SECURITY AGREEMENT
                               ------------------


         THIS SECURITY AGREEMENT (the "Security Agreement") is made and dated as
of the ____ day of ____________, 1998, by WESTMARK MORTGAGE CORPORATION, a
California corporation (the "Company"), in favor of FIRST UNION NATIONAL BANK, a
national banking association (the "Lender").

                                    RECITALS
                                    --------

         A. Pursuant to that certain Mortgage Loan Warehousing Agreement of even
date herewith by and between the Company and the Lender (as same may be amended,
extended or replaced from time to time, the "Warehousing Agreement," and with
capitalized terms not otherwise defined herein used with the same meanings as in
the Warehousing Agreement), the Lender has extended credit to the Company.

         B. As a condition precedent to the effectiveness of the Warehousing
Agreement, the Company is required to execute and deliver to the Lender this
Security Agreement.

         NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:

                                    AGREEMENT
                                    ---------

         1. Delivery of Collateral. The Company shall deliver the Collateral or
cause the Collateral to be delivered to the Lender. Delivery of Collateral
consisting of Mortgage Loans and Mortgage-Backed Securities shall be effected by
delivery of the Required Documents therefor. The Lender's responsibility to
review such Collateral is limited to the review steps described on Exhibit 1
hereto, said review of Collateral delivered on any Business Day to be completed
before the opening of business of the Lender on the next succeeding Business
Day. All Mortgage Loans and Mortgage-Backed Securities at any time delivered to
the Lender hereunder shall be held by the Lender in a fire resistant vault,
drawer or other suitable depositary maintained and controlled solely by the
Lender, conspicuously marked to show the interests of the Lender therein and not
commingled with any other assets or property of, or held by, the Lender. The
Lender is not, and shall not at any time in the future be, subject, with respect
to the Collateral, in any manner or to any extent, to the direction or control
of the Company except as expressly permitted hereunder or under the other Credit
Documents. Under no circumstances will the Lender deliver possession of the
Collateral to the Company except in accordance with the express terms of this
Security Agreement.

         2. Grant of Security Interest. The Company hereby pledges, assigns and
grants to the Lender, a first perfected security interest in the property
described in Paragraph 3 below (collectively and severally, the "Collateral"),
to secure payment and performance of the Obligations.
<PAGE>

         3. Collateral. The Collateral shall consist of all now existing and
hereafter arising right, title and interest of the Company in, under and to each
of the following:

                  (a) All Mortgage Loans now owned or hereafter acquired or
originated by the Company and submitted to or held by or on behalf of the
Lender, including, without limitation, the promissory notes or other instruments
or agreements evidencing the indebtedness of Obligors thereon, all mortgages,
deeds to secure debt, trust deeds and security agreements related thereto, all
rights to payment thereunder, all rights in the Properties securing payment of
the indebtedness of the Obligors thereon, all rights under documents related
thereto, such as guaranties and insurance policies (issued by governmental
agencies or otherwise), including, without limitation, mortgage and title
insurance policies, fire and extended coverage insurance policies (including the
right to any return premiums), and all rights in cash deposits consisting of
impounds, insurance premiums or other funds held on account thereof;

                  (b) All Mortgage-Backed Securities, including, without
limitation, all Warehouse-Related MBSs, now owned or hereafter acquired by the
Company and submitted to or held by or on behalf of the Lender, all right to the
payment of monies and non-cash distributions on account thereof and all new,
substituted and additional securities at any time issued with respect thereto;

                  (c) All rights of the Company (but not its obligations) under
all Take-Out Commitments and Buy/Sell Agreements, now existing or hereafter
arising, covering any part of the foregoing Collateral, all rights to deliver
Mortgage Loans and Mortgage-Backed Securities to permanent investors and other
purchasers pursuant thereto and all proceeds resulting from the disposition of
such Collateral pursuant thereto;

                  (d) All now existing and hereafter arising rights to service,
administer and collect Mortgage Loans and Mortgage-Backed Securities submitted
to and held by or on behalf of the Lender (it being acknowledged and agreed that
prior to the occurrence of an Event of Default and acceleration of the
Obligations, the security interest in such servicing rights granted hereunder
shall be automatically terminated without need for further action upon the sale,
transfer or other disposition of the related Mortgage Loan or Mortgage-Backed
Security in accordance with the provisions of the Credit Documents), and all
rights to the payment of money on account of such servicing, administration and
collection activities;

                  (e) All now existing and hereafter arising accounts, contract
rights and general intangibles constituting or relating to any of the foregoing
Collateral;

                  (f) All now existing and hereafter acquired files, documents,
instruments, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, cards, accounting records and other books, records,
information and data of the Company relating to the foregoing Collateral
(including all information, records, data, programs, tapes, discs, and cards
necessary or helpful in the administration or servicing of the foregoing
Collateral);
                                       2
<PAGE>

                  (g) The Funding Account, the Settlement Account and each
Custodian Settlement Account (as defined below) and any and all funds at any
time held in any such accounts; and

                  (h) All products and Proceeds of the foregoing Collateral.

         4. Lender's Review of Collateral. Each delivery of Mortgage Loans and
Mortgage-Backed Securities to the Lender shall be accompanied by a certificate
in form acceptable to the Lender (the "Delivery Certificate"). Upon any receipt
of Required Documents for any Mortgage Loan, the Lender shall review the same
and verify that:

                  (a) All Required Documents relating to such item of Collateral
appear regular on their face and are in the Lender's possession; and

                  (b) The statements set forth on Exhibit 1 hereto are accurate
and complete in all respects.

If the Lender notes any exception in the review described in subparagraph (a) or
(b) above or questions, in its reasonable discretion, the genuineness,
regularity, propriety, or accuracy of any item of Collateral, the Lender shall
notify the Company of such exception or noncompliance, and the Lender may
exclude the Mortgage Loan from the Borrowing Base. In the event that the Company
had been requested to deliver the Additional Required Documents with respect to
any Mortgage Loan, the Lender shall review and verify such Additional Required
Documents consistent with the obligations of the Lender above.

         4A.      Collateral Value Determination.

                  (a) No later than 2:00 p.m. (Charlotte, North Carolina time)
on each Business Day, the Lender shall compute the Collateral Value of the
Borrowing Base (a "Collateral Value Determination") as of 2:00 p.m. on such
Business Day and make a notation thereof.

                  (b) No later than 2:00 p.m. (Charlotte, North Carolina time)
on each Business Day, the Lender shall prepare and deliver to the Company via
facsimile a schedule showing the composition of the Borrowing Base on a
per-Mortgage Loan basis, as of such time. The Company shall certify as to the
accuracy of such schedule and shall return such schedule, with such
certification attached, to the Lender via facsimile no later than 3:00 p.m.
(Charlotte, North Carolina time) on each such Business Day.

         5.       Handling of Collateral; Settlement Account.

                  (a) So long as an Event of Default shall not have occurred and
be continuing, from time to time, the Lender may release documentation relating
to Mortgage Loans to the Company against a trust receipt executed by the Company
in the form of Exhibit 2 hereto. The Company and the Lender will comply with the
trust receipt procedures specified on Exhibit 3 hereto. The Company hereby
represents and warrants that any request by the Company for release of
Collateral under this subparagraph 5(a) shall be solely for the purposes of
correcting 

                                       3
<PAGE>

clerical or other non-substantial documentation problems in preparation of
returning such Collateral to the Lender for ultimate sale or exchange and that
the Company has requested such release in compliance with all terms and
conditions of such release set forth herein and in the Warehousing Agreement,
including, without limitation, subparagraph (k)(1) of the definition of Eligible
Mortgage Loan.

                  (b) So long as an Event of Default shall not have occurred and
be continuing, upon delivery by the Company to the Lender of a shipping request
in the form of that attached hereto as Exhibit 4, the Lender will transmit
Mortgage Loans held by it as directed by the Company as follows:

                           (1) If the transmittal is of documentation for
         Mortgage Loans in the possession of the Lender in connection with the
         sale thereof to a permanent investor or sale under a repurchase
         facility, such transmittal will be under cover of a transmittal letter
         in the form of that attached hereto as Exhibit 5A (or such other form
         as may be required under any government program pursuant to which the
         relevant Mortgage Loans are being shipped).

                           (2) If the transmittal is of documentation for
         Mortgage Loans in connection with the shipment to a custodian or
         trustee in connection with the formation of a mortgage pool supporting
         a Mortgage-Backed Security (any such Mortgage- Backed Security secured
         or otherwise supported by any such Mortgage Loan being referred to
         herein as a "Warehouse-Related MBS") such transmittal will be under
         cover of a transmittal letter in the form of that attached hereto as
         Exhibit 5B (or such other form as may be required under any government
         program pursuant to which such Warehouse-Related MBS is being issued),
         and, in addition, will be conditioned upon the facts that:

                                    (i) If the Warehouse-Related MBS is being
                  issued under a government program, there has been delivered to
                  the transfer agent for the Warehouse-Related MBS such form as
                  may be required under the government program pursuant to which
                  such Warehouse-Related MBS is being issued (which form shall
                  name the Lender or an Approved MBS Custodian (as defined
                  below) as the subscriber and the Person to whom the
                  Warehouse-Related MBS is to be delivered);

                               (ii) If the Warehouse-Related MBS is being issued
                  pursuant to a program other than a government program, there
                  has been delivered to and acknowledged by the trustee and
                  collateral agent or custodian for the underlying mortgage pool
                  a letter in form acceptable to the Lender;

                              (iii) The Person to whom such Warehouse-Related
                  MBS is to be delivered by the transfer agent or trustee is a.
                  a Person which has agreed to hold such Warehouse-Related MBS
                  and the proceeds of any sale or other disposition thereof as
                  custodian, agent and bailee for the benefit of Lender pursuant
                  to a custodial agreement substantially in the form of that
                  attached hereto as Exhibit 6

                                       4
<PAGE>

                  (a "Custodial Agreement"), and b. a Person which has been
                  approved by the Lender (any Person acting in such capacity
                  being referred to herein as an "Approved MBS Custodian"); and

                               (iv) There has been delivered to the Approved MBS
                  Custodian a letter in the form of that attached to the
                  Custodial Agreement as Exhibit A.

In no event shall the Lender have any obligation to obtain written
acknowledgement of receipt from the addressee of any transmittal letter or other
communication sent by the Lender hereunder.

                  (c) All amounts payable on account of the sale of Collateral
(including, but not limited to a sale pursuant to a repurchase agreement) will
be instructed to be paid directly by the purchaser to the Settlement Account, or
in the case of Mortgage-Backed Securities delivered to an Approved MBS
Custodian, to a demand deposit account maintained with such Approved MBS
Custodian (a "Custodian Settlement Account") and, thereafter, to the Settlement
Account as provided in the applicable Custodial Agreement. Pursuant to Paragraph
2 above the Company has granted a security interest in and lien upon the
Settlement Account and in all Custodian Settlement Accounts and in any and all
amounts at any time held therein to the Lender as collateral security for the
Obligations. This Paragraph 5(c) shall constitute notice to any Approved MBS
Custodian of such security interest pursuant to the Uniform Commercial Code of
all relevant jurisdictions and any other law or regulation requiring such
notice. This Paragraph 5(c) shall further constitute irrevocable notice to any
Approved MBS Custodian that the accounts referred to in Paragraph 3(g) above are
"no access" accounts to the Company except to the extent expressly permitted
hereunder. The Lender shall hold such security interest in and lien upon the
accounts referred to in Paragraph 3(g) above and all funds at any time held
therein for its benefit with all rights of a secured party under the Uniform
Commercial Code of all relevant jurisdictions.

                  (d) So long as an Event of Default shall not have occurred and
be continuing, the Lender and any Approved MBS Custodian shall take such steps
as they may be reasonably directed from time to time by the Company in writing
which are not inconsistent with the provisions of this Security Agreement and
the other Credit Documents and which the Company deems necessary to enable the
Company to perform and comply with Take-Out Commitments and Buy/Sell Agreements
and with other agreements for the sale or other disposition in whole or in part
of Mortgage Loans and Mortgage-Backed Securities.

                  (e) Prior to the occurrence of an Event of Default and
acceleration of the Obligations and if, but only if, such action is not
inconsistent with the express provisions of this Security Agreement and the
other Credit Documents and would not create an Event of Default or Potential
Default, the Company may, in connection with its residential mortgage banking
business: originate, acquire and service Mortgage Loans; receive payments on
Mortgage Loans from the Obligors thereon and impounds and fees in connection
therewith; retain, use and apply fees and payments made on account of the
Mortgage Loans by the Obligors thereunder; disburse from impound accounts; in
the ordinary course of the Company's business, create, use, destroy 

                                       5

<PAGE>

and transfer records, files and other items described in Paragraph 3(f) above;
sell or otherwise dispose of Mortgage Loans not constituting Collateral, with or
without servicing rights; pledge Mortgage Loans to the extent permitted under
the Credit Documents; sell servicing rights; and enter into, exercise rights
under, perform, modify, waive and cancel any Take-Out Commitments or Buy/Sell
Agreements.

                  (f) Following the occurrence and during the continuance of an
Event of Default, the Lender shall not, and shall incur no liability to the
Company or any other Person for refusing, in its sole discretion, to, deliver
any item of Collateral to the Company or any other Person (other than under
existing Take-Out Commitments).

         6. Costs and Expenses. The Lender shall notify the Company of all
extraordinary costs and expenses (including, without limitation, expenses of
legal counsel to the Lender) of the Lender directly relating to the Lender's
performance of this Security Agreement, and such extraordinary costs and
expenses shall be paid promptly by the Company or, if already paid by the
Lender, the Company promptly shall reimburse the Lender therefor.

         7. Representations and Warranties. The Company hereby represents and
warrants that: (a) the Company is the sole owner of the Collateral (or, in the
case of after-acquired Collateral, at the time the Company acquires rights in
the Collateral, will be the sole owner thereof); (b) except for security
interests in favor of the Lender, no Person has (or, in the case of
after-acquired Collateral, at the time the Company acquires rights therein, will
have) any right, title, claim or interest (by way of Lien or otherwise) in,
against or to the Collateral and, in any event, the Lender has a perfected,
first priority security interest thereon; (c) to the best knowledge of the
Company, all information heretofore, herein or hereafter supplied to the Lender
by or on behalf of the Company with respect to the Collateral is or will be
accurate and complete; and (d) each Mortgage Loan is, at the time when it is
submitted by the Company to the Lender for inclusion in the computation of the
Collateral Value of the Borrowing Base, an Eligible Mortgage Loan.

         8. Covenants of the Company. The Company hereby agrees: (a) to procure,
execute and deliver from time to time any endorsements, assignments, financing
statements and other writings deemed necessary or appropriate by the Lender to
perfect, maintain and protect its security interest hereunder and the priority
thereof and to deliver promptly to the Lender all originals of Collateral or
Proceeds consisting of chattel paper or instruments; (b) not to surrender or
lose possession of (other than to the Lender), sell, encumber, or otherwise
dispose of or transfer, any Collateral or right or interest therein other than
shipment of Mortgage Loans and Mortgage-Backed Securities under Take-Out
Commitments or Buy/Sell Agreements and as otherwise permitted under Paragraph 5
above; (c) at all times to account fully for and promptly to deliver to the
Lender, in the form received, all Collateral or Proceeds received, endorsed to
the Lender as appropriate and accompanied by such assignments and powers, duly
executed, as the Lender shall request, and until so delivered all Collateral and
Proceeds shall be held in trust for the Lender, separate from all other property
of the Company and identified as the property of the Lender; (d) at any
reasonable time, upon demand by the Lender, to exhibit to and allow inspection
by the Lender (or Persons designated by the Lender) of the Collateral and the
records


                                       6
<PAGE>

concerning the Collateral; (e) to keep the records concerning the Collateral at
the location(s) set forth in Paragraph 15 below and not to remove the records
from such location(s) without the prior written consent of the Lender; (f) at
the request of the Lender, to place on each of its records pertaining to the
Collateral a legend, in form and content satisfactory to the Lender, indicating
that such Collateral has been assigned to the Lender; (g) not to modify,
compromise, extend, rescind or cancel any deed of trust, mortgage, note or other
document, instrument or agreement connected with any Mortgage Loan pledged under
this Security Agreement or any document relating thereto or connected therewith
or consent to a postponement of strict compliance on the part of any party
thereto with any term or provision thereof; (h) to keep the Collateral insured
against loss, damage, theft, and such other risks as the Lender may request; (i)
to do all acts that a prudent investor would deem necessary or desirable to
maintain, preserve and protect the Collateral; (j) not knowingly to use or
permit any Collateral to be used unlawfully or in violation of any provision of
this Security Agreement or any applicable statute, regulation or ordinance or
any policy of insurance covering the Collateral; (k) to pay (or require to be
paid) prior to their becoming delinquent all taxes, assessments, insurance
premiums, charges, encumbrances, and liens now or hereafter imposed upon or
affecting any Collateral; (l) to notify the Lender before any such change shall
occur of any change in the Company's name, identity or structure through merger,
consolidation or otherwise; (m) to appear in and defend, at the Company's cost
and expense, any action or proceeding which may affect its title to or the
Lender's interest in the Collateral; (n) to keep accurate and complete records
of the Collateral and to provide the Lender with such records and such reports
and information relating to the Collateral as the Lender may request from time
to time; and (o) to comply with all laws, regulations and ordinances relating to
the possession, operation, maintenance and control of the Collateral.

         9.       Collection of Collateral Payments.

                  (a) The Company shall, at its sole cost and expense, endeavor
to obtain payment, when due and payable, of all sums due or to become due with
respect to any Collateral (each such payment being referred to as a "Collateral
Payment"), including, without limitation, the taking of such action with respect
thereto as the Lender may request, or, in the absence of such request, as the
Company may reasonably deem advisable; provided, however, that the Company shall
not, without the prior written consent of the Lender, grant or agree to any
rebate, refund, compromise or extension with respect to any Collateral Payment.
Upon the request of the Lender following the occurrence and during the
continuance of an Event of Default (and subject to the requirements of
applicable law), the Company will notify and direct any party who is or might
become obligated to make any Collateral Payment, to make payment thereof to the
Lender (or to the Company in care of the Lender) at such address as the Lender
may designate. The Company will reimburse the Lender promptly upon demand for
all out-of-pocket costs and expenses, including reasonable attorneys' fees and
litigation expenses, incurred by the Lender in seeking to collect any Collateral
Payment.

                  (b) Following the occurrence and during the continuance of an
Event of Default, upon the request of the Lender the Company will transmit and
deliver to the Lender, forthwith upon receipt and in the form received, all
cash, checks, drafts and other instruments for 

                                       7
<PAGE>

the payment of money (properly endorsed where required so that such items may be
collected by the Lender) which may be received by the Company at any time as
payment on account of any Collateral Payment and if such request shall be made,
until delivery to the Lender, such items will be held in trust for the Lender
and will not be commingled by the Company with any of its other funds or
property. Thereafter, the Lender is hereby authorized and empowered to endorse
the name of the Company on any check, draft or other instrument for the payment
of money received by the Lender on account of any Collateral Payment if the
Lender believes such endorsement is necessary or desirable for purposes of
collection.

                  (c) The Company hereby agrees to indemnify, defend and save
harmless the Lender and its agents, officers, employees and representatives from
and against all reasonable liabilities and expenses on account of any adverse
claim asserted against the Lender relating to any moneys received by the Lender
on account of any Collateral Payment (other than as a direct result of the gross
negligence or willful misconduct of the Lender) and such obligation of the
Company shall continue in effect after and notwithstanding the discharge of the
Obligations and the release of the security interest granted in Paragraph 2
above.

         10. Authorized Action by Lender. The Company hereby irrevocably
appoints the Lender as its attorney-in-fact to do (but the Lender shall not be
obligated to and shall incur no liability to the Company or any third party for
failure so to do) at any time and from time to time following the occurrence and
during the continuance of an Event of Default, any act which the Company is
obligated by this Security Agreement to do, and to exercise such rights and
powers as the Company might exercise with respect to the Collateral, including,
without limitation, the right to (a) collect by legal proceedings or otherwise
and endorse, receive and receipt for all dividends, interest, payments, proceeds
and other sums and property now or hereafter payable on or on account of the
Collateral; (b) enter into any extension, reorganization, deposit, merger,
consolidation or other agreement pertaining to, or deposit, surrender, accept,
hold or apply other property in exchange for the Collateral; (c) insure, process
and preserve the Collateral; (d) transfer the Collateral to the Lender's own or
its nominee's name; and (e) make any compromise or settlement, and take any
other action it deems advisable with respect to the Collateral. Notwithstanding
anything contained herein, in no event shall the Lender be required to make any
presentment, demand or protest, or give any notice and the Lender need not take
any action to preserve any rights against any prior party or any other person in
connection with the Obligations or with respect to the Collateral.

         11. Default and Remedies. Upon the occurrence of an Event of Default
and following the acceleration of the Obligations, the Lender shall have the
right to, without notice to or demand upon the Company: (a) foreclose or
otherwise enforce the Lender's security interest in the Collateral in any manner
permitted by law or provided for hereunder; (b) sell or otherwise dispose of the
Collateral or any part thereof at one or more public or private sales, whether
or not such Collateral is present at the place of sale, for cash or credit or
future delivery and without assumption of any credit risk, on such terms and in
such manner as the Lender may determine; (c) require the Company to assemble the
Collateral or books and records relating thereto and make such available to the
Lender at a place to be designated by the Lender; (d) enter onto property where
any Collateral or books and records relating thereto are located and take

                                       8
<PAGE>

possession thereof with or without judicial process; and (e) prior to the
disposition of the Collateral, prepare it for disposition in any manner and to
the extent the Lender deems appropriate. Upon any sale or other disposition
pursuant to this Security Agreement, the Lender shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral or portion thereof
so sold or disposed of and all proceeds thereof shall be applied to the
Obligations. Each purchaser at any such sale or other disposition shall hold the
Collateral free from any claim or right of whatever kind, including any equity
or right of redemption of the Company, and the Company specifically waives (to
the extent permitted by law) all rights of redemption, stay or appraisal which
it has or may have under any rule of law or statute now existing or hereafter
adopted.

         12. Binding Upon Successors. All rights of the Lender under this
Security Agreement shall inure to the benefit of its successors and assigns, and
all obligations of the Company shall bind its successors and assigns.

         13. Entire Agreement; Severability. This Security Agreement contains
the entire security agreement with respect to the Collateral between the Lender
and the Company. All waivers by the Company provided for in this Security
Agreement have been specifically negotiated by the parties with full cognizance
and understanding of their rights. If any of the provisions of this Security
Agreement shall be held invalid or unenforceable, this Security Agreement shall
be construed as if not containing such provisions, and the rights and
obligations of the parties hereto shall be construed and enforced accordingly.

         14. Choice of Law. This Security Agreement shall be construed in
accordance with and governed by the laws of the State of North Carolina and,
where applicable and except as otherwise defined herein, terms used herein shall
have the meanings given them in the Uniform Commercial Code as in effect from
time to time in the State of North Carolina.

         15. Place of Business; Records. The Company represents and warrants
that its chief place of business is at 355 N.E. 5th Avenue, Suite 4, DelRay
Beach, Florida 33483, and that its books and records concerning the Collateral
are kept at its chief place of business.

         16. Notice. Any written notice, consent or other communication provided
for in this Security Agreement shall be delivered or sent as provided in the
Warehousing Agreement.

                                       9
<PAGE>

         EXECUTED and sealed the day and year first above written.


                                    WESTMARK MORTGAGE CORPORATION,
                                    a  California corporation
[CORPORATE SEAL]

ATTEST:

By:____________________________     By:____________________________
   Name: ______________________        Name: ______________________
   Title: _____________________        Title: _____________________


                                    FIRST UNION NATIONAL BANK, a
                                    national banking association




                                    By:____________________________
                                       Name:_______________________
                                       Title:______________________





                                       10

<PAGE>


                              SCHEDULE OF EXHIBITS
                                       TO
                               SECURITY AGREEMENT


EXHIBIT                         DOCUMENT
-------                         --------

      1                 Required Review Steps
      2                 Form of Trust Receipt
      3                 Trust Receipt Procedures
      4                 Form of Shipping Request
      5A                Form of Whole Loan Sale Transmittal Letter
      5B                Form of Warehouse-Related MBS Transmittal
      6                 Form of Custodial Agreement



                                       11
<PAGE>

                                                                      EXHIBIT 1
                                                                      ---------
                                                                    TO SECURITY
                                                                    -----------
                                                                      AGREEMENT
                                                                      ---------


                              REQUIRED REVIEW STEPS
                              ---------------------


1.       All submitted documents, including the report attached to the Delivery
         Certificate, are consistent as to borrower name, loan face amount, loan
         type (A+, A, B, C or D; FRM or ARM) and the Company's loan number.

2.       The note and mortgage/deed of trust each bears an original signature or
         signatures which appear to be those of the person or persons named as
         the maker and mortgagor/trustor, or, in the case of a certified copy of
         the mortgage/deed of trust, such copy bears what appears to be a
         reproduction of such signature or signatures.

3.       Except for (a) the endorsement to the Company of the note in the event
         such loan was purchased by the Company and (b) the endorsement in blank
         of the note by the Company, neither the note, the mortgage/deed of
         trust, nor the assignment(s) of the mortgage/deed of trust contain any
         irregular writings which appear on their face to affect the validity of
         any such endorsement or to restrict the enforceability of the document
         on which they appear.

4.       The note is endorsed in blank and such endorsement bears an original
         signature of an authorized officer of the Company, based on the current
         list of such officers supplied by the Company.

5.       The assignment of the mortgage/deed of trust bears an original
         signature of an authorized officer of the Company, based on the current
         list of such officers supplied by the Company.


                                       12
<PAGE>


                                                                      EXHIBIT 2
                                                                      ---------
                                                          TO SECURITY AGREEMENT
                                                          ---------------------

                              FORM OF TRUST RECEIPT
                              ---------------------

                                                         Date: ___________, 19__

         The undersigned, WESTMARK MORTGAGE CORPORATION, a California
corporation (the "Company"), acknowledges receipt from FIRST UNION NATIONAL BANK
(the "Lender") pursuant to the Security Agreement (as those terms and
capitalized terms not otherwise defined herein are defined in that certain
Mortgage Loan Warehousing Agreement dated as of ____________, 1998, between the
Lender and the Company), or from its duly appointed agent, of the following
described documentation for the identified Mortgage Loans (the "Collateral
Documents"), possession of which is herewith entrusted to the Company solely for
the purpose of correcting documentary defects relating thereto:


                                                             Loan Document
Borrower Name         Loan Number        Note Amount           Delivered
-------------         -----------        -----------         -------------

         It is hereby acknowledged that a security interest pursuant to the
Uniform Commercial Code as in effect in the State of North Carolina in the
Collateral hereinabove described and in the Proceeds of said Collateral has been
granted to the Lender pursuant to the Security Agreement.

         The Company hereby represents and warrants that the Unit Collateral
Value of the Mortgage Loans for which the Collateral Documents are requested to
be released hereunder when added to the Unit Collateral Value of all other
Mortgage Loans included in the computation of the Collateral Value of the
Borrowing Base the Collateral Documents for which have been similarly released
does not exceed $250,000.

         In consideration of the aforesaid delivery by the Lender (or by its
duly appointed agent), the Company hereby agrees to hold said Collateral
Documents in trust for the Lender as provided under and in accordance with all
provisions of the Security Agreement and to return said Collateral Documents to
the Lender no later than the close of business on the tenth calendar day
following the date hereof or, if such day is not a Business Day, on the
immediately succeeding Business Day.

                                                  WESTMARK MORTGAGE CORPORATION,
                                                  a California corporation


                                                  By:___________________________
                                                     Name:______________________
                                                     Title:_____________________


                                       13


<PAGE>


                                                                      EXHIBIT 3
                                                                      ---------
                                                          TO SECURITY AGREEMENT
                                                          ---------------------

                            TRUST RECEIPT PROCEDURES
                            ------------------------



The Company and Lender will adhere to the following procedures with respect to
trust receipts:

         The Lender will maintain all original trust receipts in a vault, drawer
         or other suitable depositary with a one hour fire rating maintained and
         controlled solely by the Lender.





                                       14

<PAGE>


                                                                      EXHIBIT 4
                                                                      ---------
                                                          TO SECURITY AGREEMENT
                                                          ---------------------

                            FORM OF SHIPPING REQUEST
                            ------------------------
                           (For Whole Loan Deliveries)

Date: ________________

FIRST UNION NATIONAL BANK
One First Union Center
301 South College Street
Charlotte, North Carolina  28288
Attention:  ____________________
            ____________________

This letter is to serve as authorization for you to endorse and ship the
following loans:

Loan Number                         Borrower Name                   Note Amount



to the following address under Commitment #____________ (the "Commitment") from,
or under a Buy/Sell Agreement between the undersigned and, an Approved Investor
as follows:

NAME:
ADDRESS:

ATTENTION:

Please endorse the notes as follows:

Please ship the loan documents either by ___________________ or by such other
courier service as we have designated to you as "approved." The courier shall
act as an independent contractor bailee acting solely on your behalf as Lender,
as defined in that certain Mortgage Loan Warehousing Agreement dated as of
____________, 1998, as the same may be amended, extended or replaced from time
to time, but we acknowledge and agree that you are not responsible for any
delays in shipment or any other actions or inactions of the courier; however,
because the Commitment or the Buy/Sell Agreement expires on ______________,
199_, we ask that you deliver the loan documents to the courier no later than
_________________, 199_.



                                       15
<PAGE>

Please have the courier bill us by using our acct #____________. If you should
have any questions, or should feel the need for additional documentation, please
do not hesitate to call _________________

                                                 WESTMARK  MORTGAGE CORPORATION,
                                                 a California corporation


                                                 By:____________________________
                                                    Name:_______________________
                                                    Title:______________________



                                       16
<PAGE>


                                                                      EXHIBIT 5A
                                                           TO SECURITY AGREEMENT
                                                               (Direct Investor)


                   FORM OF WHOLE LOAN SALE TRANSMITTAL LETTER
                             [LETTERHEAD OF LENDER]


                              __________ __, 199__




Dear [Approved Investor]:
      -----------------

                  Re:  Westmark Mortgage Corporation:
                       -----------------------------
                       Sale of Mortgage Loans
                       ----------------------

         Attached please find original promissory note(s) in the original
principal amount of $____________ evidencing those Mortgage Loans listed
separately on the attached schedule, along with other related documents
(collectively, the "Mortgage Loan Collateral") which Mortgage Loans are owned by
Westmark Mortgage Corporation, a California corporation (the "Company") and are
being delivered to you for purchase.

         The Mortgage Loans comprise a portion of the Collateral under (and as
the term "Collateral" and capitalized terms not otherwise defined herein are
defined in) that certain Mortgage Loan Warehousing Agreement dated as of
___________, 1998 by and between the Company as borrower and the undersigned as
lender ("Lender"), as amended or modified from time to time. Each of the
Mortgage Loans is subject to a security interest in favor of Lender, as set
forth in that certain Security Agreement dated as of ____________, 1998 by and
between the Company and Lender, as amended or modified from time to time. Said
security interest shall be automatically released upon your remittance of an
amount equal to the greater of (i) the full amount of the purchase price of such
Mortgage Loan(s) (as set forth on the schedule attached hereto), or (ii)
$________, which is the collateral value assigned by Lender to such Mortgage
Loan(s), by wire transfer to the following account of the Company:

                    WIRE INSTRUCTIONS TO SETTLEMENT ACCOUNT:
                    _______________________________________
                    _______________________________________
                    _______________________________________


         Pending your purchase of each Mortgage Loan and until payment therefor
is received, the aforesaid security interest therein will remain in full force
and effect, and you shall hold possession of such Mortgage Loan Collateral as
custodian, agent and bailee for and on behalf of Lender and subject to the
direction and control of Lender. In the event any Mortgage Loan is


                                       17
<PAGE>

unacceptable for purchase, return the rejected Mortgage Loan and all related
Mortgage Loan Collateral directly to Lender at the address set forth below. In
no event shall any Mortgage Loan or related Mortgage Loan Collateral be
returned, or sales proceeds remitted, to the Company or to any of its
affiliates. The Mortgage Loan and related Mortgage Loan Collateral must be so
returned or sales proceeds remitted in full no later than thirty (30) days from
the date hereof. If you are unable to comply with the above instructions, please
so advise the undersigned immediately.

         NOTE: BY ACCEPTING THE MORTGAGE LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR LENDER ON THE
TERMS DESCRIBED IN THIS LETTER. THE UNDERSIGNED LENDER REQUESTS THAT YOU
ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE LOANS AND THIS LETTER BY SIGNING
AND RETURNING THE ENCLOSED COPY OF THIS LETTER TO THE UNDERSIGNED; HOWEVER, YOUR
FAILURE TO DO SO DOES NOT NULLIFY SUCH CONSENT.

                                    Sincerely,

                                    FIRST UNION NATIONAL BANK

                                    By:_________________________________________
                                    Title:______________________________________
                                    Address:  One First Union Center
                                              301 South College Street
                                              Charlotte, North Carolina 28288
                                    Attn: ______________________________
                                          ______________________________



ACKNOWLEDGEMENT OF RECEIPT

[Approved Investor]
 -----------------

By:________________________________
   Name:___________________________
   Title:__________________________

Date:______________________________



                                       18
<PAGE>


                                                                      EXHIBIT 5B
                                                           TO SECURITY AGREEMENT
                                                                (Pool Formation)


                FORM OF WAREHOUSE-RELATED MBS TRANSMITTAL LETTER
                             [LETTERHEAD OF LENDER]


                              __________ __, 199__



Dear [Certificating Custodian]:
      -----------------------

                  Re:  Westmark Mortgage Corporation:
                       -----------------------------
                       Securitization of Mortgage Loans
                       --------------------------------

Attached please find original promissory note(s) in the original principal
amount of $____________ evidencing those Mortgage Loans listed separately on the
attached schedule, along with other related documents (collectively, the
"Mortgage Loan Collateral") which Mortgage Loans are owned by Westmark Mortgage
Corporation, a California corporation (the "Company") and are being delivered to
you as Custodian/Trustee for certification in connection with the formation of a
mortgage pool supporting the issuance of a Mortgage-Backed Security (the
"Warehouse-Related MBS") described as follows:

           __________________________________________________________

           __________________________________________________________


         The Mortgage Loans comprise a portion of the Collateral under (and as
the term "Collateral" and capitalized terms not otherwise defined herein are
defined in) that certain Mortgage Loan Warehousing Agreement dated as of
___________, 1998 by and between the Company as borrower and the undersigned as
lender ("Lender"), as amended or modified from time to time. Each of the
Mortgage Loans is subject to a security interest in favor of Lender, as set
forth in the certain Security Agreement dated as of _____________, 1998 by and
between the Company and Lender, as amended or modified from time to time. Said
security interest shall be automatically released upon the issuance of the
Warehouse-Related MBS in accordance with the terms of the prescribed GNMA, FNMA
or FHLMC (or other) form enclosed herewith.

         Pending issuance of the Warehouse-Related MBS, the aforesaid security
interest therein will remain in full force and effect, and you shall hold
possession of such Mortgage Loan Collateral as custodian, agent and bailee for
and on behalf of Lender and subject to the direction and control of Lender. In
the event any Mortgage Loan is unacceptable for pool formation, return the
rejected Mortgage Loan and all related Mortgage Loan Collateral directly to
Lender at the address set forth below. In no event shall any Mortgage Loan or
related Mortgage Loan Collateral be returned, or proceeds remitted, to the
Company or to any of its affiliates. The Mortgage Loan and related Mortgage Loan
Collateral must be so returned or the Warehouse-



<PAGE>

Based MBS issued no later than thirty (30) days from the date hereof. If you are
unable to comply with the above instructions, please so advise the undersigned
immediately.

         NOTE: BY ACCEPTING THE MORTGAGE LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR LENDER ON THE
TERMS DESCRIBED IN THIS LETTER. THE UNDERSIGNED LENDER REQUESTS THAT YOU
ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE LOANS AND THIS LETTER BY SIGNING
AND RETURNING THE ENCLOSED COPY OF THIS LETTER TO THE UNDERSIGNED; HOWEVER, YOUR
FAILURE TO DO SO DOES NOT NULLIFY SUCH CONSENT.

                                    Sincerely,

                                    FIRST UNION NATIONAL BANK

                                    By:_________________________________________
                                    Title:______________________________________
                                    Address:     One First Union Center
                                                 301 South College Street
                                                 Charlotte, North Carolina 28288
                                    Attn: _______________________
                                          _______________________



ACKNOWLEDGEMENT OF RECEIPT

[Certificating Custodian]
 -----------------------

By:_____________________________
Name:___________________________
Title:__________________________

Date: __________________________




                                       2
<PAGE>


                                                                       EXHIBIT 6
                                                                       ---------
                                                           TO SECURITY AGREEMENT
                                                           ---------------------


                           FORM OF CUSTODIAL AGREEMENT
                           ---------------------------
                     (With Operating Instructions Attached)

                             _________________, 19__


______________________
______________________
______________________



         Re:      Westmark Mortgage Corporation:
                  -----------------------------

Ladies and Gentlemen:

         The undersigned, FIRST UNION NATIONAL BANK (the "Lender") has entered
into (i) that certain Mortgage Loan Warehousing Agreement dated as of
____________, 1998 with Westmark Mortgage Corporation (the "Company") as the
same may be amended, extended or replaced from time to time (the "Warehousing
Agreement," capitalized terms not otherwise defined herein being used with the
same meaning as in the Warehousing Agreement) and (2) that certain Security
Agreement (the "Security Agreement") with the Company dated concurrently
therewith.

         The Lender represents and confirms that it has the power and authority
under the Warehousing Agreement and the Security Agreement to execute this
Custodial Agreement. The Lender may execute any of its duties hereunder by or
through agents or attorneys-in-fact notified to you in writing.

         The Lender hereby appoints you and you hereby accept appointment to act
as agent, custodian and bailee for the benefit of the Lender (in such capacity,
the "Approved MBS Custodian"). In such capacity, you agree to accept delivery
only on a free basis of certain mortgage-backed securities delivered to you from
time to time identified in a letter in the form of that attached hereto as
Exhibit A (all such mortgage-backed securities delivered to you and so
identified being referred to herein as "Subject Securities"). This Custodial
Agreement governs your rights and responsibilities as Approved MBS Custodian
with respect to all Subject Securities.

         The Lender hereby directs you, as Approved MBS Custodian, to hold or
dispose of Subject Securities deposited with you only in accordance with the
instructions of a person described as an "Authorized Lender Representative" on a
schedule from time to time delivered to you by the Lender (the initial list of
such persons being attached hereto as Schedule I) or 


<PAGE>

otherwise as expressly permitted hereunder. You are authorized, directed and
instructed to act upon all instructions from persons reasonably believed by you
to be genuine and authorized. Any instruction given hereunder may, in your
discretion, be written, oral, by telephone, telegraph, cable, radio or
electronic communication which is received by you. Written confirmations, if
any, of oral instructions provided hereunder shall in no way affect any action
taken by you in reliance upon the oral instructions, absent your gross
negligence or willful misconduct.

         All Subject Securities are to be held by you in a custodial account
(Account No. _____________) maintained with you (the "MBS Custodial Account").
Unless and until you have received written notice from an Authorized Lender
Representative (which notice may be by facsimile transmission) that there has
occurred an "Event of Default" or a "Potential Default" under the Warehousing
Agreement, you may from time to time deliver Subject Securities at the direction
of the Company, to, but only to, Approved Investors (as listed on a schedule of
"Approved Investors" delivered to you from time to time by an Authorized Lender
Representative) against, in the case of delivery to an Approved Investor,
payment of the purchase price therefor. The proceeds of the sale or other
disposition of all Subject Securities are to be held by you in an account
(Account No. _____________) maintained with you (the "Custodian Settlement
Account") and transferred by the end of each Business Day to Account No.
__________________ maintained in the Lender's name at First Union National Bank
(the "Settlement Account") as follows:

                          ____________________________
                          ____________________________
                          ____________________________

By executing this Custodial Agreement the Company confirms and the Lender and
the Company notify you that the Company has assigned and granted to the Lender a
security interest in and lien upon all now existing and hereafter arising right,
title and interest of the Company in the MBS Custodial Account, the Custodian
Settlement Account and the Settlement Account and in any and all investments and
proceeds at any time held therein.

         You shall be under no duty to take or omit to take any action with
respect to Subject Securities, except in accordance with this Agreement and the
Operating Instructions attached hereto as Exhibit B, unless specifically
otherwise directed by the Lender and agreed to by you in writing. In the event
that you shall be uncertain as to your duties or rights hereunder, you shall be
entitled to refrain from taking any action until you shall be directed otherwise
by an order of a court of competent jurisdiction. In case you should agree to
our request and on our behalf to appear in, prosecute or defend any legal or
equitable proceeding either in your own name or in the name of your nominee, you
shall first be indemnified to your satisfaction (other than against your gross
negligence and willful misconduct).

         By accepting delivery of any Subject Security, you shall be deemed to
have agreed to hold the Subject Security as Approved MBS Custodian hereunder,
free and clear of all liens, 


                                       2

<PAGE>

claims, interests and rights of offset in your favor or in favor of persons
claiming through you, subject only to due bills and checks described in the
second immediately following paragraph. Until you have been notified in writing
(including by telecopier) by an Authorized Lender Representative of the
occurrence of an Event of Default, you are hereby authorized to return Subject
Securities to the issuer/transfer agent therefor at the Company's written
request in connection with the reissuance thereof in smaller denominations;
provided, however, that any delivery of Subject Securities for reissuance shall
be covered by a transmittal letter or other written agreement instructing that
the reissued securities be returned directly to you. In this connection, we
acknowledge familiarity with the current securities industry practice of
delivering physical securities against later payment on the delivery date.
Notwithstanding our instructions to deliver Subject Securities against payment,
you are authorized to make delivery of such physical securities against a
temporary receipt (sometimes called a "window ticket") in lieu of payment. You
agree to use your best efforts to obtain payment therefor during the same
business day, but we confirm our assumption of all risks of payment for such
deliveries. You may accept certified checks in payment for Subject Securities
delivered on the Company's instruction and we assume sole responsibility for the
risks of collectability of such checks. YOU ARE HEREBY IRREVOCABLY INSTRUCTED BY
THE COMPANY AND THE LENDER THAT ALL PROCEEDS RECEIVED FROM THE SALE OR OTHER
DISPOSITION OF SUBJECT SECURITIES, UNTIL OTHERWISE NOTIFIED IN WRITING BY THE
LENDER SHALL BE WIRED TO THE SETTLEMENT ACCOUNT AS PROVIDED ABOVE.

         You will provide to the Lender on a daily basis a report of activity
with respect to the MBS Custodian Account and the Custodial Settlement Account.

         From time to time Subject Securities delivered for purchase may be
delivered by you following the scheduled settlement date for the sale thereof (a
"late delivery") and, as a result of such late delivery, the Company may be
obligated to pay to the purchaser accrued interest or principal amounts on
account thereof. Prior to your receipt from the Lender of notice of the
occurrence of an "Event of Default" or a "Potential Default," you are hereby
authorized to issue a due bill or check against the Custodian Settlement Account
for such amounts concurrently with such delivery. In the event amounts held in
the Custodian Settlement Account shall be insufficient to cover such due bill or
check, the Company shall immediately upon demand pay to you the full amount
thereof. It is expressly agreed and understood that the issuance of a required
due bill or bank check which will or may create an overdraft in the Custodian
Settlement Account shall be at your sole discretion and that any overdraft shall
be subject to the payment of interest on the amount thereof at your customary
rate. Notwithstanding anything to the contrary otherwise set forth herein, you
shall have a first lien against the Custodian Settlement Account for the amount
of such overdraft plus any accrued interest but such lien shall not secure any
other Indebtedness of the Company to you, whether arising hereunder or
otherwise.

         You shall not be liable or accountable for any act or omission of
brokers, dealers or agents in connection with this Custodial Agreement. In
carrying out your duties hereunder, you may use such methods or agencies as you
determine in your sole discretion, including your own facilities.


                                       3
<PAGE>

         You shall maintain regular business records documenting all
instructions transmitted to you through any authorized means and any response by
you. You are authorized to electronically record any telephone communications
with the Company or the Lender arising out of this Custodial Agreement. Your
records shall be determinative of the form, content and time of all the
Company's and Lender's instructions and any response from you. The record of
each instruction and any response thereto shall be retained by you for at least
ninety (90) days following the date of the instruction. Any claim against you
for failure to properly follow an instruction transmitted by the Company or the
Lender must be made in writing and received by you within ten (10) days after
the date the instruction was received by you.

         You shall give the Subject Securities that come into your possession
under this Custodial Agreement the same physical care and safeguards as are
afforded similar property owned by you; provided, however, your responsibility
hereunder is limited to losses occasioned directly by the gross negligence or
willful misconduct of your employees, or by robbery, burglary or theft (while
the securities are in your physical possession), to the extent of the market
value of the Subject Securities at the date of the discovery of such loss. With
respect to any Subject Securities which you deliver for us to a third party, and
with respect to such delivery, you shall be deemed no more than an
"intermediary" as referenced in Section 8-306(3) of the Uniform Commercial Code
as in effect from time to time in the State of North Carolina, and the only
warranty given by you shall be the warranty provided in said Section 8-306(3).
In no event shall you be liable for any indirect, special or consequential loss.
You may, at your option, make arrangements for insuring yourselves against loss
from any cause, but you shall not be under any obligation to insure for our
benefit.

         Except as expressly set forth above with respect to advances made by
you in connection with "late deliveries," none of the Subject Securities held in
the MBS Custodial Account, the funds held at any time in the Custodian
Settlement Account, the Subject Securities or any proceeds of the sale or other
disposition thereof will be subject to any right, charge, security interest,
lien, encumbrance or claim of any kind in your or your creditors' favor. Any
claims for the payment of fees with respect to the safe custody or
administration of Subject Securities or for compensation, expenses, commitments
made by you upon instructions of the Lender, reimbursement of taxes incurred by
you for the account of the Lender, any penalties incurred by or levied or
assessed against you resulting from the Lender's improper or incorrect
instructions, or other liabilities of the Lender to you, and for indemnity
against any claim or liability to which you are subjected by reason of any
registration of Subject Securities shall be enforceable solely against the
Company and the Lender shall not have any responsibility therefor. The Lender
and the Company agree to make no claim against you except for any such claims or
liabilities arising, or claimed to have arisen, as a result of your gross
negligence or willful misconduct.

         The Operating Instructions attached hereto are hereby made part hereof
and any and all capitalized terms defined herein shall have the same meaning
when used therein.


                                       4

<PAGE>

         This Custodial Agreement contains the whole of the understanding
between you and the Lender concerning the subject matter hereof and no provision
hereof shall be modified or altered except in writing signed by both you and the
Lender.

         This Custodial Agreement shall be governed by the laws of the State of
North Carolina and shall be binding upon the Lender and upon its successors and
assigns and shall inure to your benefit and your successors and assigns and
shall be deemed continuing until terminated by either the Lender or you upon at
least sixty (60) days prior written notice to the other.

         This letter is made in triplicate and will become an agreement between
you and the Lender upon your acceptance hereof in the space provided below.


                                            FIRST UNION NATIONAL BANK



                                            By:________________________________
                                            Title:_____________________________


AGREED TO AND ACCEPTED:

__________________________
as Approved MBS Custodian



By:_____________________________
Title:__________________________
Date:___________________________



                                       5
<PAGE>



                        ACKNOWLEDGEMENT AND AUTHORIZATION
                        ---------------------------------


         The Company approves the foregoing Custodial Agreement and authorizes
the Approved MBS Custodian to act in accordance with the terms thereof. The
Company agrees to be bound by the terms of the Custodial Agreement (including
all Exhibits thereto) to the same extent as if a party thereto. The Company
agrees to indemnify the Approved MBS Custodian for, and hold the Approved MBS
Custodian harmless against, any loss, liability or expense in connection with,
arising out of or in any way related to the transactions contemplated and
relationship established by the Custodial Agreement, or any action or omission
by the Approved MBS Custodian in connection with the Custodial Agreement, or any
agent, broker or dealer employed by the Approved MBS Custodian hereunder,
including the reasonable costs and expenses incurred in defending any such claim
of liability, except that the Company shall not be liable for (i) any loss,
liability or expense that is determined by a judgment of a court of competent
jurisdiction that is binding on the Approved MBS Custodian, final and not
subject to review on appeal, to be the direct result of acts or omissions on the
Approved MBS Custodian's part constituting gross negligence or willful
misconduct, or (ii) any claim that is based on the Approved MBS Custodian's
warranty as provided in Section 8-306(3) of the Uniform Commercial Code as in
effect from time to time in the State of North Carolina.

                                           WESTMARK MORTGAGE CORPORATION,
                                           a California corporation


                                           By:________________________________
                                           Name:______________________________
                                           Title:_____________________________



<PAGE>


                                                                       EXHIBIT A
                                                                       ---------
                                                                    TO CUSTODIAL
                                                                    ------------
                                                                       AGREEMENT
                                                                       ---------

                  FORM OF LETTER TO APPROVED MBS CUSTODIAN
                  ----------------------------------------


To:   __________________________,
      as Approved MBS Custodian


                  Re:      Westmark Mortgage Corporation:
                           Custodial and Collateral Agency Instructions
                           --------------------------------------------

Ladies and Gentlemen:

         Reference is made to the attached letter/certification to the transfer
agent/trustee for the issuance of the Security described more particularly
therein, which Security is supported by a pool of residential mortgage loans,
mortgage-backed securities or both including mortgage loans and mortgage-backed
securities in which the undersigned (the "Lender") acting under that certain
Security Agreement dated as of _______________, 1998, as amended, extended or
replaced from time to time, holds a first perfected security interest. Pursuant
to such letter/certification, the transfer agent/trustee has been instructed to
deliver such Security to you. You are hereby notified that the Lender has a
first perfected security interest in the Security and in all proceeds of the
sale or other disposition thereof and in all accounts into which said proceeds
may be deposited.

         This letter will confirm your agreement to hold such Security as a
"Subject Security" under and on terms and conditions set forth more particularly
in that certain Custodial Agreement, dated as of ______________, 199___ between
you and the Lender.

                                            Very truly yours,

                                            FIRST UNION NATIONAL BANK


                                            By:________________________________




<PAGE>


         The undersigned Company agrees to and acknowledges the terms of this
letter and, notwithstanding any contrary understanding with or instructions to
you, the addressee of this letter, the Company instructs you to act according to
the instructions set forth in this letter. These instructions cannot be altered
except by written instructions executed by the Lender.


                                           WESTMARK MORTGAGE CORPORATION

                                           By: _______________________________
                                               Name: _________________________
                                               Title: ________________________


 


                                        2
<PAGE>


                                                                       EXHIBIT B
                                                                       ---------
                                                          TO CUSTODIAL AGREEMENT
                                                          ----------------------

                             OPERATING INSTRUCTIONS


         These Operating Instructions are attached to and made a part of the
Custodial Agreement between First Union National Bank and
____________________________________, dated as of _________, 199__ (the
"Custodial Agreement"). Terms defined therein shall have their same meanings
when used herein.

         1. From time to time GNMA, FNMA and FHLMC Subject Securities will be
issued at the request of the Company and credited to your account with [Federal
Reserve Bank of ________________] (in the case of FNMA and FHLMC Subject
Securities) or your account with the Participants Trust Company ("PTC") (in the
case of GNMA Subject Securities) (in each case, to be held by you for the
account of the Lender) in accordance with the Code of Federal Regulations (in
the case of FNMA and FHLMC Subject Securities) or the rules of PTC (in the case
of GNMA Subject Securities). Upon your receipt of confirmation that such Subject
Securities have been deposited into your account with the [Federal Reserve Bank
of ____________________] (in the case of FNMA and FHLMC Subject Securities) or
your account with PTC (in the case of GNMA Subject Securities), you shall
promptly issue to the Lender and the Company your confirmation that (1) you have
received such confirmation on the Fedwire (in the case of FNMA and FHLMC Subject
Securities, which confirmation will include the number of Subject Securities
deposited into your account with [Federal Reserve Bank of __________________])
or from PTC (in the case of GNMA Subject Securities), (2) you have made
appropriate entries on your books reflecting the interests of the Company as
beneficial owner and the Lender as secured party with respect to such Subject
Securities, and (3) there are no security interests or any rights or claims of
any third party in such Subject Securities in your favor or known to you which
have priority over the security interest of the Lender in such Subject
Securities.

         2. With respect to the delivery or transfer of Subject Securities which
you hold for the account of the Lender, you are hereby authorized to act only
upon instructions from the Lender or, to the extent permitted by the Custodial
Agreement, by the Company. Upon notification to you by the Lender of an "Event
of Default" or a "Potential Default" under the Warehousing Agreement, no third
party, including without limitation the Company, may direct you to make any
delivery or transfer of such Subject Securities.

         3. The proceeds of redemptions, collections and other receipts,
including dividend and interest income, shall be credited to the Custodian
Settlement Account upon collection or payment.

         4. You are to notify the Lender and the Company upon receipt of notice
by you of any call for conversion, redemption, subscription rights or similar
proceeding affecting the 


<PAGE>

Subject Securities held in the relevant account (any of the foregoing being
referred to herein as "Account Proceedings"), and shall take such action in
respect thereof as you may be directed in writing by the Lender; provided,
however, that you shall have no duty or responsibility to notify the Company or
the Lender of any Account Proceedings which do not appear in The Wall Street
Journal (New York Edition), The Standard & Poor's Called Bond Record for
Preferred Stocks, Financial Daily Called Bond Service, The Kenney Services or
official notifications from the Depository Trust Company or such other
publications of which you may from time to time notify the Lender in writing.
All solicitation fees payable to you as agent in connection with such event will
be retained by you unless specifically agreed to the contrary by you.

         5. If applicable, you are authorized to exchange temporary for
definitive certificates, and old certificates for new or overstamped
certificates evidencing a change therein.

         6. You are authorized and empowered in the name and on behalf of the
Lender and the Company to execute any certificates of ownership or other reports
which you are or may hereafter be required to execute and furnish under any
regulation of the Internal Revenue Service, or other authority of the United
States, insofar as the same are required in connection with any property which
is now or may hereafter be in your possession by virtue of the Custodial
Agreement and these Operating Instructions, claiming no exemptions on behalf of
the Lender or the Company. In the preparation of such reports, the status of the
Lender is to be described as a bank, trust company or financial institution, as
the case may be, domiciled in the United States. The Lender agrees to notify you
immediately in writing of any change in such status.

         7. All mail communications which are to be furnished or forwarded
hereunder to the Lender or the Company shall be addressed to such party at the
last address on your records, provided that in case you in your sole discretion
shall determine that an emergency exists, you may use such other means of
communication as you shall deem advisable.

         8. You are under no duty to supervise, recommend or advise the Lender
relative to the investment, purchase, sale, retention or other disposition of
any property held hereunder unless provided for by the Custodial Agreement.

         9. With respect to any direction to receive securities in transactions
not placed through you, you shall have no duty or responsibility to advise the
Company of non-receipt, or to take any steps to obtain delivery of securities
from any brokers or dealers. All dealer concessions made to you will be retained
by you unless specifically agreed to the contrary by you.

         10. Notwithstanding anything herein to the contrary, unless
instructions are received from the Lender, specifying a different destination
than the address listed on your records for the Lender, within ten (10) days of
the receipt of any termination notice, you shall have the right to transfer all
securities and other property held by you or any depositary in connection with
this Custodial Agreement or registered in your name to the Lender at the address
listed on your records.



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