Mortgagor under the related Mortgage Loan or, in the case of REO Property, such
REO Property.

      Mortgagor: The obligor on a Mortgage Note.

      Net Interest Shortfall: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.

      Net Liquidation Proceeds: As to any Liquidated Mortgage Loan, Liquidation
Proceeds net of (i) Liquidation Expenses which are payable therefrom by the
related Servicer or the Master Servicer in accordance with the related Servicing
Agreement or this Agreement and (ii) unreimbursed advances by the related
Servicer or the Master Servicer and Monthly Advances.

      Net Rate: With respect to each Mortgage Loan, the Mortgage Interest Rate
in effect from time to time less the Aggregate Expense Rate (expressed as a per
annum rate).

      Nexstar: Nexstar Financial Corporation, or its successor in interest.

      Nexstar Servicing Agreement: The Master Sale and Servicing Agreement,
dated as of March 18, 2002, between EMC and Nexstar, which is attached hereto as
Exhibit H-5.


                                      -31-
<PAGE>

      Nonrecoverable Advance: Any advance or Monthly Advance (i) which was
previously made or is proposed to be made by the Master Servicer, the Trustee
(as successor Master Servicer) or applicable Servicer and (ii) which, in the
good faith judgment of the Master Servicer, the Trustee or applicable Servicer,
will not or, in the case of a proposed advance or Monthly Advance, would not, be
ultimately recoverable by the Master Servicer, the Trustee (as successor Master
Servicer) or applicable Servicer from Liquidation Proceeds, Insurance Proceeds
or future payments on the Mortgage Loan for which such advance or Monthly
Advance was made.

      Notional Amount: The Notional Amount of the Class VII-A-X Certificates, as
of any date of determination, is equal to the Current Principal Amount of the
Class VII-A-1 Certificates. For federal income tax purposes, however, the
notional amount of the Class VII-A-X Certificates is the Uncertificated
Principal Balance of REMIC II Regular Interest VII-A-1. The Notional Amount of
the Class VIII-A-X Certificates, as of any date of determination, is equal to
the Current Principal Amount of the Class VIII-A-1 Certificates. For federal
income tax purposes, however, the notional amount of the Class VIII-A-X
Certificates is the Uncertificated Principal Balance of REMIC II Regular
Interest VIII-A-1.

      Offered Certificate: Any Senior Certificate, Senior Mezzanine Certificate
or Offered Subordinate Certificate.

      Offered Subordinate Certificates: The Class B-l, Class B-2 and Class B-3
Certificates.

      Officer's Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a Vice President or Assistant
Vice President or other authorized officer of the Master Servicer or the Seller,
as applicable, and delivered to the Trustee, as required by this Agreement.

      Opinion of Counsel: A written opinion of counsel who is or are acceptable
to the Trustee and who, unless required to be Independent (an "Opinion of
Independent Counsel"), may be internal counsel for EMC, the Master Servicer or
the Seller.

      Original Senior Mezzanine and Subordinate Principal Balance: The sum of
the aggregate Current Principal Amounts of each Class of Senior Mezzanine
Certificates and Subordinate Certificates as of the Closing Date.

      Original Value: The lesser of (i) the Appraised Value or (ii) the sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except in instances where either clauses (i) or (ii) is unavailable, the other
may be used to determine the Original Value, or if both clauses (i) and (ii) are
unavailable, Original Value may be determined from other sources reasonably
acceptable to the Seller.

      Outstanding Mortgage Loan: With respect to any Due Date, a Mortgage Loan
which, prior to such Due Date, was not the subject of a Principal Prepayment in
full, did not become a Liquidated Mortgage Loan and was not purchased or
replaced.


                                      -32-
<PAGE>

      Outstanding Principal Balance: As of the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor at the time such property was
acquired by the Trust Fund less any Net Liquidation Proceeds with respect
thereto to the extent applied to principal.

      Pass-Through Rate: As to each Class of Certificates and the REMIC I
Regular Interests and REMIC II Regular Interests, the rate of interest
determined as provided with respect thereto, in Section 5.01(c). Any monthly
calculation of interest at a stated rate shall be based upon annual interest at
such rate divided by twelve.

      Periodic Rate Cap: With respect to each Mortgage Loan, the maximum
adjustment that can be made to the Mortgage Interest Rate on each Interest
Adjustment Date in accordance with its terms, regardless of changes in the
applicable Index.

      Permitted Investments: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders:

            (i) direct obligations of, and obligations the timely payment of
      which are fully guaranteed by the United States of America or any agency
      or instrumentality of the United States of America the obligations of
      which are backed by the full faith and credit of the United States of
      America;

            (ii) (a) demand or time deposits, federal funds or bankers'
      acceptances issued by any depository institution or trust company
      incorporated under the laws of the United States of America or any state
      thereof (including the Trustee or the Master Servicer or its Affiliates
      acting in its commercial banking capacity) and subject to supervision and
      examination by federal and/or state banking authorities, provided that the
      commercial paper and/or the short- term debt rating and/or the long-term
      unsecured debt obligations of such depository institution or trust company
      at the time of such investment or contractual commitment providing for
      such investment have the Applicable Credit Rating or better from each
      Rating Agency and (b) any other demand or time deposit or certificate of
      deposit that is fully insured by the Federal Deposit Insurance
      Corporation;

            (iii) repurchase obligations with respect to (a) any security
      described in clause (i) above or (b) any other security issued or
      guaranteed by an agency or instrumentality of the United States of
      America, the obligations of which are backed by the full faith and credit
      of the United States of America, in either case entered into with a
      depository institution or trust company (acting as principal) described in
      clause (ii)(a) above where the Trustee holds the security therefor;

            (iv) securities bearing interest or sold at a discount issued by any
      corporation (including the Trustee or the Master Servicer or its
      Affiliates) incorporated under the laws of the United States of America or
      any state thereof that have the Applicable Credit Rating or better from
      each Rating Agency at the time of such investment or contractual
      commitment providing for such


                                      -33-
<PAGE>

      investment; provided, however, that securities issued by any particular
      corporation will not be Permitted Investments to the extent that
      investments therein will cause the then outstanding principal amount of
      securities issued by such corporation and held as part of the Trust to
      exceed 10% of the aggregate Outstanding Principal Balances of all the
      Mortgage Loans and Permitted Investments held as part of the Trust;

            (v) commercial paper (including both non-interest-bearing discount
      obligations and interest-bearing obligations payable on demand or on a
      specified date not more than one year after the date of issuance thereof)
      having the Applicable Credit Rating or better from each Rating Agency at
      the time of such investment;

            (vi) a Reinvestment Agreement issued by any bank, insurance company
      or other corporation or entity;

            (vii) any other demand, money market or time deposit, obligation,
      security or investment as may be acceptable to each Rating Agency as
      evidenced in writing by each Rating Agency to the Trustee; and

            (viii) any money market or common trust fund having the Applicable
      Credit Rating or better from each Rating Agency, including any such fund
      for which the Trustee or Master Servicer or any affiliate of the Trustee
      or Master Servicer acts as a manager or an advisor; provided, however,
      that no instrument or security shall be a Permitted Investment if such
      instrument or security evidences a right to receive only interest payments
      with respect to the obligations underlying such instrument or if such
      security provides for payment of both principal and interest with a yield
      to maturity in excess of 120% of the yield to maturity at par or if such
      instrument or security is purchased at a price greater than par.

      Permitted Transferee: Any Person other than a Disqualified Organization or
an "electing large partnership" (as defined by Section 775 of the Code).

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

      Physical Certificates: The Residual Certificates and the Private
Certificates.

      Prepayment Charge: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof.

      Prepayment Period: With respect to any Mortgage Loan and any Distribution
Date, the calendar month preceding the month in which such Distribution Date
occurs.


                                      -34-
<PAGE>

      Principal Prepayment: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it 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, including Insurance Proceeds
and Repurchase Proceeds, but excluding the principal portion of Net Liquidation
Proceeds.

      Private Certificates: Any Class B-4, Class B-5 and Class B-6 Certificate.

      Protected Account: An account established and maintained for the benefit
of Certificateholders by each Servicer with respect to the related Mortgage
Loans and with respect to REO Property pursuant to the respective Servicing
Agreements.

      QIB: A Qualified Institutional Buyer as defined in Rule 144A promulgated
under the Securities Act.

      Qualified Insurer: Any insurance company duly qualified as such under the
laws of the state or states in which the related Mortgaged Property or Mortgaged
Properties is or are located, duly authorized and licensed in such state or
states to transact the type of insurance business in which it is engaged and
approved as an insurer by the Master Servicer, so long as the claims paying
ability of which is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.

      Rating Agencies: Moody's and S&P.

      Realized Loss: Any (i) Bankruptcy Loss or (ii) as to any Liquidated
Mortgage Loan, (x) the Outstanding Principal Balance of such Liquidated Mortgage
Loan plus accrued and unpaid interest thereon at the Mortgage Interest Rate
through the last day of the month of such liquidation, less (y) the related Net
Liquidation Proceeds with respect to such Mortgage Loan and the related Mortgage
Property.

      Record Date: With respect to any Distribution Date, the close of business
on the last Business Day of the month immediately preceding the month of such
Distribution Date.

      Reinvestment Agreements: One or more reinvestment agreements, acceptable
to the Rating Agencies, from a bank, insurance company or other corporation or
entity (including the Trustee).

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

      Relief Act Mortgage Loan: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.

      REMIC: A real estate mortgage investment conduit, as defined in the Code.

      REMIC I: That group of assets contained in the Trust Fund designated as a
REMIC consisting of (i) the Mortgage Loans, (ii) the Master Servicer Collection
Account, (iii) any REO Property relating to the


                                      -35-
<PAGE>

Mortgage Loans, (iv) the rights with respect to any related Servicing Agreement,
(v) the rights with respect to any related Assignment Agreement and (vi) any
proceeds of the foregoing.

      REMIC I Interests: The REMIC I Regular Interests and the Class R-I
Certificates.

      REMIC I Regular Interests: The REMIC I Regular Interests, with such terms
as described in Section 5.01(c).

      REMIC I Subordinated Balance Ratio: The ratio among the Uncertificated
Principal Balances of each of the REMIC I Regular Interests ending with the
designation "A," equal to the ratio among, with respect to each such REMIC I
Regular Interest, the excess of (x) the aggregate Scheduled Principal Balance of
the Mortgage Loans in the related Loan Group over (y) the Current Principal
Amount of the Senior Certificates in the related Group.

      REMIC II: That group of assets contained in the Trust Fund designated as a
REMIC consisting of the REMIC I Regular Interests.

      REMIC II Interests: The REMIC II Regular Interests and the Class R-II
Certificates.

      REMIC II Regular Interests: As defined in Section 5.01(c).

      REMIC III: That group of assets contained in the Trust Fund designated as
a REMIC consisting of the REMIC II Regular Interests.

      REMIC III Interests: The REMIC III Regular Certificates and the Class
R-III Certificates.

      REMIC III Regular Certificates: Certificates as defined in Section
5.01(c).

      REMIC Opinion: An Opinion of Independent Counsel, to the effect that the
proposed action described therein would not, under the REMIC Provisions, (i)
cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC while any
regular interest in such REMIC is outstanding, (ii) result in a tax on
prohibited transactions with respect to any REMIC or (iii) constitute a taxable
contribution to any REMIC after the Startup Day.

      REMIC Provisions: The provisions of the federal income tax law relating to
the REMIC, which appear at Sections 860A through 860G of the Code, and related
provisions and regulations promulgated thereunder, as the foregoing may be in
effect from time to time.

      REO Property: A Mortgaged Property acquired in the name of the Trustee,
for the benefit of Certificateholders, by foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.


                                      -36-
<PAGE>

      Repurchase Price: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased by the Mortgage Loan
Seller pursuant to the Mortgage Loan Purchase Agreement or Article II of this
Agreement, an amount equal to the sum of (i) 100% of the Outstanding Principal
Balance of such Mortgage Loan as of the date of repurchase (or if the related
Mortgaged Property was acquired with respect thereto, 100% of the Outstanding
Principal Balance at the date of the acquisition), plus (ii) accrued but unpaid
interest on the Outstanding Principal Balance at the related Mortgage Interest
Rate, through and including the last day of the month of repurchase, and reduced
by (iii) any portion of the Master Servicing Compensation, Monthly Advances and
advances payable to the purchaser of the Mortgage Loan.

      Repurchase Proceeds: the Repurchase Price in connection with any
repurchase of a Mortgage Loan by the Mortgage Loan Seller and any cash deposit
in connection with the substitution of a Mortgage Loan.

      Request for Release: A request for release in the form attached hereto as
Exhibit D.

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

      Residual Certificates: Any of the Class R Certificates.

      Responsible Officer: Any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement, and any other officer
of the Trustee to whom a matter arising hereunder may be referred.

      Rule 144A Certificate: The certificate to be furnished by each purchaser
of a Private Certificate (which is also a Physical Certificate) which is a
Qualified Institutional Buyer as defined under Rule 144A promulgated under the
Securities Act, substantially in the form set forth as Exhibit F-2 hereto.

      S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and
its successors in interest.

      Scheduled Payment: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which either is payable by a Mortgagor in such month under
the related Mortgage Note or, in the case of REO Property, would otherwise have
been payable under the related Mortgage Note.

      Scheduled Principal: The principal portion of any Scheduled Payment.

      Scheduled Principal Balance: With respect to any Mortgage Loan on any
Distribution Date, (i) the unpaid principal balance of such Mortgage Loan as of
the close of business on the related Due Date (i.e.,


                                      -37-
<PAGE>

taking account of the principal payment to be made on such Due Date and
irrespective of any delinquency in its payment), as specified in the
amortization schedule at the time relating thereto (before any adjustment to
such amortization schedule by reason of any bankruptcy or similar proceeding
occurring after the Cut-off Date (other than a Deficient Valuation) or any
moratorium or similar waiver or grace period) and less (ii) any Principal
Prepayments (including the principal portion of Net Liquidation Proceeds)
received during or prior to the related Prepayment Period; provided that the
Scheduled Principal Balance of a Liquidated Mortgage Loan is zero.

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

      Securities Administrator: Wells Fargo Bank Minnesota, National
Association, or its successor in interest, or any successor securities
administrator appointed as herein provided.

      Securities Legend: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3)
IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT
OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO
(A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN
THE AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY
OTHER APPLICABLE JURISDICTION. THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR
INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED [in the case of the Class B-4, Class B-5 and Class B-6
Certificates]:, UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND
THE SERVICING, MANAGEMENT AND/OR OPERATION OF THE


                                      -38-
<PAGE>

TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS
NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION,
INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14,
PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY
ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE SELLER, THE SECURITIES
ADMINISTRATOR, THE MASTER SERVICER, ANY SERVICER OR THE TRUSTEE, WHICH WILL BE
DEEMED REPRESENTED BY AN OWNER OF A BOOK- ENTRY CERTIFICATE OR A GLOBAL
CERTIFICATE AND WILL BE EVIDENCED BY A REPRESENTATION OR AN OPINION OF COUNSEL
TO SUCH EFFECT BY OR ON BEHALF OF AN INSTITUTIONAL ACCREDITED INVESTOR]."

      Security Instrument: A written instrument creating a valid first lien on a
Mortgaged Property securing a Mortgage Note, which may be any applicable form of
mortgage, deed of trust, deed to secure debt or security deed, including any
riders or addenda thereto.

      Seller: Structured Asset Mortgage Investments Inc., a Delaware
corporation, or its successors in interest.

      Senior Certificates: The Group 1 Senior Certificates, Group 2 Senior
Certificates, Group 3 Senior Certificates, Group 4 Senior Certificates, Group 5
Senior Certificates, Group 6 Senior Certificates, Group 7 Senior Certificates or
Group 8 Senior Certificates.

      Senior Mezzanine Certificates: The Class M Certificates.

      Senior Mezzanine Certificate Writedown Amount: As of any Distribution Date
on or after the aggregate Current Principal Amount of the Subordinated
Certificates is reduced to zero, the amount by which (a) the sum of the Current
Principal Amounts of all the Certificates (after giving effect to the
distribution of principal and the allocation of applicable Realized Losses in
reduction of the Current Principal Amounts of such Certificates on such
Distribution Date) exceeds (b) the aggregate Scheduled Principal Balances of the
Mortgage Loans on the Due Date related to such Distribution Date.

      Senior Mezzanine Loss and Delinquency Test: On any Distribution Date, the
Senior Mezzanine Loss and Delinquency Test is satisfied if, as of the last day
of the month preceding such Distribution Date, (A) the aggregate Scheduled
Principal Balance of the Mortgage Loans delinquent 60 days or more (including
for this purpose any such Mortgage Loans in foreclosure and Mortgage Loans with
respect to which the related Mortgaged Property has been acquired by the Trust),
averaged over the last six months, as a percentage of the aggregate Current
Principal Amount of the Senior Mezzanine and Subordinate Certificates does not
exceed 100%; and (B) cumulative Realized Losses on the Mortgage Loans do not
exceed (a) 30% of the Original Senior Mezzanine and Subordinate Principal
Balance if such Distribution Date occurs between and including March 2010 and
February 2011, (b) 35% of the Original Senior Mezzanine and Subordinate
Principal Balance if such Distribution Date occurs between and including March
2011 and February 2012, (c) 40% of the Original Senior Mezzanine and Subordinate
Principal Balance if such Distribution Date occurs between and including March
2012 and February 2013, (d) 45%


                                      -39-
<PAGE>

of the Original Senior Mezzanine and Subordinate Principal Balance if such
Distribution Date occurs between and including March 2013 and February 2014, and
(e) 50% of the Original Senior Mezzanine and Subordinate Principal Balance if
such Distribution Date occurs during or after March 2014.

      Senior Mezzanine and Subordinate Optimal Principal Amount: As to any
Distribution Date, an amount equal to the sum, without duplication, of the
following for the Group 1, Group 2, Group 3, Group 4, Group 5, Group 6, Group 7
and Group 8 Mortgage Loans (but in no event greater than the aggregate Current
Principal Amount of the Subordinate Certificates immediately prior to such
Distribution Date):

            (i) the applicable Senior Mezzanine and Subordinate Percentage of
            the principal portion of all Scheduled Payments due on each
            Outstanding Mortgage Loan in the related Loan Group on the related
            Due Date as specified in the amortization schedule at the time
            applicable thereto (after adjustment for previous Principal
            Prepayments but before any adjustment to such amortization schedule
            by reason of any bankruptcy or similar proceeding or any moratorium
            or similar waiver or grace period);

            (ii) the applicable Senior Mezzanine and Subordinate Prepayment
            Percentage of the Scheduled Principal Balance of each Mortgage Loan
            in the related Loan Group that was the subject of a Principal
            Prepayment in full received by the Master Servicer during the
            related Prepayment Period;

            (iii) the applicable Senior Mezzanine and Subordinate Prepayment
            Percentage of each Principal Prepayment in part received during the
            related Prepayment Period with respect to each Mortgage Loan in the
            related Loan Group;

            (iv) the excess, if any, of (a) all Net Liquidation Proceeds
            allocable to principal received during the related Prepayment Period
            in respect of each Liquidated Mortgage Loan in the related Loan
            Group over (b) the sum of the amounts distributable to the related
            Senior Certificateholders pursuant to clause (iv) of the related
            definition of Senior Optimal Principal Amount on such Distribution
            Date;

            (vi) the applicable Senior Mezzanine and Subordinate Prepayment
            Percentage of the sum of (a) the Scheduled Principal Balance of each
            Mortgage Loan in the related Loan Group which was purchased with
            respect to such Distribution Date and (b) the difference, if any,
            between the Scheduled Principal Balance of a Mortgage Loan in the
            related Loan Group that has been replaced by the Mortgage Loan
            Seller with a Substitute Mortgage Loan pursuant to the Mortgage Loan
            Purchase Agreement in connection with such Distribution Date over
            the Scheduled Principal Balance of such Substitute Mortgage Loan;
            and

            (vi) on the Distribution Date on which the Current Principal Amounts
            of the Group 1 Senior Certificates, Group 2 Senior Certificates,
            Group 3 Senior Certificates, Group 4 Senior Certificates, Group 5
            Senior Certificates, Group 6 Senior Certificates, Group 7


                                      -40-
<PAGE>

            Senior Certificates (other than the Class VII-A-X Certificates) or
            Group 8 Senior Certificates (other than the Class VII-A-X
            Certificates) have all been reduced to zero, 100% of the related
            Senior Optimal Principal Amount. After the aggregate Current
            Principal Amount of the Senior Mezzanine Certificates and
            Subordinate Certificates has been reduced to zero, the Senior
            Mezzanine and Subordinate Optimal Principal Amount shall be zero.

      Senior Mezzanine and Subordinate Percentage: The Group 1, Group 2, Group
3, Group 4, Group 5, Group 6, Group 7 or Group 8 Senior Mezzanine and
Subordinate Percentage, with respect to the Group 1, Group 2, Group 3, Group 4,
Group 5, Group 6, Group 7 or Group 8 Mortgage Loans, respectively.

      Senior Mezzanine and Subordinate Prepayment Percentage: The Group 1, Group
2, Group 3, Group 4, Group 5, Group 6, Group 7 or Group 8 Senior Mezzanine and
Subordinate Prepayment Percentage, with respect to the Group 1, Group 2, Group
3, Group 4, Group 5, Group 6, Group 7 or Group 8 Mortgage Loans, respectively.

      Senior Optimal Principal Amount: Group 1 Senior Optimal Principal Amount,
Group 2 Senior Optimal Principal Amount, Group 3 Senior Optimal Principal
Amount, Group 4 Senior Optimal Principal Amount, Group 5 Senior Optimal
Principal Amount, Group 6 Senior Optimal Principal Amount, Group 7 Senior
Optimal Principal Amount or Group 8 Senior Optimal Principal Amount, as
applicable.

      Senior Percentage: The Group 1 Senior Percentage, Group 2 Senior
Percentage, Group 3 Senior Percentage, Group 4 Senior Percentage, Group 5 Senior
Percentage, Group 6 Senior Percentage, Group 7 Senior Percentage or Group 8
Senior Percentage.

      Senior Prepayment Percentage: The Group 1 Senior Prepayment Percentage,
Group 2 Senior Prepayment Percentage, Group 3 Senior Prepayment Percentage,
Group 4 Senior Prepayment Percentage, Group 5 Senior Prepayment Percentage,
Group 6 Senior Prepayment Percentage, Group 7 Senior Prepayment Percentage or
Group 8 Senior Prepayment Percentage.

      Servicer: With respect to each Mortgage Loan, WFHM, GMAC, Chevy Chase,
Countrywide, Cendant, WMBFA, Nexstar or Alliance.

      Servicer Remittance Date: With respect to each Mortgage Loan, the date set
forth in the related Servicing Agreement.

      Servicing Agreements: The Alliance Servicing Agreement, Cendant Servicing
Agreements, Chevy Chase Servicing Agreement, Countrywide Servicing Agreement,
GMAC Servicing Agreements, Nexstar Servicing Agreement, WFHM Servicing
Agreedment and WMBFA Servicing Agreement.

      Servicing Fee: As to any Mortgage Loan and Distribution Date, an amount
equal to the product of (i) the Scheduled Principal Balance of such Mortgage
Loan as of the Due Date in the preceding calendar month and (ii) the applicable
Servicing Fee Rate.


                                      -41-
<PAGE>

      Servicing Fee Rate: As to any Mortgage Loan, a per annum rate as set forth
in the Mortgage Loan Schedule.

      Startup Day: February 28, 2003.

      Subordinate Certificates: The Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates.

      Subordinate Certificate Writedown Amount: As to any Distribution Date, the
amount by which (a) the sum of the Current Principal Amounts of all the
Certificates (after giving effect to the distribution of principal and the
allocation of applicable Realized Losses in reduction of the Current Principal
Amounts of such Certificates on such Distribution Date) exceeds (b) the
aggregate Scheduled Principal Balances of the Mortgage Loans on the Due Date
related to such Distribution Date.

      Substitute Mortgage Loan: A mortgage loan tendered to the Trustee pursuant
to the related Servicing Agreement, the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, in each case, (i) which has an
Outstanding Principal Balance not greater nor materially less than the Mortgage
Loan for which it is to be substituted; (ii) which has a Mortgage Interest Rate
and Net Rate not less than, and not materially greater than, such Mortgage Loan;
(iii) which has a maturity date not materially earlier or later than such
Mortgage Loan and not later than the latest maturity date of any Mortgage Loan;
(iv) which is of the same property type and occupancy type as such Mortgage
Loan; (v) which has a Loan-to-Value Ratio not greater than the Loan-to-Value
Ratio of such Mortgage Loan; (vi) which is current in payment of principal and
interest as of the date of substitution; (vii) as to which the payment terms do
not vary in any material respect from the payment terms of the Mortgage Loan for
which it is to be substituted and (viii) which has a Gross Margin, Periodic Rate
Cap and Maximum Lifetime Mortgage Rate no less than those of such Mortgage Loan,
has the same Index and interval between Interest Adjustment Dates as such
Mortgage Loan, and a Minimum Lifetime Mortgage Rate no lower than that of such
Mortgage Loan.

      Tax Administration and Tax Matters Person: The Securities Administrator or
any successor thereto or assignee thereof shall serve as tax administrator
hereunder and as agent for the Tax Matters Person. The Holder of each Class of
Residual Certificates shall be the Tax Matters Person for the related REMIC, as
more particularly set forth in Section 9.12 hereof.

      Trust Fund or Trust: The corpus of the trust created by this Agreement,
consisting of the Mortgage Loans and the other assets described in Section
2.01(a).

      Trustee: JPMorgan Chase Bank, or its successor in interest, or any
successor trustee appointed as herein provided.

      Uncertificated Principal Balance: With respect to any REMIC I Regular
Interest or REMIC II Regular Interest as of any Distribution Date, the initial
principal amount of such Regular Interest, reduced by (i) all amounts
distributed on previous Distribution Dates on such Regular Interest with respect
to


                                      -42-
<PAGE>

principal, (ii) the principal portion of all Realized Losses allocated prior to
such Distribution Date to such Regular Interest, taking account of the Loss
Allocation Limitation and (iii) in the case of a REMIC II Regular Interest for
which the Corresponding Class is a Senior Mezzanine or a Subordinate
Certificate, such Regular Interest's pro rata share, if any, of the applicable
Senior Mezzanine Certificate Writedown Amount or Subordinate Certificate
Writedown Amount allocated to such Corresponding Class for previous Distribution
Dates.

      Underlying Seller: With respect to each Mortgage Loan, WFHM, GMAC, Chevy
Chase, Countrywide, Cendant, WMBFA, Nexstar, E*TRADE, or E-Loan, as indicated on
the Mortgage Loan Schedule.

      Uninsured Cause: Any cause of damage to a Mortgaged Property or related
REO Property such that the complete restoration of such Mortgaged Property or
related REO Property is not fully reimbursable by the hazard insurance policies
required to be maintained pursuant the related Servicing Agreement, without
regard to whether or not such policy is maintained.

      United States Person: A citizen or resident of the United States, a
corporation or partnership (including an entity treated as a corporation or
partnership for 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
(except, in the case of a partnership, to the extent provided in regulations),
provided that, for purposes solely of the Class R Certificates, no partnership
or other entity treated as a partnership for United States federal income tax
purposes shall be treated as a United States Person unless all persons that own
an interest in such partnership either directly or through any entity that is
not a corporation for United States federal income tax purposes are United
States Persons, or an estate whose income is subject to United States federal
income tax regardless of its source, 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 United States Persons have the authority to control
all substantial decisions of the trust. To the extent prescribed in regulations
by the Secretary of the Treasury, which have not yet been issued, a trust which
was in existence on August 20, 1996 (other than a trust treated as owned by the
grantor under subpart E of part I of subchapter J of chapter 1 of the Code), and
which was treated as a United States person on August 20, 1996 may elect to
continue to be treated as a United States person notwithstanding the previous
sentence.

      WFHM: Wells Fargo Home Mortgage, Inc., or its successor in interest.

      WFHM Servicing Agreement: The Seller's Warranties and Servicing Agreement,
dated as of November 1, 2002 (WFHM 2002-W81), November 1, 2002 (WFHM 2002-W83),
December 1,

      2002 (WFHM 2002-W86), January 1, 2003 (WFHM 2003-W07) and February 1,
2003, between EMC and WFHM, which is attached hereto as Exhibit H-6.

      WMBFA: Washington Mutual Bank, FA, or its successor in interest.

      WMBFA Servicing Agreement: The Servicing Agreement, dated as of April 1,
2001, between EMC and WMBFA, which is attached hereto as Exhibit H-7.


                                      -43-
<PAGE>

                                   ARTICLE II
                          Conveyance of Mortgage Loans;
                        Original Issuance of Certificates

      Section 2.01 Conveyance of Mortgage Loans to Trustee. (a) The Seller
concurrently with the execution and delivery of this Agreement, sells, transfers
and assigns to the Trust without recourse all its right, title and interest in
and to (i) the Mortgage Loans identified in the Mortgage Loan Schedule,
including all interest and principal due with respect to the Mortgage Loans
after the Cut-off Date, but excluding any payments of principal and interest due
on or prior to the Cut-off Date; (ii) such assets as shall from time to time be
credited or are required by the terms of this Agreement to be credited to the
Master Servicer Collection Account, (iii) such assets relating to the Mortgage
Loans as from time to time may be held by the Servicers in Protected Accounts,
the Master Servicer in the Master Servicer Collection Account and the Trustee in
the Distribution Account for the benefit of the Trustee on behalf of the
Certificateholders, (iv) any REO Property, (v) the Required Insurance Policies
and any amounts paid or payable by the insurer under any Insurance Policy (to
the extent the mortgagee has a claim thereto), (vi) the Mortgage Loan Purchase
Agreement to the extent provided in Subsection 2.03(a), (vii) the rights with
respect to the Servicing Agreements as assigned to the Trustee on behalf of the
Certificateholders by the Assignment Agreements and (viii) any proceeds of the
foregoing. Although it is the intent of the parties to this Agreement that the
conveyance of the Seller's right, title and interest in and to the Mortgage
Loans and other assets in the Trust Fund pursuant to this Agreement shall
constitute a purchase and sale and not a loan, in the event that such conveyance
is deemed to be a loan, it is the intent of the parties to this Agreement that
the Seller shall be deemed to have granted to the Trustee a first priority
perfected security interest in all of the Seller's right, title and interest in,
to and under the Mortgage Loans and other assets in the Trust Fund, and that
this Agreement shall constitute a security agreement under applicable law.

      (b) In connection with the above transfer and assignment, the Seller
hereby deposits with the Trustee or the Custodian, as its agent, with respect to
each Mortgage Loan, (i) the original Mortgage Note, endorsed without recourse to
the order of the Trustee and showing an unbroken chain of endorsements from the
original payee thereof to the Person endorsing it to the Trustee, or lost note
affidavit, (ii) the original Mortgage and, if the related Mortgage Loan is a MOM
Loan, noting the presence of the MIN and language indicating that such Mortgage
Loan is a MOM Loan, which shall have been recorded (or if the original is not
available, a copy), with evidence of such recording indicated thereon (or if
clause (x) in the proviso below applies, shall be in recordable form), (iii)
unless the Mortgage Loan is a MOM Loan, a certified copy of the assignment
(which may be in the form of a blanket assignment if permitted in the
jurisdiction in which the Mortgaged Property is located) to "JPMorgan Chase
Bank, as Trustee", with evidence of recording with respect to each Mortgage Loan
in the name of the Trustee thereon (or if clause (x) in the proviso below
applies or for Mortgage Loans with respect to which the related Mortgaged
Property is located in a state other than Maryland or an Opinion of Counsel has
been provided as set forth in this Section 2.01(b), shall be in recordable
form), (iv) all intervening assignments of the Security Instrument, if
applicable and only to the extent available to the Seller with evidence of
recording thereon, (v) the original or a copy of the policy or certificate of
primary mortgage guaranty insurance, to the extent available, if any, (vi) the
original policy of title insurance or mortgagee's certificate of title insurance
or

                                      -44-
<PAGE>

commitment or binder for title insurance and (vii) originals of all modification
agreements, if applicable and available;

provided, however, that in lieu of the foregoing, the Seller may deliver the
following documents, under the circumstances set forth below: (x) in lieu of the
original Security Instrument, assignments to the Trustee or intervening
assignments thereof which have been delivered, are being delivered or will, upon
receipt of recording information relating to the Security Instrument required to
be included thereon, be delivered to recording offices for recording and have
not been returned to the Seller in time to permit their delivery as specified
above, the Seller may deliver a true copy thereof with a certification by the
Seller, on the face of such copy, substantially as follows: "Certified to be a
true and correct copy of the original, which has been transmitted for
recording"; (y) in lieu of the Security Instrument, assignment to the Trustee or
intervening assignments thereof, if the applicable jurisdiction retains the
originals of such documents (as evidenced by a certification from the Seller to
such effect) the Seller may deliver photocopies of such documents containing an
original certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; and (z) the Seller shall not be
required to deliver intervening assignments or Mortgage Note endorsements
between the related Underlying Seller and EMC Mortgage Corporation, between EMC
Mortgage Corporation and the Depositor, and between the Depositor and the
Trustee; and provided, further, however, that in the case of Mortgage Loans
which have been prepaid in full after the Cut-off Date and prior to the Closing
Date, the Seller, in lieu of delivering the above documents, may deliver to the
Trustee or the Custodian, as its agent, a certification to such effect and shall
deposit all amounts paid in respect of such Mortgage Loans in the Master
Servicer Collection Account on the Closing Date. The Seller shall deliver such
original documents (including any original documents as to which certified
copies had previously been delivered) to the Trustee or the Custodian, as its
agent, promptly after they are received. The Seller shall cause, at its expense,
the assignment of the Security Instrument to the Trustee to be recorded not
later than 180 days after the Closing Date, unless (a) such recordation is not
required by the Rating Agencies or an Opinion of Counsel addressed to the
Trustee has been provided to the Trustee (with a copy to the Custodian) which
states that recordation of such Security Instrument is not required to protect
the interests of the Certificateholders in the related Mortgage Loans or (b)
MERS is identified on the Mortgage or on a properly recorded assignment of the
Mortgage as the mortgagee of record solely as nominee for Seller and its
successor and assigns; provided, however, that each assignment shall be
submitted for recording by the Seller in the manner described above, at no
expense to the Trust or the Trustee or the Custodian, as its agent, upon the
earliest to occur of: (i) reasonable direction by the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 25% of the
Trust, (ii) the occurrence of an Event of Default, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Seller and (iv) the
occurrence of a servicing transfer as described in Section 8.02 hereof.
Notwithstanding the foregoing, if the Seller fails to pay the cost of recording
the assignments, such expense will be paid by the Trustee and the Trustee shall
be reimbursed for such expenses by the Trust in accordance with Section 9.05.

      (c) The Seller hereby assigns to the Trustee its security interest in and
to any Additional Collateral, its right to receive amounts due or to become due
in respect of any Additional Collateral pursuant to the related Servicing
Agreement.


                                      -45-
<PAGE>

      Section 2.02 Acceptance of Mortgage Loans by Trustee. (a) The Trustee
acknowledges the sale, transfer and assignment of the Trust to it by the Seller
and receipt of, subject to further review and the exceptions which may be noted
pursuant to the procedures described below, and declares that it holds, the
documents (or certified copies thereof) delivered to it pursuant to Section
2.01, and declares that it will continue to hold those documents and any
amendments, replacements or supplements thereto and all other assets of the
Trust Fund delivered to it as Trustee in trust for the use and benefit of all
present and future Holders of the Certificates. On the Closing Date, the
Custodian, with respect to the Mortgage Loans, shall acknowledge with respect to
each Mortgage Loan by delivery to the Seller and the Trustee of an Initial
Certification receipt of the Mortgage File, but without review of such Mortgage
File, except to the extent necessary to confirm that such Mortgage File contains
the related Mortgage Note or lost note affidavit. No later than 90 days after
the Closing Date (or, with respect to any Substitute Mortgage Loan, within five
Business Days after the receipt by the Trustee or Custodian thereof), the
Trustee agrees, for the benefit of the Certificateholders, to review or cause to
be reviewed by the Custodian on its behalf (under the Custodial Agreement), each
Mortgage File delivered to it and to execute and deliver, or cause to be
executed and delivered, to the Seller and the Trustee an Interim Certification.
In conducting such review, the Trustee or Custodian will ascertain whether all
required documents have been executed and received, and based on the Mortgage
Loan Schedule, whether those documents relate, determined on the basis of the
Mortgagor name, original principal balance and loan number, to the Mortgage
Loans it has received, as identified in the Mortgage Loan Schedule. In
performing any such review, the Trustee or the Custodian, as its agent, may
conclusively rely on the purported due execution and genuineness of any such
document and on the purported genuineness of any signature thereon. If the
Trustee or the Custodian, as its agent, finds any document constituting part of
the Mortgage File not to have been executed or received, or to be unrelated to
the Mortgage Loans identified in Exhibit B or to appear to be defective on its
face, the Trustee or the Custodian, as its agent, shall promptly notify the
Mortgage Loan Seller. In accordance with the Mortgage Loan Purchase Agreement,
the Mortgage Loan Seller shall correct or cure any such defect within ninety
(90) days from the date of notice from the Trustee or the Custodian, as its
agent, of the defect and if the Mortgage Loan Seller fails to correct or cure
the defect within such period, and such defect materially and adversely affects
the interests of the Certificateholders in the related Mortgage Loan, the
Trustee or the Custodian, as its agent, shall enforce the Mortgage Loan Seller's
obligation pursuant to the Mortgage Loan Purchase Agreement, within 90 days from
the Trustee's or the Custodian's notification, to purchase such Mortgage Loan at
the Repurchase Price; provided that, if such defect would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such cure or repurchase must occur within 90 days from the date
such breach was discovered; provided, however, that if such defect relates
solely to the inability of the Mortgage Loan Seller to deliver the original
Security Instrument or intervening assignments thereof, or a certified copy
because the originals of such documents, or a certified copy have not been
returned by the applicable jurisdiction, the Mortgage Loan Seller shall not be
required to purchase such Mortgage Loan if the Mortgage Loan Seller delivers
such original documents or certified copy promptly upon receipt, but in no event
later than 360 days after the Closing Date. The foregoing repurchase obligation
shall not apply in the event that the Mortgage Loan Seller cannot deliver such
original or copy of any document submitted for recording to the appropriate
recording office in the applicable jurisdiction because such document has not
been returned by such office; provided that the Mortgage Loan Seller shall
instead deliver a recording receipt of such recording office or, if such receipt
is not available, a certificate confirming that such documents have been
accepted for recording, and delivery


                                      -46-
<PAGE>

to the Trustee or the Custodian, as its agent, shall be effected by the Mortgage
Loan Seller within thirty days of its receipt of the original recorded document.

      (b) No later than 180 days after the Closing Date, the Trustee or the
Custodian, as its agent, will review, for the benefit of the Certificateholders,
the Mortgage Files delivered to it and will execute and deliver or cause to be
executed and delivered to the Seller and the Trustee a Final Certification. In
conducting such review, the Trustee or the Custodian, as its agent, will
ascertain whether an original of each document required to be recorded has been
returned from the recording office with evidence of recording thereon or a
certified copy has been obtained from the recording office. If the Trustee or
the Custodian, as its agent, finds any document constituting part of the
Mortgage File has not been received, or to be unrelated, determined on the basis
of the Mortgagor name, original principal balance and loan number, to the
Mortgage Loans identified in Exhibit B or to appear defective on its face, the
Trustee or the Custodian, as its agent, shall promptly notify the Mortgage Loan
Seller (provided, however, that with respect to those documents described in
subsection (b)(iv), (b)(v) and (b)(vii) of Section 2.01, the Trustee's
obligations shall extend only to the documents actually delivered pursuant to
such subsections). In accordance with the Mortgage Loan Purchase Agreement, the
Mortgage Loan Seller shall correct or cure any such defect or EMC shall deliver
to the Trustee an Opinion of Counsel addressed to the Trustee to the effect that
such defect does not materially or adversely affect the interests of
Certificateholders in such Mortgage Loan within 90 days from the date of notice
from the Trustee of the defect and if the Mortgage Loan Seller is unable to cure
such defect within such period, and if such defect materially and adversely
affects the interests of the Certificateholders in the related Mortgage Loan,
the Trustee shall enforce the Mortgage Loan Seller's obligation under the
Mortgage Loan Purchase Agreement to purchase such Mortgage Loan at the
Repurchase Price, provided, however, that if such defect relates solely to the
inability of the Mortgage Loan Seller to deliver the original Security
Instrument or intervening assignments thereof, or a certified copy, because the
originals of such documents. or a certified copy, have not been returned by the
applicable jurisdiction, the Mortgage Loan Seller shall not be required to
purchase such Mortgage Loan, if the Mortgage Loan Seller delivers such original
documents or certified copy promptly upon receipt, but in no event later than
360 days after the Closing Date.

      (c) In the event that a Mortgage Loan is purchased by the Mortgage Loan
Seller in accordance with Subsections 2.02(a) or (b) above, the Mortgage Loan
Seller shall remit to the Master Servicer the Repurchase Price for deposit in
the Master Servicer Collection Account and the Mortgage Loan Seller shall
provide to the Trustee written notification detailing the components of the
Repurchase Price. Upon deposit of the Repurchase Price in the Master Servicer
Collection Account, the Seller shall notify the Trustee and the Trustee or the
Custodian, as its agent (upon receipt of a Request for Release in the form of
Exhibit D attached hereto with respect to such Mortgage Loan), shall release to
the Mortgage Loan Seller the related Mortgage File and the Trustee shall execute
and deliver all instruments of transfer or assignment, without recourse,
representation or warranty furnished to it by the Mortgage Loan Seller as are
necessary to vest in the Mortgage Loan Seller title to and rights under the
Mortgage Loan. Such purchase shall be deemed to have occurred on the date on
which the Repurchase Price in available funds is received by the Trustee. The
Trustee shall amend the Mortgage Loan Schedule, which was previously delivered
to it by Seller in a form agreed to between the Seller and the Trustee, to
reflect such repurchase and shall promptly notify the Rating Agencies and the
Master Servicer of such amendment. The obligation


                                      -47-
<PAGE>

of the Mortgage Loan Seller to repurchase any Mortgage Loan as to which such a
defect in a constituent document exists shall be the sole remedy respecting such
defect available to the Certificateholders or to the Trustee on their behalf.

      Section 2.03 Assignment of Interest in the Mortgage Loan Purchase
Agreement. (a) The Seller hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Mortgage Loan
Purchase Agreement, including but not limited to Seller's rights and obligations
pursuant to the Servicing Agreements (noting that the Mortgage Loan Seller has
retained the right in the event of breach of the representations, warranties and
covenants, if any, with respect to the related Mortgage Loans of the related
Servicer under the related Servicing Agreement to enforce the provisions thereof
and to seek all or any available remedies). The obligations of the Mortgage Loan
Seller to substitute or repurchase, as applicable, a Mortgage Loan shall be the
Trustee's and the Certificateholders' sole remedy for any breach thereof. At the
request of the Trustee, the Seller shall take such actions as may be necessary
to enforce the above right, title and interest on behalf of the Trustee and the
Certificateholders or shall execute such further documents as the Trustee may
reasonably require in order to enable the Trustee to carry out such enforcement.

      (b) If the Seller, the Securities Administrator or the Trustee discovers a
breach of any of the representations and warranties set forth in the Mortgage
Loan Purchase Agreement, which breach materially and adversely affects the value
of the interests of Certificateholders or the Trustee in the related Mortgage
Loan, the party discovering the breach shall give prompt written notice of the
breach to the other parties. The Mortgage Loan Seller, within 90 days of its
discovery or receipt of notice that such breach has occurred (whichever occurs
earlier), shall cure the breach in all material respects or, subject to the
Mortgage Loan Purchase Agreement or Section 2.04 of this Agreement, as
applicable, shall purchase the Mortgage Loan or any property acquired with
respect thereto from the Trustee; provided, however, that if there is a breach
of any representation set forth in the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, and the Mortgage Loan or the
related property acquired with respect thereto has been sold, then the Mortgage
Loan Seller shall pay, in lieu of the Repurchase Price, any excess of the
Repurchase Price over the Net Liquidation Proceeds received upon such sale. (If
the Net Liquidation Proceeds exceed the Repurchase Price, any excess shall be
paid to the Mortgage Loan Seller to the extent not required by law to be paid to
the borrower.) Any such purchase by the Mortgage Loan Seller shall be made by
providing an amount equal to the Repurchase Price to the Master Servicer for
deposit in the Master Servicer Collection Account and written notification
detailing the components of such Repurchase Price. The Seller shall notify the
Trustee and submit to the Trustee or the Custodian, as its agent, a Request for
Release, and the Trustee shall release, or the Trustee shall cause the Custodian
to release, to the Mortgage Loan Seller the related Mortgage File and the
Trustee shall execute and deliver all instruments of transfer or assignment
furnished to it by the Mortgage Loan Seller, without recourse, representation or
warranty as are necessary to vest in the Mortgage Loan Seller title to and
rights under the Mortgage Loan or any property acquired with respect thereto.
Such purchase shall be deemed to have occurred on the date on which the
Repurchase Price in available funds is received by the Trustee. The Master
Servicer shall amend the Mortgage Loan Schedule to reflect such repurchase and
shall promptly notify the Trustee and the Rating Agencies of such amendment.
Enforcement of the obligation of the Mortgage Loan Seller to purchase (or
substitute a Substitute Mortgage Loan for) any Mortgage Loan or


                                      -48-
<PAGE>

any property acquired with respect thereto (or pay the Repurchase Price as set
forth in the above proviso) as to which a breach has occurred and is continuing
shall constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on their behalf.

      Section 2.04 Substitution of Mortgage Loans. Notwithstanding anything to
the contrary in this Agreement, in lieu of purchasing a Mortgage Loan pursuant
to the Mortgage Loan Purchase Agreement or Sections 2.02 or 2.03 of this
Agreement, the Mortgage Loan Seller may, no later than the date by which such
purchase by the Mortgage Loan Seller would otherwise be required, tender to the
Trustee a Substitute Mortgage Loan accompanied by a certificate of an authorized
officer of the Mortgage Loan Seller that such Substitute Mortgage Loan conforms
to the requirements set forth in the definition of "Substitute Mortgage Loan" in
the Mortgage Loan Purchase Agreement or this Agreement, as applicable; provided,
however, that substitution pursuant to the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, in lieu of purchase shall not be
permitted after the termination of the two-year period beginning on the Startup
Day; provided, further, that if the breach would cause the Mortgage Loan to be
other than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code,
any such cure or substitution must occur within 90 days from the date the breach
was discovered. The Trustee or the Custodian, as its agent, shall examine the
Mortgage File for any Substitute Mortgage Loan in the manner set forth in
Section 2.02(a) and the Trustee or the Custodian, as its agent, shall notify the
Mortgage Loan Seller, in writing, within five Business Days after receipt,
whether or not the documents relating to the Substitute Mortgage Loan satisfy
the requirements of the fourth sentence of Subsection 2.02(a). Within two
Business Days after such notification, the Mortgage Loan Seller shall provide to
the Trustee for deposit in the Distribution Account the amount, if any, by which
the Outstanding Principal Balance as of the next preceding Due Date of the
Mortgage Loan for which substitution is being made, after giving effect to the
Scheduled Principal due on such date, exceeds the Outstanding Principal Balance
as of such date of the Substitute Mortgage Loan, after giving effect to
Scheduled Principal due on such date, which amount shall be treated for the
purposes of this Agreement as if it were the payment by the Mortgage Loan Seller
of the Repurchase Price for the purchase of a Mortgage Loan by the Mortgage Loan
Seller. After such notification to the Mortgage Loan Seller and, if any such
excess exists, upon receipt of such deposit, the Trustee shall accept such
Substitute Mortgage Loan which shall thereafter be deemed to be a Mortgage Loan
hereunder. In the event of such a substitution, accrued interest on the
Substitute Mortgage Loan for the month in which the substitution occurs and any
Principal Prepayments made thereon during such month shall be the property of
the Trust Fund and accrued interest for such month on the Mortgage Loan for
which the substitution is made and any Principal Prepayments made thereon during
such month shall be the property of the Mortgage Loan Seller. The Scheduled
Principal on a Substitute Mortgage Loan due on the Due Date in the month of
substitution shall be the property of the Mortgage Loan Seller and the Scheduled
Principal on the Mortgage Loan for which the substitution is made due on such
Due Date shall be the property of the Trust Fund. Upon acceptance of the
Substitute Mortgage Loan (and delivery to the Trustee or Custodian of a Request
for Release for such Mortgage Loan), the Trustee shall release to the Mortgage
Loan Seller the related Mortgage File related to any Mortgage Loan released
pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable, and shall execute and deliver all instruments of
transfer or assignment, without recourse, representation or warranty in form as
provided to it as are necessary to vest in the Mortgage Loan Seller title to and
rights under any Mortgage Loan released pursuant to the Mortgage Loan Purchase
Agreement or Section 2.04 of this Agreement, as


                                      -49-
<PAGE>

applicable. The Mortgage Loan Seller shall deliver the documents related to the
Substitute Mortgage Loan in accordance with the provisions of the Mortgage Loan
Purchase Agreement or Subsections 2.01(b) and 2.02(b) of this Agreement, as
applicable, with the date of acceptance of the Substitute Mortgage Loan deemed
to be the Closing Date for purposes of the time periods set forth in those
Subsections. The representations and warranties set forth in the Mortgage Loan
Purchase Agreement shall be deemed to have been made by the Mortgage Loan Seller
with respect to each Substitute Mortgage Loan as of the date of acceptance of
such Mortgage Loan by the Trustee. The Master Servicer shall amend the Mortgage
Loan Schedule to reflect such substitution and shall provide a copy of such
amended Mortgage Loan Schedule to the Trustee and the Rating Agencies.

      Section 2.05 Issuance of Certificates.

      (a) The Trustee acknowledges the assignment to it of the Mortgage Loans
and the other assets comprising the Trust Fund and, concurrently therewith, has
signed, and countersigned and delivered to the Seller, in exchange therefor,
Certificates in such authorized denominations representing such Fractional
Undivided Interests as the Seller has requested. The Trustee agrees that it will
hold the Mortgage Loans and such other assets as may from time to time be
delivered to it segregated on the books of the Trustee in trust for the benefit
of the Certificateholders.

      (b) The Seller, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey in trust to the Trustee
without recourse all the right, title and interest of the Seller in and to the
REMIC I Regular Interests, and the other assets of REMIC II for the benefit of
the holders of the REMIC II Certificates. The Trustee acknowledges receipt of
the REMIC I Regular Interests (which are uncertificated) and the other assets of
REMIC II and declares that it holds and will hold the same in trust for the
exclusive use and benefit of the holders of the REMIC II Certificates.

      (c) The Seller, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey in trust to the Trustee
without recourse all the right, title and interest of the Seller in and to the
REMIC II Regular Interests, and the other assets of REMIC III for the benefit of
the holders of the REMIC III Certificates. The Trustee acknowledges receipt of
the REMIC I Regular Interests (which are uncertificated) and the other assets of
REMIC II and declares that it holds and will hold the same in trust for the
exclusive use and benefit of the holders of the REMIC III Certificates.

      Section 2.06 Representations and Warranties Concerning the Seller. The
Seller hereby represents and warrants to the Trustee, the Master Servicer and
the Securities Administrator as follows:

            (i) the Seller (a) is a corporation duly organized, validly existing
      and in good standing under the laws of the State of Delaware and (b) is
      qualified and in good standing as a foreign corporation to do business in
      each jurisdiction where such qualification is necessary, except where the
      failure so to qualify would not reasonably be expected to have a material
      adverse effect on the Seller's business as presently conducted or on the
      Seller's ability to enter into this Agreement and to consummate the
      transactions contemplated hereby;


                                      -50-
<PAGE>

            (ii) the Seller has full corporate power to own its property, to
      carry on its business as presently conducted and to enter into and perform
      its obligations under this Agreement;

            (iii) the execution and delivery by the Seller of this Agreement
      have been duly authorized by all necessary corporate action on the part of
      the Seller; and neither the execution and delivery of this Agreement, nor
      the consummation of the transactions herein contemplated, nor compliance
      with the provisions hereof, will conflict with or result in a breach of,
      or constitute a default under, any of the provisions of any law,
      governmental rule, regulation, judgment, decree or order binding on the
      Seller or its properties or the articles of incorporation or by-laws of
      the Seller, except those conflicts, breaches or defaults which would not
      reasonably be expected to have a material adverse effect on the Seller's
      ability to enter into this Agreement and to consummate the transactions
      contemplated hereby;

            (iv) the execution, delivery and performance by the Seller of this
      Agreement and the consummation of the transactions contemplated hereby do
      not require the consent or approval of, the giving of notice to, the
      registration with, or the taking of any other action in respect of, any
      state, federal or other governmental authority or agency, except those
      consents, approvals, notices, registrations or other actions as have
      already been obtained, given or made;

            (v) this Agreement has been duly executed and delivered by the
      Seller and, assuming due authorization, execution and delivery by the
      other parties hereto, constitutes a valid and binding obligation of the
      Seller enforceable against it in accordance with its terms (subject to
      applicable bankruptcy and insolvency laws and other similar laws affecting
      the enforcement of the rights of creditors generally);

            (vi) there are no actions, suits or proceedings pending or, to the
      knowledge of the Seller, threatened against the Seller, before or by any
      court, administrative agency, arbitrator or governmental body (i) with
      respect to any of the transactions contemplated by this Agreement or (ii)
      with respect to any other matter which in the judgment of the Seller will
      be determined adversely to the Seller and will if determined adversely to
      the Seller materially and adversely affect the Seller's ability to enter
      into this Agreement or perform its obligations under this Agreement; and
      the Seller is not in default with respect to any order of any court,
      administrative agency, arbitrator or governmental body so as to materially
      and adversely affect the transactions contemplated by this Agreement; and

            (vii) immediately prior to the transfer and assignment to the
      Trustee, each Mortgage Note and each Mortgage were not subject to an
      assignment or pledge, and the Seller had good and marketable title to and
      was the sole owner thereof and had full right to transfer and sell such
      Mortgage Loan to the Trustee free and clear of any encumbrance, equity,
      lien, pledge, charge, claim or security interest.


                                      -51-
<PAGE>

                                   ARTICLE III
                 Administration and Servicing of Mortgage Loans

      Section 3.01 Master Servicer. The Master Servicer shall supervise, monitor
and oversee the obligation of the Servicers to service and administer their
respective Mortgage Loans in accordance with the terms of the applicable
Servicing Agreement and shall have full power and authority to do any and all
things which it may deem necessary or desirable in connection with such master
servicing and administration. In performing its obligations hereunder, the
Master Servicer shall act in a manner consistent with Accepted Master Servicing
Practices. Furthermore, the Master Servicer shall oversee and consult with each
Servicer as necessary from time-to-time to carry out the Master Servicer's
obligations hereunder, shall receive, review and evaluate all reports,
information and other data provided to the Master Servicer by each Servicer and
shall cause each Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by such Servicer under the applicable
Servicing Agreement. The Master Servicer shall independently and separately
monitor each Servicer's servicing activities with respect to each related
Mortgage Loan, reconcile the results of such monitoring with such information
provided in the previous sentence on a monthly basis and coordinate corrective
adjustments to the Servicers' and Master Servicer's records, and based on such
reconciled and corrected information, the Master Servicer shall provide such
information to the Securities Administrator as shall be necessary in order for
it to prepare the statements specified in Section 6.04, and prepare any other
information and statements required to be forwarded by the Master Servicer
hereunder. The Master Servicer shall reconcile the results of its Mortgage Loan
monitoring with the actual remittances of the Servicers to the Protected Account
pursuant to the applicable Servicing Agreements.

      Notwithstanding anything in this Agreement to the contrary, with respect
to any Mortgage Loan secured by any Additional Collateral, the Master Servicer
shall have no duty of obligation to supervise, monitor or oversee the activities
of Cendant (or any successor thereto) under any Cendant Servicing Agreements
with respect to any Additional Collateral (unless the Master Servicer shall have
assumed the obligations of Cendant (or any successor thereto)as successor
Servicer under any Cendant Servicing Agreement pursuant to Section 3.03 of this
Agreement, in which event, as successor Servicer, it will service and administer
the Additional Collateral in accordance with the provisions of the Cendant
Servicing Agreements.

      The Trustee shall furnish the Servicers and the Master Servicer with any
powers of attorney and other documents in form as provided to it necessary or
appropriate to enable the Servicers and the Master Servicer to service and
administer the related Mortgage Loans and REO Property.

      The Trustee shall provide access to the records and documentation in
possession of the Trustee regarding the related Mortgage Loans and REO Property
and the servicing thereof to the Certificateholders, the FDIC, and the
supervisory agents and examiners of the FDIC, such access being afforded only
upon reasonable prior written request and during normal business hours at the
office of the Trustee; provided, however, that, unless otherwise required by
law, the Trustee shall not be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow representatives of the above entities
to photocopy any


                                      -52-
<PAGE>

of the records and documentation and shall provide equipment for that purpose at
a charge that covers the Trustee's actual costs.

      The Trustee shall execute and deliver to the related Servicer and the
Master Servicer any court pleadings, requests for trustee's sale or other
documents necessary or desirable to (i) the foreclosure or trustee's sale with
respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Security Instrument;
(iii) obtain a deficiency judgment against the Mortgagor; or (iv) enforce any
other rights or remedies provided by the Mortgage Note or Security Instrument or
otherwise available at law or equity.

      Section 3.02 REMIC-Related Covenants. For as long as each REMIC shall
exist, the Trustee and the Securities Administrator shall act in accordance
herewith to assure continuing treatment of such REMIC as a REMIC, and the
Trustee and the Securities Administrator shall comply with any directions of the
Seller, the related Servicer or the Master Servicer to assure such continuing
treatment. In particular, the Trustee shall not (a) sell or permit the sale of
all or any portion of the Mortgage Loans or of any investment of deposits in an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion addressed
to the Trustee prepared at the expense of the Trust Fund; and (b) other than
with respect to a substitution pursuant to the Mortgage Loan Purchase Agreement
or Section 2.04 of this Agreement, as applicable, accept any contribution to any
REMIC after the Startup Day without receipt of a REMIC Opinion addressed to the
Trustee .

      Section 3.03 Monitoring of Servicers. (a) The Master Servicer shall be
responsible for reporting to the Trustee and the Seller the compliance by each
Servicer with its duties under the related Servicing Agreement. In the review of
each Servicer's activities, the Master Servicer may rely upon an officer's
certificate of the Servicer with regard to such Servicer's compliance with the
terms of its Servicing Agreement. In the event that the Master Servicer, in its
judgment, determines that a Servicer should be terminated in accordance with its
Servicing Agreement, or that a notice should be sent pursuant to such Servicing
Agreement with respect to the occurrence of an event that, unless cured, would
constitute grounds for such termination, the Master Servicer shall notify the
Seller and the Trustee thereof and the Master Servicer shall issue such notice
or take such other action as it deems appropriate.

      (b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of each Servicer under the
related Servicing Agreement, and shall, in the event that a Servicer fails to
perform its obligations in accordance with the related Servicing Agreement,
subject to the preceding paragraph, terminate the rights and obligations of such
Servicer thereunder and act as servicer of the related Mortgage Loans or to
cause the Trustee to enter in to a new Servicing Agreement with a successor
Servicer selected by the Master Servicer; provided, however, it is understood
and acknowledged by the parties hereto that there will be a period of transition
(not to exceed 90 days) before the actual servicing functions can be fully
transferred to such successor Servicer. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Servicing Agreements
and the pursuit of other appropriate remedies, shall be in such form and carried
out to such an extent and at such time as the Master Servicer, in its good faith
business judgment, would require were it the owner of the


                                      -53-
<PAGE>

related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, provided that the Master Servicer shall not be
required to prosecute or defend any legal action except to the extent that the
Master Servicer shall have received reasonable indemnity for its costs and
expenses in pursuing such action.

      (c) To the extent that the costs and expenses of the Master Servicer
related to any termination of a Servicer, appointment of a successor Servicer or
the transfer and assumption of servicing by the Master Servicer with respect to
any Servicing Agreement (including, without limitation, (i) all legal costs and
expenses and all due diligence costs and expenses associated with an evaluation
of the potential termination of the Servicer as a result of an event of default
by such Servicer and (ii) all costs and expenses associated with the complete
transfer of servicing, including all servicing files and all servicing data and
the completion, correction or manipulation of such servicing data as may be
required by the successor servicer to correct any errors or insufficiencies in
the servicing data or otherwise to enable the successor service to service the
Mortgage Loans in accordance with the related Servicing Agreement) are not fully
and timely reimbursed by the terminated Servicer, the Master Servicer shall be
entitled to reimbursement of such costs and expenses from the Master Servicer
Collection Account.

      (d) The Master Servicer shall require each Servicer to comply with the
remittance requirements and other obligations set forth in the related Servicing
Agreement.

      (e) If the Master Servicer acts as Servicer, it will not assume liability
for the representations and warranties of the Servicer, if any, that it
replaces.

      Section 3.04 Fidelity Bond. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The errors and omissions insurance policy and the fidelity bond shall be in such
form and amount generally acceptable for entities serving as master servicers or
trustees.

      Section 3.05 Power to Act; Procedures. The Master Servicer shall master
service the Mortgage Loans and shall have full power and authority, subject to
the REMIC Provisions and the provisions of Article X hereof, to do any and all
things that it may deem necessary or desirable in connection with the master
servicing and administration of the Mortgage Loans, including but not limited to
the power and authority (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 and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement and the related Servicing Agreement, as applicable; provided,
however, that the Master Servicer shall not (and, consistent with its
responsibilities under Section 3.03, shall not permit any Servicer to) knowingly
or intentionally take any action, or fail to take (or fail to cause to be taken)
any action reasonably within its control and the scope of duties more
specifically set forth herein, that, under the


                                      -54-
<PAGE>

REMIC Provisions, if taken or not taken, as the case may be, would cause REMIC
I, REMIC II or REMIC III to fail to qualify as a REMIC or result in the
imposition of a tax upon the Trust Fund (including but not limited to the tax on
prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) unless the
Master Servicer has received an Opinion of Counsel (but not at the expense of
the Master Servicer) to the effect that the contemplated action will not would
cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC or result in
the imposition of a tax upon REMIC I, REMIC II or REMIC III as the case may be.
The Trustee shall furnish the Master Servicer, upon written request from a
Servicing Officer, with any powers of attorney empowering the Master Servicer or
any Servicer to execute and deliver instruments of satisfaction or cancellation,
or of partial or full release or discharge, and to foreclose upon or otherwise
liquidate Mortgaged Property, and to appeal, prosecute or defend in any court
action relating to the Mortgage Loans or the Mortgaged Property, in accordance
with the applicable Servicing Agreement and this Agreement, and the Trustee
shall execute and deliver such other documents, as the Master Servicer may
request, to enable the Master Servicer to master service and administer the
Mortgage Loans and carry out its duties hereunder, in each case in accordance
with Accepted Master Servicing Practices (and the Trustee shall have no
liability for misuse of any such powers of attorney by the Master Servicer or
any Servicer). If the Master Servicer or the Trustee has been advised that it is
likely that the laws of the state in which action is to be taken prohibit such
action if taken in the name of the Trustee or that the Trustee would be
adversely affected under the "doing business" or tax laws of such state if such
action is taken in its name, the Master Servicer shall join with the Trustee in
the appointment of a co-trustee pursuant to Section 9.11 hereof. In the
performance of its duties hereunder, the Master Servicer shall be an independent
contractor and shall not, except in those instances where it is taking action in
the name of the Trustee, be deemed to be the agent of the Trustee.

      Section 3.06 Due-on-Sale Clauses; Assumption Agreements. To the extent
provided in the applicable Servicing Agreement, to the extent Mortgage Loans
contain enforceable due-on-sale clauses, the Master Servicer shall cause the
Servicers to enforce such clauses in accordance with the applicable Servicing
Agreement. If applicable law prohibits the enforcement of a due-on-sale clause
or such clause is otherwise not enforced in accordance with the applicable
Servicing Agreement, and, as a consequence, a Mortgage Loan is assumed, the
original Mortgagor may be released from liability in accordance with the
applicable Servicing Agreement.

      Section 3.07 Release of Mortgage Files. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by any Servicer of a
notification that payment in full has been escrowed in a manner customary for
such purposes for payment to Certificateholders on the next Distribution Date,
the Servicer will, if required under the applicable Servicing Agreement,
promptly furnish to the Custodian, on behalf of the Trustee, two copies of a
certification substantially in the form of Exhibit D hereto signed by a
Servicing Officer or in a mutually agreeable electronic format which will, in
lieu of a signature on its face, originate from a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payment that are required to be deposited in the
Protected Account maintained by the applicable Servicer pursuant to Section 4.01
or by the applicable Servicer pursuant to its Servicing Agreement have been or
will be so deposited) and shall request that the Custodian, on behalf of the
Trustee, deliver to the applicable Servicer the related Mortgage File. Upon
receipt of such


                                      -55-
<PAGE>

certification and request, the Custodian, on behalf of the Trustee, shall
promptly release the related Mortgage File to the applicable Servicer and the
Trustee and Custodian shall have no further responsibility with regard to such
Mortgage File. Upon any such payment in full, each Servicer is authorized, to
give, as agent for the Trustee, as the mortgagee under the Mortgage that secured
the Mortgage Loan, an instrument of satisfaction (or assignment of mortgage
without recourse) regarding the Mortgaged Property subject to the Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor of
such payment, it being understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Protected Account.

      (b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan and in accordance with the applicable Servicing Agreement,
the Trustee shall execute such documents as shall be prepared and furnished to
the Trustee by a Servicer or the Master Servicer (in form reasonably acceptable
to the Trustee) and as are necessary to the prosecution of any such proceedings.
The Custodian, on behalf of the Trustee, shall, upon the request of a Servicer
or the Master Servicer, and delivery to the Custodian, on behalf of the Trustee,
of two copies of a request for release signed by a Servicing Officer
substantially in the form of Exhibit D (or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer), release the related Mortgage File held in its possession or
control to the Servicer or the Master Servicer, as applicable. Such trust
receipt shall obligate the Servicer or the Master Servicer to return the
Mortgage File to the Custodian on behalf of the Trustee, when the need therefor
by the Servicer or the Master Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the Mortgage File shall be
released by the Custodian, on behalf of the Trustee, to the Servicer or the
Master Servicer.

      Section 3.08 Documents, Records and Funds in Possession of Master Servicer
To Be Held for Trustee.

      (a) The Master Servicer shall transmit and each Servicer (to the extent
required by the related Servicing Agreement) shall transmit to the Trustee or
Custodian such documents and instruments coming into the possession of the
Master Servicer or such Servicer from time to time as are required by the terms
hereof, or in the case of the Servicers, the applicable Servicing Agreement, to
be delivered to the Trustee or Custodian. Any funds received by the Master
Servicer or by a Servicer in respect of any Mortgage Loan or which otherwise are
collected by the Master Servicer or by a Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be held for the benefit
of the Trustee and the Certificateholders subject to the Master Servicer's right
to retain or withdraw from the Master Servicer Collection Account the Master
Servicing Compensation and other amounts provided in this Agreement, and to the
right of each Servicer to retain its Servicing Fee and other amounts as provided
in the applicable Servicing Agreement. The Master Servicer shall, and (to the
extent provided in the applicable Servicing Agreement) shall cause each Servicer
to, provide access to information and documentation regarding the Mortgage Loans
to the Trustee, its agents and accountants at any time upon reasonable request
and during normal business hours, and to Certificateholders that are savings and
loan associations, banks or insurance companies, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of such


                                      -56-
<PAGE>

Office and Corporation or examiners of any other federal or state banking or
insurance regulatory authority if so required by applicable regulations of the
Office of Thrift Supervision or other regulatory authority, such access to be
afforded without charge but only upon reasonable request in writing and during
normal business hours at the offices of the Master Servicer designated by it. In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.

      (b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, shall be held by the Master Servicer for and on behalf of
the Trustee and the Certificateholders and shall be and remain the sole and
exclusive property of the Trustee; provided, however, that the Master Servicer
and each Servicer shall be entitled to setoff against, and deduct from, any such
funds any amounts that are properly due and payable to the Master Servicer or
such Servicer under this Agreement or the applicable Servicing Agreement.

      Section 3.09 Standard Hazard Insurance and Flood Insurance Policies.

      (a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of the Servicers under the related Servicing Agreements to maintain
or cause to be maintained standard fire and casualty insurance and, where
applicable, flood insurance, all in accordance with the provisions of the
related Servicing Agreements. It is understood and agreed that such insurance
shall be with insurers meeting the eligibility requirements set forth in the
applicable Servicing Agreement and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance.

      (b) Pursuant to Section 4.01 and 4.02, any amounts collected by the
Servicers or the Master Servicer, or by any Servicer, under any insurance
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or released to the Mortgagor in
accordance with the applicable Servicing Agreement) shall be deposited into the
Master Servicer Collection Account, subject to withdrawal pursuant to Section
4.02 and 4.03. Any cost incurred by the Master Servicer or any Servicer in
maintaining any such insurance if the Mortgagor defaults in its obligation to do
so shall be added to the amount owing under the Mortgage Loan where the terms of
the Mortgage Loan so permit; provided, however, that the addition of any such
cost shall not be taken into account for purposes of calculating the
distributions to be made to Certificateholders and shall be recoverable by the
Master Servicer or such Servicer pursuant to Section 4.02 and 4.03.

      Section 3.10 Presentment of Claims and Collection of Proceeds. The Master
Servicer shall (to the extent provided in the applicable Servicing Agreement)
cause the related Servicer to, prepare and present on behalf of the Trustee and
the Certificateholders all claims under the Insurance Policies and take such
actions (including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such policies.
Any proceeds disbursed to the Master Servicer (or disbursed to a Servicer and
remitted to the Master Servicer) in respect of such policies, bonds or contracts
shall be promptly deposited in the Master Servicer Collection Account upon
receipt, except that


                                      -57-
<PAGE>

any amounts realized that are to be applied to the repair or restoration of the
related Mortgaged Property as a condition precedent to the presentation of
claims on the related Mortgage Loan to the insurer under any applicable
Insurance Policy need not be so deposited (or remitted).

      Section 3.11 Maintenance of the Primary Mortgage Insurance Policies.

      (a) The Master Servicer shall not take, or permit any Servicer (to the
extent such action is prohibited under the applicable Servicing Agreement) to
take, any action that would result in noncoverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of such Master
Servicer or Servicer, would have been covered thereunder. The Master Servicer
shall use its best reasonable efforts to cause each Servicer (to the extent
required under the related Servicing Agreement) to keep in force and effect (to
the extent that the Mortgage Loan requires the Mortgagor to maintain such
insurance), primary mortgage insurance applicable to each Mortgage Loan in
accordance with the provisions of this Agreement and the related Servicing
Agreement, as applicable. The Master Servicer shall not, and shall not permit
any Servicer (to the extent required under the related Servicing Agreement) to,
cancel or refuse to renew any such Primary Mortgage Insurance Policy that is in
effect at the date of the initial issuance of the Mortgage Note and is required
to be kept in force hereunder except in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable.

      (b) The Master Servicer agrees to present, or to cause each Servicer (to
the extent required under the related Servicing Agreement) to present, on behalf
of the Trustee and the Certificateholders, claims to the insurer under any
Primary Mortgage Insurance Policies and, in this regard, to take such reasonable
action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policies respecting defaulted Mortgage Loans. Pursuant to Section 4.01
and 4.02, any amounts collected by the Master Servicer or any Servicer under any
Primary Mortgage Insurance Policies shall be deposited in the Master Servicer
Collection Account, subject to withdrawal pursuant to Section 4.03.

      Section 3.12 Trustee to Retain Possession of Certain Insurance Policies
and Documents.

      The Trustee (or the Custodian, as directed by the Trustee), shall retain
possession and custody of the originals (to the extent available) of any Primary
Mortgage Insurance Policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer otherwise
has fulfilled its obligations under this Agreement, the Trustee (or its
Custodian, if any, as directed by the Trustee) shall also retain possession and
custody of each Mortgage File in accordance with and subject to the terms and
conditions of this Agreement. The Master Servicer shall promptly deliver or
cause to be delivered to the Trustee (or the Custodian, as directed by the
Trustee), upon the execution or receipt thereof the originals of any Primary
Mortgage Insurance Policies, any certificates of renewal, and such other
documents or instruments that constitute portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.


                                      -58-
<PAGE>

      Section 3.13 Realization Upon Defaulted Mortgage Loans. The Master
Servicer shall cause each Servicer (to the extent required under the related
Servicing Agreement) to foreclose upon, repossess or otherwise comparably
convert the ownership of Mortgaged 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, all in
accordance with the applicable Servicing Agreement.

      Section 3.14 Compensation for the Master Servicer.

      The Master Servicer will be entitled to all income and gain realized from
any investment of funds in the Distribution Account and the Master Servicer
Collection Account, pursuant to Article IV, for the performance of its
activities hereunder. Servicing compensation in the form of assumption fees, if
any, late payment charges, as collected, if any, or otherwise (but not including
any prepayment premium or penalty) shall be retained by the applicable Servicer
and shall not be deposited in the Protected Account. The Master Servicer shall
be required to pay all expenses incurred by it in connection with its activities
hereunder and shall not be entitled to reimbursement therefor except as provided
in this Agreement.

      Section 3.15 REO Property.

      (a) In the event the Trust Fund acquires ownership of any REO Property in
respect of any related Mortgage Loan, the deed or certificate of sale shall be
issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall, to the extent provided in the
applicable Servicing Agreement, cause the applicable Servicer to sell, any REO
Property as expeditiously as possible and in accordance with the provisions of
this Agreement and the related Servicing Agreement, as applicable. Pursuant to
its efforts to sell such REO Property, the Master Servicer shall cause the
applicable Servicer to protect and conserve, such REO Property in the manner and
to the extent required by the applicable Servicing Agreement, in accordance with
the REMIC Provisions and in a manner that does not result in a tax on "net
income from foreclosure property" or cause such REO Property to fail to qualify
as "foreclosure property" within the meaning of Section 860G(a)(8) of the Code.

      (b) The Master Servicer shall, to the extent required by the related
Servicing Agreement, cause the applicable Servicer to deposit all funds
collected and received in connection with the operation of any REO Property in
the Protected Account.

      (c) The Master Servicer and the applicable Servicer, upon the final
disposition of any REO Property, shall be entitled to reimbursement for any
related unreimbursed Monthly Advances and other unreimbursed advances as well as
any unpaid Servicing Fees from Liquidation Proceeds received in connection with
the final disposition of such REO Property; provided, that any such unreimbursed
Monthly Advances as well as any unpaid Servicing Fees may be reimbursed or paid,
as the case may be, prior to final disposition, out of any net rental income or
other net amounts derived from such REO Property.

      (d) To the extent provided in the related Servicing Agreement, the
Liquidation Proceeds from the final disposition of the REO Property, net of any
payment to the Master Servicer and the applicable Servicer as provided above
shall be deposited in the Protected Account on or prior to the Determination


                                      -59-
<PAGE>

Date in the month following receipt thereof and be remitted by wire transfer in
immediately available funds to the Master Servicer for deposit into the related
Master Servicer Collection Account on the next succeeding Servicer Remittance
Date.

      Section 3.16 Annual Officer's Certificate as to Compliance.

      (a) The Master Servicer shall deliver to the Trustee and the Rating
Agencies on or before May 31 of each year, commencing on May 31, 2004, an
Officer's Certificate, certifying that with respect to the period ending
December 31 of the prior year: (i) such Servicing Officer has reviewed the
activities of such Master Servicer during the preceding calendar year or portion
thereof and its performance under this Agreement, (ii) to the best of such
Servicing Officer's knowledge, based on such review, such Master Servicer has
performed and fulfilled its duties, responsibilities and obligations under this
Agreement in all material respects throughout such year, or, if there has been a
default in the fulfillment of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer and the nature and
status thereof, (iii) nothing has come to the attention of such Servicing
Officer to lead such Servicing Officer to believe that any Servicer has failed
to perform any of its duties, responsibilities and obligations under its
Servicing Agreement in all material respects throughout such year, or, if there
has been a material default in the performance or fulfillment of any such
duties, responsibilities or obligations, specifying each such default known to
such Servicing Officer and the nature and status thereof.

      (b) Copies of such statements shall be provided to any Certificateholder
upon request, by the Master Servicer or by the Trustee at the Master Servicer's
expense if the Master Servicer failed to provide such copies (unless (i) the
Master Servicer shall have failed to provide the Trustee with such statement or
(ii) the Trustee shall be unaware of the Master Servicer's failure to provide
such statement).

      Section 3.17 Annual Independent Accountant's Servicing Report. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, the Rating Agencies and the Seller on or
before May 31 of each year, commencing on May 31, 2004 to the effect that, with
respect to the most recently ended fiscal year, such firm has examined certain
records and documents relating to the Master Servicer's performance of its
servicing obligations under this Agreement and pooling and servicing and trust
agreements in material respects similar to this Agreement and to each other and
that, on the basis of such examination conducted substantially in compliance
with the audit program for mortgages serviced for Freddie Mac or the Uniform
Single Attestation Program for Mortgage Bankers, such firm is of the opinion
that the Master Servicer's activities have been conducted in compliance with
this Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as such firm believes to be
immaterial, (ii) such other exceptions as are set forth in such statement and
(iii) such exceptions that the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages Serviced by Freddie Mac requires it
to report. Copies of such statements shall be provided to any Certificateholder
upon request by the Master Servicer, or by the Trustee at the expense of the
Master Servicer if the Master Servicer shall fail to provide such copies. If
such report discloses exceptions that are material, the Master Servicer shall


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<PAGE>

advise the Trustee whether such exceptions have been or are susceptible of cure,
and will take prompt action to do so.

      Section 3.18 Reports Filed with Securities and Exchange Commission. (a)
Within 15 days after each Distribution Date, the Master Servicer shall, in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering and Retrieval System ("EDGAR"), a Form 8-K with a copy of the
statement to the Trustee who shall furnish a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. If
requested by the Seller, prior to January 30, 2004, the Master Servicer shall,
in accordance with industry standards, file a Form 15 Suspension Notice with
respect to the Trust Fund. Prior to March 30, 2004 and annually thereafter, the
Master Servicer shall, subject to subsection (c), file a Form 10-K, in substance
conforming to industry standards, with respect to the Trust Fund. Such Form 10-K
shall include, to the extent available, as exhibits (i) each applicable
Servicer's annual statement of compliance described under the related Servicing
Agreement, (ii) each applicable Servicer's accountant's report described under
the related Servicing Agreement, and (iii) the Master Servicer's accountant's
report described under Section 3.17, if applicable, in each case to the extent
timely delivered, if applicable, to the Master Servicer. If items (i) and (ii)
in the preceding sentence are not timely delivered, the Master Servicer shall
file an amended Form 10-K including such documents as exhibits reasonably
promptly after they are delivered to the Master Servicer. The Seller hereby
grants to the Master Servicer a limited power of attorney to execute and file
each Form 8-K on behalf of the Seller. Such power of attorney shall continue
until either the earlier of (i) receipt by the Master Servicer from the Seller
of written termination of such power of attorney and (ii) the termination of the
Trust Fund. The Seller and the Trustee each agree to promptly furnish to the
Master Servicer, 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 Master Servicer reasonably deems appropriate to
prepare and file all necessary reports with the Commission. The Master Servicer
will cooperate with the Seller in connection with any additional filings with
respect to the Trust Fund as the Seller deems necessary under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Copies of all reports
filed by the Master Servicer under the Exchange Act shall be sent to: the Seller
c/o Bear, Stearns & Co. Inc., Attn: Managing Director-Analysis and Control, One
Metrotech Center North, Brooklyn, New York 11202-3859.

      (b) The Master Servicer shall indemnify and hold harmless the Seller, the
Trustee and their respective officers, directors and Affiliates from and against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses arising out
of or based upon a breach of the Master Servicer's obligations under this
Section 3.18 or the Master Servicer's negligence, bad faith or willful
misconduct in connection therewith. Fees and expenses incurred by the Master
Servicer in connection with this Section 3.18 shall not be reimbursable from the
Trust Fund.

      (c) Nothing shall be construed from the foregoing subsection (a) and (b)
to require the Seller or the Master Servicer or any officer, director or
Affiliate thereof to sign any Form 10-K or any certification contained therein.
The failure of the Seller or the Master Servicer to sign the Form 10-K or any
certification contained therein shall not be regarded as a breach by the related
party of this Agreement. Furthermore, the inability of the Master Servicer to
file a Form 10-K as a result of the lack of required


                                      -61-
<PAGE>

signatures on such Form 10-K or any certification contained therein shall not be
regarded as a breach by the Master Servicer of any obligation under this
Agreement. However, the Seller, the Master Servicer and the Trustee agree to
negotiate in good faith to comply with further guidance from the Commission
concerning the filing of Form 10-Ks.

      Section 3.19 EMC. On the Closing Date, EMC will receive from the Seller a
payment of $5,000.

      Section 3.20 UCC. The Seller shall inform the Trustee in writing of any
Uniform Commercial Code financing statements that were filed on the Closing Date
in connection with the Trust with stamped recorded copies of such financing
statements to be delivered to the Trustee promptly upon receipt by the Seller..
The Trustee agrees to monitor and notify the Seller if any continuation
statements for such Uniform Commercial Code financing statements need to be
filed. If directed by the Seller in writing, the Trustee will file any such
continuation statements solely at the expense of the Seller. The Seller shall
file any financing statements or amendments thereto required by any change in
the Uniform Commercial Code.

      Section 3.21 Optional Purchase of Defaulted Mortgage Loans.

      (a) With respect to any Mortgage Loan which as of the first day of a
Calendar Quarter is delinquent in payment by 90 days or more or is an REO
Property, EMC shall have the right to purchase such Mortgage Loan from the Trust
at a price equal to the Repurchase Price; provided however (i) that such
Mortgage Loan is still 90 days or more delinquent or is an REO Property as of
the date of such purchase and (ii) this purchase option, if not theretofore
exercised, shall terminate on the date prior to the last day of the related
Calendar Quarter. This purchase option, if not exercised, shall not be
thereafter reinstated unless the delinquency is cured and the Mortgage Loan
thereafter again becomes 90 days or more delinquent or becomes an REO Property,
in which case the option shall again become exercisable as of the first day of
the related Calendar Quarter.

      (b) If at any time EMC remits to the Master Servicer a payment for deposit
in the Master Servicer Collection Account covering the amount of the Repurchase
Price for such a Mortgage Loan, and EMC provides to the Trustee a certification
signed by a Servicing Officer stating that the amount of such payment has been
deposited in the Master Servicer Collection Account, then the Trustee shall
execute the assignment of such Mortgage Loan to EMC at the request of EMC
without recourse, representation or warranty which shall succeed to all the
Trustee's right, title and interest in and to such Mortgage Loan, and all
security and documents relative thereto. Such assignment shall be an assignment
outright and not for security. EMC will thereupon own such Mortgage, and all
such security and documents, free of any further obligation to the Trustee or
the Certificateholders with respect thereto.


                                      -62-
<PAGE>

                                   ARTICLE IV
                                    Accounts

      Section 4.01 Protected Accounts. (a) The Master Servicer shall enforce the
obligation of each Servicer to establish and maintain a Protected Account in
accordance with the applicable Servicing Agreement, with records to be kept with
respect thereto on a Mortgage Loan by Mortgage Loan basis, into which accounts
shall be deposited within 48 hours (or as of such other time specified in the
related Servicing Agreement) of receipt all collections of principal and
interest on any Mortgage Loan and with respect to any REO Property received by a
Servicer, including Principal Prepayments, Insurance Proceeds, Liquidation
Proceeds, and advances made from the Servicer's own funds (less servicing
compensation as permitted by the applicable Servicing Agreement in the case of
any Servicer) and all other amounts to be deposited in the Protected Account.
The Servicer is hereby authorized to make withdrawals from and deposits to the
related Protected Account for purposes required or permitted by this Agreement.
To the extent provided in the related Servicing Agreement, the Protected Account
shall be held in a Designated Depository Institution and segregated on the books
of such institution in the name of the Trustee for the benefit of
Certificateholders.

      (b) To the extent provided in the related Servicing Agreement, amounts on
deposit in a Protected Account may be invested in Permitted Investments in the
name of the Trustee for the benefit of Certificateholders and, except as
provided in the preceding paragraph, not commingled with any other funds, such
Permitted Investments to mature, or to be subject to redemption or withdrawal,
no later than the date on which such funds are required to be withdrawn for
deposit in the Master Servicer Collection Account, and shall be held until
required for such deposit. The income earned from Permitted Investments made
pursuant to this Section 4.01 shall be paid to the related Servicer under the
applicable Servicing Agreement, and the risk of loss of moneys required to be
distributed to the Certificateholders resulting from such investments shall be
borne by and be the risk of the related Servicer. The related Servicer (to the
extent provided in the Servicing Agreement) shall deposit the amount of any such
loss in the Protected Account within two Business Days of receipt of
notification of such loss but not later than the second Business Day prior to
the Distribution Date on which the moneys so invested are required to be
distributed to the Certificateholders.

      (c) To the extent provided in the related Servicing Agreement and subject
to this Article IV, on or before each Servicer Remittance Date, the related
Servicer shall withdraw or shall cause to be withdrawn from the Protected
Accounts and shall immediately deposit or cause to be deposited in the Master
Servicer Collection Account amounts representing the following collections and
payments (other than with respect to principal of or interest on the Mortgage
Loans due on or before the Cut-off Date) with respect to each Loan Group:

            (i) Scheduled Payments on the Mortgage Loans received or any related
      portion thereof advanced by the Servicers pursuant to the Servicing
      Agreements which were due on or before the related Due Date, net of the
      amount thereof comprising the Servicing Fees or any fees with respect to
      any lender-paid primary mortgage insurance policy;


                                      -63-
<PAGE>

            (ii) Full Principal Prepayments and any Liquidation Proceeds
      received by the Servicers with respect to such Mortgage Loans in the
      related Prepayment Period, with interest to the date of prepayment or
      liquidation, net of the amount thereof comprising the Servicing Fees;

            (iii) Partial Principal Prepayments received by the Servicers for
      such Mortgage Loans in the related Prepayment Period; and

            (iv) Any amount to be used as an Advance.

      (d) Withdrawals may be made from an Account only to make remittances as
provided in Section 4.01(c), 4.02 and 4.03; to reimburse the Master Servicer or
a Servicer for Monthly Advances which have been recovered by subsequent
collection from the related Mortgagor; to remove amounts deposited in error; to
remove fees, charges or other such amounts deposited on a temporary basis; or to
clear and terminate the account at the termination of this Agreement in
accordance with Section 10.01. As provided in Sections 4.01(c) and 4.02(b)
certain amounts otherwise due to the Servicers may be retained by them and need
not be deposited in the Master Servicer Collection Account.

      Section 4.02 Master Servicer Collection Account. (a) The Master Servicer
shall establish and maintain in the name of the Trustee, for the benefit of the
Certificateholders, the Master Servicer Collection Account as a segregated trust
account or accounts. The Master Servicer Collection Account shall be an Eligible
Account. The Master Servicer will deposit in the Master Servicer Collection
Account as identified by the Master Servicer and as received by the Master
Servicer, the following amounts:

            (i) Any amounts withdrawn from a Protected Account;

            (ii) Any Monthly Advance and any Compensating Interest Payments;

            (iii) Any Insurance Proceeds or Net Liquidation Proceeds received by
      or on behalf of the Master Servicer or which were not deposited in a
      Protected Account;

            (iv) The Repurchase Price with respect to any Mortgage Loans
      purchased by the Mortgage Loan Seller or Section 2.02 or 2.03, any amounts
      which are to be treated pursuant to Section 2.04 of this Agreement as the
      payment of such a Repurchase Price, the Repurchase Price with respect to
      any Mortgage Loans purchased by EMC pursuant to Section 3.21, and all
      proceeds of any Mortgage Loans or property acquired with respect thereto
      repurchased by the Seller or its designee pursuant to Section 10.01;

            (v) Any amounts required to be deposited with respect to losses on
      investments of deposits in an Account; and

            (vi) Any other amounts received by or on behalf of the Master
      Servicer and required to be deposited in the Master Servicer Collection
      Account pursuant to this Agreement.


                                      -64-
<PAGE>

      (b) All amounts deposited to the Master Servicer Collection Account shall
be held by the Master Servicer in the name of the Trustee in trust for the
benefit of the Certificateholders in accordance with the terms and provisions of
this Agreement. The requirements for crediting the Master Servicer Collection
Account or the Distribution Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of (i) prepayment or late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges and (ii) the items enumerated in Subsections 4.05(a)(i), (ii),
(iii), (iv), (vi), (vii), (viii), (ix), (x), (xi) and (xii) with respect to the
Securities Administrator, need not be credited by the Master Servicer or the
related Servicer to the Distribution Account or the Master Servicer Collection
Account, as applicable. In the event that the Master Servicer shall deposit or
cause to be deposited to the Distribution Account any amount not required to be
credited thereto, the Trustee, upon receipt of a written request therefor signed
by a Servicing Officer of the Master Servicer, shall promptly transfer such
amount to the Master Servicer, any provision herein to the contrary
notwithstanding.

      (c) The amount at any time credited to the Master Servicer Collection
Account shall be invested, in the name of the Trustee, or its nominee, for the
benefit of the Certificateholders, in Permitted Investments as directed by
Master Servicer. All Permitted Investments shall mature or be subject to
redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Account Deposit Date. Any and all investment earnings on
amounts on deposit in the Master Servicer Account from time to time shall be for
the account of the Master Servicer. The Master Servicer from time to time shall
be permitted to withdraw or receive distribution of any and all investment
earnings from the Master Servicer Account. The risk of loss of moneys required
to be distributed to the Certificateholders resulting from such investments
shall be borne by and be the risk of the Master Servicer. The Master Servicer
shall deposit the amount of any such loss in the Master Servicer Collection
Account within two Business Days of receipt of notification of such loss but not
later than the second Business Day prior to the Distribution Date on which the
moneys so invested are required to be distributed to the Certificateholders.

      Section 4.03 Permitted Withdrawals and Transfers from the Master Servicer
Collection Account. (a) The Master Servicer will, from time to time on demand of
a Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Master Servicer Collection Account as the
Master Servicer has designated for such transfer or withdrawal pursuant to this
Agreement and the related Servicing Agreement. The Master Servicer may clear and
terminate the Master Servicer Collection Account pursuant to Section 10.01 and
remove amounts from time to time deposited in error. (b) On an ongoing basis,
the Master Servicer shall withdraw from the Master Servicer Collection Account
(i) any expenses recoverable by the Trustee, the Master Servicer or the
Securities Administrator or the Custodian pursuant to Sections 3.03, 7.04 and
9.05 and (ii) any amounts payable to the Master Servicer as set forth in Section
3.14.

      (c) In addition, on or before each Distribution Account Deposit Date, the
Master Servicer shall deposit in the Distribution Account (or remit to the
Trustee for deposit therein) any Monthly Advances required to be made by the
Master Servicer with respect to the Mortgage Loans.


                                      -65-
<PAGE>

      (d) No later than 3:00 p.m. New York time on each Distribution Account
Deposit Date, the Master Servicer will transfer all Available Funds on deposit
in the Master Servicer Collection Account with respect to the related
Distribution Date to the Trustee for deposit in the Distribution Account.

      Section 4.04 Distribution Account. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Distribution Account as a segregated trust account or accounts.

      (b) All amounts deposited to the Distribution Account shall be held by the
Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.

      (c) The Distribution Account shall constitute a trust account of the Trust
Fund segregated on the books of the Trustee and held by the Trustee in trust in
its Corporate Trust Office, and the Distribution Account and the funds deposited
therein shall not be subject to, and shall be protected from, all claims, liens,
and encumbrances of any creditors or depositors of the Trustee or the Master
Servicer (whether made directly, or indirectly through a liquidator or receiver
of the Trustee or the Master Servicer). The Distribution Account shall be an
Eligible Account. The amount at any time credited to the Distribution Account
shall be (i) fully insured by the FDIC to the maximum coverage provided thereby
or (ii) invested in the name of the Trustee, in such Permitted Investments
selected by the Master Servicer or deposited in demand deposits with such
depository institutions as selected by the Master Servicer, provided that time
deposits of such depository institutions would be a Permitted Investment. All
Permitted Investments shall mature or be subject to redemption or withdrawal on
or before, and shall be held until, the next succeeding Distribution Date if the
obligor for such Permitted Investment is the Trustee or, if such obligor is any
other Person, the Business Day preceding such Distribution Date. All investment
earnings on amounts on deposit in the Distribution Account or benefit from funds
uninvested therein from time to time shall be for the account of the Master
Servicer. The Master Servicer shall be permitted to withdraw or receive
distribution of any and all investment earnings from the Distribution Account on
each Distribution Date. If there is any loss on a Permitted Investment or demand
deposit, the Master Servicer shall remit the amount of the loss to the Trustee
who shall deposit such amount in the Distribution Account. With respect to the
Distribution Account and the funds deposited therein, the Master Servicer shall
take such action as may be necessary to ensure that the Certificateholders shall
be entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e),
and applicable regulations pursuant thereto, if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.


                                      -66-
<PAGE>

      Section 4.05 Permitted Withdrawals and Transfers from the Distribution
Account. (a) The Trustee will, from time to time on demand of the Master
Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Distribution Account as the Master Servicer
has designated for such transfer or withdrawal pursuant to this Agreement and
the Servicing Agreements or as the Securities Administrator has instructed
hereunder for the following purposes (limited in the case of amounts due the
Master Servicer to those not withdrawn from the Master Servicer Collection
Account in accordance with the terms of this Agreement):

            (i) to reimburse the Master Servicer or any Servicer for any Monthly
      Advance of its own funds or any advance of such Servicer's own funds, the
      right of the Master Servicer or a Servicer to reimbursement pursuant to
      this subclause (i) being limited to amounts received on a particular
      Mortgage Loan (including, for this purpose, the Repurchase Price therefor,
      Insurance Proceeds and Liquidation Proceeds) which represent late payments
      or recoveries of the principal of or interest on such Mortgage Loan
      respecting which such Monthly Advance or advance was made;

            (ii) to reimburse the Master Servicer or any Servicer from Insurance
      Proceeds or Liquidation Proceeds relating to a particular Mortgage Loan
      for amounts expended by the Master Servicer or such Servicer in good faith
      in connection with the restoration of the related Mortgaged Property which
      was damaged by an Uninsured Cause or in connection with the liquidation of
      such Mortgage Loan;

            (iii) to reimburse the Master Servicer or any Servicer from
      Insurance Proceeds relating to a particular Mortgage Loan for insured
      expenses incurred with respect to such Mortgage Loan and to reimburse the
      Master Servicer or such Servicer from Liquidation Proceeds from a
      particular Mortgage Loan for Liquidation Expenses incurred with respect to
      such Mortgage Loan; provided that the Master Servicer shall not be
      entitled to reimbursement for Liquidation Expenses with respect to a
      Mortgage Loan to the extent that (i) any amounts with respect to such
      Mortgage Loan were paid as Excess Liquidation Proceeds pursuant to clause
      (xi) of this Subsection 4.03 (a) to the Master Servicer; and (ii) such
      Liquidation Expenses were not included in the computation of such Excess
      Liquidation Proceeds;

            (iv) to pay the Master Servicer or any Servicer, as appropriate,
      from Liquidation Proceeds or Insurance Proceeds received in connection
      with the liquidation of any Mortgage Loan, the amount which it or such
      Servicer would have been entitled to receive under subclause (ix) of this
      Subsection 4.03(a) as servicing compensation on account of each defaulted
      scheduled payment on such Mortgage Loan if paid in a timely manner by the
      related Mortgagor;

            (v) to pay the Master Servicer or any Servicer from the Repurchase
      Price for any Mortgage Loan, the amount which it or such Servicer would
      have been entitled to receive under subclause (ix) of this Subsection 4.03
      (a) as servicing compensation;


                                      -67-
<PAGE>

            (vi) to reimburse the Master Servicer or any Servicer for advances
      of funds (other than Monthly Advances) made with respect to the Mortgage
      Loans, and the right to reimbursement pursuant to this subclause being
      limited to amounts received on the related Mortgage Loan (including, for
      this purpose, the Repurchase Price therefor, Insurance Proceeds and
      Liquidation Proceeds) which represent late recoveries of the payments for
      which such advances were made;

            (vii) to reimburse the Master Servicer or any Servicer for any
      Monthly Advance or advance, after a Realized Loss has been allocated with
      respect to the related Mortgage Loan if the Monthly Advance or advance has
      not been reimbursed pursuant to clauses (i) and (vi);

            (viii) to pay the Master Servicer as set forth in Section 3.14;

            (ix) to reimburse the Master Servicer for expenses, costs and
      liabilities incurred by and reimbursable to it pursuant to Sections 3.03,
      7.04(c) and (d);

            (x) to pay to the Master Servicer, as additional servicing
      compensation, any Excess Liquidation Proceeds to the extent not retained
      by the related Servicer;

            (xi) to reimburse or pay any Servicer any such amounts as are due
      thereto under the applicable Servicing Agreement and have not been
      retained by or paid to the Servicer, to the extent provided in the related
      Servicing Agreement;

            (xii) to reimburse the Trustee, the Securities Administrator or the
      Custodian for expenses, costs and liabilities incurred by or reimbursable
      to it pursuant to this Agreement;

            (xiii) to remove amounts deposited in error; and

            (xiv) to clear and terminate the Distribution Account pursuant to
      Section 10.01.

      (b) The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (i) through
(vi), inclusive, and (viii) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Master
Servicer without being deposited in the Distribution Account under Section
4.02(b).

      (c) On each Distribution Date, the Trustee shall distribute the Available
Funds to the extent on deposit in the Distribution Account for each Loan Group
to the Holders of the Certificates in accordance with distribution instructions
provided to it by the Securities Administrator no later than two Business Days
prior to such Distribution Date and determined by the Securities Administrator
in accordance with Section 6.01.


                                      -68-
<PAGE>

                                    ARTICLE V
                                  Certificates

      Section 5.01 Certificates. (a) The Depository, the Seller and the Trustee
have entered into a Depository Agreement dated as of the Closing Date (the
"Depository Agreement"). Except for the Residual Certificates, the Private
Certificates and the Individual Certificates and as provided in Subsection
5.01(b), the Certificates shall at all times remain registered in the name of
the Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to a successor to the
Depository; (ii) ownership and transfers of registration of such Certificates on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iii) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (iv) the Trustee shall
deal with the Depository as representative of such Certificate Owners of the
respective Class of Certificates for purposes of exercising the rights of
Certificateholders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (v) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants.

      The Residual Certificates and the Private Certificates are initially
Physical Certificates. If at any time the Holders of all of the Certificates of
one or more such Classes request that the Trustee cause such Class to become
Global Certificates, the Trustee and the Seller will take such action as may be
reasonably required to cause the Depository to accept such Class or Classes for
trading if it may legally be so traded.

      All transfers by Certificate Owners of such respective Classes of
Book-Entry Certificates and any Global Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures. (b) If (i)(A) the Seller advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Seller is unable to locate a
qualified successor within 30 days or (ii) the Seller at its option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall request that the Depository notify all Certificate
Owners of the occurrence of any such event and of the availability of
definitive, fully registered Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue the definitive Certificates. Neither the Seller nor the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.

      (c) (i) REMIC I will be evidenced by (x) the REMIC I Regular Interests
(designated below), which will be uncertificated and non-transferable and are
hereby designated as the "regular interests" in REMIC I and have the principal
balances and accrue interest at the Pass-Through Rates equal to those set


                                      -69-
<PAGE>

forth in this Section 5.01(c)(i) and (y) the Class R-I Certificates, which is
hereby designated as the single "residual interest" in REMIC I.

      The REMIC I Regular Interests and the Class R-I Certificate will have the
following designations, initial balances and pass-through rates:

  REMIC I Interest   Initial Balance        Pass-Through Rate     Related Group
  ----------------   ---------------        -----------------     -------------
         1A          $ 1,804.14                   (1)                 Group 1
         1B          $ 25,773.46                  (2)                 Group 1
         2A          $ 853.12                     (1)                 Group 2
         2B          $ 12,187.39                  (3)                 Group 2
         3A          $ 1,435.30                   (1)                 Group 3
         3B          $ 20,504.29                  (4)                 Group 3
         4A          $ 195.16                     (1)                 Group 4
         4B          $ 2,788.01                   (5)                 Group 4
         5A          $ 1,261.47                   (1)                 Group 5
         5B          $ 18,020.99                  (6)                 Group 5
         6A          $ 1,916.47                   (1)                 Group 6
         6B          $ 27,378.18                  (7)                 Group 6
         7A          $ 563.14                     (1)                 Group 7
         7B          $ 8,044.87                   (8)                 Group 7
         8A          $ 189.01                     (1)                 Group 8
         8B          $ 2,700.04                   (9)                 Group 8
         ZZZ         $ 1,173,846,804.92           (1)                   N/A
     Class R-I       $ 100.00                     (2)                 Group 1

----------
(1)   The weighted average of the Net Rates of the Mortgage Loans, weighted on
      the basis of the respective Scheduled Principal Balance of each such
      Mortgage Loan as of the beginning of the Due Period immediately preceding
      the related Distribution Date.

(2)   The weighted average of the Net Rates of the Group 1 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(3)   The weighted average of the Net Rates of the Group 2 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(4)   The weighted average of the Net Rates of the Group 3 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(5)   The weighted average of the Net Rates of the Group 4 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(6)   The weighted average of the Net Rates of the Group 5 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(7)   The weighted average of the Net Rates of the Group 6 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.


                                      -70-
<PAGE>

(8)   The weighted average of the Net Rates of the Group 7 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(9)   The weighted average of the Net Rates of the Group 8 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

      Distributions shall be deemed to be made to the REMIC I Regular Interests
first, so as to keep the Uncertificated Principal Balance of each REMIC I
Regular Interest ending with the designation "B" equal to 0.01% of the aggregate
Scheduled Principal Balance of the Mortgage Loans in the related Group; second,
to each REMIC I Regular Interest ending with the designation "A," so that the
Uncertificated Principal Balance of each such REMIC I Regular Interest is equal
to 0.01% of the excess of (x) the aggregate Scheduled Principal Balance of the
Mortgage Loans in the related Group over (y) the Current Principal Amount of the
Senior Certificate in the related Group (except that if any such excess is a
larger number than in the preceding distribution period, the least amount of
principal shall be distributed to such REMIC I Regular Interests such that the
REMIC I Subordinated Balance Ratio is maintained); and third, any remaining
principal to REMIC I Regular Interest ZZZ. Realized Losses shall be applied
after all distributions have been made on each Distribution Date first, so as to
keep the Uncertificated Principal Balance of each REMIC I Regular Interest
ending with the designation "B" equal to 0.01% of the aggregate Scheduled
Principal Balance of the Mortgage Loans in the related Group; second, to each
REMIC I Regular Interest ending with the designation "A," so that the
Uncertificated Principal Balance of each such REMIC I Regular Interest is equal
to 0.01% of the excess of (x) the aggregate Scheduled Principal Balance of the
Mortgage Loans in the related Group over (y) the Current Principal Amount of the
Senior Certificate in the related Group (except that if any such excess is a
larger number than in the preceding distribution period, the least amount of
Realized Losses shall be applied to such REMIC I Regular Interests such that the
REMIC I Subordinated Balance Ratio is maintained); and third, any remaining
Realized Losses shall be allocated to REMIC I Regular Interest ZZZ.

      (ii) REMIC II will be evidenced by (x) the REMIC II Regular Interests
(designated below), which will be uncertificated and non-transferable and are
hereby designated as the "regular interests" in REMIC II and have the principal
balances and accrue interest at the Pass-Through Rates equal to those set forth
in this Section 5.01(c)(ii) and (y) the Class R-II Certificate, which is hereby
designated as the single "residual interest" in REMIC II.

      The REMIC II Regular Interests and the Class R-II Certificate will have
the following designations, initial balances and pass-through rates:

 REMIC II Interest   Initial Balance        Pass-Through Rate     Related Group
 -----------------   ---------------        -----------------     -------------
        I-A-1        $ 239,692,900.00              (1)               Group 1
       II-A-1        $ 113,342,700.00              (2)               Group 2
      III-A-1        $ 190,689,900.00              (3)               Group 3
       IV-A-1        $ 25,928,500.00               (4)               Group 4

        V-A-1        $ 167,595,200.00              (5)               Group 5
       VI-A-1        $ 254,617,100.00              (6)               Group 6


                                      -71-
<PAGE>

       VII-A-1       $ 74,817,300.00               (7)               Group 7
      VIII-A-1       $ 25,110,300.00               (8)               Group 8
        MT-R         $ 100.00                      (1)               Group 1
         M           $ 44,023,800.00               (9)                 N/A
        B-1          $ 13,500,700.00               (9)                 N/A
        B-2          $ 9,978,800.00                (9)                 N/A
        B-3          $ 7,043,800.00                (9)                 N/A
        B-4          $ 3,521,800.00                (9)                 N/A
        B-5          $ 1,760,900.00                (9)                 N/A
        B-6          $ 2,348,520.00                (9)                 N/A

     Class R-II      $ 100.00                      (1)               Group 1

----------
(1)   The weighted average of the Net Rates of the Group 1 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(2)   The weighted average of the Net Rates of the Group 2 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(3)   The weighted average of the Net Rates of the Group 3 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(4)   The weighted average of the Net Rates of the Group 4 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(5)   The weighted average of the Net Rates of the Group 5 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(6)   The weighted average of the Net Rates of the Group 6 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(7)   The weighted average of the Net Rates of the Group 7 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(8)   The weighted average of the Net Rates of the Group 8 Mortgage Loans,
      weighted on the basis of the respective Scheduled Principal Balance of
      each such Mortgage Loan as of the beginning of the Due Period immediately
      preceding the related Distribution Date.

(9)   A variable Pass-Through Rate equal to the weighted average of the
      Pass-Through Rates on REMIC I Regular Interests 1A, 2A, 3A, 4A, 5A, 6A, 7A
      and 8A, weighted on the basis of the Uncertificated Principal Balance of


                                      -72-
<PAGE>

      each such REMIC I Regular Interest immediately preceding the related
      Distribution Date, provided that for purposes of such weighted average,
      the Pass-Through Rate of each such REMIC I Regular Interest shall be
      subject to a cap and a floor equal to the Pass-Through Rate of the REMIC I
      Regular Interest from the related Group ending with the designation "B".

      Principal shall be payable to, and shortfalls, losses and prepayments are
allocable to, the REMIC II Regular Interests as such amounts are payable and
allocable to the Corresponding Certificates.

      (iii) The Classes of the Certificates shall have the following
designations, initial principal amounts and Pass-Through Rates:

                           Initial Principal/
 Designation                Notional Amount             Pass-Through Rate
 -----------                ---------------             -----------------
    I-A-1                    $239,692,900                    (1)
   II-A-1                    $113,342,700                    (2)
  III-A-1                    $190,689,900                    (3)
   IV-A-1                    $ 25,928,500                    (4)
    V-A-1                    $167,595,200                    (5)
   VI-A-1                    $254,617,100                    (6)
  VII-A-1                    $ 74,817,300                    (7)
  VII-A-X                    $ 74,817,300                    (8)
 VIII-A-1                    $ 25,110,300                    (9)
 VIII-A-X                    $ 25,110,300                    (10)
    R-I                      $        100                    (1)
    R-II                     $        100                    (1)
    R-III                    $        100                    (1)
      M                      $ 44,023,800                    (11)
     B-1                     $ 13,500,700                    (11)
     B-2                     $  9,978,800                    (11)
     B-3                     $  7,043,800                    (11)
     B-4                     $  3,521,800                    (11)
     B-5                     $  1,760,900                    (11)
     B-6                     $  2,348,519                    (11)


                                      -73-
<PAGE>

----------

      (1) The Class I-A-1, Class R-I, Class R-II and Class R-III Certificates
will bear interest at a variable pass- through rate equal to the weighted
average of the Net Rates of the Group 1 Mortgage Loans, weighted on the basis of
the respective Scheduled Principal Balances of each such Mortgage Loan as of the
beginning of the Due Period immediately preceding the related Distribution Date;
provided that for federal income tax purposes such Certificates will bear
interest at a rate equivalent to the foregoing, expressed as the weighted
average of the Pass-Through Rate on REMIC II Regular Interest I-A-1, weighted on
the basis of the Uncertificated Principal balance of such REMIC II Regular
Interest immediately preceding the related Distribution Date. The pass-through
rate with respect to the first Interest Accrual Period is expected to be
approximately 5.083% per annum.

      (2) The Class II-A-1 Certificates will bear interest at a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the Group 2
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, on such
Distribution Dates, for federal income tax purposes the Class II-A-1
Certificates will bear interest at a rate equivalent to the foregoing, expressed
as the weighted average of the Pass-Through Rate on REMIC II Regular Interest
II-A-1, weighted on the basis of the Uncertificated Principal Balance of such
REMIC II Regular Interest immediately preceding the related Distribution Date.
The pass-through rate with respect to the first Interest Accrual Period is
expected to be approximately 5.430% per annum.

      (3) The Class III-A-1 Certificates will bear interest at a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the Group 3
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, on such
Distribution Dates, for federal income tax purposes the Class III-A-1
Certificates will bear interest at a rate equivalent to the foregoing, expressed
as the weighted average of the Pass-Through Rate on REMIC II Regular Interest
III-A-1, weighted on the basis of the Uncertificated Principal Balance of such
REMIC II Regular Interest immediately preceding the related Distribution Date.
The pass-through rate with respect to the first Interest Accrual Period is
expected to be approximately 5.468% per annum.

      (4) The Class IV-A-1 Certificates will bear interest at a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the Group 4
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, on such
Distribution Dates, for federal income tax purposes the Class IV-A-1
Certificates will bear interest at a rate equivalent to the foregoing, expressed
as the weighted average of the Pass-Through Rate on REMIC II Regular Interest
IV-A-1, weighted on the basis of the Uncertificated Principal Balance of such
REMIC II Regular Interest immediately preceding the related Distribution Date.
The pass-through rate with respect to the first Interest Accrual Period is
expected to be approximately 4.560% per annum.

      (5) The Class V-A-1 Certificates will bear interest at a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the Group 5
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, on such
Distribution Dates, for federal income tax purposes the Class V-A-1 Certificates
will bear interest at a rate equivalent to the foregoing, expressed as the
weighted average of the Pass-Through Rate on REMIC II Regular Interest V-A-1,
weighted on the basis of the Uncertificated Principal Balance of such REMIC II
Regular Interest immediately preceding the related Distribution Date. The
pass-through rate with respect to the first Interest Accrual Period is expected
to be approximately 5.464% per annum.

      (6) The Class VI-A-1 Certificates will bear interest at a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the Group 6
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, on such
Distribution Dates, for federal income tax purposes the Class VI-A-1


                                      -74-
<PAGE>

Certificates will bear interest at a rate equivalent to the foregoing, expressed
as the weighted average of the Pass-Through Rate on REMIC II Regular Interest
VI-A-1, weighted on the basis of the Uncertificated Principal Balance of such
REMIC II Regular Interest immediately preceding the related Distribution Date.
The pass-through rate with respect to the first Interest Accrual Period is
expected to be approximately 5.235% per annum.

      (7) The Class VII-A-1 Certificates will bear interest at a variable
Pass-Through Rate equal to (A) on or prior to the Distribution Date in January
2008 the lesser of (i) 3.812% per annum and (ii) the weighted average of the Net
Rates of the Group 7 Mortgage Loans and (B) thereafter, the weighted average of
the Net Rates of the Group 7 Mortgage Loans; provided that, on such Distribution
Dates, for federal income tax purposes the Class VII-A-1 Certificates will bear
interest at a rate equivalent to the foregoing, expressed as (A) on or prior to
the Distribution Date in January 2008, the lesser of (i) 3.812% per annum and
(ii) the weighted average of the Pass-Through Rate on REMIC II Regular Interest
VII-A-1, weighted on the basis of the Uncertificated Principal Balance of such
REMIC II Regular Interest immediately preceding the related Distribution Date
and (B) thereafter, the weighted average of the Pass-Through Rate on REMIC II
Regular Interest VII-A-1, weighted on the basis of the Uncertificated Principal
Balance of such REMIC II Regular Interest immediately preceding the related
Distribution Date. The pass-through rate with respect to the first Interest
Accrual Period is expected to be approximately 3.812% per annum.

      (8) The Class VII-A-X Certificates will bear interest at a variable
Pass-Through Rate equal to the excess, if any, of the weighted average of the
Net Rates of the Group 7 Mortgage Loans minus the Class VII-A-1 Pass-Through
Rate. The Pass-Through Rate with respect to the first Interest Accrual Period is
expected to be approximately 1.451% per annum based on a notional amount equal
to the current principal balance of the Class VII-A-1 Certificates. After the
distribution date in January 2008, the Class VII-A-X Certificates will not bear
any interest. For federal income tax purposes, however, the Class VII-A-X
Certificates will bear interest at a rate equivalent to the foregoing, expressed
as: (A) on or prior to the Distribution Date in January 2008, the excess of (i)
the Weighted Average of the Pass-Through Rate on REMIC II Regular Interest
VII-A-1 (for federal income tax purposes, the equivalent of the foregoing,
expressed as the weighted average of the Pass-Through Rate on REMIC II Regular
Interest VII-A-1, weighted on the basis of the Uncertificated Principal Balance
of such REMIC II Regular Interest immediately preceding the related Distribution
Date) over (ii) 3.812% and (B) thereafter, a rate equivalent to 0.00% per annum.

      (9) The Class VIII-A-1 Certificates will bear interest at a variable
Pass-Through Rate equal to (A) on or prior to the Distribution Date in November
2009, the weighted average of the Net Rates of the Group 8 Mortgage Loans less
0.383% and (B) thereafter, the weighted average of the Net Rates of the Group 8
Mortgage Loans; provided that, on such Distribution Dates, for federal income
tax purposes the Class VIII-A-1 Certificates will bear interest at a rate
equivalent to the foregoing, expressed as (A) on or prior to the Distribution
Date in November 2009, the weighted average of the Pass-Through Rate on REMIC II
Regular Interest VIII-A-1, weighted on the basis of the Uncertificated Principal
Balance of such REMIC II Regular Interest immediately preceding the related
Distribution Date minus 0.383% and (B) thereafter, the weighted average of the
Pass-Through Rate on REMIC II Regular Interest VIII-A-1, weighted on the basis
of the Uncertificated Principal Balance of such REMIC II Regular Interest
immediately preceding the related Distribution Date. The Pass-Through Rate with
respect to the first Interest Accrual Period is expected to be approximately
4.990% per annum.

      (10) The Class VIII-A-X Certificates will bear interest at a fixed rate
equal to 0.383% per annum based on a notional amount equal to the current
principal balance of the Class VIII-A-1 Certificates. After the distribution
date in November 2009, the Class VIII-A-X Certificates will not bear any
interest. For federal income tax purposes, the Class VIII-A-X Certificates will
accrue interest on a notional amount equal to the Uncertificated Principal
Balance of REMIC II Regular Interest VIII-A-1.

      (11) The Class M, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5
and Class B-6 Certificates will bear interest at a variable pass-through rate
equal to the weighted average of the Net Rates of each Mortgage Loan Group,
weighted in proportion to the results of subtracting from the aggregate
principal balance of each Mortgage Loan Group, the Current Principal Amount of
the related class or classes of Senior Certificates; provided that for federal
income tax purposes such Certificates will bear interest at a rate equivalent to
the foregoing, expressed as the weighted average of the Pass-Through Rates on
REMIC II Regular Interests M, B-1, B-2, B-3, B-4, B-5 and B-6, weighted on the
basis of the Uncertificated Principal balance of each such REMIC II Regular
Interest immediately preceding the related


                                      -75-
<PAGE>

Distribution Date. The pass-through rate with respect to the first Interest
Accrual Period is expected to be approximately 5.287% per annum.

      (d) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date for
the Mortgage Loan with the latest maturity date in the Trust Fund has been
designated as the "latest possible maturity date" for the REMIC I Regular
Interests, REMIC II Regular Interests and the Certificates.

      (e) With respect to each Distribution Date, each Class of Certificates
shall accrue interest during the related Interest Accrual Period. With respect
to each Distribution Date and each such Class of Certificates, interest shall be
calculated, on the basis of a 360-day year comprised of twelve 30-day months,
based upon the respective Pass-Through Rate set forth, or determined as
provided, above and the Current Principal Amount of such Class applicable to
such Distribution Date.

      (f) The Certificates shall be substantially in the forms set forth in
Exhibits A-1, A-2 and A-3. On original issuance, the Trustee shall sign,
countersign and shall deliver them at the direction of the Seller. Pending the
preparation of definitive Certificates of any Class, the Trustee may sign and
countersign temporary Certificates that are printed, lithographed or
typewritten, in authorized denominations for Certificates of such Class,
substantially of the tenor of the definitive Certificates in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers or authorized signatories executing such
Certificates may determine, as evidenced by their execution of such
Certificates. If temporary Certificates are issued, the Seller will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office of the Trustee, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall sign and countersign and deliver in exchange therefor a like
aggregate principal amount, in authorized denominations for such Class, of
definitive Certificates of the same Class. Until so exchanged, such temporary
Certificates shall in all respects be entitled to the same benefits as
definitive Certificates.

      (g) Each Class of Book-Entry Certificates will be registered as a single
Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of (i) in the
case of the Senior Certificates (other than the Residual Certificates), $1,000
and in each case increments of $1.00 in excess thereof, and (ii) in the case of
the Senior Mezzanine Certificates and the Offered Subordinate Certificates,
$25,000 and increments of $1.00 in excess thereof, except that one Certificate
of each such Class may be issued in a different amount so that the sum of the
denominations of all outstanding Certificates of such Class shall equal the
Current Principal Amount of such Class on the Closing Date. On the Closing Date,
the Trustee shall execute and countersign Physical Certificates all in an
aggregate principal amount that shall equal the Current Principal Amount of such
Class on the Closing Date. The Private Certificates shall be issued in
certificated fully-registered form in minimum dollar denominations of $25,000
and integral multiples of $1.00 in excess thereof, except that one Private
Certificate of each Class may be issued in a different amount so that the sum of
the denominations of all outstanding Private Certificates of such Class shall
equal the Current Principal Amount of such Class on the Closing Date. The
Residual


                                      -76-
<PAGE>

Certificates shall each be issued in certificated fully-registered form in the
denomination of $50 and $50, respectively. Each Class of Global Certificates, if
any, shall be issued in fully registered form in minimum dollar denominations of
$50,000 and integral multiples of $1.00 in excess thereof, except that one
Certificate of each Class may be in a different denomination so that the sum of
the denominations of all outstanding Certificates of such Class shall equal the
Current Principal Amount of such Class on the Closing Date. On the Closing Date,
the Trustee shall execute and countersign (i) in the case of each Class of
Offered Certificates, the Certificate in the entire Current Principal Amount of
the respective Class and (ii) in the case of each Class of Private Certificates,
Individual Certificates all in an aggregate principal amount that shall equal
the Current Principal Amount of each such respective Class on the Closing Date.
The Certificates referred to in clause (i) and if at any time there are to be
Global Certificates, the Global Certificates shall be delivered by the Seller to
the Depository or pursuant to the Depository's instructions, shall be delivered
by the Seller on behalf of the Depository to and deposited with the DTC
Custodian. The Trustee shall sign the Certificates by facsimile or manual
signature and countersign them by manual signature on behalf of the Trustee by
one or more authorized signatories, each of whom shall be Responsible Officers
of the Trustee or its agent. A Certificate bearing the manual and facsimile
signatures of individuals who were the authorized signatories of the Trustee or
its agent at the time of issuance shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such positions prior to the
delivery of such Certificate.

      (h) No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate the
manually executed countersignature of the Trustee or its agent, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued thereafter shall be dated the date of their
countersignature.

      (i) The Closing Date is hereby designated as the "startup" day of each
REMIC within the meaning of Section 860G(a)(9) of the Code.

      (j) For federal income tax purposes, each REMIC shall have a tax year that
is a calendar year and shall report income on an accrual basis.

      (k) The Trustee on behalf of the Trust shall cause each REMIC to timely
elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of any
Trust established hereby shall be resolved in a manner that preserves the
validity of such elections.

      (l) The following legend shall be placed on the Residual Certificates,
whether upon original issuance or upon issuance of any other Certificate of any
such Class in exchange therefor or upon transfer thereof:

      THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
      BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT


                                      -77-
<PAGE>

      ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
      SECURITY ACT OF 1974, AS AMENDED, AND/OR SECTION 4975 OF THE INTERNAL
      REVENUE CODE OF 1986, AS AMENDED, UNLESS THE PROPOSED TRANSFEREE PROVIDES
      THE TRUSTEE, THE MASTER SERVICER AND THE SECURITIES ADMINISTRATOR WITH AN
      OPINION OF COUNSEL THAT THE PURCHASE OF CERTIFICATES ON BEHALF OF SUCH
      WILL NOT RESULT IN OR CONSTITUTE A NONEXEMPT PROHIBITED TRANSACTION, IS
      PERMISSIBLE UNDER APPLICABLE LAW AND WILL NOT GIVE RISE TO ANY ADDITIONAL
      FIDUCIARY OBLIGATIONS ON THE PART OF THE SELLER, THE MASTER SERVICER OR
      THE TRUSTEE.

The following legend shall be placed upon the Private Certificates, whether upon
original issuance or upon issuance of any other Certificate of any such Class in
exchange therefor or upon transfer thereof:

      THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE TRANSFEREE CERTIFIES OR REPRESENTS THAT THE PROPOSED TRANSFER AND
HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND OPERATION OF THE
TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS
NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION,
INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14,
PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY
ADDITIONAL FIDUCIARY OBLIGATIONS ON THE PART OF THE SELLER, THE SECURITIES
ADMINISTRATOR, THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED
REPRESENTED BY AN OWNER OF A BOOK- ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE OR
UNLESS THE OPINION SPECIFIED IN SECTION 5.07 OF THE AGREEMENT IS PROVIDED.

      Section 5.02 Registration of Transfer and Exchange of Certificates. (a)
The Trustee shall maintain at its Corporate Trust Office a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided.

      (b) Subject to Subsection 5.01(a) and, in the case of any Global
Certificate or Physical Certificate upon the satisfaction of the conditions set
forth below, upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall sign, countersign and shall deliver, in the name of the designated
transferee or transferees, a new Certificate of a like Class and aggregate
Fractional Undivided Interest, but bearing a different number.

      (c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate


                                      -78-
<PAGE>

set forth in the Securities Legend and agrees that it will transfer such a
Certificate only as provided herein. In addition to the provisions of Subsection
5.02(h), the following restrictions shall apply with respect to the transfer and
registration of transfer of an Individual Certificate to a transferee that takes
delivery in the form of an Individual Certificate:

            (i) The Trustee shall register the transfer of an Individual
      Certificate if the requested transfer is being made to a transferee who
      has provided the Trustee with a Rule 144A Certificate or comparable
      evidence as to its QIB status.

            (ii) The Trustee shall register the transfer of any Individual
      Certificate if (x) the transferor has advised the Trustee in writing that
      the Certificate is being transferred to an Institutional Accredited
      Investor; and (y) prior to the transfer the transferee furnishes to the
      Trustee an Investment Letter (and the Trustee shall be fully protected in
      so doing), provided that, if based upon an Opinion of Counsel addressed to
      the Trustee to the effect that the delivery of (x) and (y) above are not
      sufficient to confirm that the proposed transfer is being made pursuant to
      an exemption from, or in a transaction not subject to, the registration
      requirements of the Securities Act and other applicable laws, the Trustee
      shall as a condition of the registration of any such transfer require the
      transferor to furnish such other certifications, legal opinions or other
      information prior to registering the transfer of an Individual Certificate
      as shall be set forth in such Opinion of Counsel.

      (d) Subject to Subsection 5.02(h), so long as a Global Certificate of such
Class is outstanding and is held by or on behalf of the Depository, transfers of
beneficial interests in such Global Certificate, or transfers by holders of
Individual Certificates of such Class to transferees that take delivery in the
form of beneficial interests in the Global Certificate, may be made only in
accordance with this Subsection 5.02(d) and in accordance with the rules of the
Depository:

            (i) In the case of a beneficial interest in the Global Certificate
      being transferred to an Institutional Accredited Investor, such transferee
      shall be required to take delivery in the form of an Individual
      Certificate or Certificates and the Trustee shall register such transfer
      only upon compliance with the provisions of Subsection 5.02(c)(ii).

            (ii) In the case of a beneficial interest in a Class of Global
      Certificates being transferred to a transferee that takes delivery in the
      form of an Individual Certificate or Certificates of such Class, except as
      set forth in clause (i) above, the Trustee shall register such transfer
      only upon compliance with the provisions of Subsection 5.02(c)(i).

            (iii) In the case of an Individual Certificate of a Class being
      transferred to a transferee that takes delivery in the form of a
      beneficial interest in a Global Certificate of such Class, the Trustee
      shall register such transfer if the transferee has provided the Trustee
      with a Rule 144A Certificate or comparable evidence as to its QIB status.


                                      -79-
<PAGE>

            (iv) No restrictions shall apply with respect to the transfer or
      registration of transfer of a beneficial interest in the Global
      Certificate of a Class to a transferee that takes delivery in the form of
      a beneficial interest in the Global Certificate of such Class; provided
      that each such transferee shall be deemed to have made such
      representations and warranties contained in the Rule 144A Certificate as
      are sufficient to establish that it is a QIB.

      (e) Subject to Subsection 5.02(h), an exchange of a beneficial interest in
a Global Certificate of a Class for an Individual Certificate or Certificates of
such Class, an exchange of an Individual Certificate or Certificates of a Class
for a beneficial interest in the Global Certificate of such Class and an
exchange of an Individual Certificate or Certificates of a Class for another
Individual Certificate or Certificates of such Class (in each case, whether or
not such exchange is made in anticipation of subsequent transfer, and, in the
case of the Global Certificate of such Class, so long as such Certificate is
outstanding and is held by or on behalf of the Depository) may be made only in
accordance with this Subsection 5.02(e) and in accordance with the rules of the
Depository:

            (i) A holder of a beneficial interest in a Global Certificate of a
      Class may at any time exchange such beneficial interest for an Individual
      Certificate or Certificates of such Class.

            (ii) A holder of an Individual Certificate or Certificates of a
      Class may exchange such Certificate or Certificates for a beneficial
      interest in the Global Certificate of such Class if such holder furnishes
      to the Trustee a Rule 144A Certificate or comparable evidence as to its
      QIB status.

            (iii) A holder of an Individual Certificate of a Class may exchange
      such Certificate for an equal aggregate principal amount of Individual
      Certificates of such Class in different authorized denominations without
      any certification.

      (f) (i) Upon acceptance for exchange or transfer of an Individual
Certificate of a Class for a beneficial interest in a Global Certificate of such
Class as provided herein, the Trustee shall cancel such Individual Certificate
and shall (or shall request the Depository to) endorse on the schedule affixed
to the applicable Global Certificate (or on a continuation of such schedule
affixed to the Global Certificate and made a part thereof) or otherwise make in
its books and records an appropriate notation evidencing the date of such
exchange or transfer and an increase in the certificate balance of the Global
Certificate equal to the certificate balance of such Individual Certificate
exchanged or transferred therefor.

            (ii) Upon acceptance for exchange or transfer of a beneficial
      interest in a Global Certificate of a Class for an Individual Certificate
      of such Class as provided herein, the Trustee shall (or shall request the
      Depository to) endorse on the schedule affixed to such Global Certificate
      (or on a continuation of such schedule affixed to such Global Certificate
      and made a part thereof) or otherwise make in its books and records an
      appropriate notation evidencing the date of such exchange or transfer and
      a decrease in the certificate balance of such Global Certificate equal to
      the certificate balance of such Individual Certificate issued in exchange
      therefor or upon transfer thereof.


                                      -80-
<PAGE>

      (g) The Securities Legend shall be placed on any Individual Certificate
issued in exchange for or upon transfer of another Individual Certificate or of
a beneficial interest in a Global Certificate.

      (h) Subject to the restrictions on transfer and exchange set forth in this
Section 5.02, the holder of any Individual Certificate may transfer or exchange
the same in whole or in part (in an initial certificate balance equal to the
minimum authorized denomination set forth in Section 5.01(h) above or any
integral multiple of $1.00 in excess thereof) by surrendering such Certificate
at the Corporate Trust Office, or at the office of any transfer agent, together
with an executed instrument of assignment and transfer satisfactory in form and
substance to the Trustee in the case of transfer and a written request for
exchange in the case of exchange. The holder of a beneficial interest in a
Global Certificate may, subject to the rules and procedures of the Depository,
cause the Depository (or its nominee) to notify the Trustee in writing of a
request for transfer or exchange of such beneficial interest for an Individual
Certificate or Certificates. Following a proper request for transfer or
exchange, the Trustee shall, within five Business Days of such request made at
such Corporate Trust Office, sign, countersign and deliver at such Corporate
Trust Office, to the transferee (in the case of transfer) or holder (in the case
of exchange) or send by first class mail at the risk of the transferee (in the
case of transfer) or holder (in the case of exchange) to such address as the
transferee or holder, as applicable, may request, an Individual Certificate or
Certificates, as the case may require, for a like aggregate Fractional Undivided
Interest and in such authorized denomination or denominations as may be
requested. The presentation for transfer or exchange of any Individual
Certificate shall not be valid unless made at the Corporate Trust Office by the
registered holder in person, or by a duly authorized attorney-in-fact.

      (i) At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of a like Class and aggregate
Fractional Undivided Interest, upon surrender of the Certificates to be
exchanged at any such office or agency; provided, however, that no Certificate
may be exchanged for new Certificates unless the original Fractional Undivided
Interest represented by each such new Certificate (i) is at least equal to the
minimum authorized denomination or (ii) is acceptable to the Seller as indicated
to the Trustee in writing. Whenever any Certificates are so surrendered for
exchange, the Trustee shall sign and countersign and the Trustee shall deliver
the Certificates which the Certificateholder making the exchange is entitled to
receive.

      (j) If the Trustee so requires, every Certificate presented or surrendered
for transfer or exchange shall be duly endorsed by, or be accompanied by a
written instrument of transfer, with a signature guarantee, in form satisfactory
to the Trustee, duly executed by the holder thereof or his or her attorney duly
authorized in writing.

      (k) No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.

      (l) The Trustee shall cancel all Certificates surrendered for transfer or
exchange but shall retain such Certificates in accordance with its standard
retention policy or for such further time as is required by


                                      -81-
<PAGE>

the record retention requirements of the Securities Exchange Act of 1934, as
amended, and thereafter may destroy such Certificates.

      Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates. (a) If (i)
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 (ii) there is delivered to the Trustee such security or
indemnity as it may require to save it harmless, and (iii) the Trustee has not
received notice that such Certificate has been acquired by a third Person, the
Trustee shall sign, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Undivided Interest but in each case bearing a different
number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be
canceled of record by the Trustee and shall be of no further effect and evidence
no rights.

      (b) Upon 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 duplicate 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.

      Section 5.04 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Seller, the Trustee and any agent
of the Seller 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 pursuant to Section 6.01 and for all other purposes whatsoever.
Neither the Seller, the Trustee nor any agent of the Seller or the Trustee shall
be affected by notice to the contrary. No Certificate shall be deemed duly
presented for a transfer effective on any Record Date unless the Certificate to
be transferred is presented no later than the close of business on the third
Business Day preceding such Record Date.

      Section 5.05 Transfer Restrictions on Residual Certificates. (a) Residual
Certificates, or interests therein, may not be transferred without the prior
express written consent of the Tax Matters Person and the Seller. As a
prerequisite to such consent, the proposed transferee must provide the Tax
Matters Person, the Seller and the Trustee with an affidavit that the proposed
transferee is a Permitted Transferee (and, unless the Tax Matters Person and the
Seller consent to the transfer to a person who is not a U.S. Person, an
affidavit that it is a U.S. Person) as provided in Subsection 5.05(b).

      (b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of a Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax
Matters Person, the Trustee and the Seller an affidavit in the form attached
hereto as Exhibit E stating, among other things, that as of the date of such
transfer (i) such transferee is a Permitted Transferee and that (ii) such
transferee is not acquiring such Residual Certificate for the account of any
person who is not a Permitted Transferee. The Tax Matters Person shall not
consent to a transfer of a Residual Certificate if it has actual knowledge that
any statement made in the affidavit issued pursuant to the preceding sentence is
not true. Notwithstanding any transfer, sale or other disposition of a Residual
Certificate to any Person who is not a Permitted


                                      -82-
<PAGE>

Transferee, such transfer, sale or other disposition shall be deemed to be of no
legal force or effect whatsoever and such Person shall not be deemed to be a
Holder of a Residual Certificate for any purpose hereunder, including, but not
limited to, the receipt of distributions thereon. If any purported transfer
shall be in violation of the provisions of this Subsection 5.05(b), then the
prior Holder thereof shall, upon discovery that the transfer of such Residual
Certificate was not in fact permitted by this Subsection 5.05(b), be restored to
all rights as a Holder thereof retroactive to the date of the purported
transfer. None of the Trustee, the Tax Matters Person or the Seller shall be
under any liability to any Person for any registration or transfer of a Residual
Certificate that is not permitted by this Subsection 5.05(b) or for making
payments due on such Residual Certificate to the purported Holder thereof or
taking any other action with respect to such purported Holder under the
provisions of this Agreement so long as the written affidavit referred to above
was received with respect to such transfer, and the Tax Matters Person, the
Trustee and the Seller, as applicable, had no knowledge that it was untrue. The
prior Holder shall be entitled to recover from any purported Holder of a
Residual Certificate that was in fact not a permitted transferee under this
Subsection 5.05(b) at the time it became a Holder all payments made on such
Residual Certificate. Each Holder of a Residual Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this Subsection 5.05(b) and to any amendment of this Agreement deemed necessary
(whether as a result of new legislation or otherwise) by counsel of the Tax
Matters Person or the Seller to ensure that the Residual Certificates are not
transferred to any Person who is not a Permitted Transferee and that any
transfer of such Residual Certificates will not cause the imposition of a tax
upon the Trust or cause any REMIC to fail to qualify as a REMIC.

      (c) Unless the Tax Matters Person shall have consented in writing (which
consent may be withheld in the Tax Matters Person's sole discretion), the
Residual Certificates (including a beneficial interest therein) may not be
purchased by or transferred to any person who is not a United States Person.

      (d) By accepting a Residual Certificate, the purchaser thereof agrees to
be a Tax Matters Person, and appoints the Securities Administrator to act as its
agent with respect to all matters concerning the tax obligations of the Trust.

      Section 5.06 Restrictions on Transferability of Certificates. (a) No
offer, sale, transfer or other disposition (including pledge) of any Certificate
shall be made by any Holder thereof unless registered under the Securities Act,
or an exemption from the registration requirements of the Securities Act and any
applicable state securities or "Blue Sky" laws is available and the prospective
transferee (other than the Seller) of such Certificate signs and delivers to the
Trustee an Investment Letter, if the transferee is an Institutional Accredited
Investor, in the form set forth as Exhibit F-l hereto, or a Rule 144A
Certificate, if the transferee is a QIB, in the form set forth as Exhibit F-2
hereto. Notwithstanding the provisions of the immediately preceding sentence, no
restrictions shall apply with respect to the transfer or registration of
transfer of a beneficial interest in any Certificate that is a Global
Certificate of a Class to a transferee that takes delivery in the form of a
beneficial interest in the Global Certificate of such Class provided that each
such transferee shall be deemed to have made such representations and warranties
contained in the Rule 144A Certificate as are sufficient to establish that it is
a QIB. In the case of a proposed transfer of any Certificate to a transferee
other than a QIB, the Trustee may require an Opinion of Counsel addressed to


                                      -83-
<PAGE>

the Trustee that such transaction is exempt from the registration requirements
of the Securities Act. The cost of such opinion shall not be an expense of the
Trustee or the Trust Fund.

      (b) The Private Certificates shall each bear a Securities Legend.

      Section 5.07 ERISA Restrictions. (a) Subject to the provisions of
subsection (b), no Residual Certificates or Private Certificates may be acquired
directly or indirectly by, or on behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of ERISA and/or Section 4975
of the Code, unless the proposed transferee provides either (i) the Trustee, the
Master Servicer and the Securities Administrator with an Opinion of Counsel
addressed to the Trustee that is satisfactory to the Trustee, the Master
Servicer and the Securities Administrator, which opinion will not be at the
expense of the Trustee, the Master Servicer or the Securities Administrator,
that the purchase of such Certificates by or on behalf of such Plan is
permissible under applicable law, will not constitute or result in a nonexempt
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Trustee, the Master Servicer or the Securities Administrator to any
obligation in addition to those undertaken in the Agreement or (ii) in the case
of the Class B-4, Class B-5 and Class B-6 Certificates, a representation or
certification to the Trustee (upon which the Trustee is authorized to rely) to
the effect that the proposed transfer and/or holding of such a Certificate and
the servicing, management and operation of the Trust: (I) will not result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
which is not covered under an individual or class prohibited transaction
exemption including but not limited to Department of Labor Prohibited
Transaction Exemption ("PTE") 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers); PTE 91-38
(Class Exemption for Certain Transactions Involving Bank Collective Investment
Funds); PTE 90-1 (Class Exemption for Certain Transactions Involving Insurance
Company Pooled Separate Accounts), PTE 95-60 (Class Exemption for Certain
Transactions Involving Insurance Company General Accounts), and PTCE 96-23
(Class Exemption for Plan Asset Transactions Determined by In-House Asset
Managers and (II) will not subject the Seller, the Securities Administrator, the
Master Servicer or the Trustee to any obligation in addition to those undertaken
in the Agreement.

      (b) Any Person acquiring an interest in a Global Certificate which is a
Private Certificate, by acquisition of such Certificate, shall be deemed to have
represented to the Trustee that in the case of the Class B-4, Class B-5 and
Class B-6 Certificates, either: (i) it is not acquiring an interest in such
Certificate directly or indirectly by, or on behalf of, an employee benefit plan
or other retirement arrangement which is subject to Title I of ERISA and/or
Section 4975 of the Code, or (ii) the transfer and/or holding of an interest in
such Certificate to that Person and the subsequent servicing, management and/or
operation of the Trust and its assets: (I) will not result in any prohibited
transaction which is not covered under an individual or class prohibited
transaction exemption, including, but not limited to, PTE 84-14, PTE 91-38, PTE
90-1, PTE 95-60 or PTE 96- 23 and (II) will not subject the Seller, the
Securities Administrator, the Master Servicer or the Trustee to any obligation
in addition to those undertaken in the Agreement.

      (c) Each beneficial owner of a Class M, Class B-1, Class B-2 or Class B-3
Certificate or any interest therein shall be deemed to have represented, by
virtue of its acquisition or holding of that certificate or interest therein,
that either (i) it is not a Plan or investing with "Plan Assets", (ii) it has
acquired and is


                                      -84-
<PAGE>

holding such certificate in reliance on the Exemption, and that it understands
that there are certain conditions to the availability of the Exemption,
including that the certificate must be rated, at the time of purchase, not lower
than "BBB-" (or its equivalent) by S&P, Fitch or Moody's Investors Service,
Inc., and the certificate is so rated or (iii) (1) it is an insurance company,
(2) the source of funds used to acquire or hold the certificate or interest
therein is an "insurance company general account," as such term is defined in
Prohibited Transaction Class Exemption ("PTCE") 95-60, and (3) the conditions in
Sections I and III of PTCE 95-60 have been satisfied.

      (d) Neither the Trustee, the Master Servicer nor the Securities
Administrator will be required to monitor, determine or inquire as to compliance
with the transfer restrictions with respect to the Global Certificates. Any
attempted or purported transfer of any Certificate in violation of the
provisions of Subsections (a) or (b) above shall be void ab initio and such
Certificate shall be considered to have been held continuously by the prior
permitted Certificateholder. Any transferor of any Certificate in violation of
such provisions, shall indemnify and hold harmless the Trustee, the Securities
Administrator and the Master Servicer from and against any and all liabilities,
claims, costs or expenses incurred by the Trustee, the Securities Administrator
or the Master Servicer as a result of such attempted or purported transfer. The
Trustee shall have no liability for transfer of any such Global Certificates in
or through book-entry facilities of any Depository or between or among
Depository Participants or Certificate Owners made in violation of the transfer
restrictions set forth herein.

      Section 5.08 Rule 144A Information. For so long as any Certificates are
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
of the Securities Act, (1) the Seller will provide or cause to be provided to
any holder of such Certificates and any prospective purchaser thereof designated
by such a holder, upon the request of such holder or prospective purchaser, the
information required to be provided to such holder or prospective purchaser by
Rule 144A(d)(4) under the Securities Act; and (2) the Seller shall update such
information from time to time in order to prevent such information from becoming
false and misleading and will take such other actions as are necessary to ensure
that the safe harbor exemption from the registration requirements of the
Securities Act under Rule 144A is and will be available for resales of such
Certificates conducted in accordance with Rule 144A.


                                      -85-
<PAGE>

                                   ARTICLE VI
                         Payments to Certificateholders

      Section 6.01 Distributions on the Certificates. (a) Interest and principal
on the Certificates (other than the Interest Only Certificates) will be
distributed monthly on each Distribution Date, commencing in March 2003, in an
amount equal to the Available Funds on deposit in the Distribution Account for
such Distribution Date. On each Distribution Date, the Available Funds on
deposit in the Distribution Account shall be distributed as follows:

            (A) on each Distribution Date, the Group 1 Available Funds will be
            distributed to the Group 1 Senior Certificates as follows:

                  first, to the Group 1 Senior Certificates, on a pro rata
                  basis, the Accrued Certificate Interest on such Classes for
                  such Distribution Date. As described below, Accrued
                  Certificate Interest on the Group 1 Senior Certificates is
                  subject to reduction in the event of certain Net Interest
                  Shortfalls allocable thereto;

                  second, to the Group 1 Senior Certificates, on a pro rata
                  basis, any Accrued Certificate Interest thereon remaining
                  undistributed from previous Distribution Dates, to the extent
                  of remaining Group 1 Available Funds; and

                  third, sequentially, in the following order, to the Class R-I,
                  Class R-II, Class R-III and the Class I-A-1 Certificates, in
                  reduction of the Current Principal Amounts thereof, the Group
                  1 Senior Optimal Principal Amount for such Distribution Date
                  to the extent of remaining Group 1 Available Funds, until the
                  Current Principal Amount of such Classes have been reduced to
                  zero;

            (B) on each Distribution Date, the Group 2 Available Funds will be
            distributed to the Group 2 Senior Certificates as follows:

                  first, to the Group 2 Senior Certificates, the Accrued
                  Certificate Interest on such Class for such Distribution Date.
                  As described below, Accrued Certificate Interest on the Group
                  2 Senior Certificates is subject to reduction in the event of
                  certain Net Interest Shortfalls allocable thereto;

                  second, to the Group 2 Senior Certificates, any Accrued
                  Certificate Interest thereon remaining undistributed from
                  previous Distribution Dates, to the extent of remaining Group
                  2 Available Funds; and

                  third, to the Group 2 Senior Certificates, in reduction of the
                  Current Principal Amount thereof, the Group 2 Senior Optimal
                  Principal Amount for such Distribution Date to the extent of
                  remaining Group 2 Available Funds, until the Current Principal
                  Amount of such Class has been reduced to zero;


                                      -86-
<PAGE>

            (C) on each Distribution Date, the Group 3 Available Funds will be
            distributed to the Group 3 Senior Certificates as follows:

                  first, to the Group 3 Senior Certificates, the Accrued
                  Certificate Interest on each such Class for such Distribution
                  Date. As described below, Accrued Certificate Interest on the
                  Group 3 Senior Certificates is subject to reduction in the
                  event of certain Net Interest Shortfalls allocable thereto;

                  second, to the Group 3 Senior Certificates, any Accrued
                  Certificate Interest thereon remaining undistributed from
                  previous Distribution Dates, to the extent of remaining Group
                  3 Available Funds; and

                  third, to the Group 3 Senior Certificates, in reduction of the
                  Current Principal Amount thereof, the Group 3 Senior Optimal
                  Principal Amount for such Distribution Date to the extent of
                  remaining Group 3 Available Funds, until the Current Principal
                  Amount of such Class has been reduced to zero;

            (D) on each Distribution Date, the Group 4 Available Funds will be
            distributed to the Group 4 Senior Certificates as follows:

                  first, to the Group 4 Senior Certificates, the Accrued
                  Certificate Interest on such Class for such Distribution Date.
                  As described below, Accrued Certificate Interest on the Group
                  4 Senior Certificates is subject to reduction in the event of
                  certain Net Interest Shortfalls allocable thereto;

                  second, to the Group 4 Senior Certificates, any Accrued
                  Certificate Interest thereon remaining undistributed from
                  previous Distribution Dates, to the extent of remaining Group
                  4 Available Funds; and

                  third, to the Group 4 Senior Certificates, in reduction of the
                  Current Principal Amount thereof, the Group 4 Senior Optimal
                  Principal Amount for such Distribution Date to the extent of
                  remaining Group 4 Available Funds, until the Current Principal
                  Amount of such Class has been reduced to zero;

            (E) on each Distribution Date, the Group 5 Available Funds will be
            distributed to the Group 5 Senior Certificates as follows:

                  first, to the Group 5 Senior Certificates, the Accrued
                  Certificate Interest on each such Class for such Distribution
                  Date. As described below, Accrued Certificate Interest on the
                  Group 5 Senior Certificates is subject to reduction in the
                  event of certain Net Interest Shortfalls allocable thereto;


                                      -87-
<PAGE>

                  second, to the Group 5 Senior Certificates, any Accrued
                  Certificate Interest thereon remaining undistributed from
                  previous Distribution Dates, to the extent of remaining Group
                  5 Available Funds; and

                  third, to the Group 5 Senior Certificates, in reduction of the
                  Current Principal Amount thereof, the Group 5 Senior Optimal
                  Principal Amount for such Distribution Date to the extent of
                  remaining Group 5 Available Funds, until the Current Principal
                  Amount of such Class has been reduced to zero;

            (F) on each Distribution Date, the Group 6 Available Funds will be
            distributed to the Group 6 Senior Certificates as follows:

                  first, to the Group 6 Senior Certificates, the Accrued
                  Certificate Interest on each such Class for such Distribution
                  Date. As described below, Accrued Certificate Interest on the
                  Group 6 Senior Certificates is subject to reduction in the
                  event of certain Net Interest Shortfalls allocable thereto;

                  second, to the Group 6 Senior Certificates, any Accrued
                  Certificate Interest thereon remaining undistributed from
                  previous Distribution Dates, to the extent of remaining Group
                  6 Available Funds; and

                  third, to the Group 6 Senior Certificates, in reduction of the
                  Current Principal Amount thereof, the Group 6 Senior Optimal
                  Principal Amount for such Distribution Date to the extent of
                  remaining Group 6 Available Funds, until the Current Principal
                  Amount of such Class has been reduced to zero;

            (G) on each Distribution Date, the Group 7 Available Funds will be
            distributed to the Group 7 Senior Certificates as follows:

                  first, to the Group 7 Senior Certificates, on a pro rata
                  basis, the Accrued Certificate Interest on each such Class for
                  such Distribution Date. As described below, Accrued
                  Certificate Interest on the Group 7 Senior Certificates is
                  subject to reduction in the event of certain Net Interest
                  Shortfalls allocable thereto;

                  second, to the Group 7 Senior Certificates, on a pro rata
                  basis, any Accrued Certificate Interest thereon remaining
                  undistributed from previous Distribution Dates, to the extent
                  of remaining Group 7 Available Funds; and

                  third, to the Group 7 Senior Certificates (other than the
                  Class VII-A-X Certificates), in reduction of the Current
                  Principal Amount thereof, the Group 7 Senior Optimal Principal
                  Amount for such Distribution Date to the extent of remaining
                  Group 7 Available Funds, until the Current Principal Amount of
                  such Class has been reduced to zero;


                                      -88-
<PAGE>

            (H) on each Distribution Date, the Group 8 Available Funds will be
            distributed to the Group 8 Senior Certificates as follows:

                  first, to the Group 8 Senior Certificates, on a pro rata
                  basis, the Accrued Certificate Interest on each such Class for
                  such Distribution Date. As described below, Accrued
                  Certificate Interest on the Group 8 Senior Certificates is
                  subject to reduction in the event of certain Net Interest
                  Shortfalls allocable thereto;

                  second, to the Group 8 Senior Certificates, on a pro rata
                  basis, any Accrued Certificate Interest thereon remaining
                  undistributed from previous Distribution Dates, to the extent
                  of remaining Group 8 Available Funds; and

                  third, to the Group 8 Senior Certificates (other than the
                  Class VIII-A-X Certificates), in reduction of the Current
                  Principal Amount thereof, the Group 8 Senior Optimal Principal
                  Amount for such Distribution Date to the extent of remaining
                  Group 8 Available Funds, until the Current Principal Amount of
                  such Class has been reduced to zero;

            (I) Except as provided in (K) and (L) below, on each Distribution
            Date prior to the Cross-Over Date, an amount equal to any remaining
            Group 1, Group 2, Group 3, Group 4, Group 5, Group 6, Group 7 and
            Group 8 Available Funds after the distributions in (A), (B), (C),
            (D), (E), (F), (G) and (H) above will be distributed to the Class M
            Certificates, in each case up to an amount equal to and in the
            following order: (a) the Accrued Certificate Interest thereon for
            such Distribution Date, (b) any Accrued Certificate Interest thereon
            remaining undistributed from previous Distribution Dates and (c)
            such Class's Allocable Share for such Distribution Date, in each
            case, to the extent of the remaining Group 1, Group 2, Group 3,
            Group 4, Group 5, Group 6, Group 7 and Group 8 Available Funds.

            (J) Except as provided in (K) and (L) below, on each Distribution
            Date prior to the Cross-Over Date, an amount equal to any remaining
            Group 1, Group 2, Group 3, Group 4, Group 5, Group 6, Group 7 and
            Group 8 Available Funds after the distributions in (A), (B), (C),
            (D), (E), (F), (G), (H) and (I) above will be distributed
            sequentially, in the following order, to the Class B-1, Class B-2,
            Class B-3, Class B- 4, Class B-5 and Class B-6 Certificates, in each
            case up to an amount equal to and in the following order: (a) the
            Accrued Certificate Interest thereon for such Distribution Date, (b)
            any Accrued Certificate Interest thereon remaining undistributed
            from previous Distribution Dates and (c) such Class's Allocable
            Share for such Distribution Date, in each case, to the extent of the
            remaining Group 1, Group 2, Group 3, Group 4, Group 5, Group 6,
            Group 7 and Group 8 Available Funds.

            (K) On each Distribution Date prior to the Cross-Over Date, but
            after the reduction of the Current Principal Amount of the Group 1,
            Group 2, Group 3, Group 4, Group 5, Group 6, Group 7 and Group 8
            Senior Certificates to zero, the remaining Class or Classes


                                      -89-
<PAGE>

            of Senior Certificates will be entitled to receive in reduction of
            their Current Principal Amounts, pro rata based upon their Current
            Principal Amounts immediately prior to such Distribution Date, in
            addition to any Principal Prepayments related to such remaining
            Senior Certificates' respective Loan Group allocated to such Group
            of Senior Certificates, 100% of the Principal Prepayments on any
            Mortgage Loan in the Loan Group relating to the fully repaid Class
            of Senior Certificates; provided, however, that if (A) the weighted
            average Senior Mezzanine and Subordinate Percentage equals or
            exceeds 14.00% on such Distribution Date and (B) the aggregate
            Scheduled Principal Balance of the Mortgage Loans delinquent 60 days
            or more (including for this purpose any such Mortgage Loans in
            foreclosure and Mortgage Loans with respect to which the related
            Mortgaged Property has been acquired by the Trust), averaged over
            the last six months, as a percentage of the sum of the aggregate
            Current Principal Amount of the Senior Mezzanine Certificates and
            Subordinate Certificates does not exceed 100%, then the additional
            allocation of Principal Prepayments to the Senior Certificates in
            accordance with this clause (K) will not be made.

            (L) If on any Distribution Date on which the aggregate Current
            Principal Amount of any Class or Classes of Senior Certificates
            would be greater than the aggregate Scheduled Principal Balance of
            the Mortgage Loans in its related Loan Group and any Senior
            Mezzanine Certificates and Subordinate Certificates are still
            outstanding in each case after giving effect to distributions to be
            made on such Distribution Date, (i) 100% of amounts otherwise
            allocable to the Senior Mezzanine Certificates and Subordinate
            Certificates in respect of principal will be distributed to such
            Class or Classes of Senior Certificates in reduction of the Current
            Principal Amounts thereof, until the aggregate Current Principal
            Amount of such Class or Classes of Senior Certificates is an amount
            equal to the aggregate Scheduled Principal Balance of the Mortgage
            Loans in its related Loan Group, and (ii) the Accrued Certificate
            Interest otherwise allocable to the Senior Mezzanine Certificates
            and Subordinate Certificates on such Distribution Date will be
            reduced, if necessary, and distributed to such Class or Classes of
            Senior Certificates in an amount equal to the Accrued Certificate
            Interest for such Distribution Date on the excess of (x) the
            aggregate Current Principal Balance of such Class or Classes of
            Senior Certificates over (y) the aggregate Scheduled Principal
            Balance of the Mortgage Loans in the related Loan Group. Any such
            reduction in the Accrued Certificate Interest on the Senior
            Mezzanine Certificates and Subordinate Certificates will be
            allocated in reverse order of the Senior Mezzanine Certificates and
            Subordinate Certificates numerical designations, commencing with the
            Class B-6 Certificates.

      (b) If, after distributions have been made pursuant to priorities first
and second of clauses (a)(i)(A), (B), (C), (D), (E), (F), (G) or (H) above on
any Distribution Date, the remaining Group 1, Group 2, Group 3, Group 4, Group
5, Group 6, Group 7 or Group 8 Available Funds are less than the the Group 1,
Group 2, Group 3, Group 4, Group 5, Group 6, Group 7 or Group 8 Senior Optimal
Principal Amounts, respectively, such amount shall be reduced, and such
remaining funds will be distributed on the related Senior Certificates on the
basis of such reduced amount.


                                      -90-
<PAGE>

      (c) "Pro rata" distributions among Classes of Certificates will be made in
proportion to the then Current Principal Amount of such Classes.

      (d) On each Distribution Date, any Available Funds remaining after payment
of interest and principal to the Classes of Certificates entitled thereto, as
described above, will be distributed to the Class R-III Certificates; provided
that if on any Distribution Date there are any Group 1, Group 2, Group 3, Group
4, Group 5, Group 6, Group 7 and Group 8 Available Funds remaining after payment
of interest and principal to a Class or Classes of Certificates entitled
thereto, such amounts will be distributed to the other Classes of Senior
Certificates, pro rata, based upon their Current Principal Amounts, until all
amounts due to all Classes of Senior Certificates have been paid in full, before
any amounts are distributed to the Class R-III Certificates.

      (e) No Accrued Certificate Interest will be payable with respect to any
Class of Certificates after the Distribution Date on which the Current Principal
Amount of such Certificate has been reduced to zero.

      (f) If on any Distribution Date the Available Funds for the Senior
Certificates in any Certificate Group is less than the Accrued Certificate
Interest on the related Senior Certificates for such Distribution Date prior to
reduction for Net Interest Shortfall and the interest portion of Realized
Losses, the shortfall will be allocated among the holders of each Class of
Senior Certificates in such Certificate Group in proportion to the respective
amounts of Accrued Certificate Interest that would have been allocated thereto
in the absence of such Net Interest Shortfall and/or Realized Losses for such
Distribution Date. In addition, the amount of any interest shortfalls will
constitute unpaid Accrued Certificate Interest and will be distributable to
holders of the Certificates of the related Classes entitled to such amounts on
subsequent Distribution Dates, to the extent of the applicable Available Funds
after current interest distributions as required herein. Any such amounts so
carried forward will not bear interest. Shortfalls in interest payments will not
be offset by a reduction in the servicing compensation of the Master Servicer or
otherwise, except to the extent of applicable Compensating Interest Payments.

      (g) The expenses and fees of the Trust shall be paid by each of the
REMICs, to the extent that such expenses relate to the assets of each of such
respective REMICs, and all other expenses and fees of the Trust shall be paid
pro rata by each of the REMICs.

      Section 6.02 Allocation of Losses. (a) On or prior to each Determination
Date, the Master Servicer shall determine the amount of any Realized Loss in
respect of each Mortgage Loan that occurred during the immediately preceding
calendar month.

      (b) With respect to any Certificates on any Distribution Date, the
principal portion of each Realized Loss on a Mortgage Loan shall be allocated as
follows:

            first, to the Class B-6 Certificates until the Current Principal
      Amount thereof has been reduced to zero;


                                      -91-
<PAGE>

            second, to the Class B-5 Certificates until the Current Principal
      Amount thereof has been reduced to zero;

            third, to the Class B-4 Certificates until the Current Principal
      Amount thereof has been reduced to zero;

            fourth, to the Class B-3 Certificates until the Current Principal
      Amount thereof has been reduced to zero;

            fifth, to the Class B-2 Certificates until the Current Principal
      Amount thereof has been reduced to zero;

            sixth, to the Class B-1 Certificates until the Current Principal
      Amount thereof has been reduced to zero;

            seventh, to the Class M Certificates until the Current Principal
      Amount thereof has been reduced to zero;

            eighth, if such loss is on a Group 1, Group 2, Group 3, Group 4,
      Group 5, Group 6, Group 7 or Group 8 Mortgage Loan, to the Group 1, Group
      2, Group 3, Group 4, Group 5, Group 6, Group 7 or Group 8 Senior
      Certificates, respectively; and

            ninth, to the Senior Certificates, on a pro rata basis.

      (c) Notwithstanding the foregoing clause (b), no such allocation of any
Realized Loss shall be made on a Distribution Date to any Class of Certificates
to the extent that such allocation would result in the reduction of the
aggregate Current Principal Amounts of all the Certificates as of such
Distribution Date, after giving effect to all distributions and prior
allocations of Realized Losses on such date, to an amount less than the
aggregate Scheduled Principal Balance of all of the Mortgage Loans as of the
first day of the month of such Distribution Date (such limitation, the "Loss
Allocation Limitation").

      (d) Any Realized Losses allocated to a Class of Certificates shall be
allocated among the Certificates of such Class in proportion to their respective
Current Principal Amounts. Any allocation of Realized Losses shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date.

      (e) Realized Losses shall be allocated on the Distribution Date in the
month following the month in which such loss was incurred and, in the case of
the principal portion thereof, after giving effect to distributions made on such
Distribution Date.

      (f) On each Distribution Date, the Securities Administrator shall
determine and notify the Trustee of the Senior Mezzanine Certificate Writedown
Amount or the Subordinate Certificate Writedown Amount. Any such Senior
Mezzanine Certificate Writedown Amount or Subordinate Certificate Writedown
Amount shall effect a corresponding reduction in the Current Principal Amount of
(i) if prior to the Cross-


                                      -92-
<PAGE>

Over Date, the Current Principal Amounts of the Senior Mezzanine Certificates
and Subordinate Certificates, in the reverse order of their numerical Class
designations and (ii) from and after the Cross-Over Date, the Senior
Certificates which reduction shall occur on such Distribution Date after giving
effect to distributions made on such Distribution Date.

      (g) Any Net Interest Shortfall will be allocated among the Classes of
Certificates in proportion to the respective amounts of Accrued Certificate
Interest that would have been allocated thereto in the absence of such Net
Interest Shortfall for such Distribution Date. The interest portion of any
Realized Losses with respect to the Mortgage Loans occurring on or prior to the
Cross-Over Date will not be allocated among any Certificates, but will reduce
the amount of Available Funds on the related Distribution Date. As a result of
the subordination of the Senior Mezzanine Certificates and Subordinate
Certificates in right of distribution, such Realized Losses will be borne by the
Subordinate Certificates in inverse order of their numerical Class designations
and then by the Senior Mezzanine Certificates. Following the Cross-Over Date,
the interest portion of Realized Losses on the Mortgage Loans in any Loan Group
will be allocated to the related Senior Certificates.

      Section 6.03 Payments. (a) On each Distribution Date, other than the final
Distribution Date, the Trustee shall distribute to each Certificateholder of
record on the directly preceding Record Date the Certificateholder's pro rata
share of its Class (based on the aggregate Fractional Undivided Interest
represented by such Holder's Certificates) of all amounts required to be
distributed on such Distribution Date to such Class, based on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall calculate the amount to be distributed to each Class and,
based on such amounts, the Securities Administrator shall determine the amount
to be distributed to each Certificateholder. All of the Securities
Administrator's calculations of payments shall be based solely on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall not be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information.

      (b) Payment of the above amounts to each Certificateholder shall be made
(i) by check mailed to each Certificateholder entitled thereto at the address
appearing in the Certificate Register or (ii) upon receipt by the Trustee on or
before the fifth Business Day preceding the Record Date of written instructions
from a Certificateholder by wire transfer to a United States dollar account
maintained by the payee at any United States depository institution with
appropriate facilities for receiving such a wire transfer; provided, however,
that the final payment in respect of each Class of Certificates will be made
only upon presentation and surrender of such respective Certificates at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final payment.

      Section 6.04 Statements to Certificateholders. (a) Concurrently with each
distribution to Certificateholders, the Securities Administrator shall make
available to the parties hereto and each Certificateholder via the Securities
Administrator's internet website as set forth below, the following information,
expressed with respect to clauses (i) through (vii) in the aggregate and as a
Fractional Undivided Interest representing an initial Current Principal Amount
of $1,000, or in the case of each Class of Residual Certificates, an initial
Current Principal Amount of $50:


                                      -93-
<PAGE>

            (i) the Current Principal Amount or Notional Amount of each Class of
      Certificates immediately prior to such Distribution Date;

            (ii) the amount of the distribution allocable to principal on each
      applicable Class of Certificates;

            (iii) the aggregate amount of interest accrued at the related
      Pass-Through Rate with respect to each Class during the related Interest
      Accrual Period;

            (iv) the Net Interest Shortfall and any other adjustments to
      interest at the related Pass-Through Rate necessary to account for any
      difference between interest accrued and aggregate interest distributed
      with respect to each Class of Certificates;

            (v) the amount of the distribution allocable to interest on each
      Class of Certificates;

            (vi) the Pass-Through Rates for each Class of Certificates with
      respect to such Distribution Date;

            (vii) the Current Principal Amount or Notional Amount of each Class
      of Certificates after such Distribution Date;

            (viii) the amount of any Monthly Advances, Compensating Interest
      Payments and outstanding unreimbursed advances by the Master Servicer or
      the Servicer included in such distribution separately stated for each Loan
      Group;

            (ix) the aggregate amount of any Realized Losses (listed separately
      for each category of Realized Loss and for each Loan Group) during the
      related Prepayment Period and cumulatively since the Cut-off Date and the
      amount and source (separately identified) of any distribution in respect
      thereof included in such distribution;

            (x) with respect to each Mortgage Loan which incurred a Realized
      Loss during the related Prepayment Period, (i) the loan number, (ii) the
      Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
      (ii) the Scheduled Principal Balance of such Mortgage Loan as of the
      beginning of the related Due Period, (iii) the Net Liquidation Proceeds
      with respect to such Mortgage Loan and (iv) the amount of the Realized
      Loss with respect to such Mortgage Loan;

            (xi) with respect to each Loan Group, the amount of Scheduled
      Principal and Principal Prepayments, (including but separately identifying
      the principal amount of principal prepayments, Insurance Proceeds, the
      purchase price in connection with the purchase of Mortgage Loans, cash
      deposits in connection with substitutions of Mortgage Loans and Net
      Liquidation Proceeds) and the number and principal balance of Mortgage
      Loans purchased or substituted for during the relevant period and
      cumulatively since the Cut-off Date;


                                      -94-
<PAGE>

            (xii) the number of Mortgage Loans (excluding REO Property) in each
      Loan Group remaining in the Trust Fund as of the end of the related
      Prepayment Period;

            (xiii) information for each Loan Group and in the aggregate
      regarding any Mortgage Loan delinquencies as of the end of the related
      Prepayment Period, including the aggregate number and aggregate
      Outstanding Principal Balance of Mortgage Loans (a) delinquent 30 to 59
      days on a contractual basis, (b) delinquent 60 to 89 days on a contractual
      basis, and (c) delinquent 90 or more days on a contractual basis, in each
      case as of the close of business on the last Business Day of the
      immediately preceding month;

            (xiv) for each Loan Group, the number of Mortgage Loans in the
      foreclosure process as of the end of the related Due Period and the
      aggregate Outstanding Principal Balance of such Mortgage Loans;

            (xv) for each Loan Group, the number and aggregate Outstanding
      Principal Balance of all Mortgage Loans as to which the Mortgaged Property
      was REO Property as of the end of the related Due Period;

            (xvi) the book value (the sum of (A) the Outstanding Principal
      Balance of the Mortgage Loan, (B) accrued interest through the date of
      foreclosure and (C) foreclosure expenses) of any REO Property in each Loan
      Group; provided that, in the event that such information is not available
      to the Securities Administrator on the Distribution Date, such information
      shall be furnished promptly after it becomes available;

            (xvii) the amount of Realized Losses allocated to each Class of
      Certificates since the prior Distribution Date and in the aggregate for
      all prior Distribution Dates; and

            (xviii) the Average Loss Severity for the prior calendar month for
      each Loan Group; and

            (xix) the then applicable Group 1, Group 2, Group 3, Group 4, Group
      5, Group 6, Group 7 and Group 8 Senior Percentage, Group 1, Group 2, Group
      3, Group 4, Group 5, Group 6, Group 7 and Group 8 Senior Prepayment
      Percentage, Group 1, Group 2, Group 3, Group 4, Group 5, Group 6, Group 7
      and Group 8 Senior Mezzanine and Subordinate Percentage and Group 1, Group
      2, Group 3, Group 4, Group 5, Group 6, Group 7 and Group 8 Senior
      Mezzanine and Subordinate Prepayment Percentage.

      The information set forth above shall be calculated or reported, as the
case may be, by the Securities Administrator, based solely on, and to the extent
of, information provided to the Securities Administrator by the Master Servicer.
The Securities Administrator may conclusively rely on such information and shall
not be required to confirm, verify or recalculate any such information.

      The Securities Administrator may make available each month, to any
interested party , the monthly statement to Certificateholders via the
Securities Administrator's website initially located at "www.ctslink.com."
Assistance in using the website can be obtained by calling the Securities


                                      -95-
<PAGE>

Administrator's customer service desk at (301) 815-6600. Parties that are unable
to use the above distribution option are entitled to have a paper copy mailed to
them via first class mail by calling the Securities Administrator's customer
service desk and indicating such. The Securities Administrator shall have the
right to change the way such reports are distributed in order to make such
distribution more convenient and/or more accessible to the parties, and the
Securities Administrator shall provide timely and adequate notification to all
parties regarding any such change.

      Tot he extent timely received from the Securities Administrator, the
Trustee will also make monthly statements available each month to
certificateholders via the Trustee's internet website. The Trustee's internet
website will initially be located at www.jpmorgan.com/absmbs. Assistance in
using the Trustee's website service can be obtained by calling the Trustee's
customer service desk at (877) 722-1095.

      (b) By April 30 of each year beginning in 2004, the Trustee will furnish
such report to each Holder of the Certificates of record at any time during the
prior calendar year as to the aggregate of amounts reported pursuant to
subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Securities Administrator may determine and advises
the Trustee to be necessary and/or to be required by the Internal Revenue
Service or by a federal or state law or rules or regulations to enable such
Holders to prepare their tax returns for such calendar year. Such obligations
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Securities Administrator or the
Trustee pursuant to the requirements of the Code.

      Section 6.05 Monthly Advances. If the Scheduled Payment on a Mortgage Loan
that was due on a related Due Date and is delinquent other than as a result of
application of the Relief Act and for which the related Servicer was required to
make an advance pursuant to the related Servicing Agreement exceeds the amount
deposited in the Master Servicer Collection Account which will be used for an
advance with respect to such Mortgage Loan, the Master Servicer will deposit in
the Master Servicer Collection Account not later than the Distribution Account
Deposit Date immediately preceding the related Distribution Date an amount equal
to such deficiency, net of the Servicing Fee for such Mortgage Loan except to
the extent the Master Servicer determines any such advance to be nonrecoverable
from Liquidation Proceeds, Insurance Proceeds or future payments on the Mortgage
Loan for which such Monthly Advance was made. Subject to the foregoing, the
Master Servicer shall continue to make such advances through the date that the
related Servicer is required to do so under its Servicing Agreement. If
applicable, on the Distribution Account Deposit Date, the Master Servicer shall
present an Officer's Certificate to the Trustee (i) stating that the Master
Servicer elects not to make a Monthly Advance in a stated amount and (ii)
detailing the reason it deems the advance to be nonrecoverable.

      Section 6.06 Compensating Interest Payments. The Master Servicer shall
deposit in the Master Servicer Collection Account not later than each
Distribution Account Deposit Date an amount equal to the aggregate amounts
required to be paid by the Servicers under the Servicing Agreements with respect
to subclauses (a) and (b) of the definition of Interest Shortfall with respect
to the Mortgage Loans for the related Distribution Date, and not so paid by the
related Servicers (such amount, the "Compensating Interest Payment"). The Master
Servicer shall not be entitled to any reimbursement of any Compensating Interest
Payment.


                                      -96-
<PAGE>

                                   ARTICLE VII
                               The Master Servicer

      Section 7.01 Liabilities of the Master Servicer. The Master Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein.

      Section 7.02 Merger or Consolidation of the Master Servicer.

      (a) The Master Servicer will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the state of its
incorporation, and will obtain and preserve its qualification to do business as
a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement,
the Certificates or any of the Mortgage Loans and to perform its duties under
this Agreement.

      (b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, 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.

      Section 7.03 Indemnification of the Trustee, the Master Servicer and the
Securities Administrator. (a) The Master Servicer agrees to indemnify the
Indemnified Persons for, and to hold them harmless against, any loss, liability
or expense (including reasonable legal fees and disbursements of counsel)
incurred on their part that may be sustained in connection with, arising out of,
or relating to, any claim or legal action (including any pending or threatened
claim or legal action) relating to this Agreement, the Servicing Agreements, the
Assignment Agreements or the Certificates or the powers of attorney delivered by
the Trustee hereunder (i) related to the Master Servicer's failure to perform
its duties in compliance with this Agreement (except as any such loss, liability
or expense shall be otherwise reimbursable pursuant to this Agreement) or (ii)
incurred by reason of the Master Servicer's willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder, provided, in each case, that with
respect to any such claim or legal action (or pending or threatened claim or
legal action), the Trustee shall have given the Master Servicer and the Seller
written notice thereof promptly after the Trustee shall have with respect to
such claim or legal action knowledge thereof. The Master Servicer's failure to
receive any such notice shall not affect the Trustee's right to indemnification
hereunder, except to the extent the Master Servicer is materially prejudiced by
such failure to give notice. This indemnity shall survive the resignation or
removal of the Trustee, Master Servicer or the Securities Administrator and the
termination of this Agreement.

      (b) The Seller will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise covered by the
Master Servicer's indemnification pursuant to Subsection (a) above.


                                      -97-
<PAGE>

      Section 7.04 Limitations on Liability of the Master Servicer and Others.
Subject to the obligation of the Master Servicer to indemnify the Indemnified
Persons pursuant to Section 7.03:

      (a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Seller, the Trust Fund or the Certificateholders for
taking any action or for refraining from taking any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such Person against
any breach of warranties or representations made herein or any liability which
would otherwise be imposed by reason of such Person's willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.

      (b) The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.

      (c) The Master Servicer, the Custodian and any director, officer, employee
or agent of the Master Servicer or the Custodian shall be indemnified by the
Trust and held harmless thereby against any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or related to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement, the Certificates or any Servicing Agreement
(except to the extent that the Master Servicer is indemnified by the Servicer
thereunder), other than (i) any such loss, liability or expense related to the
Master Servicer's failure to perform its duties in compliance with this
Agreement (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement), or to the Custodian's failure to
perform its duties under the Custodial Agreement, respectively, or (ii) any such
loss, liability or expense incurred by reason of the Master Servicer's or the
Custodian's willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or under the Custodial Agreement, as applicable,
or by reason of reckless disregard of obligations and duties hereunder or under
the Custodial Agreement, as applicable.

      (d) The Master Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, the Master Servicer may in its discretion, with
the consent of the Trustee (which consent shall not be unreasonably withheld),
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Master Servicer shall
be entitled to be reimbursed therefor out of the Master Servicer Collection
Account as provided by Section 4.03. Nothing in this Subsection 7.04(d) shall
affect the Master Servicer's obligation to supervise, or to take such actions as
are necessary to ensure, the servicing and administration of the Mortgage Loans
pursuant to Subsection 3.01(a).

      (e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to


                                      -98-
<PAGE>

investigate or make recommendations concerning potential liabilities which the
Trust might incur as a result of such course of action by reason of the
condition of the Mortgaged Properties but shall give notice to the Trustee if it
has notice of such potential liabilities.

      (f) The Master Servicer shall not be liable for any acts or omissions of
any Servicer, except as otherwise expressly provided herein.

      Section 7.05 Master Servicer Not to Resign. Except as provided in Section
7.07, the Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon a determination that any such duties hereunder
are no longer permissible under applicable law and such impermissibility cannot
be cured. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Independent Counsel addressed to
the Trustee to such effect delivered to the Trustee. No such resignation by the
Master Servicer shall become effective until EMC or the Trustee or a successor
to the Master Servicer reasonably satisfactory to the Trustee shall have assumed
the responsibilities and obligations of the Master Servicer in accordance with
Section 8.02 hereof. The Trustee shall notify the Rating Agencies of the
resignation of the Master Servicer.

      Section 7.06 Successor Master Servicer. In connection with the appointment
of any successor Master Servicer or the assumption of the duties of the Master
Servicer, EMC or the Trustee may make such arrangements for the compensation of
such successor master servicer out of payments on the Mortgage Loans as EMC or
the Trustee and such successor master servicer shall agree. If the successor
master servicer does not agree that such market value is a fair price, such
successor master servicer shall obtain two quotations of market value from third
parties actively engaged in the servicing of single-family mortgage loans.

      Section 7.07 Sale and Assignment of Master Servicing. The Master Servicer
may sell and assign its rights and delegate its duties and obligations in its
entirety as Master Servicer under this Agreement and EMC may terminate the
Master Servicer without cause and select a new Master Servicer; provided,
however, that: (i) the purchaser or transferee accepting such assignment and
delegation (a) shall be a Person which shall be qualified to service mortgage
loans for Fannie Mae or Freddie Mac; (b) shall have a net worth of not less than
$10,000,000 (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below); (c) shall be reasonably satisfactory to the Trustee (as evidenced
in a writing signed by the Trustee); and (d) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
from and after the effective date of such agreement; (ii) each Rating Agency
shall be given prior written notice of the identity of the proposed successor to
the Master Servicer and each Rating Agency's rating of the Certificates in
effect immediately prior to such assignment, sale and delegation will not be
downgraded, qualified or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect delivered to the Master
Servicer and the Trustee; (iii) the Master Servicer assigning and selling the
master servicing shall deliver to the Trustee an Officer's Certificate and an
Opinion of Independent Counsel addressed to the Trustee, each stating that all
conditions precedent to such action under this Agreement have been completed and
such action is permitted by and complies with the terms of this Agreement; and
(iv) in the event the Master


                                      -99-
<PAGE>

Servicer is terminated without cause by EMC, EMC shall pay the terminated Master
Servicer a termination fee equal to 0.25% of the aggregate Scheduled Principal
Balance of the Mortgage Loans at the time the master servicing of the Mortgage
Loans is transferred to the successor Master Servicer. No such assignment or
delegation shall affect any liability of the Master Servicer arising prior to
the effective date thereof.


                                     -100-
<PAGE>

                                  ARTICLE VIII
                                     Default

      Section 8.01 Events of Default. "Event of Default," wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
only with respect to the defaulting Master Servicer:

            (i) The Master Servicer fails to cause to be deposited in the
      Distribution Account any amount so required to be deposited pursuant to
      this Agreement, and such failure continues unremedied for a period of
      three Business Days after the date upon which written notice of such
      failure, requiring the same to be remedied, shall have been given to the
      Master Servicer; or

            (ii) The Master Servicer fails to observe or perform in any material
      respect any other material covenants and agreements set forth in this
      Agreement to be performed by it, which covenants and agreements materially
      affect the rights of Certificateholders, and such failure continues
      unremedied for a period of 60 days after the date on which written notice
      of such failure, properly requiring the same to be remedied, shall have
      been given to the Master Servicer by the Trustee or to the Master Servicer
      and the Trustee by the Holders of Certificates evidencing Fractional
      Undivided Interests aggregating not less than 25% of the Trust Fund; or

            (iii) There is entered against the Master Servicer a decree or order
      by a court or agency or supervisory authority having jurisdiction in the
      premises for the appointment of a conservator, 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, and the continuance of any such decree or order is unstayed and
      in effect for a period of 60 consecutive days, or an involuntary case is
      commenced against the Master Servicer under any applicable insolvency or
      reorganization statute and the petition is not dismissed within 60 days
      after the commencement of the case; or

            (iv) The Master Servicer consents to the appointment of a
      conservator or receiver or liquidator in any insolvency, readjustment of
      debt, marshaling of assets and liabilities or similar proceedings of or
      relating to the Master Servicer or substantially all of its property; or
      the Master Servicer admits in writing its inability to pay its debts
      generally as they become due, files a petition to take advantage of any
      applicable insolvency or reorganization statute, makes an assignment for
      the benefit of its creditors, or voluntarily suspends payment of its
      obligations; or

            (v) The Master Servicer assigns or delegates its duties or rights
      under this Agreement in contravention of the provisions permitting such
      assignment or delegation under Sections 7.05 or 7.07.

In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided


                                     -101-
<PAGE>

Interests aggregating not less than 51% of the principal of the Trust Fund, by
notice in writing to the Master Servicer (and to the Trustee if given by such
Certificateholders), with a copy to the Rating Agencies, and with the consent of
EMC, may terminate all of the rights and obligations (but not the liabilities)
of the Master Servicer under this Agreement and in and to the Mortgage Loans
and/or the REO Property serviced by the Master Servicer and the proceeds
thereof. Upon the receipt by the Master Servicer of the written notice, all
authority and power of the Master Servicer under this Agreement, whether with
respect to the Certificates, the Mortgage Loans, REO Property or under any other
related agreements (but only to the extent that such other agreements relate to
the Mortgage Loans or related REO Property) shall, subject to Section 8.02,
automatically and without further action pass to and be vested in the Trustee
pursuant to this Section 8.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Trust or which thereafter become part of the Trust; and (ii) originals or copies
of all documents of the Master Servicer reasonably requested by the Trustee to
enable it to assume the Master Servicer's duties thereunder. In addition to any
other amounts which are then, or, notwithstanding the termination of its
activities under this Agreement, may become payable to the Master Servicer under
this Agreement, the Master Servicer shall be entitled to receive, out of any
amount received on account of a Mortgage Loan or related REO Property, that
portion of such payments which it would have received as reimbursement under
this Agreement if notice of termination had not been given. The termination of
the rights and obligations of the Master Servicer shall not affect any
obligations incurred by the Master Servicer prior to such termination.

      Section 8.02 Trustee to Act; Appointment of Successor. (a) Upon the
receipt by the Master Servicer of a notice of termination pursuant to Section
8.01 or an Opinion of Independent Counsel pursuant to Section 7.05 to the effect
that the Master Servicer is legally unable to act or to delegate its duties to a
Person which is legally able to act, the Trustee shall automatically become the
successor in all respects to the Master Servicer in its capacity under this
Agreement and the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities, duties, liabilities and
limitations on liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; provided, however, that EMC shall have the right to
either (a) immediately assume the duties of the Master Servicer or (b) select a
successor Master Servicer; provided further, however, that the Trustee shall
have no obligation whatsoever with respect to any liability (other than advances
deemed recoverable and not previously made) incurred by the Master Servicer at
or prior to the time of termination. As compensation therefor, but subject to
Section 7.06, the Trustee shall be entitled to compensation which the Master
Servicer would have been entitled to retain if the Master Servicer had continued
to act hereunder, except for those amounts due the Master Servicer as
reimbursement permitted under this Agreement for advances previously made or
expenses previously incurred. Notwithstanding the above, the Trustee may, if it
shall be unwilling so to act, or shall, if it is legally unable so to act,
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution which is a Fannie Mae- or
Freddie Mac-approved servicer, and with respect to a successor to the Master
Servicer only, having a net worth of not less than


                                     -102-
<PAGE>

$10,000,000, as the successor to the Master Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder; provided, that the Trustee shall obtain a letter from each
Rating Agency that the ratings, if any, on each of the Certificates will not be
lowered as a result of the selection of the successor to the Master Servicer.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on the Mortgage Loans as it and
such successor shall agree; provided, however, that the provisions of Section
7.06 shall apply, no such compensation shall be in excess of that permitted the
Trustee under this Subsection 8.02(a), and that such successor shall undertake
and assume the obligations of the Trustee to pay compensation to any third
Person acting as an agent or independent contractor in the performance of master
servicing responsibilities hereunder. The Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.

      (b) If the Trustee shall succeed to any duties of the Master Servicer
respecting the Mortgage Loans as provided herein, it shall do so in a separate
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article IX shall be inapplicable to the Trustee in its duties as the successor
to the Master Servicer in the servicing of the Mortgage Loans (although such
provisions shall continue to apply to the Trustee in its capacity as Trustee);
the provisions of Article VII, however, shall apply to it in its capacity as
successor master servicer.

      Section 8.03 Notification to Certificateholders. Upon any termination or
appointment of a successor to the Master Servicer, the Trustee shall give prompt
written notice thereof to Certificateholders at their respective addresses
appearing in the Certificate Register and to the Rating Agencies.

      Section 8.04 Waiver of Defaults. The Trustee shall transmit by mail to all
Certificateholders, within 60 days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Trustee, unless such Event of
Default shall have been cured, notice of each such Event of Default. The Holders
of Certificates evidencing Fractional Undivided Interests aggregating not less
than 51% of the Trust Fund may, on behalf of all Certificateholders, waive any
default by the Master Servicer in the performance of its obligations hereunder
and the consequences thereof, except a default in the making of or the causing
to be made any required distribution on the Certificates. Upon any such waiver
of a past default, such default shall be deemed to cease to exist, and any Event
of Default arising therefrom shall be deemed to have been timely remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived. The Trustee shall give notice of any such waiver to the
Rating Agencies.

      Section 8.05 List of Certificateholders. Upon written request of three or
more Certificateholders of record, for purposes of communicating with other
Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.


                                     -103-
<PAGE>

                                   ARTICLE IX
             Concerning the Trustee and the Securities Administrator

      Section 9.01 Duties of Trustee. (a) The Trustee, prior to the occurrence
of an Event of Default and after the curing or waiver of all Events of Default
which may have occurred, and the Securities Administrator each undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement as duties of the Trustee and the Securities Administrator,
respectively. If an Event of Default has occurred and has not been cured or
waived, the Trustee shall exercise such of the rights and powers vested in it by
this Agreement, and subject to Section 8.02(b) use the same degree of care and
skill in their exercise, as a prudent person would exercise under the
circumstances in the conduct of his own affairs.

      (b) Upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments which are specifically required
to be furnished to the Trustee and the Securities Administrator pursuant to any
provision of this Agreement, the Trustee and the Securities Administrator,
respectively, shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that neither the Trustee nor the
Securities Administrator shall be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished hereunder; provided, further, that neither the Trustee nor
the Securities Administrator shall be responsible for the accuracy or
verification of any calculation provided to it pursuant to this Agreement.

      (c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 6.01 and 10.01 herein based
solely on the report of the Securities Administrator.

      (d) No provision of this Agreement shall be construed to relieve the
Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:

            (i) Prior to the occurrence of an Event of Default, and after the
      curing or waiver of all such Events of Default which may have occurred,
      the duties and obligations of the Trustee and the Securities Administrator
      shall be determined solely by the express provisions of this Agreement,
      neither the Trustee nor the Securities Administrator shall be liable
      except for the performance of their respective 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 or the
      Securities Administrator and, in the absence of bad faith on the part of
      the Trustee or the Securities Administrator, respectively, the Trustee or
      the Securities Administrator, respectively, 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 or the
      Securities Administrator, respectively, and conforming to the requirements
      of this Agreement;

            (ii) Neither the Trustee nor the Securities Administrator shall be
      liable in its individual capacity for an error of judgment made in good
      faith by a Responsible Officer or Responsible


                                     -104-
<PAGE>

      Officers of the Trustee or an officer of the Securities Administrator,
      respectively, unless it shall be proved that the Trustee or the Securities
      Administrator, respectively, was negligent in ascertaining the pertinent
      facts;

            (iii) Neither the Trustee nor the Securities Administrator shall be
      liable with respect to any action taken, suffered or omitted to be taken
      by it in good faith in accordance with the directions of the Holders of
      Certificates evidencing Fractional Undivided Interests aggregating not
      less than 25% of the Trust Fund, if such action or non-action relates to
      the time, method and place of conducting any proceeding for any remedy
      available to the Trustee or the Securities Administrator, respectively, or
      exercising any trust or other power conferred upon the Trustee or the
      Securities Administrator, respectively, under this Agreement;

            (iv) The Trustee shall not be required to take notice or be deemed
      to have notice or knowledge of any default or Event of Default unless a
      Responsible Officer of the Trustee's Corporate Trust Office shall have
      actual knowledge thereof. In the absence of such notice, the Trustee may
      conclusively assume there is no such default or Event of Default;

            (v) The Trustee shall not in any way be liable by reason of any
      insufficiency in any Account held by or in the name of Trustee unless it
      is determined by a court of competent jurisdiction that the Trustee's
      gross negligence or willful misconduct was the primary cause of such
      insufficiency (except to the extent that the Trustee is obligor and has
      defaulted thereon);

            (vi) Anything in this Agreement to the contrary notwithstanding, in
      no event shall the Trustee or the Securities Administrator be liable for
      special, indirect or consequential loss or damage of any kind whatsoever
      (including but not limited to lost profits), even if the Trustee or the
      Securities Administrator, respectively, has been advised of the likelihood
      of such loss or damage and regardless of the form of action; and

            (vii) None of the Securities Administrator, EMC or the Trustee shall
      be responsible for the acts or omissions of the other, it being understood
      that this Agreement shall not be construed to render them partners, joint
      venturers or agents of one another.

            Neither the Trustee nor the Securities Administrator shall be
      required to expend or risk its own funds or otherwise incur financial
      liability in the performance of any of its duties hereunder, or in the
      exercise of any of its rights or powers, if there is reasonable ground for
      believing that the repayment of such funds or adequate indemnity against
      such risk or liability is not reasonably assured to it, and none of the
      provisions contained in this Agreement shall in any event require the
      Trustee or the Securities Administrator to perform, or be responsible for
      the manner of performance of, any of the obligations of the Master
      Servicer under the Servicing Agreements, except during such time, if any,
      as the Trustee shall be the successor to, and be vested with the rights,
      duties, powers and privileges of, the Master Servicer in accordance with
      the terms of this Agreement.


                                     -105-
<PAGE>

      (e) All funds received by the Master Servicer and the Trustee and required
to be deposited in the Master Servicer Collection Account or Distribution
Account pursuant to this Agreement will be promptly so deposited by the Master
Servicer and the Trustee.

      (f) Except for those actions that the Trustee or the Securities
Administrator is required to take hereunder, neither the Trustee nor the
Securities Administrator shall have any obligation or liability to take any
action or to refrain from taking any action hereunder in the absence of written
direction as provided hereunder.

      Section 9.02 Certain Matters Affecting the Trustee and the Securities
Administrator. Except as otherwise provided in Section 9.01:

            (i) The Trustee and the Securities Administrator may rely and shall
      be protected in acting or refraining from acting in reliance on any
      resolution, certificate of a Seller, Master Servicer or Servicer,
      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 and the Securities Administrator may consult with
      counsel and any advice of such counsel or any Opinion of Counsel shall be
      full and complete authorization and protection with respect to any action
      taken or suffered or omitted by it hereunder in good faith and in
      accordance with such advice or Opinion of Counsel:

            (iii) Neither the Trustee nor the Securities Administrator shall be
      under any obligation to exercise any of the trusts or powers vested in it
      by this Agreement, other than its obligation to give notices pursuant to
      this Agreement, or to institute, conduct or defend any litigation
      hereunder or in relation hereto at the request, order or direction of any
      of the Certificateholders pursuant to the provisions of this Agreement,
      unless such Certificateholders shall have offered to the Trustee
      reasonable security or indemnity against the costs, expenses and
      liabilities which may be incurred therein or thereby. Nothing contained
      herein shall, however, relieve the Trustee of the obligation, upon the
      occurrence of an Event of Default of which a Responsible Officer of the
      Trustee's Corporate Trust Office has actual knowledge (which has not been
      cured or waived), to exercise such of the rights and powers vested in it
      by this Agreement, and to use the same degree of care and skill in their
      exercise, as a prudent person would exercise under the circumstances in
      the conduct of his own affairs;

            (iv) Prior to the occurrence of an Event of Default hereunder and
      after the curing or waiver of all Events of Default which may have
      occurred, neither the Trustee nor the Securities Administrator shall be
      liable in its individual capacity for any action taken, suffered or
      omitted by it in good faith and believed by it to be authorized or within
      the discretion or rights or powers conferred upon it by this Agreement;

            (v) Neither the Trustee nor the Securities Administrator shall be
      bound to make any investigation into the facts or matters stated in any
      resolution, certificate, statement, instrument,


                                     -106-
<PAGE>

      opinion, report, notice, request, consent, order, approval, bond or other
      paper or document, unless requested in writing to do so by Holders of
      Certificates evidencing Fractional Undivided Interests aggregating not
      less than 25% of the Trust Fund and provided that the payment within a
      reasonable time to the Trustee or the Securities Administrator, as
      applicable, of the costs, expenses or liabilities likely to be incurred by
      it in the making of such investigation is, in the opinion of the Trustee
      or the Securities Administrator, as applicable, reasonably assured to the
      Trustee or the Securities Administrator, as applicable, by the security
      afforded to it by the terms of this Agreement. The Trustee or the
      Securities Administrator may require reasonable indemnity against such
      expense or liability as a condition to taking any such action. The
      reasonable expense of every such examination shall be paid by the
      Certificateholders requesting the investigation;

            (vi) The Trustee and the Securities Administrator may execute any of
      the trusts or powers hereunder or perform any duties hereunder either
      directly or through Affiliates, agents or attorneys; provided, however,
      that the Trustee may not appoint any agent to perform its custodial
      functions with respect to the Mortgage Files or paying agent functions
      under this Agreement without the express written consent of the Master
      Servicer, which consent will not be unreasonably withheld. Neither the
      Trustee nor the Securities Administrator shall be liable or responsible
      for the misconduct or negligence of any of the Trustee's or the Securities
      Administrator's agents or attorneys or a custodian or paying agent
      appointed hereunder by the Trustee or the Securities Administrator with
      due care and, when required, with the consent of the Master Servicer;

            (vii) Should the Trustee or the Securities Administrator deem the
      nature of any action required on its part, other than a payment or
      transfer under Subsection 4.01(b) or Section 4.02, to be unclear, the
      Trustee or the Securities Administrator, respectively, may require prior
      to such action that it be provided by the Seller with reasonable further
      instructions;

            (viii) The right of the Trustee or the Securities Administrator to
      perform any discretionary act enumerated in this Agreement shall not be
      construed as a duty, and neither the Trustee nor the Securities
      Administrator shall be accountable for other than its negligence or
      willful misconduct in the performance of any such act;

            (ix) Neither the Trustee nor the Securities Administrator shall be
      required to give any bond or surety with respect to the execution of the
      trust created hereby or the powers granted hereunder, except as provided
      in Subsection 9.07; and

            (x) Neither the Trustee nor the Securities Administrator shall have
      any duty to conduct any affirmative investigation as to the occurrence of
      any condition requiring the repurchase of any Mortgage Loan by the
      Mortgage Loan Seller pursuant to this Agreement or the Mortgage Loan
      Purchase Agreement, as applicable, or the eligibility of any Mortgage Loan
      for purposes of this Agreement.


                                     -107-
<PAGE>

      Section 9.03 Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans. The recitals contained herein and in the
Certificates (other than the signature and countersignature of the Trustee on
the Certificates) shall be taken as the statements of the Seller, and neither
the Trustee nor the Securities Administrator shall have any responsibility for
their correctness. Neither the Trustee nor the Securities Administrator makes
any representation as to the validity or sufficiency of the Certificates (other
than the signature and countersignature of the Trustee on the Certificates) or
of any Mortgage Loan except as expressly provided in Sections 2.02 and 2.05
hereof; provided, however, that the foregoing shall not relieve the Trustee of
the obligation to review the Mortgage Files pursuant to Sections 2.02 and 2.04.
The Trustee's signature and countersignature (or countersignature of its agent)
on the Certificates shall be solely in its capacity as Trustee and shall not
constitute the Certificates an obligation of the Trustee in any other capacity.
Neither the Trustee or the Securities Administrator shall be accountable for the
use or application by the Seller of any of the Certificates or of the proceeds
of such Certificates, or for the use or application of any funds paid to the
Seller with respect to the Mortgage Loans. Subject to the provisions of Section
2.05, neither the Trustee nor the Securities Administrator shall not be
responsible for the legality or validity of this Agreement or any document or
instrument relating to this Agreement, the validity of the execution of this
Agreement or of any supplement hereto or instrument of further assurance, or the
validity, priority, perfection or sufficiency of the security for the
Certificates issued hereunder or intended to be issued hereunder. Neither the
Trustee nor the Securities Administrator shall at any time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. Neither the Trustee nor the Securities Administrator shall have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement.

      Section 9.04 Trustee and Securities Administrator May Own Certificates.
The Trustee and the Securities Administrator in its individual capacity or in
any capacity other than as Trustee hereunder may become the owner or pledgee of
any Certificates with the same rights it would have if it were not Trustee or
the Securities Administrator, as applicable, and may otherwise deal with the
parties hereto.

      Section 9.05 Trustee's and Securities Administrator's Fees and Expenses.
The fees and expenses of the Trustee and the Securities Administrator shall be
paid in accordance with a side letter agreement between the Trustee and the
Master Servicer. In addition, the Trustee and the Securities Administrator will
be entitled to recover from the Master Servicer Collection Account pursuant to
Section 4.03(b) all reasonable out-of-pocket expenses, disbursements and
advances and the expenses of the Trustee and the Securities Administrator,
respectively, in connection with any Event of Default, any breach of this
Agreement or any claim or legal action (including any pending or threatened
claim or legal action) incurred or made by the Trustee or the Securities
Administrator, respectively, in the administration of the trusts hereunder
(including the reasonable compensation, expenses and disbursements of its
counsel) except any such expense, disbursement or advance as may arise from its
negligence or intentional misconduct or which is the responsibility of the
Certificateholders. If funds in the Master Servicer Collection Account are
insufficient therefor, the Trustee and the Securities Administrator shall
recover such expenses from the


                                     -108-
<PAGE>

Seller. Such compensation and reimbursement obligation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust.

      Section 9.06 Eligibility Requirements for Trustee and Securities
Administrator. The Trustee and any successor Trustee and the Securities
Administrator and any successor Securities Administrator shall during the entire
duration of this Agreement be a state bank or trust company or a national
banking association organized and doing business under the laws of such state or
the United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee, $50,000,000, subject
to supervision or examination by federal or state authority and, in the case of
the Trustee, rated "BBB" or higher by S&P and Fitch with respect to their long-
term rating and rated "BBB" or higher by S&P and Fitch and "Baa2" or higher by
Moody's with respect to any outstanding long-term unsecured unsubordinated debt,
and, in the case of a successor Trustee or successor Securities Administrator
other than pursuant to Section 9.10, rated in one of the two highest long-term
debt categories of, or otherwise acceptable to, each of the Rating Agencies. If
the Trustee 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 9.06 the combined capital and surplus of such
corporation shall be deemed to be its total equity capital (combined capital and
surplus) as set forth in its most recent report of condition so published. In
case at any time the Trustee or the Securities Administrator shall cease to be
eligible in accordance with the provisions of this Section 9.06, the Trustee or
the Securities Administrator shall resign immediately in the manner and with the
effect specified in Section 9.08.

      Section 9.07 Insurance. The Trustee and the Securities Administrator, at
their own expense, shall at all times maintain and keep in full force and
effect: (i) fidelity insurance, (ii) theft of documents insurance and (iii)
forgery insurance (which may be collectively satisfied by a "Financial
Institution Bond" and/or a "Bankers' Blanket Bond"). All such insurance shall be
in amounts, with standard coverage and subject to deductibles, as are customary
for insurance typically maintained by banks or their affiliates which act as
custodians for investor-owned mortgage pools. A certificate of an officer of the
Trustee or the Securities Administrator as to the Trustee's or the Securities
Administrator's, respectively, compliance with this Section 9.07 shall be
furnished to any Certificateholder upon reasonable written request.

      Section 9.08 Resignation and Removal of the Trustee and Securities
Administrator. (a) The Trustee and the Securities Administrator may at any time
resign and be discharged from the Trust hereby created by giving written notice
thereof to the Seller and the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Seller shall promptly
appoint a successor Trustee or successor Securities Administrator, as
applicable, by written instrument, in triplicate, one copy of which instrument
shall be delivered to each of the resigning Trustee or Securities Administrator,
as applicable, the successor Trustee or Securities Administrator, as applicable.
If no successor Trustee or Securities Administrator shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Securities Administrator may petition any
court of competent jurisdiction for the appointment of a successor Trustee or
Securities Administrator.

      (b) If at any time the Trustee or the Securities Administrator shall cease
to be eligible in accordance with the provisions of Section 9.06 and shall fail
to resign after written request therefor by the


                                     -109-
<PAGE>

Seller or if at any time the Trustee or the Securities Administrator shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or the Securities Administrator, as applicable, or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or the Securities Administrator, as applicable, or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Seller shall promptly remove the Trustee, or shall be
entitled to remove the Securities Administrator, as applicable, and appoint a
successor Trustee or Securities Administrator, as applicable, by written
instrument, in triplicate, one copy of which instrument shall be delivered to
each of the Trustee or Securities Administrator, as applicable, so removed, the
successor Trustee or Securities Administrator, as applicable.

      (c) The Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust Fund may at any time remove the
Trustee or the Securities Administrator and appoint a successor Trustee or
Securities Administrator by written instrument or instruments, in quadruplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Seller, the Master Servicer,
the Securities Administrator (if the Trustee is removed), the Trustee (if the
Securities Administrator is removed), and the Trustee or Securities
Administrator so removed and the successor so appointed.

      (d) No resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor Trustee or Securities Administrator
pursuant to any of the provisions of this Section 9.08 shall become effective
except upon appointment of and acceptance of such appointment by the successor
Trustee or Securities Administrator as provided in Section 9.09.

      Section 9.09 Successor Trustee and Successor Securities Administrator. (a)
Any successor Trustee or Securities Administrator appointed as provided in
Section 9.08 shall execute, acknowledge and deliver to the Seller and to its
predecessor Trustee or Securities Administrator an instrument accepting such
appointment hereunder. The resignation or removal of the predecessor Trustee or
Securities Administrator shall then become effective and such successor Trustee
or Securities Administrator, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee or
Securities Administrator herein. The predecessor Trustee or Securities
Administrator shall after payment of its outstanding fees and expenses promptly
deliver to the successor Trustee or Securities Administrator, as applicable, all
assets and records of the Trust held by it hereunder, and the Seller and the
predecessor Trustee or Securities Administrator, as applicable, shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
Trustee or Securities Administrator, as applicable, all such rights, powers,
duties and obligations.

      (b) No successor Trustee or Securities Administrator shall accept
appointment as provided in this Section 9.09 unless at the time of such
acceptance such successor Trustee or Securities Administrator shall be eligible
under the provisions of Section 9.06.

      (c) Upon acceptance of appointment by a successor Trustee or Securities
Administrator as provided in this Section 9.09, the successor Trustee or
Securities Administrator shall mail notice of the succession of such Trustee or
Securities Administrator hereunder to all Certificateholders at their addresses


                                     -110-
<PAGE>

as shown in the Certificate Register and to the Rating Agencies. EMC shall pay
the cost of any mailing by the successor Trustee or Securities Administrator.

      Section 9.10 Merger or Consolidation of Trustee or Securities
Administrator. Any state bank or trust company or national banking association
into which the Trustee or the Securities Administrator may be merged or
converted or with which it may be consolidated or any state bank or trust
company or national banking association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator,
respectively, shall be a party, or any state bank or trust company or national
banking association succeeding to all or substantially all of the corporate
trust business of the Trustee or the Securities Administrator, respectively,
shall be the successor of the Trustee or the Securities Administrator,
respectively, hereunder, provided such state bank or trust company or national
banking association shall be eligible under the provisions of Section 9.06. Such
succession shall be valid 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.

      Section 9.11 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust or property constituting the same may at the time be located, the Seller
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 Seller to act as cotrustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust, and to
vest in such Person or Persons, in such capacity, such title to the Trust, or
any part thereof, and, subject to the other provisions of this Section 9.11,
such powers, duties, obligations, rights and trusts as the Seller and the
Trustee may consider necessary or desirable.

      (b) If the Seller shall not have joined in such appointment within 15 days
after the receipt by it of a written request so to do, the Trustee shall have
the power to make such appointment without the Seller.

      (c) No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor Trustee under Section 9.06 hereunder and
no notice to Certificateholders of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 9.08 hereof.

      (d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.


                                     -111-
<PAGE>

      (e) 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 IX. 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.

      (f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or attorney-in-fact,
with full power and authority, to do any lawful act under or with respect to
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.

      (g) No trustee under this Agreement shall be personally liable by reason
of any act or omission of another trustee under this Agreement. The Seller and
the Trustee acting jointly may at any time accept the resignation of or remove
any separate trustee or co-trustee.

      Section 9.12 Federal Information Returns and Reports to
Certificateholders; REMIC Administration. (a) For federal income tax purposes,
the taxable year of each of REMIC I, REMIC II and REMIC III shall be a calendar
year and the Securities Administrator shall maintain or cause the maintenance of
the books of each such REMIC on the accrual method of accounting.

      (b) The Securities Administrator shall prepare and file or cause to be
filed with the Internal Revenue Service, and the Trustee shall sign, Federal tax
information returns or elections required to be made hereunder with respect to
each of REMIC I, REMIC II and REMIC III, the Trust Fund, if applicable, and the
Certificates containing such information and at the times and in the manner as
may be required by the Code or applicable Treasury regulations, and shall
furnish to each Holder of Certificates at any time during the calendar year for
which such returns or reports are made such statements or information at the
times and in the manner as may be required thereby, including, without
limitation, reports relating to interest, original issue discount and market
discount or premium (using a constant prepayment assumption of 25% CPR). The
Securities Administrator will apply for an Employee Identification Number from
the IRS under Form SS-4 or any other acceptable method for all tax entities. In
connection with the foregoing, the Securities Administrator shall timely prepare
and file, and the Trustee shall sign, IRS Form 8811, which shall provide the
name and address of the person who can be contacted to obtain information
required to be reported to the holders of regular interests in each of REMIC I,
REMIC II and REMIC III (the "REMIC Reporting Agent"). The Trustee shall make
elections to treat each of REMIC I, REMIC II and REMIC III as a REMIC (which
elections shall apply to the taxable period ending December 31, 2002 and each
calendar year thereafter) in such manner as the Code or applicable Treasury
regulations may prescribe, and as described by the Securities Administrator. The
Trustee shall sign all tax information returns filed pursuant to this Section
and any other returns as may be required by the Code. The Holder of the Class
R-I Certificate is hereby designated as the "Tax Matters Person" (within the
meaning of Treas.


                                     -112-
<PAGE>

Reg. ss.ss.1.860F-4(d)) for REMIC I, the Holder of the Class R-II Certificate is
hereby designated as the "Tax Matters Person" for REMIC II and the Holder of the
Class R-III Certificate is hereby designated as the "Tax Matters Person" for
REMIC III. The Securities Administrator is hereby designated and appointed as
the agent of each such Tax Matters Person. Any Holder of a Residual Certificate
will by acceptance thereof appoint the Securities Administrator as agent and
attorney-in-fact for the purpose of acting as Tax Matters Person for each of
REMIC I, REMIC II and REMIC III during such time as the Securities Administrator
does not own any such Residual Certificate. In the event that the Code or
applicable Treasury regulations prohibit the Trustee from signing tax or
information returns or other statements, or the Securities Administrator from
acting as agent for the Tax Matters Person, the Trustee and the Securities
Administrator shall take whatever action that in its sole good faith judgment is
necessary for the proper filing of such information returns or for the provision
of a tax matters person, including designation of the Holder of a Residual
Certificate to sign such returns or act as tax matters person. Each Holder of a
Residual Certificate shall be bound by this Section.

      (c) The Securities Administrator shall provide upon request and receipt of
reasonable compensation, such information as required in Section 860D(a)(6)(B)
of the Code to the Internal Revenue Service, to any Person purporting to
transfer a Residual Certificate to a Person other than a transferee permitted by
Section 5.05(b), and to any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate, organization described in
Section 1381 of the Code, or nominee holding an interest in a pass-through
entity described in Section 860E(e)(6) of the Code, any record holder of which
is not a transferee permitted by Section 5.05(b) (or which is deemed by statute
to be an entity with a disqualified member).

      (d) The Securities Administrator shall prepare and file or cause to be
filed, and the Trustee shall sign, any state income tax returns required under
Applicable State Law with respect to each of REMIC I, REMIC II and REMIC III or
the Trust Fund.

      (e) Notwithstanding any other provision of this Agreement, the Trustee and
the Securities Administrator shall comply with all federal withholding
requirements respecting payments to Certificateholders of interest or original
issue discount on the Mortgage Loans, that the Trustee or the Securities
Administrator reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee or the Securities Administrator withholds any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trustee or the Securities
Administrator shall, together with its monthly report to such
Certificateholders, indicate such amount withheld.

      (f) The Trustee and the Securities Administrator agree to indemnify the
Trust Fund and the Seller for any taxes and costs including, without limitation,
any reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Seller or the Master Servicer, as a result of a breach of the Trustee's
covenants and the Securities Administrator's covenants, respectively, set forth
in this Section 9.12; provided, however, such liability and obligation to
indemnify in this paragraph shall not be joint and several and neither the
Trustee nor the Securities Administrator shall be liable or be obligated to
indemnify the Trust


                                     -113-
<PAGE>

Fund for the failure by the other to perform any duty under this Agreement or
the breach by the other of any covenant in this Agreement.


                                     -114-
<PAGE>

                                    ARTICLE X
                                   Termination

      Section 10.01 Termination Upon Repurchase by the Seller or its Designee or
Liquidation of the Mortgage Loans.

      (a) Subject to Section 10.03, the respective obligations and
responsibilities of the Seller, the Trustee, the Master Servicer and the
Securities Administrator created hereby, other than the obligation of the
Trustee to make payments to Certificateholders as hereinafter set forth shall
terminate upon:

            (i) the repurchase by or at the direction of the Seller or its
      designee of all Mortgage Loans and all related REO Property remaining in
      the Trust at a price equal to (a) 100% of the Outstanding Principal
      Balance of each Mortgage Loan (other than a Mortgage Loan related to REO
      Property) as of the date of repurchase, net of the principal portion of
      any unreimbursed Monthly Advances made by the purchaser, together with
      interest at the applicable Mortgage Interest Rate accrued but unpaid to,
      but not including, the first day of the month of repurchase, plus (b) the
      appraised value of any related REO Property, less the good faith estimate
      of the Seller of liquidation expenses to be incurred in connection with
      its disposal thereof (but not more than the Outstanding Principal Balance
      of the related Mortgage Loan, together with interest at the applicable
      Mortgage Interest Rate accrued on that balance but unpaid to, but not
      including, the first day of the month of repurchase), such appraisal to be
      calculated by an appraiser mutually agreed upon by the Seller and the
      Trustee at the expense of the Seller; or

            (ii) the later of the making of the final payment or other
      liquidation, or any advance with respect thereto, of the last Mortgage
      Loan remaining in the Trust Fund or the disposition of all property
      acquired with respect to any Mortgage Loan; provided, however, that in the
      event that an advance has been made, but not yet recovered, at the time of
      such termination, the Person having made such advance shall be entitled to
      receive, notwithstanding such termination, any payments received
      subsequent thereto with respect to which such advance was made; or

            (iii) the payment to Certificateholders of all amounts required to
      be paid to them pursuant to this Agreement.

      (b) In no event, however, shall the Trust created hereby continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James's, living on the date of this Agreement.

      (c) The right of the Seller or its designee to repurchase all the assets
of the Trust Fund described in Subsection 10.01(a)(i) above shall be exercisable
only if (i) the aggregate Scheduled Principal Balance of the Mortgage Loans at
the time of any such repurchase is less than 5% of the Cut-off Date Balance or
(ii) the Seller, based upon an Opinion of Counsel, has determined that the REMIC
status of the REMIC I, REMIC II or REMIC III has been lost or that a substantial
risk exists that such REMIC status will be lost for the then-current taxable
year. At any time thereafter, in the case of (i) or (ii) above, the Seller


                                     -115-
<PAGE>

may elect to terminate REMIC I, REMIC II and REMIC III at any time, and upon
such election, the Seller or its designee, shall repurchase all the assets of
the Trust Fund described in Subsection 10.01(a)(i) above.

      (d) The Trustee shall give notice of any termination to the
Certificateholders, with a copy to the Master Servicer, the Securities
Administrator and the Rating Agencies, upon which the Certificateholders shall
surrender their Certificates to the Trustee for payment of the final
distribution and cancellation. Such notice shall be given by letter, mailed not
earlier than the l5th day and not later than the 25th day of the month next
preceding the month of such final distribution, and shall specify (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Trustee therein specified.

      (e) If the option of the Seller to repurchase or cause the repurchase of
all the assets in the Trust Fund as described Subsection 10.01(a)(i) above is
exercised, the Seller and/or its designee shall deliver to the Trustee for
deposit in the Distribution Account, by the Business Day prior to the applicable
Distribution Date, an amount equal to the repurchase price for the Mortgage
Loans being purchased by it and all property acquired with respect to such
Mortgage Loans remaining in REMIC I, REMIC II and REMIC III. Upon presentation
and surrender of the Certificates by the Certificateholders, the Trustee shall
distribute to the Certificateholders as directed by the Securities Administrator
in writing an amount determined as follows: with respect to each Certificate
(other than the Class R Certificates), the outstanding Current Principal Amount,
plus with respect to each Certificate (other than the Class R Certificates), one
month's interest thereon at the applicable Pass- Through Rate; and with respect
to the Class R Certificates, the percentage interest evidenced thereby
multiplied by the difference, if any, between the above described repurchase
price and the aggregate amount to be distributed to the Holders of the
Certificates (other than the Class R Certificates).If the proceeds with respect
to the Group 1 Mortgage Loans are not sufficient to pay all of the Group 1
Senior Certificates in full, any such deficiency will be allocated first, to the
Subordinate Certificates, in inverse order of their numerical designation, then
to the Senior Mezzanine Certificates, and then to the Group 1 Senior
Certificates on a pro rata basis. If the proceeds with respect to the Group 2
Mortgage Loans are not sufficient to pay all of the Group 2 Senior Certificates
in full, any such deficiency will be allocated first, to the Subordinate
Certificates, in inverse order of their numerical designation, then to the
Senior Mezzanine Certificates, and then to the Group 2 Senior Certificates on a
pro rata basis. If the proceeds with respect to the Group 3 Mortgage Loans are
not sufficient to pay all of the Group 3 Senior Certificates in full, any such
deficiency will be allocated first, to the Subordinate Certificates, in inverse
order of their numerical designation, then to the Senior Mezzanine Certificates,
and then to the Group 3 Senior Certificates on a pro rata basis. If the proceeds
with respect to the Group 4 Mortgage Loans are not sufficient to pay all of the
Group 4 Senior Certificates in full, any such deficiency will be allocated
first, to the Subordinate Certificates, in inverse order of their numerical
designation, then to the Senior Mezzanine Certificates, and then to the Group 4
Senior Certificates on a pro rata basis. If the proceeds with respect to the
Group 4 Mortgage Loans are not sufficient to pay all of the Group 4 Senior
Certificates in full, any such deficiency will be allocated first, to the
Subordinate Certificates, in inverse order of their numerical designation, then
to the Senior Mezzanine Certificates, and then to the Group 4 Senior
Certificates on a pro rata basis. If the proceeds with respect to the Group 5
Mortgage


                                     -116-
<PAGE>

Loans are not sufficient to pay all of the Group 5 Senior Certificates in full,
any such deficiency will be allocated first, to the Subordinate Certificates, in
inverse order of their numerical designation, then to the Senior Mezzanine
Certificates, and then to the Group 5 Senior Certificates on a pro rata basis.
If the proceeds with respect to the Group 6 Mortgage Loans are not sufficient to
pay all of the Group 6 Senior Certificates in full, any such deficiency will be
allocated first, to the Subordinate Certificates, in inverse order of their
numerical designation, then to the Senior Mezzanine Certificates, and then to
the Group 6 Senior Certificates on a pro rata basis. If the proceeds with
respect to the Group 7 Mortgage Loans are not sufficient to pay all of the Group
7 Senior Certificates in full, any such deficiency will be allocated first, to
the Subordinate Certificates, in inverse order of their numerical designation,
then to the Senior Mezzanine Certificates, and then to the Group 7 Senior
Certificates on a pro rata basis. If the proceeds with respect to the Group 8
Mortgage Loans are not sufficient to pay all of the Group 8 Senior Certificates
in full, any such deficiency will be allocated first, to the Subordinate
Certificates, in inverse order of their numerical designation, then to the
Senior Mezzanine Certificates, and then to the Group 8 Senior Certificates on a
pro rata basis. Upon deposit of the required repurchase price and following such
final Distribution Date, the Trustee shall release promptly to the Seller and/or
its designee the Mortgage Files for the remaining applicable Mortgage Loans, and
the Accounts with respect thereto shall terminate, subject to the Trustee's
obligation to hold any amounts payable to Certificateholders in trust without
interest pending final distributions pursuant to Subsection 10.01(g). Any other
amounts remaining in the Accounts will belong to the Seller. Upon deposit of the
required repurchase price and following such final Distribution Date, the
Trustee shall release promptly to the Seller and/or its designee, as the case
may be, the Mortgage Files for the remaining Mortgage Loans, and the Accounts
with respect thereto shall terminate, subject to the Trustee's obligation to
hold any amounts payable to Certificateholders in trust without interest pending
final distributions pursuant to Subsection 10.01(g).

      (f) In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above,
the Master Servicer shall deliver to the Trustee for deposit in the Distribution
Account all distributable amounts remaining in the Master Servicer Collection
Account. Upon the presentation and surrender of the Certificates, the Trustee
shall distribute to the remaining Certificateholders, pursuant to the written
direction of the Securities Administrator and in accordance with their
respective interests, all distributable amounts remaining in the Distribution
Account. Upon deposit by the Master Servicer of such distributable amounts, and
following such final Distribution Date, the Trustee shall release promptly to
the Seller or its designee the Mortgage Files for the remaining Mortgage Loans,
and the Master Servicer Collection Account and the Distribution Account shall
terminate, subject to the Trustee's obligation to hold any amounts payable to
the Certificateholders in trust without interest pending final distributions
pursuant to this Subsection 10.01(g).

      (g) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time 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, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their


                                     -117-
<PAGE>

Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain subject to this Agreement.

      Section 10.02 Additional Termination Requirements. (a) If the option of
the Seller to repurchase all the Mortgage Loans under Subsection 10.01(a)(i)
above is exercised, the Trust Fund and each of REMIC I, REMIC II and REMIC III
shall be terminated in accordance with the following additional requirements,
unless the Trustee has been furnished with an Opinion of Counsel addressed to
the Trustee to the effect that the failure of the Trust to comply with the
requirements of this Section 10.02 will not (i) result in the imposition of
taxes on "prohibited transactions" as defined in Section 860F of the Code on
REMIC I, REMIC II or REMIC III or (ii) cause any REMIC to fail to qualify as a
REMIC at any time that any Regular Certificates are outstanding:

            (i) within 90 days prior to the final Distribution Date, at the
      written direction of the Seller, the Trustee, as agent for the respective
      Tax Matters Persons, shall adopt a plan of complete liquidation of REMIC
      I, REMIC II and REMIC III in the case of a termination under Subsection
      10.01(a)(i), or a plan of complete liquidation of REMIC I in the case of a
      termination under Subsection 10.01(c), provided to it by the Seller
      meeting the requirements of a "qualified liquidation" under Section 860F
      of the Code and any regulations thereunder.

            (ii) the Seller shall notify the Trustee at the commencement of such
      90-day liquidation period and, at or prior to the time of making of the
      final payment on the Certificates, the Trustee shall sell or otherwise
      dispose of all of the remaining assets of the Trust Fund in accordance
      with the terms hereof; and

            (iii) at or after the time of adoption of such a plan of complete
      liquidation of any of REMIC I, REMIC II and REMIC III and at or prior to
      the final Distribution Date relating thereto, the Trustee shall sell for
      cash all of the assets of the Trust to or at the direction of the Seller,
      and REMIC I, REMIC II and REMIC III as applicable, shall terminate at such
      time.

      (b) By their acceptance of the Residual Certificates, the Holders thereof
hereby (i) agree to adopt such a plan of complete liquidation of the related
REMIC upon the written request of the Seller, and to take such action in
connection therewith as may be reasonably requested by the Seller and (ii)
appoint the Seller as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation. The Trustee shall
adopt such plan of liquidation by filing the appropriate statement on the final
tax return of each REMIC. Upon complete liquidation or final distribution of all
of the assets of the Trust Fund, the Trust Fund and each of REMIC I, REMIC II
and REMIC III shall terminate.

                                     -118-
<PAGE>

                                   ARTICLE XI
                            Miscellaneous Provisions

      Section 11.01 Intent of Parties. The parties intend that each of REMIC I,
REMIC II and REMIC III shall be treated as a REMIC for federal income tax
purposes and that the provisions of this Agreement should be construed in
furtherance of this intent.

      Section 11.02 Amendment. (a) This Agreement may be amended from time to
time by EMC, the Seller, the Master Servicer, the Securities Administrator and
the Trustee, and the Servicing Agreements may be amended from time to time by
EMC, the Master Servicer and the Trustee, without notice to or the consent of
any of the Certificateholders, to cure any ambiguity, to correct or supplement
any provisions herein or therein that may be defective or inconsistent with any
other provisions herein or therein, to comply with any changes in the Code or to
make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Independent Counsel, addressed to the Trustee, adversely affect in
any material respect the interests of any Certificateholder.

      (b) This Agreement may also be amended from time to time by EMC, the
Master Servicer, the Seller, the Securities Administrator and the Trustee, and
the Servicing Agreements may also be amended from time to time by the Master
Servicer and the Trustee, with the consent of the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund or of the applicable Class or Classes, if such amendment affects only
such Class or Classes, 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 Certificateholders; provided, however,
that no such amendment shall (i) reduce in any manner the amount of, or delay
the timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such amendment, without the consent of the
Holders of all Certificates then outstanding, or (iii) cause REMIC I, REMIC II
or REMIC III to fail to qualify as a REMIC for federal income tax purposes, as
evidenced by an Opinion of Independent Counsel addressed to the Trustee which
shall be provided to the Trustee other than at the Trustee's expense.
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to Section 11.02(b), Certificates
registered in the name of or held for the benefit of the Seller, the Securities
Administrator, the Master Servicer, or the Trustee or any Affiliate thereof
shall be entitled to vote their Fractional Undivided Interests with respect to
matters affecting such Certificates.

      (c) Promptly after the execution of any such amendment, the Trustee shall
furnish a copy of such amendment or written notification of the substance of
such amendment to each Certificateholder, with a copy to the Rating Agencies.

      (d) In the case of an amendment under Subsection 11.02(b) above, it shall
not be necessary for the Certificateholders to approve the particular form of
such an amendment. Rather, it shall be sufficient if the Certificateholders
approve the substance of the amendment. The manner of obtaining such consents


                                     -119-
<PAGE>

and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe.

      (e) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel addressed to
the Trustee stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee and the Securities Administrator may,
but shall not be obligated to, enter into any such amendment which affects the
Trustee's or the Securities Administrator's own respective rights, duties or
immunities under this Agreement.

      Section 11.03 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Seller shall
effect such recordation, at the expense of the Trust upon the request in writing
of a Certificateholder, but only if such direction is accompanied by an Opinion
of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.

      Section 11.04 Limitation on Rights of Certificateholders. (a) The death or
incapacity of any Certificateholder shall not terminate this Agreement or the
Trust, nor entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

      (b) Except as expressly provided in this Agreement, no Certificateholders
shall have any right to vote or in any manner otherwise control the operation
and management of the Trust, 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 establish the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholders be under
any liability to any third Person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.

      (c) No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon, under or with respect to this Agreement against the Seller, the
Securities Administrator, the Master Servicer or any successor to any such
parties unless (i) such Certificateholder previously shall have given to the
Trustee a written notice of a continuing default, as herein provided, (ii) the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Trust Fund shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs and expenses and liabilities to be incurred
therein or thereby, and (iii) 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.

      (d) No one or more Certificateholders shall have any right by virtue of
any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or


                                     -120-
<PAGE>

preference over any other such Certificateholder, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 11.04, each and every Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.

      Section 11.05 Acts of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.

      (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.

      (c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Securities Administrator, the Seller, the Master Servicer nor any
successor to any such parties shall be affected by any notice to the contrary.

      (d) Any request, demand, authorization, direction, notice, consent, waiver
or other action of the holder of any Certificate shall bind every future holder
of the same Certificate and the holder of every Certificate issued upon the
registration of transfer or exchange thereof, if applicable, or in lieu thereof
with respect to anything done, omitted or suffered to be done by the Trustee,
the Securities Administrator, the Seller, the Master Servicer or any successor
to any such party in reliance thereon, whether or not notation of such action is
made upon such Certificates.

      (e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Securities Administrator, the Seller, the
Master Servicer or any Affiliate thereof shall be disregarded, except as
otherwise provided in Section 11.02(b) and except that, in determining whether
the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Certificates which have been pledged in good faith to the Trustee,
the Securities Administrator, the Seller, the Master Servicer or any


                                     -121-
<PAGE>

Affiliate thereof may be regarded as outstanding if the pledgor establishes to
the satisfaction of the Trustee the pledgor's right to act with respect to such
Certificates and that the pledgor is not an Affiliate of the Trustee, the
Securities Administrator, the Seller, or the Master Servicer, as the case may
be.

      Section 11.06 Governing Law. THIS AGREEMENT AND THE CERTIFICATES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS CONFLICT OF LAWS RULES (OTHER THAN SECTION 5- 1401 OF THE GENERAL
OBLIGATIONS LAW, WHICH THE PARTIES HERETO EXPRESSLY RELY UPON IN THE CHOICE OF
SUCH LAW AS THE GOVERNING LAW HEREUNDER) AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.

      Section 11.07 Notices. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at (including delivery by
facsimile) or mailed by registered mail, return receipt requested, postage
prepaid, or by recognized overnight courier, to (i) in the case of the Seller,
383 Madison Avenue, New York, New York 10179, Attention: Vice
President-Servicing, telecopier number: (212) 272-5591, or to such other address
as may hereafter be furnished to the other parties hereto in writing; (ii) in
the case of the Trustee, at its Corporate Trust Office, or such other address as
may hereafter be furnished to the other parties hereto in writing; (iii) in the
case of the EMC, 383 Madison Avenue, New York, New York 10179, Attention: Vice
President-Servicing, telecopier number: (212) 272-5591, or to such other address
as may hereafter be furnished to the other parties hereto in writing; (iv) in
the case of the Master Servicer or Securities Administrator, Wells Fargo Bank
Minnesota, National Association, P.O. Box 98, Columbia Maryland 21046 (or, in
the case of overnight deliveries, 9062 Old Annapolis Road, Columbia, Maryland
21045) (Attention: BART 2003-1), facsimile no.: (410) 715-2380, or such other
address as may hereafter be furnished to the other parties hereto in writing; or
(v) in the case of the Rating Agencies, Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007 and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., 55 Water Street, New York, New York 10041. Any
notice delivered to the Seller, the Master Servicer, the Securities
Administrator or the Trustee under this Agreement shall be effective only upon
receipt. Any notice required or permitted to be mailed to a Certificateholder,
unless otherwise provided herein, shall be given by first-class mail, postage
prepaid, at the address of such Certificateholder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given when mailed, whether or
not the Certificateholder receives such notice.

      Section 11.08 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 severed 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.


                                     -122-
<PAGE>

      Section 11.09 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto.

      Section 11.10 Article and Section Headings. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.

      Section 11.11 Counterparts. This Agreement may be executed in two or more
counterparts each of which when so executed and delivered shall be an original
but all of which together shall constitute one and the same instrument.

      Section 11.12 Notice to Rating Agencies. The article and section headings
herein are for convenience of reference only, and shall not limited or otherwise
affect the meaning hereof. The Trustee shall promptly provide notice to each
Rating Agency with respect to each of the following of which a Responsible
Officer of the Trustee has actual knowledge:

      1. Any material change or amendment to this Agreement or the Servicing
Agreements;

      2. The occurrence of any Event of Default that has not been cured;

      3. The resignation or termination of the Master Servicer, the Trustee or
the Securities Administrator;

      4. The repurchase or substitution of Mortgage Loans;

      5. The final payment to Certificateholders; and

      6. Any change in the location of the Master Servicer Collection Account or
the Distribution Account.


                                     -123-
<PAGE>

      IN WITNESS WHEREOF, the Seller, the Trustee, the Master Servicer and the
Securities Administrator have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.

                                           STRUCTURED ASSET MORTGAGE
                                           INVESTMENTS INC., as Seller

                                           By:
                                              ----------------------------------
                                           Name: Baron Silverstein
                                           Title: Vice President


                                           JPMORGAN CHASE BANK, as Trustee

                                           By:
                                              ----------------------------------
                                           Name:
                                           Title:


                                           WELLS FARGO BANK MINNESOTA,
                                           NATIONAL ASSOCIATION, as Master
                                           Servicer

                                           By:
                                              ----------------------------------
                                           Name: Stacey Wainwright
                                           Title: Assistant Vice President


                                           WELLS FARGO BANK MINNESOTA,
                                           NATIONAL ASSOCIATION, as Securities
                                           Administrator

                                           By:
                                              ----------------------------------
                                           Name: Stacey Wainwright
                                           Title: Assistant Vice President
<PAGE>

                                           EMC MORTGAGE CORPORATION


                                           By
                                             -----------------------------------
                                           Name: Sherri Lauritson
                                           Title: Executive Vice President

Accepted and Agreed as to Sections
2.01, 2.02, 2.03, 2.04 and 9.09(c)
in its capacity as Mortgage Loan
Seller

EMC MORTGAGE CORPORATION


By:
   ----------------------------------
Name: Sherri Lauritson
Title: Executive Vice President

<PAGE>

STATE OF NEW YORK                   )
                                    ) ss.:
COUNTY OF NEW YORK                  )

      On the 28th day of February, 2003 before me, a notary public in and for
said State, personally appeared Baron Silverstein, known to me to be a(n) Vice
President of Structured Asset Mortgage Investments Inc., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

      IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                    ____________________________
                                                    Notary Public

[Notarial Seal]

<PAGE>

STATE OF NEW YORK                   )
                                    ) ss.:
COUNTY OF NEW YORK                  )

      On the 28th day of February, 2003 before me, a notary public in and for
said State, personally appeared __________________, known to me to be a(n)
____________________ of JPMorgan Chase Bank, the entity that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said entity, and acknowledged to me that such entity executed the within
instrument.

      IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                    ____________________________
                                                    Notary Public

[Notarial Seal]

<PAGE>

STATE OF MARYLAND          )
                           ) ss.:
COUNTY OF HOWARD           )

      On the 28th day of February, 2003 before me, a notary public in and for
said State, personally appeared Stacey Wainwright, known to me to be an
Assistant Vice President of Wells Fargo Bank Minnesota, National Association,
the entity that executed the within instrument, and also known to me to be the
person who executed it on behalf of said entity, and acknowledged to me that
such entity executed the within instrument.

      IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                    ____________________________
                                                    Notary Public

[Notarial Seal]

<PAGE>

STATE OF MARYLAND          )
                           ) ss.:
COUNTY OF HOWARD           )

      On the 28th day of February, 2003 before me, a notary public in and for
said State, personally appeared Stacey Wainwright, known to me to be a(n)
Assistant Vice President of Wells Fargo Bank Minnesota, National Association,
the entity that executed the within instrument, and also known to me to be the
person who executed it on behalf of said entity, and acknowledged to me that
such entity executed the within instrument.

      IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                    ____________________________
                                                    Notary Public

[Notarial Seal]

<PAGE>

STATE OF TEXAS                      )
                                    ) ss.:
COUNTY OF DALLAS                    )

      On the 28th day of February, 2003 before me, a notary public in and for
said State, personally appeared Sherri Lauritson, known to me to be Executive
Vice President of EMC Mortgage Corporation, the corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

      IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                    ____________________________
                                                    Notary Public

[Notarial Seal]

<PAGE>

STATE OF TEXAS                      )
                                    ) ss.:
COUNTY OF DALLAS                    )

      On the 28th day of February, 2003 before me, a notary public in and for
said State, personally appeared Ralene Ruyle, known to me to be President of EMC
Mortgage Corporation, the corporation that executed the within instrument, and
also known to me to be the person who executed it on behalf of said corporation,
and acknowledged to me that such corporation executed the within instrument.

      IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                    ____________________________
                                                    Notary Public

[Notarial Seal]

<PAGE>

                                                                     EXHIBIT A-1

                        FORM OF CLASS [_-A-_] CERTIFICATE

      SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

      [THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO. ACCORDINGLY,
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT
OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY
OF THE TRUSTEE NAMED HEREIN.]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED WILL BE REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT WILL BE MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.


                                       A-1
<PAGE>


<TABLE>
<S>                                              <C>
Certificate No.1                                 Variable Pass-Through Rate

Class [_-A-_] Senior

                                                 Aggregate Initial Current [Principal] [Notional]
Date of Pooling and Servicing Agreement and      Amount of this Senior Certificate as of the
Cut-off Date:                                    Cut-off Date:
February 1, 2003                                 $[____________]


First Distribution Date:                         Initial Current [Principal][Notional] Amount of
March 25, 2003                                   this Senior Certificate as of the Cut-off Date:
                                                 $[____________]

Master Servicer:
Wells Fargo Bank Minnesota, National
Association                                      CUSIP: [____________]

Assumed Final Distribution Date:
April 25, 2033
</TABLE>

                          BEAR STEARNS ARM TRUST 2003-1
                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2003-1

      evidencing a fractional undivided interest in the distributions allocable
      to the Class [_-A-_] Certificates with respect to a Trust Fund consisting
      primarily of a pool of adjustable rate mortgage loans secured by first
      liens on one-to-four family residential properties and sold by STRUCTURED
      ASSET MORTGAGE INVESTMENTS INC.

            This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer or the Trustee referred to below
or any of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

            This certifies that Cede & Co. is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") primarily consisting of conventional adjustable rate mortgage
loans secured by


                                       A-2
<PAGE>


first liens on one- to four- family residential properties (collectively, the
"Mortgage Loans") sold by Structured Asset Mortgage Investments Inc. ("SAMI").
The Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to SAMI. Wells
Fargo Bank Minnesota, National Association ("Wells Fargo") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust Fund was
created pursuant to the Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement"), among SAMI, as seller (the "Seller"),
Wells Fargo Bank Minnesota, National Association as master servicer and
securities administrator, EMC Mortgage Corporation and JPMorgan Chase Bank, as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.

            Interest on this Certificate will accrue during the month prior to
the month in which a Distribution Date (as hereinafter defined) occurs on the
[Current Principal][Notional] Amount hereof at a per annum rate equal to the
Pass-Through Rate set forth above and as further described in the Agreement. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day (or if such last day is not a Business Day,
the Business Day immediately preceding such last day) of the calendar month
preceding the month of such Distribution Date, an amount equal to the product of
the Fractional Undivided Interest evidenced by this Certificate and the amount
(of interest and principal, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the Distribution Date in the month immediately following
the month of the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the [Current Principal][Notional] Amount of this
Class of Certificates will be reduced to zero.

            Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial [Current Principal][Notional] Amount of this Certificate is set forth
above. [The Current Principal Amount hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto.]

            This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.


                                       A-3
<PAGE>


            The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

            This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

            The Agreement permits, with certain exceptions therein provided; (i)
the amendment thereof and the modification of the rights and obligations of the
Seller, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by EMC, the Seller, the
Master Servicer, the Securities Administrator and the Trustee, and (ii) the
amendment of the Servicing Agreements by the Mater Servicer and the Trustee with
the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof and of the
Servicing Agreements in certain limited circumstances, without the consent of
the Holders of any of the Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Fractional Undivided Interest will
be issued to the designated transferee.

            The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.

            No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.


                                       A-4
<PAGE>


            The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate unpaid principal balance of
the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.

            Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.


                                       A-5
<PAGE>


            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated: February ___, 2003                     JPMORGAN CHASE BANK
                                              Not in its individual capacity but
                                              solely as Trustee


                                              By:
                                                 -------------------------------
                                                     Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

            This is one of the Class [_-A-_] Certificates referred to in
the within-mentioned Agreement.

                                              JPMORGAN CHASE BANK
                                              Authorized signatory of JPMorgan
                                              Chase Bank, not in its individual
                                              capacity but solely as Trustee

                                              By:
                                                  ------------------------------
                                                      Authorized Signatory


<PAGE>


                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.

            I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Dated:
                                        ________________________________________
                                         Signature by or on behalf of assignor


                                        ________________________________________
                                         Signature Guaranteed


                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.

            This information is provided by __________________, the assignee
named above, or ________________________, as its agent.


<PAGE>


                                                                     EXHIBIT A-2

                       FORM OF CLASS [M][B-_] CERTIFICATE

            THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR
CERTIFICATES, [AND THE] [SENIOR MEZZANINE CERTIFICATES] [AND THE CLASS B-1
CERTIFICATES] [AND CLASS B-2 CERTIFICATES], AS DESCRIBED IN THE AGREEMENT (AS
DEFINED BELOW).

            SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

            THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.

            UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN

            EACH BENEFICIAL OWNER OF THIS CERTIFICATE OR ANY INTEREST THEREIN
SHALL BE DEEMED TO HAVE REPRESENTED, BY VIRTUE OF ITS ACQUISITION OR HOLDING OF
THAT CERTIFICATE OR INTEREST THEREIN, THAT EITHER (I) IT IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
("PLAN"), OR INVESTING WITH ASSETS OF A PLAN OR (II) IT HAS ACQUIRED AND IS
HOLDING SUCH CERTIFICATE IN RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 90-30,
AS AMENDED FROM TIME TO TIME ("EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE
ARE CERTAIN CONDITIONS TO THE AVAILABILITY OF THE


<PAGE>


EXEMPTION, INCLUDING THAT THE CERTIFICATE MUST BE RATED, AT THE TIME OF
PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY STANDARD & POOR'S, FITCH,
INC. OR MOODY'S INVESTORS SERVICE, INC., AND THE CERTIFICATE IS SO RATED OR
(III) (1) IT IS AN INSURANCE COMPANY, (2) THE SOURCE OF FUNDS USED TO ACQUIRE OR
HOLD THE CERTIFICATE OR INTEREST THEREIN IS AN "INSURANCE COMPANY GENERAL
ACCOUNT", AS SUCH TERM IS DEFINED IN PROHIBITED TRANSACTION CLASS EXEMPTION
("PTCE") 95-60, AND (3) THE CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE
BEEN SATISFIED.


                                      A-2-2
<PAGE>


<TABLE>
<S>                                             <C>
Certificate No.1                                Variable Pass-Through Rate

Class [M][B-_][Senior Mezzanine]
[Subordinate]

                                                Aggregate Initial Current Principal Amount of
Date of Pooling and Servicing Agreement and     this [Senior Mezzanine] [Subordinate]
Cut-off Date: February 1, 2003                  Certificate as of the Cut-off Date:
                                                $[__________]

                                                Initial Current Principal Amount of this
First Distribution Date:                        Subordinate Certificate as of the Cut-off Date:
March 25, 2003                                  $[__________]


Master Servicer:
Wells Fargo Bank Minnesota, National
Association                                     CUSIP: [____________]

Assumed Final Distribution Date:
April 25, 2033
</TABLE>

                          BEAR STEARNS ARM TRUST 2003-1
                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2003-1

      evidencing a fractional undivided interest in the distributions allocable
      to the Class [M][B-_] Certificates with respect to a Trust Fund consisting
      primarily of a pool of adjustable rate mortgage loans secured by first
      liens on one-to-four family residential properties and individual
      condominium units sold by STRUCTURED ASSET MORTGAGE INVESTMENTS INC.

            This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer or the Trustee referred to below
or any of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

            This certifies that Cede & Co. is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") primarily consisting of conventional adjustable rate mortgage
loans secured by


                                        2
<PAGE>


first liens on one- to four- family residential properties (collectively, the
"Mortgage Loans") sold by Structured Asset Mortgage Investments Inc. ("SAMI").
The Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to SAMI. Wells
Fargo Bank Minnesota, National Association ("Wells Fargo") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust Fund was
created pursuant to the Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement"), among SAMI, as seller (the "Seller"),
Wells Fargo Bank Minnesota, National Association as master servicer and
securities administrator, EMC Mortgage Corporation and JPMorgan Chase Bank, as
trustee (the "Trustee") , a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.

            Interest on this Certificate will accrue during the month prior to
the month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above and as further described in the Agreement. The Trustee will
distribute on the 25th day of each month, or, if such 25th day is not a Business
Day, the immediately following Business Day (each, a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day (or if such last day is not a Business Day, the Business Day
immediately preceding such last day) of the calendar month preceding the month
of such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount (of interest and
principal, if any) required to be distributed to the Holders of Certificates of
the same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month immediately following the month of the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the Current Principal Amount of this Class of Certificates will be reduced
to zero.

            Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principal Amount hereof will be reduced to the extent of distributions
allocable to principal hereon and any Realized Losses allocable hereto.

            This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.

            The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any


                                        3
<PAGE>


amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.

            Each beneficial owner of this Certificate or any interest therein
shall be deemed to have represented, by virtue of its acquisition or holding of
that certificate or interest therein, that either (i) it is not an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as
amended or section 4975 of the Internal Revenue Code of 1986, as amended
("Plan"), or investing with assets of a Plan or (ii) it has acquired and is
holding such certificate in reliance on Prohibited Transaction Exemption 90-30,
as amended from time to time ("Exemption"), and that it understands that there
are certain conditions to the availability of the Exemption, including that the
certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by Standard & Poor's, Fitch, Inc. or Moody's Investors Service,
Inc., and the certificate is so rated or (iii) (1) it is an insurance company,
(2) the source of funds used to acquire or hold the certificate or interest
therein is an "insurance company general account", as such term is defined in
Prohibited Transaction Class Exemption ("PTCE") 95-60, and (3) the conditions in
Sections I and III of PTCE 95-60 have been satisfied.

            This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

            The Agreement permits, with certain exceptions therein provided; (i)
the amendment thereof and the modification of the rights and obligations of the
Seller, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by EMC, the Seller, the
Master Servicer, the Securities Administrator and the Trustee, and (ii) the
amendment of the Servicing Agreements by the Mater Servicer and the Trustee with
the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof and of the
Servicing Agreements in certain limited circumstances, without the consent of
the Holders of any of the Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Fractional Undivided Interest will
be issued to the designated transferee.

            The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain


                                        4
<PAGE>


limitations therein set forth, this Certificate is exchangeable for one or more
new Certificates evidencing the same Class and in the same aggregate Fractional
Undivided Interest, as requested by the Holder surrendering the same.

            No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate unpaid principal balance of
the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.

            Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.


                                        5
<PAGE>


            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated: February ___, 2003                     JPMORGAN CHASE BANK
                                              Not in its individual capacity
                                              but solely as Trustee


                                              By:
                                                  ------------------------------
                                                      Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

            This is one of the Class [M] [B-_] Certificates referred to in the
within-mentioned Agreement.

                                              JPMORGAN CHASE BANK
                                              Authorized signatory of JPMorgan
                                              Chase Bank, not in its individual
                                              capacity but solely as Trustee

                                              By:
                                                  ------------------------------
                                                      Authorized Signatory


<PAGE>


                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.

            I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Dated:
                                        ________________________________________
                                         Signature by or on behalf of assignor


                                        ________________________________________
                                         Signature Guaranteed


                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to ______________________________________________.

            This information is provided by __________________, the assignee
named above, or ________________________, as its agent.


<PAGE>


                                                                     EXHIBIT A-3

                         FORM OF CLASS R-[_] CERTIFICATE

            THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON, A PUBLICLY TRADED PARTNERSHIP OR A DISQUALIFIED ORGANIZATION (AS
DEFINED BELOW).

            SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

            THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR
ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFEREE PROVIDES THE TRUSTEE, THE MASTER SERVICER AND THE
SECURITIES ADMINISTRATOR WITH AN OPINION OF COUNSEL THAT THE PURCHASE OF
CERTIFICATES ON BEHALF OF SUCH WILL NOT RESULT IN OR CONSTITUTE A NONEXEMPT
PROHIBITED TRANSACTION, IS PERMISSIBLE UNDER APPLICABLE LAW AND WILL NOT GIVE
RISE TO ANY ADDITIONAL FIDUCIARY OBLIGATIONS ON THE PART OF THE SELLER, THE
MASTER SERVICER OR THE TRUSTEE.

            ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) 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, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION


<PAGE>


OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND
SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.


<PAGE>


<TABLE>
<S>                                              <C>
Certificate No.1

Class R-[_]

                                                 Aggregate Initial Current Principal Amount of
Date of Pooling and Servicing Agreement and      this Certificate as of the Cut-off Date:
Cut-off Date: February 1, 2003                   $100.00


First Distribution Date:                         Initial Current Principal Amount of this
March 25, 2003                                   Certificate as of the Cut-off Date: $100.00

Master Servicer:
Wells Fargo Bank Minnesota, National
Association                                      CUSIP: [_____________]

Assumed Final Distribution Date:
April 25, 2033
</TABLE>

                          BEAR STEARNS ARM TRUST 2003-1
                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2003-1

      evidencing a fractional undivided interest in the distributions allocable
      to the Class R-[_] Certificates with respect to a Trust Fund consisting
      primarily of a pool of adjustable rate mortgage loans secured by first
      liens on one-to-four family residential properties sold by STRUCTURED
      ASSET MORTGAGE INVESTMENTS INC.

            This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer or the Trustee referred to below
or any of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

            This certifies that Bear, Stearns Securities Corp. is the registered
owner of the Fractional Undivided Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund") primarily consisting of conventional adjustable rate
mortgages loans secured by first liens on one- to four- family residential
properties (collectively, the "Mortgage Loans") sold by Structured Asset
Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were sold


                                        3
<PAGE>


by EMC Mortgage Corporation ("EMC") to SAMI. Wells Fargo Bank Minnesota,
National Association ("Wells Fargo") will act as master servicer of the Mortgage
Loans (the "Master Servicer," which term includes any successors thereto under
the Agreement referred to below). The Trust Fund was created pursuant to the
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "Agreement'), among SAMI, as seller (the "Seller"), Wells Fargo Bank
Minnesota, National Association as master servicer and securities administrator,
EMC Mortgage Corporation and JPMorgan Chase Bank, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, capitalized terms used herein shall have the
meaning ascribed to them in the Agreement. This Certificate is issued under and
is subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of its acceptance hereof
assents and by which such Holder is bound.

            The Trustee will distribute on the 25th day of each month, or, if
such 25th day is not a Business Day, the immediately following Business Day
(each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Fractional Undivided Interest evidenced by this Certificate
and the amount (of principal, if any) required to be distributed to the Holders
of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the Distribution Date in the month immediately following
the month of the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

            Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice. The Initial Current Principal
Amount of this Certificate is set forth above. The Current Principal Amount
hereof will be reduced to the extent of distributions allocable to principal
hereon and any Realized Losses allocable hereto.

            Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Seller will have the right, in its
sole discretion and without notice to the Holder of this Certificate, to sell
this Certificate to a purchaser selected by the


                                        4
<PAGE>


Company, which purchaser may be the Seller, or any affiliate of the Seller, on
such terms and conditions as the Seller may choose.

            This certificate may not be acquired directly or indirectly by, or
on behalf of, an employee benefit plan or other retirement arrangement which is
subject to title I of the Employee Retirement Income Security Act of 1974, as
amended, and/or section 4975 of the Internal Revenue Code of 1986, as amended,
unless the proposed transferee provides the Trustee, Master Servicer and the
Securities Administrator with an opinion of counsel (which shall not be at the
expense of the Trustee, Master Servicer or the Securities Administrator) which
is acceptable to such entities, that the purchase of this certificate will not
result in or constitute a nonexempt prohibited transaction, is permissible under
applicable law and will not give rise to any additional fiduciary obligations on
the part of the Seller, the Master Servicer or the Trustee.

            This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.

            The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

            This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

            The Agreement permits, with certain exceptions therein provided; (i)
the amendment thereof and the modification of the rights and obligations of the
Seller, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by EMC, the Seller, the
Master Servicer, the Securities Administrator and the Trustee, and (ii) the
amendment of the Servicing Agreements by the Mater Servicer and the Trustee with
the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof and of the
Servicing Agreements in certain limited circumstances, without the consent of
the Holders of any of the Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof


                                        5
<PAGE>


or such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates in authorized denominations representing a like aggregate
Fractional Undivided Interest will be issued to the designated transferee.

            The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.

            No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate unpaid principal balance of
the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.

            Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.


                                        6
<PAGE>


            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated: February ___, 2003                   JPMORGAN CHASE BANK
                                            Not in its individual capacity but
                                            solely as Trustee


                                            By:
                                                 -------------------------------
                                                     Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

            This is one of the Class R-[_] Certificates referred to in the
within-mentioned Agreement.

                                            JPMORGAN CHASE BANK
                                            Authorized signatory of Bank One,
                                            National Association, not in its
                                            individual capacity but solely as
                                            Trustee

                                            By:
                                                 -------------------------------
                                                     Authorized Signatory


<PAGE>


                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.

            I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Dated:
                                        ________________________________________
                                         Signature by or on behalf of assignor


                                        ________________________________________
                                         Signature Guaranteed


                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.

            This information is provided by __________________, the assignee
named above, or ________________________, as its agent.


<PAGE>


                                                                       EXHIBIT B

                             MORTGAGE LOAN SCHEDULE

                             [PROVIDED UPON REQUEST]


<PAGE>


                                                                       EXHIBIT C

                                   [RESERVED]


<PAGE>


                                                                       EXHIBIT D

                        REQUEST FOR RELEASE OF DOCUMENTS

To:   JPMorgan Chase Bank
      4 New York Plaza, 6th Floor
      New York, New York 10004

RE:   Pooling and Servicing Agreement dated as of
      February 1, 2003, among SAMI,
      Wells Fargo Bank Minnesota,
      National Association, as master servicer
       and securities administrator,
      EMC Mortgage Corporation and
      JPMorgan Chase Bank as Trustee

      In connection with the administration of the Mortgage Loans held by you
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 and proceeds have been deposited into
                  the Custodial Account

_____       2.    Foreclosure

_____       3.    Substitution

_____       4.    Other Liquidation

_____       5.    Nonliquidation               Reason:__________________________

_____       6.    California Mortgage Loan paid in full

                                               By: _____________________________
                                                        (authorized signer)

                                               Issuer:__________________________

                                               Address:_________________________

                                               Date:____________________________


                                       D-1
<PAGE>


                                                         EXHIBIT E

                                FORM OF AFFIDAVIT

                                              Affidavit pursuant to Section
                                              860E(e)(4) of the Internal Revenue
                                              Code of 1986, as amended, and for
                                              other purposes

STATE OF       )
               ) ss:
COUNTY OF      )

      [NAME OF OFFICER], being first duly sworn, deposes and says:

      1. That he is [Title of Officer] of [Name of Investor] (the "Investor"), a
[savings institution] [corporation] duly organized and existing under the laws
of [the State of         ] [the United States], on behalf of which he makes this
affidavit.

      2. That (i) the Investor is not a "disqualified organization" as defined
in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended (the
"Code"), and will not be a disqualified organization as of [Closing Date] [date
of purchase]; (ii) it is not acquiring the Structured Asset Mortgage Investments
Inc., Bear Stearns ARM Trust, Mortgage Pass-Through Certificates, Series 2003-1,
Class R Certificates (the "Residual Certificates") for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by Structured Asset Mortgage
Investments Inc. (upon advice of counsel) to constitute a reasonable arrangement
to ensure that the Residual Certificates will not be owned directly or
indirectly by a disqualified organization; and (iv) it will not transfer such
Residual Certificates unless (a) it has received from the transferee an
affidavit in substantially the same form as this affidavit containing these same
four representations and (b) as of the time of the transfer, it does not have
actual knowledge that such affidavit is false.

      3. That the Investor is one of the following: (i) a citizen or resident of
the United States, (ii) a corporation or partnership (including an entity
treated as a corporation or partnership for 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 (except, in the case of a partnership, to the extent
provided in regulations), provided that no partnership or other entity treated
as a partnership for United States federal income tax purposes shall be treated
as a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are United States Persons, (iii) an
estate whose income is subject to United States federal income tax regardless of
its source, or (iv) a trust other than a "foreign trust," as defined in Section
7701 (a)(31) of the Code.

      4. That the Investor's taxpayer identification number is
______________________.


                                      E-1
<PAGE>


      5. That no purpose of the acquisition of the Residual Certificates is to
avoid or impede the assessment or collection of tax.

      6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.

      7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.

      IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [Title of
Officer] this ____ day of _________, 20__.

                                      [NAME OF INVESTOR]


                                      By:
                                          --------------------------------------
                                          [Name of Officer]
                                          [Title of Officer]
                                          [Address of Investor for receipt of
                                          distributions]

                                          Address of Investor
                                          for receipt of tax
                                          information:


                                      E-2
<PAGE>


      Personally appeared before me the above-named [Name of Officer], known or
proved to me to be the same person who executed the foregoing instrument and to
be the [Title of Officer] 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 _________, 20___.

NOTARY PUBLIC

COUNTY OF

STATE OF

My commission expires the ___ day of ___________________, 20___.


                                      E-3
<PAGE>


                                                                     EXHIBIT F-1

                            FORM OF INVESTMENT LETTER

                                                                          [Date]

[SELLER]

JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York ,New York 10004

Structured Asset Mortgage Investments Inc.
383 Madison Avenue
New York, New York 10179

      Re: Structured Asset Mortgage Investments Inc., Bear Stearns ARM Trust,
          Series 2003-1 Mortgage Pass-Through Certificates (the "Certificates"),
          including the [Class B-4, Class B-5, Class B-6] Certificates
          (the "Privately Offered Certificates")

Dear Ladies and Gentlemen:

      In connection with our purchase of Privately Offered Certificates, we
confirm that:

            (i)   we understand that the Privately Offered Certificates are not
                  being registered under the Securities Act of 1933, as amended
                  (the "Act") or any applicable state securities or "Blue Sky"
                  laws, and are being sold to us in a transaction that is exempt
                  from the registration requirements of such laws;

            (ii)  any information we desired concerning the Certificates,
                  including the Privately Offered Certificates, the trust in
                  which the Certificates represent the entire beneficial
                  ownership interest (the "Trust") or any other matter we deemed
                  relevant to our decision to purchase Privately Offered
                  Certificates has been made available to us;

            (iii) we are able to bear the economic risk of investment in
                  Privately Offered Certificates; we are an institutional
                  "accredited investor" as defined in Section 501(a) of
                  Regulation D promulgated under the Act and a sophisticated
                  institutional investor;

            (iv)  we are acquiring Privately Offered Certificates for our own
                  account, not as nominee for any other person, and not with a
                  present view to any distribution or other disposition of the
                  Privately Offered Certificates;


                                      F-1-1
<PAGE>


            (v)   we agree the Privately Offered Certificates must be held
                  indefinitely by us (and may not be sold, pledged, hypothecated
                  or in any way disposed of) unless subsequently registered
                  under the Act and any applicable state securities or "Blue
                  Sky" laws or an exemption from the registration requirements
                  of the Act and any applicable state securities or "Blue Sky"
                  laws is available;

            (vi)  we agree that in the event that at some future time we wish to
                  dispose of or exchange any of the Privately Offered
                  Certificates (such disposition or exchange not being currently
                  foreseen or contemplated), we will not transfer or exchange
                  any of the Privately Offered Certificates unless:

                        (A) (1) the sale is to an Eligible Purchaser (as defined
                  below), (2) if required by the Pooling and Servicing Agreement
                  (as defined below) a letter to substantially the same effect
                  as either this letter or, if the Eligible Purchaser is a
                  Qualified Institutional Buyer as defined under Rule 144A of
                  the Act, the Rule 144A and Related Matters Certificate in the
                  form attached to the Pooling and Servicing Agreement (as
                  defined below) (or such other documentation as may be
                  acceptable to the Trustee) is executed promptly by the
                  purchaser and delivered to the addressees hereof and (3) all
                  offers or solicitations in connection with the sale, whether
                  directly or through any agent acting on our behalf, are
                  limited only to Eligible Purchasers and are not made by means
                  of any form of general solicitation or general advertising
                  whatsoever; and

                        (B) if the Privately Offered Certificate is not
                  registered under the Act (as to which we acknowledge you have
                  no obligation), the Privately Offered Certificate is sold in a
                  transaction that does not require registration under the Act
                  and any applicable state securities or "blue sky" laws and, if
                  JPMorgan Chase Bank (the "Trustee") so requests, a
                  satisfactory Opinion of Counsel is furnished to such effect,
                  which Opinion of Counsel shall be an expense of the transferor
                  or the transferee;

            (vii) we agree to be bound by all of the terms (including those
                  relating to restrictions on transfer) of the Pooling and
                  Servicing, pursuant to which the Trust was formed; we have
                  reviewed carefully and understand the terms of the Pooling and
                  Servicing Agreement;

           (viii) we either: (i) are not acquiring the Privately Offered
                  Certificate directly or indirectly by, or on behalf of, an
                  employee benefit plan or other retirement arrangement which is
                  subject to Title I of the Employee Retirement Income Security
                  Act of 1974, as amended, or section 4975 of the Internal
                  Revenue Code of 1986, as amended, or (ii) are providing a
                  representation to the effect that the proposed transfer and
                  holding of a Privately Offered Certificate and the servicing,
                  management and operation of the Trust and its assets: (I) will
                  not result in any


                                      F-1-2

<PAGE>


                  prohibited transaction which is not covered under an
                  individual or class prohibited transaction exemption,
                  including, but not limited to, Prohibited Transaction
                  Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60, or
                  PTE 96-23 and (II) will not give rise to any additional
                  fiduciary duties on the part of the Seller, the Master
                  Servicer or the Trustee (iii) have attached hereto the opinion
                  specified in Section 5.0 of the Agreement.

            (ix)  We understand that each of the Class B-4, Class B-5 and Class
                  B-6 Certificates bears, and will continue to bear, a legend to
                  substantiate the following effect: "THIS CERTIFICATE HAS NOT
                  BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
                  1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
                  SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
                  CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
                  RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE
                  WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
                  PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")
                  TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
                  INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
                  PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE
                  ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
                  THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING
                  MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION
                  FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
                  ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
                  "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF
                  IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE
                  ACT OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME
                  WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN
                  VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
                  THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN
                  THE AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER
                  EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE,
                  PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT
                  AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH
                  ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY
                  OTHER APPLICABLE JURISDICTION. THIS CERTIFICATE MAY NOT BE
                  ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN
                  EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
                  SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY
                  ACT OF 1974, AS


                                      F-1-3
<PAGE>


                  AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
                  AS AMENDED, UNLESS THE PROPOSED TRANSFER AND HOLDING OF A
                  CERTIFICATE AND THE SERVICING, MANAGEMENT AND OPERATION OF THE
                  TRUST AND ITS ASSETS: (1) WILL NOT RESULT IN ANY PROHIBITED
                  TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
                  PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED
                  TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38,
                  PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE
                  TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE SELLER,
                  THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED
                  REPRESENTED BY AN OWNER OF A BOOK-ENTRY CERTIFICATE OR A
                  GLOBAL CERTIFICATE OR UNLESS THE OPINION PROVIDED IN SECTION
                  5.0 OF THE AGREEMENT IS PROVIDED."

      "Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.

      Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement, dated as of February 1, 2003, among
Structured Asset Mortgage Investments Inc., Wells Fargo Bank Minnesota, National
Association as master servicer and securities administrator, EMC Mortgage
Corporation and JPMorgan Chase Bank, as Trustee (the "Pooling and Servicing
Agreement').

      If the Purchaser proposes that its Certificates be registered in the name
of a nominee on its behalf, the Purchaser has identified such nominee below, and
has caused such nominee to complete the Nominee Acknowledgment at the end of
this letter.

Name of Nominee (if any): ___________________________


                                      F-1-4
<PAGE>


      IN WITNESS WHEREOF, this document has been executed by the undersigned who
is duly authorized to do so on behalf of the undersigned Eligible Purchaser on
the ___ day of ________, 20___.

                                           Very truly yours,

                                           [PURCHASER]

                                           By:
                                                --------------------------------
                                                    (Authorized Officer)

                                           [By:
                                                --------------------------------
                                                    Attorney-in-fact]


                                      F-1-5
<PAGE>


                             Nominee Acknowledgment

      The undersigned hereby acknowledges and agrees that as to the Certificates
being registered in its name, the sole beneficial owner thereof is and shall be
the Purchaser identified above, for whom the undersigned is acting as nominee.

                                           [NAME OF NOMINEE]

                                           By:
                                                --------------------------------
                                                    (Authorized Officer)


                                           [By:
                                                --------------------------------
                                                    Attorney-in-fact]


                                      F-1-6
<PAGE>


                                                                     EXHIBIT F-2

                FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE

[SELLER]                                                                  [Date]

JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York, New York 10004

Structured Asset Mortgage Investments Inc.
383 Madison Avenue
New York, New York 10179

        Re:  Structured Asset Mortgage Investments Inc., Bear Stearns ARM Trust,
             Series 2003-1 Mortgage Pass-Through Certificates,
             Class B-4, Class B-5 and Class B-6 Certificates
             (the "Privately Offered Certificates")

Dear Ladies and Gentlemen:

      In connection with our purchase of Privately Offered Certificates, the
undersigned certifies to each of the parties to whom this letter is addressed
that it is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act")) as follows:

1.    It owned and/or invested on a discretionary basis eligible securities
      (excluding affiliate's securities, bank deposit notes and CD's, loan
      participations, repurchase agreements, securities owned but subject to a
      repurchase agreement and swaps), as described below:

      Date: ______________, 20__ (must be on or after the close of its most
      recent fiscal year)

      Amount: $ _____________________; and

2.    The dollar amount set forth above is:

      a.    greater than $100 million and the undersigned is one of the
            following entities:

            (x)   |_|   an insurance company as defined in Section 2(13) of the
                        Act(1); or

----------

(1)   A purchase by an insurance company for one or more of its separate
      accounts, as defined by Section 2(a)(37) of the Investment Company Act of
      1940, which are neither registered nor required to be registered
      thereunder, shall be deemed to be a purchase for the account of such
      insurance company.


                                      F-2-1
<PAGE>


            (y)   |_|   an investment company registered under the Investment
                        Company Act or any business development company as
                        defined in Section 2(a)(48) of the Investment Company
                        Act of 1940; or

            (z)   |_|   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; or

            (aa)  |_|   a plan (i) established and maintained by a state, its
                        political subdivisions, or any agency or instrumentality
                        of a state or its political subdivisions, the laws of
                        which permit the purchase of securities of this type,
                        for the benefit of its employees and (ii) the governing
                        investment guidelines of which permit the purchase of
                        securities of this type; or

            (bb)  |_|   a business development company as defined in Section
                        202(a)(22) of the Investment Advisers Act of 1940; or

            (cc)  |_|   a corporation (other than a U.S. bank, savings and loan
                        association or equivalent foreign institution),
                        partnership, Massachusetts or similar business trust, or
                        an organization described in Section 501(c)(3) of the
                        Internal Revenue Code; or

            (dd)  |_|   a U.S. bank, savings and loan association or equivalent
                        foreign institution, which has an audited net worth of
                        at least $25 million as demonstrated in its latest
                        annual financial statements; or

            (ee)  |_|   an investment adviser registered under the Investment
                        Advisers Act; or

      b.    |_|   greater than $10 million, and the undersigned is a
                  broker-dealer registered with the SEC; or

      c.    |_|   less than $ 10 million, and the undersigned is a broker-dealer
                  registered with the SEC and will only purchase Rule 144A
                  securities in transactions in which it acts as a riskless
                  principal (as defined in Rule 144A); or

      d.    |_|   less than $100 million, and the undersigned is an investment
                  company registered under the Investment Company Act of 1940,
                  which, together with one or more registered investment
                  companies having the same or an affiliated investment adviser,
                  owns at least $100 million of eligible securities; or

      e.    |_|   less than $100 million, and the undersigned is an entity, all
                  the equity owners of which are qualified institutional buyers.


                                      F-2-2
<PAGE>


      The undersigned further certifies that it is purchasing a Privately
Offered Certificate for its own account or for the account of others that
independently qualify as "Qualified Institutional Buyers" as defined in Rule
144A. It is aware that the sale of the Privately Offered Certificates is being
made in reliance on its continued compliance with Rule 144A. It is aware that
the transferor may rely on the exemption from the provisions of Section 5 of the
Act provided by Rule 144A. The undersigned understands that the Privately
Offered Certificates may be resold, pledged or transferred only to (i) a person
reasonably believed 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 in Rule
144A, or (ii) an institutional "accredited investor," as such term is defined
under Rule 501 of the Act in a transaction that otherwise does not constitute a
public offering.

      The undersigned agrees that if at some future time it wishes to dispose of
or exchange any of the Privately Offered Certificates, it will not transfer or
exchange any of the Privately Offered Certificates to a Qualified Institutional
Buyer without first obtaining a Rule 144A and Related Matters Certificate in the
form hereof from the transferee and delivering such certificate to the
addressees hereof. Prior to making any transfer of Privately Offered
Certificates, if the proposed Transferee is an institutional "accredited
investor," the transferor shall obtain from the transferee and deliver to the
addressees hereof an Investment Letter in the form attached to the Pooling and
Servicing Agreement, dated as of February 1, 2003, among Structured Asset
Mortgage Investments Inc., Wells Fargo Bank Minnesota, National Association, EMC
Mortgage Corporation and JPMorgan Chase Bank, as Trustee, pursuant to
Certificates were issued.

      The undersigned certifies that it either: (i) is not acquiring the
Privately Offered Certificate directly or indirectly by, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of the Employee Retirement Income Security Act of 1974, as amended, or section
4975 of the Internal Revenue Code of 1986, as amended, or (ii) is providing a
representation or an opinion of counsel to the effect that the proposed transfer
and holding of a Privately Offered Certificate and the servicing, management and
operation of the Trust and its assets: (I) will not result in any prohibited
transaction which is not covered under a prohibited transaction exemption,
including, but not limited to, Prohibited Transaction Exemption ("PTE") 84-14,
PTE 91- 38, PTE 90-1, PTE 95-60, PTE 96-23 and (II) will not give rise to any
additional fiduciary duties on the part of the Seller, the Master Servicer or
the Trustee or (iii) has attached hereto the opinion specified in Section 5.07
of the Agreement.

      If the Purchaser proposes that its Certificates be registered in the name
of a nominee on its behalf, the Purchaser has identified such nominee below, and
has caused such nominee to complete the Nominee Acknowledgment at the end of
this letter.


                                      F-2-3
<PAGE>


Name of Nominee (if any):

IN WITNESS WHEREOF, this document has been executed by the undersigned who is
duly authorized to do so on behalf of the undersigned Eligible Purchaser on the
____ day of ___________, 20___.

                                           Very truly yours,

                                           [PURCHASER]


                                           By:
                                                --------------------------------
                                                    (Authorized Officer)

                                           [By:
                                                --------------------------------
                                                    Attorney-in-fact]


                                      F-2-4
<PAGE>


                             Nominee Acknowledgment

      The undersigned hereby acknowledges and agrees that as to the Certificates
being registered in its name, the sole beneficial owner thereof is and shall be
the Purchaser identified above, for whom the undersigned is acting as nominee.

                                           [NAME OF NOMINEE]

                                           By:
                                                --------------------------------
                                                    (Authorized Officer)

                                           [By:
                                                --------------------------------
                                                    Attorney-in-fact]


                                      F-2-5
<PAGE>


                                                                       EXHIBIT G

                           FORM OF CUSTODIAL AGREEMENT

            THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to
time, the "Agreement'), dated as of February ___, 2003, by and among JPMORGAN
CHASE BANK, as trustee (including its successors under the Pooling and Servicing
Agreement defined below, the "Trustee"), STRUCTURED ASSET MORTGAGE INVESTMENTS
INC., as company (together with any successor in interest, the "Company"), WELLS
FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as master servicer and securities
administrator (together with any successor in interest or successor under the
Pooling and Servicing Agreement referred to below, the "Master Servicer") and
WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as custodian (together with
any successor in interest or any successor appointed hereunder, the
"Custodian").

                                WITNESSETH THAT:

            WHEREAS, the Company, the Master Servicer and the Trustee have
entered into a Pooling and Servicing Agreement, dated as of February 1, 2002,
relating to the issuance of Bear Stearns ARM Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1 (as in effect on the date of this agreement, the
"Original Pooling and Servicing Agreement," and as amended and supplemented from
time to time, the "Pooling and Servicing Agreement'); and

            WHEREAS, the Custodian has agreed to act as agent for the Trustee
for the purposes of receiving and holding certain documents and other
instruments delivered by the Company or the Master Servicer under the Pooling
and Servicing Agreement and the Servicers under their respective Servicing
Agreements, all upon the terms and conditions and subject to the limitations
hereinafter set forth;

            NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Trustee, the Company, the
Master Servicer and the Custodian hereby agree as follows:

                                   ARTICLE I.
                                   DEFINITIONS

            Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned in the Original Pooling and Servicing
Agreement, unless otherwise required by the context herein.

                                   ARTICLE II.
                          CUSTODY OF MORTGAGE DOCUMENTS

            Section 2.1. Custodian to Act as Agent: Acceptance of Mortgage
Files. The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges (subject to any exceptions noted in the Initial
Certification referred to in Section 2.3(a) receipt of the Mortgage Files
relating to the Mortgage Loans identified on the schedule attached hereto (the
"Mortgage Files") and declares that it holds


<PAGE>


and will hold such Mortgage Files as agent for the Trustee, in trust, for the
use and benefit of all present and future Certificateholders.

            Section 2.2. Recordation of Assignments. If any Mortgage File
includes one or more assignments of Mortgage to the Trustee in a state which is
specifically excluded from the Opinion of Counsel delivered by the Seller to the
Trustee (with a copy to the Custodian) pursuant to the provisions of Section
2.01 of the Pooling and Servicing Agreement, each such assignment shall be
delivered by the Custodian to the Company for the purpose of recording it in the
appropriate public office for real property records, and the Company, at no
expense to the Custodian, shall promptly cause to be recorded in the appropriate
public office for real property records each such assignment of Mortgage and,
upon receipt thereof from such public office, shall return each such assignment
of Mortgage to the Custodian.

            Section 2.3. Review of Mortgage Files.

            (a) On or prior to the Closing Date, in accordance with Section 2.02
of the Pooling and Servicing Agreement, the Custodian shall deliver to the
Trustee an Initial Certification in the form annexed hereto as Exhibit One
evidencing receipt (subject to any exceptions noted therein) of a Mortgage File
for each of the Mortgage Loans listed on the Schedule attached hereto (the
"Mortgage Loan Schedule").

            (b) Within 90 days of the Closing Date, the Custodian agrees, for
the benefit of Certificateholders, to review, in accordance with the provisions
of Section 2.02 of the Pooling and Servicing Agreement, each such document, and
shall deliver to the Seller and the Trustee an Interim Certification in the form
annexed hereto as Exhibit Two to the effect that all such documents have been
executed and received and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, except for any exceptions listed on
Schedule A attached to such Interim Certification. The Custodian shall be under
no duty or obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.

            (c) Not later than 180 days after the Closing Date, the Custodian
shall review the Mortgage Files as provided in Section 2.02 of the Pooling and
Servicing Agreement and deliver to the Seller and the Trustee a Final
Certification in the form annexed hereto as Exhibit Three evidencing the
completeness of the Mortgage Files.

            (d) In reviewing the Mortgage Files as provided herein and in the
Pooling and Servicing Agreement, the Custodian shall make no representation as
to and shall not be responsible to verify (i) the validity, legality,
enforceability, due authorization, recordability, sufficiency or genuineness of
any of the documents included in any Mortgage File or (ii) the collectibility,
insurability, effectiveness or suitability of any of the documents in any
Mortgage File.


                                       G-2
<PAGE>


      Upon receipt of written request from the Trustee, the Custodian shall as
soon as practicable supply the Trustee with a list of all of the documents
relating to the Mortgage Loans missing from the Mortgage Files.

            Section 2.4. Notification of Breaches of Representations and
Warranties. Upon discovery by the Custodian of a breach of any representation or
warranty made by the Company as set forth in the Pooling and Servicing Agreement
with respect to a Mortgage Loan relating to a Mortgage File, the Custodian shall
give prompt written notice to the Company, the related Servicer and the Trustee.

            Section 2.5. Custodian to Cooperate: Release of Mortgage Files. Upon
receipt of written notice from the Trustee that the Mortgage Loan Seller has
repurchased a Mortgage Loan pursuant to Article II of the Pooling and Servicing
Agreement, and that the purchase price therefore has been deposited in the
Master Servicer Collection Account or the Distribution Account, then the
Custodian agrees to promptly release to the Mortgage Loan Seller the related
Mortgage File.

            Upon the Custodian's receipt of a request for release (a "Request
for Release") substantially in the form of Exhibit D to the Pooling and
Servicing Agreement signed by a Servicing Officer of the related Servicer
stating that it has received payment in full of a Mortgage Loan or that payment
in full will be escrowed in a manner customary for such purposes, the Custodian
agrees promptly to release to the related Servicer the related Mortgage File.
The Company shall deliver to the Custodian and the Custodian agrees to accept
the Mortgage Note and other documents constituting the Mortgage File with
respect to any Substitute Mortgage Loan.

            From time to time as is appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any Primary
Insurance Policy, the related Servicer shall deliver to the Custodian a Request
for Release signed by a Servicing Officer requesting that possession of all of
the Mortgage File be released to the related Servicer and certifying as to the
reason for such release and that such release will not invalidate any insurance
coverage provided in respect of the Mortgage Loan under any of the Insurance
Policies. Upon receipt of the foregoing, the Custodian shall deliver the
Mortgage File to the related Servicer. The related Servicer shall cause each
Mortgage File or any document therein so released to be returned to the
Custodian when the need therefore by the related Servicer no longer exists,
unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Master Servicer
Collection Account or the Distribution Account or (ii) the Mortgage File or such
document has 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 either
judicially or non-judicially, and the related Servicer has delivered to the
Custodian a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery.

            At any time that a Servicer is required to deliver to the Custodian
a Request for Release, the Servicer shall deliver two copies of the Request for
Release if delivered in hard copy or the Servicer may furnish such Request for
Release electronically to the Custodian, in which event the Servicing Officer


                                       G-3
<PAGE>


transmitting the same shall be deemed to have signed the Request for Release. In
connection with any Request for Release of a Mortgage File because of a
repurchase of a Mortgage Loan, such Request for Release shall be accompanied by
an assignment of mortgage, without recourse, representation or warranty from the
Trustee to the Mortgage Loan Seller and the related Mortgage Note shall be
endorsed without recourse by the Trustee and be returned to the Mortgage Loan
Seller. In connection with any Request for Release of a Mortgage File because of
the payment in full of a Mortgage Loan, such Request for Release shall be
accompanied by a certificate of satisfaction or other similar instrument to be
executed by or on behalf of the Trustee and returned to the related Servicer.

            Section 2.6. Assumption Agreements. In the event that any assumption
agreement, substitution of liability agreement or sale of servicing agreement is
entered into with respect to any Mortgage Loan subject to this Agreement in
accordance with the terms and provisions of the Pooling and Servicing Agreement,
the Master Servicer, to the extent provided in the related Servicing Agreement,
shall cause the related Servicer to notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which shall be added to
the related Mortgage File and, for all purposes, shall be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting parts thereof.

                                  ARTICLE III.
                            CONCERNING THE CUSTODIAN

            Section 3.1. Custodian as Bailee and Agent of the Trustee. With
respect to each Mortgage Note, Mortgage and other documents constituting each
Mortgage File which are delivered to the Custodian, the Custodian is exclusively
the bailee and agent of the Trustee and has no instructions to hold any Mortgage
Note or Mortgage for the benefit of any person other than the Trustee and the
Certificateholders and undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. Except upon compliance with the
provisions of Section 2.5 of this Agreement, no Mortgage Note, Mortgage or
Mortgage File shall be delivered by the Custodian to the Company, the Servicers
or the Master Servicer or otherwise released from the possession of the
Custodian.

            Section 3.2. Reserved.

            Section 3.3. Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Custodian.

            Section 3.4. Master Servicer to Pay Custodian's Fees and Expenses.
The Master Servicer covenants and agrees to pay to the Custodian from time to
time, and the Custodian shall be entitled to, reasonable compensation for all
services rendered by it in the exercise and performance of any of the powers and
duties hereunder of the Custodian, and the Master Servicer will pay or reimburse
the Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its


                                       G-4
<PAGE>


employ), except any such expense, disbursement or advance as may arise from its
negligence or bad faith or to the extent that such cost or expense is
indemnified by the Company pursuant to the Pooling and Servicing Agreement.

            Section 3.5. Custodian May Resign Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans. Upon receiving such notice of resignation, the Trustee shall either take
custody of the Mortgage Files itself and give prompt notice thereof to the
Company, the Master Servicer and the Custodian, or promptly appoint a successor
Custodian by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Custodian and one copy to the successor
Custodian. If the Trustee shall not have taken custody of the Mortgage Files and
no successor Custodian shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Custodian may petition any court of competent jurisdiction for the
appointment of a successor Custodian.

            The Trustee may remove the Custodian at any time with the consent of
the Master Servicer. In such event, the Trustee shall appoint, or petition a
court of competent jurisdiction to appoint, a successor Custodian hereunder. Any
successor Custodian shall be a depository institution subject to supervision or
examination by federal or state authority, shall be able to satisfy the other
requirements contained in Section 3.7 and shall be unaffiliated with the
Servicer or the Company.

            Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5 shall
become effective upon acceptance of appointment by the successor Custodian. The
Trustee shall give prompt notice to the Company and the Master Servicer of the
appointment of any successor Custodian. No successor Custodian shall be
appointed by the Trustee without the prior approval of the Company and the
Master Servicer.

            Section 3.6. Merger or Consolidation of Custodian. Any Person into
which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any Person succeeding
to the business of the Custodian, shall be the successor of the Custodian
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.

            Section 3.7. Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.


                                       G-5

<PAGE>


                                   ARTICLE IV.
                            MISCELLANEOUS PROVISIONS

            Section 4.1. Notices. All notices, requests, consents and demands
and other communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram or
telex, or by registered or certified mail, postage prepaid, return receipt
requested, at the addresses specified on the signature page hereof (unless
changed by the particular party whose address is stated herein by similar notice
in writing), in which case the notice will be deemed delivered when received.

            Section 4.2. Amendments. No modification or amendment of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by all parties hereto, and neither the Company, the Master
Servicer nor the Trustee shall enter into any amendment hereof except as
permitted by the Pooling and Servicing Agreement. The Trustee shall give prompt
notice to the Custodian of any amendment or supplement to the Pooling and
Servicing Agreement and furnish the Custodian with written copies thereof.

            Section 4.3. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

            Section 4.4. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Company and at the Trust's expense, but
only upon direction accompanied by an Opinion of Counsel reasonably satisfactory
to the Company to the effect that the failure to effect such recordation is
likely to materially and adversely affect the interests of the
Certificateholders.

            For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.

            Section 4.5. 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.


                                       G-6
<PAGE>


            IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.


Address:                                   JPMORGAN CHASE BANK, as Trustee

4 New York Plaza, 6th Floor
New York, New York 10004                   By:
                                              ----------------------------------
                                           Name:
Attention:                                 Title:
Telecopy:
Confirmation:

Address:                                   STRUCTURED ASSET MORTGAGE
                                           INVESTMENTS INC.
383 Madison Avenue
New York, New York 10179
                                           By:
                                              ----------------------------------
                                           Name:   Baron Silverstein
                                           Title:  Vice President

Address:                                   WELLS FARGO BANK MINNESOTA,
                                           NATIONAL ASSOCIATION, as Master
9062 Old Annapolis Road                    Servicer
Columbia, Maryland 21045

                                           By:
                                              ----------------------------------
                                           Name:   Stacey Wainwright
                                           Title:  Assistant Vice President

Address:                                   WELLS FARGO BANK MINNESOTA,
                                           NATIONAL ASSOCIATION, as Custodian
9062 Old Annapolis Road
Columbia, Maryland 21045                   By:
                                              ----------------------------------
                                           Name:   Stacey Wainwright
                                           Title:  Assistant Vice President


<PAGE>


STATE OF NEW YORK       )
                        )ss.:
COUNTY OF NEW YORK      )

            On the ___th day of February 2003 before me, a notary public in and
for said State, personally appeared _______________, known to me to be a
_________________of JPMorgan Chase Bank, a national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation and acknowledged to me that such
corporation executed the within instrument.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.


                                                    ____________________________
                                                           Notary Public

[SEAL]


<PAGE>


STATE OF MARYLAND    )
                     ) ss.:
COUNTY OF HOWARD     )

            On the ___th day of February 2003 before me, a notary public in and
for said State, personally appeared Stacey Wainwright, known to me to be an
Assistant Vice President of Wells Fargo Bank Minnesota, National Association, a
national banking association that executed the within instrument, and also known
to me to be the person who executed it on behalf of said national banking
association, and acknowledged to me that such national banking association
executed the within instrument.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.


                                                    ____________________________
                                                           Notary Public

[SEAL]


<PAGE>


STATE OF NEW YORK     )
                      )ss.:
COUNTY OF NEW YORK    )

            On the ___th day of February 2003 before me, a notary public in and
for said State, personally appeared Baron Silverstein, known to me to be a Vice
President of Structured Asset Mortgage Investments Inc., one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.


                                                    ____________________________
                                                           Notary Public

[Notarial Seal]


<PAGE>


STATE OF MARYLAND     )
                      )ss.:
COUNTY OF HOWARD      )

            On the ___th day of February 2003 before me, a notary public in and
for said State, personally appeared Stacey Wainwright, known to me to be an
Assistant Vice President of Wells Fargo Bank Minnesota, National Association,
one of the corporations that executed the within instrument, and also known to
me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.


                                                    ____________________________
                                                           Notary Public

[Notarial Seal]


<PAGE>


                                   EXHIBIT ONE

                     FORM OF CUSTODIAN INITIAL CERTIFICATION

                                                               February __, 20__

JPMorgan Chase Bank                   Structured Asset Mortgage Investments Inc.
4 New York Plaza, 6th Floor           383 Madison Avenue
New York, New York 10004              New York, New York 10179

Attention: Structured Asset Mortgage Investments Inc.
Bear Stearns ARM Trust 2003-1, Mortgage Pass-Through Certificates, Series 2003-1

         Re:   Custodial Agreement, dated as of February ___, 2003 , by and
               among JPMorgan Chase Bank, Structured Asset Mortgage
               Investments Inc. and Wells Fargo Bank Minnesota, National
               Association relating to Bear Stearns ARM Trust 2003-1,
               Mortgage Pass-Through Certificates, Series 2003-1

Ladies and Gentlemen:

            In accordance with Section 2.3 of the above-captioned Custodial
Agreement, and subject to Section 2.02 of the Pooling and Servicing Agreement,
the undersigned, as Custodian, hereby certifies that it has received a Mortgage
File (which contains an original Mortgage Note or lost note affidavit) to the
extent required in Section 2.01 of the Pooling and Servicing Agreement with
respect to each Mortgage Loan listed in the Mortgage Loan Schedule, with any
exceptions listed on Schedule A attached hereto.

            Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.

                                              WELLS FARGO BANK MINNESOTA,
                                              NATIONAL ASSOCIATION

                                              By:
                                                 -------------------------------
                                              Name:
                                              Title:


<PAGE>


                                   EXHIBIT TWO

                     FORM OF CUSTODIAN INTERIM CERTIFICATION

                                                February __, 20__



JPMorgan Chase Bank                   Structured Asset Mortgage Investments Inc.
4 New York Plaza, 6th Floor           383 Madison Avenue
New York, New York 10004              New York, New York 10179

Attention:  Structured Asset Mortgage Investments Inc.
Bear Stearns ARM Trust 2003-1, Mortgage Pass-Through Certificates, Series 2003-1

         Re:   Custodial Agreement, dated as of February ___, 2003 , by and
               among JPMorgan Chase Bank, Structured Asset Mortgage
               Investments Inc. and Wells Fargo Bank Minnesota, National
               Association relating to Bear Stearns ARM Trust 2003-1,
               Mortgage Pass-Through Certificates, Series 2003-1

Ladies and Gentlemen:

            In accordance with Section 2.3 of the above-captioned Custodial
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File to the extent required pursuant to Section 2.01 of the Pooling
and Servicing Agreement with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule, and it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: all required documents have been executed
and received and that such documents related to the Mortgage Loans identified on
the Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.

            Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.

                                           WELLS FARGO BANK MINNESOTA,
                                           NATIONAL ASSOCIATION


                                           By:
                                              ----------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------


<PAGE>


                                  EXHIBIT THREE

                      FORM OF CUSTODIAN FINAL CERTIFICATION

                                                February __, 20__

JPMorgan Chase Bank                   Structured Asset Mortgage Investments Inc.
4 New York Plaza, 6th Floor           383 Madison Avenue
New York, New York 10004              New York, New York 10179

Attention: Structured Asset Mortgage Investments Inc.
Bear Stearns ARM Trust 2003-1, Mortgage Pass-Through Certificates, Series 2003-1

        Re:   Custodial Agreement, dated as of February ___, 2003 , by and
              among JPMorgan Chase Bank, Structured Asset Mortgage
              Investments Inc. and Wells Fargo Bank Minnesota, National
              Association relating to Bear Stearns ARM Trust 2003-1,
              Mortgage Pass-Through Certificates, Series 2003-1

Ladies and Gentlemen:

            In accordance with Section 2.3 of the above-captioned Custodial
Agreement and subject to Section 2.02(b) of the Pooling and Servicing Agreement,
the undersigned, as Custodian, hereby certifies that it has received a Mortgage
File with respect to each Mortgage Loan listed in the Mortgage Loan Schedule
containing with respect to each such Mortgage Loan:

            (i) The original Mortgage Note, endorsed without recourse to the
      order of the Trustee and showing an unbroken chain of endorsements from
      the originator thereof to the Person endorsing it to the Trustee or a lost
      note affidavit;

            (ii) The original Mortgage and, if the related Mortgage Loan is a
      MOM Loan, noting the presence of the MIN and language indicating that such
      Mortgage Loan is a MOM Loan, which shall have been recorded (or if the
      original is not available, a copy), with evidence of such recording
      indicated thereon;

            (iii) unless the Mortgage Loan is a MOM Loan, a certified copy of
      the assignment (which may be in the form of a blanket assignment if
      permitted in the jurisdiction in which the Mortgage Property is located)
      to "Bank One, National Association, as Trustee", with evidence of
      recording with respect to each Mortgage Loan in the name of the Trustee
      thereon;


<PAGE>


            (iv) With respect to each Mortgage Loan, to the extent available,
      the original recorded assignment or assignments of the Mortgage showing an
      unbroken chain of title from the originator thereof to the Person
      assigning it to the Trustee or a copy of such assignment or assignments of
      the Mortgage certified by the public recording office in which such
      assignment or assignments have been recorded; and

            (v) the original or a copy of the policy or certificate of primary
      mortgage guaranty insurance, to the extent available, if any,

            (vi) the original policy of title insurance or mortgagee's
      certificate of title insurance or commitment or binder for title
      insurance, and

            (vii) The original of each modification, assumption, extension or
      guaranty agreement, if any, relating to such Mortgage Loan or a copy of
      each modification, assumption, extension or guaranty agreement certified
      by the public recording office in which such document has been recorded.

            Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement or in the
Pooling and Servicing Agreement, as applicable.

                                                  WELLS FARGO BANK
                                                  MINNESOTA, NATIONAL
                                                  ASSOCIATION



                                                  By:
                                                     ---------------------------
                                                  Name:
                                                       -------------------------
                                                  Title:
                                                        ------------------------


<PAGE>


                                                                     EXHIBIT H-1

                               SERVICING AGREEMENT

                                     NEXTAR

                             [provided upon request]


<PAGE>


                                                                     EXHIBIT H-2

                               SERVICING AGREEMENT

                                   WELLS FARGO

                             [provided upon request]


<PAGE>


                                                                     EXHIBIT H-3

                              SERVICING AGREEMENTS

                                WASHINGTON MUTUAL

                             [provided upon request]


                                      H-3-1
<PAGE>


                                                                     EXHIBIT H-4

                               SERVICING AGREEMENT

                          ALLIANCE MORTGAGE CORPORATION

                             [provided upon request]


                                      H-4-1
<PAGE>


                                                                     EXHIBIT H-5

                               SERVICING AGREEMENT

                             CHEVY CHASE BANK F.S.B.

                             [provided upon request]


                                      H-5-1
<PAGE>


                                                                     EXHIBIT H-6

                               SERVICING AGREEMENT

                          COUNTRYWIDE HOME LOANS, INC.

                             [provided upon request]


                                      H-6-1
<PAGE>


                                                                     EXHIBIT H-7

                               SERVICING AGREEMENT

                            GMAC MORTGAGE CORPORATION

                             [provided upon request]


                                      H-7-1
<PAGE>


                                                                     EXHIBIT H-8

                               SERVICING AGREEMENT

                          CENDANT MORTGAGE CORPORATION

                             [provided upon request]


<PAGE>


                                    EXHIBIT I

                              ASSIGNMENT AGREEMENTS

                             [provided upon request]


                                       I-1
<PAGE>


                                    EXHIBIT J

                        MORTGAGE LOAN PURCHASE AGREEMENT

                             [provided upon request]


                                       J-1