EXHIBIT 4.1

                       NEW CENTURY MORTGAGE SECURITIES LLC

                                    Depositor

                            [NAME OF MASTER SERVICER]

                                 Master Servicer

                                       and

                                [NAME OF TRUSTEE]

                                     Trustee





                   __________________________________________

                         POOLING AND SERVICING AGREEMENT
                          Dated as of ________ 1, ____

                   __________________________________________





                    New Century Home Equity Loan Trust _____,

             Asset-Backed Pass-Through Certificates, Series ____-___





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                                TABLE OF CONTENTS


                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.01.   Defined Terms..................................................8
SECTION 1.02.   Allocation of Certain Interest Shortfalls.....................49

                                ARTICLE II

      CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES

SECTION 2.01.   Conveyance of Mortgage Loans..................................50
SECTION 2.02.   Acceptance of REMIC I by the Trustee..........................52
SECTION 2.03.   Repurchase or Substitution of Mortgage Loans by the
                Originator, the Seller or the Depositor; Payment of
                Prepayment Charges in the event of breach.....................54
SECTION 2.04.   Representations and Warranties of the Depositor...............57
SECTION 2.05.   Representations, Warranties and Covenants of the
                Master Servicer...............................................59
SECTION 2.06.   Issuance of Class R-I Certificates............................62
SECTION 2.07.   Conveyance of REMIC I Regular Interests; Acceptance of
                REMIC II by the Trustee.......................................62
SECTION 2.08.   Issuance of Class R-II Certificates...........................63
SECTION 2.09.   Conveyance of REMIC II Regular Interests; Acceptance of
                REMIC III by the Trustee......................................63
SECTION 2.10.   Issuance of REMIC III Certificates............................63
SECTION 2.11.   Conveyance of the Subsequent Mortgage Loans...................63

                                ARTICLE III

            ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

SECTION 3.01.   Master Servicer to Act as Master Servicer.....................66
SECTION 3.02.   Sub-Servicing Agreements Between the Master Servicer
                and Sub-Servicers.............................................68
SECTION 3.03.   Successor Sub-Servicers.......................................69
SECTION 3.04.   Liability of the Master Servicer..............................69
SECTION 3.05.   No Contractual Relationship Between Sub-Servicers and
                Trustee or Certificateholders.................................69
SECTION 3.06.   Assumption or Termination of Sub-Servicing Agreements
                by Trustee....................................................70
SECTION 3.07.   Collection of Certain Mortgage Loan Payments..................70
SECTION 3.08.   Sub-Servicing Accounts........................................71
SECTION 3.09.   Collection of Taxes, Assessments and Similar Items;
                Servicing Accounts............................................71
SECTION 3.10.   Collection Account and Distribution Account...................72




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SECTION 3.11.   Withdrawals from the Collection Account and Distribution
                Account.......................................................74
SECTION 3.12.   Investment of Funds in the Pre-Funding Account, the
                Interest  Coverage Account, Collection Account and the
                Distribution Account..........................................76
SECTION 3.13.   [intentionally omitted].......................................77
SECTION 3.14.   Maintenance of Hazard Insurance and Errors and Omissions
                and Fidelity Coverage.........................................77
SECTION 3.15.   Enforcement of Due-On-Sale Clauses; Assumption Agreements.....79
SECTION 3.16.   Realization Upon Defaulted Mortgage Loans.....................80
SECTION 3.17.   Trustee to Cooperate; Release of Mortgage Files...............82
SECTION 3.18.   Servicing Compensation........................................83
SECTION 3.19.   Reports to the Trustee; Collection Account Statements.........84
SECTION 3.20.   Statement as to Compliance....................................84
SECTION 3.21.   Independent Public Accountants' Servicing Report..............84
SECTION 3.22.   Access to Certain Documentation...............................85
SECTION 3.23.   Title, Management and Disposition of REO Property.............85
SECTION 3.24.   Obligations of the Master Servicer in Respect of
                Prepayment Interest Shortfalls................................88
SECTION 3.25.   Obligations of the Master Servicer in Respect of
                Mortgage Rates and Monthly Payments...........................88
SECTION 3.26.   Advance Facility..............................................89

                                ARTICLE IV

                      PAYMENTS TO CERTIFICATEHOLDERS

SECTION 4.01.   Distributions.................................................89
SECTION 4.02.   Statements to Certificateholders..............................96
SECTION 4.03.   Remittance Reports; P&I Advances..............................99
SECTION 4.04.   Allocation of Realized Losses................................101
SECTION 4.05.   Compliance with Withholding Requirements.....................103
SECTION 4.06.   Commission Reporting.........................................103
SECTION 4.07.   Pre-Funding Account..........................................104
SECTION 4.08.   Interest Coverage Account....................................105

                                 ARTICLE V

                             THE CERTIFICATES

SECTION 5.01.   The Certificates.............................................106
SECTION 5.02.   Registration of Transfer and Exchange of Certificates........108
SECTION 5.03.   Mutilated, Destroyed, Lost or Stolen Certificates............113
SECTION 5.04.   Persons Deemed Owners........................................113
SECTION 5.05.   Certain Available Information................................114

                                ARTICLE VI

                   THE DEPOSITOR AND THE MASTER SERVICER



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SECTION 6.01.   Liability of the Depositor and the Master Servicer...........114
SECTION 6.02.   Merger or Consolidation of the Depositor or the
                Master Servicer..............................................114
SECTION 6.03.   Limitation on Liability of the Depositor, the
                Master Servicer and Others...................................115
SECTION 6.04.   Limitation on Resignation of the Master Servicer.............116
SECTION 6.05.   Rights of the Depositor in Respect of the Master Servicer....116

                                ARTICLE VII

                                  DEFAULT

SECTION 7.01.   Master Servicer Events of Default............................117
SECTION 7.02.   Trustee to Act; Appointment of Successor.....................119
SECTION 7.03.   Notification to Certificateholders...........................121
SECTION 7.04.   Waiver of Master Servicer Events of Default..................121

                               ARTICLE VIII

                          CONCERNING THE TRUSTEE

SECTION 8.01.   Duties of Trustee............................................122
SECTION 8.02.   Certain Matters Affecting the Trustee........................123
SECTION 8.03.   Trustee Not Liable for Certificates or Mortgage Loans........124
SECTION 8.04.   Trustee May Own Certificates.................................124
SECTION 8.05.   Trustee's Fees and Expenses..................................124
SECTION 8.06.   Eligibility Requirements for Trustee.........................125
SECTION 8.07.   Resignation and Removal of the Trustee.......................126
SECTION 8.08.   Successor Trustee............................................126
SECTION 8.09.   Merger or Consolidation of Trustee...........................127
SECTION 8.10.   Appointment of Co-Trustee or Separate Trustee................127
SECTION 8.11.   Appointment of Custodians....................................128
SECTION 8.12.   Appointment of Office or Agency..............................128
SECTION 8.13.   Representations and Warranties of the Trustee................129

                                ARTICLE IX

                                TERMINATION

SECTION 9.01.   Termination Upon Repurchase or Liquidation of All
                Mortgage Loans...............................................130
SECTION 9.02.   Additional Termination Requirements..........................132

                                 ARTICLE X

                             REMIC PROVISIONS

SECTION 10.01.  REMIC Administration.........................................132
SECTION 10.02.  Prohibited Transactions and Activities.......................135
SECTION 10.03.  Master Servicer and Trustee Indemnification..................136


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                                ARTICLE XI

                         MISCELLANEOUS PROVISIONS

SECTION 11.01.  Amendment....................................................136
SECTION 11.02.  Recordation of Agreement; Counterparts.......................137
SECTION 11.03.  Limitation on Rights of Certificateholders...................138
SECTION 11.04.  Governing Law................................................138
SECTION 11.05.  Notices......................................................138
SECTION 11.06.  Severability of Provisions...................................139
SECTION 11.07.  Notice to Rating Agencies....................................139
SECTION 11.08.  Article and Section References...............................140
SECTION 11.09.  Grant of Security Interest...................................140

Exhibits

Exhibit A-1     Form of Class A-1 Certificate

Exhibit A-2     Form of Class A-2 Certificate

Exhibit A-3     Form of Class M-1 Certificate

Exhibit A-4     Form of Class M-2 Certificate

Exhibit A-5     Form of Class M-3 Certificate

Exhibit A-6     Form of Class CE Certificate

Exhibit A-7     Form of Class P Certificate

Exhibit A-8     Form of Class R-I Certificate

Exhibit A-9     Form of Class R-II Certificate

Exhibit A-10    Form of Class R-III Certificate

Exhibit B       [Reserved]

Exhibit C-1     Form of Trustee's Initial Certification

Exhibit C-2     Form of Trustee's Final Certification

Exhibit D-1     Form of Mortgage Loan Sale and Contribution Agreement

Exhibit D-2     Form of Mortgage Loan Purchase Agreement

Exhibit E-1     Request for Release

Exhibit E-2     Request for Release Mortgage Loans paid in full



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Exhibit F-1     Form of Transferor Representation Letter and Form of Transferee
                Representation Letter in Connection with Transfer of Class CE
                and Class Certificates Pursuant to Rule 144A Under the 1933 Act

Exhibit F-2     Form of Transfer Affidavit and Agreement and Form of Transferor
                Affidavit in Connection with Transfer of Residual Certificates

Exhibit G       Form of Certification with respect to ERISA and the Code

Exhibit H       Form of Custodial Agreement

Exhibit I       Subsequent Transfer Instrument

Exhibit J       Addition Notice

Schedule 1      Mortgage Loan Schedule

Schedule 2      Prepayment Charge Schedule




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                  This Pooling and Servicing Agreement, is dated and effective
as of ________ 1, ____, among NEW CENTURY MORTGAGE SECURITIES LLC as Depositor,
[NAME OF MASTER SERVICER], as Master Servicer and [NAME OF TRUSTEE], as Trustee.

                             PRELIMINARY STATEMENT:

                  The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest in
each REMIC (as defined herein) created hereunder. The Trust Fund will consist of
a segregated pool of assets comprising of the Mortgage Loans, the Pre-Funding
Account and the Interest Coverage Account and certain other related assets
subject to this Agreement.

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets (other than the Master Servicer Prepayment Charge Payment Amount,
the Pre-Funding Account and the Interest Coverage Account) subject to this
Agreement as a REMIC for federal income tax purposes, and such segregated pool
of assets will be designated as "REMIC I." The Class R-I Certificates will be
the sole class of "residual interests" in REMIC I for purposes of the REMIC
Provisions (as defined herein). The following table irrevocably sets forth the
designation, the REMIC I Remittance Rate, the initial Uncertificated Balance
and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC I
Regular Interests (as defined herein). None of the REMIC I Regular Interests
will be certificated.

Designation                REMIC I Initial              Latest Possible
Maturity Date(1)           Remittance Rate              Uncertificated Balance
----------------           ---------------              ----------------------
I-LT1                      Variable(2)
I-LT2                      Variable(2)
I-LT3                      Variable(2)
I-LT4                      Variable(2)
I-LT5                      Variable(2)
I-LT6                      Variable(2)
I-LT7                      Variable(2)
I-LTP                      Variable(2)
-------------------------
(1)      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 has been
         designated as the "latest possible maturity date" for each REMIC I
         Regular Interest.

(2)      Calculated in accordance with the definition of "REMIC I Remittance
         Rate" herein.

(3)      The REMIC I Regular Interest I-LTP will not accrue interest.

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Certificates will



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evidence the sole class of "residual interests" in REMIC II for purposes of the
REMIC Provisions. The following table irrevocably sets forth the designation,
the REMIC II Remittance Rate, the initial Uncertificated Balance and, solely for
purposes of satisfying Treasury regulation Section 1.860G- 1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC II Regular Interests. None
of the REMIC II Regular Interests will be certificated.

                                                          Latest Possible
Designation                REMIC II Initial               Uncertificated Balance
Maturity Date(1)           Remittance Rate                Maturity
----------------           ---------------                ----------------------

II-LT1                     Variable(2)
II-LT2                     Variable(2)
II-LT3                     Variable(2)
II-LT4                     Variable(2)
II-LT5                     Variable(2)
II-LT6                     Variable(2)
II-LT7                     Variable(2)
II-LTP                     Variable(2)
II-LT2S                    Variable(2)                    (4)
II-LT3S                    Variable(2)                    (4)
II-LT4S                    Variable(2)                    (4)
II-LT5S                    Variable(2)                    (4)
II-LT6S                    Variable(2)                    (4)

----------------------------
(1)      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 has been
         designated as the "latest possible maturity date" for each REMIC II
         Regular Interest.

(2)      Calculated in accordance with the definition of "REMIC II Remittance
         Rate" herein.

(3)      The REMIC II Regular Interest II-LTP will not accrue interest.

(4)      This REMIC II Regular Interest has no Uncertificated Balance but will
         accrue interest at the related REMIC II Remittance Rate on the related
         Uncertificated Notional Amount, which is equal to the Uncertificated
         Balance of the Uncertificated Corresponding Component.

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III." The Class R-III Certificates will evidence the
sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions under federal income tax law. The following table irrevocably sets
forth the designation, the Pass-Through Rate, the initial aggregate Certificate
Principal Balance and, solely for purposes of satisfying Treasury regulation
Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for the
indicated Classes of Certificates.



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Designation              Initial Aggregate         Latest Possible
Maturity Date(1)         Pass-through Rate         Certificate Principal Balance
----------------         -----------------         -----------------------------
Class A-1                Variable(2)
Class A-2                Variable(2)
Class M-1                Variable(2)
Class M-2                Variable(2)
Class M-3                7.000%
Class CE                 Variable(2)
Class P                  (4)
----------------------
(1)      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 Loans with the latest maturity date has been
         designated as the "latest possible maturity date" for each Class of
         Certificates.

(2)      Calculated in accordance with the definition of "Pass-Through Rate"
         herein.

(3)      The Class CE Certificates will accrue interest at their variable
         Pass-Through Rate on the Notional Amount of the Class CE Certificates
         outstanding from time to time which shall equal the Uncertificated
         Balance of REMIC II Regular Interests (other than the Uncertificated
         Balance of the REMIC II Regular Interest II-LTP). The Class CE
         Certificates will not accrue interest on their Certificate Principal
         Balance.

(4)      The Class P Certificates will not accrue interest.

                  As of the Cut-off Date, the Initial Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $_____________. The amount
deposited by the Depositor in the Pre- Funding Account on the Closing Date is
$____________.

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

                                   ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01. DEFINED TERMS.

                  Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.

                  "Accrued Certificate Interest": With respect to any Class of
Certificates (other than the Class P Certificates and the Residual Certificates)
and each Distribution Date, interest accrued during the related Interest Accrual
Period at the Pass-Through Rate for such Certificate for such Distribution Date
on the Certificate Principal Balance, in the case of the Class A



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Certificates and the Mezzanine Certificates, or on the Notional Amount, in the
case of the Class CE Certificates, of such Certificate immediately prior to such
Distribution Date. The Class P Certificates are not entitled to distributions in
respect of interest and, accordingly, will not accrue interest. All
distributions of interest on the Class A Certificates and the Mezzanine
Certificates will be calculated on the basis of a 360-day year and the actual
number of days in the applicable Interest Accrual Period. Accrued Certificate
Interest with respect to each Distribution Date, as to any Class A Certificate,
Mezzanine Certificate or Class CE Certificate, shall be reduced by an amount
equal to the portion allocable to such Certificate pursuant to Section 1.02
hereof of the sum of (a) the aggregate Prepayment Interest Shortfall, if any,
for such Distribution Date to the extent not covered by payments pursuant to
Section 3.24 and (b) the aggregate amount of any Relief Act Interest Shortfall,
if any, for such Distribution Date. In addition, Accrued Certificate Interest
with respect to each Distribution Date, as to any Class CE Certificate, shall be
reduced by an amount equal to the portion allocable to such Class CE Certificate
of Realized Losses, if any, pursuant to Section 4.04 hereof.

                  "Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust Fund pursuant to Section 2.11, a notice of the
Depositor's designation of the Subsequent Mortgage Loans to be sold to the Trust
Fund and the aggregate principal balance of such Subsequent Mortgage Loans as of
the Subsequent Cut-off Date. The Addition Notice shall be given not later than
three Business Days prior to the related Subsequent Transfer Date and shall be
substantially in the form of Exhibit J.

                  "Adjustment Date": With respect to each Mortgage Loan, the
first day of the month in which the Mortgage Rate of a Mortgage Loan changes
pursuant to the related Mortgage Note. The first Adjustment Date following the
Cut-off Date as to each Mortgage Loan is set forth in the Mortgage Loan
Schedule.

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

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

                  "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom if applicable,
the mortgage recordation information which has not been returned by the
applicable recorder's office and/or the assignee's name), which is sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect of record the sale of the Mortgage.

                  "Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Collection Account and Distribution Account as of the
close of business on the related Determination Date, (b) the aggregate of any
amounts received in respect of an REO Property withdrawn from any



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REO Account and deposited in the Distribution Account for such Distribution Date
pursuant to Section 3.23, (c) the aggregate of any amounts deposited in the
Distribution Account by the Master Servicer in respect of Prepayment Interest
Shortfalls for such Distribution Date pursuant to Section 3.24, (d) the
aggregate of any P&I Advances made by the Master Servicer for such Distribution
Date pursuant to Section 4.03, (e) the aggregate of any advances made by the
Trustee for such Distribution Date pursuant to Section 7.02(b), (f) with respect
to the Distribution Date immediately following the end of the Funding Period,
any amounts in the Pre-Funding Account after giving effect to any purchase of
Subsequent Mortgage Loans and (g) with respect to each Distribution Date during
the Funding Period and on the Distribution Date immediately following the end of
the Funding Period, any amounts withdrawn by the Trustee from the Interest
Coverage Account for distribution on the Certificates, reduced (to not less than
zero) by (2) the sum of (x) the portion of the amount described in clause (1)(a)
above that represents (i) Monthly Payments on the Mortgage Loans received from a
Mortgagor on or prior to the Determination Date but due during any Due Period
subsequent to the related Due Period, (ii) Principal Prepayments on the Mortgage
Loans received after the related Prepayment Period (together with any interest
payments received with such Principal Prepayments to the extent they represent
the payment of interest accrued on the Mortgage Loans during a period subsequent
to the related Prepayment Period), (iii) Liquidation Proceeds and Insurance
Proceeds received in respect of the Mortgage Loans after the related Prepayment
Period, (iv) amounts reimbursable or payable to the Depositor, the Master
Servicer, the Trustee, the Originator or any Sub-Servicer pursuant to Section
3.11 or Section 3.12 or otherwise payable in respect of Extraordinary Trust Fund
Expenses, (v) Stayed Funds, (vi) the Trustee Fee payable from the Distribution
Account pursuant to Section 8.05, (vii) amounts deposited in the Collection
Account or the Distribution Account in error and (viii) the amount of any
Prepayment Charges collected by the Master Servicer in connection with the
voluntary Principal Prepayment in full of any of the Mortgage Loans (or any
Master Servicer Prepayment Charge Payment Amount) and (y) amounts reimbursable
to the Trustee for an advance made pursuant to Section 7.02(b) which advance the
Trustee has determined to be nonrecoverable from the Stayed Funds in respect of
which it was made.

                  "Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.

                  "Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation or Debt Service Reduction.

                   "Book-Entry Certificate": Any Certificate registered in the
name of the Depository or its nominee. Initially, the Book-Entry Certificates
will be the Class A Certificates and the Mezzanine Certificates.

                  "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.

                  "Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the State of Nevada,
the State of _________or the State of ____________, or in the city in which the
Corporate Trust Office of the Trustee is located, are authorized or obligated by
law or executive order to be closed.



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"Certificate": Any one of the Depositor's New Century Home Equity Loan Trust
_____, Asset Backed Pass Though Certificates, Series ____-___, Class A-1, Class
A-2, Class M-1, Class M-2, Class M-3, Class CE, Class P, Class R-I, Class R-II
or Class R-III, issued under this Agreement.

                  "Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (and in the case of the Class CE Certificates, the Notional
Amount) of such Class of Certificates on such Distribution Date (after giving
effect to any distributions of principal and allocations of Realized Losses in
reduction of the Certificate Principal Balance (and in the case of the Class CE
Certificates, the Notional Amount) of such Class of Certificates to be made on
such Distribution Date), and the denominator of which is the initial aggregate
Certificate Principal Balance (and in the case of the Class CE Certificates, the
Notional Amount) of such Class of Certificates as of the Closing Date.

                  "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Master Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee may conclusively rely upon a
certificate of the Depositor or the Master Servicer in determining whether a
Certificate is held by an Affiliate thereof. All references herein to "Holders"
or "Certificateholders" shall reflect the rights of Certificate Owners as they
may indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee shall be required to recognize as a "Holder" or "Certificateholder"
only the Person in whose name a Certificate is registered in the Certificate
Register.

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

                  "Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate or Class P Certificate as of any date of
determination, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination, minus all
distributions allocable to principal made thereon and Realized Losses allocated
thereto on such immediately prior Distribution Date (or, in the case of any date
of determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of the REMIC II Regular Interests over (B) the then aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificates then outstanding.



                                       11
<PAGE>


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

                  "Class": Collectively, all of the Certificates bearing the
same class designation.

                  "Class A Certificate": Any Class A-1 Certificate or Class A-2
Certificate, and taken together, the "Class A Certificates."

                  "Class A-1 Certificate": Any one of the Class A-1 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-1 and
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.

                  "Class A-2 Certificate": Any one of the Class A-2 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-2 and
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.

                  "Class A-1 Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A-1 Certificates and (ii) the
Interest Carry Forward Amount with respect to the Class A-1 Certificates.

                  "Class A-2 Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A-2 Certificates and (ii) the
Interest Carry Forward Amount with respect to the Class A-2 Certificates.

                  "Class A-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the Certificate Principal Balance of the Class
A-1 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) _____% and (ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period minus $_________.

                  "Class A-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A-1 Certificates (after taking into account the payment of
the Class A-1 Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class A-2 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
_____% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period minus
$_________.

                  "Class CE Certificate": Any one of the Class CE Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form



                                       12
<PAGE>


annexed hereto as Exhibit A-6 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

                  "Class Exemption": A class exemption granted by the DOL, which
provides relief from certain of the prohibited transaction provisions of ERISA
and the related excise tax provisions of the Code.

                  "Class M-1 Certificate": Any one of the Class M-1 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-3 and
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.

                  "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A-1 Certificates (after taking into account the payment of
the Class A-1 Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class A-2 Certificates (after taking into
account the payment of the Class A-2 Principal Distribution Amount on such
Distribution Date) and (iii) the Certificate Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) _____% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period minus $6,000,000.

                  "Class M-2 Certificate": Any one of the Class M-2 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-4 and
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.

                  "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A-1 Certificates (after taking into account the payment of
the Class A-1 Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class A-2 Certificates (after taking into
account the payment of the Class A-2 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date) and (iv) the Certificate
Principal Balance of the Class M-2 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) _____% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period minus $_________.

                  "Class M-3 Certificate": Any one of the Class M-3 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-5 and
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.



                                       13
<PAGE>


                  "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A-1 Certificates (after taking into account the payment of
the Class A-1 Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class A-2 Certificates (after taking into
account the payment of the Class A-2 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date) and (v)
the Certificate Principal Balance of the Class M-3 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
_____% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period minus
$_________.

                  "Class P Certificate": Any one of the Class P Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7 and
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.

                  "Class R-I Certificate": Any one of the Class R-I Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-8 and
evidencing the Residual Interest in REMIC I for purposes of the REMIC
Provisions.

                  "Class R-II Certificate": Any one of the Class R-II
Certificates executed by the Trustee, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-9
and evidencing the Residual Interest in REMIC II for purposes of the REMIC
Provisions.

                  "Class R-III Certificates": Any one of the Class R-III
Certificates executed by the Trustee, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-10
and evidencing the Residual Interest in REMIC III for purposes of the REMIC
Provisions.

                  "Closing Date": ___________, ____.

                  "Code":  The Internal Revenue Code of 1986.

                  "Collection Account": The account or accounts created and
maintained by the Master Servicer pursuant to Section 3.10(a), which shall be
entitled "___________________________, as Master Servicer for
______________________, as Trustee, in trust for the registered holders of New
Century Home Equity Loan Trust _____, Asset-Backed Pass-Through Certificates,
Series ____-___" The Collection Account must be an Eligible Account.

                  "Commission": The Securities and Exchange Commission.



                                       14
<PAGE>


                  "Corporate Trust Office": The principal corporate trust office
of the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at ______________________, or at
such other address as the Trustee may designate from time to time by notice to
the Certificateholders, the Depositor and the Master Servicer.

                  "Corresponding Certificate": With respect to REMIC I Regular
Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular Interest I-LT4,
REMIC I Regular Interest I-LT5, REMIC I Regular Interest I-LT6 and REMIC I
Regular Interest I-LTP, the Class A-1 Certificates, Class A-2 Certificates,
Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates and Class
P Certificates, respectively. With respect to REMIC II Regular Interest II-LT2,
REMIC II Regular Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular Interest II-LT5, REMIC II Regular Interest II-LT6 and REMIC II Regular
Interest II-LTP, the Class A-1 Certificates, Class A-2 Certificates, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates and Class P
Certificates, respectively.

                  "Credit Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the sum of
the aggregate Certificate Principal Balances of the Class A-2 Certificates, the
Mezzanine Certificates and the Class CE Certificates, and the denominator of
which is the aggregate Stated Principal Balance of the Mortgage Loans,
calculated after taking into account distributions of principal on the Mortgage
Loans and distribution of the Principal Distribution Amount to the Certificates
then entitled to distributions of principal on such Distribution Date.

                  "Cumulative Loss Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred from the Cut-off Date to the last
day of the preceding calendar month and the denominator of which is the sum of
the aggregate Stated Principal Balance of the Initial Mortgage Loans as of the
Cut-off Date and the Original Pre-Funded Amount.

                  "Custodial Agreement": An agreement that may be entered into
among the Depositor, the Master Servicer, the Trustee and a Custodian in the
form of Exhibit H annexed hereto or an agreement assigned to the Trustee with
respect to the Mortgage Loans.

                  "Custodian": A Custodian, which shall not be the Depositor,
the Master Servicer, the Seller or any affiliate of any of them, appointed
pursuant to a Custodial Agreement.

                  "Cut-off Date": With respect to each Initial Mortgage Loan,
__________, ____. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.

                  "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.



                                       15
<PAGE>


                  "Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.

                  "Definitive Certificates":  As defined in Section 5.01(b).

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

                  "Delinquency Percentage": As of the last day of the related
Due Period, the percentage equivalent of a fraction, the numerator of which is
the aggregate Stated Principal Balance of all Mortgage Loans that, as of the
last day of the previous calendar month, are 60 or more days delinquent, are in
foreclosure, have been converted to REO Properties or have been discharged by
reason of bankruptcy, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties as of the last day of
the previous calendar month; provided, however, that any Mortgage Loan purchased
by the Master Servicer pursuant to Section 3.16(c) shall not be included in
either the numerator or the denominator for purposes of calculating the
Delinquency Percentage.

                  "Depositor": New Century Mortgage Securities LLC, a Delaware
corporation, or its successor in interest.

                  "Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.

                  "Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations that
are rated D-1+ by Fitch (if rated by Fitch), P-1 by Moody's and A-1 by S&P (or
comparable ratings if Fitch, Moody's and S&P are not the Rating Agencies).

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

                  "Determination Date": With respect to each Distribution Date,
the first day of the calendar month in which such Distribution Date occurs or,
if such first day is not a Business Day, the Business Day immediately preceding
such first day.

                  "Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any



                                       16
<PAGE>


construction work thereon or any use of such REO Property in a trade or business
conducted by REMIC I other than through an Independent Contractor; provided,
however, that the Trustee (or the Master Servicer on behalf of the Trustee)
shall not be considered to Directly Operate an REO Property solely because the
Trustee (or the Master Servicer on behalf of the Trustee) establishes rental
terms, chooses tenants, enters into or renews leases, deals with taxes and
insurance, or makes decisions as to repairs or capital expenditures with respect
to such REO Property.

                  "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 Freddie Mac, 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, (v) an "electing
large partnership" and (vi) 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 of REMIC I, REMIC II or REMIC
III or any Person having an Ownership Interest in any Class of Certificates
(other than such Person) to incur a liability for any federal tax imposed under
the Code that would not otherwise be imposed but for the Transfer of an
Ownership Interest in a 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 by the Trustee pursuant to Section 3.10(b) which shall be
entitled " ___________________, as Trustee, in trust for the registered holders
of New Century Home Equity Loan Trust _____, Asset-Backed Pass-Through
Certificates, Series ____-___" The Distribution Account must be an Eligible
Account.

                  "Distribution Date": The 15th day of any month, or if such
15th day is not a Business Day, the Business Day immediately following such 15th
day, commencing in _____________, 200_.

                  "Due Date": With respect to each Distribution Date, the first
day of the calendar month in which such Distribution Date occurs, which is the
day of the month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.

                  "Due Period": With respect to any Distribution Date, the
period commencing on the second day of the month immediately preceding the month
in which such Distribution Date occurs and ending on the related Due Date.

                  "Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution or trust company the short-term
unsecured debt obligations of which are rated "AAA" or "D-1+", as applicable, by
Fitch, P-1 by Moody's and A-1+ by S&P (or comparable ratings if Fitch, Moody's
and S&P are not the Rating Agencies) at the time any



                                       17
<PAGE>


amounts are held on deposit therein, (ii) an account or accounts the deposits in
which are fully insured by the FDIC or (iii) a trust account or accounts
maintained with the corporate trust department of a federal or state chartered
depository institution or trust company acting in its fiduciary capacity.
Eligible Accounts may bear interest.

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

                  "Estate in Real Property": A fee simple estate in a parcel of
land.

                  "Excess Overcollateralized Amount": With respect to the Class
A Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date
over (ii) the Required Overcollateralized Amount for such Distribution Date.

                  "Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan or REO Property, the then applicable Mortgage Rate thereon minus the sum of
(i) the Trustee's Fee Rate and (ii) the Servicing Fee Rate.

                  "Extraordinary Trust Fund Expense": Any amounts reimbursable
to the Trustee, or any director, officer, employee or agent of the Trustee, from
the Trust Fund pursuant to Section 8.05, any amounts payable from the
Distribution Account in respect of taxes pursuant to Section 10.01(g)(iii) and
any amounts payable by the Trustee for the recording of the assignments of
mortgage pursuant to Section 2.01.

                  "Fannie Mae": Fannie Mae, formally known as the Federal
National Mortgage Association, or any successor thereto.

                  "FDIC": Federal Deposit Insurance Corporation or any successor
thereto.

                  "Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Originator, the Seller, the Depositor, the Majority Class CE
Certificateholder or the Master Servicer pursuant to or as contemplated by
Section 2.03, Section 3.16(c) or Section 9.01), a determination made by the
Master Servicer that all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries which the Master Servicer, in its reasonable good faith
judgment, expects to be finally recoverable in respect thereof have been so
recovered. The Master Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.

                  "Fitch": Fitch Ratings, or its successor in interest.

                  "Freddie Mac": Freddie Mac, formally known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.

                  "Funding Period": The period beginning on the Closing Date and
ending on the earlier of the date on which (a) the amount on deposit in the
Pre-Funding Account is reduced to zero or (b) 2:00 p.m., _____________ time, on
_______________.



                                       18
<PAGE>


                  "Gross Margin": With respect to each Mortgage Loan, the fixed
percentage set forth in the related Mortgage Note that is added to the Index on
each Adjustment Date in accordance with the terms of the related Mortgage Note
used to determine the Mortgage Rate for such Mortgage Loan.

                  "Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Master
Servicer, the Originator and their respective Affiliates, (b) does not have any
direct financial interest in or any material indirect financial interest in the
Depositor, the Originator, the Master Servicer or any Affiliate thereof, and (c)
is not connected with the Depositor, the Originator, the Master Servicer or any
Affiliate thereof as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions; provided, however,
that a Person shall not fail to be Independent of the Depositor, the Originator,
the Master Servicer or any Affiliate thereof merely because such Person is the
beneficial owner of 1% or less of any class of securities issued by the
Depositor or the Master Servicer or any Affiliate thereof, as the case may be.

                  "Independent Contractor": Either (i) any Person (other than
the Master Servicer) that would be an "independent contractor" with respect to
REMIC I within the meaning of Section 856(d)(3) of the Code if REMIC I were a
real estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including the Master Servicer) if the Trustee has received an Opinion of
Counsel to the effect that the taking of any action in respect of any REO
Property by such Person, subject to any conditions therein specified, that is
otherwise herein contemplated to be taken by an Independent Contractor will not
cause such REO Property to cease to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.

                  "Index": With respect to each Mortgage Loan and each related
Adjustment Date, the average of the interbank offered rates for six-month United
States dollar deposits in the London market as published in [THE WALL STREET
JOURNAL] and as most recently available as of the first business day 45 days or
more prior to such Adjustment Date, as specified in the related Mortgage Note.

                  "Initial Mortgage Loan": Any of the Mortgage Loans included in
REMIC I as of the Closing Date.

                  "Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing mortgage loans held for its own
account, subject to the terms and conditions of the related Mortgage Note and
Mortgage.



                                       19
<PAGE>


                  "Interest Accrual Period": With respect to any Distribution
Date and the Class A Certificates, the Mezzanine Certificates (other than the
Class M-3 Certifiates), REMIC II Regular Interest II-LT2, REMIC II Regular
Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II Regular Interest
II-LT5, REMIC II Regular Interest II-LT2S, REMIC II Regular Interest II-LT3S,
REMIC II Regular Interest II-LT4S and REMIC II Regular Interest II-LT5S, the
period commencing on the Distribution Date of the month immediately preceding
the month in which such Distribution Date occurs (or, in the case of the first
Distribution Date, commencing on the Closing Date) and ending on the day
preceding such Distribution Date. With respect to any Distribution Date and the
Class M-3 Certificates, REMIC II Regular Interest II-LT1, REMIC II Regular
Interest II-LT6, REMIC II Regular Interest II-LT6S, REMIC II Regular Interest
II-LT7 and the REMIC I Regular Interests, the one-month period ending on the
last day of the calendar month preceding the month in which such Distribution
Date occurs.

                  "Interest Carry Forward Amount": With respect to any
Distribution Date and any Class of Class A Certificates or Mezzanine
Certificates, the sum of (i) the amount, if any, by which (a) the Interest
Distribution Amount for such Class of Certificates as of the immediately
preceding Distribution Date exceeded (b) the actual amount distributed on such
Class of Certificates in respect of interest on such immediately preceding
Distribution Date and (ii) the amount of any Interest Carry Forward Amount for
such Class of Certificates remaining unpaid from the previous Distribution Date,
plus accrued interest on such sum calculated at the related Pass-Through Rate
for the most recently ended Interest Accrual Period.

                  "Interest Coverage Account": The account established and
maintained pursuant to Section 4.08, as defined therein.

                  "Interest Coverage Amount": The amount to be paid by the
Depositor to the Trustee for deposit into the Interest Coverage Account on the
Closing Date pursuant to Section 4.08, which amount is $____________.

                  "Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates (other than the Class M-3
Certificates), REMIC II Regular Interest II-LT2, REMIC II Regular Interest
II-LT2S, REMIC II Regular Interest II-LT3, REMIC II Regular Interest II-LT3S,
REMIC II Regular Interest II-LT4, REMIC II Regular Interest II-LT4S, REMIC II
Regular Interest II-LT5 and REMIC II Regular Interest II-LT5S, and any Interest
Accrual Period therefor, the second London Business Day preceding the
commencement of such Interest Accrual Period.

                  "Interest Distribution Amount": With respect to any
Distribution Date and any Class A Certificate, any Mezzanine Certificate and any
Class CE Certificate, the aggregate Accrued Certificate Interest on the
Certificates of such Class for such Distribution Date.

                  "Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Distribution Amount for such Distribution
Date allocable to interest.

                  "Late Collections": With respect to any Mortgage Loan and any
Due Period, all amounts received subsequent to the Determination Date
immediately following such Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds



                                       20
<PAGE>


or otherwise, which represent late payments or collections of principal and/or
interest due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) but delinquent for such Due Period and not
previously recovered.

                  "Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01.
With respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 9.01.

                  "Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the Master Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.

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

                  "London Business Day": Any day on which banks in the City of
London are open and conducting transactions in United States dollars.

                  "Majority Class CE Certificateholder": Any single Holder or
group of Holders of Class CE Certificates representing a greater than 50%
Percentage Interest in such Class.

                  "Master Servicer": ____________________ ("___________") or any
successor master servicer appointed as herein provided, in its capacity as
Master Servicer hereunder.

                  "Master Servicer Event of Default": One or more of the events
described in Section 7.01.

                  "Master Servicer Prepayment Charge Payment Amount": The
amounts payable by the Master Servicer in respect of any waived Prepayment
Charges pursuant to Section 2.05 or Section 3.01.

                  "Master Servicer Remittance Date": With respect to any
Distribution Date, 3:00 p.m. ________ time on the 8th day of the calendar month
in which such Distribution Date occurs or, if such 8th day is not a Business
Day, the Business Day immediately preceding such 8th day; provided, however,
that if such immediately preceding Business Day is the Determination Date, the
Master Servicer Remittance Date shall be the next succeeding Business Day.



                                       21
<PAGE>


                  "Master Servicer Termination Test": With respect to any
Distribution Date, the Master Servicer Termination Test will be failed if the
Cumulative Loss Percentage exceeds ____%.

                  "Maximum I-LT7 Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LT7 for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LT7 minus the REMIC I Overcollateralized Amount, in each case
for such Distribution Date, over (ii) Uncertificated Interest on REMIC II
Regular Interest II- LT2, REMIC II Regular Interest II-LT3, REMIC II Regular
Interest II-LT4, REMIC II Regular Interest II-LT5 and REMIC II Regular Interest
II-LT6 for such Distribution Date.

                  "Maximum Mortgage Rate": With respect to each Mortgage Loan,
the percentage set forth in the related Mortgage Note as the maximum Mortgage
Rate thereunder.

                  "Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate or Class M-3 Certificate.

                  "Minimum Mortgage Rate": With respect to each Mortgage Loan,
the percentage set forth in the related Mortgage Note as the minimum Mortgage
Rate thereunder.

                  "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Section 3.07; and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.

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

                  "Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on, or first priority security interest in, a Mortgaged
Property securing a Mortgage Note.

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

                  "Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.03(d) of this Agreement, as
held from time to time held as a part of REMIC I, the Mortgage Loans so held
being identified in the Mortgage Loan Schedule.

                  "Mortgage Loan Purchase Agreement": The agreement among the
Originator, the Seller and the Depositor, regarding the transfer of the Mortgage
Loans by the Seller to or at the direction of the Depositor, substantially in
the form of Exhibit D-2 annexed hereto.



                                       22
<PAGE>


                  "Mortgage Loan Sale and Contribution Agreement": The agreement
between the Seller and the Originator, regarding the transfer of the Mortgage
Loans by the Originator to or at the direction of the Seller, substantially in
the form of Exhibit D-1 annexed hereto.

                  "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, attached hereto as Schedule 1 as
supplemented by each schedule of Subsequent Mortgage Loans attached to a
Subsequent Transfer Instrument. The Mortgage Loan Schedule shall set forth the
following information with respect to each Mortgage Loan:

                  (i) the Originator's Mortgage Loan identifying number;

                  (ii) the Mortgagor's name;

                  (iii) the street address of the Mortgaged Property including
the state and zip code;

                  (iv) a code indicating whether the Mortgaged Property is
owner-occupied;

                  (v) the type of Residential Dwelling constituting the
Mortgaged Property;

                  (vi) the original months to maturity;

                  (vii) the Loan-to-Value Ratio at origination;

                  (viii) the Mortgage Rate in effect immediately following the
Cut-off Date (or Subsequent Cut-off Date, with respect to a Subsequent Mortgage
Loan);

                  (ix) the date on which the first Monthly Payment was due on
the Mortgage Loan;

                  (x) the stated maturity date;

                  (xi) the amount of the Monthly Payment due on the first Due
Date after the Cut-off Date (or Subsequent Cut-off Date, with respect to a
Subsequent Mortgage Loan);

                  (xii) the last Due Date on which a Monthly Payment was
actually applied to the unpaid Stated Principal Balance;

                  (xiii) the original principal amount of the Mortgage Loan;

                  (xiv) the Scheduled Principal Balance of the Mortgage Loan as
of the close of business on the Cut-off Date (or Subsequent Cut-off Date, with
respect to a Subsequent Mortgage Loan);

                  (xv) the Gross Margin;

                  (xvi) a code indicating the purpose of the Mortgage Loan
(i.e., purchase financing, rate/term refinancing, cash-out refinancing);



                                       23
<PAGE>


                  (xvii) the Maximum Mortgage Rate;

                  (xviii) the Minimum Mortgage Rate;

                  (xix) the Mortgage Rate at origination;

                  (xx) the Periodic Rate Cap and the maximum first Adjustment
Date Mortgage Rate adjustment;

                  (xxi) a code indicating the documentation program (i.e., Full
Documentation, Fast Trac or Stated Income);

                  (xxii) the first Adjustment Date immediately following the
Cut-off Date (or Subsequent Cut-off Date, with respect to a Subsequent Mortgage
Loan);

                  (xxiii) the risk grade;

                  (xxiv) the Value of the Mortgaged Property; and

                  (xxv) the sale price of the Mortgaged Property, if applicable.

                  The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans in the aggregate as of the
Cut-off Date (or Subsequent Cut-off Date, with respect to a Subsequent Mortgage
Loan): (1) the number of Mortgage Loans; (2) the current principal balance of
the Mortgage Loans; (3) the weighted average Mortgage Rate of the Mortgage
Loans; and (4) the weighted average maturity of the Mortgage Loans. The Mortgage
Loan Schedule shall be amended from time to time by the Depositor in accordance
with the provisions of this Agreement. With respect to any Qualified Substitute
Mortgage Loan, the Cut-off Date shall refer to the related Cut-off Date for such
Mortgage Loan, determined in accordance with the definition of Cut-off Date
herein.

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

                  "Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 from time to time, and any REO Properties acquired in respect
thereof.

                  "Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (A) as
of any date of determination until the first Adjustment Date following the
Cut-off Date (or Subsequent Cut-off Date, with respect to a Subsequent Mortgage
Loan) shall be the rate set forth in the Mortgage Loan Schedule as the Mortgage
Rate in effect immediately following the Cut-off Date (or Subsequent Cut-off
Date, with respect to a Subsequent Mortgage Loan) and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date equal to the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, as most recently available as of a date prior
to the Adjustment Date as set forth in the related Mortgage Note, plus the
related Gross Margin; provided that the Mortgage Rate on such Mortgage Loan on
any Adjustment Date



                                       24
<PAGE>


shall never be more than the lesser of (i) the sum of the Mortgage Rate in
effect immediately prior to the Adjustment Date plus the related Periodic Rate
Cap, if any, and (ii) the related Maximum Mortgage Rate, and shall never be less
than the greater of (i) the Mortgage Rate in effect immediately prior to the
Adjustment Date less the Periodic Rate Cap, if any, and (ii) the related Minimum
Mortgage Rate. With respect to each Mortgage Loan that becomes an REO Property,
as of any date of determination, the annual rate determined in accordance with
the immediately preceding sentence as of the date such Mortgage Loan became an
REO Property.

                  "Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.

                  "Mortgagor":  The obligor on a Mortgage Note.

                  "Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Overcollateralization Reduction Amount for
such Distribution Date and (ii) the excess of (x) the Available Distribution
Amount for such Distribution Date over (y) the sum for such Distribution Date of
(A) the Interest Distribution Amount payable to the holders of the Class A
Certificates and the Mezzanine Certificates and (B) the sum of the amounts
described in clauses (b)(i) through (iii) of the definition of Principal
Distribution Amount.

                  "Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the Servicing Fee Rate.

                  "Net WAC Pass-Through Rate": With respect to REMIC II Regular
Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II Regular Interest
II-LT4, REMIC II Regular Interest II-LT5, the Class A Certificates and the
Mezzanine Certificates (other than the Class M-3 Certificates) and any
Distribution Date, a rate per annum equal to the weighted average of the Expense
Adjusted Mortgage Rates on the then outstanding Mortgage Loans, weighted based
on their Scheduled Principal Balances as of the first day of the calendar month
preceding the month in which the Distribution Date occurs multiplied by a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Interest Accrual Period.

                  "New Lease": Any lease of REO Property entered into on behalf
of REMIC I, including any lease renewed or extended on behalf of REMIC I, if
REMIC I has the right to renegotiate the terms of such lease.

                  "Nonrecoverable P&I Advance": Any P&I Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Master Servicer, will not or, in the
case of a proposed P&I Advance, would not be ultimately recoverable from related
late payments, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan
or REO Property as provided herein.

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



                                       25
<PAGE>


                  "Notional Amount": With respect to the Class CE Certificates
and any Distribution Date, the Uncertificated Balance of the REMIC II Regular
Interests (other than the Uncertificated Balance of REMIC II Regular Interest
II-LTP) for such Distribution Date.

                  "Officers' Certificate": With respect to the Depositor, a
certificate signed by the Chairman of the Board, the Vice Chairman of the Board,
the President or a vice president (however denominated), and by the Treasurer,
the Secretary, or one of the assistant treasurers or assistant secretaries. With
respect to the Seller, the Mortgage Loan Transferor and the Master Servicer, any
officer who is authorized to act for the Master Servicer in matters relating to
this Agreement, and whose action is binding upon the Master Servicer, initially
including those individuals whose names appear on the list of authorized
officers delivered at the closing.

                  "One-Month LIBOR": With respect to the Class A Certificates,
the Mezzanine Certificates (other than the Class M-3 Certificates), REMIC II
Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II Regular
Interest II-LT4 and REMIC II Regular Interest II-LT5 and any Interest Accrual
Period therefor, the rate determined by the Trustee on the related Interest
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits, as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such Interest Determination Date; provided that if such rate does not
appear on Telerate Page 3750, the rate for such date will be determined on the
basis of the offered rates of the Reference Banks for one-month U.S. dollar
deposits, as of 11:00 a.m. (London time) on such Interest Determination Date. In
such event, the Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If on such Interest
Determination Date, two or more Reference Banks provide such offered quotations,
One-Month LIBOR for the related Interest Accrual Period shall be the arithmetic
mean of such offered quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If on such Interest Determination Date, fewer than two
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above, LIBOR
for an Interest Determination Date would be based on LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Trustee shall select an alternative comparable index (over which the
Trustee has no control), used for determining one-month Eurodollar lending rates
that is calculated and published (or otherwise made available) by an independent
party.

                  "One-Month LIBOR Pass-Through Rate": With respect to the Class
A-1 Certificates and REMIC II Regular Interest II-LT2 and any Distribution Date,
a per annum rate equal to One- Month LIBOR plus ____%, in the case of each
Distribution Date through and including the Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties
remaining in the Trust Fund is reduced to less than ____% of the sum of the
aggregate Stated Principal Balance of the Initial Mortgage Loans as of the
Cut-off Date and the Original Pre- Funded Amount, or One-Month LIBOR plus ____%,
in the case of any Distribution Date thereafter.

                  With respect to the Class A-2 Certificates and REMIC II
Regular Interest II-LT3 and any Distribution Date, a per annum rate equal to
One-Month LIBOR plus ____%, in the case of each Distribution Date through and
including the Distribution Date on which the aggregate Stated Principal Balance
of the Mortgage Loans and REO Properties remaining in the Trust Fund is reduced
to less than ___% of the sum of the aggregate Stated Principal Balance of the
Initial Mortgage Loans as of the Cut-off Date and the Original Pre-Funded
Amount, or One-Month LIBOR plus ___%, in the case of any Distribution Date
thereafter.

                  With respect to the Class M-1 Certificates and REMIC II
Regular Interest II-LT4 and any Distribution Date, a per annum rate equal to
One-Month LIBOR plus ____%, in the case of each Distribution Date through and
including the Distribution Date on which the aggregate



                                       26
<PAGE>


Stated Principal Balance of the Mortgage Loans and REO Properties remaining in
the Trust Fund is reduced to less than ___% of the sum of the aggregate Stated
Principal Balance of the Initial Mortgage Loans as of the Cut-off Date and the
Original Pre-Funded Amount, or One-Month LIBOR plus ____%, in the case of any
Distribution Date thereafter.

                  With respect to the Class M-2 Certificates and REMIC II
Regular Interest II-LT5 and any Distribution Date, a per annum rate equal to
One-Month LIBOR plus ___%, in the case of each Distribution Date through and
including the Distribution Date on which the aggregate Stated Principal Balance
of the Mortgage Loans and REO Properties remaining in the Trust Fund is reduced
to less than ___% of the sum of the aggregate Stated Principal Balance of the
Initial Mortgage Loans as of the Cut-off Date and the Original Pre-Funded
Amount, or One-Month LIBOR plus ___%, in the case of any Distribution Date
thereafter.

                  "Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or the Master Servicer
acceptable to the Trustee, except that any opinion of counsel relating to (a)
the qualification of any of REMIC I, REMIC II or REMIC III as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of Independent counsel.

                  "Original Pre-Funded Amount": The amount deposited by the
Depositor in the Pre- Funding Account on the Closing Date, which amount is
$___________.

                  "Original Mortgage Loan": Any of the Mortgage Loans included
in REMIC I as of the Closing Date.

                  "Originator": ___________________________, or its successor in
interest, in its capacity as originator under the Mortgage Loan Purchase
Agreement.

                  "Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
over (b) the sum of the aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates and the Class P Certificates as of such
Distribution Date (after taking into account the payment of the amounts
described in clauses (b)(i) through (iv) of the definition of Principal
Distribution Amount on such Distribution Date).

                  "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Required Overcollateralized
Amount applicable to such Distribution Date over (b) the Overcollateralized
Amount applicable to such Distribution Date



                                       27
<PAGE>


prior to taking into account the payment of any Overcollateralization Increase
Amount on such Distribution Date.

                  "Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency Amount
as of such Distribution Date (after taking into account the payment of the
Principal Distribution Amount on such Distribution Date, exclusive of the
payment of any Overcollateralization Increase Amount) and (b) the amount of
Accrued Certificate Interest payable on the Class CE Certificates on such
Distribution Date as reduced by Realized Losses allocated thereto with respect
to such Distribution Date pursuant to Section 4.04.

                  "Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the sum of the amounts available for
distribution specified in clauses (b)(i) through (iii) of the definition of
Principal Distribution Amount.

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

                  "Pass-Through Rate": With respect to the Class A Certificates
and the Mezzanine Certificates (other than the Class M-3 Certificates) and any
Distribution Date, a rate per annum equal to the lesser of (i) the related
One-Month LIBOR Pass-Through Rate for such Distribution Date and (ii) the Net
WAC Pass-Through Rate for such Distribution Date. With respect to the Class M-3
Certificates, for any Distribution Date, a fixed rate equal to _____% per annum.
With respect to the Class CE Certificates and any Distribution Date, a rate per
annum equal to the percentage equivalent of a fraction, the numerator of which
is the sum of the amounts calculated pursuant to clauses (i) through (vii)
below, and the denominator of which is the Uncertificated Balance of the REMIC
II Regular Interests (other than the Uncertificated Balance of REMIC II Regular
Interest II- LTP). For purposes of calculating the Pass-Through Rate for the
Class CE Certificates, the numerator is equal to the sum of the following
components:

         (i)      the REMIC II Remittance Rate for REMIC II Regular Interest
                  II-LT1 minus two (2) times the weighted average of the REMIC
                  II Remittance Rates for REMIC II Regular Interest II-LT2,
                  REMIC II Regular Interest II-LT3, REMIC II Regular Interest
                  II-LT4, REMIC II Regular Interest II-LT5, REMIC II Regular
                  Interest II-LT6 and REMIC II Regular Interest II-LT7, with the
                  rate on REMIC II Regular Interest II-LT7 equal to zero for the
                  purpose of this calculation, applied to an amount equal to the
                  Uncertificated Balance of REMIC II Regular Interest II-LT1;

         (ii)     the weighted average of the REMIC II Remittance Rates for
                  REMIC II Regular Interest II-LT2, REMIC II Regular Interest
                  II-LT3, REMIC II Regular Interest II- LT4, REMIC II Regular
                  Interest II-LT5 and REMIC II Regular Interest II-LT6 minus two
                  (2) times the weighted average of the REMIC II Remittance
                  Rates for REMIC II Regular Interest II-LT2, REMIC II Regular
                  Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II
                  Regular Interest II-LT5, REMIC II Regular Interest II-LT6 and
                  REMIC II Regular Interest II-LT7, with the rate on REMIC II



                                       28
<PAGE>


                  Regular Interest II-LT7 equal to zero for the purpose of this
                  calculation, applied to an amount equal to the sum of the
                  Uncertificated Balances of REMIC II Regular Interest II-LT2,
                  REMIC II Regular Interest II-LT3, REMIC II Regular Interest
                  II-LT4, REMIC II Regular Interest II-LT5 and REMIC II Regular
                  Interest II-LT6;

         (iii)    the REMIC II Remittance Rate for REMIC II Regular Interest
                  II-LT7 minus two (2) times the weighted average of the REMIC
                  II Remittance Rates for REMIC II Regular Interest II-LT2,
                  REMIC II Regular Interest II-LT3, REMIC II Regular Interest
                  II-LT4, REMIC II Regular Interest II-LT5, REMIC II Regular
                  Interest II-LT6 and REMIC II Regular Interest II-LT7, with the
                  rate on REMIC II Regular Interest II-LT7 equal to zero for the
                  purpose of this calculation, applied to an amount equal to the
                  Uncertificated Balance of REMIC II Regular Interest II-LT7;

         (iv)     100% of the interest on REMIC II Regular Interest II-LT2S;

         (v)      100% of the interest on REMIC II Regular Interest II-LT3S;

         (v)      100% of the interest on REMIC II Regular Interest II-LT4S;

         (vi)     100% of the interest on REMIC II Regular Interest II-LT5S; and

         (vii)    100% of the interest on REMIC II Regular Interest II-LT6S.

                  "Percentage Interest": With respect to any Class of
Certificates (other than the Residual Certificates), the undivided percentage
ownership in such Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the initial Certificate Principal Balance
represented by such Certificate and the denominator of which is the aggregate
initial Certificate Principal Balance of all of the Certificates of such Class.
The Class A Certificates and the Mezzanine Certificates are issuable only in
minimum Percentage Interests corresponding to minimum initial Certificate
Principal Balances of $______ and integral multiples of $____ in excess thereof.
The Class P Certificates are issuable only in minimum Percentage Interests
corresponding to minimum initial Certificate Principal Balances of $___ and
integral multiples thereof. The Class CE Certificates are issuable only in
minimum Percentage Interests corresponding to minimum initial Certificate
Principal Balances of $______ and integral multiples of $____ in excess thereof;
provided, however, that a single Certificate of such Class of Certificates may
be issued having a Percentage Interest corresponding to the remainder of the
aggregate initial Certificate Principal Balance of such Class or to an otherwise
authorized denomination for such Class plus such remainder. With respect to any
Residual Certificate, the undivided percentage ownership in such Class evidenced
by such Certificate, as set forth on the face of such Certificate. The Residual
Certificates are issuable in Percentage Interests of ___% and multiples thereof.

                  "Periodic Rate Cap": With respect to each Mortgage Loan and
any Adjustment Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage Rate for such
Mortgage Loan may increase or decrease (without regard to the Maximum Mortgage
Rate or the Minimum Mortgage Rate) on such Adjustment Date from the Mortgage
Rate in effect immediately prior to such Adjustment Date.



                                       29
<PAGE>


                  "Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, the Master Servicer, the Trustee
or any of their respective Affiliates:

         (i)      direct obligations of, or obligations fully guaranteed as to
                  timely payment of principal and interest by, the United States
                  or any agency or instrumentality thereof, provided such
                  obligations are backed by the full faith and credit of the
                  United States;

         (ii)     demand and time deposits in, certificates of deposit of, or
                  bankers' acceptances (which shall each have an original
                  maturity of not more than 90 days and, in the case of bankers'
                  acceptances, shall in no event have an original maturity of
                  more than 365 days or a remaining maturity of more than 30
                  days) denominated in United States dollars and issued by, any
                  Depository Institution;

         (iii)    repurchase obligations with respect to any security described
                  in clause (i) above entered into with a Depository Institution
                  (acting as principal);

         (iv)     securities bearing interest or sold at a discount that are
                  issued by any corporation incorporated under the laws of the
                  United States of America or any state thereof and that are
                  rated by each Rating Agency that rates such securities in its
                  highest long-term unsecured rating categories at the time of
                  such investment or contractual commitment providing for such
                  investment;

         (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 30 days after the date of
                  acquisition thereof) that is rated by each Rating Agency that
                  rates such securities in its highest short-term unsecured debt
                  rating available at the time of such investment;

         (vi)     units of money market funds, including money market funds
                  advised by the Trustee or an Affiliate thereof, that have been
                  rated "AAA" by Fitch (if rated by Fitch), "Aaa" by Moody's and
                  "AAA" by S&P; and

         (vii)    if previously confirmed in writing to the Trustee, any other
                  demand, money market or time deposit, or any other obligation,
                  security or investment, as may be acceptable to the Rating
                  Agencies as a permitted investment of funds backing securities
                  having ratings equivalent to its highest initial rating of the
                  Class A Certificates; provided, however, that no instrument
                  described hereunder shall evidence either the right to receive
                  (a) only interest with respect to the obligations underlying
                  such instrument or (b) both principal and interest payments
                  derived from obligations underlying such instrument and the
                  interest and principal payments with respect to such
                  instrument provide a yield to maturity at par greater than
                  120% of the yield to maturity at par of the underlying
                  obligations.

                  "Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.



                                       30
<PAGE>


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

                  "P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the Master Servicer in respect of any Distribution Date
representing the aggregate of all payments of principal and interest, net of the
Servicing Fee, that were due during the related Due Period on the Mortgage Loans
and that were delinquent on the related Determination Date, plus certain amounts
representing assumed payments not covered by any current net income on the
Mortgaged Properties acquired by foreclosure of deed in lieu of foreclosure as
determined pursuant to Section 4.03.

                  "Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Keogh plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the Code.

                  "Pre-Funding Account": The account established and maintained
pursuant to Section 4.07 as defined therein.

                  "Prepayment Assumption": A prepayment rate for the Mortgage
Loans of ___% CPR. The Prepayment Assumption is used solely for determining the
accrual of original issue discount on the Certificates for federal income tax
purposes. A CPR (or Constant Prepayment Rate) represents an annualized constant
assumed rate of prepayment each month of a pool of mortgage loans relative to
its outstanding principal balance for the life of such pool.

                  "Prepayment Charge": With respect to any Prepayment Period,
any prepayment premium, penalty or charge collected by the Master Servicer from
a Mortgagor in connection with any voluntary Principal Prepayment in full
pursuant to the terms of the related Mortgage Note as from time to time held as
a part of the Trust Fund, the Prepayment Charges so held being identified in the
Prepayment Charge Schedule (other than any Master Servicer Prepayment Charge
Payment Amount).

                  "Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges included in the Trust Fund on such date, attached hereto as
Schedule 2 (including the prepayment charge summary attached thereto) as
supplemented by each schedule of Subsequent Mortgage Loans which by their terms
have related Prepayment Charges. The Prepayment Charge Schedule shall set forth
the following information with respect to each Prepayment Charge:

         (i)      the Master Servicer's Mortgage Loan identifying number;

         (ii)     a code indicating the type of Prepayment Charge;

         (iii)    the date on which the first Monthly Payment was due on the
                  related Mortgage Loan;

         (iv)     the term of the Prepayment Charge;



                                       31
<PAGE>


         (v)      the original principal balance of the related Mortgage Loan;

         (vi)     the principal balance of the related Mortgage Loan as of the
                  Cut-off Date (or Subsequent Cut-off Date, with respect to a
                  Subsequent Mortgage Loan;

                  The Prepayment Charge Schedule shall be amended from time to
time by the Depositor in accordance with the provisions of this Agreement.

                  "Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related Prepayment
Period the subject of a Principal Prepayment in full or in part that was applied
by the Master Servicer to reduce the outstanding principal balance of such loan
on a date preceding the Due Date in the succeeding Prepayment Period, an amount
equal to interest at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the date on which the
prepayment is applied and ending on the last day of the related Prepayment
Period. The obligations of the Master Servicer in respect of any Prepayment
Interest Shortfall are set forth in Section 3.24.

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

                  "Principal Distribution Amount": With respect to any
Distribution Date, the lesser of:

                  (a) the excess of the Available Distribution Amount over the
amount payable on the Class A Certificates and the Mezzanine Certificates
pursuant to Section 4.01(a)(2); and

                  (b) the sum of:

                  (i) the principal portion of each Monthly Payment on the
Mortgage Loans due during the related Due Period, whether or not received on or
prior to the related Determination Date;

                  (ii) the Stated Principal Balance of any Mortgage Loan that
was purchased during the related Prepayment Period pursuant to or as
contemplated by Section 2.03, Section 3.16(c) or Section 9.01 and the amount of
any shortfall deposited in the Collection Account in connection with the
substitution of a Deleted Mortgage Loan pursuant to Section 2.03 during the
related Prepayment Period;

                  (iii) the principal portion of all other unscheduled
collections (including, without limitation, Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds and REO Principal Amortization) received during
the related Prepayment Period, net of any portion thereof that represents a
recovery of principal for which an advance was made by the Master Servicer
pursuant to Section 4.03 in respect of a preceding Distribution Date, and with
respect to the Distribution Date immediately following the end of the Funding
Period, any amounts in the Pre-Funding Account after giving effect to the
purchase of any Subsequent Mortgage Loans;



                                       32
<PAGE>


                  (iv) the principal portion of any Realized Losses incurred on
the Mortgage Loans in the calendar month preceding such Distribution Date; and

                  (v) the amount of any Overcollateralization Increase Amount
for such Distribution Date;

                  minus:

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

                  "Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest (without regard to
any prepayment charge that may have been collected by the Master Servicer in
connection with such payment of principal) representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment.

                  "PTCE":  A Prohibited Transaction Class Exemption.

                  "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, and as confirmed by an Officers' Certificate from the
Master Servicer to the Trustee, an amount equal to the sum of (i) 100% of the
Stated Principal Balance thereof as of the date of purchase (or such other price
as provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or an advance by the Master Servicer, which
payment or advance had as of the date of purchase been distributed pursuant to
Section 4.01, through the end of the calendar month in which the purchase is to
be effected and (y) an REO Property, the sum of (1) accrued interest on such
Stated Principal Balance at the applicable Net Mortgage Rate in effect from time
to time from the Due Date as to which interest was last covered by a payment by
the Mortgagor or an advance by the Master Servicer through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, plus (2) REO Imputed Interest for such REO Property for
each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to Section
4.01, (iii) any unreimbursed Servicing Advances and P&I Advances and any unpaid
Servicing Fees allocable to such Mortgage Loan or REO Property, (iv) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan or REO Property pursuant to Sections 3.11(ix) and 3.16(b), and (v) in the
case of a Mortgage Loan required to be purchased pursuant to Section 2.03,
expenses reasonably incurred or to be incurred by the Master Servicer or the
Trustee in respect of the breach or defect giving rise to the purchase
obligation.



                                       33
<PAGE>


                  "Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Scheduled
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) have a Maximum Mortgage Rate not less
than the Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) have a Minimum
Mortgage Rate not less than the Minimum Mortgage Rate of the Deleted Mortgage
Loan, (v) have a Gross Margin equal to the Gross Margin of the Deleted Mortgage
Loan, (vi) have a next Adjustment Date not more than two months later than the
next Adjustment Date on the Deleted Mortgage Loan, (vii) have a remaining term
to maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (viii) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (x) have a risk grading determined by the Seller
at least equal to the risk grading assigned on the Deleted Mortgage Loan and
(xi) conform to each representation and warranty set forth in Section 6 of the
Mortgage Loan Purchase Agreement applicable to the Deleted Mortgage Loan. In the
event that one or more mortgage loans are substituted for one or more Deleted
Mortgage Loans, the amounts described in clause (i) hereof shall be determined
on the basis of aggregate principal balances, the Mortgage Rates described in
clause (ii) hereof shall be determined on the basis of weighted average Mortgage
Rates, the risk gradings described in clause (x) hereof shall be satisfied as to
each such mortgage loan, the terms described in clause (vii) hereof shall be
determined on the basis of weighted average remaining terms to maturity, the
Loan-to-Value Ratios described in clause (ix) hereof shall be satisfied as to
each such mortgage loan and, except to the extent otherwise provided in this
sentence, the representations and warranties described in clause (xi) hereof
must be satisfied as to each Qualified Substitute Mortgage Loan or in the
aggregate, as the case may be.

                  "Rating Agency or Rating Agencies": ______, _______ and _____
or their successors. If such agencies or their successors are no longer in
existence, "Rating Agencies" shall be such nationally recognized statistical
rating agencies, or other comparable Persons, designated by the Depositor,
notice of which designation shall be given to the Trustee and the Master
Servicer.

                  "Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor through the end of the calendar month in which such Final
Recovery Determination was made, calculated in the case of each calendar month
during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on such Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of such Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (iv)



                                       34
<PAGE>


the proceeds, if any, received in respect of such Mortgage Loan during the
calendar month in which such Final Recovery Determination was made, net of
amounts that are payable therefrom to the Master Servicer with respect to such
Mortgage Loan pursuant to Section 3.11(a)(iii).

                  With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus
(v) the aggregate of all P&I Advances made by the Master Servicer in respect of
such REO Property or the related Mortgage Loan for which the Master Servicer has
been or, in connection with such Final Recovery Determination, will be
reimbursed pursuant to Section 3.23 out of rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property, minus (vi) the
total of all net rental income, Insurance Proceeds and Liquidation Proceeds
received in respect of such REO Property that has been, or in connection with
such Final Recovery Determination, will be transferred to the Distribution
Account pursuant to Section 3.23.

                  With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.

                  With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.

                  "Record Date": With respect to each Distribution Date and any
Book-Entry Certificate, the Business Day immediately preceding such Distribution
Date. With respect to each Distribution Date and any other Class of
Certificates, including any Definitive Certificates, the last Business Day of
the month immediately preceding the month in which such Distribution Date
occurs.

                  "Reference Banks": _____________________, __________________,
________________ and __________________ and their successors in interest;
provided, however, that if any of the foregoing banks are not suitable to serve
as a Reference Bank, then



                                       35
<PAGE>


any leading banks selected by the Trustee which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Depositor or any Affiliate thereof and (iii)
which have been designated as such by the Trustee.

                  "Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.

                  "Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class P Certificate or Class CE Certificate.

                  "Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.

                  "Relief Act": The Servicemembers Civil Relief Act, as amended.

                  "Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.

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

                  "REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans and Prepayment Charges as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof, (ii) any REO Property, together
with all collections thereon and proceeds thereof, (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby) to the extent conveyed pursuant to Section
2.01 and (v) the Collection Account (other than any amounts representing any
Master Servicer Prepayment Charge Payment Amount), the Distribution Account
(other than any amounts representing any Master Servicer Prepayment Charge
Payment Amount) and any REO Account and such assets that are deposited therein
from time to time and any investments thereof, together with any and all income,
proceeds and payments with respect thereto. Notwithstanding the foregoing,
however, REMIC I specifically excludes the Pre-Funding Account, the Interest
Coverage and all payments and other collections of principal and interest due on
the Mortgage Loans on or before the Cut-off Date and all Prepayment Charges
payable in connection with Principal Prepayments made before the Cut-off Date.

                  "REMIC I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LT1 minus two (2) times the weighted average of the REMIC II Remittance Rates
for REMIC II Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II- LT4, REMIC II Regular Interest II-LT5, REMIC II Regular




                                       36
<PAGE>


Interest II-LT6 and REMIC II Regular Interest II-LT7, with the rate on REMIC II
Regular Interest II-LT7 equal to zero for purposes of this calculation, divided
by (b) 12.

                  "REMIC I Overcollateralized Amount": With respect to any date
of determination, (i) 1% of the aggregate Uncertificated Balances of the REMIC I
Regular Interests minus (ii) the aggregate of the Uncertificated Balances of
REMIC I Regular Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular
Interest I-LT4, REMIC I Regular Interest I-LT5 and REMIC I Regular Interest
I-LT6, in each case as of such date of determination.

                  "REMIC I Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LT2,
REMIC I Regular Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I Regular
Interest I-LT5 and REMIC I Regular Interest I-LT6 and the denominator of which
is the aggregate of the Uncertificated Balances of REMIC I Regular Interest
I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular Interest I- LT4, REMIC I
Regular Interest I-LT5, REMIC I Regular Interest I-LT6 and REMIC I Regular
Interest I-LT7.

                  "REMIC I Regular Interest": Any of the seven separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I. Each REMIC I Regular Interest
(other than REMIC I Regular Interest I-LTP, with respect to interest) shall
accrue interest at the related REMIC I Remittance Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC I Regular Interests are set forth in the
Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms



                                       37
<PAGE>



and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT5
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT6
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LT7": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT7
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP
shall be entitled to any Prepayment Charges collected by the Master Servicer and
to a distribution of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Balance as set forth in
the Preliminary Statement hereto.

                  "REMIC I Remittance Rate": With respect to each REMIC I
Regular Interest, the weighted average of the Expense Adjusted Mortgage Rates on
the then outstanding Mortgage Loans and REO Properties.

                  "REMIC I Required Overcollateralized Amount": ____% of the
Required Overcollateralization Amount.

                  "REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee for the benefit
of REMIC III, as holder of the



                                       38
<PAGE>



REMIC II Regular Interests, and the Class R-II Certificateholders pursuant to
Section 2.07, and all amounts deposited therein, with respect to which a
separate REMIC election is to be made.

                  "REMIC II Regular Interest": Any of the eleven separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. Each REMIC II Regular Interest
(other than REMIC II Regular Interest II-LTP, with respect to interest) shall
accrue interest at the related REMIC II Remittance Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC II Regular Interests are set forth in the
Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT1
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT3
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT4
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT5
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.



                                       39
<PAGE>


                  "REMIC II Regular Interest II-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT6
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT7": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT7
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTP
shall be entitled to any Prepayment Charges collected by the Master Servicer and
to a distribution of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Balance as set forth in
the Preliminary Statement hereto.

                  "REMIC II Regular Interest II-LT2S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.

                  "REMIC II Regular Interest II-LT3S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT3S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.

                  "REMIC II Regular Interest II-LT4S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT4S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.

                  "REMIC II Regular Interest II-LT5S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT5S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.

                  "REMIC II Regular Interest II-LT6S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT6S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.

                  "REMIC II Remittance Rate": With respect to REMIC II Regular
Interest II-LT1 and REMIC II Regular Interest II-LT7, the weighted average of
the Expense Adjusted Mortgage



                                       40
<PAGE>


Rates on the then outstanding Mortgage Loans and REO Properties. With respect to
REMIC II Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II-LT4 and REMIC II Regular Interest II-LT5, the lesser of (i)
the related One-Month LIBOR Pass-Through Rate (based on the actual number of
days elapsed in the applicable Interest Accrual Period and a 360-day year) and
(ii) the Net WAC Pass-Through Rate, multiplied by the actual number of days
elapsed in the related Interest Accrual Period divided by 360. With respect to
REMIC II Regular Interest II-LT6, a fixed rate per annum equal to the related
REMIC II Remittance Rate as set forth in the Preliminary Statement hereto. With
respect to REMIC II Regular Interest II-LT2S, REMIC II Regular Interest II-LT3S,
REMIC II Regular Interest II-LT4S, REMIC II Regular Interest II-LT5S and REMIC
II Regular Interest II-LT6S, a rate per annum equal to excess of the REMIC I
Remittance Rate for the related Uncertificated Corresponding Component over the
REMIC II Remittance Rate for REMIC II Regular Interest II-LT2, REMIC II Regular
Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II Regular Interest
II-LT5 and REMIC II Regular Interest II-LT6, respectively.

                  "REMIC III": The segregated pool of assets consisting of all
of the REMIC II Regular Interests conveyed in trust to the Trustee for the
benefit of the REMIC III Certificateholders pursuant to Section 2.09, and all
amounts deposited therein, with respect to which a separate REMIC election is to
be made.

                  "REMIC III Certificate": Any Regular Certificate or Class
R-III Certificate.

                  "REMIC III Certificateholder": The Holder of any REMIC III
Certificate.

                  "REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.

                  "Remittance Report": A report in form and substance that is
acceptable to the Trustee on a magnetic disk or tape prepared by the Master
Servicer pursuant to Section 4.03 with such additions, deletions and
modifications as agreed to by the Trustee and the Master Servicer.
                  "Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."

                  "REO Account": Each of the accounts maintained by the Master
Servicer in respect of an REO Property pursuant to Section 3.23.

                  "REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.

                  "REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the



                                       41
<PAGE>


case of the first such calendar month, of the related Mortgage Loan, if
appropriate) as of the close of business on the Distribution Date in such
calendar month.

                  "REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
9.01 that is allocable to such REO Property) or otherwise, net of any portion of
such amounts (i) payable pursuant to Section 3.23(c) in respect of the proper
operation, management and maintenance of such REO Property or (ii) payable or
reimbursable to the Master Servicer pursuant to Section 3.23(d) for unpaid
Servicing Fees in respect of the related Mortgage Loan and unreimbursed
Servicing Advances and P&I Advances in respect of such REO Property or the
related Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO
Property for such calendar month.

                  "REO Property": A Mortgaged Property acquired by the Master
Servicer on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.23.

                  "Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E-1 or Exhibit E-2 attached hereto.

                  "Required Overcollateralized Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, $__________, (ii) on or after
the Stepdown Date provided a Trigger Event is not in effect, the greater of (x)
____% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period and (y) $_________, and (iii) on or after the
Stepdown Date and a Trigger Event is in effect, the Required Overcollateralized
Amount for the immediately preceding Distribution Date.

                  "Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which New York
City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which New
York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.

                  "Residential Dwelling": Any one of the following: (i) an
attached or detached one-family dwelling, (ii) a detached two- to four-family
dwelling, (iii) a one-family dwelling unit in a condominium project or (iv) a
detached one-family dwelling in a planned unit development, none of which is a
co-operative, mobile or manufactured home (unless such mobile or manufactured
home is defined as real property under applicable state law).

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



                                       42
<PAGE>


                  "Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.

                  "Responsible Officer": When used with respect to the Trustee,
the Chairman or Vice Chairman of the Board of Directors or Trustees, the
Chairman or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any vice president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the Cashier, any
assistant cashier, any trust officer or assistant trust officer, the Controller
and any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and, with respect to a particular matter, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.

                  "Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cutoff Date, (or Subsequent Cut-off Date, with respect to a
Subsequent Mortgage Loan), the outstanding principal balance of such Mortgage
Loan as of such date, net of the principal portion of all unpaid Monthly
Payments, if any, due on or before such date; (b) as of any Due Date subsequent
to the Cutoff Date (or Subsequent Cut-off Date, as applicable) up to and
including the Due Date in the calendar month in which a Liquidation Event occurs
with respect to such Mortgage Loan, the Scheduled Principal Balance of such
Mortgage Loan as of the Cut-off Date (or Subsequent Cut-off Date, as
applicable), minus the sum of (i) the principal portion of each Monthly Payment
due on or before such Due Date but subsequent to the Cut-off Date (or Subsequent
Cut-off Date, as applicable), whether or not received, (ii) all Principal
Prepayments received before such Due Date but after the Cut-off Date (or
Subsequent Cut-off Date, as applicable), (iii) the principal portion of all
Liquidation Proceeds and Insurance Proceeds received before such Due Date but
after the Cut-off Date (or Subsequent Cut-off Date, as applicable), net of any
portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of the Trust
Fund up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such REO Property, an amount (not less
than zero) equal to the Scheduled Principal Balance of the related Mortgage Loan
as of the Due Date in the calendar month in which such REO Property was
acquired, minus the aggregate amount of REO Principal Amortization, if any, in
respect of such REO Property for all previously ended calendar months; and (b)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such REO Property, zero.

                  "Seller": ____________________________, a ______________
company, or its successor in interest, in its capacity as seller under the
Mortgage Loan Purchase Agreement.



                                       43
<PAGE>


                  "Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.

                  "Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Master Servicer in connection with a default,
delinquency or other unanticipated event by the Master Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
in respect of a particular Mortgage Loan, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property and
(iv) the performance of its obligations under Section 3.01, Section 3.09,
Section 3.14, Section 3.16 and Section 3.23. The Master Servicer shall not be
required to make any Servicing Advance in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Master Servicer, would
not be ultimately recoverable from related Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein.

                  "Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one month's interest (or in the event of
any payment of interest which accompanies a Principal Prepayment in full made by
the Mortgagor during such calendar month, interest for the number of days
covered by such payment of interest) at the applicable Servicing Fee Rate on the
same principal amount on which interest on such Mortgage Loan accrues for such
calendar month. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.

                  "Servicing Fee Rate": ____% per annum; provided however, in
the event that the weighted average of the Net Mortgage Rates on the Mortgage
Loans is less than ____%, the Servicing Fee Rate shall be reduced by the amount
needed to pay the Pass-Through Certificates on the Class M-3 Certificates.

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

                  "Single Certificate": With respect to any Class of
Certificates (other than the Class P Certificates and the Residual
Certificates), a hypothetical Certificate of such Class evidencing a Percentage
Interest for such Class corresponding to an initial Certificate Principal
Balance or Notional Amount of $1,000. With respect to the Class P Certificates
and the Residual Certificates, a hypothetical Certificate of such Class
evidencing a 20% Percentage Interest in such Class.

                  "S&P": Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or its successor in interest.

                  "Startup Day": With respect to each of REMIC I, REMIC II and
REMIC III, the day designated as such pursuant to Section 10.01(b) hereof.



                                       44
<PAGE>


                  "Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the Scheduled Principal Balance of such
Mortgage Loan as of the Cut-off Date (or Subsequent Cut-off Date, with respect
to a Subsequent Mortgage Loan), as shown in the Mortgage Loan Schedule, minus
the sum of (i) the principal portion of each Monthly Payment due on a Due Date
subsequent to the Cut-off Date (or Subsequent Cut-off Date, as applicable), to
the extent received from the Mortgagor or advanced by the Master Servicer and
distributed pursuant to Section 4.01 on or before such date of determination,
(ii) all Principal Prepayments received after the Cut-off Date (or Subsequent
Cut-off Date, as applicable), to the extent distributed pursuant to Section 4.01
on or before such date of determination, (iii) all Liquidation Proceeds and
Insurance Proceeds applied by the Master Servicer as recoveries of principal in
accordance with the provisions of Section 3.16, to the extent distributed
pursuant to Section 4.01 on or before such date of determination and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient Valuation
made during or prior to the Prepayment Period for the most recent Distribution
Date coinciding with or preceding such date of determination; and (b) as of any
date of determination coinciding with or subsequent to the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, zero. With respect to any REO Property: (a) as of any
date of determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of REMIC I, minus the sum of (i) if such REO Property was
acquired before the Distribution Date in any calendar month, the principal
portion of the Monthly Payment due on the Due Date in the calendar month of
acquisition, to the extent advanced by the Master Servicer and distributed
pursuant to Section 4.01 on or before such date of determination, and (ii) the
aggregate amount of REO Principal Amortization in respect of such REO Property
for all previously ended calendar months, to the extent distributed pursuant to
Section 4.01 on or before such date of determination; and (b) as of any date of
determination coinciding with or subsequent to the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such REO Property
would be distributed, zero.

                  "Stayed Funds": If the Master Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of a Remittance (as
defined in Section 7.02(b)) is prohibited by Section 362 of the federal
Bankruptcy Code, funds that are in the custody of the Master Servicer, a trustee
in bankruptcy or a federal bankruptcy court and should have been the subject of
such Remittance absent such prohibition.

                  "Stepdown Date": The later to occur of (i) the Distribution
Date occurring in ____________ and (ii) the first Distribution Date on which the
Credit Enhancement Percentage (calculated for this purpose only after taking
into account distributions of principal on the Mortgage Loans but prior to any
distribution of the Principal Distribution Amount to the Certificates then
entitled to distributions of principal on such Distribution Date) is equal to or
greater than _____________%.



                                       45
<PAGE>


                  "Subsequent Cut-off Date": With respect to those Subsequent
Mortgage Loans sold to the Trust Fund pursuant to a Subsequent Transfer
Instrument, the first day of the month in which the related Subsequent Transfer
Date occurs.

                  "Subsequent Mortgage Loan": A Mortgage Loan sold by the
Depositor to the Trust Fund pursuant to Section 2.11, such Mortgage Loan being
identified on the Mortgage Loan Schedule attached to a Subsequent Transfer
Instrument.

                  "Subsequent Mortgage Loan Purchase Agreement": The agreement
between the Depositor and the Seller regarding the transfer of the Subsequent
Mortgage Loans by the Seller to the Depositor.

                  "Subsequent Transfer Date": With respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Mortgage Loans are
sold to the Trust Fund.

                  "Subsequent Transfer Instrument": Each subsequent transfer
instrument, dated as of a Subsequent Transfer Date, executed by the Trustee and
the Depositor substantially in the form of Exhibit I, by which Subsequent
Mortgage Loans are sold to the Trust Fund.

                  "Sub-Servicer": Any Person with which the Master Servicer has
entered into a Sub- Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.

                  "Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the Master Servicer.

                  "Sub-Servicing Agreement": The written contract between the
Master Servicer and a Sub-Servicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02.

                  "Substitution Shortfall Amount": As defined in Section
2.03(d).

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

                  "Telerate Page 3750": The display designated as page "3750" on
the Dow Jones Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).

                  "Termination Price":  As defined in Section 9.01.

                  "Terminator":  As defined in Section 9.01.



                                       46
<PAGE>


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

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

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

                  "Trigger Event": A Trigger Event has occurred with respect to
a Distribution Date if the Delinquency Percentage exceeds the lesser of (i)
____% of the Credit Enhancement Percentage (calculated for this purpose only
with the aggregate Certificate Principal Balance of the Mezzanine Certificates
and the Class CE Certificates) or (ii) ____%.

                  "Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II and REMIC III.

                  "Trustee": ______________________, a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.

                  "Trustee's Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal one twelfth of the product of (i) the Trustee's Fee Rate,
multiplied by (ii) the aggregate Scheduled Principal Balance of the Mortgage
Loans and any REO Properties and any amount in the Pre-Funding Account as of the
second preceding Due Date (or, in the case of the initial Distribution Date, as
of the Cut-off Date).

                  "Trustee's Fee Rate":  _______% per annum.

                  "Uncertificated Balance": The amount of any REMIC I Regular
Interest or REMIC II Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Balance of each REMIC
I Regular Interest and each REMIC II Regular Interest shall equal the amount set
forth in the Preliminary Statement hereto as its initial uncertificated balance.
On each Distribution Date, the Uncertificated Balance of each REMIC I Regular
Interest and each REMIC II Regular Interest shall be reduced by all
distributions of principal made on such REMIC I Regular Interest or such REMIC
II Regular Interest, as applicable, on such Distribution Date pursuant to
Section 4.01 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 4.04 and the Uncertificated Balances of the REMIC I Regular Interest
I-LT7 and REMIC II Regular Interest II-LT7 shall be increased by interest
deferrals as provided in Section 4.01(a)(1)(A)(i) and Section 4.01(a)(1)(B)(i),
respectively. The Uncertificated Balance of each REMIC I Regular Interest and
each REMIC II Regular Interest shall never be less than zero.

                  "Uncertificated Corresponding Component": With respect to:
REMIC II Regular Interest II-LT1, REMIC I Regular Interest I-LT1; REMIC II
Regular Interest II-LT2 and REMIC II Regular Interest II-LT2S, REMIC I Regular
Interest I-LT2; REMIC II Regular Interest II-LT3



                                       47
<PAGE>


and REMIC II Regular Interest II-LT3S, REMIC I Regular Interest I-LT3, REMIC II
Regular Interest II-LT4 and REMIC II Regular Interest II-LT4S, REMIC I Regular
Interest I-LT4; REMIC II Regular Interest II-LT5 and REMIC II Regular Interest
II-LT5S, REMIC I Regular Interest I-LT5; REMIC II Regular Interest II-LT6 and
REMIC II Regular Interest II-LT6S, REMIC I Regular Interest I-LT6; REMIC II
Regular Interest II-LT7, REMIC I Regular Interest I-LT7; and REMIC II Regular
Interest II-LTP, REMIC I Regular Interest I-LTP.

                  "Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. With respect to any REMIC II Regular Interest
for any Distribution Date, one month's interest at the REMIC II Remittance Rate
applicable to such REMIC II Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance thereof immediately prior to such Distribution
Date. Uncertificated Interest in respect of any REMIC I Regular Interest (other
than REMIC I Regular Interest I-LTP), REMIC II Regular Interest II-LT1, REMIC II
Regular Interest II-LT6, REMIC II Regular Interest II-LT7, REMIC II Regular
Interest II-LT2S, REMIC II Regular Interest II-LT3S, REMIC II Regular Interest
II-LT4S, REMIC II Regular Interest II-LT5S and REMIC II Regular Interest II-LT6S
shall accrue on the basis of a 360-day year consisting of twelve 30-day months;
Uncertificated Interest in respect of REMIC II Regular Interest II-LT2, REMIC II
Regular Interest II-LT3, REMIC II Regular Interest II-LT4 and REMIC II Regular
Interest II-LT5, shall accrue on the basis of a 360-day year and the actual
number of days in the applicable Interest Accrual Period. Uncertificated
Interest with respect to each Distribution Date, as to any REMIC I Regular
Interest or REMIC II Regular Interest, shall be reduced by an amount equal to
the sum of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section 3.24
and (b) the aggregate amount of any Relief Act Interest Shortfall, if any
allocated, in each case, to such REMIC I Regular Interest or REMIC II Regular
Interest pursuant to Section 1.02. In addition, Uncertificated Interest with
respect to each Distribution Date, as to any REMIC I Regular Interest or REMIC
II Regular Interest, shall be reduced by Realized Losses, if any, allocated to
such REMIC I Regular Interest or REMIC II Regular Interest pursuant to Section
1.02 and Section 4.04.

                  "Uncertificated Notional Amount": With respect to REMIC II
Regular Interest II-LT2S, REMIC II Regular Interest II-LT3S, REMIC II Regular
Interest II-LT4S, REMIC II Regular Interest II-LT5S and REMIC II Regular
Interest II-LT6S, the Uncertificated Balance of REMIC I Regular Interest I-LT2,
REMIC I Regular Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I Regular
Interest I-LT5 and REMIC I Regular Interest I-LT6, respectively.

                  "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.

                  "United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof
(except, in the case of a partnership, to the extent provided in regulations) 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



                                       48
<PAGE>


over the administration of the trust and one or more 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. The term "United States" shall have the
meaning set forth in Section 7701 of the Code.

                  "Value": With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, and (ii) the purchase price paid for the
related Mortgaged Property by the Mortgagor with the proceeds of the Mortgage
Loan, provided, however, in the case of a Refinanced Mortgage Loan, such value
of the Mortgaged Property is based solely upon the value determined by an
appraisal made for the originator of such Refinanced Mortgage Loan at the time
of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989.

                  "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any date
of determination, 98% of all Voting Rights will be allocated among the holders
of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated to the holders of the Class P Certificates and 1/3 of 1% of all Voting
Rights will be allocated among the holders of each Class of Residual
Certificates. The Voting Rights allocated to each Class of Certificate shall be
allocated among Holders of each such Class in accordance with their respective
Percentage Interests as of the most recent Record Date.

                  SECTION 1.02. ALLOCATION OF CERTAIN INTEREST SHORTFALLS.

                  For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A
Certificates, the Mezzanine Certificates and the Class CE Certificates for any
Distribution Date, (1) the aggregate amount of any Prepayment Interest
Shortfalls (to the extent not covered by payments by the Master Servicer
pursuant to Section 3.24) and any Relief Act Interest Shortfall incurred in
respect of the Mortgage Loans for any Distribution Date shall be allocated
first, among the Class CE Certificates on a PRO RATA basis based on, and to the
extent of, one month's interest at the then applicable respective Pass-Through
Rate on the respective Notional Amount of each such Certificate and thereafter,
among the Class A Certificates and the Mezzanine Certificates on a PRO RATA
basis based on, and to the extent of, one month's interest at the then
applicable respective Pass-Through Rate on the respective Certificate Principal
Balance of each such Certificate and (2) the aggregate amount of any Realized
Losses incurred for any Distribution Date shall be allocated among the Class CE
Certificates on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Notional Amount of each such Certificate.



                                       49
<PAGE>


                  For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Master Servicer pursuant to Section 3.24) and Relief
Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Interest payable
to REMIC I Regular Interest I-LT1 and REMIC I Regular Interest I-LT7 up to an
aggregate amount equal to the REMIC I Interest Loss Allocation Amount, 98% and
2%, respectively, and thereafter among REMIC I Regular Interest I- LT1, REMIC I
Regular Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular Interest
I-LT4, REMIC I Regular Interest I-LT5, REMIC I Regular Interest I-LT6 and REMIC
I Regular Interest I-LT7 PRO RATA based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Uncertificated Balance of each such REMIC I Regular Interest.

                  All Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls on the REMIC II Regular Interests shall be allocated by the Trustee
on each Distribution Date among the REMIC II Regular Interests in the proportion
that Prepayment Interest Shortfalls and Relief Act Interest Shortfalls are
allocated to the related Uncertificated Corresponding Component.

                                  ARTICLE II.

         CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES

                  SECTION 2.01. CONVEYANCE OF MORTGAGE LOANS.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan Purchase Agreement (except Section 17 thereof), and all other
assets included or to be included in REMIC I. Such assignment includes all
interest and principal received by the Depositor or the Master Servicer on or
with respect to the Mortgage Loans (other than payments of principal and
interest due on such Mortgage Loans on or before the Cut-off Date). The
Depositor herewith delivers to the Trustee an executed copy of the Mortgage Loan
Purchase Agreement and the Mortgage Loan Sale and Contribution Agreement.

                  In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trustee, or to one or more
Custodians as the agent or agents of the Trustee, the following documents or
instruments with respect to each Initial Mortgage Loan so transferred and
assigned and the Depositor shall, in accordance with Section 2.11, deliver or
cause to be delivered to the Trustee with respect to each Subsequent Mortgage
Loan, the following documents or instruments (a "Mortgage File"):

                           (i) the original Mortgage Note, endorsed in blank or
                  in the following form: "Pay to the order of
                  _______________________________, as Trustee under the
                  applicable agreement, without recourse," with all prior and
                  intervening



                                       50
<PAGE>


                  endorsements showing a complete chain of endorsement from the
                  originator to the Person so endorsing to the Trustee;

                           (ii) the original Mortgage with evidence of recording
                  thereon, and a copy, certified by the appropriate recording
                  office, of the recorded power of attorney, if the Mortgage was
                  executed pursuant to a power of attorney, with evidence of
                  recording thereon;

                           (iii) an original Assignment of the Mortgage in
                  blank;

                           (iv) the original recorded Assignment or Assignments
                  of the Mortgage showing a complete chain of assignment from
                  the originator to the Person assigning the Mortgage to the
                  Trustee as contemplated by the immediately preceding clause
                  (iii);

                           (v) the original or copies of each assumption,
                  modification, written assurance or substitution agreement, if
                  any; and

                           (vi) the original lender's title insurance policy,
                  together with all endorsements or riders which were issued
                  with or subsequent to the issuance of such policy, insuring
                  the priority of the Mortgage as a first lien on the Mortgaged
                  Property represented therein as a fee interest vested in the
                  Mortgagor, or in the event such original title policy is
                  unavailable, a written commitment or uniform binder or
                  preliminary report of title issued by the title insurance or
                  escrow company.

                  The Master Servicer (in its capacity as Originator) shall
promptly (and in no event later than thirty (30) Business Days, subject to
extension upon a mutual agreement between the Master Servicer and the Trustee,
following the later of (i) the Closing Date (or Subsequent Transfer Date, with
respect to the Subsequent Mortgage Loans), (ii) the date on which the Originator
receives the Assignment from the Custodian and (iii) the date of receipt by the
Master Servicer of the recording information for a Mortgage) submit or cause to
be submitted for recording, at no expense to the Trust Fund or the Trustee, in
the appropriate public office for real property records, each Assignment
referred to in Sections 2.01(iii) and (iv) above and shall execute each original
Assignment in the following form: "______________________, as Trustee under the
applicable agreement". In the event that any such Assignment is lost or returned
unrecorded because of a defect therein, the Master Servicer (in its capacity as
Originator) shall promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded. Notwithstanding the
foregoing, however, for administrative convenience and facilitation of servicing
and to reduce closing costs, the assignments of Mortgage shall not be required
to be completed and submitted for recording with respect to any Mortgage Loan
only if the Trustee and each Rating Agency has received an opinion of counsel,
satisfactory in form and substance to the Trustee and each Rating Agency, to the
effect that the recordation of such assignments in any specific jurisdiction is
not necessary to protect the Trustee's interest in the related Mortgage Note;
provided further, however, notwithstanding the delivery of any opinion of
counsel, each assignment of Mortgage shall be submitted for recording by the
Originator in the manner



                                       51
<PAGE>



described above, at no expense to the Trust Fund or Trustee, upon the earliest
to occur of: (i) reasonable direction by Holders of Certificates entitled to at
least 25% of the Voting Rights, (ii) failure of the Master Servicer Termination
Test, (iii) the occurrence of a bankruptcy, insolvency or foreclosure relating
to the Originator, (iv) the occurrence of a servicing transfer as described in
Section 7.02 hereof and (iv) if the Originator is not the Master Servicer and
with respect to any one assignment of Mortgage, the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgagor under the related Mortgage.
Notwithstanding the foregoing, if the Master Servicer is unable to pay the cost
of recording the Assignments of Mortgage, such expense will be paid by the
Trustee.

                  If any of the documents referred to in Sections 2.01(ii),
(iii) or (iv) above has as of the Closing Date (or Subsequent Transfer Date,
with respect to the Subsequent Mortgage Loans) been submitted for recording but
either (x) has not been returned from the applicable public recording office or
(y) has been lost or such public recording office has retained the original of
such document, the obligations of the Depositor to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Trustee, or to the
appropriate Custodian on behalf of the Trustee, of a copy of each such document
certified by the Originator in the case of (x) above or the applicable public
recording office in the case of (y) above to be a true and complete copy of the
original that was submitted for recording and (2) if such copy is certified by
the Originator, delivery to the Trustee, or to the appropriate Custodian on
behalf of the Trustee, promptly upon receipt thereof of either the original or a
copy of such document certified by the applicable public recording office to be
a true and complete copy of the original. If the original lender's title
insurance policy was not delivered pursuant to Section 2.01(vi) above, the
Depositor shall deliver or cause to be delivered to the Trustee, or to the
appropriate Custodian on behalf of the Trustee, promptly after receipt thereof,
the original lender's title insurance policy. The Depositor shall deliver or
cause to be delivered to the Trustee, or to the appropriate Custodian on behalf
of the Trustee, promptly upon receipt thereof any other original documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.

                  All original documents relating to the Mortgage Loans that are
not delivered to the Trustee, or to the appropriate Custodian on behalf of the
Trustee, are and shall be held by or on behalf of the Originator, the Seller,
the Depositor or the Master Servicer, as the case may be, in trust for the
benefit of the Trustee on behalf of the Certificateholders. In the event that
any such original document is required pursuant to the terms of this Section to
be a part of a Mortgage File, such document shall be delivered promptly to the
Trustee, or to the appropriate Custodian on behalf of the Trustee. Any such
original document delivered to or held by the Depositor that is not required
pursuant to the terms of this Section to be a part of a Mortgage File, shall be
delivered promptly to the Master Servicer.

                  SECTION 2.02. ACCEPTANCE OF REMIC I BY THE TRUSTEE.

                  Subject to the provisions of Section 2.01 and subject to any
exceptions noted on the exception report described in the next paragraph below,
the Trustee acknowledges receipt (or, with respect to Mortgage Loans subject to
a Custodial Agreement, receipt by the respective Custodian as the duly appointed
agent of the Trustee) of the documents referred to in Section 2.01 (other than
such documents described in Section 2.01(v)) above and all other assets



                                       52
<PAGE>


included in the definition of "REMIC I" under clauses (i), (iii), (iv) and (v)
(to the extent of amounts deposited into the Distribution Account) and declares
that it, or such Custodian as its agent, holds and will hold such documents and
the other documents delivered to it constituting the Mortgage File, and that it
holds or will hold all such assets and such other assets included in the
definition of "REMIC I" in trust for the exclusive use and benefit of all
present and future Certificateholders.

                  The Trustee agrees, for the benefit of the Certificateholders,
to review (or cause a Custodian on its behalf to review) each Mortgage File on
or before the Closing Date (or Subsequent Transfer Date, with respect to the
Subsequent Mortgage Loans) and to certify in substantially the form attached
hereto as Exhibit C-1 (or cause the Custodian to certify in the form of the
Initial Certification attached to the Custodial Agreement) that, as to each
Initial Mortgage Loan or Subsequent Mortgage Loan, as the case may be, listed in
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in the exception report annexed thereto as
not being covered by such certification), (i) all documents constituting part of
such Mortgage File (other than such documents described in Section 2.01(v))
required to be delivered to it pursuant to this Agreement are in its possession,
(ii) such documents have been reviewed by it or such Custodian and are not
mutilated, torn or defaced unless initialed by the related borrower and relate
to such Mortgage Loan, (iii) based on its or the Custodian's examination and
only as to the foregoing, the information set forth in the Mortgage Loan
Schedule that corresponds to items (i) through (iii), (vi), (ix), (x), (xiii),
(xv) and (xvii) through (xx) of the definition of "Mortgage Loan Schedule"
accurately reflects information set forth in the Mortgage File. It is herein
acknowledged that, in conducting such review, the Trustee or such Custodian was
under no duty or obligation (i) to inspect, review or examine any such
documents, instruments, certificates or other papers to determine whether they
are genuine, enforceable, or appropriate for the represented purpose or whether
they have actually been recorded or that they are other than what they purport
to be on their face or (ii) to determine whether any Mortgage File should
include any of the documents specified in clause (v) of Section 2.01.

                  Prior to the first anniversary date of this Agreement the
Trustee shall deliver to the Depositor and the Master Servicer a final
certification in the form annexed hereto as Exhibit C-2 (or shall cause the
Custodian to deliver to the Trustee, the Depositor and the Master Servicer a
final certification in the form attached to the Custodial Agreement) evidencing
the completeness of the Mortgage Files, with any applicable exceptions noted
thereon, with respect to all of the Initial Mortgage Loans and the Subsequent
Mortgage Loans.

                  If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee or any Custodian finds any document or documents constituting a part of
a Mortgage File to be missing or defective in any material respect, at the
conclusion of its review the Trustee (or a Custodian on behalf of the Trustee)
shall so notify the Depositor and the Master Servicer. In addition, upon the
discovery by the Depositor, the Master Servicer or the Trustee of a breach of
any of the representations and warranties made by the Originator or the Seller
in the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects such Mortgage Loan or the interests of the related
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties.



                                       53
<PAGE>


                  The Trustee (or a Custodian on behalf of the Trustee) shall,
at the written request and expense of any Certificateholder, provide a written
report to such Certificateholder, of all Mortgage Files released to the Master
Servicer for servicing purposes.

                  SECTION 2.03. REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS BY
                                THE ORIGINATOR, THE SELLER OR THE DEPOSITOR;
                                PAYMENT OF PREPAYMENT CHARGES IN THE EVENT OF
                                BREACH.

                  (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, the Mortgage File or
of the breach by the Originator or the Seller of any representation, warranty or
covenant under the Mortgage Loan Purchase Agreement in respect of any Mortgage
Loan which materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders (in the case of any such
representation or warranty made to the knowledge or the best of knowledge of the
Originator or the Seller, as to which the Originator or the Seller has no
knowledge, without regard to the Originator's or the Seller's lack of knowledge
with respect to the substance of such representation or warranty being
inaccurate at the time it was made), the Trustee (or a Custodian on behalf of
the Trustee) shall promptly notify the Originator or the Seller and the Master
Servicer of such defect, missing document or breach and request that the
Originator or the Seller, as the case may be, deliver such missing document or
cure such defect or breach within 90 days from the date the Originator or the
Seller, as the case may be, was notified of such missing document, defect or
breach, and if the Originator or the Seller, as the case may be, does not
deliver such missing document or cure such defect or breach in all material
respects during such period, the Master Servicer (or, in accordance with Section
3.02(b), the Trustee) shall enforce the obligations of the Originator or the
Seller, as the case may be, under the Mortgage Loan Purchase Agreement to
repurchase such Mortgage Loan from REMIC I at the Purchase Price within 90 days
after the date on which the Originator or the Seller, as the case may be, was
notified (subject to Section 2.03(e)) of such missing document, defect or
breach, if and to the extent that the Originator or the Seller, as the case may
be, is obligated to do so under the Mortgage Loan Purchase Agreement. The
Purchase Price for the repurchased Mortgage Loan shall be deposited in the
Collection Account, and the Trustee, upon receipt of written certification from
the Master Servicer of such deposit, shall release to the Originator or the
Seller, as the case may be, the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as the Originator or the Seller, as the case may be, shall furnish to
it and as shall be necessary to vest in the Originator or the Seller, as the
case may be, any Mortgage Loan released pursuant hereto, and the Trustee shall
have no further responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, if so provided in the
Mortgage Loan Purchase Agreement, the Originator or the Seller, as the case may
be, may cause such Mortgage Loan to be removed from REMIC I (in which case it
shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the limitations set forth
in Section 2.03(d). It is understood and agreed that the obligation of the
Originator or the Seller, as the case may be, to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a material
defect in a constituent document exists or as to which such a breach has
occurred and is continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Trustee on behalf of the
Certificateholders.



                                       54
<PAGE>


                  (b) Subject to Section 2.03(e), within 90 days of the earlier
of discovery by the Depositor or receipt of notice by the Depositor of the
breach of any representation or warranty of the Depositor set forth in Section
2.04 with respect to any Mortgage Loan, which materially adversely affects the
value of such Mortgage Loan or the interest therein of the Certificateholders,
the Depositor shall (i) cure such breach in all material respects, (ii)
repurchase the Mortgage Loan from REMIC I at the Purchase Price or (iii) remove
such Mortgage Loan from REMIC I (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.03(d). If any
such breach is a breach of any of the representations and warranties included in
Section 2.04(a)(iv), and the Depositor is unable to cure such breach, the
Depositor shall repurchase or substitute the smallest number of Mortgage Loans
as shall be required to make such representation or warranty true and correct.
The Purchase Price for any repurchased Mortgage Loan shall be delivered to the
Master Servicer for deposit in the Collection Account, and the Trustee, upon
receipt of written certification from the Master Servicer of such deposit, shall
at the Depositor's direction release to the Depositor the related Mortgage File
and shall execute and deliver such instruments of transfer or assignment
furnished by the Depositor, in each case without recourse, as the Depositor
shall furnish to it and as shall be necessary to vest in the Depositor any
Mortgage Loan released pursuant hereto.

                  (c) (i) Promptly upon the earlier of discovery by the Master
Servicer or receipt of notice by the Master Servicer of the breach of any
representation, warranty or covenant of the Master Servicer set forth in Section
2.05 which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the Master Servicer shall cure such
breach in all material respects.

                           (ii) Within 90 days of the earlier of discovery by
                  the Master Servicer or receipt of notice by the Master
                  Servicer of the breach of any representation, warranty or
                  covenant of the Master Servicer set forth in Section 2.05
                  which materially and adversely affects the interests of the
                  Holders of the Class P Certificates to any Prepayment Charge,
                  the Master Servicer shall cure such breach in all material
                  respects. If the representation made by the Master Servicer in
                  Section 2.05(vii) is breached, the Master Servicer must pay
                  into the Collection Account the amount of the scheduled
                  Prepayment Charge, less any amount collected and paid by the
                  Master Servicer into the Collection Account; and if the
                  covenant made by the Master Servicer in Section 2.05(viii) is
                  breached, the Master Servicer must pay into the Collection
                  Account the amount of the waived Prepayment Charge.

                  (d) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a), in the case of the
Originator or the Seller, or Section 2.03(b), in the case of the Depositor, must
be effected prior to the date which is two years after the Startup Day for REMIC
I.

                  As to any Deleted Mortgage Loan for which the Originator or
the Seller or the Depositor substitutes a Qualified Substitute Mortgage Loan or
Loans, such substitution shall be effected by the Originator or the Seller or
the Depositor, as the case may be, delivering to the Trustee (or a Custodian on
behalf of the Trustee), for such Qualified Substitute Mortgage Loan



                                       55
<PAGE>


or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and
such other documents and agreements, with all necessary endorsements thereon, as
are required by Section 2.01, together with an Officers' Certificate providing
that each such Qualified Substitute Mortgage Loan satisfies the definition
thereof and specifying the Substitution Shortfall Amount (as described below),
if any, in connection with such substitution. The Trustee (or a Custodian on
behalf of the Trustee) shall acknowledge receipt for such Qualified Substitute
Mortgage Loan or Loans and, within ten Business Days thereafter, review such
documents as specified in Section 2.02 and deliver to the Depositor and the
Master Servicer, with respect to such Qualified Substitute Mortgage Loan or
Loans, a certification substantially in the form attached hereto as Exhibit C-1,
with any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Depositor and the Master Servicer
a certification substantially in the form of Exhibit C-2 hereto with respect to
such Qualified Substitute Mortgage Loan or Loans, with any applicable exceptions
noted thereon. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution are not part of REMIC I and will be
retained by the Depositor, the Originator or the Seller, as the case may be. For
the month of substitution, distributions to Certificateholders will reflect the
Monthly Payment due on such Deleted Mortgage Loan on or before the Due Date in
the month of substitution, and the Depositor, the Originator or the Seller, as
the case may be, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Depositor shall give or
cause to be given written notice to the Certificateholders that such
substitution has taken place, shall amend the Mortgage Loan Schedule to reflect
the removal of such Deleted Mortgage Loan from the terms of this Agreement and
the substitution of the Qualified Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, such Qualified Substitute Mortgage Loan or Loans shall constitute
part of the Mortgage Pool and shall be subject in all respects to the terms of
this Agreement and, in the case of a substitution effected by the Originator or
the Seller, the Mortgage Loan Purchase Agreement, including, in the case of a
substitution effected by the Originator or the Seller, all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement, and in the case of a substitution effected by the Depositor, all
applicable representations and warranties thereof set forth in Section 2.04, in
each case as of the date of substitution.

                  For any month in which the Depositor, the Originator or the
Seller substitutes one or more Qualified Substitute Mortgage Loans for one or
more Deleted Mortgage Loans, the Master Servicer will determine the amount (the
"Substitution Shortfall Amount"), if any, by which the aggregate Purchase Price
of all such Deleted Mortgage Loans exceeds the aggregate of, as to each such
Qualified Substitute Mortgage Loan, the Scheduled Principal Balance thereof as
of the date of substitution, together with one month's interest on such
Scheduled Principal Balance at the applicable Net Mortgage Rate. On the date of
such substitution, the Depositor, the Originator or the Seller, as the case may
be, will deliver or cause to be delivered to the Master Servicer for deposit in
the Collection Account an amount equal to the Substitution Shortfall Amount, if
any, and the Trustee, upon receipt of the related Qualified Substitute Mortgage
Loan or Loans and certification by the Master Servicer of such deposit, shall
release to the Depositor, the Originator or the Seller, as the case may be, the
related Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Depositor, the
Originator or the Seller, as the case may be, shall deliver to it and as shall
be necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.



                                       56
<PAGE>


                  In addition, the Depositor, the Originator or the Seller, as
the case may be, shall obtain at its own expense and deliver to the Trustee an
Opinion of Counsel to the effect that such substitution will not cause (a) any
federal tax to be imposed on any of REMIC I, REMIC II or REMIC III, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the startup date"
under Section 860G(d)(1) of the Code, or (b) any of REMIC I, REMIC II or REMIC
III to fail to qualify as a REMIC at any time that any Certificate is
outstanding.

                  (e) Upon discovery by the Depositor, the Originator, the
Seller, the Master Servicer or the Trustee that any Mortgage Loan does not
constitute a "qualified mortgage" within the meaning of Section 860G(a)(3) of
the Code, the party discovering such fact shall within two Business Days give
written notice thereof to the other parties. In connection therewith, the
Originator, the Seller or the Depositor shall repurchase or, subject to the
limitations set forth in Section 2.03(d), substitute one or more Qualified
Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. Such repurchase or substitution shall be made by (i) the
Originator or the Seller, as the case may be, if the affected Mortgage Loan's
status as a non-qualified mortgage is or results from a breach of any
representation, warranty or covenant made by the Originator or the Seller, as
the case may be, under the Mortgage Loan Purchase Agreement or (ii) the
Depositor, if the affected Mortgage Loan's status as a non-qualified mortgage is
a breach of any representation or warranty of the Depositor set forth in Section
2.04, or if its status as a non-qualified mortgage is a breach of no
representation or warranty. Any such repurchase or substitution shall be made in
the same manner as set forth in Section 2.03(a), if made by the Originator or
the Seller, or Section 2.03(b), if made by the Depositor. The Trustee shall
reconvey to the Depositor, the Originator or the Seller, as the case may be, the
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.

                  SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.

                  (a) The Depositor hereby represents and warrants to the
Trustee for the benefit of the Certificateholders that as of the Closing Date or
as of such other date specifically provided herein:

                           (i) The information set forth in the Mortgage Loan
                  Schedule for the Initial Mortgage Loans is complete, true and
                  correct in all material respects at the date or dates
                  respecting which such information is furnished;

                           (ii) Except with respect to approximately ____% of
                  the Initial Mortgage Loans, by aggregate Stated Principal
                  Balance as of the Cut-off Date, which, as of the Cut-off Date,
                  were 30 or more but less than 60 days delinquent and
                  approximately ____% of the Initial Mortgage Loans by aggregate
                  Stated Principal Balance as of the Cut-off Date, which, as of
                  the Cut-off Date, were 60 or more but less than 90 days
                  delinquent, as of the Cutoff Date, the Monthly Payment due
                  under each Initial Mortgage Loan is not 30 or more days
                  delinquent in payment and has not been 30 or more days
                  delinquent in payment more than



                                       57
<PAGE>


                  once in the twelve month period prior to the Cut-off Date
                  (assuming that a "rolling" 30 day delinquency is considered to
                  be one time delinquent);

                           (iii) Each Initial Mortgage Loan had an original term
                  to maturity of not greater than 30 years; each Initial
                  Mortgage Loan is an adjustable-rate mortgage loan with
                  payments due on the first day of each month and each such
                  Mortgage Loan is fully amortizing; effective with the first
                  payment due after each Adjustment Date, the monthly payment
                  amount for each Initial Mortgage Loan will be adjusted to an
                  amount which would amortize fully the outstanding principal
                  balance of such Mortgage Loan over its remaining term and pay
                  interest at the Mortgage Rate so adjusted; on the first
                  Adjustment Date and on each Adjustment Date thereafter the
                  Mortgage Rate on each Initial Mortgage Loan will be adjusted
                  to equal the sum of the Index and the related Gross Margin,
                  rounded to the nearest multiple of 0.125%, subject to the
                  Periodic Rate Cap, the Maximum Mortgage Rate and the Minimum
                  Mortgage Rate applicable to such Mortgage Loan;

                           (iv) (A) No more than approximately ___%,
                  approximately ___%, approximately ___%, approximately ___%,
                  approximately ___%, approximately ___%, approximately ___%,
                  approximately ___%, approximately ___% and approximately ___%
                  of the Initial Mortgage Loans, by outstanding principal
                  balance of the Initial Mortgage Loans as of the Cut-off Date,
                  will be secured by Mortgaged Properties located in California,
                  Florida, Illinois, Massachusetts, Michigan, Minnesota, New
                  Jersey, New York, Pennsylvania, Texas and Washington,
                  respectively, and no more than approximately ___% of the
                  Initial Mortgage Loans, by outstanding principal balance of
                  the Initial Mortgage Loans as of the Cut-off Date, will be
                  secured by Mortgaged Properties located in any other single
                  state; (B) as of the Cutoff Date, no more than approximately
                  ___% of the Initial Mortgage Loans, by outstanding principal
                  balance of the Initial Mortgage Loans as of the Cut-off Date,
                  are secured by Mortgaged Properties located in any one
                  California zip code area, and no more than approximately ___%
                  of the Initial Mortgage Loans, by outstanding principal
                  balance of the Initial Mortgage Loans as of the Cut-off Date
                  are secured by units in two- to four-family dwellings,
                  condominiums, town houses, planned unit developments or
                  manufactured housing; and (C) at least approximately ___% of
                  the Initial Mortgage Loans, by outstanding principal balance
                  of the Initial Mortgage Loans as of the Cut-off Date, are
                  secured by real property with a single family residence
                  erected thereon;

                           (v) If the Mortgaged Property securing an Initial
                  Mortgage Loan is identified in the Federal Register by the
                  Federal Emergency Management Agency ("FEMA") as having special
                  flood hazards, a flood insurance policy is in effect at the
                  Closing Date which met the requirements of FEMA at the time
                  such policy was issued;



                                       58
<PAGE>


                           (vi) With respect to each Initial Mortgage Loan, the
                  Loan-to-Value Ratio was less than or equal to ____% at the
                  origination of such Initial Mortgage Loan; and

                           (vii) With respect to at least approximately ___% of
                  the Initial Mortgage Loans by outstanding principal balance as
                  of the Cut-off Date, at the time that the Mortgage Loan was
                  made, the Mortgagor represented that the Mortgagor would
                  occupy the Mortgaged Property as the Mortgagor's primary
                  residence. With respect to approximately ____% of the Initial
                  Mortgage Loans by outstanding principal balance as of the
                  Cut-off Date, at the time that the Mortgage Loan was made, the
                  Mortgagor represented that the Mortgagor would occupy the
                  Mortgaged Property as the Mortgagor's secondary residence or
                  that the Mortgaged Property would be an investor property.

                  (b) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee or to a Custodian, as the case may be, and shall inure to
the benefit of the Certificateholders notwithstanding any restrictive or
qualified endorsement or assignment. Upon discovery by any of the Depositor, the
Master Servicer or the Trustee of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of any Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties, and in no event later than two Business Days from
the date of such discovery. It is understood and agreed that the obligations of
the Depositor set forth in Section 2.03(b) to cure, substitute for or repurchase
a Mortgage Loan constitute the sole remedies available to the Certificateholders
or to the Trustee on their behalf respecting a breach of the representations and
warranties contained in this Section 2.04.

                  SECTION 2.05. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                                MASTER SERVICER.

                  The Master Servicer hereby represents, warrants and covenants
to the Trustee, for the benefit of each of the Trustee, the Certificateholders
and to the Depositor that as of the Closing Date or as of such date specifically
provided herein:

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

                           (ii) The Master Servicer has the full corporate power
                  and authority to service each Mortgage Loan, and to execute,
                  deliver and perform, and to enter into and consummate the
                  transactions contemplated by this Agreement and has



                                       59
<PAGE>


                  duly authorized by all necessary corporate action on the part
                  of the Master Servicer the execution, delivery and performance
                  of this Agreement; and this Agreement, assuming the due
                  authorization, execution and delivery thereof by the Depositor
                  and the Trustee, constitutes a legal, valid and binding
                  obligation of the Master Servicer, enforceable against the
                  Master Servicer in accordance with its terms, except to the
                  extent that (a) the enforceability thereof may be limited by
                  bankruptcy, insolvency, moratorium, receivership and other
                  similar laws relating to creditors' rights generally and (b)
                  the remedy of specific performance and injunctive and other
                  forms of equitable relief may be subject to the equitable
                  defenses and to the discretion of the court before which any
                  proceeding therefor may be brought;

                           (iii) The execution and delivery of this Agreement by
                  the Master Servicer, the servicing of the Mortgage Loans by
                  the Master Servicer hereunder, the consummation of any other
                  of the transactions herein contemplated, and the fulfillment
                  of or compliance with the terms hereof are in the ordinary
                  course of business of the Master Servicer and will not (A)
                  result in a breach of any term or provision of the charter or
                  by-laws of the Master Servicer or (B) conflict with, result in
                  a breach, violation or acceleration of, or result in a default
                  under, the terms of any other material agreement or instrument
                  to which the Master Servicer is a party or by which it may be
                  bound, or any statute, order or regulation applicable to the
                  Master Servicer of any court, regulatory body, administrative
                  agency or governmental body having jurisdiction over the
                  Master Servicer; and the Master Servicer is not a party to,
                  bound by, or in breach or violation of any indenture or other
                  agreement or instrument, or subject to or in violation of any
                  statute, order or regulation of any court, regulatory body,
                  administrative agency or governmental body having jurisdiction
                  over it, which materially and adversely affects or, to the
                  Master Servicer's knowledge, would in the future materially
                  and adversely affect, (x) the ability of the Master Servicer
                  to perform its obligations under this Agreement or (y) the
                  business, operations, financial condition, properties or
                  assets of the Master Servicer taken as a whole;

                           (iv) The Master Servicer is an approved
                  seller/servicer for Fannie Mae or Freddie Mac in good standing
                  and is a HUD approved mortgagee pursuant to Section 203 and
                  Section 211 of the National Housing Act;

                           (v) No litigation is pending against the Master
                  Servicer that would materially and adversely affect the
                  execution, delivery or enforceability of this Agreement or the
                  ability of the Master Servicer to service the Mortgage Loans
                  or to perform any of its other obligations hereunder in
                  accordance with the terms hereof;

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



                                       60
<PAGE>


                  this Agreement, except for such consents, approvals,
                  authorizations or orders, if any, that have been obtained
                  prior to the Closing Date;

                           (vii) The information set forth in the Prepayment
                  Charge Schedule (including the prepayment charge summary
                  attached thereto) is complete, true and correct in all
                  material respects at the date or dates respecting which such
                  information is furnished and each Prepayment Charge is
                  permissible and enforceable in accordance with its terms
                  (except to the extent that (i) the enforceability thereof may
                  be limited by bankruptcy, insolvency, moratorium, receivership
                  and other similar laws relating to creditors' rights
                  generally, (ii) the collectability thereof may be limited due
                  to acceleration in connection with a foreclosure or other
                  involuntary payment and (iii) subsequent changes in applicable
                  law may limit or prohibit the enforceability thereof) under
                  applicable state law;

                           (viii) The Master Servicer will not waive any
                  Prepayment Charge or part of a Prepayment Charge unless, in
                  the Master Servicer's reasonable judgment as described in
                  Section 3.01 hereof, such waiver would maximize recovery of
                  total proceeds taking into account the value of such
                  Prepayment Charge and related Mortgage Loan and doing so is
                  standard and customary in servicing similar Mortgage Loans
                  (including any waiver of a Prepayment Charge in connection
                  with a refinancing of a Mortgage Loan that is related to a
                  default or a reasonably foreseeable default) and in no event
                  will it waive a Prepayment Charge in connection with a
                  refinancing of a Mortgage Loan that is not related to a
                  default or a reasonably foreseeable default;

                           (ix) The Master Servicer's computer and other systems
                  used in servicing mortgage loans will be modified and
                  maintained to operate in a manner such that at all times,
                  including on and after January 1, 2000, (i) the Master
                  Servicer can service the Mortgage Loans in accordance with the
                  terms of this Agreement if necessary and (ii) the Master
                  Servicer can operate its business in the same manner as it is
                  operating on the date hereof; provided that the Master
                  Servicer's ability to meet the requirements of this
                  representation may be limited in circumstances where it relies
                  (after reasonable due diligence in inquiring into and
                  obtaining reasonable compliance representations) on third
                  party systems which are incompatible with those of the Master
                  Servicer on or after January 1, 2000; and

                           (x) The information set forth in the "monthly tape"
                  provided to the Trustee or any of its affiliates is true and
                  correct in all material respects.

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee or to a Custodian, as the case may be, and
shall inure to the benefit of the Trustee, the Depositor and the
Certificateholders. Upon discovery by any of the Depositor, the Master Servicer
or the Trustee of a breach of any of the foregoing representations, warranties
and covenants which materially and adversely affects the value of any Mortgage
Loan, Prepayment Charge or the interests therein of



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the Certificateholders, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the Trustee. Subject to Section 7.01, the obligation of the Master
Servicer set forth in Section 2.03(c) to cure breaches shall constitute the sole
remedies against the Master Servicer available to the Certificateholders, the
Depositor or the Trustee on behalf of the Certificateholders respecting a breach
of the representations, warranties and covenants contained in this Section 2.05.
The preceding sentence shall not, however, limit any remedies available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders, pursuant to the Mortgage Loan Purchase Agreement signed by
the Master Servicer in its capacity as Seller, respecting a breach of the
representations, warranties and covenants of the Master Servicer in its capacity
as Seller contained in such Mortgage Loan Purchase Agreement.

                  SECTION 2.06. ISSUANCE OF CLASS R-I CERTIFICATES.

                  The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it, or any Custodian on its behalf, of the Mortgage
Files, subject to the provisions of Section 2.01 and Section 2.02, together with
the assignment to it of all other assets included in REMIC I, receipt of which
is hereby acknowledged. Concurrently with such assignment and delivery and in
exchange therefor, the Trustee, pursuant to the written request of the Depositor
executed by an officer of the Depositor, has executed, authenticated and
delivered to or upon the order of the Depositor, the Class R-I Certificates in
authorized denominations. The interests evidenced by the Class R-I Certificates,
together with the REMIC I Regular Interests, constitute the entire beneficial
ownership interest in REMIC I. The rights of the Class R-I Certificateholders
and REMIC II (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC I in respect of the Class R-I
Certificates and the REMIC I Regular Interests, respectively, and all ownership
interests evidenced or constituted by the Class R-I Certificates and the REMIC I
Regular Interests, shall be as set forth in this Agreement.

                  SECTION 2.07. CONVEYANCE OF REMIC I REGULAR INTERESTS;
                                ACCEPTANCE OF REMIC II BY THE TRUSTEE.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II and REMIC
III Certificateholders. The Trustee acknowledges receipt of the REMIC I Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of all present and future Class R-II
Certificateholders and REMIC III Certificateholders. The rights of the Class
R-II Certificateholders and REMIC III (as holder of the REMIC II Regular
Interests) to receive distributions from the proceeds of REMIC II in respect of
the Class R-II Certificates and REMIC II Regular Interests, respectively, and
all ownership interests evidenced or constituted by the Class R-II Certificates
and the REMIC II Regular Interests, shall be as set forth in this Agreement.



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                  SECTION 2.08. ISSUANCE OF CLASS R-II CERTIFICATES.

                  The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the Class R-II Certificates in authorized denominations. The
interests evidenced by the Class R-II Certificates, together with the REMIC II
Regular Interests, constitute the entire beneficial ownership interest in REMIC
II.

                  SECTION 2.09. CONVEYANCE OF REMIC II REGULAR INTERESTS;
                                ACCEPTANCE OF REMIC III BY THE TRUSTEE.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests for the benefit of the REMIC III
Certificateholders. The Trustee acknowledges receipt of the REMIC II Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of all present and future REMIC III
Certificateholders. The rights of the REMIC III Certificateholders to receive
distributions from the proceeds of REMIC III in respect of the REMIC III
Certificates, and all ownership interests evidenced or constituted by the REMIC
III Certificates, shall be as set forth in this Agreement.

                  SECTION 2.10. ISSUANCE OF REMIC III CERTIFICATES.

                  The Trustee acknowledges the assignment to it of the REMIC II
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the REMIC III Certificates in authorized denominations evidencing
the entire beneficial ownership interest in REMIC III.

                  SECTION 2.11. CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.


                  (a) Subject to the conditions set forth in paragraph (b) below
in consideration of the Trustee's delivery on the Subsequent Transfer Dates to
or upon the order of the Depositor of all or a portion of the balance of funds
in the Pre-Funding Account, the Depositor shall on any Subsequent Transfer Date
sell, transfer, assign, set over and convey without recourse to the Trust Fund
but subject to the other terms and provisions of this Agreement all of the
right, title and interest of the Depositor in and to (i) the Subsequent Mortgage
Loans identified on the Mortgage Loan Schedule attached to the related
Subsequent Transfer Instrument delivered by the Depositor on such Subsequent
Transfer Date, (ii) principal due and interest accruing on the Subsequent
Mortgage Loans after the related Subsequent Cut-off Date and (iii) all items
with respect to such Subsequent Mortgage Loans to be delivered pursuant to
Section 2.01 and the other items in the related Mortgage Files; provided,
however, that the Depositor reserves and retains all right, title and interest
in and to principal received and interest accruing on the Subsequent Mortgage
Loans prior to the related Subsequent Cut-off Date. The transfer to the Trustee
for deposit in the Mortgage Pool by the Depositor of the Subsequent Mortgage
Loans identified on the Mortgage Loan Schedule shall be absolute and is intended
by the Depositor, the Master Servicer, the



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Trustee and the Certificateholders to constitute and to be treated as a sale of
the Subsequent Mortgage Loans by the Depositor to the Trust Fund. The related
Mortgage File for each Subsequent Mortgage Loan shall be delivered to the
Trustee or the Custodian at least three Business Days prior to the related
Subsequent Transfer Date.

                  The purchase price paid by the Trustee from amounts released
from the Pre-Funding Account shall be one-hundred percent (100%) of the
aggregate Stated Principal Balance of the Subsequent Mortgage Loans so
transferred (as identified on the Mortgage Loan Schedule provided by the
Depositor). This Agreement shall constitute a fixed-price purchase contract in
accordance with Section 860G(a)(3)(A)(ii) of the Code.

                  (b) The Depositor shall transfer to the Trustee for deposit in
the Mortgage Pool the Subsequent Mortgage Loans and the other property and
rights related thereto as described in paragraph (a) above, and the Trustee
shall release funds from the Pre-Funding Account, only upon the satisfaction of
each of the following conditions on or prior to the related Subsequent Transfer
Date:

                           (i) the Depositor shall have provided the Trustee
                  with a timely Addition Notice and shall have provided any
                  information reasonably requested by the Trustee with respect
                  to the Subsequent Mortgage Loans;

                           (ii) the Depositor shall have delivered to the
                  Trustee a duly executed Subsequent Transfer Instrument, which
                  shall include a Mortgage Loan Schedule listing the Subsequent
                  Mortgage Loans, and the Master Servicer, in its capacity as
                  Seller, shall have delivered a computer file containing such
                  Mortgage Loan Schedule to the Trustee at least three Business
                  Days prior to the related Subsequent Transfer Date;

                           (iii) as of each Subsequent Transfer Date, as
                  evidenced by delivery of the Subsequent Transfer Instrument,
                  substantially in the form of Exhibit I, the Depositor shall
                  not be insolvent nor shall it have been rendered insolvent by
                  such transfer nor shall it be aware of any pending insolvency;

                           (iv) such sale and transfer shall not result in a
                  material adverse tax consequence to the Trust Fund or the
                  Certificateholders;

                           (v) the Funding Period shall not have terminated;

                           (vi) the Depositor shall not have selected the
                  Subsequent Mortgage Loans in a manner that it believed to be
                  adverse to the interests of the Certificateholders;

                           (vii) the Depositor shall have delivered to the
                  Trustee a Subsequent Transfer Instrument confirming the
                  satisfaction of the conditions precedent specified in this
                  Section 2.11 and, pursuant to the Subsequent Transfer
                  Instrument, assigned to the Trustee without recourse for the
                  benefit of the Certificateholders all the right, title and
                  interest of the Depositor, in, to and under



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<PAGE>


                  the Subsequent Mortgage Loan Purchase Agreement, to the extent
                  of the Subsequent Mortgage Loans;

                           (viii) the Depositor shall have delivered to the
                  Trustee a letter from an Independent accountant (with copies
                  provided to each Rating Agency) stating that the
                  characteristics of the Subsequent Mortgage Loans conform to
                  the characteristics set forth in paragraphs (c) and (d) below;
                  and

                           (ix) the Depositor shall have delivered to the
                  Trustee an Opinion of Counsel addressed to the Trustee and the
                  Rating Agencies with respect to the transfer of the Subsequent
                  Mortgage Loans substantially in the form of the Opinion of
                  Counsel delivered to the Trustee on the Closing Date regarding
                  the true sale of the Subsequent Mortgage Loans.

                  (c) The obligation of the Trust Fund to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the satisfaction of
the conditions set forth in paragraph (d) below and the accuracy of the
following representations and warranties with respect to such Subsequent
Mortgage Loan determined as of the Subsequent Cut-off Date: (i) the Subsequent
Mortgage Loan may not be 30 or more days delinquent as of the related Subsequent
Cut-off Date provided, however that approximately ___% of the Subsequent
Mortgage Loans, by aggregate principal balance as of the related Subsequent
Cut-off Date, may be thirty days or more but less than sixty days delinquent in
their monthly payments as of the related Subsequent Cut-off Date and
approximately ___% of the Subsequent Mortgage Loans, by aggregate principal
balance as of the related Subsequent Cut-off Date, may be sixty days or more but
less than ninety days delinquent in their monthly payments as of the related
Subsequent Cut-off Date; (ii) the stated term to maturity of the Subsequent
Mortgage Loan will not be less than ___ months and will not exceed ___ months;
(iii) the Subsequent Mortgage Loan may not provide for negative amortization;
(iv) the Subsequent Mortgage Loan will not have a Loan-to-Value Ratio greater
than ___%; (v) the Subsequent Mortgage Loans will have as of the Subsequent
Cut-off Date, a weighted average term since origination not in excess of ___
months; (vi) no Subsequent Mortgage Loan shall have a Mortgage Rate less than
____% or greater than ___%; (vii) the Subsequent Mortgage Loan will have been
serviced by the Master Servicer since origination or purchased by the Depositor;
(viii) the Subsequent Mortgage Loan must have a first Monthly Payment due on or
before ________________ and (ix) the Subsequent Mortgage Loan will be
underwritten in accordance with the criteria set forth under the section "The
Mortgage Pool--Underwriting Standards; Representations" in the Prospectus
Supplement.

                  (d) Following the purchase of the Subsequent Mortgage Loans by
the Trust Fund, the Mortgage Loans (including the Subsequent Mortgage Loans)
will, as of the Subsequent Cut-off Date: (i) have a weighted average original
term to stated maturity of not more than ___ months; (ii) have a weighted
average Mortgage Rate of not less than _____% and not more than _____%; (iii)
have a weighted average Loan-to-Value Ratio of not more than ______%; (iv) have
no Mortgage Loan with a principal balance in excess of $_______ and (v) have a
weighted average Gross Margin of not less than _____%, in each case, as
applicable, by aggregate principal balance of the Mortgage Loans as of the
related Subsequent Cut-off Date.



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<PAGE>


                  (e) Notwithstanding the foregoing, any Subsequent Mortgage
Loan may be rejected by either Rating Agency if the inclusion of any such
Subsequent Mortgage Loan would adversely affect the ratings of any Class of
Certificates. At least one Business Day prior to the related Subsequent Transfer
Date, each Rating Agency shall notify the Trustee, the Master Servicer and the
Depositor as to which Subsequent Mortgage Loans, if any, shall not be included
in the transfer on the related Subsequent Transfer Date; provided, however, that
the Master Servicer, in its capacity as Seller, shall have delivered to each
Rating Agency at least three Business Days prior to such Subsequent Transfer
Date a computer file acceptable to each Rating Agency describing the
characteristics specified in paragraphs (c) and (d) above.

                                  ARTICLE III

               ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

                  SECTION 3.01. MASTER SERVICER TO ACT AS MASTER SERVICER.

                  The Master Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and in the best interests of and for the benefit
of the Certificateholders (as determined by the Master Servicer in its
reasonable judgment) in accordance with the terms of this Agreement and the
respective Mortgage Loans and, to the extent consistent with such terms, in the
same manner in which it services and administers similar mortgage loans for its
own portfolio, giving due consideration to customary and usual standards of
practice of prudent mortgage lenders and loan servicers administering similar
mortgage loans but without regard to:

                           (i) any relationship that the Master Servicer, any
                  Sub-Servicer or any Affiliate of the Master Servicer or any
                  Sub-Servicer may have with the related Mortgagor;

                           (ii) the ownership of any Certificate by the Master
                  Servicer or any Affiliate of the Master Servicer;

                           (iii) the Master Servicer's obligation to make P&I
                  Advances or Servicing Advances; or

                           (iv) the Master Servicer's or any Sub-Servicer's
                  right to receive compensation for its services hereunder or
                  with respect to any particular transaction.

                  To the extent consistent with the foregoing, the Master
Servicer shall also seek to maximize the timely and complete recovery of
principal and interest on the Mortgage Notes. Subject only to the
above-described servicing standards and the terms of this Agreement and of the
respective Mortgage Loans, the Master Servicer shall have full power and
authority, acting alone or through Sub-Servicers as provided in Section 3.02, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Master Servicer in its own name or in the name
of a Sub-Servicer is hereby authorized and empowered by the Trustee when the
Master Servicer believes it appropriate in its best judgment in accordance with
the servicing standards set forth above, to execute and deliver, on behalf of
the Certificateholders and the



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Trustee, and upon notice to the Trustee, any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans and the Mortgaged
Properties and to institute foreclosure proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and to hold or
cause to be held title to such properties, on behalf of the Trustee and
Certificateholders. The Master Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Master Servicer shall also comply in the performance of this Agreement with
all reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.17, the Trustee shall execute, at the
written request of the Master Servicer, and furnish to the Master Servicer and
any Sub-Servicer such documents as are necessary or appropriate to enable the
Master Servicer or any Sub-Servicer to carry out their servicing and
administrative duties hereunder, and the Trustee hereby grants to the Master
Servicer a power of attorney to carry out such duties. The Trustee shall not be
liable for the actions of the Master Servicer or any Sub-Servicers under such
powers of attorney.

                  Subject to Section 3.09 hereof, in accordance with the
standards of the preceding paragraph, the Master Servicer shall advance or cause
to be advanced funds as necessary for the purpose of effecting the timely
payment of taxes and assessments on the Mortgaged Properties, which advances
shall be Servicing Advances reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11. Any cost incurred by the Master Servicer or by
Sub-Servicers in effecting the timely payment of taxes and assessments on a
Mortgaged Property shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.

                  Notwithstanding anything in this Agreement to the contrary,
the Master Servicer may not make any future advances with respect to a Mortgage
Loan (except as provided in Section 4.03) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or final, temporary or proposed Treasury regulations promulgated thereunder)
and (B) cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a
REMIC under the Code or the imposition of any tax on "prohibited transactions"
or "contributions after the startup date" under the REMIC Provisions.

                  The Master Servicer may delegate its responsibilities under
this Agreement; provided, however, that no such delegation shall release the
Master Servicer from the responsibilities or liabilities arising under this
Agreement.



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                  SECTION 3.02. SUB-SERVICING AGREEMENTS BETWEEN THE MASTER
                                SERVICER AND SUB-SERVICERS.

                  (a) The Master Servicer may enter into Sub-Servicing
Agreements (provided that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the ratings on any Class of Certificates)
with Sub-Servicers, for the servicing and administration of the Mortgage Loans.

                  Each Sub-Servicer shall be (i) authorized to transact business
in the state or states in which the related Mortgaged Properties it is to
service are situated, if and to the extent required by applicable law to enable
the Sub-Servicer to perform its obligations hereunder and under the
Sub-Servicing Agreement, (ii) an institution approved as a mortgage loan
originator by the Federal Housing Administration or an institution the deposit
accounts in which are insured by the FDIC and (iii) a Freddie Mac or Fannie Mae
approved mortgage servicer. Each Sub-Servicing Agreement must impose on the
Sub-Servicer requirements conforming to the provisions set forth in Section 3.08
and provide for servicing of the Mortgage Loans consistent with the terms of
this Agreement. The Master Servicer will examine each Sub-Servicing Agreement
and will be familiar with the terms thereof. The terms of any Sub-Servicing
Agreement will not be inconsistent with any of the provisions of this Agreement.
The Master Servicer and the Sub-Servicers may enter into and make amendments to
the Sub-Servicing Agreements or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement, and that no
such amendment or different form shall be made or entered into which could be
reasonably expected to be materially adverse to the interests of the
Certificateholders, without the consent of the Holders of Certificates entitled
to at least 66% of the Voting Rights. Any variation without the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Sub-Servicing Accounts, or credits and charges to the
Sub-Servicing Accounts or the timing and amount of remittances by the
Sub-Servicers to the Master Servicer, are conclusively deemed to be inconsistent
with this Agreement and therefore prohibited. The Master Servicer shall deliver
to the Trustee copies of all Sub-Servicing Agreements, and any amendments or
modifications thereof, promptly upon the Master Servicer's execution and
delivery of such instruments.

                  (b) As part of its servicing activities hereunder, the Master
Servicer (except as otherwise provided in the last sentence of this paragraph),
for the benefit of the Trustee and the Certificateholders, shall enforce the
obligations of each Sub-Servicer under the related Sub-Servicing Agreement and
of the Seller under the Mortgage Loan Purchase Agreement, including, without
limitation, any obligation to make advances in respect of delinquent payments as
required by a Sub- Servicing Agreement, or to purchase a Mortgage Loan on
account of missing or defective documentation or on account of a breach of a
representation, warranty or covenant, as described in Section 2.03(a). Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-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 related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such



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enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Enforcement of the Mortgage Loan Purchase Agreement
against the Seller shall be effected by the Master Servicer to the extent it is
not the Seller, and otherwise by the Trustee, in accordance with the foregoing
provisions of this paragraph.

                  SECTION 3.03. SUCCESSOR SUB-SERVICERS.

                  The Master Servicer shall be entitled to terminate any
Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer
pursuant to any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement. In the event of termination of any
Sub-Servicer, all servicing obligations of such Sub-Servicer shall be assumed
simultaneously by the Master Servicer without any act or deed on the part of
such Sub-Servicer or the Master Servicer, and the Master Servicer either shall
service directly the related Mortgage Loans or shall enter into a Sub- Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02.

                  Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the Master
Servicer shall, for any reason, no longer be the Master Servicer (including
termination due to a Master Servicer Event of Default).

                  SECTION 3.04. LIABILITY OF THE MASTER SERVICER.

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

                  SECTION 3.05. NO CONTRACTUAL RELATIONSHIP BETWEEN
                                SUB-SERVICERS AND TRUSTEE OR CERTIFICATEHOLDERS.

                  Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Master Servicer alone, and the Trustee and Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer except as set forth in Section
3.06. The Master Servicer shall be solely liable for all fees owed by it to any
Sub-Servicer,



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<PAGE>



irrespective of whether the Master Servicer's compensation pursuant to this
Agreement is sufficient to pay such fees.

                  SECTION 3.06. ASSUMPTION OR TERMINATION OF SUB-SERVICING
                                AGREEMENTS BY TRUSTEE.

                  In the event the Master Servicer shall for any reason no
longer be the master servicer (including by reason of the occurrence of a Master
Servicer Event of Default), the Trustee or its designee shall thereupon assume
all of the rights and obligations of the Master Servicer under each
Sub-Servicing Agreement that the Master Servicer may have entered into, unless
the Trustee elects to terminate any Sub-Servicing Agreement in accordance with
its terms as provided in Section 3.03. Upon such assumption, the Trustee, its
designee or the successor servicer for the Trustee appointed pursuant to Section
7.02 shall be deemed, subject to Section 3.03, to have assumed all of the Master
Servicer's interest therein and to have replaced the Master Servicer as a party
to each Sub-Servicing Agreement to the same extent as if each Sub-Servicing
Agreement had been assigned to the assuming party, except that (i) the Master
Servicer shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement and (ii) none of the Trustee, its designee or any
successor Master Servicer shall be deemed to have assumed any liability or
obligation of the Master Servicer that arose before it ceased to be the Master
Servicer.

                  The Master Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.

                  SECTION 3.07. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.

                  The Master Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or, if applicable, penalty interest, or (ii) extend the due dates
for the Monthly Payments due on a Mortgage Note for a period of not greater than
180 days; provided that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Master Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.03
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Master Servicer, such default is reasonably foreseeable, the Master
Servicer, consistent with the standards set forth in Section 3.01, may also,
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan),



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accept payment from the related Mortgagor of an amount less than the Stated
Principal Balance in final satisfaction of such Mortgage Loan (such payment, a
"Short Pay-off") or consent to the postponement of strict compliance with any
such term or otherwise grant indulgence to any Mortgagor.

                  SECTION 3.08. SUB-SERVICING ACCOUNTS.

                  In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required
to establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account. The
Sub-Servicer shall deposit in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Sub-Servicer's
receipt thereof, all proceeds of Mortgage Loans received by the Sub-Servicer
less its servicing compensation to the extent permitted by the Sub-Servicing
Agreement, and shall thereafter deposit such amounts in the Sub-Servicing
Account, in no event more than two Business Days after the deposit of such funds
into the clearing account. The Sub- Servicer shall thereafter deposit such
proceeds in the Collection Account or remit such proceeds to the Master Servicer
for deposit in the Collection Account not later than two Business Days after the
deposit of such amounts in the Sub-Servicing Account. For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on the
Mortgage Loans when the Sub-Servicer receives such payments.

                  SECTION 3.09. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR
                                ITEMS; SERVICING ACCOUNTS.

                  The Master Servicer shall establish and maintain one or more
accounts (the "Servicing Accounts"). Servicing Accounts shall be Eligible
Accounts. The Master Servicer shall deposit in the clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Master Servicer's receipt thereof, all collections from the Mortgagors (or
related advances from Sub-Servicers) for the payment of taxes, assessments,
hazard insurance premiums and comparable items for the account of the Mortgagors
("Escrow Payments") collected on account of the Mortgage Loans and shall
thereafter deposit such Escrow Payments in the Servicing Accounts, in no event
more than two Business Days after the deposit of such funds in the clearing
account, for the purpose of effecting the payment of any such items as required
under the terms of this Agreement. Withdrawals of amounts from a Servicing
Account may be made only to (i) effect payment of taxes, assessments, hazard
insurance premiums, and comparable items; (ii) reimburse the Master Servicer (or
a Sub-Servicer to the extent provided in the related Sub-Servicing Agreement)
out of related collections for any advances made pursuant to Section 3.01 (with
respect to taxes and assessments) and Section 3.14 (with respect to hazard
insurance); (iii) refund to Mortgagors any sums as may be determined to be
overages; (iv) pay interest, if required and as described below, to Mortgagors
on balances in the Servicing Account; (v) clear and terminate the Servicing
Account at the termination of the Master Servicer's obligations and
responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article IX or (vi) recover amounts deposited in error. As part
of its servicing



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duties, the Master Servicer or Sub-Servicers shall pay to the Mortgagors
interest on funds in Servicing Accounts, to the extent required by law and, to
the extent that interest earned on funds in the Servicing Accounts is
insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor. To the extent that a Mortgage does not provide for
Escrow Payments, the Master Servicer shall determine whether any such payments
are made by the Mortgagor in a manner and at a time that avoids the loss of the
Mortgaged Property due to a tax sale or the foreclosure of a tax lien. The
Master Servicer assumes full responsibility for the payment of all such bills
and shall effect payments of all such bills irrespective of the Mortgagor's
faithful performance in the payment of same or the making of the Escrow Payments
and shall make advances from its own funds to effect such payments.

                  SECTION 3.10. COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT.

                  (a) On behalf of the Trust Fund, the Master Servicer shall
establish and maintain one or more accounts (such account or accounts, the
"Collection Account"), held in trust for the benefit of the Trustee and the
Certificateholders. On behalf of the Trust Fund, the Master Servicer shall
deposit or cause to be deposited in the clearing account (which account must be
an Eligible Account) in which it customarily deposits payments and collections
on mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Master
Servicer's receipt thereof, and shall thereafter deposit in the Collection
Account, in no event more than two Business Days after the deposit of such funds
into the clearing account, as and when received or as otherwise required
hereunder, the following payments and collections received or made by it
subsequent to the Cut-off Date with respect to the Initial Mortgage Loans, or
Subsequent Cut-off Date with respect to the Subsequent Mortgage Loans (other
than in respect of principal or interest on the related Mortgage Loans due on or
before the Cut-off Date or Subsequent Cut-off Date, as applicable), or payments
(other than Principal Prepayments) received by it on or prior to the Cut-off
Date or Subsequent Cut-off Date, as applicable but allocable to a Due Period
subsequent thereto:

                           (i) all payments on account of principal, including
                  Principal Prepayments, on the Mortgage Loans;

                           (ii) all payments on account of interest (net of the
                  related Servicing Fee) on each Mortgage Loan;

                           (iii) all Insurance Proceeds and Liquidation Proceeds
                  (other than proceeds collected in respect of any particular
                  REO Property and amounts paid by the Master Servicer in
                  connection with a purchase of Mortgage Loans and REO
                  Properties pursuant to Section 9.01);

                           (iv) any amounts required to be deposited pursuant to
                  Section 3.12 in connection with any losses realized on
                  Permitted Investments with respect to funds held in the
                  Collection Account;

                           (v) any amounts required to be deposited by the
                  Master Servicer pursuant to the second paragraph of Section
                  3.14(a) in respect of any blanket policy deductibles;



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                           (vi) all proceeds of any Mortgage Loan repurchased or
                  purchased in accordance with Section 2.03 or Section 9.01;

                           (vii) all amounts required to be deposited in
                  connection with shortfalls in principal amount of Qualified
                  Substitute Mortgage Loans pursuant to Section 2.03; and

                           (viii) all Prepayment Charges collected by the Master
                  Servicer in connection with the voluntary Principal Prepayment
                  in full of any of the Mortgage Loans.

For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the date
of substitution.

                  The foregoing requirements for deposit in the Collection
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, NSF fees, reconveyance fees or assumption fees and other similar fees
and charges need not be deposited by the Master Servicer in the Collection
Account and shall, upon collection, belong to the Master Servicer as additional
compensation for its servicing activities. In the event the Master Servicer
shall deposit in the Collection Account any amount not required to be deposited
therein, it may at any time withdraw such amount from the Collection Account,
any provision herein to the contrary notwithstanding.

                  (b) On behalf of the Trust Fund, the Trustee shall establish
and maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Certificateholders. On behalf of
the Trust Fund, the Master Servicer shall deliver to the Trustee in immediately
available funds for deposit in the Distribution Account on or before 3:00 p.m.
____________ time (i) on the Master Servicer Remittance Date, that portion of
the Available Distribution Amount (calculated without regard to the references
in clause (2) of the definition thereof to amounts that may be withdrawn from
the Distribution Account) for the related Distribution Date then on deposit in
the Collection Account and the amount of all Prepayment Charges collected by the
Master Servicer in connection with the voluntary Principal Prepayment in full of
any of the Mortgage Loans then on deposit in the Collection Account (other than
any such Prepayment Charges received after the related Prepayment Period) and
(ii) on each Business Day as of the commencement of which the balance on deposit
in the Collection Account exceeds $________ following any withdrawals pursuant
to the next succeeding sentence, the amount of such excess, but only if the
Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account."

                  If the balance on deposit in the Collection Account exceeds
$______ as of the commencement of business on any Business Day and the
Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account," the Master Servicer shall, on or
before 3:00 p.m. New York time on such Business Day, withdraw from the
Collection Account any and all amounts payable or reimbursable to the Depositor,
the Master Servicer, the Trustee, the Seller or any Sub-Servicer pursuant to
Section 3.11 and shall pay such amounts to the Persons entitled thereto.



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                  (c) Funds in the Collection Account and the Distribution
Account may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.12. The Master Servicer shall give notice to
the Trustee and the Depositor of the location of the Collection Account
maintained by it when established and prior to any change thereof. The Trustee
shall give notice to the Master Servicer and the Depositor of the location of
the Distribution Account when established and prior to any change thereof.

                  (d) Funds held in the Collection Account at any time may be
delivered by the Master Servicer to the Trustee for deposit in an account (which
may be the Distribution Account and must satisfy the standards for the
Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection
Account; provided, however, that the Trustee shall have the sole authority to
withdraw any funds held pursuant to this subsection (d). In the event the Master
Servicer shall deliver to the Trustee for deposit in the Distribution Account
any amount not required to be deposited therein, it may at any time request that
the Trustee withdraw such amount from the Distribution Account and remit to it
any such amount, any provision herein to the contrary notwithstanding. In
addition, the Master Servicer shall deliver to the Trustee from time to time for
deposit, and the Trustee shall so deposit, in the Distribution Account:

                           (i) any P&I Advances, as required pursuant to Section
                  4.03;

                           (ii) any amounts required to be deposited pursuant to
                  Section 3.23(d) or (f) in connection with any REO Property;

                           (iii) any amounts to be paid by the Master Servicer
                  in connection with a purchase of Mortgage Loans and REO
                  Properties pursuant to Section 9.01;

                           (iv) any amounts required to be deposited pursuant to
                  Section 24 in connection with any Prepayment Interest
                  Shortfalls; and

                           (v) any Stayed Funds, as soon as permitted by the
                  federal bankruptcy court having jurisdiction in such matters.

                  (e) Promptly upon receipt of any Stayed Funds, whether from
the Master Servicer, a trustee in bankruptcy, or federal bankruptcy court or
other source, the Trustee shall deposit such funds in the Distribution Account,
subject to withdrawal thereof pursuant to Section 7.02(b) or as otherwise
permitted hereunder. In addition, the Master Servicer shall deposit in the
Collection Account any amounts required to be deposited pursuant to Section
3.12(b) in connection with losses realized on Permitted Investments with respect
to funds held in the Collection Account.

                  SECTION 3.11. WITHDRAWALS FROM THE COLLECTION ACCOUNT AND
                                DISTRIBUTION ACCOUNT.

                  (a) The Master Servicer shall, from time to time, make
withdrawals from the Collection Account for any of the following purposes or as
described in Section 4.03:



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                           (i) to remit to the Trustee for deposit in the
                  Distribution Account the amounts required to be so remitted
                  pursuant to Section 3.10(b) or permitted to be so remitted
                  pursuant to the first sentence of Section 3.10(d);

                           (ii) subject to Section 3.16(d), to reimburse the
                  Master Servicer for P&I Advances, but only to the extent of
                  amounts received which represent Late Collections (net of the
                  related Servicing Fees) of Monthly Payments on Mortgage Loans
                  with respect to which such P&I Advances were made in
                  accordance with the provisions of Section 4.03;

                           (iii) subject to Section 3.16(d), to pay the Master
                  Servicer or any Sub-Servicer any unpaid Servicing Fees and
                  reimburse any unreimbursed Servicing Advances with respect to
                  each Mortgage Loan, but only to the extent of any Liquidation
                  Proceeds, Insurance Proceeds or other amounts as may be
                  collected by the Master Servicer from a Mortgagor, or
                  otherwise received with respect to such Mortgage Loan;

                           (iv) to pay to the Master Servicer as servicing
                  compensation (in addition to the Servicing Fee) on the Master
                  Servicer Remittance Date any interest or investment income
                  earned on funds deposited in the Collection Account;

                           (v) to pay to the Master Servicer, the Depositor or
                  the Seller, as the case may be, with respect to each Mortgage
                  Loan that has previously been purchased or replaced pursuant
                  to Section 2.03 or Section 3.16(c) all amounts received
                  thereon subsequent to the date of purchase or substitution, as
                  the case may be;

                           (vi) to reimburse the Master Servicer for any P&I
                  Advance previously made which the Master Servicer has
                  determined to be a Nonrecoverable P&I Advance in accordance
                  with the provisions of Section 4.03;

                           (vii) to reimburse the Master Servicer or the
                  Depositor for expenses incurred by or reimbursable to the
                  Master Servicer or the Depositor, as the case may be, pursuant
                  to Section 6.03;

                           (viii) to reimburse the Master Servicer or the
                  Trustee, as the case may be, for expenses reasonably incurred
                  in respect of the breach or defect giving rise to the purchase
                  obligation under Section 2.03 or Section 2.04 of this
                  Agreement that were included in the Purchase Price of the
                  Mortgage Loan, including any expenses arising out of the
                  enforcement of the purchase obligation;

                           (ix) to pay, or to reimburse the Master Servicer for
                  advances in respect of, expenses incurred in connection with
                  any Mortgage Loan pursuant to Section 3.16(b); and

                           (x) to clear and terminate the Collection Account
                  pursuant to Section 9.01.



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<PAGE>


                  The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Collection Account, to the extent held by or
on behalf of it, pursuant to subclauses (ii), (iii), (iv), (v), (vi), (viii) and
(ix) above.

                  The Master Servicer shall provide written notification to the
Trustee, on or prior to the next succeeding Master Servicer Remittance Date,
upon making any withdrawals from the Collection Account pursuant to subclause
(vii) above.

                  (b) The Trustee shall, from time to time, make withdrawals
from the Distribution Account, for any of the following purposes, without
priority:

                           (i) to make distributions to Certificateholders in
                  accordance with Section 4.01;

                           (ii) to pay to itself the Trustee's Fee pursuant to
                  Section 8.05;

                           (iii) to pay itself any interest income earned on
                  funds deposited in the Distribution Account pursuant to
                  Section 3.12(c);

                           (iv) to reimburse itself pursuant to Section 7.02;

                           (v) to pay any amounts in respect of taxes pursuant
                  to Section 10.01(g)(iii); and (vi) to clear and terminate the
                  Distribution Account pursuant to Section 9.01.

                  SECTION 3.12. INVESTMENT OF FUNDS IN THE PRE-FUNDING ACCOUNT,
                                THE INTEREST COVERAGE ACCOUNT, COLLECTION
                                ACCOUNT AND THE DISTRIBUTION ACCOUNT.

                  (a) The Master Servicer may direct any depository institution
maintaining the Pre- Funding Account, the Interest Coverage Account and the
Collection Account (for purposes of this Section 3.12, an "Investment Account"),
and the Trustee, in its individual capacity, may direct any depository
institution maintaining the Distribution Account (for purposes of this Section
3.12, also an "Investment Account"), to invest the funds (other than the Initial
Deposit) in such Investment Account in one or more Permitted Investments bearing
interest or sold at a discount, and maturing, unless payable on demand, (i) no
later than the Business Day immediately preceding the date on which such funds
are required to be withdrawn from such account pursuant to this Agreement, if a
Person other than the Trustee is the obligor thereon and (ii) no later than the
date on which such funds are required to be withdrawn from such account pursuant
to this Agreement, if the Trustee is the obligor thereon. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in an Investment Account shall be made in the name of the Trustee (in
its capacity as such) or in the name of a nominee of the Trustee. The Trustee
shall be entitled to sole possession (except with respect to investment
direction of funds held in the Pre- Funding Account, the Interest Coverage
Account and the Collection Account and any income and gain realized thereon)
over each such



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investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Trustee shall:

         (x)      consistent with any notice required to be given thereunder,
                  demand that payment thereon be made on the last day such
                  Permitted Investment may otherwise mature hereunder in an
                  amount equal to the lesser of (1) all amounts then payable
                  thereunder and (2) the amount required to be withdrawn on such
                  date; and

         (y)      demand payment of all amounts due thereunder promptly upon
                  determination by a Responsible Officer of the Trustee that
                  such Permitted Investment would not constitute a Permitted
                  Investment in respect of funds thereafter on deposit in the
                  Investment Account.

                  (b) All income and gain realized from the investment of funds
deposited in the Pre- Funding Account, the Interest Coverage Account and the
Collection Account held by or on behalf of the Master Servicer, shall be for the
benefit of the Master Servicer and shall be subject to its withdrawal in
accordance with Sections 4.07 and 4.08. The Master Servicer shall deposit in the
Pre- Funding Account, the Interest Coverage Account and the Collection Account
the amount of any loss of principal incurred in respect of any such Permitted
Investment made with funds in such accounts immediately upon realization of such
loss.

                  (c) All income and gain realized from the investment of funds
deposited in the Distribution Account held by or on behalf of the Trustee, shall
be for the benefit of the Trustee and shall be subject to its withdrawal at any
time. The Trustee shall deposit in the Distribution Account, the amount of any
loss of principal incurred in respect of any such Permitted Investment made with
funds in such accounts immediately upon realization of such loss.

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

                  SECTION 3.13. [INTENTIONALLY OMITTED].

                  SECTION 3.14. MAINTENANCE OF HAZARD INSURANCE AND ERRORS AND
                                OMISSIONS AND FIDELITY COVERAGE.

                  (a) The Master Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the least of (i) the current
principal balance of such Mortgage Loan, (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis and (iii) the maximum insurable value of
the




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<PAGE>


improvements which are a part of such Mortgaged Property, in each case in an
amount not less than such amount as is necessary to avoid the application of any
coinsurance clause contained in the related hazard insurance policy. The Master
Servicer shall also cause to be maintained fire insurance with extended coverage
on each REO Property in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding principal balance of the related Mortgage Loan
at the time it became an REO Property, plus accrued interest at the Mortgage
Rate and related Servicing Advances. The Master Servicer will comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any such hazard policies. Any amounts to be collected by the
Master Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or amounts
to be released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing loans held for its own account,
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.11, if received in respect of a Mortgage Loan, or in the REO Account,
subject to withdrawal pursuant to Section 3.23, if received in respect of an REO
Property. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.

                  It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the Mortgaged Property or REO
Property is at any time in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards, the Master
Servicer will cause to be maintained a flood insurance policy in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the unpaid principal balance of the related Mortgage Loan and (ii) the maximum
amount of such insurance available for the related Mortgaged Property under the
national flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).

                  In the event that the Master Servicer shall obtain and
maintain a blanket policy with an insurer having a General Policy Rating of A:X
or better in Best's Key Rating Guide (or such other rating that is comparable to
such rating) insuring against hazard losses on all of the Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first two sentences of this Section 3.14, it being understood and agreed
that such policy may contain a deductible clause, in which case the Master
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Collection Account
from its own funds the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.



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                  (b) The Master Servicer shall keep in force during the term of
this Agreement a policy or policies of insurance covering errors and omissions
for failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of Fannie Mae or Freddie Mac if it were the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from Fannie Mae or Freddie Mac. The Master Servicer shall also
maintain a fidelity bond in the form and amount that would meet the requirements
of Fannie Mae or Freddie Mac, unless the Master Servicer has obtained a waiver
of such requirements from Fannie Mae or Freddie Mac. The Master Servicer shall
provide the Trustee (upon the Trustee's reasonable request) with copies of any
such insurance policies and fidelity bond. The Master Servicer shall be deemed
to have complied with this provision if an Affiliate of the Master Servicer has
such errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends to
the Master Servicer. Any such errors and omissions policy and fidelity bond
shall by its terms not be cancelable without thirty days' prior written notice
to the Trustee. The Master Servicer shall also cause each Sub-Servicer to
maintain a policy of insurance covering errors and omissions and a fidelity bond
which would meet such requirements.

                  SECTION 3.15. ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION
                                AGREEMENTS.

                  The Master Servicer will, to the extent it has knowledge of
any conveyance or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note and/or
the Mortgage), exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due-on-sale" clause, if any, applicable thereto; provided,
however, that the Master Servicer shall not exercise any such rights if
prohibited by law from doing so. If the Master Servicer reasonably believes it
is unable under applicable law to enforce such "due-on-sale" clause, or if any
of the other conditions set forth in the proviso to the preceding sentence
apply, the Master Servicer will enter into an assumption and modification
agreement from or with the person to whom such property has been conveyed or is
proposed to be conveyed, pursuant to which such person becomes liable under the
Mortgage Note and, to the extent permitted by applicable state law, the
Mortgagor remains liable thereon. The Master Servicer is also authorized to
enter into a substitution of liability agreement with such person, pursuant to
which the original Mortgagor is released from liability and such person is
substituted as the Mortgagor and becomes liable under the Mortgage Note,
provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Master Servicer and has a credit risk
rating at least equal to that of the original Mortgagor. In connection with any
assumption or substitution, the Master Servicer shall apply such underwriting
standards and follow such practices and procedures as shall be normal and usual
in its general mortgage servicing activities and as it applies to other mortgage
loans owned solely by it. The Master Servicer shall not take or enter into any
assumption and modification agreement, however, unless (to the extent
practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy, or a new policy meeting the requirements of this Section is obtained.
Any fee collected by the Master Servicer in respect of an assumption or
substitution of liability agreement will be retained by the Master Servicer as
additional servicing compensation. In connection with any such assumption, no
material term of



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<PAGE>



the Mortgage Note (including but not limited to the related Mortgage Rate and
the amount of the Monthly Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof. The Master Servicer shall
notify the Trustee and any respective Custodian that any such substitution or
assumption agreement has been completed by forwarding to the Trustee or to such
Custodian, as the case may be, the executed original of such substitution or
assumption agreement, which document shall be added to the related Mortgage File
and shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.

                  Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or by the terms of the
Mortgage Note or any assumption which the Master Servicer may be restricted by
law from preventing, for any reason whatever. For purposes of this Section 3.15,
the term "assumption" is deemed to also include a sale (of the Mortgaged
Property) subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.

                  SECTION 3.16. REALIZATION UPON DEFAULTED MORTGAGE LOANS.

                  (a) The Master Servicer shall, consistent with the servicing
standard set forth in Section 3.01, foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans
(including selling any such Mortgage Loans other than converting the ownership
of the related property) as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. The Master Servicer shall be responsible for all costs
and expenses incurred by it in any such proceedings; provided, however, that
such costs and expenses will be recoverable as Servicing Advances by the Master
Servicer as contemplated in Section 3.11 and Section 3.23. The foregoing is
subject to the provision that, in any case in which Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Master Servicer shall not be
required to expend its own funds toward the restoration of such property unless
it shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.

                  (b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Master Servicer has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Mortgaged Property, the Master Servicer shall not, on behalf of the Trustee,
either (i) obtain title to such Mortgaged Property as a result of or in lieu of
foreclosure or otherwise or (ii) otherwise acquire possession of, or take any
other action with respect to, such Mortgaged Property, if, as a result of any
such action, the Trustee, the Trust Fund or the Certificateholders would be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or "operator" of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Master Servicer has
also previously determined, based on its reasonable judgment and a report
prepared by a Person who regularly conducts environmental audits using customary
industry standards, that:



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<PAGE>


                                    (1) such Mortgaged Property is in compliance
                           with applicable environmental laws or, if not, that
                           it would be in the best economic interest of the
                           Trust Fund to take such actions as are necessary to
                           bring the Mortgaged Property into compliance
                           therewith; and

                                    (2) there are no circumstances present at
                           such Mortgaged Property relating to the use,
                           management or disposal of any hazardous substances,
                           hazardous materials, hazardous wastes, or
                           petroleum-based materials for which investigation,
                           testing, monitoring, containment, clean-up or
                           remediation could be required under any federal,
                           state or local law or regulation, or that if any such
                           materials are present for which such action could be
                           required, that it would be in the best economic
                           interest of the Trust Fund to take such actions with
                           respect to the affected Mortgaged Property.

                  The cost of the environmental audit report contemplated by
this Section 3.16 shall be advanced by the Master Servicer, subject to the
Master Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(a)(ix), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.

                  If the Master Servicer determines, as described above, that it
is in the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(ix), such right of
reimbursement being prior to the rights of Certificateholders to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.

                  (c) The Master Servicer may at its option purchase from REMIC
I any Mortgage Loan or related REO Property that is 90 days or more delinquent,
which the Master Servicer determines in good faith will otherwise become subject
to foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee prior to purchase), at a price equal to the Purchase
Price; provided, however, that the Master Servicer shall purchase any such
Mortgage Loans or related REO Properties on the basis of delinquency, purchasing
the most delinquent Mortgage Loans or related REO Properties first. The Purchase
Price for any Mortgage Loan or related REO Property purchased hereunder shall be
deposited in the Collection Account, and the Trustee, upon receipt of written
certification from the Master Servicer of such deposit, shall release or cause
to be released to the Master Servicer the related Mortgage File and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as the Master Servicer shall furnish and as shall be necessary
to vest in the Master Servicer title to any Mortgage Loan or related REO
Property released pursuant hereto.



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<PAGE>


                  (d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances and P&I Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); second,
to accrued and unpaid interest on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Master Servicer as follows: first, to
unpaid Servicing Fees; and second, to the balance of the interest then due and
owing. The portion of the recovery so allocated to unpaid Servicing Fees shall
be reimbursed to the Master Servicer or any Sub-Servicer pursuant to Section
3.11(a)(iii).

                  SECTION 3.17. TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.

                  (a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Master Servicer of a notification that payment in full shall be
escrowed in a manner customary for such purposes, the Master Servicer will
immediately notify the Trustee and any related Custodian by a certification in
the form of Exhibit E-2 (which certification shall include a statement to the
effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 3.10 have been or will be so deposited) of a Servicing Officer and shall
request delivery to it of the Mortgage File. Upon receipt of such certification
and request, the Trustee or such Custodian, as the case may be, shall promptly
release the related Mortgage File to the Master Servicer. No expenses incurred
in connection with any instrument of satisfaction or deed of reconveyance shall
be chargeable to the Collection Account or the Distribution Account.

                  (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee and any related
Custodian shall, upon request of the Master Servicer and delivery to the Trustee
or such Custodian, as the case may be, of a Request for Release in the form of
Exhibit E-l, release the related Mortgage File to the Master Servicer, and the
Trustee shall, at the direction of the Master Servicer, execute such documents
as shall be necessary to the prosecution of any such proceedings and the Master
Servicer shall retain such Mortgage File in trust for the benefit of the
Certificateholders. Such Request for Release shall obligate the Master Servicer
to return each and every document previously requested from the Mortgage File to
the Trustee or to such Custodian when the need therefor by the Master Servicer
no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or 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 Master Servicer has delivered to the Trustee a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a



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Servicing Officer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation that are
required to be deposited into the Collection Account have been so deposited, or
that such Mortgage Loan has become an REO Property, a copy of the Request for
Release shall be released by the Trustee or such Custodian to the Master
Servicer.

                  (c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Master Servicer any court pleadings,
requests for trustee's sale or other documents reasonably necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity. Each such certification shall include a request that such
pleadings or documents be executed by the Trustee and a statement as to the
reason such documents or pleadings are required and that the execution and
delivery thereof by the Trustee will not invalidate or otherwise affect the lien
of the Mortgage, except for the termination of such a lien upon completion of
the foreclosure or trustee's sale.

                  SECTION 3.18. SERVICING COMPENSATION.

                  As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Servicing Fee with
respect to each Mortgage Loan payable solely from payments of interest in
respect of such Mortgage Loan, subject to Section 3.24. In addition, the Master
Servicer shall be entitled to recover unpaid Servicing Fees out of Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Master Servicer's responsibilities and obligations under this Agreement.

                  Additional servicing compensation in the form of assumption
fees, late payment charges, NSF fees, reconveyance fees and other similar fees
and charges (other than Prepayment Charges) shall be retained by the Master
Servicer (subject to Section 3.24) only to the extent such fees or charges are
received by the Master Servicer. The Master Servicer shall also be entitled
pursuant to Section 3.11(a)(iv) to withdraw from the Collection Account, and
pursuant to Section 3.23(b) to withdraw from any REO Account, as additional
servicing compensation, interest or other income earned on deposits therein,
subject to Section 3.12 and Section 3.24. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its servicing activities
hereunder (including premiums for the insurance required by Section 3.14, to the
extent such premiums are not paid by the related Mortgagors or by a
Sub-Servicer, servicing compensation of each Sub-Servicer, and to the extent
provided herein in Section 8.05, the fees and expenses of the Trustee) and shall
not be entitled to reimbursement therefor except as specifically provided
herein.



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                  SECTION 3.19. REPORTS TO THE TRUSTEE; COLLECTION ACCOUNT
                                STATEMENTS.

                  Not later than fifteen days after each Distribution Date, the
Master Servicer shall forward to the Trustee and the Depositor a statement
prepared by the Master Servicer setting forth the status of the Collection
Account as of the close of business on such Distribution Date and showing, for
the period covered by such statement, the aggregate amount of deposits into and
withdrawals from the Collection Account of each category of deposit specified in
Section 3.10(a) and each category of withdrawal specified in Section 3.11. Such
statement may be in the form of the then current Fannie Mae Monthly Accounting
Report for its Guaranteed Mortgage Pass-Through Program with appropriate
additions and changes, and shall also include information as to the aggregate of
the outstanding principal balances of all of the Mortgage Loans as of the last
day of the calendar month immediately preceding such Distribution Date. Copies
of such statement shall be provided by the Trustee to any Certificateholder and
to any Person identified to the Trustee as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided such
statement is delivered by the Master Servicer to the Trustee.

                  SECTION 3.20. STATEMENT AS TO COMPLIANCE.

                  The Master Servicer will deliver to the Trustee, the Depositor
and each Rating Agency on or before __________ of each calendar year commencing
in ________, an Officers' Certificate stating, as to each signatory thereof,
that (i) a review of the activities of the Master Servicer during the preceding
year and of performance under this Agreement has been made under such officers'
supervision and (ii) to the best of such officers' knowledge, based on such
review, the Master Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Copies of any such statement shall be
provided by the Trustee to any Certificateholder and to any Person identified to
the Trustee as a prospective transferee of a Certificate, upon the request and
at the expense of the requesting party, provided that such statement is
delivered by the Master Servicer to the Trustee.

                  SECTION 3.21. INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
                                REPORT.

                  Not later than _________ of each calendar year commencing in
______, the Master Servicer, at its expense, shall cause a nationally recognized
firm of independent certified public accountants to furnish to the Master
Servicer a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Master Servicer which
includes an assertion that the Master Servicer has complied with certain minimum
residential mortgage loan servicing standards, identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America, with respect to the servicing of residential mortgage
loans during the most recently completed fiscal year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established by
the American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. In rendering its report such firm may
rely, as to matters relating to the direct servicing of residential mortgage
loans by Sub-Servicers, upon comparable reports of firms of independent


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certified public accountants rendered on the basis of examinations conducted in
accordance with the same standards (rendered within one year of such report)
with respect to those Sub-Servicers. Immediately upon receipt of such report,
the Master Servicer shall furnish a copy of such report to the Trustee and each
Rating Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided that
such statement is delivered by the Master Servicer to the Trustee. In the event
such firm of independent certified public accountants requires the Trustee to
agree to the procedures performed by such firm, the Master Servicer shall direct
the Trustee in writing to so agree; it being understood and agreed that the
Trustee will deliver such letter of agreement in conclusive reliance upon the
direction of the Master Servicer, and the Trustee has not made any independent
inquiry or investigation as to, and shall have no obligation or liability in
respect of, the sufficiency, validity or correctness of such procedures.

                  SECTION 3.22. ACCESS TO CERTAIN DOCUMENTATION.

                  The Master Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation regarding the Mortgage Loans required by applicable
laws and regulations. Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Master Servicer designated by it. In addition, access to the documentation
regarding the Mortgage Loans will be provided to any Certificateholder, the
Trustee and to any Person identified to the Master Servicer as a prospective
transferee of a Certificate, upon reasonable request during normal business
hours at the offices of the Master Servicer designated by it at the expense of
the Person requesting such access.

                  SECTION 3.23. TITLE, MANAGEMENT AND DISPOSITION OF REO
                                PROPERTY.

                  (a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. The Master Servicer, on behalf of REMIC I (and on behalf
of the Trustee for the benefit of the Certificateholders), shall either sell any
REO Property before the close of the third taxable year after the year REMIC I
acquires ownership of such REO Property for purposes of Section 860G(a)(8) of
the Code or request from the Internal Revenue Service, no later than 60 days
before the day on which the three-year grace period would otherwise expire, an
extension of the three-year grace period, unless the Master Servicer shall have
delivered to the Trustee and the Depositor an Opinion of Counsel, addressed to
the Trustee and the Depositor, to the effect that the holding by REMIC I of such
REO Property subsequent to three years after its acquisition will not result in
the imposition on REMIC I, REMIC II or REMIC III of taxes on "prohibited
transactions" thereof, as defined in Section 860F of the Code, or cause any of
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC under Federal law
at any time that any Certificates are outstanding. The Master Servicer shall
manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by REMIC I, REMIC II or REMIC III of any "income from
non-permitted assets" within the meaning of



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Section 860F(a)(2)(B) of the Code, or any "net income from foreclosure property"
which is subject to taxation under the REMIC Provisions.

                  (b) The Master Servicer shall segregate and hold all funds
collected and received in connection with the operation of any REO Property
separate and apart from its own funds and general assets and shall establish and
maintain with respect to REO Properties an account held in trust for the Trustee
for the benefit of the Certificateholders (the "REO Account"), which shall be an
Eligible Account. The Master Servicer shall be permitted to allow the Collection
Account to serve as the REO Account, subject to separate ledgers for each REO
Property. The Master Servicer shall be entitled to retain or withdraw any
interest income paid on funds deposited in the REO Account.

                  (c) The Master Servicer shall have full power and authority,
subject only to the specific requirements and prohibitions of this Agreement, to
do any and all things in connection with any REO Property as are consistent with
the manner in which the Master Servicer manages and operates similar property
owned by the Master Servicer or any of its Affiliates, all on such terms and for
such period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Master
Servicer's receipt thereof, and shall thereafter deposit in the REO Account, in
no event more than two Business Days after the deposit of such funds into the
clearing account, all revenues received by it with respect to an REO Property
and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of such REO Property including, without limitation:

                           (i) all insurance premiums due and payable in respect
                  of such REO Property;

                           (ii) all real estate taxes and assessments in respect
                  of such REO Property that may result in the imposition of a
                  lien thereon; and

                           (iii) all costs and expenses necessary to maintain
                  such REO Property.

To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.

                  Notwithstanding the foregoing, neither the Master Servicer nor
the Trustee shall:

                           (i) authorize the Trust Fund to enter into, renew or
                  extend any New Lease with respect to any REO Property, if the
                  New Lease by its terms will give rise to any income that does
                  not constitute Rents from Real Property;



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<PAGE>


                           (ii) authorize any amount to be received or accrued
                  under any New Lease other than amounts that will constitute
                  Rents from Real Property;

                           (iii) authorize any construction on any REO Property,
                  other than the completion of a building or other improvement
                  thereon, and then only if more than ten percent of the
                  construction of such building or other improvement was
                  completed before default on the related Mortgage Loan became
                  imminent, all within the meaning of Section 856(e)(4)(B) of
                  the Code; or

                           (iv) authorize any Person to Directly Operate any REO
                  Property on any date more than 90 days after its date of
                  acquisition by the Trust Fund;

unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, provided to the Trustee, to the effect that such action will not cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code at any time that it is held by REMIC
I, in which case the Master Servicer may take such actions as are specified in
such Opinion of Counsel.

                  The Master Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:

                           (i) the terms and conditions of any such contract
                  shall not be inconsistent herewith;

                           (ii) any such contract shall require, or shall be
                  administered to require, that the Independent Contractor pay
                  all costs and expenses incurred in connection with the
                  operation and management of such REO Property, including those
                  listed above and remit all related revenues (net of such costs
                  and expenses) to the Master Servicer as soon as practicable,
                  but in no event later than thirty days following the receipt
                  thereof by such Independent Contractor;

                           (iii) none of the provisions of this Section 3.23(c)
                  relating to any such contract or to actions taken through any
                  such Independent Contractor shall be deemed to relieve the
                  Master Servicer of any of its duties and obligations to the
                  Trustee on behalf of the Certificateholders with respect to
                  the operation and management of any such REO Property; and

                           (iv) the Master Servicer shall be obligated with
                  respect thereto to the same extent as if it alone were
                  performing all duties and obligations in connection with the
                  operation and management of such REO Property.

The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees.



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                  (d) In addition to the withdrawals permitted under Section
3.23(c), the Master Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and P&I Advances
made in respect of such REO Property or the related Mortgage Loan. On the Master
Servicer Remittance Date, the Master Servicer shall withdraw from each REO
Account maintained by it and deposit into the Distribution Account in accordance
with Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).

                  (e) Subject to the time constraints set forth in Section
3.23(a), each REO Disposition shall be carried out by the Master Servicer at
such price and upon such terms and conditions as the Master Servicer shall deem
necessary or advisable, as shall be normal and usual in its general servicing
activities for similar properties.

                  (f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Master Servicer or any
Sub-Servicer as provided above, shall be deposited in the Distribution Account
in accordance with Section 3.10(d)(ii) on the Master Servicer Remittance Date in
the month following the receipt thereof for distribution on the related
Distribution Date in accordance with Section 4.01. Any REO Disposition shall be
for cash only (unless changes in the REMIC Provisions made subsequent to the
Startup Day allow a sale for other consideration).

                  (g) The Master Servicer shall file information returns with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code, respectively. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.

                  SECTION 3.24. OBLIGATIONS OF THE MASTER SERVICER IN RESPECT OF
                                PREPAYMENT INTEREST SHORTFALLS.

                  The Master Servicer shall deliver to the Trustee for deposit
into the Distribution Account on or before 3:00 p.m. New York time on the Master
Servicer Remittance Date from its own funds an amount equal to the lesser of (i)
the aggregate of the Prepayment Interest Shortfalls for the related Distribution
Date resulting solely from Principal Prepayments during the related Prepayment
Period and (ii) the amount of its aggregate Servicing Fee for the most recently
ended calendar month.

                  SECTION 3.25. OBLIGATIONS OF THE MASTER SERVICER IN RESPECT OF
                                MORTGAGE RATES AND MONTHLY PAYMENTS.

                  In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly



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Payments or Stated Principal Balances that were made by the Master Servicer in a
manner not consistent with the terms of the related Mortgage Note and this
Agreement, the Master Servicer, upon discovery or receipt of notice thereof,
immediately shall deliver to the Trustee for deposit in the Distribution Account
from its own funds the amount of any such shortfall and shall indemnify and hold
harmless the Trust Fund, the Trustee, the Depositor and any successor master
servicer in respect of any such liability. Such indemnities shall survive the
termination or discharge of this Agreement.

                  SECTION 3.26. ADVANCE FACILITY.

                  The Master Servicer is hereby authorized to enter into a
facility with any Person which provides that such Person (an "Advancing Person")
may fund P&I Advances and/or Servicing Advances under this Agreement, although
no such facility shall reduce or otherwise affect the Master Servicer's
obligation to fund such P&I Advances and/or Servicing Advances. To the extent
that an Advancing Person funds any P&I Advance or any Servicing Advance and
provides the Trustee with notice, such Advancing Person shall be entitled to
receive reimbursement pursuant to this Agreement for such amount to the same
extent that the Master Servicer would be so reimbursed had the Master Servicer
funded such amount. An Advancing Person whose obligations are limited to the
funding of P&I Advances and/or Servicing Advances shall not be required to meet
the qualifications of a Sub-Servicer pursuant to Section 3.02 hereof.

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

                  SECTION 4.01. DISTRIBUTIONS.

                  (a) (1)(A) On each Distribution Date, the following amounts,
in the following order of priority, shall be distributed by REMIC I to REMIC II
on account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R-I Certificates, as the
case may be:

                           (i) to the Holders of REMIC I Regular Interests
                  (other than REMIC I Regular Interest I-LTP), in an amount
                  equal to (A) the Uncertificated Interest for such Distribution
                  Date, plus (B) any amounts in respect thereof remaining unpaid
                  from previous Distribution Dates. Amounts payable as
                  Uncertificated Interest in respect of REMIC I Regular Interest
                  I-LT7 shall be reduced when the REMIC I Overcollateralized
                  Amount is less than the REMIC I Required Overcollateralized
                  Amount, by the lesser of (x) the amount of such difference and
                  (y) the Maximum I-LT7 Uncertificated Interest Deferral Amount;
                  and

                           (ii) on each Distribution Date, to the Holders of
                  REMIC I Regular Interests, in an amount equal to the remainder
                  of the Available Distribution Amount for such Distribution
                  Date after the distributions made pursuant to clause (i)
                  above, allocated as follows (except as provided below):

                           (a)      the Holders of the REMIC I Regular Interest
                                    I-LTP, on the Distribution Date immediately
                                    following the expiration of the



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                                    latest Prepayment Charge term as identified
                                    on the Mortgage Loan Schedule or any
                                    Distribution Date thereafter until $100 has
                                    been distributed pursuant to this clause;

                           (b)      to the Holders of the REMIC I Regular
                                    Interest I-LT1, ____% of the amount
                                    remaining after application of clause (a),
                                    until the Uncertificated Balance of such
                                    REMIC I Regular Interest is reduced to zero
                                    and any remaining amount to the Holders of
                                    the Class R-I Certificates;

                           (c)      to the Holders of the REMIC I Regular
                                    Interest I-LT2, REMIC I Regular Interest
                                    I-LT3, REMIC I Regular Interest I-LT4, REMIC
                                    I Regular Interest I-LT5 and REMIC I Regular
                                    Interest I-LT6, ____% of the amount
                                    remaining after application of clause (a),
                                    in the same proportion as principal payments
                                    are allocated to the related Corresponding
                                    Certificates, until the Uncertificated
                                    Balances of such REMIC I Regular Interests
                                    are reduced to zero and any remaining amount
                                    to the Holders of the Class R-I
                                    Certificates; and

                           (d)      to the Holders of the REMIC I Regular
                                    Interest I-LT7, ____% of the amount
                                    remaining after application of clause (a),
                                    until the Uncertificated Balance of such
                                    REMIC I Regular Interest is reduced to zero
                                    and any remaining amount to the Holders of
                                    the Class R-I Certificates;

provided, however, that _____% and _____% of any principal payments that are
attributable to a Overcollateralization Reduction Amount shall be allocated to
Holders of the REMIC I Regular Interest I-LT1 and REMIC I Regular Interest
I-LT7, respectively.

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

                           (i) any amounts paid as either Uncertificated
                  Interest paid or accrued to the REMIC I Regular Interests
                  (other than REMIC I Regular Interest I-LTP) shall be deemed to
                  have been paid to the related Uncertificated Corresponding
                  Component in REMIC II in accordance with the REMIC II
                  Remittance Rates and any amounts deferred on REMIC I Regular
                  Interest I-LT7 pursuant to Section 4.01(a)(1)(A) shall be
                  deemed to have been deferred with respect to REMIC II Regular
                  Interest II-LT7; and

                           (ii) any amounts paid as principal on the REMIC I
                  Regular Interests shall be deemed to have been paid to the
                  related Uncertificated Corresponding Component in REMIC II in
                  accordance with the same priorities and conditions.

                           (2) On each Distribution Date, the Trustee shall
                  withdraw from the Distribution Account an amount equal to the
                  Interest Remittance Amount and



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                  distribute to the Certificateholders the following amounts, in
                  the following order of priority:

                           (i) to the Holders of the Class A-1 Certificates, an
                  amount equal to the Class A-1 Interest Distribution Amount;

                           (ii) to the extent of the Interest Remittance Amount
                  remaining after distribution of the Class A-1 Interest
                  Distribution Amount, to the Holders of the Class A-2
                  Certificates, an amount equal to the Class A-2 Interest
                  Distribution Amount allocable to the Class A- 2 Certificates;

                           (iii) to the extent of the Interest Remittance Amount
                  remaining after distribution of the Class A-1 Interest
                  Distribution Amount and the Class A-2 Interest Distribution
                  Amount, to the Holders of the Class M-1 Certificates, an
                  amount equal to the Interest Distribution Amount allocable to
                  the Class M-1 Certificates;

                           (iv) to the extent of the Interest Remittance Amount
                  remaining after distribution of the Class A-1 Interest
                  Distribution Amount, the Class A-2 Interest Distribution
                  Amount and the Interest Distribution Amount allocable to the
                  Class M-1 Certificates, to the Holders of the Class M-2
                  Certificates, an amount equal to the Interest Distribution
                  Amount allocable to the Class M-2 Certificates; and

                           (v) to the extent of the Interest Remittance Amount
                  remaining after distribution of the Class A-1 Interest
                  Distribution Amount, the Class A-2 Interest Distribution
                  Amount and the Interest Distribution Amounts allocable to the
                  Class M-1 Certificates and the Class M-2 Certificates, to the
                  Holders of the Class M-3 Certificates, an amount equal to the
                  Interest Distribution Amount allocable to the Class M-3
                  Certificates.

                           (3) On each Distribution Date, the Trustee shall
                  withdraw from the Distribution Account an amount equal to the
                  Principal Distribution Amount and distribute to the
                  Certificateholders the following amounts, in the following
                  order of priority:

                           (i) On each Distribution Date (a) prior to the
                  Stepdown Date or (b) on which a Trigger Event is in effect,
                  the Principal Distribution Amount shall be distributed in the
                  following order of priority;

FIRST, to the Holders of the Class A-1 Certificates, until the Certificate
Principal Balance of such Class has been reduced to zero;

SECOND, to the Holders of the Class A-2 Certificates, until the Certificate
Principal Balance of such Class has been reduced to zero;

THIRD, to the Holders of the Class M-1 Certificates, until the Certificate
Principal Balance of such Class has been reduced to zero;



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FOURTH, to the Holders of the Class M-2 Certificates, until the Certificate
Principal Balance of such Class has been reduced to zero; and

FIFTH, to the Holders of the Class M-3 Certificates, until the Certificate
Principal Balance of such Class has been reduced to zero.

                           (ii) On each Distribution Date (a) on or after the
                  Stepdown Date and (b) on which a Trigger Event is not in
                  effect, the Principal Distribution Amount shall be distributed
                  in the following order of priority;

FIRST, the lesser of (x) the Principal Distribution Amount and (y) the Class A-1
Principal Distribution Amount shall be distributed to the Holders of the Class
A-1 Certificates, until the Certificate Principal Balance of such Class has been
reduced to zero;

SECOND, the lesser of (x) the excess of (i) the Principal Distribution Amount
over (ii) the amount distributed to the Holders of the Class A-1 Certificates
pursuant to clause first above and (y) the Class A-2 Principal Distribution
Amount shall be distributed to the Holders of the Class A-2 Certificates, until
the Certificate Principal Balance of such Class has been reduced to zero;

THIRD, the lesser of (x) the excess of (i) the Principal Distribution Amount
over (ii) the amount distributed to the Holders of the Class A-1 Certificates
pursuant to clause first above and to the Holders of the Class A-2 Certificates
pursuant to clause second above and (y) the Class M-1 Principal Distribution
Amount shall be distributed to the Holders of the Class M-1 Certificates, until
the Certificate Principal Balance of such Class has been reduced to zero;

FOURTH, the lesser of (x) the excess of (i) the Principal Distribution Amount
over (ii) the sum of the amounts distributed to the Holders of the Class A-1
Certificates pursuant to clause first above, to the Holders of the Class A-2
Certificates pursuant to clause second above and to the Holders of the Class M-1
Certificates pursuant to clause third above and (y) the Class M-2 Principal
Distribution Amount shall be distributed to the Holders of the Class M-2
Certificates, until the Certificate Principal Balance of such Class has been
reduced to zero; and

FIFTH, the lesser of (x) the excess of (i) the Principal Distribution Amount
over (ii) the sum of the amounts distributed to the Holders of the Class A-1
Certificates pursuant to clause first above, to the Holders of the Class A-2
Certificates pursuant to clause second above, to the Holders of the Class M-1
Certificates pursuant to clause third above and to the Holders of the Class M-2
Certificates pursuant to clause fourth above and (y) the Class M-3 Principal
Distribution Amount shall be distributed to the Holders of the Class M-3
Certificates, until the Certificate Principal Balance of such Class has been
reduced to zero.

                           (4) On each Distribution Date, the Net Monthly Excess
                  Cashflow (or, in the case of clause (i) below, the Net Monthly
                  Excess Cashflow exclusive of any Overcollateralization
                  Reduction Amount) shall be distributed as follows:

                           (i) to the Holders of the Class or Classes of
                  Certificates then entitled to receive distributions in respect
                  of principal, in an amount equal to the principal portion of
                  any Realized Losses incurred or deemed to have been incurred
                  on the Mortgage Loans, applied to reduce the Certificate
                  Principal Balance of such



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<PAGE>



                  Certificates until the aggregate Certificate Principal Balance
                  of such Certificates is reduced to zero;

                           (ii) to the Holders of the Class or Classes of
                  Certificates then entitled to receive distributions in respect
                  of principal, in an amount equal to the Overcollateralization
                  Increase Amount, applied to reduce the Certificate Principal
                  Balance of such Certificates until the aggregate Certificate
                  Principal Balance of such Certificates is reduced to zero;

                           (iii) to the Holders of the Class M-1 Certificates,
                  in an amount equal to the Interest Carry Forward Amount (plus
                  accrued interest) allocable to such Class of Certificates;

                           (iv) to the Holders of the Class M-2 Certificates, in
                  an amount equal to the Interest Carry Forward Amount (plus
                  accrued interest) allocable to such Class of Certificates;

                           (v) to the Holders of the Class M-3 Certificates, in
                  an amount equal to the Interest Carry Forward Amount (plus
                  accrued interest) allocable to such Class of Certificates;

                           (vi) to the Holders of the Class A-1 Certificates, in
                  an amount equal to the aggregate of any Prepayment Interest
                  Shortfalls (to the extent not covered by payments pursuant to
                  Section 3.24) and any Relief Act Interest Shortfall allocated
                  to such Certificates;

                           (vii) to the Holders of the Class A-2 Certificates,
                  in an amount equal to the aggregate of any Prepayment Interest
                  Shortfalls (to the extent not covered by payments pursuant to
                  Section 3.24) and any Relief Act Interest Shortfall allocated
                  to such Certificates;

                           (viii) to the Holders of the Class M-1 Certificates,
                  in an amount equal to the aggregate of any Prepayment Interest
                  Shortfalls (to the extent not covered by payments pursuant to
                  Section 3.24) and any Relief Act Interest Shortfall allocated
                  to such Certificates;

                           (ix) to the Holders of the Class M-2 Certificates, in
                  an amount equal to the aggregate of any Prepayment Interest
                  Shortfalls (to the extent not covered by payments pursuant to
                  Section 3.24) and any Relief Act Interest Shortfall allocated
                  to such Certificates;

                           (x) to the Holders of the Class M-3 Certificates, in
                  an amount equal to the aggregate of any Prepayment Interest
                  Shortfalls (to the extent not covered by payments pursuant to
                  Section 3.24) and any Relief Act Interest Shortfall allocated
                  to such Certificates;



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                           (xi) to the Holders of the Class CE Certificates, the
                  Interest Distribution Amount and any Overcollateralization
                  Reduction Amount for such Distribution Date; and

                           (xii) to the Holders of the Class R-III Certificates,
                  any remaining amounts; provided that if such Distribution Date
                  is the Distribution Date immediately following the expiration
                  of the latest Prepayment Charge term as identified on the
                  Mortgage Loan Schedule or any Distribution Date thereafter,
                  then any such remaining amounts will be distributed FIRST, to
                  the Holders of the Class P Certificates, until the Certificate
                  Principal Balance thereof has been reduced to zero; and
                  SECOND, to the Holders of the Class R-III Certificates.

                  On the Distribution Date immediately following the end of the
Funding Period, the Trustee shall distribute any amounts remaining in the
Pre-Funding Account to the Holders of the Certificates then entitled to
distributions in respect of principal in reductionof the Certificate Principal
Balance of such Certificates.

                  (b) On each Distribution Date, the Trustee shall withdraw any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges collected by the Master Servicer in connection with the Principal
Prepayment of any of the Mortgage Loans or any Master Servicer Prepayment Charge
Payment Amount and shall distribute such amounts to the Holders of the Class P
Certificates. Such distributions shall not be applied to reduce the Certificate
Principal Balance of the Class P Certificates.

                  (c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Certificates having an initial
aggregate Certificate Principal Balance that is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the initial Certificate Principal Balance of
such Class of Certificates, or otherwise by check mailed by first class mail to
the address of such Holder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the Corporate Trust Office or
such other location specified in the notice to Certificateholders of such final
distribution.

                  Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a



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<PAGE>


"brokerage firm" or "indirect participating firm") for which it acts as agent.
Each brokerage firm shall be responsible for disbursing funds to the Certificate
Owners that it represents. None of the Trustee, the Certificate Registrar, the
Depositor or the Master Servicer shall have any responsibility therefor except
as otherwise provided by this Agreement or applicable law.

                  (d) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. Neither the Holders of any Class of Certificates nor the Trustee nor
the Master Servicer shall in any way be responsible or liable to the Holders of
any other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.

                  (e) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than five (5) days after the related Determination Date, mail to each
Holder on such date of such Class of Certificates a notice to the effect that:

                           (i) the Trustee expects that the final distribution
                  with respect to such Class of Certificates will be made on
                  such Distribution Date, but only upon presentation and
                  surrender of such Certificates at the office of the Trustee
                  therein specified, and

                           (ii) no interest shall accrue on such Certificates
                  from and after the end of the related Interest Accrual Period.

Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust by
the Trustee and credited to the account of the appropriate non- tendering Holder
or Holders. If any Certificates as to which notice has been given pursuant to
this Section 4.01(e) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, mail a final notice to remaining
non-tendering Certificateholders concerning surrender of their Certificates but
shall continue to hold any remaining funds for the benefit of non-tendering
Certificateholders. The costs and expenses of maintaining the funds in trust and
of contacting such Certificateholders shall be paid out of the assets remaining
in such trust fund. If within one year after the final notice any such
Certificates shall not have been surrendered for cancellation, the Trustee shall
pay to Salomon Smith Barney Inc. all such amounts, and all rights of
non-tendering Certificateholders in or to such amounts shall thereupon cease. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust by the Trustee as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with this
Section 4.01(e).

                  (f) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate or a
Mezzanine Certificate be reduced more



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<PAGE>


than once in respect of any particular amount both (a) allocated to such
Certificate in respect of Realized Losses pursuant to Section 4.04 and (b)
distributed to the Holder of such Certificate in reduction of the Certificate
Principal Balance thereof pursuant to this Section 4.01 from Net Monthly Excess
Cashflow and (ii) in no event shall the Uncertificated Balance of a REMIC I
Regular Interest be reduced more than once in respect of any particular amount
both (a) allocated to such REMIC I Regular Interest in respect of Realized
Losses pursuant to Section 4.04 and (b) distributed on such REMIC I Regular
Interest in reduction of the Uncertificated Balance thereof pursuant to this
Section 4.01.

                  SECTION 4.02. STATEMENTS TO CERTIFICATEHOLDERS.

                  On each Distribution Date, the Trustee shall prepare and make
available to each Holder of the Regular Certificates, a statement as to the
distributions made on such Distribution Date setting forth:

                           (i) the amount of the distribution made on such
                  Distribution Date to the Holders of the Certificates of each
                  Class allocable to principal, and the amount of distribution
                  made on such Distribution Date to the Holders of the Class P
                  Certificates allocable to Prepayment Charges;

                           (ii) the amount of the distribution made on such
                  Distribution Date to the Holders of the Certificates of each
                  Class allocable to interest;

                           (iii) the aggregate Servicing Fee received by the
                  Master Servicer during the related Due Period and such other
                  customary information as the Trustee deems necessary or
                  desirable, or which a Certificateholder reasonably requests,
                  to enable Certificateholders to prepare their tax returns;

                           (iv) the aggregate amount of P&I Advances for such
                  Distribution Date;

                           (v) the aggregate Stated Principal Balance of the
                  Mortgage Loans and any REO Properties as of the close of
                  business on such Distribution Date;

                           (vi) the number, aggregate principal balance,
                  weighted average remaining term to maturity and weighted
                  average Mortgage Rate of the Mortgage Loans as of the related
                  Due Date and the number and aggregate principal balance of all
                  Subsequent Mortgage Loans added during the preceding Due
                  Period;

                           (vii) the number and aggregate unpaid principal
                  balance of Mortgage Loans (a) delinquent 30-59 days, (b)
                  delinquent 60-89 days, (c) delinquent 90 or more days in each
                  case, as of the last day of the preceding calendar month, (d)
                  as to which foreclosure proceedings have been commenced and
                  (e) with respect to which the related Mortgagor has filed for
                  protection under applicable bankruptcy laws, with respect to
                  whom bankruptcy proceedings are pending or with respect to
                  whom bankruptcy protection is in force;

                           (viii) with respect to any Mortgage Loan that became
                  an REO Property during the preceding calendar month, the loan
                  number of such Mortgage Loan,



                                       96
<PAGE>


                  the unpaid principal balance and the Stated Principal Balance
                  of such Mortgage Loan as of the date it became an REO
                  Property;

                           (ix) the book value and the Stated Principal Balance
                  of any REO Property as of the close of business on the last
                  Business Day of the calendar month preceding the Distribution
                  Date;

                           (x) the aggregate amount of Principal Prepayments
                  made during the related Prepayment Period;

                           (xi) the aggregate amount of Realized Losses incurred
                  during the related Prepayment Period (or, in the case of
                  Bankruptcy Losses allocable to interest, during the related
                  Due Period), separately identifying whether such Realized
                  Losses constituted Bankruptcy Losses and the aggregate amount
                  of Realized Losses incurred since the Closing Date;

                           (xii) the aggregate amount of Extraordinary Trust
                  Fund Expenses withdrawn from the Collection Account or the
                  Distribution Account for such Distribution Date;

                           (xiii) the aggregate Certificate Principal Balance of
                  the each Class of Certificates, after giving effect to the
                  distributions, and allocations of Realized Losses, made on
                  such Distribution Date, separately identifying any reduction
                  thereof due to allocations of Realized Losses;

                           (xiv) the Certificate Factor for each such Class of
                  Certificates applicable to such Distribution Date;

                           (xv) the Interest Distribution Amount in respect of
                  the Class A Certificates, the Mezzanine Certificates and the
                  Class CE Certificates for such Distribution Date and the
                  Interest Carry Forward Amount, if any, with respect to the
                  Class A Certificates and the Mezzanine Certificates on such
                  Distribution Date, and in the case of the Class A
                  Certificates, the Mezzanine Certificates and the Class CE
                  Certificates, separately identifying any reduction thereof due
                  to allocations of Realized Losses, Prepayment Interest
                  Shortfalls and Relief Act Interest Shortfalls;

                           (xvi) the aggregate amount of any Prepayment Interest
                  Shortfall for such Distribution Date, to the extent not
                  covered by payments by the Master Servicer pursuant to Section
                  3.24;

                           (xvii) the aggregate amount of Relief Act Interest
                  Shortfalls for such Distribution Date;

                           (xviii) the Required Overcollateralized Amount and
                  the Credit Enhancement Percentage for such Distribution Date;



                                       97
<PAGE>


                           (xix) the Overcollateralization Increase Amount, if
                  any, for such Distribution Date;

                           (xx) the Overcollateralization Reduction Amount, if
                  any, for such Distribution Date;

                           (xxi) with respect to any Mortgage Loan as to which
                  foreclosure proceedings have been concluded, the loan number
                  and unpaid principal balance of such Mortgage Loan as of the
                  date of such conclusion of foreclosure proceedings;

                           (xxii) with respect to Mortgage Loans as to which a
                  Final Liquidation has occurred, the number of Mortgage Loans,
                  the unpaid principal balance of such Mortgage Loans as of the
                  date of such Final Liquidation and the amount of proceeds
                  (including Liquidation Proceeds and Insurance Proceeds)
                  collected in respect of such Mortgage Loans; and

                           (xxiii) the respective Pass-Through Rates applicable
                  to the Class A Certificates, the Mezzanine Certificates and
                  the Class CE Certificates for such Distribution Date and the
                  Pass-Through Rate applicable to the Class A Certificates and
                  the Mezzanine Certificates for the immediately succeeding
                  Distribution Date.

                           (xxiv) the amount on deposit in the Pre-Funding
                  Account and the Interest Coverage Account;

                           (xxv) for the distribution occurring on the
                  Distribution Date immediately following the end of the Funding
                  Period, the current balance on deposit in the Pre-Funding
                  Account that has not been used to purchase Subsequent Mortgage
                  Loans and that is being distributed to the Class A-1
                  Certificateholders as a mandatory prepayment of principal, if
                  any, on such Distribution Date;

                  The Trustee will make such statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders and the Rating Agencies via the
Trustee's internet website and its fax-on-demand service. The Trustee's
fax-on-demand service may be accessed by calling (301) 815-6610. The Trustee's
internet website shall initially be located at "www.ctslink.com". Assistance in
using the website or the fax-on- demand service can be obtained by calling the
Trustee's customer service desk at (301) 815-6600. Parties that are unable to
use the above distribution options are entitled to have a paper copy mailed to
them via first class mail by calling the customer service desk and indicating
such. The Trustee shall have the right to change the way such statements are
distributed in order to make such distribution more convenient and/or more
accessible to the above parties and the Trustee shall provide timely and
adequate notification to all above parties regarding any such changes.

                  In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.



                                       98
<PAGE>


                  Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Regular Certificate a statement containing
the information set forth in subclauses (i) through (iii) above, aggregated for
such calendar year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.

                  Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Residual Certificate a statement setting
forth the amount, if any, actually distributed with respect to the Residual
Certificates, as appropriate, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be prepared by the Trustee and
furnished to such Holders pursuant to the rules and regulations of the Code as
are in force from time to time.

                  The Trustee shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trustee's duties are limited to the extent
that the Trustee receives timely reports as required from the Master Servicer.

                  On each Distribution Date the Trustee shall provide Bloomberg
Financial Markets, L.P. ("Bloomberg") CUSIP level factors for each class of
Certificates as of such Distribution Date, using a format and media mutually
acceptable to the Trustee and Bloomberg.

                  SECTION 4.03. REMITTANCE REPORTS; P&I ADVANCES.

                  (a) On the Master Servicer Remittance Date, the Master
Servicer shall deliver to the Trustee by telecopy (or by such other means as the
Master Servicer and the Trustee may agree from time to time) a Remittance Report
with respect to the related Distribution Date. Such Remittance Report will
include (i) the amount of P&I Advances to be made by the Master Servicer in
respect of the related Distribution Date, the aggregate amount of P&I Advances
outstanding after giving effect to such P&I Advances, and the aggregate amount
of Nonrecoverable P&I Advances in respect of such Distribution Date and (ii)
such other information with respect to the Mortgage Loans as the Trustee may
reasonably require to perform the calculations necessary to make the
distributions contemplated by Section 4.01 and to prepare the statements to
Certificateholders contemplated by Section 4.02. The Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it
by the Master Servicer.

                  On or prior to each Master Servicer Remittance Date, the
Master Servicer shall provide in an electronic format acceptable to the Trustee
the data necessary for the Trustee to



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<PAGE>


perform its verification duties set forth in this Section 4.03(a). The Trustee
or a third party reasonably acceptable to the Trustee and the Depositor (the
"Verification Agent") will perform such verification duties and will use its
best efforts to issue its findings in a report (the "Verification Report")
within ten (10) Business Days following the Master Servicer Remittance Date;
provided, however, that if the Verification Agent is unable to issue the
Verification Report within ten (10) Business Days following the Master Servicer
Remittance Date, the Verification Agent may issue the Verification Report upon
the completion of its verification duties. The Trustee shall forward the
Verification Report to the Master Servicer and shall notify the Master Servicer
if the Trustee has determined that the Master Servicer did not deliver the
appropriate Prepayment Charges to the Trustee in accordance with Section 3.10
and Schedule 2 hereof. Such written notification from the Trustee shall include
the loan number, prepayment penalty code and prepayment penalty amount as
calculated by the Trustee or the Verification Agent, as applicable, of each
Mortgage Loan for which there is a discrepancy. If the Master Servicer agrees
with the verified amounts, the Master Servicer shall adjust the immediately
succeeding Remittance Report and the amount remitted to the Trustee with respect
to prepayments accordingly. If the Master Servicer disagrees with the
determination of the Trustee, the Master Servicer shall, within five (5)
Business Days of its receipt of the Verification Report, notify the Trustee of
such disagreement and provide the Trustee with detailed information to support
the Master Servicer's position. The Master Servicer and the Trustee shall
cooperate to resolve any discrepancy on or prior to the immediately succeeding
Master Servicer Remittance Date, and the Master Servicer will indicate the
effect of such resolution on the related Remittance Report and shall adjust the
amount remitted with respect to prepayments on such Master Servicer Remittance
Date accordingly. During such time as the Master Servicer and the Trustee are
resolving discrepancies with respect to the Prepayment Charges, no payments in
respect of any disputed Prepayment Charges will be remitted to the Collection
Account and the Trustee shall not be obligated to remit such payments, unless
otherwise required pursuant to Section 7.02 hereof.

                  In connection with such duties, the Trustee shall be able to
rely solely on the information provided to it by the Master Servicer and any
Verification Agent in accordance with this Section. The Trustee shall not be
responsible for verifying the accuracy of any of the information provided to it
by the Master Servicer or the Verification Agent. The costs of such
verification, whether performed by the Trustee or any third party on behalf of
the Trustee, shall be paid by the Trustee. Anything to the contrary herein
notwithstanding, the verification procedures set forth in this Section shall not
be performed after the securities relating to any resecuritization of the Class
P Certificates have been paid in full.

                  (b) The amount of P&I Advances to be made by the Master
Servicer for any Distribution Date shall equal, subject to Section 4.03(d), the
sum of (i) the aggregate amount of Monthly Payments (with each interest portion
thereof net of the related Servicing Fee), due on the related Due Date in
respect of the Mortgage Loans, which Monthly Payments were delinquent as of the
close of business on the related Determination Date and (ii) with respect to
each REO Property, which REO Property was acquired during or prior to the
related Prepayment Period and as to which such REO Property an REO Disposition
did not occur during the related Prepayment Period, an amount equal to the
excess, if any, of the Monthly Payments (with each interest portion thereof net
of the related Servicing Fee) that would have been due on the related Due Date
in respect of the related Mortgage Loans, over the net income from such REO
Property



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<PAGE>



transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date.

                  On or before 3:00 p.m. __________ time on the Master Servicer
Remittance Date, the Master Servicer shall remit in immediately available funds
to the Trustee for deposit in the Distribution Account an amount equal to the
aggregate amount of P&I Advances, if any, to be made in respect of the Mortgage
Loans and REO Properties for the related Distribution Date either (i) from its
own funds or (ii) from the Collection Account, to the extent of funds held
therein for future distribution (in which case, it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 4.03, used by the
Master Servicer in discharge of any such P&I Advance) or (iii) in the form of
any combination of (i) and (ii) aggregating the total amount of P&I Advances to
be made by the Master Servicer with respect to the Mortgage Loans and REO
Properties. Any amounts held for future distribution and so used shall be
appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account on or before any future
Master Servicer Remittance Date to the extent that the Available Distribution
Amount for the related Distribution Date (determined without regard to P&I
Advances to be made on the Master Servicer Remittance Date) shall be less than
the total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 4.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make P&I Advances. The Trustee will
provide notice to the Master Servicer by telecopy by the close of business on
any Master Servicer Remittance Date in the event that the amount remitted by the
Master Servicer to the Trustee on such date is less than the P&I Advances
required to be made by the Master Servicer for the related Distribution Date.

                  (c) The obligation of the Master Servicer to make such P&I
Advances is mandatory, notwithstanding any other provision of this Agreement but
subject to (d) below, and, with respect to any Mortgage Loan or REO Property,
shall continue until a Final Recovery Determination in connection therewith or
the removal thereof from REMIC I pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.

                  (d) Notwithstanding anything herein to the contrary, no P&I
Advance shall be required to be made hereunder by the Master Servicer if such
P&I Advance would, if made, constitute a Nonrecoverable P&I Advance. The
determination by the Master Servicer that it has made a Nonrecoverable P&I
Advance or that any proposed P&I Advance, if made, would constitute a
Nonrecoverable P&I Advance, shall be evidenced by an Officers' Certificate of
the Master Servicer delivered to the Depositor and the Trustee.

                  SECTION 4.04. ALLOCATION OF REALIZED LOSSES.

                  (a) Prior to each Determination Date, the Master Servicer
shall determine as to each Mortgage Loan and REO Property: (i) the total amount
of Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Bankruptcy Losses and (iii) the
respective portions of such Realized Losses allocable to interest and allocable
to principal. Prior to each Determination Date, the Master Servicer shall also
determine as to each Mortgage Loan: (A) the total amount of Realized Losses, if
any, incurred in connection with any Deficient Valuations made during the
related Prepayment Period and (B) the total amount of Realized Losses, if any,
incurred in




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connection with Debt Service Reductions in respect of Monthly Payments due
during the related Due Period. The information described in the two preceding
sentences that is to be supplied by the Master Servicer shall be evidenced by an
Officers' Certificate delivered to the Trustee by the Master Servicer prior to
the Determination Date immediately following the end of (x) in the case of
Bankruptcy Losses allocable to interest, the Due Period during which any such
Realized Loss was incurred, and (y) in the case of all other Realized Losses,
the Prepayment Period during which any such Realized Loss was incurred.

                  (b) All Realized Losses on the Mortgage Loans allocated to any
REMIC II Regular Interest pursuant to Section 4.04(c), shall be allocated by the
Trustee on each Distribution Date as follows: first, to Net Monthly Excess
Cashflow; second, to the Class CE Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; third, to the Class M-3 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero;
fourth, to the Class M-2 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero; fifth, to the Class M-1 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero and sixth, to
the Class A-2 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero. All Realized Losses to be allocated to the Certificate
Principal Balances of all Classes on any Distribution Date shall be so allocated
after the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.

                  Any allocation of Realized Losses to a Class A-2 Certificate
or a Mezzanine Certificate on any Distribution Date shall be made by reducing
the Certificate Principal Balance thereof by the amount so allocated, or in the
case of a Class CE Certificate, by reducing the amount otherwise payable in
respect thereof pursuant to Section 4.01(a)(4)(x). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A-1 Certificates or the Class P Certificates.

                  As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among two or more specified Classes of Certificates means an
allocation on a PRO RATA basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.

                  (c) All Realized Losses on the Mortgage Loans shall be
allocated by the Trustee on each Distribution Date to the following REMIC I
Regular Interests in the specified percentages, as follows: first, to
Uncertificated Interest payable to the REMIC I Regular Interest I-LT1 and REMIC
I Regular Interest I-LT7 up to an aggregate amount equal to the REMIC I Interest
Loss Allocation Amount, _____% and 2%, respectively; second, to the
Uncertificated Balances of the REMIC I Regular Interest I-LT1 and REMIC I
Regular Interest I-LT7 up to an



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<PAGE>


aggregate amount equal to the REMIC I Principal Loss Allocation Amount, ___% and
____%, respectively; third, to the Uncertificated Balances of REMIC I Regular
Interest I-LT1, REMIC I Regular Interest I-LT6 and REMIC I Regular Interest
I-LT7, ____%, 1% and 1%, respectively, until the Uncertificated Balance of REMIC
I Regular Interest I-LT6 has been reduced to zero; fourth, to the Uncertificated
Balances of REMIC I Regular Interest I-LT1, REMIC I Regular Interest I-LT5 and
REMIC I Regular Interest I-LT7, ____%, __% and __%, respectively, until the
Uncertificated Balance of REMIC I Regular Interest I-LT5 has been reduced to
zero; fifth, to the Uncertificated Balances of REMIC I Regular Interest I-LT1,
REMIC I Regular Interest I-LT4 and REMIC I Regular Interest I-LT7, ___%, __% and
____%, respectively, until the Uncertificated Balance of REMIC I Regular
Interest I-LT4 has been reduced to zero and sixth, to the Uncertificated
Balances of REMIC I Regular Interest I-LT1, REMIC I Regular Interest I-LT3 and
REMIC I Regular Interest I-LT7, ___%, ___% and ___%, respectively, until the
Uncertificated Balance of REMIC I Regular Interest I-LT3 has been reduced to
zero.

                  (d) All Realized Losses on the REMIC II Regular Interests
shall be allocated by the Trustee on each Distribution Date among the REMIC II
Regular Interests in the proportion that Realized Losses are allocated to the
related Uncertificated Corresponding Component.

                  As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among the REMIC I Regular Interests (other than REMIC I Regular
Interest I-LTP) means an allocation on a PRO RATA basis among the REMIC I
Regular Interests (other than REMIC I Regular Interest I-LTP) on the basis of
their then outstanding Uncertificated Balances, in each case prior to giving
effect to distributions to be made on such Distribution Date.

                  SECTION 4.05. COMPLIANCE WITH WITHHOLDING REQUIREMENTS.

                  Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.

                  SECTION 4.06. COMMISSION REPORTING.

                  Within 15 days after each Distribution Date, the Trustee shall
file with the Commission via the Electronic Data Gathering and Retrieval System,
a Form 8-K with a copy of the statement to Certificateholders for such
Distribution Date as an exhibit thereto. Prior to ______________, the Trustee
shall file a Form 15 Suspension Notification with respect to the Trust Fund, if
applicable. Prior to ________________, the Trustee shall file a Form 10-K, in
substance conforming to industry standards, with respect to the Trust Fund. The
Depositor hereby grants to the Trustee a limited power of attorney to execute
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until the earlier of (i) receipt by the Trustee from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. At least three Business Days prior to filing any
Form 8-K or Form 10-K pursuant to this Section 4.06, the Trustee shall deliver a
copy of such Form 8-K or Form



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10-K, as the case may be, to the Depositor. The
Depositor agrees to promptly furnish to the Trustee, from time to time upon
request, such further information, reports and financial statements within its
control related to this Agreement and the Mortgage Loans as the Trustee
reasonably deems appropriate to prepare and file all necessary reports with the
Commission.

                  SECTION 4.07. PRE-FUNDING ACCOUNT.

                  (a) No later than the Closing Date, the Trustee shall
establish and maintain a segregated trust account that is an Eligible Account,
which shall be titled "Pre-Funding Account, ____________________ as Trustee for
the registered holders of New Century Home Equity Loan Trust _____, Asset-Backed
Pass-Through Certificates, Series ____" (the "Pre-Funding Account"). The Trustee
shall, promptly upon receipt, deposit in the Pre-Funding Account and retain
therein the Original Pre-Funded Amount remitted on the Closing Date to the
Trustee by the Depositor. Funds deposited in the Pre-Funding Account shall be
held in trust by the Trustee for the Certificateholders for the uses and
purposes set forth herein.

                  (b) The Trustee will invest funds deposited in the Pre-Funding
Account in Permitted Investments of the kind described in clauses (i), (v) or
(vi) of the definition of Permitted Investments, as directed by the Master
Servicer, with a maturity date no later than the second Business Day preceding
each Distribution Date. For federal income tax purposes, the holder of the
largest Percentage Interest of the Residual Certificates shall be the owner of
the Pre-Funding Account and shall report all items of income, deduction, gain or
loss arising therefrom. All income and gain realized from investment of funds
deposited in the Pre-Funding Account shall be transferred to the Interest
Coverage Account on the Business Day immediately preceding each Distribution
Date. The Master Servicer shall deposit in the Pre-Funding Account the amount of
any net loss incurred in respect of any such Permitted Investment immediately
upon realization of such loss without any right of reimbursement therefor. Prior
to the Distribution Date immediately following the end of the Funding Period or
any earlier Subsequent Transfer Date on which the entire balance of the Original
Pre-Funded Amount is applied to purchase Subsequent Mortgage Loans, the
Pre-Funding Account will not be an asset of any of REMIC I, REMIC II or REMIC
III.

                  (c) Amounts on deposit in the Pre-Funding Account shall be
withdrawn by the Trustee as follows:

                           (i) On any Subsequent Transfer Date, the Trustee
                  shall withdraw from the Pre- Funding Account an amount equal
                  to ___% of the Stated Principal Balances of the Subsequent
                  Mortgage Loans transferred and assigned to the Trustee for
                  deposit in the Mortgage Pool on such Subsequent Transfer Date
                  and pay such amount to or upon the order of the Depositor upon
                  satisfaction of the conditions set forth in Section 2.11 with
                  respect to such transfer and assignment;

                           (ii) if the amount on deposit in the Pre-Funding
                  Account has not been reduced to zero during the Funding
                  Period, on the day immediately following the termination of
                  the Funding Period, the Trustee shall deposit into the
                  Distribution Account any amounts remaining in the Pre-Funding
                  Account, net of any gain


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<PAGE>


                  realized from the investment of funds on deposit therein to
                  the extent not previously paid to the Master Servicer, for
                  distribution in accordance with the terms hereof;

                           (iii) to withdraw any amount not required to be
                  deposited in the Pre-Funding Account or deposited therein in
                  error;

                           (iv) to distribute to the Master Servicer any income
                  and gain realized from the investment of funds in the
                  Pre-Funding Account; and

                           (v) to clear and terminate the Pre-Funding Account
                  upon the earlier to occur of (A) the Distribution Date
                  immediately following the end of the Funding Period and (B)
                  the termination of this Agreement, with any amounts remaining
                  on deposit therein being paid to the Holders of the
                  Certificates then entitled to distributions in respect of
                  principal.

                  SECTION 4.08. INTEREST COVERAGE ACCOUNT.

                  (a) No later than the Closing Date, the Trustee shall
establish and maintain a segregated trust account that is an Eligible Account,
which shall be titled "Interest Coverage Account, ____________________, as
Trustee for the registered holders of New Century Home Equity Loan Trust _____,
Asset-Backed Pass-Through Certificates, Series ____" (the "Interest Coverage
Account"). The Trustee shall, promptly upon receipt, deposit in the Interest
Coverage Account and retain therein the Interest Coverage Amount remitted on the
Closing Date to the Trustee by the Depositor. Funds deposited in the Interest
Coverage Account shall be held in trust by the Trustee for the
Certificateholders for the uses and purposes set forth herein.

                  (b) The Trustee will invest funds deposited in the Interest
Coverage Account in Permitted Investments of the kind described in clauses (i),
(v) or (vi) of the definition of Permitted Investments, as directed by the
Master Servicer, with a maturity date no later than the second Business Day
preceding each Distribution Date. For federal income tax purposes, the holder of
the largest Percentage Interest of the Residual Certificates shall be the owner
of the Interest Coverage Account and shall report all items of income,
deduction, gain or loss arising therefrom. At no time will the Interest Coverage
Account be an asset of any of REMIC I, REMIC II or REMIC III. All income and
gain realized from investment of funds deposited in the Interest Coverage
Account shall be for the sole and exclusive benefit of the Master Servicer and
shall be remitted by the Trustee to the Master Servicer on the first Business
Day following each Remittance Date. The Master Servicer shall deposit in the
Interest Coverage Account the amount of any net loss incurred in respect of any
such Permitted Investment immediately upon realization of such loss.

                  (c) With respect to each Distribution Date during the Funding
Period and on the Distribution Date immediately following the end of the Funding
Period, the Trustee shall withdraw from the Interest Coverage Account and
deposit in the Distribution Account an amount, as provided in the related
Remittance Report, equal to (i) 30 days' interest on the Original Pre-Funded
Amount calculated at an annual rate equal to the weighted average of the Net
Mortgage Rates of the Mortgage Loans in the Trust Fund as of the commencement of
the



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related Due Period, minus (ii) the sum of (1) any interest payments received by
the Master Servicer on Subsequent Mortgage Loans during the related Due Period
and (2) any P&I Advance in respect of the interest portion of delinquent Monthly
Payments on the Subsequent Mortgage Loans conveyed to the Trustee during the
related Due Period.

                  (d) Upon the earlier of (i) the Distribution Date immediately
following the end of the Funding Period, (ii) the reduction of the Certificate
Principal Balance of the Class A Certificates and the Mezzanine Certificates to
zero or (iii) the termination of this Agreement in accordance with Section 9.01,
any amount remaining on deposit in the Interest Coverage Account after
distributions pursuant to paragraph (c) above shall be withdrawn by the Trustee
and paid to the Depositor or its designee.


                                   ARTICLE V

                                THE CERTIFICATES

                  SECTION 5.01. THE CERTIFICATES.

                  (a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I. At the Closing Date, the aggregate Certificate Principal
Balance of the Certificates will equal the aggregate Stated Principal Balance of
the Mortgage Loans.

                  The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-10. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.

                  Upon original issue, the Certificates shall be executed and
delivered by the Trustee, and the Trustee shall cause the Certificates to be
authenticated by the Certificate Registrar to or upon the order of the
Depositor. The Certificates shall be executed and attested by manual or
facsimile signature on behalf of the Trustee by an authorized signatory.
Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided herein executed by the Certificate Registrar by manual
signature, and such certificate of authentication shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.

                  (b) The Class A Certificates and the Mezzanine Certificates
shall initially be issued as one or more Certificates held by the Book-Entry
Custodian or, if appointed to hold such Certificates as provided below, the
Depository and registered in the name of the Depository or its nominee and,
except as provided below, registration of such Certificates may not be



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<PAGE>


transferred by the Trustee except to another Depository that agrees to hold such
Certificates for the respective Certificate Owners with Ownership Interests
therein. The Certificate Owners shall hold their respective Ownership Interests
in and to such Certificates through the book-entry facilities of the Depository
and, except as provided below, shall not be entitled to definitive, fully
registered Certificates ("Definitive Certificates") in respect of such Ownership
Interests. All transfers by Certificate Owners of their respective Ownership
Interests in the Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trustee is hereby
initially appointed as the Book-Entry Custodian and hereby agrees to act as such
in accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian may, and if
it is no longer qualified to act as such, the Book-Entry Custodian shall,
appoint, by a written instrument delivered to the Depositor, the Master
Servicer, the Trustee (if the Trustee is not the Book-Entry Custodian) and any
other transfer agent (including the Depository or any successor Depository) to
act as Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than the
Depository. If the Trustee resigns or is removed in accordance with the terms
hereof, the successor trustee or, if it so elects, the Depository shall
immediately succeed to its predecessor's duties as Book-Entry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any
Certificates held as Book-Entry Certificates by the Book-Entry Custodian.

                  The Trustee, the Master Servicer and the Depositor may for all
purposes (including the making of payments due on the Book-Entry Certificates)
deal with the Depository as the authorized representative of the Certificate
Owners with respect to the Book-Entry Certificates for the purposes of
exercising the rights of Certificateholders hereunder. The rights of Certificate
Owners with respect to the Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the Book-Entry Certificates with respect to any particular matter
shall not be deemed inconsistent if they are made with respect to different
Certificate Owners. The Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by Certificateholders
and shall give notice to the Depository of such record date.

                  If (i)(A) the Depositor advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (iii) after the occurrence of a Master Servicer Event of Default, Certificate
Owners representing in the aggregate not less than 51% of the Ownership
Interests of the Book-Entry Certificates advise the Trustee through the
Depository, in writing, that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event



                                      107
<PAGE>



and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Book-Entry Custodian or the Depository, as applicable,
accompanied by registration instructions from the Depository for registration of
transfer, the Trustee shall issue the Definitive Certificates. Such Definitive
Certificates will be issued in minimum denominations of $______, except that any
beneficial ownership that was represented by a Book-Entry Certificate in an
amount less than $______ immediately prior to the issuance of a Definitive
Certificate shall be issued in a minimum denomination equal to the amount
represented by such Book-Entry Certificate. None of the Depositor, the Master
Servicer or the Trustee shall be liable for any delay in the delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates all references
herein to obligations imposed upon or to be performed by the Depository shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates, and the Trustee shall recognize
the Holders of the Definitive Certificates as Certificateholders hereunder.

                  SECTION 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF
                                CERTIFICATES.

                  (a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Trustee will initially serve as Certificate Registrar
for the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided. The Certificate Registrar may appoint, by a
written instrument delivered to the Master Servicer and the Depositor, any other
bank or trust company to act as Certificate Registrar under such conditions as
the predecessor Certificate Registrar may prescribe, provided that the
predecessor Certificate Registrar shall not be relieved of any of its duties or
responsibilities hereunder by reason of such appointment. If the Trustee shall
at any time not be the Certificate Registrar, the Trustee shall have and
maintain the right to inspect the Certificate Register or to obtain a copy
thereof at all reasonable times, and to rely conclusively upon a certificate of
the Certificate Registrar as to the information set forth in the Certificate
Register.

                  (b) No transfer of any Class CE Certificate, Class P
Certificate or Residual Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of a Class CE Certificate, Class P Certificate or
Residual Certificate is to be made without registration or qualification (other
than in connection with the initial transfer of any such Certificate by the
Depositor to an affiliate of the Depositor), the Trustee and the Certificate
Registrar shall each require receipt of: (i) if such transfer is purportedly
being made in reliance upon Rule 144A under the 1933 Act, written certifications
from the Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the forms attached
hereto as Exhibit F-1; and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee, the Master Servicer, in its capacity as such, or the
Trust Fund), together with copies of the written certification(s) of the
Certificateholder


                                      108
<PAGE>


desiring to effect the transfer and/or such Certificateholder's prospective
transferee upon which such Opinion of Counsel is based, if any. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class CE Certificates, the Class P Certificates or the Residual
Certificates under the 1933 Act or any other securities laws or to take any
action not otherwise required under this Agreement to permit the transfer of
such Certificates without registration or qualification. Any Certificateholder
desiring to effect the transfer of a Class CE Certificate, a Class P Certificate
or a Residual Certificate shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar and the Master Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

                  (c) (i) No transfer of a Class A-2 Certificate or Mezzanine
Certificate or any interest therein shall be made to any Plan subject to ERISA
or Section 4975 of the Code, any Person acting, directly or indirectly, on
behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Depositor,
the Master Servicer and the Trustee are provided with an Opinion of Counsel
which establishes to the satisfaction of the Depositor, the Trustee and the
Master Servicer that the purchase of such Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor, the
Master Servicer, the Trustee or the Trust Fund to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Depositor, the Master Servicer, the Trustee or
the Trust Fund. In lieu of such Opinion of Counsel, any prospective Transferee
of such Certificates may provide a certification (which the Transferee will be
deemed to have represented such certification) of the foregoing in the form of
Exhibit G to this Agreement (or other form acceptable to the Depositor, the
Trustee and the Master Servicer), which the Trustee may rely upon without
further inquiry or investigation. An Opinion of Counsel, any certification or a
deemed representation will not be required in connection with the initial
transfer of any such Certificate by the Depositor to an affiliate of the
Depositor (in which case, the Depositor or any affiliate thereof shall have
deemed to have represented that such affiliate is not a Plan or a Person
investing Plan Assets) and the Trustee shall be entitled to conclusively rely
upon a representation (which, upon the request of the Trustee, shall be a
written representation) from the Depositor of the status of such transferee as
an affiliate of the Depositor. The Transferee of a Class A-2 Certificate or a
Mezzanine Certificate that is a Plan, a Person acting, directly or indirectly,
on behalf of any such Plan or a person using Plan Assets to acquire Class A-2
Certificates or Mezzanine Certificates will be deemed to have represented that
such acquisition is permissible under applicable law, will not constitute or
result in any non-exempt prohibited transaction under ERISA or Section 4975 of
the Code, will not subject the Depositor, the Master Servicer, the Trusteee or
the Trust Fund to any obligation in addition to those undertaken in this
Agreement and the following conditions are met: (a) the source of funds used to
purchase such Class A-2 Certificates or Mezzanine Certificates is an "insurance
company general account" (as such term is defined in PTCE 95-60), (b) the
conditions set forth in PTCE 95-60 have been satisfied and (c) there is no Plan
with respect to which the amount of such general account's reserves and
liabilities for contracts held by or on behalf of such Plan and all other Plans
maintained by the same employer (or any "affiliate" thereof, as defined in PTCE
95-60) or by the same employee organization exceed 10% of the



                                      109
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total of all reserves and liabilities of such general account (as determined
under PTCE 95-60) as of the date of the acquisition of such Class A-2
Certificates or Mezzanine Certificates.

                  (ii) No transfer of a Class CE Certificate, Class P
         Certificate or Residual Certificate or any interest therein shall be
         made to any Plan subject to ERISA or Section 4975 of the Code, any
         Person acting, directly or indirectly, on behalf of any such Plan or
         any Person acquiring such Certificates with "Plan Assets" of a Plan
         within the meaning of the Department of Labor regulation promulgated at
         29 C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Depositor, the
         Master Servicer and the Trustee are provided with an Opinion of Counsel
         which establishes to the satisfaction of the Depositor, the Trustee and
         the Master Servicer that the purchase of such Certificates is
         permissible under applicable law, will not constitute or result in any
         prohibited transaction under ERISA or Section 4975 of the Code and will
         not subject the Depositor, the Master Servicer, the Trustee or the
         Trust Fund to any obligation or liability (including obligations or
         liabilities under ERISA or Section 4975 of the Code) in addition to
         those undertaken in this Agreement, which Opinion of Counsel shall not
         be an expense of the Depositor, the Master Servicer, the Trustee or the
         Trust Fund.

                  (d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of Transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly subject
to the following provisions:

                  (A) Each Person holding or acquiring any Ownership Interest in
         a Residual Certificate shall be a Permitted Transferee and shall
         promptly notify the Trustee of any change or impending change in its
         status as a Permitted Transferee.

                  (B) In connection with any proposed Transfer of any Ownership
         Interest in a Residual Certificate, the Trustee shall require delivery
         to it and shall not register the Transfer of any Residual Certificate
         until its receipt of an affidavit and agreement (a "Transfer Affidavit
         and Agreement"), in the form attached hereto as Exhibit F-2 from the
         proposed Transferee, in form and substance satisfactory to the Trustee,
         representing and warranting, among other things, that such Transferee
         is a Permitted Transferee, that it is not acquiring its Ownership
         Interest in the Residual Certificate that is the subject of the
         proposed Transfer as a nominee, trustee or agent for any Person that is
         not a Permitted Transferee, that for so long as it retains its
         Ownership Interest in a Residual Certificate, it will endeavor to
         remain a Permitted Transferee, and that it has reviewed the provisions
         of this Section 5.02(d) and agrees to be bound by them.

                  (C) Notwithstanding the delivery of a Transfer Affidavit and
         Agreement by a proposed Transferee under clause (B) above, if a
         Responsible Officer of the Trustee who is assigned to this transaction
         has actual knowledge that the proposed Transferee is not a



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         Permitted Transferee, no Transfer of an Ownership Interest in a
         Residual Certificate to such proposed Transferee shall be effected.

                  (D) Each Person holding or acquiring any Ownership Interest in
         a Residual Certificate shall agree (x) to require a Transfer Affidavit
         and Agreement from any other Person to whom such Person attempts to
         transfer its Ownership Interest in a Residual Certificate and (y) not
         to transfer its Ownership Interest unless it provides a Transferor
         Affidavit (in the form attached hereto as Exhibit F-2), to the Trustee
         stating that, among other things, it has no actual knowledge that such
         other Person is not a Permitted Transferee.

                  (E) Each Person holding or acquiring an Ownership Interest in
         a Residual Certificate, by purchasing an Ownership Interest in such
         Certificate, agrees to give the Trustee written notice that it is a
         "pass-through interest holder" within the meaning of temporary Treasury
         regulation Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
         Ownership Interest in a Residual Certificate, if it is, or is holding
         an Ownership Interest in a Residual Certificate on behalf of, a
         "pass-through interest holder."

                           (ii) The Trustee will register the Transfer of any
                  Residual Certificate only if it shall have received the
                  Transfer Affidavit and Agreement and all of such other
                  documents as shall have been reasonably required by the
                  Trustee as a condition to such registration. In addition, no
                  Transfer of a Residual Certificate shall be made unless the
                  Trustee shall have received a representation letter from the
                  Transferee of such Certificate to the effect that such
                  Transferee is a Permitted Transferee.

                           (iii) (A) If any purported Transferee shall become a
                  Holder of a Residual Certificate in violation of the
                  provisions of this Section 5.02(d), then the last preceding
                  Permitted Transferee shall be restored, to the extent
                  permitted by law, to all rights as holder thereof retroactive
                  to the date of registration of such Transfer of such Residual
                  Certificate. The Trustee shall be under no liability to any
                  Person for any registration of Transfer of a Residual
                  Certificate that is in fact not permitted by this Section
                  5.02(d) or for making any payments due on such Certificate to
                  the holder thereof or for taking any other action with respect
                  to such holder under the provisions of this Agreement.

                  (B) If any purported Transferee shall become a holder of a
         Residual Certificate in violation of the restrictions in this Section
         5.02(d) and to the extent that the retroactive restoration of the
         rights of the holder of such Residual Certificate as described in
         clause (iii)(A) above shall be invalid, illegal or unenforceable, then
         the Trustee shall have the right, without notice to the holder or any
         prior holder of such Residual Certificate, to sell such Residual
         Certificate to a purchaser selected by the Trustee on such terms as the
         Trustee may choose. Such purported Transferee shall promptly endorse
         and deliver each Residual Certificate in accordance with the
         instructions of the Trustee. Such purchaser may be the Trustee itself
         or any Affiliate of the Trustee. The proceeds of such sale, net of the
         commissions (which may include commissions payable to the Trustee or
         its Affiliates), expenses and taxes due, if any, will be remitted by
         the Trustee



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         to such purported Transferee. The terms and conditions of any sale
         under this clause (iii)(B) shall be determined in the sole discretion
         of the Trustee, and the Trustee shall not be liable to any Person
         having an Ownership Interest in a Residual Certificate as a result of
         its exercise of such discretion.

                           (iv) The Trustee shall make available to the Internal
                  Revenue Service and those Persons specified by the REMIC
                  Provisions all information necessary to compute any tax
                  imposed (A) as a result of the Transfer of an Ownership
                  Interest in a Residual Certificate to any Person who is a
                  Disqualified Organization, including the information described
                  in Treasury regulations sections 1.860D-1(b)(5) and
                  1.860E-2(a)(5) with respect to the "excess inclusions" of such
                  Residual Certificate and (B) as a result of any regulated
                  investment company, real estate investment trust, common trust
                  fund, partnership, trust, estate or organization described in
                  Section 1381 of the Code that holds an Ownership Interest in a
                  Residual Certificate having as among its record holders at any
                  time any Person which is a Disqualified Organization.
                  Reasonable compensation for providing such information may be
                  accepted by the Trustee.

                           (v) The provisions of this Section 5.02(d) set forth
                  prior to this subsection (v) may be modified, added to or
                  eliminated, provided that there shall have been delivered to
                  the Trustee at the expense of the party seeking to modify, add
                  to or eliminate any such provision the following:

                  (A) written notification from each Rating Agency to the effect
         that the modification, addition to or elimination of such provisions
         will not cause such Rating Agency to downgrade its then-current ratings
         of any Class of Certificates; and

                  (B) an Opinion of Counsel, in form and substance satisfactory
         to the Trustee, to the effect that such modification of, addition to or
         elimination of such provisions will not cause any of REMIC I, REMIC II
         or REMIC III to cease to qualify as a REMIC and will not cause any of
         REMIC I, REMIC II or REMIC III, as the case may be, to be subject to an
         entity-level tax caused by the Transfer of any Residual Certificate to
         a Person that is not a Permitted Transferee or (y) a Person other than
         the prospective transferee to be subject to a REMIC-tax caused by the
         Transfer of a Residual Certificate to a Person that is not a Permitted
         Transferee.

                  (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.12, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in the
name of the designated Transferee or Transferees, one or more new Certificates
of the same Class of a like aggregate Percentage Interest.

                  (f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.12. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and cause the Certificate
Registrar to




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authenticate and deliver the Certificates which the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
transfer or exchange shall (if so required by the Trustee) be duly endorsed by,
or be accompanied by a written instrument of transfer in the form satisfactory
to the Trustee and the Certificate Registrar duly executed by, the Holder
thereof or his attorney duly authorized in writing.

                  (g) No service charge to the Certificateholders 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.

                  (h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Certificate Registrar in accordance with
its customary procedures.

                  (i) The Trustee will cause the Certificate Registrar (unless
the Trustee is acting as Certificate Registrar) to provide notice to the Trustee
of each transfer of a Certificate and to provide the Trustee with an updated
copy of the Certificate Register on the first Business Day in January and June
of each year, commencing in ___________.

                  (j) Any attempted or purported transfer of any Certificate in
violation of the provisions of Section 5.02(c) hereof shall be void ab initio
and such Certificate shall be considered to have been held continuously by the
prior permitted Holder.

                  SECTION 5.03. MUTILATED, DESTROYED, LOST OR STOLEN
                                CERTIFICATES.

                  If (i) any mutilated Certificate is surrendered to the Trustee
or the Certificate Registrar, or the Trustee and the Certificate Registrar
receive evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of actual knowledge by the Trustee or the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
the same Class and of like denomination and Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Certificate Registrar) connected therewith. Any replacement
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the applicable REMIC created hereunder, 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.

                  The Depositor, the Master Servicer, the Trustee, the
Certificate Registrar and any agent of any of them 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 4.01 and for all other
purposes whatsoever, and none of the Depositor, the Master Servicer, the
Trustee, the Certificate Registrar or any agent of any of them shall be affected
by notice to the contrary.



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                  SECTION 5.05. CERTAIN AVAILABLE INFORMATION.

                  On or prior to the date of the first sale of any Class CE
Certificate, Class P Certificate or Residual Certificate to an Independent third
party, the Depositor shall provide to the Trustee ten copies of any private
placement memorandum or other disclosure document used by the Depositor in
connection with the offer and sale of the Class CE Certificates, Class P
Certificates or the Residual Certificates. In addition, if any such private
placement memorandum or disclosure document is revised, amended or supplemented
at any time following the delivery thereof to the Trustee, the Depositor
promptly shall inform the Trustee of such event and shall deliver to the Trustee
ten copies of the private placement memorandum or disclosure document, as
revised, amended or supplemented. The Trustee shall maintain at its Corporate
Trust Office and shall make available free of charge during normal business
hours for review by any Holder of a Certificate or any Person identified to the
Trustee as a prospective transferee of a Certificate, originals or copies of the
following items: (i) in the case of a Holder or prospective transferee of a
Class CE Certificate, a Class P Certificate or a Residual Certificate, the
private placement memorandum or other disclosure document relating to such
Certificates, if any, in the form most recently provided to the Trustee; and
(ii) in all cases, (A) this Agreement and any amendments hereof entered into
pursuant to Section 11.01, (B) all monthly statements required to be delivered
to Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trustee since the Closing Date
pursuant to Section 10.01(h), (D) any and all Officers' Certificates delivered
to the Trustee by the Master Servicer since the Closing Date to evidence the
Master Servicer's determination that any P&I Advance was, or if made, would be a
Nonrecoverable P&I Advance and (E) any and all Officers' Certificates delivered
to the Trustee by the Master Servicer since the Closing Date pursuant to Section
4.04(a). Copies and mailing of any and all of the foregoing items will be
available from the Trustee upon request at the expense of the person requesting
the same.


                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

                  SECTION 6.01. LIABILITY OF THE DEPOSITOR AND THE MASTER
                                SERVICER.

                  The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement and undertaken hereunder by the Depositor and the Master
Servicer herein.

                  SECTION 6.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE
                                MASTER SERVICER.

                  Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
the Master Servicer will keep in full effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its


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incorporation and its qualification as an approved conventional seller/servicer
for Fannie Mae or Freddie Mac in good standing. The Depositor and the Master
Servicer each 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 respective duties
under this Agreement.

                  The Depositor or the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Fannie Mae or Freddie Mac; and provided further that the Rating Agencies'
ratings of the Class A Certificates and the Mezzanine Certificates in effect
immediately prior to such merger or consolidation will not be qualified, reduced
or withdrawn as a result thereof (as evidenced by a letter to such effect from
the Rating Agencies).

                  SECTION 6.03. LIMITATION ON LIABILITY OF THE DEPOSITOR, THE
                                MASTER SERVICER AND OTHERS.

                  None of the Depositor, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor or the Master Servicer
shall be under any liability to the Trust Fund or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on the Master Servicer
pursuant hereto, or against any liability which would otherwise be imposed by
reason willful misfeasance, bad faith or negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder. The
Depositor, the Master Servicer and any director, officer, employee or agent of
the Depositor or the Master Servicer may rely in good faith on any document of
any kind which, PRIMA FACIE, is properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Master Servicer and
any director, officer, employee or agent of the Depositor or the Master Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
relating to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) or any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder. Neither the
Depositor nor the Master Servicer shall be under any obligation to appear in,
prosecute or defend any legal action unless such action is related to its
respective duties under this Agreement and, in its opinion, does not involve it
in any expense or liability; provided, however, that each of the Depositor and
the Master Servicer may in its discretion undertake any such action which it may
deem necessary or



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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, unless the Depositor or the Master Servicer acts without the consent of
Holders of Certificates entitled to at least _____% of the Voting Rights (which
consent shall not be necessary in the case of litigation or other legal action
by either to enforce their respective rights or defend themselves hereunder),
the legal expenses and costs of such action and any liability resulting
therefrom (except any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder) shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor and the
Master Servicer shall be entitled to be reimbursed therefor from the Collection
Account as and to the extent provided in Section 3.11, any such right of
reimbursement being prior to the rights of the Certificateholders to receive any
amount in the Collection Account.

                  SECTION 6.04. LIMITATION ON RESIGNATION OF THE MASTER
                                SERVICER.

                  The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that its duties
hereunder are no longer permissible under applicable law or (ii) with the
written consent of the Trustee and written confirmation from each Rating Agency
(which confirmation shall be furnished to the Depositor and the Trustee) that
such resignation will not cause such Rating Agency to reduce the then current
rating of the Class A Certificates or the Mezzanine Certificates. Any such
determination pursuant to clause (i) of the preceding sentence permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of Counsel
to such effect obtained at the expense of the Master Servicer and delivered to
the Trustee. No resignation of the Master Servicer shall become effective until
the Trustee or a successor servicer shall have assumed the Master Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.

                  Except as expressly provided herein, the Master Servicer shall
not assign or transfer any of its rights, benefits or privileges hereunder to
any other Person, nor delegate to or subcontract with, nor authorize or appoint
any other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. If, pursuant to any provision
hereof, the duties of the Master Servicer are transferred to a successor master
servicer, the entire amount of the Servicing Fee and other compensation payable
to the Master Servicer pursuant hereto shall thereafter be payable to such
successor master servicer.

                  SECTION 6.05. RIGHTS OF THE DEPOSITOR IN RESPECT OF THE MASTER
                                SERVICER.

                  The Master Servicer shall afford (and any Sub-Servicing
Agreement shall provide that each Sub-Servicer shall afford) the Depositor and
the Trustee, upon reasonable notice, during normal business hours, access to all
records maintained by the Master Servicer (and any such Sub-Servicer) in respect
of the Master Servicer's rights and obligations hereunder and access to officers
of the Master Servicer (and those of any such Sub-Servicer) responsible for such
obligations. Upon request, the Master Servicer shall furnish to the Depositor
and the Trustee its (and any such Sub- Servicer's) most recent financial
statements and such other information relating to the Master Servicer's capacity
to perform its obligations under this Agreement that it possesses. To the extent
such information is not otherwise available to the



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public, the Depositor and the Trustee shall not disseminate any information
obtained pursuant to the preceding two sentences without the Master Servicer's
(or any such Sub-Servicer's) written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies,
rating agencies or reinsurers or (ii) pursuant to any law, rule, regulation,
order, judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Depositor, the Trustee or the Trust Fund,
and in either case, the Depositor or the Trustee, as the case may be, shall use
its best efforts to assure the confidentiality of any such disseminated
non-public information. The Depositor may, but is not obligated to, enforce the
obligations of the Master Servicer under this Agreement and may, but is not
obligated to, perform, or cause a designee to perform, any defaulted obligation
of the Master Servicer under this Agreement or exercise the rights of the Master
Servicer under this Agreement; provided that the Master Servicer shall not be
relieved of any of its obligations under this Agreement by virtue of such
performance by the Depositor or its designee. The Depositor shall not have any
responsibility or liability for any action or failure to act by the Master
Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.


                                  ARTICLE VII

                                     DEFAULT

                  SECTION 7.01. MASTER SERVICER EVENTS OF DEFAULT.


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

                           (i) any failure by the Master Servicer to remit to
                  the Trustee for distribution to the Certificateholders any
                  payment (other than a P&I Advance required to be made from its
                  own funds on any Master Servicer Remittance Date pursuant to
                  Section 4.03) required to be made under the terms of the
                  Certificates and this Agreement which continues unremedied for
                  a period of _____________ after the date upon which written
                  notice of such failure, requiring the same to be remedied,
                  shall have been given to the Master Servicer by the Depositor
                  or the Trustee (in which case notice shall be provided by
                  telecopy), or to the Master Servicer, the Depositor and the
                  Trustee by the Holders of Certificates entitled to at least
                  ___% of the Voting Rights; or

                           (ii) any failure on the part of the Master Servicer
                  duly to observe or perform in any material respect any of the
                  covenants or agreements on the part of the Master Servicer
                  contained in the Certificates or in this Agreement (or, if the
                  Master Servicer is the Originator, the failure of the
                  Originator to repurchase a Mortgage Loan as to which a breach
                  has been established that requires a repurchase pursuant to
                  the terms of Section 7 of the Mortgage Loan Purchase
                  Agreement) which continues unremedied for a period of ___ days
                  after the earlier of (i) the date on which written notice of
                  such failure, requiring the same to be



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                  remedied, shall have been given to the Master Servicer by the
                  Depositor or the Trustee, or to the Master Servicer, the
                  Depositor and the Trustee by the Holders of Certificates
                  entitled to at least ___% of the Voting Rights and (ii) actual
                  knowledge of such failure by a Servicing Officer of the Master
                  Servicer; or

                           (iii) a decree or order of a court or agency or
                  supervisory authority having jurisdiction in the premises in
                  an involuntary case under any present or future federal or
                  state bankruptcy, insolvency or similar law or the appointment
                  of a conservator or receiver or liquidator in any insolvency,
                  readjustment of debt, marshalling of assets and liabilities or
                  similar proceeding, or for the winding-up or liquidation of
                  its affairs, shall have been entered against the Master
                  Servicer and if such proceeding is being contested by the
                  Master Servicer in good faith, such decree or order shall have
                  remained in force undischarged or unstayed for a period of
                  ____ days or results in the entry of an order for relief or
                  any such adjudication or appointment; or

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

                           (v) the Master Servicer shall admit in writing its
                  inability to pay its debts generally as they become due, file
                  a petition to take advantage of any applicable insolvency or
                  reorganization statute, make an assignment for the benefit of
                  its creditors, or voluntarily suspend payment of its
                  obligations; or

                           (vi) any failure by the Master Servicer of the Master
                  Servicer Termination Test; or

                           (vii) any failure of the Master Servicer to make any
                  P&I Advance on any Master Servicer Remittance Date required to
                  be made from its own funds pursuant to Section 4.03 which
                  continues unremedied until 3:00 p.m. ________ time on the
                  Business Day immediately following the Master Servicer
                  Remittance Date.

If a Master Servicer Event of Default described in clauses (i) through (vi) of
this Section shall occur, then, and in each and every such case, so long as such
Master Servicer Event of Default shall not have been remedied, the Depositor or
the Trustee may, and at the written direction of the Holders of Certificates
entitled to at least ___% of Voting Rights, the Trustee shall, by notice in
writing to the Master Servicer (and to the Depositor if given by the Trustee or
to the Trustee if given by the Depositor), terminate all of the rights and
obligations of the Master Servicer in its capacity as Master Servicer under this
Agreement, to the extent permitted by law, and in and to the Mortgage Loans and
the proceeds thereof. If a Master Servicer Event of Default described in clause
(vii) hereof shall occur, the Trustee shall, by notice in writing to the Master
Servicer and the Depositor, terminate all of the rights and obligations of the
Master Servicer in its capacity as Master Servicer under this Agreement and in
and to the Mortgage Loans and the proceeds thereof. On or after the receipt by
the Master Servicer of such written notice, all authority and



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power of the Master Servicer under this Agreement, whether with respect to the
Certificates (other than as a Holder of any Certificate) or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section and, without limitation, the Trustee is hereby authorized and
empowered, as attorney-in-fact or otherwise, to execute and deliver on behalf of
and at the expense of the Master Servicer, 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, at its sole cost
and expense, promptly (and in any event no later than ten Business Days
subsequent to such notice) to provide the Trustee with all documents and records
requested by it to enable it to assume the Master Servicer's functions under
this Agreement, and to cooperate with the Trustee in effecting the termination
of the Master Servicer's responsibilities and rights under this Agreement,
including, without limitation, the transfer within one Business Day to the
Trustee for administration by it of all cash amounts which at the time shall be
or should have been credited by the Master Servicer to the Collection Account
held by or on behalf of the Master Servicer, the Distribution Account or any REO
Account or Servicing Account held by or on behalf of the Master Servicer or
thereafter be received with respect to the Mortgage Loans or any REO Property
serviced by the Master Servicer (provided, however, that the Master Servicer
shall continue to be entitled to receive all amounts accrued or owing to it
under this Agreement on or prior to the date of such termination, whether in
respect of P&I Advances or otherwise, and shall continue to be entitled to the
benefits of Section 6.03, notwithstanding any such termination, with respect to
events occurring prior to such termination). For purposes of this Section 7.01,
the Trustee shall not be deemed to have knowledge of a Master Servicer Event of
Default unless a Responsible Officer of the Trustee assigned to and working in
the Trustee's Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such a Master Servicer Event of
Default is received by the Trustee and such notice references the Certificates,
REMIC I or this Agreement.

                  The Trustee shall be entitled to be reimbursed by the Master
Servicer (or by the Trust Fund if the Master Servicer is unable to fulfill its
obligations hereunder) for all costs associated with the transfer of servicing
from the predecessor servicer, including without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Mortgage Loans properly and
effectively.

                  SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

                  (a) On and after the time the Master Servicer receives a
notice of termination, the Trustee shall be the successor in all respects to the
Master Servicer in its capacity as Master Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto and arising thereafter
placed on the Master Servicer (except for any representations or warranties of
the Master Servicer under this Agreement, the responsibilities, duties and
liabilities contained in Section 2.03(c) its obligation to deposit amounts in
respect of losses pursuant to Section 3.12) by the terms and provisions hereof
including, without limitation, the Master Servicer's obligations to make P&I
Advances pursuant to Section 4.03; provided, however, that if the Trustee is



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prohibited by law or regulation from obligating itself to make advances
regarding delinquent mortgage loans, then the Trustee shall not be obligated to
make P&I Advances pursuant to Section 4.03; and provided further, that any
failure to perform such duties or responsibilities caused by the Master
Servicer's failure to provide information required by Section 7.01 shall not be
considered a default by the Trustee as successor to the Master Servicer
hereunder; provided, however, it is understood and acknowledged by the parties
that there will be a period of transition (not to exceed 90 days) before the
servicing transfer is fully effected. As compensation therefor, the Trustee
shall be entitled to the Servicing Fee and all funds relating to the Mortgage
Loans to which the Master Servicer would have been entitled if it had continued
to act hereunder (other than amounts which were due or would become due to the
Master Servicer prior to its termination or resignation). Notwithstanding the
above and subject to the next paragraph, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if it is prohibited
by law from making advances regarding delinquent mortgage loans, or if the
Holders of Certificates entitled to at least ___% of the Voting Rights so
request in writing to the Trustee, promptly appoint or petition a court of
competent jurisdiction to appoint, an established mortgage loan servicing
institution acceptable to each Rating Agency and having a net worth of not less
than $________ as the successor to the Master Servicer under this Agreement in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Master Servicer under this Agreement. No appointment of a successor to
the Master Servicer under this Agreement shall be effective until the assumption
by the successor of all of the Master Servicer's responsibilities, duties and
liabilities hereunder. In connection with such appointment and assumption
described herein, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the Master Servicer as such hereunder. The Depositor, the Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. Pending appointment of a
successor to the Master Servicer under this Agreement, the Trustee shall act in
such capacity as hereinabove provided.

                  Upon removal or resignation of the Master Servicer, the
Trustee, with the cooperation of the Depositor, (x) shall solicit bids for a
successor Master Servicer as described below and (y) pending the appointment of
a successor Master Servicer as a result of soliciting such bids, shall serve as
Master Servicer of the Mortgage Loans serviced by such predecessor Master
Servicer. The Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above (including the Trustee or any affiliate
thereof). Such public announcement shall specify that the successor Master
Servicer shall be entitled to the servicing compensation agreed upon between the
Trustee, the successor Master Servicer and the Depositor; provided, however,
that no such fee shall exceed the Servicing Fee. Within thirty days after any
such public announcement, the Trustee, with the cooperation of the Depositor,
shall negotiate in good faith and effect the sale, transfer and assignment of
the servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price they will pay to obtain
such servicing. The Trustee upon receipt of the purchase price shall pay such
purchase price to the Master Servicer being so removed, after deducting from any
sum received by the Trustee from the successor to the Master Servicer in respect
of such sale, transfer and assignment all costs and expenses of any public
announcement and of any sale, transfer and assignment of the servicing rights
and responsibilities reasonably incurred hereunder. After such deductions, the




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remainder of such sum shall be paid by the Trustee to the Master Servicer at the
time of such sale.

                  (b) If the Master Servicer fails to remit to the Trustee for
distribution to the Certificateholders any payment required to be made under the
terms of the Certificates and this Agreement (for purposes of this Section
7.02(b), a "Remittance") because the Master Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of such Remittance
is prohibited by Section 362 of the federal Bankruptcy Code, the Trustee shall
upon notice of such prohibition, regardless of whether it has received a notice
of termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trustee shall be obligated to make such advance only if (i) such
advance, in the good faith judgment of the Trustee, can reasonably be expected
to be ultimately recoverable from Stayed Funds and (ii) the Trustee is not
prohibited by law from making such advance or obligating itself to do so. Upon
remittance of the Stayed Funds to the Trustee or the deposit thereof in the
Distribution Account by the Master Servicer, a trustee in bankruptcy or a
federal bankruptcy court, the Trustee may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trustee's
rights to recover from the Master Servicer's own funds interest on the amount of
any such advance. If the Trustee at any time makes an advance under this
Subsection which it later determines in its good faith judgment will not be
ultimately recoverable from the Stayed Funds with respect to which such advance
was made, the Trustee shall be entitled to reimburse itself for such advance,
without interest, by withdrawing from the Distribution Account, out of amounts
on deposit therein, an amount equal to the portion of such advance attributable
to the Stayed Funds.

                  SECTION 7.03. NOTIFICATION TO CERTIFICATEHOLDERS.

                  (a) Upon any termination of the Master Servicer pursuant to
Section 7.01 above or any appointment of a successor to the Master Servicer
pursuant to Section 7.02 above, the Trustee shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register.

                  (b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Master Servicer Event of Default or five days after a
Responsible Officer of the Trustee becomes aware of the occurrence of such an
event, the Trustee shall transmit by mail to all Holders of Certificates notice
of each such occurrence, unless such default or Master Servicer Event of Default
shall have been cured or waived.

                  SECTION 7.04. WAIVER OF MASTER SERVICER EVENTS OF DEFAULT.

                  The Holders representing at least ____% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Master
Servicer Event of Default hereunder may waive such default or Master Servicer
Event of Default; provided, however, that a default or Master Servicer Event of
Default under clause (i) or (vii) of Section 7.01 may be waived only by all of
the Holders of the Regular Certificates. Upon any such waiver of a default or
Master Servicer Event of Default, such default or Master Servicer Event of
Default shall cease to exist



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and shall be deemed to have been remedied for every purpose hereunder. No such
waiver shall extend to any subsequent or other default or Master Servicer Event
of Default or impair any right consequent thereon except to the extent expressly
so waived.


                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

                  SECTION 8.01. DUTIES OF TRUSTEE.

                  The Trustee, prior to the occurrence of a Master Servicer
Event of Default and after the curing of all Master Servicer Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. During a Master Servicer Event
of Default, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs. Any permissive right of the Trustee
enumerated in this Agreement shall not be construed as a duty.

                  The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders.

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

                           (i) Prior to the occurrence of a Master Servicer
                  Event of Default, and after the curing of all such Master
                  Servicer Events of Default which may have occurred, the duties
                  and obligations of the Trustee shall be determined solely by
                  the express provisions of this Agreement, the Trustee shall
                  not be liable except for the performance of such duties and
                  obligations as are specifically set forth in this Agreement,
                  no implied covenants or obligations shall be read into this
                  Agreement against the Trustee and, in the absence of bad faith
                  on the part of the Trustee, the Trustee may conclusively rely,
                  as to the truth of the statements and the correctness of the
                  opinions expressed therein, upon any certificates or opinions
                  furnished to the Trustee that conform to the requirements of
                  this Agreement;

                           (ii) The Trustee shall not be personally liable for
                  an error of judgment made in good faith by a Responsible
                  Officer or Responsible Officers of the



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                  Trustee, unless it shall be proved that the Trustee was
                  negligent in ascertaining the pertinent facts; and

                           (iii) The Trustee shall not be personally liable with
                  respect to any action taken, suffered or omitted to be taken
                  by it in good faith in accordance with the direction of the
                  Holders of Certificates entitled to at least ____% of the
                  Voting Rights relating to the time, method and place of
                  conducting any proceeding for any remedy available to the
                  Trustee, or exercising any trust or power conferred upon the
                  Trustee, under this Agreement.

                  SECTION 8.02. CERTAIN MATTERS AFFECTING THE TRUSTEE.

                  (a) Except as otherwise provided in Section 8.01:

                           (i) The Trustee may request and rely upon and shall
                  be protected in acting or refraining from acting upon any
                  resolution, Officers' Certificate, certificate of auditors or
                  any other certificate, statement, instrument, opinion, report,
                  notice, request, consent, order, appraisal, bond or other
                  paper or document reasonably believed by it to be genuine and
                  to have been signed or presented by the proper party or
                  parties;

                           (ii) The Trustee may consult with counsel and any
                  Opinion of Counsel shall be full and complete authorization
                  and protection in respect of any action taken or suffered or
                  omitted by it hereunder in good faith and in accordance with
                  such Opinion of Counsel;

                           (iii) The Trustee shall be under no obligation to
                  exercise any of the trusts or powers vested in it by this
                  Agreement or to institute, conduct or defend any litigation
                  hereunder or in relation hereto at the request, order or
                  direction of any of the Certificateholders, 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 a Master Servicer Event of Default (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 or use under the circumstances in the conduct
                  of such person's own affairs;

                           (iv) The Trustee shall not be personally liable for
                  any action taken, suffered or omitted by it in good faith and
                  believed by it to be authorized or within the discretion or
                  rights or powers conferred upon it by this Agreement;

                           (v) Prior to the occurrence of a Master Servicer
                  Event of Default hereunder and after the curing of all Master
                  Servicer Events of Default which may have occurred, the
                  Trustee shall not be bound to make any investigation into the
                  facts or matters stated in any resolution, certificate,
                  statement, instrument, opinion, report, notice, request,
                  consent, order, approval, bond or other paper or



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                  document, unless requested in writing to do so by the Holders
                  of Certificates entitled to at least ____% of the Voting
                  Rights; provided, however, that if the payment within a
                  reasonable time to the Trustee of the costs, expenses or
                  liabilities likely to be incurred by it in the making of such
                  investigation is, in the opinion of the Trustee, not
                  reasonably assured to the Trustee by such Certificateholders,
                  the Trustee may require reasonable indemnity against such
                  expense, or liability from such Certificateholders as a
                  condition to taking any such action;

                           (vi) The Trustee may execute any of the trusts or
                  powers hereunder or perform any duties hereunder either
                  directly or by or through agents or attorneys; and

                           (vii) The Trustee shall not be personally liable for
                  any loss resulting from the investment of funds held in the
                  Collection Account at the direction of the Master Servicer
                  pursuant to Section 3.12.

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

                  SECTION 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE
                                LOANS.

                  The recitals contained herein and in the Certificates (other
than the signature of the Trustee, the authentication of the Certificate
Registrar on the Certificates, the acknowledgments of the Trustee contained in
Article II and the representations and warranties of the Trustee in Section
8.12) shall be taken as the statements of the Depositor and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth in Section 8.12) or of the Certificates (other than the
signature of the Trustee and authentication of the Certificate Registrar on the
Certificates) or of any Mortgage Loan or related document. The Trustee shall not
be accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Master Servicer, other than any funds held by or on behalf of the Trustee
in accordance with Section 3.10.

                  SECTION 8.04. TRUSTEE MAY OWN CERTIFICATES.

                  The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Certificates with the same rights it would
have if it were not Trustee.

                  SECTION 8.05. TRUSTEE'S FEES AND EXPENSES.

(a) The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself the Trustee Fee and, to the extent that the
funds therein are at



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anytime insufficient for such purpose, the Depositor shall pay such fees. The
Trustee, or any director, officer, employee or agent of the Trustee, shall be
indemnified by REMIC I and held harmless against any loss, liability or expense
(not including expenses, disbursements and advances incurred or made by the
Trustee, including the compensation and the expenses and disbursements of its
agents and counsel, in the ordinary course of the Trustee's performance in
accordance with the provisions of this Agreement) incurred by the Trustee in
connection with any claim or legal action or any pending or threatened claim or
legal action arising out of or in connection with the acceptance or
administration of its obligations and duties under this Agreement, other than
any loss, liability or expense (i) resulting from the Master Servicer's actions
or omissions in connection with this Agreement and the Mortgage Loans, (ii) that
constitutes a specific liability of the Trustee pursuant to Section 10.01(c) or
(iii) any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder or as a result of a
breach of the Trustee's obligations under Article X hereof. It is understood by
the parties hereto that a "claim" as used in the preceding sentence includes any
claim for indemnification made by the Custodian under Section 3.2 of the
Custodial Agreement. Any amounts payable to the Trustee, or any director,
officer, employee or agent of the Trustee, in respect of the indemnification
provided by this paragraph (a), or pursuant to any other right of reimbursement
from the Trust Fund that the Trustee, or any director, officer, employee or
agent of the Trustee, may have hereunder in its capacity as such, may be
withdrawn by the Trustee from the Distribution Account at any time.

                  (b) The Master Servicer agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense resulting from a
breach of the Master Servicer's obligations and duties under this Agreement.
Such indemnity shall survive the termination or discharge of this Agreement and
the resignation or removal of the Trustee. Any payment hereunder made by the
Master Servicer to the Trustee shall be from the Master Servicer's own funds,
without reimbursement from the Trust Fund therefor.

                  (c) The Trustee shall pay any annual rating agency fees of
Fitch, Moody's and S&P for ongoing surveillance from its own funds without right
of reimbursement.

                  SECTION 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.

                  The Trustee hereunder shall at all times be a corporation or
an association (other than the Depositor, the Seller, the Mortgage Loan
Transferor, the Master Servicer or any Affiliate of the foregoing) organized and
doing business under the laws of any state or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation or association
publishes reports of conditions at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07.



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                  SECTION 8.07. RESIGNATION AND REMOVAL OF THE TRUSTEE.

                  The Trustee may at any time resign and be discharged from the
trust hereby created by giving written notice thereof to the Depositor, the
Master Servicer and the Certificateholders. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the resigning
Trustee and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders and the Master Servicer by the Depositor. If
no successor trustee shall have been so appointed and have accepted appointment
within ___ days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.

                  If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders and the Master Servicer by the Depositor.

                  The Holders of Certificates entitled to at least ___% of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders and the Master Servicer by the
Depositor.

                  Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.

                  SECTION 8.08. SUCCESSOR TRUSTEE.

                  Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and related documents and statements, as well as all moneys, held
by it hereunder (other than any Mortgage Files at the time held by a Custodian,
which Custodian shall become the agent of any successor trustee hereunder), and
the Depositor and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.



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                  No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor trustee shall not result in a downgrading of any Class of Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.

                  Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Depositor.

                  SECTION 8.09. MERGER OR CONSOLIDATION OF TRUSTEE.

                  Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to the
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or association shall be eligible under the provisions
of Section 8.06, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.

                  SECTION 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

                  Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of REMIC I or property securing the same may at the time be located, the
Master Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of REMIC I, and to
vest in such Person or Persons, in such capacity, such title to REMIC I, or any
part thereof, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Master Servicer and the
Trustee may consider necessary or desirable. If the Master Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, or in case a Master Servicer Event of Default shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 8.06
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.

                  In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (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



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the holding of title to REMIC I 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.

                  Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trust 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.

                  Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.

                  SECTION 8.11. APPOINTMENT OF CUSTODIANS.

                  The Trustee may, with the consent of the Depositor and the
Master Servicer, appoint one or more Custodians to hold all or a portion of the
Mortgage Files as agent for the Trustee, by entering into a Custodial Agreement.
The appointment of any Custodian may at any time be terminated and a substitute
Custodian appointed therefor upon the reasonable request of the Master Servicer
to the Trustee, the consent to which shall not be unreasonably withheld. The
Trustee shall pay any and all fees and expenses of any Custodian in accordance
with each Custodial Agreement. The Trustee initially appoints the Custodian as
Custodian, and the Depositor and the Master Servicer consent to such
appointment. Subject to Article VIII hereof, the Trustee agrees to comply with
the terms of each Custodial Agreement and to enforce the terms and provisions
thereof against the Custodian for the benefit of the Certificateholders having
an interest in any Mortgage File held by such Custodian. Each Custodian shall be
a depository institution or trust company subject to supervision by federal or
state authority, shall have combined capital and surplus of at least
$___________ and shall be qualified to do business in the jurisdiction in which
it holds any Mortgage File. Each Custodial Agreement may be amended only as
provided in Section 11.01. In no event shall the appointment of any Custodian
pursuant to a Custodial Agreement diminish the obligations of the Trustee
hereunder.

                  SECTION 8.12. APPOINTMENT OF OFFICE OR AGENCY.

                  The Trustee will appoint an office or agency in the City of
New York where the Certificates may be surrendered for registration of transfer
or exchange, and presented for final distribution, and where notices and demands
to or upon the Trustee in respect of the Certificates and this Agreement may be
served.



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                  SECTION 8.13. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE.

                  The Trustee hereby represents and warrants to the Master
Servicer and the Depositor, as of the Closing Date, that:

                           (i) The Trustee is a national banking association
                  duly organized, validly existing and in good standing under
                  the laws of the United States.

                           (ii) The execution and delivery of this Agreement by
                  the Trustee, and the performance and compliance with the terms
                  of this Agreement by the Trustee, will not violate the
                  Trustee's charter or bylaws or constitute a default (or an
                  event which, with notice or lapse of time, or both, would
                  constitute a default) under, or result in the breach of, any
                  material agreement or other instrument to which it is a party
                  or which is applicable to it or any of its assets.

                           (iii) The Trustee has the full power and authority to
                  enter into and consummate all transactions contemplated by
                  this Agreement, has duly authorized the execution, delivery
                  and performance of this Agreement, and has duly executed and
                  delivered this Agreement.

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

                           (v) The Trustee is not in violation of, and its
                  execution and delivery of this Agreement and its performance
                  and compliance with the terms of this Agreement will not
                  constitute a violation of, any law, any order or decree of any
                  court or arbiter, or any order, regulation or demand of any
                  federal, state or local governmental or regulatory authority,
                  which violation, in the Trustee's good faith and reasonable
                  judgment, is likely to affect materially and adversely either
                  the ability of the Trustee to perform its obligations under
                  this Agreement or the financial condition of the Trustee.

                           (vi) No litigation is pending or, to the best of the
                  Trustee's knowledge, threatened against the Trustee which
                  would prohibit the Trustee from entering into this Agreement
                  or, in the Trustee's good faith reasonable judgment, is likely
                  to materially and adversely affect either the ability of the
                  Trustee to perform its obligations under this Agreement or the
                  financial condition of the Trustee.




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                                   ARTICLE IX

                                   TERMINATION

                  SECTION 9.01. TERMINATION UPON REPURCHASE OR LIQUIDATION OF
                                ALL MORTGAGE LOANS.

                  (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer and
the Trustee (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to provide for and the
Trustee to make payments in respect of the REMIC I Regular Interests, the REMIC
II Regular Interests or the Classes of Certificates as hereinafter set forth)
shall terminate upon payment to the Certificateholders and the deposit of all
amounts held by or on behalf of the Trustee and required hereunder to be so paid
or deposited on the Distribution Date coinciding with or following the earlier
to occur of (i) the purchase by the Terminator (as defined below) of all
Mortgage Loans and each REO Property remaining in REMIC I and (ii) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or REO Property remaining in REMIC I; provided, however, that in
no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. The purchase by the Terminator of all Mortgage Loans
and each REO Property remaining in REMIC I shall be at a price (the "Termination
Price") equal to the greater of (A) the aggregate Purchase Price of all the
Mortgage Loans included in REMIC I, plus the appraised value of each REO
Property, if any, included in REMIC I, such appraisal to be conducted by an
appraiser mutually agreed upon by the Terminator and the Trustee in their
reasonable discretion and (B) the aggregate fair market value of all of the
assets of REMIC I (as determined by the Terminator and the Trustee, as of the
close of business on the third Business Day next preceding the date upon which
notice of any such termination is furnished to Certificateholders pursuant to
the third paragraph of this Section 9.01); provided, however, that in the event
the Majority Class CE Certificateholder is the Terminator, the purchase by the
Majority Class CE Certificateholder of all Mortgage Loans and each REO Property
remaining in REMIC I shall be at the price designated in clause (A) above.

                  (b) The Majority Class CE Certificateholder shall have the
right, and to the extent the Majority Class CE Certificateholder does not
exercise such right, the Master Servicer, shall have the right (the party
exercising such right, the "Terminator"), to purchase all of the Mortgage Loans
and each REO Property remaining in REMIC I pursuant to clause (i) of the
preceding paragraph no later than the Determination Date in the month
immediately preceding the Distribution Date on which the Certificates will be
retired; provided, however, that the Terminator may elect to purchase all of the
Mortgage Loans and each REO Property remaining in REMIC I pursuant to clause (i)
above only if the aggregate Stated Principal Balance of the Mortgage Loans and
each REO Property remaining in the Trust Fund at the time of such election and
any amounts on deposit in the Pre-Funding Account is reduced to less than ____%
of the sum of the aggregate Stated Principal Balance of the Initial Mortgage
Loans as of the Cut-off Date and the Original Pre-Funded Amount. By acceptance
of the Residual Certificates, the Holders of the Residual Certificates agree, in
connection with any termination hereunder, to



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assign and transfer any amounts in excess of par, and to the extent received in
respect of such termination, to pay any such amounts to the Holders of the Class
CE Certificates.

                  (c) Notice of the liquidation of the REMIC I Regular Interests
shall be given promptly by the Trustee by letter to Certificateholders mailed
(a) in the event such notice is given in connection with the purchase of the
Mortgage Loans and each REO Property by the Terminator, not earlier than the
15th day and not later than the 25th day of the month next preceding the month
of the final distribution on the Certificates or (b) otherwise during the month
of such final distribution on or before the Determination Date in such month, in
each case specifying (i) the Distribution Date upon which the Trust Fund will
terminate and final payment in respect of the REMIC I Regular Interests, the
REMIC II Regular Interests and the Certificates will be made upon presentation
and surrender of the related Certificates at the office of the Trustee therein
designated, (ii) the amount of any such final payment, (iii) that no interest
shall accrue in respect of the REMIC I Regular Interests, the REMIC II Regular
Interests or the Certificates from and after the Interest Accrual Period
relating to the final Distribution Date therefor and (iv) 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. The Trustee shall give such notice to the Certificate Registrar at
the time such notice is given to Certificateholders. In the event such notice is
given in connection with the purchase of all of the Mortgage Loans and each REO
Property remaining in REMIC I by the Terminator, the Terminator shall deliver to
the Trustee for deposit in the Distribution Account not later than the last
Business Day of the month next preceding the month of the final distribution on
the Certificates an amount in immediately available funds equal to the
above-described purchase price. Upon certification to the Trustee by a Servicing
Officer of the making of such final deposit, the Trustee shall promptly release
or cause to be released to the Terminator the Mortgage Files for the remaining
Mortgage Loans, and the Trustee shall execute all assignments, endorsements and
other instruments necessary to effectuate such transfer.

                  (d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trustee shall distribute
to each Certificateholder so presenting and surrendering its Certificates the
amount otherwise distributable on such Distribution Date in accordance with
Section 4.01 in respect of the Certificates so presented and surrendered. Any
funds not distributed to any Holder or Holders of Certificates being retired on
such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust by
the Trustee and credited to the account of the appropriate non-tendering Holder
or Holders. If any Certificates as to which notice has been given pursuant to
this Section 9.01 shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, mail a final notice to remaining related
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the trust funds.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Trustee shall pay to Salomon Smith Barney
Inc. all such amounts, and all rights of non-tendering Certificateholders in or
to such amounts shall thereupon



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cease. No interest shall accrue or be payable to any Certificateholder on any
amount held in trust by the Trustee as a result of such Certificateholder's
failure to surrender its Certificate(s) for final payment thereof in accordance
with this Section 9.01.

                  Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.

                  SECTION 9.02. ADDITIONAL TERMINATION REQUIREMENTS.

                  (a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements:

                           (i) The Trustee shall specify the first day in the
                  90-day liquidation period in a statement attached to REMIC
                  I's, REMIC II's and REMIC III's final Tax Return pursuant to
                  Treasury regulation Section 1.860F-1 and shall satisfy all
                  requirements of a qualified liquidation under Section 860F of
                  the Code and any regulations thereunder, as evidenced by an
                  Opinion of Counsel obtained at the expense of the Terminator;

                           (ii) During 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 all of the assets of
                  REMIC I to the Terminator for cash; and

                           (iii) At the time of the making of the final payment
                  on the Certificates, the Trustee shall distribute or credit,
                  or cause to be distributed or credited, to the Holders of the
                  Residual Certificates all cash on hand in the Trust Fund
                  (other than cash retained to meet claims), and the Trust Fund
                  shall terminate at that time.

                  (b) At the expense of the applicable Terminator (or in the
event of termination under Section 9.01(a)(ii), at the expense of the Trustee),
the Trustee shall prepare or cause to be prepared the documentation required in
connection with the adoption of a plan of liquidation of each of REMIC I, REMIC
II and REMIC III pursuant to this Section 9.02.

                  (c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each of REMIC I, REMIC II and REMIC III, which authorization shall be
binding upon all successor Certificateholders.


                                   ARTICLE X

                                REMIC PROVISIONS

                  SECTION 10.01. REMIC ADMINISTRATION.

                  (a) The Trustee shall elect to treat each of REMIC I, REMIC II
and REMIC III as a REMIC under the Code and, if necessary, under applicable
state law. Each such election



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will be made on Form 1066 or other appropriate federal tax or information return
or any appropriate state return for the taxable year ending on the last day of
the calendar year in which the Certificates are issued. For the purposes of the
REMIC election in respect of REMIC I, the REMIC I Regular Interests shall be
designated as the Regular Interests in REMIC I and the Class R-I Certificates
shall be designated as the Residual Interests in REMIC I. The REMIC II Regular
Interests shall be designated as the Regular Interests in REMIC II and the Class
R-II Certificates shall be designated as the Residual Interests in REMIC II. The
Class A Certificates, the Mezzanine Certificates, the Class CE Certificates and
the Class P Certificates shall be designated as the Regular Interests in REMIC
III and the Class R-III Certificates shall be designated as the Residual
Interests in REMIC III. The Trustee shall not permit the creation of any
"interests" in REMIC I, REMIC II or REMIC III (within the meaning of Section
860G of the Code) other than the REMIC I Regular Interests, the REMIC II Regular
Interests and the interests represented by the Certificates.

                  (b) The Closing Date is hereby designated as the "Startup Day"
of REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of
the Code.

                  (c) The Trustee shall pay out of its own funds, without any
right of reimbursement, any and all expenses relating to any tax audit of the
Trust Fund (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to any of REMIC I, REMIC II
or REMIC III that involve the Internal Revenue Service or state tax
authorities), other than the expense of obtaining any tax related Opinion of
Counsel except as specified herein. The Trustee, as agent for all of REMIC I's,
REMIC II's and REMIC III's tax matters person, shall (i) act on behalf of the
Trust Fund in relation to any tax matter or controversy involving any of REMIC
I, REMIC II or REMIC III and (ii) represent the Trust Fund in any administrative
or judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The holder of the largest Percentage
Interest of each Class of Residual Certificates shall be designated, in the
manner provided under Treasury regulations section 1.860F-4(d) and Treasury
regulations section 301.6231(a)(7)-1, as the tax matters person of the related
REMIC created hereunder. By their acceptance thereof, the holder of the largest
Percentage Interest of the Residual Certificates hereby agrees to irrevocably
appoint the Trustee or an Affiliate as its agent to perform all of the duties of
the tax matters person for the Trust Fund.

                  (d) The Trustee shall prepare, sign and file all of the Tax
Returns in respect of each REMIC created hereunder. The expenses of preparing
and filing such returns shall be borne by the Trustee without any right of
reimbursement therefor. The Master Servicer shall provide on a timely basis to
the Trustee or its designee such information with respect to the assets of the
Trust Fund as is in its possession and reasonably required by the Trustee to
enable it to perform its obligations under this Article.

                  (e) The Trustee shall perform on behalf of each of REMIC I,
REMIC II and REMIC III all reporting and other tax compliance duties that are
the responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, as required by the Code, the REMIC
Provisions or other such compliance guidance, the Trustee shall provide (i) to
any Transferor of a Residual Certificate such information as is necessary for



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the application of any tax relating to the transfer of a Residual Certificate to
any Person who is not a Permitted Transferee, (ii) to the Certificateholders
such information or reports as are required by the Code or the REMIC Provisions
including reports relating to interest, original issue discount and market
discount or premium (using the Prepayment Assumption as required) and (iii) to
the Internal Revenue Service the name, title, address and telephone number of
the person who will serve as the representative of REMIC I, REMIC II and REMIC
III. The Master Servicer shall provide on a timely basis to the Trustee such
information with respect to the assets of the Trust Fund, including, without
limitation, the Mortgage Loans, as is in its possession and reasonably required
by the Trustee to enable it to perform its obligations under this subsection. In
addition, the Depositor shall provide or cause to be provided to the Trustee,
within ten (10) days after the Closing Date, all information or data that the
Trustee reasonably determines to be relevant for tax purposes as to the
valuations and issue prices of the Certificates, including, without limitation,
the price, yield, prepayment assumption and projected cash flow of the
Certificates.

                  (f) The Trustee shall take such action and shall cause each
REMIC created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist it, to the extent reasonably requested by it). The
Trustee shall not take any action, cause the Trust Fund to take any action or
fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of REMIC I, REMIC II or REMIC III as a REMIC or (ii) 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) (either
such event, an "Adverse REMIC Event") unless the Trustee has received an Opinion
of Counsel, addressed to the Trustee (at the expense of the party seeking to
take such action but in no event at the expense of the Trustee) to the effect
that the contemplated action will not, with respect to any of REMIC I, REMIC II
or REMIC III, endanger such status or result in the imposition of such a tax,
nor shall the Master Servicer take or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that it
has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action. In addition, prior to taking any action
with respect to REMIC I, REMIC II or REMIC III or the respective assets of each,
or causing REMIC I, REMIC II or REMIC III to take any action, which is not
contemplated under the terms of this Agreement, the Master Servicer will consult
with the Trustee or its designee, in writing, with respect to whether such
action could cause an Adverse REMIC Event to occur with respect to REMIC I,
REMIC II or REMIC III, and the Master Servicer shall not take any such action or
cause either REMIC I, REMIC II or REMIC III to take any such action as to which
the Trustee has advised it in writing that an Adverse REMIC Event could occur.
The Trustee may consult with counsel to make such written advice, and the cost
of same shall be borne by the party seeking to take the action not permitted by
this Agreement, but in no event shall such cost be an expense of the Trustee. At
all times as may be required by the Code, the Trustee will ensure that
substantially all of the assets of both REMIC I and REMIC II will consist of
"qualified mortgages" as defined in Section 860G(a)(3) of the Code and
"permitted investments" as defined in Section 860G(a)(5) of the Code.

                  (g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from



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foreclosure property" of such REMIC as defined in Section 860G(c) of the Code,
on any contributions to any such REMIC after the Startup Day therefor pursuant
to Section 860G(d) of the Code, or any other tax is imposed by the Code or any
applicable provisions of state or local tax laws, such tax shall be charged (i)
to the Trustee pursuant to Section 10.03 hereof, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Article X, (ii) to the Master Servicer pursuant to Section 10.03 hereof, if such
tax arises out of or results from a breach by the Master Servicer of any of its
obligations under Article III or this Article X, or otherwise (iii) against
amounts on deposit in the Distribution Account and shall be paid by withdrawal
therefrom.

                  (h) On or before ________ of each calendar year, commencing
______________, the Trustee shall deliver to the Master Servicer and each Rating
Agency a Certificate from a Responsible Officer of the Trustee stating the
Trustee's compliance with this Article X.

                  (i) The Trustee shall, for federal income tax purposes,
maintain books and records with respect to each of REMIC I, REMIC II and REMIC
III on a calendar year and on an accrual basis.

                  (j) Following the Startup Day, the Trustee shall not accept
any contributions of assets to any of REMIC I, REMIC II or REMIC III other than
in connection with any Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03 unless it shall have received an Opinion of Counsel
to the effect that the inclusion of such assets in the Trust Fund will not cause
the related REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject such REMIC to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local law or
ordinances.

                  (k) Neither the Trustee nor the Master Servicer shall enter
into any arrangement by which REMIC I, REMIC II or REMIC III will receive a fee
or other compensation for services nor permit any such REMIC to receive any
income from assets other than "qualified mortgages" as defined in Section
860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code.

                  SECTION 10.02. PROHIBITED TRANSACTIONS AND ACTIVITIES.

                  None of the Depositor, the Master Servicer or the Trustee
shall sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of REMIC I, (iii) the termination of
REMIC I pursuant to Article IX of this Agreement, (iv) a substitution pursuant
to Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), nor acquire any assets for any of REMIC I,
REMIC II or REMIC III (other than REO Property acquired in respect of a
defaulted Mortgage Loan), nor sell or dispose of any investments in the
Collection Account or the Distribution Account for gain, nor accept any
contributions to any of REMIC I, REMIC II or REMIC III after the Closing Date
(other than a Qualified Substitute Mortgage Loan delivered in accordance with
Section 2.03), unless it has received an Opinion of Counsel, addressed to the
Trustee (at the expense of the party seeking to



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<PAGE>



cause such sale, disposition, substitution, acquisition or contribution but in
no event at the expense of the Trustee) that such sale, disposition,
substitution, acquisition or contribution will not (a) affect adversely the
status of any of REMIC I, REMIC II or REMIC III as a REMIC or (b) cause any of
REMIC I, REMIC II or REMIC III to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.

                  SECTION 10.03. MASTER SERVICER AND TRUSTEE INDEMNIFICATION.

                  (a) The Trustee agrees to indemnify the Trust Fund, the
Depositor and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by the Trust
Fund, the Depositor or the Master Servicer, as a result of a breach of the
Trustee's covenants set forth in this Article X.

                  (b) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor and the Trustee for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of a breach of the Master
Servicer's covenants set forth in Article III or this Article X.


                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

                  SECTION 11.01. AMENDMENT.

                  This Agreement or any Custodial Agreement may be amended from
time to time by the Depositor, the Master Servicer, the Trustee and, if
applicable, the Custodian without the consent of any of the Certificateholders,
(i) to cure any ambiguity or defect, (ii) to correct, modify or supplement any
provisions herein (including to give effect to the expectations of
Certificateholders), or in any Custodial Agreement, or (iii) to make any other
provisions with respect to matters or questions arising under this Agreement or
in any Custodial Agreement which shall not be inconsistent with the provisions
of this Agreement or such Custodial Agreement, provided that such action shall
not, as evidenced by an Opinion of Counsel delivered to the Trustee, adversely
affect in any material respect the interests of any Certificateholder. No
amendment shall be deemed to adversely affect in any material respect the
interests of any Certificateholder who shall have consented thereto, and no
Opinion of Counsel shall be required to address the effect of any such amendment
on any such consenting Certificateholder.

                  This Agreement or any Custodial Agreement may also be amended
from time to time by the Depositor, the Master Servicer and the Trustee with the
consent of the Holders of Certificates entitled to at least ___% of the Voting
Rights for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or any Custodial Agreement
or of modifying in any manner the rights of the Holders of Certificates;
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) adversely affect in any material respect the interests
of the Holders of any Class of Certificates in



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<PAGE>


a manner, other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing at least ____% of the Voting Rights
allocated to such Class, or (iii) modify the consents required by the
immediately preceding clauses (i) and (ii) without the consent of the Holders of
all Certificates then outstanding. Notwithstanding any other provision of this
Agreement, for purposes of the giving or withholding of consents pursuant to
this Section 11.01, Certificates registered in the name of the Depositor or the
Master Servicer or any Affiliate thereof shall be entitled to Voting Rights with
respect to matters affecting such Certificates.

                  Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment will
not result in the imposition of any tax on any of REMIC I, REMIC II or REMIC III
pursuant to the REMIC Provisions or cause any of REMIC I, REMIC II or REMIC III
to fail to qualify as a REMIC at any time that any Certificates are outstanding.

                  Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.

                  It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.

                  The cost of any Opinion of Counsel to be delivered pursuant to
this Section 11.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee.

                  The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.

                  SECTION 11.02. RECORDATION OF AGREEMENT; COUNTERPARTS.

                  To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Certificateholders, but
only upon direction of the Trustee accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects 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.



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<PAGE>


                  SECTION 11.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.

                  The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.

                  No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

                  No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless (i)
such Holder previously shall have given to the Trustee a written notice of
default and of the continuance thereof, as hereinbefore provided, and (ii) the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

                  SECTION 11.04. GOVERNING LAW.

                  This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

                  SECTION 11.05. NOTICES.

                  All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified



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<PAGE>



herein, to (a) in the case of the Depositor, _________________________,
Attention: ______________ (telecopy number ______________), or such other
address or telecopy number as may hereafter be furnished to the Master Servicer
and the Trustee in writing by the Depositor, (b) in the case of the Master
Servicer, Attention: _______________ (telecopy number: ______________), or such
other address or telecopy number as may hereafter be furnished to the Trustee
and the Depositor in writing by the Master Servicer and (c) in the case of the
Trustee, ___________________, Attention: ____________________ (telecopy number
______________), with a copy to the Trustee at _________________________,
Attention: ________________________ (telecopy number ___________), or such other
address or telecopy number as may hereafter be furnished to the Master Servicer
and the Depositor in writing by the Trustee. Any notice required or permitted to
be given to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the manner
set forth above.

                  SECTION 11.06. SEVERABILITY OF PROVISIONS.

                  If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.

                  SECTION 11.07. NOTICE TO RATING AGENCIES.

                  The Trustee shall use its best efforts promptly to provide
notice to the Rating Agencies with respect to each of the following of which it
has actual knowledge:

         1. Any material change or amendment to this Agreement;

         2. The occurrence of any Master Servicer Event of Default that has not
been cured or waived;

         3. The resignation or termination of the Master Servicer or the
Trustee;

         4. The repurchase or substitution of Mortgage Loans pursuant to or as
contemplated by Section 2.03;

         5. The final payment to the Holders of any Class of Certificates;

         6. Any change in the location of the Collection Account or the
Distribution Account;

         7. Any event that would result in the inability of the Trustee, were it
to succeed as Master Servicer, to make advances regarding delinquent Mortgage
Loans; and



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<PAGE>


         8. The filing of any claim under the Master Servicer's blanket bond and
errors and omissions insurance policy required by Section 3.14 or the
cancellation or material modification of coverage under any such instrument.

                  In addition, the Trustee shall promptly furnish to each Rating
Agency copies of each report to Certificateholders described in Section 4.02 and
the Master Servicer, as required pursuant to Section 3.20 and Section 3.21,
shall promptly furnish to each Rating Agency copies of the following:

                  1. Each annual statement as to compliance described in Section
         3.20; and

                  2. Each annual independent public accountants' servicing
         report described in Section 3.21.

                  Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Fitch Ratings, Inc., One State Street Plaza, New York, New York 10004,
Moody's Investors Service, 99 Church Street, New York, New York 10004 and to
Standard & Poor's, a division of the McGraw-Hill Companies, Inc., 55 Water
Street, New York, New York 10041, or such other addresses as the Rating Agencies
may designate in writing to the parties hereto.

                  SECTION 11.08. ARTICLE AND SECTION REFERENCES.

                  All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.

                  SECTION 11.09. GRANT OF SECURITY INTEREST.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge of
the Mortgage Loans by the Depositor to secure a debt or other obligation of the
Depositor or the Mortgage Loan Transferor. However, in the event that, notwith
standing the aforementioned intent of the parties, the Mortgage Loans are held
to be property of the Depositor or the Mortgage Loan Transferor, then, (a) it is
the express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor or the Mortgage Loan Transferor and (b)(1) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code as in effect from time to time
in the State of New York; (2) the conveyance provided for in Section 2.01 hereof
shall be deemed to be a grant by the Mortgage Loan Transferor and the Depositor
to the Trustee of a security interest in all of the Mortgage Loan Transferor's
and the Depositor's right, title and interest in and to the Mortgage Loans and
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account and the Distribution Account,
whether in the form of cash, instruments, securities or other property; (3) the
obligations secured by such security agreement shall be deemed to be all of the
Depositor's



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obligations under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obliga tions described in clause (3) of the preceding
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 and the transfer pursuant to the Mortgage
Loan Purchase Agreement to be a true, absolute and unconditional sale of the
Mortgage Loans and assets constituting the Trust Fund by the Depositor to the
Trustee.





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                  IN WITNESS WHEREOF, the Depositor, the Master Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized, in each case as of the day and year first above
written.

                                   NEW CENTURY MORTGAGE SECURITIES LLC,
                                            as Depositor


                                   By:  ________________________________________
                                        Name:
                                        Title:



                                   [NAME OF MASTER SERVICER],
                                            as Master Servicer


                                   By:  ________________________________________
                                        Name:
                                        Title:



                                   [NAME OF TRUSTEE],
                                            as Trustee


                                   By:  ________________________________________
                                        Name:
                                        Title:




<PAGE>




STATE OF ________________  )
                           ) ss.:
COUNTY OF _______________  )

                  On the __th day of _____________, before me, a notary public
in and for said State, personally appeared ___________, known to me to be
___________________of ____________________, 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]