EXHIBIT 10.7

                                                                  EXECUTION COPY
                                                                  --------------

                          TMA MORTGAGE FUNDING TRUST I,
                                   as Issuer,

                     THORNBURG MORTGAGE FUNDING CORPORATION,
                                  as Depositor,

                         PNC MORTGAGE SECURITIES CORP.,
                                  as Servicer,

                                       and

                   BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                              as Indenture Trustee

                          SALE AND SERVICING AGREEMENT
                          Dated as of December 1, 1998

                       COLLATERALIZED ASSET-BACKED NOTES,

                                  Series 1998-1


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                                                      TABLE OF CONTENTS
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ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Section 1.2. Use of Words and Phrases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Section 1.3. Captions; Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
ARTICLE II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Conveyance of Mortgage Loans, Pooled Certificates and Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Section 2.1. Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Section 2.2. Acceptance by Indenture Trustee; Certain Substitutions of Mortgage Loans; Certification by Indenture Trustee   3
Section 2.3. Cooperation Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5
Representations, Warranties  and Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5
Section 3.1. Representations and Warranties of the Depositor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5
Section 3.2. Representations and Warranties of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
Section 3.3. Covenants of the Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
Section 3.4. Representations and Warranties of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
ARTICLE IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
Servicing and Administration of Mortgage Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
Section 4.1. General Servicing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
Section 4.2 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
Section 4.3 Subservicing Agreements Between Servicer and Subservicers . . . . . . . . . . . . . . . . . . . . . . . . . .  13
Section 4.4 Successor Subservicers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
Section 4.5 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
Section 4.6 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
Section 4.7 Assumption or Termination of Subservicing Agreement by Indenture Trustee. . . . . . . . . . . . . . . . . . .  14
Section 4.8 Principal and Interest Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
Section 4.8A. The Servicer Collection Account; Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
Section 4.9. Delinquency Advances and Servicing Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
Section 4.9A Nonrecoverable Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
Section 4.10. Compensating Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
Section 4.10A Permitted Withdrawals from the Servicer Collection Account and Principal and Interest Accounts. . . . . . .  18
Section 4.11. Maintenance of Insurance; Collections Thereunder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements . . . . . . . . . . . . . . . . . . . . . . . .  20
Section 4.13. Realization Upon Defaulted Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
Section 4.14. Indenture Trustee to Cooperate; Release of Mortgage Files . . . . . . . . . . . . . . . . . . . . . . . . .  22
Section 4.15. Compensation to the Servicer and the Subservicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
Section 4.16. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
Section 4.17. Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . . . . . . . . . . . . . . .  23
Section 4.18. Access to Certain Documentation and Information Regarding the Mortgage Loans. . . . . . . . . . . . . . . .  24
Section 4.19. Assignment of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
Section 4.20. ARMs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
Section 4.21. Inspections by Note Insurer and Account Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
Section 4.22. Reports to the Indenture Trustee; Servicer Collection Account Statement . . . . . . . . . . . . . . . . . .  24
Section 4.23 Designated Depository Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
Section 4.24. Appointment of Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
Section 4.25. [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
Section 4.26. Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
Section 4.27. Performance of Obligations; Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
Section 4.28. Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
Accounts; Payments; Statements to Certificateholders and Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . .  27
Section 5.1 Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
Section 5.2 Flow of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
Section 5.3 Investment of Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
Section 5.4 Reports by Indenture Trustee to Owners and Depositor. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
Section 5.5 Drawings under the Policy and Reports by Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . .  35
Section 5.6 Allocation of Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
Section 5.7 The Reserve Account and the Swap Counterparty Reserve Account . . . . . . . . . . . . . . . . . . . . . . . .  35
Section 5.8 Calculation of LIBOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
ARTICLE VI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
The Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
Section 6.1 Liabilities of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
Section 6.2 Merger or Consolidation of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
Section 6.3 Limitation on Liability of the Servicer and Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
Section 6.4. The Servicer not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
ARTICLE  VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
Removal of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
Section 7.1 Removal of Servicer; Resignation of Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
Section 7.2 Notification to Certificateholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
ARTICLE VIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
Section 8.1 Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
Section 8.2 Termination Upon Exercise of Collateral Purchase Options and Servicer's Optional Termination Right. . . . . .  41
Section 8.3 Disposition of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
Section 8.4 Optional Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
ARTICLE IX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
Section 9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
Section 9.2. Notices and Copies to Rating Agencies and the Note Insurer . . . . . . . . . . . . . . . . . . . . . . . . .  43
Section 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
Section 9.4 Limitations on Rights of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
Section 9.5 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
Section 9.6 Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
Section 9.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
Section 9.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
Section 9.9 Assignment to Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
Section 9.10 Limitation of Liability of Owner Trustee and Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . .  46
Section 9.11 Independence of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
Section 9.12 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
Section 9.13 Note Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
Section 9.14 Rights of the Note Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
Section 9.15 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
</TABLE>

Appendix  A-Definitions
Exhibit  A-[Reserved]
Exhibit  B-Indenture  Trustee's  Acknowledgment  of  Receipt
Exhibit  C-Pool  Certification
Exhibit D-Representations, Warranties and Covenants with Respect to the Mortgage
Loans
Exhibit  E-[Reserved]
Exhibit  F-Certificate  Re:  Prepaid  Loans
Exhibit  G-Form  of  Servicer's  Trust  Receipt
Exhibit  H-Notice  of  Charge-offs/Liquidation  Loan  Report
Exhibit  I-Form  of  Monthly  Report  to  the  Certificateholder

     THIS  SALE  AND  SERVICING AGREEMENT (this "Agreement") is made and entered
into  as  of  December  1,  1998,  by  and among TMA Mortgage Funding Trust I, a
statutory  business  trust  formed  under  the laws of the State of Delaware, as
issuer  (the  "Issuer"),  Thornburg  Mortgage  Funding  Corporation,  a Delaware
corporation,  as  depositor  (the "Depositor"), PNC Mortgage Securities Corp., a
Delaware corporation, as servicer (the "Servicer"), and Bankers Trust Company of
California,  N.A.,  a national banking association (in its capacity as indenture
trustee  under  the  Indenture  referred  to  below,  the  "Indenture Trustee").

                              PRELIMINARY STATEMENT

     The Issuer was formed for the purpose of issuing asset backed notes secured
by  mortgage  collateral  and asset backed certificates.  The Issuer has entered
into  a trust indenture, dated as of December 1, 1998 (the "Indenture"), between
the  Issuer  and  the Indenture Trustee, pursuant to which the Issuer intends to
issue  its  Collateralized  Asset-Backed  Notes, Series 1998-1, in the aggregate
initial  principal  amount  of  $1,144,423,000  (the  "Notes").  Pursuant to the
Indenture,  as  security  for  the  indebtedness  represented by such Notes, the
Issuer  is  and  will  be  pledging  to  the  Indenture Trustee, or granting the
Indenture  Trustee  a  security  interest in, the Trust Estate, including, among
other  things,  certain  Mortgage  Loans  and Pooled Certificates and its rights
under  this  Agreement.

     The  parties  desire  to  enter into this Agreement to provide, among other
things,  for the sale by the Depositor of certain assets, including the Mortgage
Loans  and  the  Pooled  Certificates,  to  the  Issuer and the servicing of the
Mortgage  Loans  by  the  Servicer.  The  Servicer  acknowledges  that, in order
further to secure the Notes, the Issuer is and will be granting to the Indenture
Trustee  a  security  interest  in,  among  other  things, its rights under this
Agreement. For its services hereunder, the Servicer will receive a Servicing Fee
and  the  Subservicers  will  receive Subservicing Fees (each as defined herein)
with  respect  to  each  Mortgage  Loan  serviced  hereunder.

     The  Depositor agrees that all covenants and agreements made or assigned by
the  Depositor herein with respect to the Mortgage Loans or otherwise shall also
be  for  the benefit and security of the Indenture Trustee, the Owners, the Note
Insurer  and  the  Swap  Counterparty.

                                    ARTICLE I

                                   Definitions

     Section  1.1.  Definitions  For all purposes of this Agreement, capitalized
                    -----------
terms  used  herein  shall have the meanings set forth in Appendix A, unless the
context  clearly  indicates  otherwise.

     Section  1.2.  Use  of Words and Phrases.  "Herein", "hereby", "hereunder",
                    -------------------------
"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this
Agreement  as a whole and not solely to the particular section of this Agreement
in which any such word is used.  The definitions set forth in Section 1.1 hereof
include  both the singular and the plural.  Whenever used in this Agreement, any
pronoun  shall  be  deemed  to include both singular and plural and to cover all
genders.

     Section 1.3.  Captions; Table of Contents  The captions or headings in this
                   ---------------------------
Agreement  are  for convenience only and in no way define, limit or describe the
scope  and  intent  of  any  provisions  of  this  Agreement.

                                   ARTICLE II

        Conveyance of Mortgage Loans, Pooled Certificates and Other Assets

     Section  2.1.  Conveyance
                    ----------

     (a)     As  of  the  Cut-off  Date,  the Depositor hereby sells, transfers,
assigns,  sets over and conveys, without recourse, to the Issuer for the benefit
of the Owners, the Certificateholders and the Note Insurer, subject to the terms
of  this  Agreement,  all of the Depositor's right, title and interest in and to
the  Trust  Estate, including the Mortgage Loans and the Pooled Certificates and
all principal and interest due on each such Mortgage Loan and Pooled Certificate
after  the  respective  Cut-off  Date;  provided,  however,  that  the Depositor
reserves  and  retains  all of its right, title and interest in and to principal
and  interest  due  on  each  such  Mortgage Loan and Pooled Certificate and all
prepayments  collected  on  each  Mortgage  Loan  on  or prior to the respective
Cut-off  Date.  In  connection with such purchase, sale, transfer and assignment
(i)  pursuant  to  Section  2.1  of the Collateral Sale Agreement, the Depositor
hereby assigns to the Issuer all of the Depositor's right, title and interest in
its  rights  and  benefits,  but  none  of its obligations or burdens, under the
Collateral  Sale  Agreement,  including  without  limitation,  the  delivery
requirements,  representations,  warranties  and  the  cure,  repurchase  or
substitution  obligations  of  the  Seller  under  the Collateral Sale Agreement
(including,  all  rights  of  the  Depositor  in and to the agreements listed in
Exhibit  E thereto) and the rights to enforce the representations and warrantees
of  sellers  of  the  Mortgage Loans to the Seller, to the extent assignable and
(ii)  the  Depositor  hereby sells, transfers, assigns, sets over and conveys to
the  Issuer  all of the Depositor's rights, title and interest in its rights and
benefits, but subject to the obligations and burdens, under the Swap Agreements.
It  is the express intent of the parties hereto that the conveyance of the Trust
Estate to the Issuer by the Depositor as provided in this Section 2.1 be, and be
construed  as,  an  absolute  sale of the Trust Estate.  It is, further, not the
intention  of  the  parties that such conveyance be deemed a pledge of the Trust
Estate  by  the  Depositor to the Issuer to secure a debt or other obligation of
the  Depositor.  However,  in  the event that, notwithstanding the intent of the
parties, the Trust Estate is held to be the property of the Depositor, or if for
any  other reason this Agreement is held or deemed to create a security interest
in  the  Trust  Estate,  then  (w)  this  Agreement shall also be deemed to be a
security  agreement  within  the  meaning  of  Articles 8 and 9 of the UCC as in
effect  in  the  State  of New York; (x) the transfer of the assets provided for
herein  shall  be  deemed  to  be  a  grant  by the Depositor to the Issuer of a
security  interest in all of the Depositor's right, title and interest in and to
the  Trust Estate and all amounts payable on the Trust Estate 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; (y) the
possession  by  the  Issuer, the Indenture Trustee or their respective agents of
the Mortgage Notes, Pooled Certificates and Swap Agreements and such other items
of  property  as  constitute instruments, money, negotiable documents or chattel
paper  shall  be  deemed to be "possession by the secured party" for purposes of
perfecting  the  security  interest  pursuant  to Section 9-305 of the UCC as in
effect  in  the  State  of  New  York  and  the  UCC  of  any  other  applicable
jurisdiction;  and  (z)  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, securities intermediaries, bailees or agents (as applicable) of the Issuer
or  the  Indenture  Trustee,  as  applicable, for the purpose of perfecting such
security  interest  under applicable law.  Any assignment of the interest of the
Issuer  to  the Indenture Trustee pursuant to any provision hereof shall also be
deemed  to  be  an  assignment  of  any  security  interest created hereby.  The
Depositor  and  the  Issuer shall, to the extent consistent with this Agreement,
take  such  actions  as  may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Trust Estate, such security interest
would  be  deemed  to  be  a perfected security interest of first priority under
applicable  law  and  will  be  maintained  as  such throughout the term of this
Agreement.

     The Depositor and the Indenture Trustee at the direction and expense of the
Depositor shall, to the extent consistent with this Agreement, take such actions
as  may  be  necessary to ensure that, if this Agreement were deemed to create a
security interest in the Trust Estate, such security interest would be deemed to
be a perfected security interest of first priority under applicable law and will
be  maintained  as  such  throughout  the  term of the Agreement.  In connection
herewith,  the  Indenture Trustee shall have all of the rights and remedies of a
secured  party  and  creditor  under  the  UCC  as  in  force  in  the  relevant
jurisdiction.

     (b) Pursuant to Section 2.1(c) of the Collateral Sale Agreement, the Seller
has agreed to take the actions specified in Part I of Exhibit D attached hereto.

     (c) The  actions  required  pursuant to Part I of Exhibit D hereto are not,
and shall not be  construed to be,  conditions  subsequent;  the parties  hereto
declaring that the sale of the Mortgage Loans and Pooled Certificates to be made
hereunder on the Closing Date shall be a completed, absolute and final sale.

     Section  2.2.  Acceptance  by  Indenture  Trustee; Certain Substitutions of
                    ------------------------------------------------------------
Mortgage  Loans;  Certification  by  Indenture  Trustee
   ----------------------------------------------------

     (a) The  Indenture  Trustee,  on  behalf  of the  Issuer  and as  Indenture
Trustee,  agrees to execute and deliver on the Closing Date an acknowledgment of
receipt of the items specified in Part I of Exhibit D and delivered by or at the
direction  of the  Issuer  with  respect  to the Trust in the form  attached  as
Exhibit  B  hereto,  and  declares  that it will  hold  such  documents  and any
amendments,  replacements  or supplements  thereto,  as well as any other assets
included in the  definition  of the Trust Estate and  delivered to the Indenture
Trustee,  as  Indenture  Trustee  upon and subject to the  conditions  set forth
herein   and  in  the   Indenture   for  the   benefit   of  the   Owners,   the
Certificateholders  and the Note Insurer.  The Indenture Trustee agrees, for the
benefit of the Owners, the  Certificateholders  and the Note Insurer,  to review
such items with  respect to the Issuer  delivered to it (i) within 45 days after
the Closing Date and (ii) within 180 days after the Closing Date with respect to
each  Mortgage  Loan as to which the  assignment is required to be recorded (or,
with respect to any document delivered after the Closing Date pursuant to Part I
of  Exhibit  D,  within 45 days of receipt  and with  respect  to any  Qualified
Replacement Mortgage, within 45 days after the related Replacement Cut-off Date)
and to  deliver  to the  Depositor,  the  Seller  and the  Note  Insurer  a pool
certification (the "Pool  Certification") in the form attached hereto as Exhibit
C to the  effect  that,  as to each  Mortgage  Loan  listed in the  Schedule  of
Mortgage  Loans (other than any Mortgage  Loan paid in full or any Mortgage Loan
specifically  identified in such Pool  Certification as not covered by such Pool
Certification),  (i) all  documents  required to be  delivered to it pursuant to
Part I of  Exhibit  D are in its  possession,  (ii)  such  documents  have  been
reviewed  by it  and  have  not  been  mutilated,  damaged,  torn  or  otherwise
physically  altered  and  relate to such  Mortgage  Loan and (iii)  based on its
examination and only as to the foregoing documents, the information set forth on
the Schedule of Mortgage Loans as to loan number,  address  (including state) of
the Property,  the Original Principal Balance,  whether such Mortgage Loan is an
ARM or a 5/1 ARM Mortgage Loan, for each 5/1 ARM Mortgage Loan, the Coupon Rate,
and for each ARM and for each 5/1 ARM, the Index, the Gross Margin, the Periodic
Rate  Cap,  the  Lifetime  Cap,  the  Lifetime  Floor,  and the  maturity  date,
accurately reflects the information set forth in the related File. The Indenture
Trustee shall be under no duty or  obligation to inspect,  review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, valid, recordable,  sufficient,  suitable, insurable,  collectable,
enforceable,  or appropriate for the represented  purpose or that they are other
than what they purport to be on their face,  nor shall the Indenture  Trustee be
under any duty to  determine  independently  whether  there are any  intervening
assignments  or  assumption  or  modification  agreements  with  respect  to any
Mortgage Loan.

     (b) If the Indenture Trustee during such 45-day or 180 day period finds any
document  constituting  a part of a File  which  is not  executed,  has not been
received,  or is unrelated to the Mortgage  Loans  identified in the Schedule of
Mortgage Loans or that any Mortgage Loan does not conform in a material  respect
to the description thereof as set forth in the Schedule of Mortgage Loans as set
forth in Section  2.2(a)(iii)  above,  the Indenture  Trustee shall  promptly so
notify the  Depositor,  the Seller and the Note  Insurer.  In the event any Pool
Certification  delivered after the 180 day period  reflects any exceptions,  the
Indenture Trustee shall deliver Pool  Certifications on each subsequent  Payment
Date  to the  Note  Insurer,  the  Depositor,  and the  Seller  until  all  such
exceptions  have been  cured  (or  waived by the Note  Insurer)  or the  related
Mortgage  Loans  have been  repurchased.  In  performing  any such  review,  the
Indenture Trustee may conclusively rely on the purported genuineness of any such
document  and any  signature  thereon.  It is  understood  that the scope of the
Indenture  Trustee's  review  of the  items  delivered  by or on  behalf  of the
Depositor  pursuant to Part I of Exhibit D is limited solely to confirming  that
the  documents  listed in Part I of Exhibit D have been  executed and  received,
where  required  to be original  documents  are  originals,  relate to the Files
identified  in the  Schedule of Mortgage  Loans and  conform  materially  to the
description  thereof in the  Schedule of Mortgage  Loans as set forth in Section
2.2(a)(iii)  above.  The Seller has  agreed,  pursuant  to the  Collateral  Sale
Agreement,  to use reasonable  efforts to remedy a material defect in a document
constituting  part of a File of which it is so notified by the Indenture Trustee
or the Note Insurer.  If, however,  within 90 days after the Indenture Trustee's
or the Note Insurer's  notice to the Seller  respecting such defect,  the Seller
has not remedied, or caused to be remedied, the defect and the defect materially
and  adversely  affects the  interest  of the Owners or the Note  Insurer in the
related Mortgage Loan, the Depositor,  at the Depositor's  option, will (or will
cause the Seller to) on the next succeeding Remittance Date either (i) if within
two  years of the  Closing  Date,  substitute  in lieu of such  Mortgage  Loan a
Qualified  Replacement  Mortgage and deliver any Substitution  Adjustment Amount
applicable  thereto  to the  Servicer  for  deposit in the  Servicer  Collection
Account or (ii) purchase  such  Mortgage  Loan at a purchase  price equal to the
Loan Purchase  Price  thereof,  which  purchase  price shall be delivered to the
Servicer for deposit in the Servicer Collection Account, and provided, in either
case, that an opinion of counsel,  acceptable to the Indenture  Trustee,  to the
effect that such  substitution or purchase will not have a material  adverse tax
consequence to the  Noteholders or the Note Insurer,  is delivered in connection
therewith.  Notwithstanding  the  foregoing,  if any exception  described in the
Indenture  Trustee's 45-day or 180-day review relates solely to the inability of
the  Seller  to  deliver  the  original  security  instrument,   or  intervening
assignments  thereof  that are  required to be  recorded,  or a certified  copy,
because the  originals of such  documents,  or a certified  copy,  have not been
returned by the  applicable  jurisdiction,  the Seller  shall not be required to
purchase such Mortgage  Loan if the Seller  delivers such original  documents or
certified copy promptly upon receipt,  but in no event later than 360 days after
the Closing Date.

     (c) Notwithstanding any requirement to the contrary herein, at any time the
Indenture  Trustee  discovers that with respect to any file any of the documents
required  to be  delivered  pursuant  to Part I of  Exhibit  D (i) have not been
executed or  received,  (ii) are not  original  documents  where  required to be
original  documents,  or (iii) fail to  conform  materially  to the  description
thereof in the  Schedule of Mortgage  Loans as set forth in Section  2.2(a)(iii)
hereof,  the Indenture Trustee shall be permitted to seek the remedies described
in Section 2.2(b).

     Section  2.3.  Cooperation  Procedures
                    -----------------------

     (a) The Depositor  shall or shall cause the Seller to, in  connection  with
the  delivery of each  Qualified  Replacement  Mortgage,  provide the  Indenture
Trustee with the information as of the Replacement Cut-Off Date set forth in the
Schedule of Mortgage Loans with respect to such Qualified Replacement Mortgage.

     (b) The  Depositor,  the Servicer,  the Issuer,  and the Indenture  Trustee
covenant  to  provide  each  other  and the  Note  Insurer  with  all  data  and
information  required  to be provided by them  hereunder  at the times  required
hereunder, and additionally covenant to reasonably cooperate with each other and
with the Note Insurer in providing any additional information required by any of
them in  connection  with  their  respective  duties  hereunder.  The  Depositor
covenants  to cause the  Seller  to  provide  such  information  and  reasonable
cooperation.

                                   ARTICLE III

                   Representations, Warranties  and Covenants

     Section  3.1.  Representations  and  Warranties  of  the  Depositor.
                    ----------------------------------------------------

     (a)     The  Depositor  hereby  represents,  warrants  and covenants to the
Issuer,  the  Servicer,  the  Indenture  Trustee, and the Note Insurer as of the
Closing  Date  as  follows:

          (i) The Depositor is a corporation  duly organized,  validly  existing
     and in good standing under the laws of the State of Delaware. The Depositor
     has all  requisite  corporate  power and  authority  to own and operate its
     properties,  to  carry  out its  business  as  presently  conducted  and as
     proposed to be conducted, to enter into and discharge its obligations under
     this  Agreement.  The Depositor is duly  qualified to do business and is in
     good  standing in each  jurisdiction  necessary to perform its  obligations
     under this Agreement.

          (ii) The execution and delivery of this Agreement by the Depositor and
     its  performance  and compliance with the terms of this Agreement have been
     duly  authorized  by all  necessary  corporate  action  on the  part of the
     Depositor and will not violate the Depositor's Certificate of Incorporation
     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 a breach
     of, any  material  contract,  agreement  or other  instrument  to which the
     Depositor  is a party or by which the  Depositor  is bound or  violate  any
     statute or any order, rule or regulation of any court,  governmental agency
     or body or other tribunal having  jurisdiction over the Depositor or any of
     its properties.

          (iii) Assuming due authorization,  execution and delivery by the other
     parties  hereto,  this  Agreement  constitutes  a valid,  legal and binding
     obligation of the Depositor,  enforceable against it in accordance with the
     terms  hereof,  except  as  the  enforcement  thereof  may  be  limited  by
     applicable  bankruptcy,  insolvency,  reorganization,  moratorium  or other
     similar  laws  affecting   creditors'   rights  generally  and  by  general
     principles  of equity  (whether  considered  in a  proceeding  or action in
     equity or at law).

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

          (v) No  litigation  is  pending  or,  to the  best of the  Depositor's
     knowledge, threatened against the Depositor the consequences of which would
     (A) prohibit its entering into this Agreement or that would  materially and
     adversely  affect the  condition  (financial or otherwise) or operations of
     the Depositor or its  properties,  (B) materially and adversely  affect its
     performance hereunder or thereunder, or (C) draw into question the validity
     of the Mortgage Loans, the Pooled Certificates,  the Swap Agreements or the
     Collateral  Sale  Agreement  or of  any  action  taken  or to be  taken  in
     connection with the obligations of the Depositor contemplated herein.

          (vi) All actions, approvals, consents, waivers, exemptions, variances,
     franchises, orders, permits,  authorizations,  rights and licenses required
     to be taken, given or obtained, as the case may be, by or from any federal,
     state  or other  governmental  authority  or  agency  (other  than any such
     actions,  approvals,  etc.,  under any state  securities  laws, real estate
     syndication or "Blue Sky" statutes, as to which the Depositor makes no such
     representation or warranty),  that are necessary or advisable in connection
     with the sale of the Mortgage Loans, the Pooled  Certificates and the other
     assets being sold hereunder and the execution and delivery by the Depositor
     of this Agreement, have been duly taken, given or obtained, as the case may
     be, are in full force and effect on the date hereof, are not subject to any
     pending proceeding or appeals  (administrative,  judicial or otherwise) and
     either the time within  which any appeal  therefrom  may be taken or review
     thereof may be obtained has expired or no review thereof may be obtained or
     appeal  therefrom  taken,  and are adequate to authorize this Agreement and
     the performance by the Depositor of its obligations hereunder.

          (vii) No  certificate of an officer,  statement  furnished in writing,
     report or  electronic  tape  delivered  pursuant to the terms hereof by the
     Depositor  contains or will contain any untrue statement of a material fact
     or omits or will  omit to state any  material  fact  necessary  to make the
     certificate, statement or report not misleading.

          (viii)  Immediately prior to the transfer and assignment  contemplated
     by this  Agreement,  the Depositor was the sole owner of each Mortgage Loan
     and each  Pooled  Certificate,  subject  to no liens,  charges,  mortgages,
     encumbrances  or rights of  others  except  liens  which  will be  released
     simultaneously  with such transfer or assignment;  and immediately upon the
     transfer and  assignment  contemplated  by this  Agreement,  the  Indenture
     Trustee  will hold  good and  indefeasible  title to,  and will be the sole
     owner of,  each  Mortgage  Loan and each Pooled  Certificate  subject to no
     liens, charges, mortgages, encumbrances or rights of others.

     (b)     It is understood and agreed that the representations and warranties
set  forth  in this Section 3.1 shall survive delivery of the Mortgage Loans and
Pooled Certificates to the Indenture Trustee.  Upon discovery by the Issuer, the
Servicer,  the  Depositor,  any  Subservicer,  the Note Insurer or the Indenture
Trustee  of  a  breach of any of the representations and warranties set forth in
this  Section  3.1  which  materially and adversely affects the interests of the
Owners  or  of  the  Note  Insurer, the party discovering such breach shall give
prompt  written  notice  to  the  other  Persons  listed  in  this  sentence.

     Section 3.2. Representations and Warranties of the Servicer.
                  ----------------------------------------------

     (a) The Servicer hereby  represents,  warrants and covenants to the Issuer,
the Depositor, and the Indenture Trustee, as of the Closing Date, that:

          (i) The Servicer is a corporation duly organized, validly existing and
     in good  standing  under  the  laws of the  State of  Delaware  and has all
     licenses necessary to carry out its business as now being conducted, and is
     licensed  and  qualified  to transact  business in and is in good  standing
     under  the laws of each  state in  which  any  Property  is  located  or is
     otherwise  exempt under applicable law from such licensing or qualification
     or is otherwise not required under  applicable law to effect such licensing
     or qualification and no demand for such licensing or qualification has been
     made upon the Servicer by any such state,  and in any event the Servicer is
     in  compliance  with the laws of any such state to the extent  necessary to
     ensure the  enforceability  of each  Mortgage Loan and the servicing of the
     Mortgage Loans in accordance with the terms of this Agreement.

          (ii) The Servicer has the full power and  authority and legal right to
     enter into and consummate all  transactions  contemplated by this Agreement
     and to conduct its business as presently conducted, has duly authorized the
     execution,  delivery and  performance  of this Agreement and any agreements
     contemplated  hereby,  has duly executed and delivered this Agreement,  and
     any agreements  contemplated  hereby,  and, assuming the due authorization,
     execution and delivery of this Agreement by the other parties hereto,  this
     Agreement  constitutes  a  legal,  valid  and  binding  obligation  of  the
     Servicer,  enforceable  against it in  accordance  with its terms,  and all
     requisite  corporate  action  has been taken by the  Servicer  to make this
     Agreement and all agreements contemplated hereby valid and binding upon the
     Servicer in accordance with their terms.

          (iii)  None of the  execution  and  delivery  of this  Agreement,  the
     consummation of the transactions contemplated hereby, or the fulfillment of
     or compliance with the terms and conditions of this Agreement will conflict
     with any of the terms,  conditions or provisions of the Servicer's  charter
     or by-laws or materially  conflict  with or result in a material  breach of
     any of the terms,  conditions or provisions of any legal restriction or any
     agreement or instrument to which the Servicer is now a party or by which it
     is bound, or constitute a default or result in an acceleration under any of
     the  foregoing,  or  result in the  material  violation  of any law,  rule,
     regulation, order, judgment or decree to which the Servicer or its property
     is subject or impair the ability of the Issuer or the Indenture Trustee, as
     the case may be, to  realize on the  Mortgage  Loans or impair the value of
     the Mortgage Loans.

          (iv) There is no litigation, suit, proceeding or investigation pending
     or  threatened,  or any order or decree  outstanding,  with  respect to the
     Servicer that is reasonably likely to have a material adverse effect on the
     sale  or  servicing  of  the  Mortgage  Loans,  the  execution,   delivery,
     performance or  enforceability  of this  Agreement,  or which is reasonably
     likely to have a material adverse effect on the financial  condition of the
     Servicer.

          (v) No  consent,  approval,  authorization  or order  of any  court or
     governmental  agency or body is required  for the  execution,  delivery and
     performance  by the Servicer of or  compliance  by the  Servicer  with this
     Agreement, except for consents,  approvals,  authorizations and orders that
     have been obtained.

          (vi) The  Servicer is an approved  servicer  of  residential  mortgage
     loans for Fannie Mae and Freddie Mac, with such facilities,  procedures and
     personnel  necessary for the sound  servicing of such mortgage  loans.  The
     Servicer is duly qualified,  licensed,  registered and otherwise authorized
     under all applicable  federal,  state and local laws, and  regulations,  if
     applicable,  meets the minimum capital requirements set forth by the Office
     of the  Comptroller  of the  Currency,  and is in  good  standing  to  sell
     mortgage loans to and service  mortgage loans for Fannie Mae or Freddie Mac
     and no event has occurred  that would make  Servicer  unable to comply with
     eligibility  requirements  or that  would  require  notification  to either
     Fannie Mae or Freddie Mac.

          (vii) The  Servicer  does not  believe,  nor does it have any cause or
     reason to believe, that it cannot perform each and every covenant contained
     in this Agreement.

          (viii) The Servicer  acknowledges  and agrees that the  Servicing  Fee
     represents  reasonable  compensation  for  performing  such services as are
     required of it as master servicer and that the  Subservicing Fee represents
     reasonable  compensation  to a Subservicer  for performing the servicing of
     the Mortgage Loans under this  Agreement and that the entire  Servicing Fee
     (and, to the extent received by the Servicer,  the Subservicing  Fee) shall
     be  treated  by  the  Servicer,   for  accounting  and  tax  purposes,   as
     compensation  for the master servicing and  administration  of the Mortgage
     Loans  pursuant to this Agreement (or the servicing and  administration  of
     the Mortgage Loans, as the case may be).

     (b)     It is understood and agreed that the representations and warranties
set forth in this Section 3.2 shall survive the Closing Date.  Upon discovery by
any  of  the  Issuer,  the  Servicer,  the  Depositor,  the  Note Insurer or the
Indenture  Trustee  of a breach of any of the representations and warranties set
forth in this Section 3.2 which materially and adversely affects the interest of
the  Owners or of the Note Insurer, the party discovering such breach shall give
prompt  written notice to the other parties.  Within 30 days of its discovery or
its  receipt  of  notice  of  breach, the Servicer shall cure such breach in all
material  respects  and,  upon  the  Servicer's  continued  failure to cure such
breach, the Servicer may thereafter be removed by the Indenture Trustee pursuant
to  Section  7.1 hereof; provided, however, that if the Servicer can demonstrate
to  the  reasonable  satisfaction  of  the  Note  Insurer  that it is diligently
pursuing  remedial  action,  then the cure period shall be extended for up to an
additional  30  days.

     Section  3.3.  Covenants  of the  Depositor.  (a)  Pursuant  to Section 2.1
                    ----------------------------
hereof,  the  Depositor  has conveyed to the Issuer all of the  Depositor's  (i)
right,  title  and  interest  in  its  rights  and  benefits,  but  none  of its
obligations or burdens,  under the Collateral Sale Agreement,  including without
limitation,  the benefit of the  representations,  warranties  and covenants and
cure, repurchase or substitution obligations of the Seller thereunder,  and (ii)
right,  title and interest,  subject to its obligations  and burdens,  under the
Swap Agreements. The Depositor hereby represents and warrants to the Issuer, the
Indenture Trustee for the benefit of the Owners, the  Certificateholders and the
Note Insurer that such assignment is valid,  enforceable and effective to permit
the  Indenture  Trustee  to enforce  the  obligations  of the  Seller  under the
Collateral  Sale  Agreement  and  of  the  Swap  Counterparty   under  the  Swap
Agreements. The Seller has made the representations and warranties regarding the
Mortgage Loans and the Pooled  Certificates as set forth in Part II of Exhibit D
hereto and in Section 3.1 of the Collateral  Sale  Agreement,  and has agreed to
take certain actions as specified in Part III of Exhibit D hereto and in Section
3.2 of the Collateral Sale Agreement.

     (b) It is understood and agreed that the representations and warranties set
forth  in  Part  II of  Exhibit  D and in  Section  3.1 of the  Collateral  Sale
Agreement  and the  covenants  set forth in Part III of Exhibit D and in Section
3.2 of the Collateral  Sale Agreement  shall survive  delivery of the respective
Mortgage  Loans  (including  Qualified  Replacement  Mortgages)  and the  Pooled
Certificates to the Issuer and the grant thereof to the Indenture Trustee.

     (c) Neither the Seller nor any  Affiliate has made any  representations  or
warranties,  whether express or implied,  to the Issuer, the Depositor or to the
Indenture  Trustee as to the  collectability of the Mortgage Loans or the Pooled
Certificates   or  the  solvency  of  the  Mortgagors,   or  any   guarantor(s),
endorser(s), co-maker(s), assuming party(ies) or the sufficiency or value, as of
the date of this  Agreement,  of any  Property,  or the yield to maturity of the
Pooled  Certificates,  except as specifically listed in Part II of Exhibit D and
in Section 3.2 of the Collateral Sale Agreement.

     Section 3.4. Representations and Warranties of the Issuer.
                  --------------------------------------------

     (a) The Issuer hereby represents,  warrants and covenants to the Depositor,
the Servicer, the Indenture Trustee, and the Note Insurer as of the Closing Date
as follows:

          (i) The Issuer is a statutory  business trust duly organized,  validly
     existing and in good standing under the laws of the State of Delaware.  The
     Issuer  has all  requisite  power  and  authority  to own and  operate  its
     properties,  to  carry  out its  business  as  presently  conducted  and as
     proposed to be conducted and to enter into and  discharge  its  obligations
     under this Agreement. The Issuer is duly qualified to do business and is in
     good  standing in each  jurisdiction  necessary to perform its  obligations
     under this Agreement.

          (ii) The  execution  and delivery of this  Agreement by the Issuer and
     its  performance  and compliance with the terms of this Agreement have been
     duly authorized by all necessary  action on the part of the Issuer and will
     not violate the Trust  Agreement or  Certificate  of Trust or  constitute a
     default (or an event which,  with notice of lapse of time,  or both,  would
     constitute  a  default),  under,  or result in a breach  of,  any  material
     contract,  agreement or other  instrument to which the Issuer is a party or
     by which the Issuer is bound or violate any  statute or any order,  rule or
     regulation  of any  court,  governmental  agency or body or other  tribunal
     having jurisdiction over the Issuer or any of its properties.

          (iii) Assuming due authorization,  execution and delivery by the other
     parties  hereto,  this  Agreement  constitutes  a valid,  legal and binding
     obligation of the Issuer,  enforceable  against it in  accordance  with the
     terms  hereof,  except  as  the  enforcement  thereof  may  be  limited  by
     applicable  bankruptcy,  insolvency,  reorganization,  moratorium  or other
     similar  laws  affecting   creditor's   rights  generally  and  by  general
     principles  of equity  (whether  considered  in a  proceeding  or action in
     equity or at law).

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

          (v) No  litigation  is  pending  or,  to  the  best  of  the  Issuer's
     knowledge,  threatened  against the Issuer the  consequences of which would
     prohibit its entering  into this  Agreement  or that would  materially  and
     adversely  affect the  condition  (financial or otherwise) or operations of
     the Issuer or its properties or the  consequences of which would materially
     and adversely affect its performance hereunder.

          (vi) All actions, approvals, consents, waivers, exemptions, variances,
     franchises, orders, permits,  authorizations,  rights and licenses required
     to be taken, given or obtained, as the case may be, by or from any federal,
     state  or other  governmental  authority  or  agency  (other  than any such
     actions,  approvals,  etc.,  under any state  securities  laws, real estate
     syndication  or "Blue Sky"  statutes,  as to which the Issuer makes no such
     representation or warranty),  that are necessary or advisable in connection
     with the purchase of the Mortgage Loans,  the Pooled  Certificates  and the
     other assets being  purchased  hereunder  and the execution and delivery by
     the Issuer of this  Agreement have been duly taken,  given or obtained,  as
     the case may be, are in full force and effect on the date  hereof,  are not
     subject to any pending proceeding or appeals  (administrative,  judicial or
     otherwise)  and either the time within  which any appeal  therefrom  may be
     taken or review  thereof may be obtained  has expired or no review  thereof
     may be obtained or appeal  therefrom  taken,  and are adequate to authorize
     this  Agreement  and  the  performance  by the  Issuer  of its  obligations
     hereunder.

     (b)     It is understood and agreed that the representations and warranties
set  forth  in this Section 3.4 shall survive delivery of the Mortgage Loans and
Pooled Certificates to the Indenture Trustee.  Upon discovery by the Issuer, the
Servicer,  the  Depositor,  any  Subservicer,  the Note Insurer or the Indenture
Trustee  of  a  breach of any of the representations and warranties set forth in
this  Section  3.4  which  materially and adversely affects the interests of the
Owners  or  of  the  Note  Insurer, the party discovering such breach shall give
prompt  written  notice  to  the  Persons  listed  in  this  sentence.

                                   ARTICLE IV

                          Servicing and Administration
                                of Mortgage Loans

     Section 4.1.  General Servicing Procedures.  (a)  The Servicer shall master
                   ----------------------------
service  and  administer the various agreements with the Subservicers to service
the  Mortgage Loans on behalf of the Issuer and for the benefit of the Indenture
Trustee, the Note Insurer, Certificateholders and Noteholders in accordance with
the terms hereof and in the same manner in which, and with the same care, skill,
prudence  and  diligence  with which, it master services and administers similar
servicing  agreements  for  mortgage  loans for other portfolios, and shall have
full  power  and  authority  to  do  or  cause  to be done any and all things in
connection  with  such  master  servicing  and  administration which it may deem
necessary  or  desirable, including, without limitation, the power and authority
to bring actions and defend the Trust Estate on behalf of the Issuer in order to
enforce  the  terms  of  the  Mortgage Notes and such servicing agreements.  The
Servicer  may  perform  its  master servicing responsibilities through agents or
independent  contractors,  but  shall  not  thereby  be released from any of its
responsibilities  hereunder, and the Servicer shall diligently pursue all of its
rights  against  such  agents  or  independent  contractors.

     (b) The Servicer  shall make  reasonable  efforts to collect or cause to be
collected 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 the Note  Insurance  Policy,  any FHA
insurance policy or VA guaranty,  any hazard insurance policy, and federal flood
insurance,  cause to be followed such collection procedures as are followed with
respect  to  mortgage  loans  comparable  to the  Mortgage  Loans  and  held  in
portfolios  of  responsible  mortgage  lenders  in the local  areas  where  each
Property is located.  The  Servicer  shall  enforce  "due-on-sale"  clauses with
respect to the related  Mortgage Loans, to the extent  permitted by law, subject
to the provisions set forth in Section 4.12.

     (c) Consistent  with the foregoing,  the Servicer may in its discretion (i)
waive or  cause to be  waived  any  assumption  fee or late  payment  charge  in
connection  with  the  prepayment  of any  Mortgage  Loan  and  (ii)  only  upon
determining  that the coverage of any  applicable  Insurance  Policy or guaranty
related to a Mortgage Loan will not be materially adversely affected,  arrange a
schedule, running for no more than 180 days after the first delinquent Due Date,
for  payment  of any  delinquent  installment  on any  Mortgage  Note or for the
liquidation of delinquent items (provided that coverage of applicable  Insurance
Policies will not be materially adversely affected).

     (d) Consistent  with the terms of this Section 4.1, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the  postponement  of
strict  compliance  with any such term or in any manner grant  indulgence to any
Mortgagor if it has determined,  exercising its good faith business  judgment in
the same manner as it would if it were the owner of the related  Mortgage  Loan,
that the security for, and the timely and full  collectability of, such Mortgage
Loan would not be adversely affected by such waiver, modification,  postponement
or indulgence;  provided, however, that (unless the Mortgagor is in default with
respect to the Mortgage Loan or in the reasonable  judgment of the Servicer such
default is imminent) the Servicer shall not permit any modification with respect
to any Mortgage Loan that would (i) change the applicable  Coupon Rate, defer or
forgive  the  payment of any  principal  or  interest,  reduce  the  outstanding
principal  balance (except for actual payments of principal) or extend the final
maturity date with respect to such Mortgage Loan, or (ii) be  inconsistent  with
the terms of the Note Insurance Policy,  and any applicable FHA insurance policy
or VA guaranty,  hazard  insurance  policy or federal  flood  insurance  policy.
Notwithstanding  the foregoing,  the Servicer shall not permit any  modification
with respect to any Mortgage Loan that would both  constitute a sale or exchange
of such Mortgage Loan within the meaning of Section 1001 of the Code  (including
any proposed, temporary or final regulations promulgated thereunder) (other than
in  connection  with a proposed  conveyance  or assumption of such Mortgage Loan
that is treated as a  Prepayment  or in a default  situation  or upon receipt of
advice of counsel  that such a sale or  exchange  would not have an adverse  tax
effect on the Issuer, the Noteholders and the Certificateholders).

     (e) The Servicer is hereby  authorized  and empowered by the Issuer and the
Indenture  Trustee to execute and deliver or cause to be executed and  delivered
on  behalf  of the  Noteholders,  and the  Issuer  or any of  them,  any and all
instruments  of  satisfaction  or  cancellation,  or of partial or full release,
discharge or modification, assignments of Mortgages and endorsements of Mortgage
Notes in connection with refinancings (in  jurisdictions  where such assignments
are the  customary and usual  standard of practice of mortgage  lenders) and all
other  comparable  instruments,  with  respect  to the  Mortgage  Loans and with
respect to the  Properties.  The Indenture  Trustee shall execute and furnish to
the  Servicer,  at the  Servicer's  direction,  any powers of attorney and other
documents  prepared  by  the  Servicer  and  determined  by the  Servicer  to be
necessary or  appropriate  to enable the Servicer to carry out its  supervisory,
servicing and administrative duties under this Agreement.

     (f) The Servicer shall, and shall cause each Subservicer to, obtain (to the
extent generally commercially available from time to time) and maintain fidelity
bond and errors and omissions  coverage  acceptable to Fannie Mae or Freddie Mac
with  respect to their  obligations  under  this  Agreement  and the  applicable
Subservicing  Agreement,  respectively.  The  Servicer or each  Subservicer,  as
applicable, shall establish escrow accounts for, or pay when due (by means of an
advance),  any tax liens in connection  with the Properties that are not paid by
the Mortgagors when due to the extent that any such payment would not constitute
a Nonrecoverable Advance when made.  Notwithstanding the foregoing, the Servicer
shall not permit any  modification  with respect to any Mortgage Loan that would
both  constitute a sale or exchange of such  Mortgage Loan within the meaning of
Section 1001 of the Code (including any proposed, temporary or final regulations
promulgated  thereunder) (other than in connection with a proposed conveyance or
assumption of such Mortgage Loan that is treated as a Principal Prepayment or in
a default  situation  or upon  receipt of advice of counsel  that such a sale or
exchange would not have an adverse tax effect on the Issuer, the Noteholders and
the  Certificateholders).  The  Servicer  shall be entitled to approve a request
from a Mortgagor for a partial release of the related Property,  the granting of
an easement thereon in favor of another Person,  any alteration or demolition of
the related  Property or other similar matters if it has determined,  exercising
its good faith  business  judgment in the same manner as it would if it were the
owner of the related  Mortgage  Loan,  that the security for, and the timely and
full  collectability  of, such  Mortgage  Loan would not be  adversely  affected
thereby.

     (g) In connection  with the servicing  and  administering  of each Mortgage
Loan,  the Servicer and any  affiliate of the Servicer (i) may perform  services
such as  appraisals,  default  management  and  brokerage  services that are not
customarily  provided by servicers of mortgage  loans,  and shall be entitled to
reasonable  compensation  therefor  and (ii) may, at its own  discretion  and on
behalf of the Issuer,  obtain credit information in the form of a "credit score"
from a credit repository.

     Section 4.2 [Reserved].

     Section 4.3 Subservicing Agreements Between Servicer and Subservicers.  The
                 ---------------------------------------------------------
Servicer may directly or indirectly enter into  Subservicing  Agreements for any
servicing and  administration  of Mortgage Loans (to the extent permitted in any
applicable  agreement  governing  the  servicing  of  Mortgage  Loans)  with any
institution  which is in  compliance  with the laws of each state  necessary  to
enable it to perform  its  obligations  under such  Subservicing  Agreement  and
(x)(i) has been designated an approved  seller-servicer by Freddie Mac or Fannie
Mae for first  mortgage  loans and (ii) has equity of at least  $15,000,000,  as
determined in accordance with generally accepted accounting principles by a firm
of certified  public  accountants  of national  reputation  or (y) is a Servicer
Affiliate or (z) is approved by the Note Insurer. The Servicer shall give notice
to the Depositor,  the Indenture Trustee, the Owner Trustee, the Rating Agencies
and the Note Insurer of the appointment of any Subservicer. For purposes of this
Agreement,  the Servicer  shall be deemed to have received  payments on Mortgage
Loans  when  any  such   Subservicer  has  received  such  payments.   Any  such
Subservicing  Agreement  shall be consistent with and not violate the provisions
of this  Agreement.  The  Subservicers  as of the Closing  Date and the Mortgage
Loans which they subservice are identified on the Schedule of Mortgage Loans.

     Section  4.4  Successor  Subservicers.  The  Servicer  shall be entitled to
                   -----------------------
terminate any Subservicing  Agreement on any agreement between a Subservicer and
the Issuer in  accordance  with the terms and  conditions  of such  Subservicing
Agreement and to either itself  directly  service the related  Mortgage Loans or
enter into a Subservicing Agreement with a successor Subservicer which qualifies
under Section 4.3.

     Section 4.5 [Reserved].

     Section 4.6 [Reserved].

     Section  4.7  Assumption  or  Termination  of  Subservicing   Agreement  by
                   -------------------------------------------------------------
Indenture Trustee. In the event the Servicer,  or any successor Servicer,  shall
-----------------
for any  reason no longer be the  Servicer  (including  by reason of a  Servicer
Termination  Event), the Indenture Trustee as Indenture Trustee hereunder or its
designee  shall  thereupon  assume  all of the  rights  and  obligations  of the
Servicer under the Subservicing  Agreements with respect to the related Mortgage
Loans  unless  the  Indenture  Trustee  elects  to  terminate  the  Subservicing
Agreements  with respect to such  Mortgage  Loans in  accordance  with the terms
thereof.  The Indenture Trustee,  its designee or the successor  Subservicer for
the  Indenture  Trustee  shall be deemed to have  assumed all of the  Servicer's
interest therein with respect to the related Mortgage Loans and to have replaced
the Servicer as a party to the Subservicing  Agreements to the same extent as if
the  rights  and  duties  under the  Subservicing  Agreements  relating  to such
Mortgage Loans had been assigned to the assuming party, except that the Servicer
shall  not  thereby  be  relieved  of any  liability  or  obligations  under the
Subservicing  Agreements  with respect to the Servicer's  duties to be performed
prior to its termination hereunder.

The  Servicer  at  its  expense  shall,  upon  request of the Indenture Trustee,
deliver  to  the  assuming  party  all  documents  and  records  relating to the
Subservicing Agreements and the Mortgage Loans then being master serviced by the
Servicer  and  an  accounting  of amounts collected and held by the Servicer and
otherwise  use  its best efforts to effect the orderly and efficient transfer of
the rights and duties under the related Subservicing Agreements relating to such
Mortgage  Loans  to  the  assuming  party.

     Section  4.8  Principal  and  Interest  Accounts.
                   ----------------------------------

     (a) (i) The Servicer shall cause to be  established  and maintained by each
Subservicer   under  the  Servicer's   supervision   at  Designated   Depository
Institutions  one or more  separate  accounts,  each a  Principal  and  Interest
Account,  and shall deposit or cause to be deposited  therein daily  collections
other than  amounts  escrowed  for taxes and  insurance  related to the Mortgage
Loans  required by the  Subservicing  Agreement to be so deposited no later than
the  first  Business  Day after  receipt.  Proceeds  received  with  respect  to
individual  Mortgage Loans from any title,  hazard,  or FHA insurance policy, VA
guaranty,  primary mortgage guaranty insurance policy, or other Insurance Policy
covering such Mortgage Loans shall be deposited  first into one or more separate
escrow accounts to be held at Designated Depository Institutions if required for
the restoration or repair of the related Property.  Proceeds from such Insurance
Policies not so applied shall be deposited in the related Principal and Interest
Account,  and shall be applied to the balances of the related  Mortgage Loans as
payments of interest and principal.

     (b) The Servicer is hereby authorized to make withdrawals from and to issue
drafts against the Principal and Interest  Accounts for the purposes required or
permitted by this  Agreement.  Each Principal and Interest  Account shall bear a
designation   clearly  showing  the  respective   interests  of  the  applicable
Subservicer,  the Indenture  Trustee,  and the Servicer,  in  substantially  the
following forms:

          (i) [Subservicer's Name], as agent for Indenture Trustee and/or bailee
     of principal  and interest  custodial  account for PNC Mortgage  Securities
     Corp.,  its successors and assigns,  for various owners of interests in TMA
     Mortgage Funding Trust I mortgage-backed pools; or

          (ii) [Subservicer's Name] in trust for PNC Mortgage Securities Corp.;

     (c) The Servicer  hereby  undertakes  to assure  remittance to the Servicer
Collection  Account of all amounts relating to the Mortgage Loans that have been
collected  by any  Subservicer  and are due to the Servicer  Collection  Account
pursuant to Section 4.8A of this Agreement.

     (d)  Investment  earnings  on  funds  held in the  Principal  and  Interest
Accounts are for the account of the Subservicers or the Servicer, as applicable.
     Section 4.8A. The Servicer Collection Account; Eligible Investments.
                   -----------------------------------------------------

     (a) The Servicer  shall  establish  and maintain at one or more  Designated
Depository  Institutions an account (the "Servicer  Collection  Account") in the
name of the Trust,  which shall be a  segregated  account  held in trust for the
benefit of the Owners of the Notes and the Note Insurer.

     (b) Not later than the  Subservicer  Remittance  Date,  the Servicer  shall
withdraw  or  direct  the  withdrawal  of funds in the  Principal  and  Interest
Accounts,  for  deposit  in  the  Servicer  Collection  Account,  in  an  amount
representing:

          (i) Scheduled  installments  of principal and interest on the Mortgage
     Loans received or advanced by the applicable Subservicers which were due on
     the Due Date prior to such Subservicer Remittance Date, net of Subservicing
     Fees due the applicable  Subservicers  and less any amounts to be withdrawn
     later by the  applicable  Subservicers  from the  applicable  Principal and
     Interest Accounts; and

          (ii)  Prepayments  and the proceeds of other types of  liquidations of
     the Mortgage Loans received by the applicable Subservicer for such Mortgage
     Loans during the applicable Remittance Period, with interest to the date of
     Prepayment  or  liquidation  less any amounts to be withdrawn  later by the
     applicable Subservicers.

     (c) At its option, the Servicer may invest funds on deposit in the Servicer
Collection  Account during any period prior to the Subservicer  Remittances Date
only as set forth in Section 4.8A(d). The Servicer shall bear any and all losses
incurred on any investments made with such funds and shall be entitled to retain
all gains realized on such investments as additional servicing compensation. Not
later than the Remittance  Date, the Servicer shall remit such funds, net of any
gains  earned  thereon to the  Indenture  Trustee  for  deposit,  in the Trustee
Collection Account.

     (d) Funds held in the Servicer  Collection Account shall be invested in (i)
one or more Eligible  Investments  which shall in no event mature later than the
Business  Day prior to the  related  Remittance  Date  (except if such  Eligible
Investments are obligations of the Indenture Trustee,  such Eligible Investments
may mature on the Remittance  Date), or (ii) such other  instruments as shall be
required  to  maintain  the  ratings  of the Notes,  without  regard to the Note
Insurance Policy, and acceptable to the Note Insurer.

     Section  4.9.  Delinquency  Advances  and  Servicing  Advances.
                    -----------------------------------------------

     (a) To the extent described below, the Servicer is obligated to advance its
own funds to the Servicer  Collection Account to cover any shortfall between (i)
payments  scheduled  to be received in respect of Mortgage  Loans,  and (ii) the
amounts actually deposited in the Servicer Collection Account on account of such
payments; the Servicer's obligation to make any advance or advances described in
this  Section 4.9 is  effective  only to the extent that such advance is, in the
good faith  judgment  of the  Servicer  made on or before the  Remittance  Date,
reimbursable  from  Insurance  Proceeds or  Liquidation  Proceeds of the related
Mortgage  Loans or  recoverable  as late  Monthly  Payments  with respect to the
related  Mortgage Loans or otherwise.  Such amounts so advanced are "Delinquency
Advances."

     (b) On or before each Remittance Date, the Servicer shall determine whether
or not it will make a Delinquency Advance on the related Remittance Date (in the
event that the  applicable  Subservicer  fails to make such  advances) and shall
furnish a written statement to the Certificateholder, the Indenture Trustee, the
Paying Agent,  if different  than the Indenture  Trustee,  and to any Noteholder
requesting the same,  setting forth the aggregate  amount to be remitted on such
Remittance  Date on account of principal and interest in respect of the Mortgage
Loans, stated separately.  In the event that full scheduled amounts of principal
and interest in respect of the Mortgage Loans shall not have been received by or
on behalf of the Servicer prior to such  Remittance  Date and the Servicer shall
have determined that a Delinquency Advance shall be made in accordance with this
Section  4.9,  the  Servicer  shall so specify and shall  specify the  aggregate
amount of such advance.

     (c) If the amount on  deposit in a  Subservicer's  Principal  and  Interest
Account as of any Subservicer  Remittance Date is less than the collections from
Mortgage Loans with respect to the related Remittance Period, the Servicer shall
cause the  Subservicer to deposit to such  Subservicer's  Principal and Interest
Account a sufficient amount of such  Subservicer's own funds to make such amount
equal  to the  related  Subservicer  Monthly  Remittance  for  such  Subservicer
Remittance  Date. Such amounts of the  Subservicer's  own funds so deposited are
also Delinquency Advances.

     (d) The Servicer  will pay all  reasonable  and  customary  "out-of-pocket"
costs and expenses (including reasonable legal fees) incurred in the performance
of its  servicing  obligations  including,  but not  limited to, the cost of (i)
advancing Preservation  Expenses,  (ii) any enforcement or judicial proceedings,
including  foreclosures,  (iii) the management  and  liquidation of REO Property
(including,  without  limitation,  advancing  realtors'  commissions)  and  (iv)
advancing  taxes,  insurance and other charges  against the Property.  Each such
expenditure  will  constitute  a "Servicing  Advance."  The Servicer may recover
Servicing  Advances from the Mortgagors to the extent  permitted by the Mortgage
Loans or, if not  theretofore  recovered from the Mortgagor on whose behalf such
Servicing  Advance  was  made,  from  Liquidation  Proceeds  realized  upon  the
liquidation  of  the  related  Mortgage  Loan.  Delinquency  Advances  shall  be
reimbursed as provided in Section 4.10A.

     (e) In the event that the Servicer  shall be required to make a Delinquency
Advance,  it shall on the  Remittance  Date either (i)  deposit in the  Servicer
Collection  Account an amount equal to such  Delinquency  Advance,  (ii) make an
appropriate entry in the records of the Servicer  Collection  Account that funds
in such account being held for future  distribution  or withdrawal have been, as
permitted  by this Section  4.9,  used by the Servicer to make such  Delinquency
Advance,  or (iii) make advances in the form of any  combination of (i) and (ii)
aggregating  the amount of such  Delinquency  Advance.  Any funds being held for
future distribution to Noteholders and so used shall be replaced by the Servicer
by deposit in the Servicer Collection Account on the Subservicer Remittance Date
to the extent that funds in the Servicer  Collection Account on such Subservicer
Remittance  Date with respect to the Mortgage  Loans shall be less than payments
to  Noteholders  required to be made on such date with  respect to the  Mortgage
Loans.  Under each Subservicing  Agreement,  the Servicer is entitled to receive
from the Principal and Interest Accounts established by the Subservicers amounts
received by the  applicable  Subservicers  on particular  Mortgage Loans as late
payments of  principal  and  interest or as  Liquidation  Proceeds or  Insurance
Proceeds and respecting which the Servicer has made an unreimbursed  Delinquency
Advance. The Servicer is also entitled to receive other amounts from the related
Principal and Interest  Accounts  established by the  Subservicers  to reimburse
itself for prior  Nonrecoverable  Advances respecting Mortgage Loans serviced by
such  Subservicers.  The Servicer  shall  deposit  these amounts in the Servicer
Collection  Account prior to withdrawal  pursuant to Section 4.8A. In accordance
with Section 4.9A,  Delinquency  Advances are  reimbursable to the Servicer from
cash in the Servicer  Collection  Account to the extent that the Servicer  shall
determine that any such advances  previously  made are  Nonrecoverable  Advances
pursuant to Sections 4.9 and 4.9A.

     Section  4.9A  Nonrecoverable  Advances.  Any advance previously made by  a
               -------------------------
Subservicer  pursuant  to  its Subservicing Agreement with respect to a Mortgage
Loan  or  by  the  Servicer  that the Servicer shall determine in its good faith
judgment not to be ultimately recoverable from Insurance Proceeds or Liquidation
Proceeds  or otherwise with respect to such Mortgage Loan or recoverable as late
Monthly  Payments with respect to such Mortgage Loan, shall be a "Nonrecoverable
Advance."   The  determination  by  the  Servicer  that  it  or  the  applicable
Subservicer  has  made  a  Nonrecoverable  Advance  or  that  any  advance would
constitute  a  Nonrecoverable  Advance,  shall  be  evidenced  by  an  Officer's
Certificate  of  the  Servicer  delivered  to the Indenture Trustee and the Note
Insurer on the Subservicer Remittance Date and shall detail the reasons for such
determination.  Notwithstanding  any  other  provision  of  this  Agreement, any
insurance policy relating to the Mortgage Loans, or any other agreement relating
to  the  Mortgage  Loans to which the Servicer is a party, (a) the Servicer, and
each  Subservicer  shall  not  be  obligated to, and shall not, make any advance
that, after reasonable inquiry and in its sole discretion, the Servicer, or such
Subservicer  shall  determine  would  be  a  Nonrecoverable Advance, and (b) the
Servicer,  and  each  Subservicer  shall  be  entitled  to reimbursement for any
advance  as  provided  in  Section  4.9  of  this  Agreement.

     Section  4.10.  Compensating  Interest.  A full month's interest at a  rate
                ----------------------
equal  to the applicable Coupon Rate with respect to each Mortgage Loan less the
sum of

          (i) the Monthly Servicing Fee and (ii) Subservicing Fee, is due to the
     Indenture  Trustee  on the Loan  Balance  of each  Mortgage  Loan as of the
     beginning of each  Remittance  Period.  If a Prepayment  of a Mortgage Loan
     occurs  during any  calendar  month,  any  difference  between the interest
     collected  from the  Mortgagor  during  such  calendar  month  and the full
     month's  interest at the applicable  Coupon Rate less the  Subservicing Fee
     ("Compensating  Interest") shall be deposited by each Subservicer  prior to
     the Subservicer  Remittance Date to the Principal and Interest  Account and
     shall be included  in the  related  Subservicer  Monthly  Remittance  to be
     remitted  to, or drafted  by, the  Servicer on the  Subservicer  Remittance
     Date;  provided,  however,  that the  Subservicer  shall not be required to
            --------   -------
     deposit  Compensating  Interest in respect of Prepayments in an amount that
     exceeds the  Subservicing  Fee received by such  Subservicer  for the prior
     calendar  month with respect to the Mortgage Loan  subserviced  by it. If a
     Subservicer fails to make some or all of a required  Compensating  Interest
     payment,  the Servicer will pay, up to the amount of its Servicing Fee with
     respect to all Mortgage Loans being subserviced by such  Subservicer,  plus
     investment  income  in the  Servicer  Collection  Account  relating  to all
     Mortgage Loans being  subserviced  by such  Subservicer,  the  Compensating
     Interest  payment that should have been made by such  Subservicer,  but was
     not, by depositing such Compensating  Interest into the Servicer Collection
     Account on the Remittance  Date.  Neither the Subservicers nor the Servicer
     shall be entitled to reimbursement for Compensating Interest payments.

     Section 4.10A Permitted  Withdrawals from the Servicer  Collection  Account
                   -------------------------------------------------------------
and Principal  and  Interest  Accounts.
--------------------------------------

     (a) The Servicer is authorized to make withdrawals, from time to time, from
the  Servicer   Collection  Account  or  the  Principal  and  Interest  Accounts
established by the Subservicers of amounts  deposited  therein in respect of the
Mortgage Loans, as follows:

          (i) To reimburse itself or the applicable  Subservicer for Delinquency
     Advances made pursuant to Section 4.9 of this  Agreement or a  Subservicing
     Agreement, such right to reimbursement pursuant to this paragraph (i) being
     limited to amounts received on particular  Mortgage Loans  (including,  for
     this purpose,  Insurance Proceeds and Liquidation Proceeds) which represent
     late  recoveries of principal  and/or  interest  respecting  which any such
     Delinquency Advance was made;

          (ii) To reimburse  itself or the  applicable  Subservicer  for amounts
     expended by or for the account of the  Servicer  pursuant to Section 4.9 or
     amounts expended by such Subservicer pursuant to the Subservicing Agreement
     or an agreement between a Subservicer and the Issuer in connection with the
     restoration of property damaged by an uninsured cause or in connection with
     the liquidation of a Mortgage Loan;

          (iii) To pay to itself,  with respect to the related  Mortgage  Loans,
     the Servicing Fee as to which no prior  withdrawals from funds deposited by
     the Servicer have been made;

          (iv) To reimburse  itself or the applicable  Subservicer  for advances
     made  with  respect  to  related  Mortgage  Loans  which the  Servicer  has
     determined to be Nonrecoverable Advances;

          (v) To pay to itself reinvestment  earnings deposited or earned in the
     Servicer Collection Account to which it is entitled and to reimburse itself
     for expenses  incurred by and  reimbursable to it pursuant to Sections 4.9,
     4.24 and 6.3;

          (vi) To remit to the  Indenture  Trustee  for  deposit in the  Trustee
     Collection Account, not later than the related Remittance Date, the amounts
     specified in Section 5.2(a);

          (vii) To withdraw amounts that have been deposited in error; and

          (viii) After making or providing for the above  withdrawals,  to clear
     and  terminate  the  Servicer  Collection  Account  and the  Principal  and
     Interest  Accounts  following  termination  of this  Agreement  pursuant to
     Section 8.1. Since, in connection with  withdrawals  pursuant to paragraphs
     (i) and (ii), the Servicer's  entitlement thereto is limited to collections
     or other  recoveries  on the related  Mortgage  Loan,  the  Servicer or the
     applicable Subservicer shall keep and maintain separate accounting for each
     Mortgage Loan, for the purpose of justifying any such withdrawals.

     (b)     The  Servicer  is  authorized to make withdrawals from time to time
from  the  Servicer  Collection  Account to reimburse itself for advances it has
made  pursuant to Section 4.9 hereof that it has determined to be Nonrecoverable
Advances.

Section  4.11.  Maintenance  of  Insurance;  Collections  Thereunder.
                ----------------------------------------------------

     (a) The Servicer shall use commercially  reasonable efforts to keep, and to
cause the  Subservicers to keep, in full force and effect each primary  mortgage
guaranty  insurance  policy  required  with respect to a Mortgage  Loan,  in the
manner  set  forth in the  applicable  Subservicing  Agreement,  until no longer
required.  Notwithstanding the foregoing,  the Servicer shall have no obligation
to maintain such primary mortgage guaranty  insurance policy for a Mortgage Loan
for which the  outstanding  Principal  Balance thereof at any time subsequent to
origination was 80% or less of the sum of (i) the value of the related  Property
(as determined by the appraisal obtained at the time of origination and (ii) the
value of any Additional  Collateral (as determined at the time of origination)),
unless required by applicable law.

     (b) Unless  required by  applicable  law, the Servicer  shall not cancel or
refuse to renew,  or allow any  Subservicer  under its  supervision to cancel or
refuse to renew, any such primary mortgage  guaranty  insurance policy in effect
at the date of the initial  issuance of the Notes that is required to be kept in
force  hereunder;   provided,   however,  that  neither  the  Servicer  nor  any
Subservicer  shall  advance  funds for the  payment of any premium due under any
primary mortgage  guaranty  insurance if it shall determine that such an advance
would be a Nonrecoverable Advance.

     (c) The Servicer shall cause to be maintained for each Mortgage Loan (other
than a Cooperative  Loan) fire and hazard insurance with extended coverage in an
amount which is not less than the original  principal  balance of such  Mortgage
Loan,  except in cases approved by the Servicer in which such amount exceeds the
value of the improvements to the Property.  The Servicer shall also require fire
and hazard insurance with extended  coverage in a comparable  amount on property
acquired upon foreclosure,  or deed in lieu of foreclosure, of any Mortgage Loan
(other than a Cooperative  Loan). Any amounts  collected under any such policies
(other than  amounts to be applied to the  restoration  or repair of the related
Property) shall be deposited into the Principal and Interest Account, subject to
withdrawal  pursuant to the  applicable  Subservicing  Agreement and pursuant to
Sections 4.8, 4.8A and 4.10A hereof.

     (d) Where any part of any  improvement  to the  Property  (other  than with
respect to a  Cooperative  Loan) is located in a  federally  designated  special
flood hazard area and in a community  which  participates  in the National Flood
Insurance  Program at the time of origination of the related  Mortgage Loan, the
Servicer  shall cause  flood  insurance  to be  provided.  The hazard  insurance
coverage  required  by  this  Section  4.11  may be met  with  blanket  policies
providing protection  equivalent to individual policies otherwise required.  The
Servicer  or the  applicable  Subservicer  shall be  responsible  for paying any
deductible amount on any such blanket policy. The Servicer agrees to present, or
cause  to be  presented,  on  behalf  of and for the  benefit  of the  Indenture
Trustee, the Noteholders,  the Note Insurer,  and the Swap Counterparty,  claims
under the hazard  insurance  policy  respecting  any Mortgage  Loan, and in this
regard to take such reasonable  actions as shall be necessary to permit recovery
under such policy.

     (e) Any unreimbursed costs incurred in maintaining any insurance  described
in this Section 4.11 shall be recoverable as an advance by the Servicer from the
Servicer Collection  Account.  Such insurance shall be with insurers approved by
the Servicer and Fannie Mae or Freddie Mac.  Other  additional  insurance may be
required  of a  Mortgagor,  in  addition  to  that  required  pursuant  to  such
applicable  laws and  regulations  as shall at any time be in force and as shall
require such additional insurance.

     Section 4.12.  Due-on-Sale Clauses; Assumption and Substitution Agreements.
                     -----------------------------------------------------------
When  any  Property  has  been  or is about to be conveyed by the Mortgagor, the
Servicer  shall,  to  the extent it has knowledge of such prospective conveyance
and  prior  to the time of the consummation of such conveyance and to the extent
permitted  in  the  applicable Subservicing Agreement or other agreement between
such  Subservicer  and the Issuer, exercise rights to accelerate the maturity of
such  Mortgage  Loan,  to  the extent that such acceleration is permitted by the
terms  of  the  related Mortgage Note, under any "due-on-sale" clause applicable
thereto;  provided, however, that the Servicer shall not exercise any such right
if  the  due-on-sale  clause,  in  the reasonable belief of the Servicer, is not
enforceable  under  applicable  law  or  if  such  exercise  would  result  in
non-coverage  of  any  resulting  loss that would otherwise be covered under any
insurance  policy.  In the event the Servicer is prohibited from exercising such
right,  the  Servicer  is  authorized  to  take  or enter into an assumption and
modification agreement from or with the Person to whom a Property has been or is
about  to  be  conveyed,  pursuant to which such Person becomes liable under the
Mortgage  Note  and,  unless  prohibited  by  applicable state law or unless the
Mortgage  Note  contains a provision allowing a qualified borrower to assume the
Mortgage  Note, the Mortgagor remains liable thereon; provided that the Mortgage
Loan shall continue to be covered (if so covered before the Servicer enters such
agreement)  by  any  related  primary  mortgage  guaranty insurance policy.  The
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 Mortgagor and becomes liable under
the  Mortgage  Note.  The  Servicer will cause the Subservicer not to enter into
any  substitution or assumption with respect to a Mortgage Loan unless permitted
by  applicable  law  and  if  such substitution or assumption shall constitute a
"significant  modification" effecting an exchange or reissuance of such Mortgage
Loan  under  the  Code  (or  Treasury  regulations promulgated thereunder in the
absence  of advice of counsel that a significant modification of a Mortgage Loan
would  not  have a material adverse effect on the Noteholders, the Issuer or the
Certificateholders).  The  Servicer  shall notify the Indenture Trustee that any
such  substitution  or  assumption agreement has been completed by forwarding to
the  Indenture  Trustee  the  original  copy  of such substitution or assumption
agreement  and  other  documents and instruments constituting a part thereof. In
connection  with any such assumption or substitution agreement, the terms of the
related  Mortgage Note shall not be changed. Any fee collected by the applicable
Subservicer  for  entering  into  an  assumption  or  substitution  of liability
agreement  shall  be  retained  by  such  Subservicer  as  additional  servicing
compensation.

Notwithstanding  the  foregoing  paragraph  or  any  other  provision  of  this
Agreement,  the  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 any assumption which the Servicer or the
Subservicer may be restricted by law from preventing, for any reason whatsoever.

     Section  4.13.  Realization  Upon  Defaulted  Mortgage  Loans.
                     ---------------------------------------------

     (a) The Servicer shall foreclose upon or otherwise  comparably  convert, or
cause to be  foreclosed  upon or  comparably  converted,  the  ownership  of any
Property  securing a Mortgage Loan which comes into and continues in default and
as to  which  no  satisfactory  arrangements  can  be  made  for  collection  of
delinquent  payments  pursuant to Section  4.1. In lieu of such  foreclosure  or
other conversion,  and taking into  consideration the desirability of maximizing
net  Liquidation  Proceeds  after  taking into  account the effect of  Insurance
Proceeds upon Liquidation  Proceeds,  the Servicer may, to the extent consistent
with prudent  mortgage loan servicing  practices,  accept a payment of less than
the outstanding Loan Balance of a delinquent  Mortgage Loan in full satisfaction
of the indebtedness  evidenced by the related Mortgage Note and release the lien
of the related  Mortgage  upon receipt of such payment.  The Servicer  shall not
foreclose  upon or  otherwise  comparably  convert a Property if the Servicer is
aware of evidence of toxic waste,  other hazardous  substances or other evidence
of environmental contamination thereon and the Servicer determines that it would
be imprudent to do so. In connection with such foreclosure or other  conversion,
the Servicer  shall cause to be followed  such  practices  and  procedures as it
shall deem  necessary or  advisable  and as shall be normal and usual in general
mortgage servicing  activities.  The foregoing is subject to the provision that,
in the case of damage to a Property from an uninsured  cause, the Servicer shall
not be required to advance its own funds towards the restoration of the property
unless it shall be determined  in the sole  judgment of the  Servicer,  (i) that
such  restoration will increase the proceeds of liquidation of the Mortgage Loan
after  reimbursement  to itself for such  expenses,  and (ii) that such expenses
will be recoverable to it through  Liquidation  Proceeds.  The Servicer shall be
responsible  for  all  other  costs  and  expenses  incurred  by it in any  such
proceedings;  provided,  however,  that it shall be  entitled  to  reimbursement
thereof  (as well as its  normal  servicing  compensation)  as an  advance.  The
Servicer  shall  maintain   information  required  for  tax  reporting  purposes
regarding  any  Property  which is  abandoned  or which has been  foreclosed  or
otherwise  comparably  converted.  The Servicer shall report such information to
the  Internal  Revenue  Service  and the  Mortgagor  in the manner  required  by
applicable law.

     (b) Notwithstanding any other provision of this Agreement, the Servicer and
the Indenture Trustee, as applicable,  shall comply with all federal withholding
requirements  with  respect to payments to  Noteholders  of interest or original
issue discount that the Servicer or the Indenture  Trustee  reasonably  believes
are applicable under the Code. The consent of Noteholders  shall not be required
for any such  withholding.  Without limiting the foregoing,  the Servicer agrees
that it will not withhold with respect to payments of interest or original issue
discount  in the  case of a  Noteholder  that  has  furnished  or  caused  to be
furnished an effective Form W-8 or an acceptable  substitute form or a successor
form  and who is not a "10  percent  shareholder"  within  the  meaning  of Code
Section  871(h)(3)(B) or a "controlled  foreign  corporation"  described in Code
Section  881(c)(3)(C) with respect to the Depositor.  In the event the Indenture
Trustee  withholds any amount from interest or original issue discount  payments
or  advances  thereof  to  any  Noteholder   pursuant  to  federal   withholding
requirements,  the Indenture  Trustee shall indicate the amount withheld to such
Noteholder.

     Section  4.14.  Indenture Trustee to Cooperate; Release of Mortgage Files.
                ---------------------------------------------------------
Upon the  Prepayment  in full or scheduled  maturity of any Mortgage  Loan,  the
Servicer  shall  cause such final  payment to be  immediately  deposited  in the
related Principal and Interest Account or the Servicer Collection Account.  Upon
notice thereof, the Servicer shall promptly notify the Indenture Trustee and the
Certificateholder by an Officer's Certificate (which certification shall include
a  statement  to the effect that all amounts  received in  connection  with such
payment  which are  required to be deposited in either such account have been so
deposited)  and shall request  delivery to it of the File.  Upon receipt of such
properly completed  certification and request,  the Indenture Trustee shall, not
later than the fifth  succeeding  Business Day,  release the related File to the
Servicer or the applicable  Subservicer indicated in such request. With any such
Prepayment in full or other final payment, the Servicer is authorized to prepare
for and procure from the Indenture Trustee or mortgagee under the Mortgage which
secured  the  Mortgage  Note a deed  of  full  reconveyance  or  other  form  of
satisfaction  or  assignment  of Mortgage and  endorsement  of Mortgage  Note in
connection  with  a  refinancing  covering  the  Property,  which  satisfaction,
endorsed Mortgage Note or assigning  document shall be delivered by the Servicer
to the person or persons entitled  thereto.  No expenses  incurred in connection
with such  satisfaction  or  assignment  shall be payable to the Servicer by the
Indenture  Trustee  or from the  Servicer  Collection  Account,  or the  related
Principal  and  Interest  Account.  From  time to time  as  appropriate  for the
servicing or  foreclosure  of any Mortgage  Loan,  including,  for this purpose,
collection under any primary mortgage guaranty insurance,  the Indenture Trustee
shall,  upon request of the  Servicer  and delivery to it of a Servicer's  Trust
Receipt  in the  form of  Exhibit  G  signed  by an  authorized  Officer  of the
Servicer,  release not later than the fifth  Business Day  following the date of
receipt  of such  request  the  related  File  to the  Servicer  or the  related
Subservicer  as indicated by the  Servicer and shall  execute such  documents as
shall be necessary to the prosecution of any such  proceedings.  Such Servicer's
Trust  Receipt  shall  obligate the Servicer to return the File to the Indenture
Trustee  when the need  therefor by the  Servicer no longer  exists,  unless the
Mortgage Loan shall be  liquidated,  in which case,  upon receipt of a Officer's
Certificate similar to that herein above specified.

     Section  4.15.  Compensation  to  the  Servicer  and  the  Subservicers.
                     -------------------------------------------------------

     (a) As  compensation  for its activities  hereunder,  the Servicer shall be
entitled,  without duplication,  to receive from the Servicer Collection Account
the Servicing Fee. The Servicer  shall be required to pay all expenses  incurred
by it in connection  with its activities  hereunder and shall not be entitled to
reimbursement therefor, except as specifically provided herein.

     (b) As compensation  for its activities  under the applicable  Subservicing
Agreement,  the applicable Subservicer shall be entitled to withhold or withdraw
from the related Principal and Interest Account the amounts provided for in such
Subservicing  Agreement.  Each  Subservicer  is  required  to pay  all  expenses
incurred  by  it  in  connection  with  its  servicing   activities   under  its
Subservicing  Agreement  (including  payment of premiums  for  primary  mortgage
guaranty  insurance  policies,  if  required)  and  shall  not  be  entitled  to
reimbursement  therefor  except as  specifically  provided in such  Subservicing
Agreement and not inconsistent with this Agreement.

     (c) Additional  servicing  compensation in the form of prepayment  charges,
release fees and similar items, to the extent collected from Mortgagors,  may be
retained by the applicable subservicer.

     Section 4.16. Annual Statement as to Compliance.  The Servicer,  at its own
                   ---------------------------------
expense,   shall   deliver  to  the   Issuer,   the   Indenture   Trustee,   the
Certificateholder,  the Rating Agencies and the Note Insurer, on or before April
30 of each year, beginning with April 30, 2000, an Officer's Certificate stating
as to the signer  thereof,  that (i) a review of the  activities of the Servicer
during the preceding calendar year and performance under this Agreement has been
made under such  officer's  supervision,  and (ii) to the best of such officer's
knowledge,  based on such review, the Servicer has fulfilled all 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 such statement shall
be provided by the  Servicer to  Noteholders  upon  request or by the  Indenture
Trustee  (solely to the extent that such copies are  available to the  Indenture
Trustee) at the expense of the Servicer,  should the Servicer fail to so provide
such copies.

     Section 4.17. Annual Independent Public  Accountants'  Servicing Report. On
                   ---------------------------------------------------------
or before April 30 of each year, beginning with April 30, 2000, the Servicer, at
its expense,  shall cause a firm of independent  public  accountants  reasonably
acceptable to the Note Insurer to furnish a statement to the Indenture  Trustee,
the  Certificateholder,  the Note Insurer and the Rating  Agencies to the effect
that on the basis of the  examination  by such firm conducted  substantially  in
compliance with the Uniform Single  Attestation  Program for Mortgage Bankers or
the Audit Guide for Audits of HUD Approved Title II Nonsupervised Mortgagees and
Loan  Correspondents  Program,  the servicing by or on behalf of the Servicer of
the Mortgage  Loans was  conducted  in  compliance  with the Sale and  Servicing
Agreement,  except for any significant  exceptions or errors in records that, in
the opinion of the firm,  the Uniform  Single  Attestation  Program for Mortgage
Bankers or the Audit  Guide for Audits of HUD  Approved  Title II  Nonsupervised
Mortgagees and Loan Correspondents  Program requires it to report. Copies of the
annual  accountants'  statement and the  officer's  statement may be obtained by
Noteholders without charge upon written request to the Servicer.

     Section 4.18. Access to Certain Documentation and Information Regarding the
                   -------------------------------------------------------------
Mortgage  Loans.  In the  event  that the Notes  are  legal  for  investment  by
---------------
federally-insured  savings associations,  the Servicer shall provide to the OTS,
the FDIC and the supervisory agents and examiners of the OTS and the FDIC access
to the documentation regarding the related Mortgage Loans required by applicable
regulations  of the OTS or the  FDIC,  as  applicable,  and  shall in any  event
provide such access to the  documentation  regarding  such Mortgage Loans to the
Indenture  Trustee and its  representatives,  such access being afforded without
charge, but only upon reasonable request and during normal business hours at the
offices of the Servicer designated by it.

     Section  4.19.  Assignment  of  Agreement.  The Servicer may not assign its
                     -------------------------
obligations under this Agreement,  in whole or in part, unless (i) it shall have
first obtained the written consent of the Indenture Trustee,  the Issuer and the
Note Insurer,  and (ii) the Indenture  Trustee,  the Issuer and the Note Insurer
shall have received a  confirmation  letter from each Rating  Agency  confirming
that no downgrade in the rating of the Notes will occur, without taking the Note
Insurance Policy into account;  provided,  however,  that any assignee must meet
the  eligibility  requirements  set forth in Section  7.1 hereof for a successor
servicer.

     Section  4.20.  ARMs.  The  Servicer  shall  enforce  each  ARM and 5/1 ARM
                     ----
Mortgage  Loan in  accordance  with its  terms  and  shall or  shall  cause  the
applicable  Subservicers  to  timely  calculate,  record,  report  and apply all
interest rate  adjustments  in accordance  with the related  Mortgage  Note. The
Servicer's records shall, at all times, reflect the then Coupon Rate and monthly
payment and the Servicer  shall or shall cause the  applicable  Subservicers  to
timely notify the Mortgagor of any changes to the Coupon Rate or the Mortgagor's
monthly payment.

Section  4.21.  Inspections  by  Note  Insurer  and  Account  Parties.  At  any
                -----------------------------------------------------
reasonable  time and from time to time upon reasonable notice, the Note Insurer,
the  Indenture  Trustee, the Issuer or any agents or representatives thereof may
inspect  the  Servicer's and each Subservicer's servicing operations and discuss
the  servicing  operations  of the Servicer and each Subservicer with any of its
officers or directors.  The costs and expenses incurred by the Servicer and each
Subservicer  or  its  agents  or  representatives  in  connection  with any such
examinations  or  discussions  shall  be  paid by the Servicer or the applicable
Subservicer.

     Section 4.22. Reports to the Indenture Trustee; Servicer Collection Account
                   -------------------------------------------------------------
Statement.
---------

     (a) Not later than each  Remittance  Date,  the  Servicer  shall  forward a
statement to the Indenture Trustee, the  Certificateholder  and the Note Insurer
setting forth the status of the Servicer  Collection  Account as of the close of
business on the related Subservicer  Remittance Date and showing, for the period
covered by such statement,  the aggregate of deposits into and withdrawals  from
the  Servicer  Collection  Account  for each  category of deposit  specified  in
Sections 4.1, 4.8 and 4.8A and each category of withdrawal  specified in Section
4.9 and 4.9A, and stating that all distributions required by this Agreement have
been made (or if any required  distribution  has not been made,  specifying  the
nature and amount thereof).

     (b) On or before each  Subservicer  Remittance  Date,  the  Servicer  shall
calculate the portion of any Principal  Shortfall  Amount  allocable to Realized
Losses on the Mortgage Loans and shall advise the Indenture Trustee and the Note
Insurer of such Principal Shortfall Amount in its report.

     (c) No later than each  Subservicer  Remittance  Date,  the Servicer  shall
prepare and provide a report to the Indenture Trustee, the Certificateholder and
the Note Insurer listing separately the interest and principal components of the
related Monthly Remittance.

     (d) Based upon such report and the related  Remittance Report regarding the
Pooled Certificates,  the Indenture Trustee no later than the Business Day prior
to the  Payment  Date shall  calculate  the  Available  Interest  Amount and the
Available Principal Amount for such Payment Date.

     (e)  The  Indenture  Trustee  shall  also  calculate  the  Note  Rate,  the
Certificate Rate, the Excess Interest,  the LIBOR Interest Carryover Amount, and
amounts payable to the Swap Counterparty pursuant to Section 5.2.

     Section 4.23. Designated Depository  Institutions.  The Servicer shall give
                   -----------------------------------
the Issuer, the Indenture Trustee and the Note Insurer (a) at least thirty days'
prior  written  notice  of  any  anticipated  change  of  Designated  Depository
Institution  and (b) written notice of any change in the ratings of a Designated
Depository  Institution of which the Servicer is aware, within two Business Days
after discovery.

     Section 4.24. Appointment of Custodian. If the Servicer determines that the
                   ------------------------
Indenture  Trustee  is unable  to  deliver  Files to the  Servicer  as  required
pursuant to Section 4.14 hereof, the Servicer shall so notify the Depositor, the
Issuer,  the Note Insurer,  the Rating Agencies and the Indenture  Trustee,  and
make request that a custodian  acceptable  to the Servicer and the Note Insurer,
be appointed to retain custody of the Files on behalf of the Indenture  Trustee.
The  Indenture  Trustee,  the  Issuer  and the  Depositor  agree  to  co-operate
reasonably  with  the  Servicer  in  connection  with  the  appointment  of such
custodian.  The  Servicer  shall  pay,  and be  reimbursed  pursuant  to Section
4.10A(a)  hereof  for,  all  expenses  incurred  by  the  Indenture  Trustee  in
connection with the transfer of the Files to such custodian.

     Section 4.25. [Reserved]

     Section 4.26. Year 2000 Compliance.  The Servicer represents,  warrants and
                   --------------------
covenants that (1) it is in the process of identifying circumstances under which
its computer  applications  may not be able to properly  perform  date-sensitive
functions after December 31, 1999 and (2) it will implement,  on a timely basis,
corrective  action to  prevent  any such  application  from  interfering  in any
material respect, due to inability to properly perform such functions,  with the
performance of its duties under this Agreement.  The Servicer will, upon request
of the Note  Insurer,  the  Certificateholder  or the Indenture  Trustee,  on or
before June 30, 1999,  promptly  provide an Officer's  Certificate to the effect
that the  Servicer  has  implemented  corrective  action to prevent its computer
applications  from  interfering,  in any material  respect,  due to inability to
perform date-sensitive  functions, with the performance of the Servicer's duties
under this Agreement.

     Section 4.27.  Performance of Obligations;  Indenture.  The Issuer appoints
                    --------------------------------------
he Servicer and the Servicer  agrees to perform such  obligations and duties of
the Issuer pursuant to the Indenture as the Issuer may request,  including,  but
not  limited to the duties and  obligations  of the Issuer  pursuant  to Section
3.09(b) of the Indenture.

     Section 4.28. Data.
                   ----

     (a) Within a reasonable period of time after the Closing Date, the Servicer
will provide to the Note Insurer a computer tape or electronic  transmission  (a
"Data Tape"),  in a format and containing  such of the servicing data maintained
by the Servicer  with  respect to the  Mortgage  Loans as of the Cut-off Date as
shall be mutually  agreed to by the  Servicer  and the Note  Insurer (but in any
event the Data Tape shall contain the Servicer's  Monthly  Remittance Report and
such other  information  as the Note Insurer may reasonably  request),  together
with a written  explanation  (the "Data  Dictionary") of each of the data fields
included in such Data Tape.  Thereafter,  on a monthly basis,  the Servicer will
provide  to  the  Note  Insurer  a Data  Tape  as of  the  end of the  preceding
Remittance  Period together with a written  explanation of any revisions made to
the Data Dictionary  during the preceding  Remittance  Period.  The Note Insurer
shall have no duty or obligation with respect to the accuracy of the information
contained in any Data Tape or in the Data Dictionary.

     (b) Each Data Tape and Data Dictionary  furnished by the Servicer  pursuant
to this Agreement shall be deemed  confidential and of proprietary  nature,  and
shall not be copied or  distributed to any other Person.  No Person  entitled to
receive copies of such tapes shall use the  information  therein for the purpose
of soliciting  the  Mortgagors  or for any other purpose  except as set forth in
this Agreement.

     (c) Upon request by a  Certificateholder,  the Servicer shall provide data,
in  a   mutually   agreeable   form,   to   such   Certificateholder.   If  such
Certificateholder  is the Owner of 100% of the Certificates,  the Servicer shall
furnish such data without additional charge,  and, if mutually acceptable to the
Servicer and such Certificateholder, on a monthly basis.

                                    ARTICLE V

      Accounts; Payments; Statements to Certificateholders and Noteholders

     Section  5.1   Establishment  of  Accounts.
                    ---------------------------

     (a) The Issuer  hereby  directs  the  Indenture  Trustee to  establish  and
maintain  the Trustee  Collection  Account,  the Insured  Amounts  Account,  the
Reserve Account, the Swap Counterparty Reserve Account and the Swap Counterparty
Floor Account.  Each such Account shall be maintained as a segregated account at
a  Designated  Depository  Institution  to be held in the name of the  Indenture
Trustee  for the  benefit of the  related  Owners and the Note  Insurer,  unless
otherwise specified below.

     (b)     The  Indenture  Trustee  shall  establish  and maintain the Insured
Amounts  Account  to receive deposits from the Note Insurer; the Insured Amounts
Account  shall  be  entitled  "Bankers  Trust  Company  of  California,  N.A. as
Indenture  Trustee  for  Thornburg  Mortgage  Funding  Trust  I, Insured Amounts
Account."

     (c)     The  Issuer  hereby  directs the Indenture Trustee to establish the
Trustee  Collection  Account  to  be maintained as a segregated account entitled
"Bankers  Trust  Company  of California, N.A. as Indenture Trustee for Thornburg
Mortgage  Funding Trust I, Trustee Collection Account." On the Closing Date, the
Depositor  is  remitting  the  amount  of $1,220,971.34 in immediately available
funds  representing the November 1998 distribution on the Pooled Certificates to
the  Indenture  Trustee for deposit into the Trustee Collection Account, and the
Indenture  Trustee hereby acknowledges receipt of $1,220,971.34 for deposit into
the  Trustee  Collection  Account.  The  Depositor  shall  (or  shall  cause the
Servicer to) remit any and all distributions received by the Depositor or Seller
on  the  Pooled Certificates on any Pooled Certificate Remittance Date after the
Closing  Date  to  the  Indenture  Trustee in immediately available funds on the
Business  Day after such Pooled Certificate Remittance Date for deposit into the
Trustee  Collection  Account.

     (d) The Issuer  hereby  directs  the  Indenture  Trustee to  establish  and
maintain the Reserve Account entitled "Bankers Trust Company of California, N.A.
as Indenture  Trustee for Thornburg  Mortgage Funding Trust I, Reserve Account."
Excess  Interest  will be  deposited  in the Reserve  Account to be held for the
benefit of the Noteholders and the Certificateholders.  On the Closing Date, the
Depositor is remitting or causing to be remitted to the Indenture  Trustee,  and
the Indenture  Trustee  hereby  acknowledges  receipt of $150,000 in immediately
available funds for deposit into the Reserve Account.

     (e)     The Indenture Trustee shall establish and maintain, for the benefit
of  the  Note  Insurer,  the Swap Counterparty Reserve Account entitled "Bankers
Trust  Company of California, N.A. as Indenture Trustee for TMA Mortgage Funding
Trust I, Swap Counterparty Reserve Account."  On the Closing Date, the Depositor
will  remit  or cause to be remitted to the Indenture Trustee, and the Indenture
Trustee  hereby  acknowledges receipt of $800,000 in immediately available funds
for  deposit  into  the  Swap  Counterparty  Reserve  Fund.

     (f)     The Indenture Trustee shall establish and maintain, for the benefit
of the Note Insurer, the Swap Counterparty Floor Account entitled "Bankers Trust
Company  of California, N.A. as Indenture Trustee for TMA Mortgage Trust I, Swap
Counterparty  Floor  Account."

     Section  5.2   Flow  of  Funds.  (a)  Upon  receipt,  the Indenture Trustee
                    ---------------
shall deposit (i) into the Trustee Collection Account (A) the Monthly Remittance
remitted  by  the Servicer, plus (B) any related Substitution Adjustment Amounts
and  any  related  Loan  Purchase Prices, plus (C) any amounts received from the
Swap  Counterparty  under the Swap Agreements, plus (D) all distributions on the
Pooled  Certificates  received  by  the  Indenture Trustee pursuant to the terms
hereof, (ii) into the Reserve Account, the Excess Interest, if any, including on
the  Closing Date, the initial deposit referred to in Section 5.1(d), (iii) into
the  Insured  Amounts  Account,  the  amount  of any Insured Amounts (other than
Insured  Amounts  in  respect  of  amounts  described  in  clause  (iii)  of the
definition  of  Insured  Amounts)  (iv) into the Trustee Collection Account, the
proceeds  of  any liquidation or termination pursuant to Article VIII hereof and
Article  X  of  the Indenture, (v) into the Swap Counterparty Floor Account, any
amounts  received  on  the  Interest Rate Floor Agreement and (vi) into the Swap
Counterparty Reserve Account, the initial deposit referred to in Section 5.1(e).
Insured  Amounts  in  respect  of  amounts  described  in  clause  (iii)  of the
definition of Insured Amounts shall be paid by the Note Insurer to the Indenture
Trustee  for  payment  to  the  Owners  of  the Notes who have complied with the
provisions of Section 5.2(j), in the same manner as payments with respect to the
Notes.

     (b)     The  Indenture  Trustee  shall  calculate  the  amount  of  Excess
Interest,  the  LIBOR Interest Carryover Amount, the amount to be transferred to
the  Reserve  Account  and  any  amount  on deposit in the Reserve Account to be
distributed  as  provided  in  Section  5.7  hereof.

     (c)     If  the  Indenture  Trustee  determines  that  a  draw  on the Note
Insurance  Policy  is necessary, the Indenture Trustee will take such actions as
are  required  under the Note Insurance Policy to inform the Note Insurer that a
payment  will be required under the Note Insurance Policy and the amount thereof
in sufficient time to have funds available for payment to the Noteholders on the
applicable  Payment  Date.  Amounts  received  from  the  Note  Insurer shall be
deposited  in  the  Insured  Amounts  Account.

     (d)     On  each  Payment  Date,  the  Indenture  Trustee will withdraw any
amount to be transferred from the Reserve Account pursuant to Section 5.7 hereof
and  any amount paid by the Note Insurer which has been deposited in the Insured
Amounts  Account  pursuant  to Section 5.2(c) hereof and deposit such amounts in
the  Trustee  Collection  Account.

     (e)     On  each  Payment Date after the transfers and payments pursuant to
Section  5.2(d),  the  Indenture  Trustee shall make the following transfers and
distributions  in  the  priority indicated from the funds then on deposit in the
Trustee  Collection  Account  (other  than  investment  earnings):

          (i)  From  the  Available  Interest  Amount, in the following order of
priority  and  in  each  case  to the extent of any remaining Available Interest
Amount after making the prior payments; provided that funds transferred from (x)
                                        --------
the Insured Amounts Account will be used only to pay Interest Shortfall Amounts,
and  (y)  the  Reserve Account will be used only to pay LIBOR Interest Carryover
Amounts  under  clause  (G):

               (A) to the Swap Counterparty, any net regularly scheduled monthly
          amounts due the Swap  Counterparty on such Payment Date under the Swap
          Agreements;

               (B) to the Note Insurer,  all premiums due to the Note Insurer on
          such Payment Date pursuant to the Insurance Agreement;

               (C) to the  Indenture  Trustee,  all  amounts  due as its monthly
          Indenture  Trustee's Fee and Custodian's Fee and any other amounts due
          it pursuant to Section 6.07 of the Indenture;

               (D) to the Owner  Trustee,  all amounts  due  purusant to Section
          8.01 of the Trust  Agreement,  including the monthly  Owner  Trustee's
          Fee; 

               (E) to the Owners, Current Interest at the Note Rate;

               (F) to the Note Insurer for  reimbursement  for any payments made
          (i) under the Note  Insurance  Policy with respect to its guarantee of
          interest  at the  Note  Rate to the  Noteholders  or  under  the  Swap
          Insurance  Policy and (ii) any other  amounts owed to the Note Insurer
          under the  Insurance  Agreement  (other than with respect to Principal
          Shortfall Amounts) to the extent not reimbursed from payments from the
          Available  Principal  Amount;  

               (G) to the Owners, any LIBOR Interest Carryover Amount;

               (H) to the  Certificate  Distribution  Account  maintained by the
          Paying  Agent  for  distribution  to the  Certificateholders,  Current
          Interest at the Certificate Rate; and,

               (I) any remainder to the Reserve  Account until, on and after the
          Reserve Account Limit Date, the Reserve Account Limit is reached,  and
          thereafter to the Certificate Distribution Account for distribution to
          the Certificateholders as Additional  Certificate Interest. 
          (ii) From the Available  Principal  Amount,  in the following order of
     priority:

               (A) to the Owners, until the outstanding principal balance of the
          Notes has been reduced to zero;

               (B) to the Note Insurer for  reimbursement  for any payments made
          under the Note  Insurance  Policy with respect to Principal  Shortfall
          Amounts and not previously  repaid to the Note Insurer,  and any other
          amounts owed the Note Insurer  under the  Insurance  Agreement  (other
          than amounts owed to the Note Insurer under Section  5.2(e)(i)(F) from
          the Available Interest Amount); and

               (C) to the Certificate  Distribution  Account for distribution to
          the  Certificateholders  as principal until the Certificate Balance of
          the  Certificates  has been  reduced  to zero  and then as  Additional
          Certificate Interest.

     (f) If on any  Payment  Date  there  are  insufficient  Available  Interest
Amounts  to pay the  amounts  due to the  Swap  Counterparty  for net  regularly
scheduled  monthly  amounts  under  the  Swap  Agreement   pursuant  to  Section
5.2(e)(i)(A),  the Indenture Trustee shall draw an amount up to such deficiency,
first from amounts, if any, received under the Interest Rate Floor Agreement and
on deposit  in the Swap  Counterparty  Floor  Account  and second  from the Swap
Counterparty  Reserve  Account and shall add such  amounts to the payment  being
made under Section  5.2(e)(i)(A).  If funds are received under the Interest Rate
Floor  Agreement  and not used as  aforesaid,  they  shall be  deposited  in the
Certificate  Distribution Account for distribution to the  Certificateholders as
Additional Certificate Interest.

     (g)     Any amounts properly distributed to the Holders of the Certificates
pursuant to the terms of this Agreement shall be distributed free of the lien of
the Indenture, and any such amounts shall in no event be required to be returned
to  the  Indenture  Trustee  or  paid  over  to  the  Owners.

     (h)     On each Payment Date, the Paying Agent shall distribute the amounts
on  deposit  in the Certificate Distribution Account as provided in Article V of
the  Trust  Agreement.

     (i)     The  Indenture Trustee shall (i) receive as attorney-in-fact of the
Owners any Insured Amounts from the Note Insurer, (ii) shall deposit the Insured
Amounts  to  the  Insured Amounts Account and (iii) shall disburse the same from
such Insured Amounts Account to the Trustee Collection Account and the Owners as
set  forth  in  Section  5.2(e)(i)(E) and 5.2(e)(ii)(A) hereof.  Insured Amounts
disbursed  by  the  Indenture Trustee from proceeds of the Note Insurance Policy
shall  not  be  considered  payment  by the Trust with respect to the applicable
Notes  and  the  Note  Insurer shall become the owner of such unpaid amounts due
from  the  Trust  in  respect  of Insured Amounts as the deemed assignee of such
Notes,  as  hereinafter  provided.  The  Indenture  Trustee,  on  behalf of each
Noteholder, hereby agrees for the benefit of the Note Insurer that it recognizes
that  to  the  extent  the Note Insurer pays Insured Amounts, either directly or
indirectly  (as  by  paying  through  the  Indenture Trustee), to the applicable
Insured  Amounts  Account, the Note Insurer (x) will be subrogated to the rights
of the Owners of the applicable Notes, with respect to such Insured Amounts, (y)
shall  be  deemed  to  the extent of the payments so made to be an owner of such
Notes  and (z) shall receive future payments from Available Interest Amounts and
Available  Principal Amounts until all such Insured Payments by the Note Insurer
have  been  fully reimbursed, as described in the following paragraph.  The Note
Insurer  shall  not  acquire  any  voting  rights  hereunder as a result of such
subrogation,  except  as  otherwise  described  herein.

     It  is  understood and agreed that the intention of the parties is that the
Note  Insurer  shall  not  be  entitled to reimbursement from Available Interest
Amounts  on  any  Payment  Date for amounts previously paid by it unless on such
Payment  Date the Owners shall also have received the full amount of the related
Current  Interest  or  from  Available Principal Amounts on any Payment Date for
amounts  previously  paid  by  it  unless  on  such Payment Date the Outstanding
principal  balance  of  the  Notes  has  been  reduced  to  zero.

     (j)     Subject  to  the terms and conditions of the Note Insurance Policy,
the  Note  Insurer  will  pay any Insured Amount that is a Preference Amount (as
defined  below)  on  the Payment Date following receipt on a Business Day by the
Note  Insurer  of  (i) a certified copy of the order requiring the return of the
preference  payment, (ii) an opinion of counsel satisfactory to the Note Insurer
that  such order is final and not subject to appeal, (iii) an assignment in such
form as is reasonably required by the Note Insurer, irrevocably assigning to the
Note Insurer all rights and claims of the Owner relating to or arising under the
applicable  Notes  against  the  debtor  which  made  such preference payment or
otherwise  with  respect  to  such  preference  payment  and  (iv)  appropriate
instruments  to  effect  the  appointment  of the Note Insurer as agent for such
Owner  in  any  legal  proceeding  related  to  such  preference  payment,  such
instruments  being  in a form satisfactory to the Note Insurer, provided that if
such  documents  are  received after 2:00 pm New York City time on such Business
Day,  they  will  be  deemed to be received on the following Business Day.  Such
payments  shall  be  disbursed to the receiver or trustee in bankruptcy named in
the  final order of the court exercising jurisdiction on behalf of the Owner and
not  to  any Owner directly unless such Owner has returned principal or interest
paid  on the Notes to such receiver or trustee in bankruptcy, in which case such
payment  shall  be paid to the Indenture Trustee for disbursement to such Owner.

     "Preference  Amount" means any amount previously distributed to an Owner of
a  Note  that is recoverable and sought to be recovered as a voidable preference
by  a  trustee  in  bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.),  as  amended from time to time in accordance with a final nonappealable
order  of  a  court  having  competent  jurisdiction.

     In  no  event  shall  the  Note Insurer pay more than one Insured Amount in
respect  of  any  Preference  Amount.  Consequently,  a  Noteholder shall not be
entitled  to  reimbursement  with  respect  to  any  final order relating to the
Noteholder's  receipt  of  funds  representing  Insured Amounts paid by the Note
Insurer.

     Each  Noteholder,  by  its  purchase of a Note, the Servicer, the Indenture
Trustee  and  the  Issuer  hereby  agree that the Note Insurer may, after making
payment of the Preference Amounts or acknowledging to Noteholders its obligation
to  make  payment  of  any Preference Amounts, at any time thereafter during the
continuation of any proceeding relating to a preference claim direct all matters
relating  to such preference claim, including, without limitation, the direction
of  any appeal of any order relating to such preference claim and the posting of
any  surety,  supersedeas  or  performance  bond  pending  any  such appeal.  In
addition and without limitation of the foregoing, the Note Insurer, after making
payment  of  the  Preference  Amounts,  shall be subrogated to the rights of the
Servicer, the Indenture Trustee, the Issuer and each Owner in the conduct of any
such preference claim, including, without limitation, all rights of any party to
an  adversary  proceeding  action  with  respect  to  any  court order issued in
connection  with  any such preference claim.  Any expenses incurred in complying
with  the  direction  of  the  Note  Insurer  shall  be borne solely by the Note
Insurer.

     (k)     With  respect  to  the  Swap  Agreements,  if  and  so  long as the
aggregate  Principal  Balance  of  the  Mortgage Loans falls below 1.5 times the
aggregate  notional  amount  of  the  Swap  Agreements,  the  selection  of  the
respective  amortization  rates  by  the  Depositor,  as  provided  in  the Swap
Agreements,  shall  be  subject  to  the  approval  of  the  Note  Insurer.

     Section  5.3  Investment  of  Accounts.
                   ------------------------

     (a)     Any  amounts in any Account permitted or required to be invested by
the Indenture Trustee pursuant to this Section 5.3 shall be invested in Eligible
Investments;

     (b) no such Eligible  Investments  shall mature later than the Business Day
immediately   preceding  the  related  Payment  Date;   provided  that  Eligible
Investments  which are  obligations  of the  financial  institution  serving  as
Indenture Trustee may mature on the related Payment Date;

     (c) every  Eligible  Investment  made pursuant to this Section 5.3 shall be
held until maturity;

     (d)  amounts  on  deposit  in the  Insured  Amounts  Account  shall  not be
invested;

     (e)  the  Indenture   Trustee  shall  invest  amounts  on  deposit  in  the
Certificate  Distribution Account for the benefit of the  Certificateholders  at
the written direction of the Depositor;

     (f) the Indenture  Trustee  shall invest  amounts on deposit in the Trustee
Collection  Account  for the  benefit of the  Certificateholders  at the written
direction of the Depositor;

     (g) the Indenture  Trustee  shall invest  amounts on deposit in the Reserve
Account for the benefit of the  Certificateholders  at the written  direction of
the Depositor;

     (h) the  Indenture  Trustee  shall  invest  amounts  on deposit in the Swap
Counterparty  Reserve Account for the benefit of the  Certificateholders  at the
written direction of the Depositor;

     (i) the  Indenture  Trustee  shall  invest  amounts  on deposit in the Swap
Counterparty  Floor  Account  for the benefit of the  Certificateholders  at the
written direction of Depositor;

     (j) on each Payment  Date,  all  investment  income  earned on each Account
listed in clauses (e) through (i) above  during  such  Accural  Period  shall be
deposited by the Indenture Trustee into the Certificate Distribution Account and
distributed to the Certificateholders as Additional Certificate Interest;

     (k)  all  income  or  gain  from  investments  in any  Account  held by the
Indenture Trustee shall be deposited into such Account immediately upon receipt,
and any loss resulting from such investments shall be the  responsibility of the
party directing the Indenture Trustee to make such Investment;

     (l) the Indenture  Trustee shall not in any way be held liable by reason of
any loss or any  insufficiency  in any  Account  held by the  Indenture  Trustee
resulting from any loss on any Eligible  Investment  included therein (except to
the extent that the financial  institution  serving as Indenture  Trustee is the
obligor thereon); and

     (m) if the  Indenture  Trustee has not  received  any written  direction as
contemplated  in  Sections  5.3(e)-(i)  above,  the  amount  on  deposit  in the
respective accounts shall be invested in Eligible Investments listed in Clause

     (h) of the definition of Eligible Investments.

     Section  5.4  Reports  by  Indenture  Trustee  to  Owners  and  Depositor.
                   -----------------------------------------------------------
On  each  Payment  Date  the  Indenture  Trustee shall report in writing to each
Noteholder  of  record,  to  each  Paying Agent, if different than the Indenture
Trustee,  to  the Owner Trustee, to each Certificateholder of record, and to the
Depositor  with  a  copy  to  the  Note  Insurer  and  the  Rating  Agencies:

          (1) (A) the  aggregate  amount of funds  available  for payment on the
     Notes on such  Payment  Date,  (B) the amount of interest to be paid to the
     Notes and the annualized rate of interest being paid on the Notes (based on
     the   original   principal   amount  of  the  Notes  minus  all   principal
     distributions  previously paid thereon),  (C) whether such interest payment
     is based upon the LIBOR Rate or the  Available  Funds Cap Rate and  whether
     the Note Insurer provided a portion of such interest  payment,  and (D) the
     amount of  principal  being paid to the Notes on such  Payment  Date in the
     aggregate and per $1,000 initial aggregate outstanding principal balance of
     Notes;

          (2) the  amount of any  Realized  Losses  being  charged  against  the
     Certificates,  and/or  the Notes  (and  whether  the Note  Insurer  will be
     concurrently  providing a payment under the Note Insurance  Policy to cover
     such applied Realized Loss);

          (3) the percentage of the initial  principal balance of the Notes that
     remains  outstanding  on such  Payment  Date,  after  giving  effect to the
     payments and Realized Loss charge-offs to be made on such Payment Date;

          (4) the outstanding principal balance of the Notes after giving effect
     to the payments and Realized  Loss  charge-offs  to be made on such Payment
     Date;

          (5) (A) the  amount  of  interest  and  Certificate  Rate  paid to the
     Certificates  on such  Payment  Date  (separately  stating  any  Additional
     Certificate  Interest not included in the  calculation  of the  Certificate
     Rate),  (B) the amount of Realized  Losses applied  against the Certificate
     Balance of the Certificates and (C) the current  Certificate Balance of the
     Certificates after any payments and write-downs on such Payment Date;

          (6) the amount of interest paid to the Swap  Counterparty (and whether
     any portion  thereof was paid by the Note Insurer under the Swap  Insurance
     Policy) and the amount of interest  received from the Swap  Counterparty on
     such Payment Date;

          (7) the amount deposited into the Reserve Account,  amounts  withdrawn
     from the Reserve  Account  (and  applications  thereof)  and balance of the
     Reserve Account as of such Payment Date;

          (8) the amounts  reimbursed to the Note Insurer,  if any,  relating to
     its payments under the Note Insurance  Policy and the Swap Insurance Policy
     or otherwise owed to the Note Insurer under the Insurance Agreement and the
     amounts under each remaining unreimbursed.

          (9) the LIBOR Rate for the Accrual  Period  beginning  on such Payment
     Date;

          (10) the weighted  average Coupon Rate of the Mortgage Loans as of the
     last day of the preceding calendar month;

          (11) the weighted  average of the remaining term of the Mortgage Loans
     as of the last day of the preceding calendar month;

          (12) The number and aggregate  Principal Balance of the Mortgage Loans
     delinquent one, two and three months or more;

          (13) The (i) number and aggregate  Principal Balance of Mortgage Loans
     with respect to which foreclosure proceedings have been initiated, and (ii)
     the  number  and  aggregate  book  value  of  Properties  acquired  through
     foreclosure,  deed in lieu of  foreclosure  or  other  exercise  of  rights
     respecting the Indenture Trustee's security interest in the Mortgage Loans;

          (14) The amount of Realized Losses incurred  allocable to the Notes on
     the related  Payment  Date and the  cumulative  amount of  Realized  Losses
     incurred allocated to the Notes since the Cut-Off Date; and

          (15) The  aggregate  Principal  Balance  of all  outstanding  Mortgage
     Loans.

     In addition, the Indenture Trustee will provide to each such Person, a copy
of  the  Remittance  Report for the Pooled Certificates.  The obligations of the
Indenture Trustee under this Section are conditioned upon such information being
received  from  the  Servicer  pursuant  to  Section  4.22  hereof.

     In addition to the  foregoing,  the  Indenture  Trustee will also provide a
monthly  report  to the  Issuer,  the  Certificateholders  and the Note  Insurer
containing  (i) the  balance in the Swap  Counterparty  Reserve  Account and the
amount of any withdrawals therefrom as of such Payment Date, and (ii) the amount
of any receipts with respect to the Interest Rate Floor Agreement.

     In  addition  to  the foregoing, for so long as TMA Acceptance Corp. or any
Affiliate  thereof  is  the  sole Holder of the Certificates, the Servicer shall
provide  to  the Certificateholder a monthly report substantially in the form of
Exhibit  I  attached  hereto.

     Upon  request  by  any  Noteholder,  the  Indenture  Trustee,  as  soon  as
reasonably  practicable,  shall  provide  the  requesting  Noteholder  with such
information  as is necessary and  appropriate,  in the Indenture  Trustee's sole
discretion, for purposes of satisfying applicable information requirements under
Rule 144A of the Securities Act.

     Section  5.5  Drawings  under  the Policy and Reports by Indenture Trustee.
                   ------------------------------------------------------------
(a)  By  11:00  A.M.  California Time on the Business Day preceding each Payment
Date,  the Indenture Trustee shall determine whether a claim is to be made under
the  Note  Insurance  Policy  for  an  Insured Amount.  If the Indenture Trustee
determines  that  a  Claim  should  be made for an Insured Amount, the Indenture
Trustee shall furnish the Note Insurer and the Issuer with a completed Notice in
the  form set forth as Exhibit A to the Note Insurance Policy.  The Notice shall
specify the amount of Insured Amount and shall constitute a claim for an Insured
Amount  pursuant  to  the  Note  Insurance  Policy.

     (b)     Without  limiting  the  generality  of the foregoing, the Indenture
Trustee  shall, at the request of the Note Insurer transmit promptly to the Note
Insurer  copies  of all accountings of receipts in respect of the Mortgage Loans
furnished  to  it  by  the  Servicer.

     (c)     From  time  to time, the Indenture Trustee shall promptly report to
the Issuer and to the Note Insurer with respect to its actual knowledge, without
independent  investigation,  of  any  inaccuracies  of any of the statements set
forth  in  Part  II  of  Exhibit  D  hereto.

     Section  5.6  Allocation  of  Realized  Losses.  Any  Realized  Losses with
                   --------------------------------
respect  to  the  Mortgage Loans or the Pooled Certificates will, on the related
Payment  Date,  be  allocated  as  follows,  separately  in the following order:

          (i) to the  Certificates  in reduction of their  Certificate  Balances
     until such Certificate Balances have been reduced to zero; and

          (ii) to the extent not covered by the Note  Insurance  Policy,  to the
     Notes in  reduction  of their  Class  Principal  Balances  until such Class
     Principal Balances have been reduced to zero.

     Section 5.7  The Reserve Account and the Swap Counterparty Reserve Account.
                  -------------------------------------------------------------
(a)  On  the initial Payment Date, all Excess Interest received by the Indenture
Trustee  shall  be  distributed  to the Certificateholder.  On each Payment Date
after the initial Payment Date, until the Reserve Account Limit Date, all Excess
Interest  received  by  the  Indenture Trustee shall be deposited in the Reserve
Account.  Thereafter,  Excess  Interest will be so deposited only to maintain an
amount  equal  to  the  Reserve  Account  Limit.  Any  amounts on deposit in the
Reserve Account and any Excess Interest received after the Reserve Account Limit
Date  in  excess  of  the  Reserve  Account  Limit, and all investment income on
amounts  in  the Reserve Account both before and after the Reserve Account Limit
Date  will be paid to the Certificateholders as Additional Certificate Interest.

     (b) The Note Insurer,  on any Payment Date and in its sole discretion,  may
direct the Indenture Trustee to release all or any part of the Swap Counterparty
Reserve  Account to the  Certificateholders  and/or  transfer  ownership  of the
Interest Rate Floor Agreement to the Certificateholders or their designees.  The
Indenture  Trustee  and  the  Issuer  will  cooperate  in the  execution  of any
documents  required by the Interest  Rate Floor  Provider to evidence and effect
such transfer;  provided, however that if the Swap Insurance Policy is no longer
in  effect,  the  Indenture  Trustee  shall  act  upon the  instructions  of the
Certificateholders without obtaining the consent of the Note Insurer.

     Section 5.8 Calculation of LIBOR.  Until the Class Principal Balance of the
                 --------------------
Notes has been reduced to zero, the Indenture  Trustee will determine  LIBOR for
each Accrual Period in accordance with the definition thereof.

     The establishment of LIBOR and the Note Rate by the Indenture Trustee shall
(in  the  absence  of manifest error) be final, conclusive and binding upon each
Holder  of a Note, the Issuer, the Depositor, the Servicer and the Note Insurer.
Each  such rate of interest may be obtained by telephoning the Indenture Trustee
at  (800)  735-7777.

                                   ARTICLE VI

                                  The Servicer

     Section  6.1  Liabilities  of the Servicer. The Servicer shall be liable in
                   ----------------------------
accordance  herewith  only to the extent of the obligations specifically imposed
upon  and  undertaken  by  the  Servicer,  as  applicable.

     Section 6.2 Merger or Consolidation  of the Servicer.  Any corporation into
                 ----------------------------------------
which  or the  Servicer  may  be  merged  or  consolidated,  or any  corporation
resulting  from any merger,  conversion or  consolidation  to which the Servicer
shall be a party (a "Business  Combination"),  or any corporation  succeeding to
the business of the Servicer,  shall be the successor of the Servicer 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  that such Person is qualified to sell  mortgage  loans to, and service
mortgage loans on behalf of, Fannie Mae or Freddie Mac and further provided that
such Business  Combination does not adversely affect the then current ratings of
the Notes by the Rating  Agencies  without regard to the Note Insurance  Policy.
Notwithstanding the foregoing,  the Servicer may provide 90 days advance written
notice to the Indenture Trustee, the Note Insurer and  Certificateholders of its
intention to resign in connection with a Business Combination that does not meet
the foregoing requirements, in which case, the Indenture Trustee shall appoint a
successor Servicer acceptable to the Issuer and the Note Insurer.  The resigning
Servicer will in a  commercially  reasonable  manner  facilitate the transfer of
servicing to the  replacement  Servicer  prior to the  expiration of such notice
period.  No removal or resignation of the Servicer will become  effective  until
the  Indenture  Trustee or a  successor  Servicer  has  assumed  the  Servicer's
responsibilities and delegations in accordance herewith.

     Section  6.3  Limitation  on Liability of the Servicer and Others.  Neither
                   ---------------------------------------------------
the  Servicer  nor  any  of  the directors, officers, employees or agents of the
Servicer  shall  be under any liability to the Issuer or the Noteholders for any
action  taken  by  such  Person  or  by  a  Subservicer  or for such Person's or
Subservicer's 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 Servicer or any such Person against any breach
of representation or warranties made by it herein or protect the Servicer or any
such  Person against any liability which would otherwise be imposed by reason of
willful  misfeasance, bad faith or gross negligence in the performance of duties
or  by  reason  of  reckless  disregard of duties and obligations hereunder. The
Servicer  and  any  director,  officer,  employee or agent of the Company or the
Servicer  may  rely  in good faith on any document of any kind properly executed
and  submitted  by  any  Person  respecting  any  matters arising hereunder. The
Servicer  and  any director, officer, employee or agent of the Servicer shall be
indemnified by the Trust Estate and held harmless against any loss, liability or
expense  incurred in connection with any legal action relating to this Agreement
or the Notes, other than any loss, liability or expense relating to any Mortgage
Loan (other than as otherwise permitted in this Agreement) or incurred by reason
of  willful  misfeasance,  bad  faith  or gross negligence in the performance of
duties  hereunder  or  by reason of reckless disregard of obligations and duties
hereunder.  The  Servicer  shall  not  be  under  any  obligation  to appear in,
prosecute  or  defend  any legal action which is not incidental to its duties to
service  the  Mortgage  Loans in accordance with this Agreement and which in its
opinion  may involve it in any expense or liability; provided, however, that the
Servicer  may  in  its  discretion  undertake  any such action which it may deem
necessary  or  desirable with respect to the Mortgage Loans, this Agreement, the
Notes  or  the  rights and duties of the parties hereto and the interests of the
Noteholders  hereunder.  In  such  event,  the  legal expenses and costs of such
action  and  any  liability  resulting  therefrom  shall  be expenses, costs and
liabilities  of  the  Trust  Estate  and  the  Servicer  shall be entitled to be
reimbursed  therefor  out  of  the  Servicer  Collection Account, as provided by
Section  4.8A.

     Section 6.4.     The Servicer not to Resign.  The Servicer shall not resign
                      --------------------------
from  the obligations and duties hereby imposed on it except upon appointment of
a successor and receipt by the Indenture Trustee and the Issuer of a letter from
each  Rating  Agency  that such resignation and appointment will not result in a
downgrading  of  the Notes without regard to the Note Insurance Policy or upon a
determination  that  its  duties  thereunder  are  no  longer  permissible under
applicable  law.  Any  such  determination  permitting  the  resignation  of the
Servicer  shall be evidenced by an opinion of counsel to such effect which shall
be  delivered  to  the Indenture Trustee, the Issuer, the Depositor and the Note
Insurer.

                                  ARTICLE  VII

                               Removal of Servicer

     Section  7.1  Removal  of  Servicer;  Resignation  of  Servicer.
                   -------------------------------------------------

     (a)     The  Indenture  Trustee  (or  the  Owners  acting  on behalf of the
Indenture  Trustee),  with  the consent of the Note Insurer  or the Note Insurer
may  remove  the  Servicer  upon  the  occurrence of any of the following events
(each,  a  "Servicer  Termination  Event"):

          (i) The Servicer shall (a) apply for or consent to the  appointment of
     a receiver,  trustee in  bankruptcy,  liquidator  or  custodian  or similar
     entity in any bankruptcy,  insolvency,  readjustment of debt, marshaling of
     assets  and  liabilities  or  similar  proceedings  of or  relating  to the
     Servicer or relating to all or substantially all of its property, (b) admit
     in writing its inability to pay its debts generally as they become due, (c)
     make an assignment for the benefit of its  creditors,  (d) be adjudicated a
     bankrupt or  insolvent,  (e)  commence a  voluntary  case under the federal
     bankruptcy  laws of the  United  States  of  America  or  file a  voluntary
     petition or answer seeking reorganization, an arrangement with creditors or
     an order for relief or seeking to take  advantage of any  insolvency law or
     file an answer  admitting  the  material  allegations  of a petition  filed
     against it in any bankruptcy,  reorganization  or insolvency  proceeding or
     (f) cause  corporate  action to be taken by it for the purpose of effecting
     any of the foregoing; or

          (ii) If without the application,  approval or consent of the Servicer,
     a proceeding  shall be instituted  in any court of competent  jurisdiction,
     under any law relating to bankruptcy, insolvency,  reorganization or relief
     of  debtors,  seeking in respect of the  Servicer an order for relief or an
     adjudication  in  bankruptcy,  reorganization,   dissolution,  winding  up,
     liquidation, a composition or arrangement with creditors, or a readjustment
     of debts, the appointment of a trustee,  receiver,  liquidator or custodian
     or similar entity with respect to the Servicer or of all or any substantial
     part of its  assets,  or other  like  relief in respect  thereof  under any
     bankruptcy or insolvency law, and, if such proceeding is being contested by
     the  Servicer in good  faith,  the same shall (a) result in the entry of an
     order for relief or any such  adjudication  or  appointment or (b) continue
     undismissed or pending and unstayed for any period of 60 consecutive  days;
     or

          (iii) The Servicer  shall fail to perform in any material  respect any
     one or more  of its  obligations  under  this  Agreement  (other  than  its
     obligations  referenced in clause (vi) below) and shall continue in default
     thereof for a period of 30 days after  receipt by the Servicer of a written
     notice from the Indenture Trustee, the Trust, any Noteholder, the Depositor
     or the  Note  Insurer  of  said  failure;  provided,  however,  that if the
     Servicer  demonstrates  to the reasonable  satisfaction of the Note Insurer
     that it is diligently  pursuing  corrective  action, the cure period may be
     extended for up to an additional 30 days; or

          (iv)  The  Servicer  shall  fail  to  cure  any  breach  of any of its
     representations and warranties set forth in this Agreement which materially
     and adversely  affects the interests of the Noteholders or the Note Insurer
     for a period of 30 days after  receipt by the Servicer of a written  notice
     from the Indenture Trustee, the Trust, any Noteholder, the Depositor or the
     Note  Insurer  of such  breach;  provided,  however,  that if the  Servicer
     demonstrates to the reasonable  satisfaction of the Note Insurer that it is
     diligently  pursuing  corrective  action, the cure period shall be extended
     for up to an additional 30 days; or

          (v) The  failure  by the  Servicer  to  make  when  due  any  required
     Servicing Advance for a period of 30 days following receipt by the Servicer
     of a written notice from the Indenture Trustee,  the Trust, any Noteholder,
     the Depositor or the Note Insurer of such failure; or

          (vi) The  failure by the  Servicer  to make any  required  Delinquency
     Advance  or to pay any  Compensating  Interest  or to pay over the  Monthly
     Remittance, Loan Purchase Prices and Substitution Adjustment Amounts; then,
     and in each and every such case,  so long as an Event of Default  shall not
     have been  remedied,  the Note  Insurer  or,  with the  consent of the Note
     Insurer,   the  Indenture  Trustee  (or  a  majority  in  interest  of  the
     Noteholders  acting on behalf of the  Indenture  Trustee)  may  remove  the
     Servicer upon the occurrence of any Servicer  Termination Event.  Whereupon
     all of the rights  (other than its rights to reimburse  for  advances)  and
     obligations, including its rights to the Servicing Fee, shall terminate. In
     addition,   the  Note   Insurer,   or  the  majority  in  interest  of  the
     Certificateholders  with the  consent of the Note  Insurer,  shall have the
     right to direct the Servicer to remove any  Subservicer as permitted  under
     the related  subservicing  agreement.  Such termination  shall be final and
     binding.  On or after the receipt by the Servicer of such  written  notice,
     all authority and power of the Servicer under this Agreement,  whether with
     respect to the Notes or the Mortgage Loans or otherwise,  shall pass to and
     be vested in the  Indenture  Trustee  pursuant  to and under  this  Section
     7.1(a); and, without limitation, the Indenture Trustee is hereby authorized
     and  empowered  to  execute  and  deliver,  on behalf of the  Servicer,  as
     attorney-in-fact or otherwise, any and all documents and other instruments,
     and to do or accomplish  all other acts or things  necessary or appropriate
     to effect the purposes of such notice of  termination,  whether to complete
     the transfer  and  endorsement  or  assignment  of the  Mortgage  Loans and
     related documents, or otherwise.  The Servicer agrees to cooperate with the
     Indenture   Trustee  in  effecting  the   termination   of  the  Servicer's
     responsibilities and rights hereunder,  including,  without limitation, the
     transfer  to the  Indenture  Trustee for  administration  by it of all cash
     amounts which shall at the time be credited by the Servicer to the Servicer
     Collection  Account or  thereafter be received with respect to the Mortgage
     Loans.

     (b)     Notwithstanding  the  foregoing,  if  a  Servicer Termination Event
described  in  clause  (vi) of Section 7.1(a) shall occur, the Indenture Trustee
shall, by notice in writing to the Servicer, which may be delivered by telecopy,
immediately suspend all of the rights and obligations of the Servicer thereafter
arising under this Agreement, but without prejudice to any rights it may have as
a  Noteholder  or to reimbursement of Delinquency Advances and other advances of
its own funds, and the Indenture Trustee shall act as provided in Section 7.1(c)
to  carry  out  the duties of the Servicer, including the obligation to make any
Delinquency  Advance  the  nonpayment  of which was a Servicer Termination Event
described  in  clause  (vi)  of  Section  7.1(a).  Any  such action taken by the
Indenture  Trustee  must  be  prior to the related Payment Date. If the Servicer
shall  within two Business Days following such suspension remit to the Indenture
Trustee  the  amount  of  any Delinquency Advance the nonpayment of which by the
Servicer  was  a  Servicer  Termination  Event  described in clause (vi) of this
Section  7.1(a),  the  Indenture Trustee shall permit the Servicer to resume its
rights  and  obligations as Servicer hereunder. The Servicer agrees that it will
reimburse  the  Indenture  Trustee  for  actual,  necessary and reasonable costs
incurred  by  the  Indenture  Trustee because of action taken pursuant to clause
(vi) Section 7.1(a). The Servicer agrees that if a Servicer Termination Event as
described  in  clause (vi) Section 7.1(a) shall occur more than two times in any
twelve-month  period,  the  Indenture  Trustee  shall  be under no obligation to
permit  the Servicer to resume its rights and obligations as Servicer hereunder.

     (c)     On and after the time the Servicer receives a notice of termination
pursuant  to  Section  7.1,  the Indenture Trustee shall be the successor in all
respects  to  the  Servicer  under  this  Agreement  and  under the Subservicing
Agreements  with  respect  to  the  Mortgage  Loans  and  with  respect  to  the
transactions  set forth or provided for herein and shall have all the rights and
powers  and  be  subject  to  all  the  responsibilities, duties and liabilities
relating  thereto arising after the Servicer receives such notice of termination
placed on the Servicer by the terms and provisions hereof and thereof, and shall
have the same limitations on liability herein granted to the Servicer; provided,
that  the Indenture Trustee shall not under any circumstances be responsible for
any  representations and warranties or any liability incurred by the Servicer at
or  prior  to the time the Servicer was terminated as Servicer and the Indenture
Trustee shall not be obligated to make a Delinquency Advance if it is prohibited
by  law  from so doing. As compensation therefor, the Indenture Trustee shall be
entitled  to  all  funds relating to the Mortgage Loans which the Servicer would
have been entitled to retain or to withdraw from the Servicer Collection Account
if  the Servicer had continued to act hereunder, except for those amounts due to
the Servicer as reimbursement for advances previously made or amounts previously
expended  and  that  are  otherwise  reimbursable hereunder. Notwithstanding the
above,  the  Indenture Trustee may, if it shall be unwilling to so act, or shall
if  it  is  unable  to  so  act,  appoint,  or  petition  a  court  of competent
jurisdiction  to  appoint,  any established housing and home finance institution
having a net worth of not less than $10,000,000 as the successor to the Servicer
hereunder  in  the assumption of all or any part of the responsibilities, duties
or  liabilities of the Servicer hereunder and under any Subservicing Agreements.
Pending  any such appointment, the Indenture Trustee is obligated to act in such
capacity.  In  connection  with  such  appointment and assumption, the Indenture
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, together with the compensation to the
Indenture  Trustee,  be  in excess of that permitted the Servicer hereunder. The
Indenture  Trustee  and  such successor shall take such actions, consistent with
this  Agreement,  as  shall  be  necessary  to  effectuate  any such succession.

     Section 7.2.  Notification to Certificateholders. Upon any such termination
                   ----------------------------------
or  appointment of a successor to the Servicer, the Indenture Trustee shall give
prompt  written  notice  thereof  to  Certificateholders  at  their  respective
addresses  appearing  in  the  Register.

                                  ARTICLE VIII

                                   Termination

     Section  8.1  Termination  of  Agreement.  All  obligations created by this
                   --------------------------
Agreement  will  terminate  upon the earlier of the payment to the Note Insurer,
the  Owners  and Certificateholders of all amounts held by the Indenture Trustee
and  required  to  be  paid  to  the  Note  Insurer,  such  Owners  and/or
Certificateholders pursuant to this Agreement upon the later to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto) of
the  last  Mortgage  Loan  in  the  Trust or (b) the disposition of all property
acquired  in  respect  of  any  Mortgage  Loan remaining in the Trust; provided,
however,  that  in  no event shall the trusts created hereby continue beyond the
expiration  of 21 years from the death of the survivor of the issue of Joseph P.
Kennedy,  the  late  ambassador  of the United States to the Court of St. James,
living  on  the  date  hereof.

Section  8.2  Termination  Upon  Exercise  of  Collateral  Purchase  Options and
              ------------------------------------------------------------------
Servicer's  Optional  Termination  Right.
----------------------------------------

     (a) On the  Payment  Date as to  which  the  Certificateholders  Collateral
Purchase  Option,  the Bear Stearns  Collateral  Purchase Option or the Optional
Termination  Right has been exercised and upon receipt of the  Certificateholder
Purchase Price,  the Bear Stearns  Purchase  Price, or the Optional  Termination
Price,  as  applicable,  and  payment  to  the  Note  Insurer,  Noteholders  and
Certificateholders of all amounts due them, this Agreement shall terminate.

     (b)  Promptly  following  any such  purchase,  the  Indenture  Trustee will
release the Files for the related Mortgage Loans with  appropriate  endorsements
and transfer documents,  to the Certificateholder,  Bear Stearns or the Servicer
(or the  Depositor in  accordance  with  Section  8.4),  or  otherwise  upon its
respective order.

     Section  8.3  Disposition  of  Proceeds.  The Indenture Trustee shall, upon
                   -------------------------
receipt  thereof,  deposit the proceeds of any liquidation or termination of the
Trust pursuant to this Article VIII to the Trustee Collection Account.  All such
proceeds  on deposit in the Trustee Collection Account shall be paid as provided
in  Section  5.2  hereof.  The Indenture Trustee shall withdraw from the Reserve
Account  an  amount  equal  to  the  funds  on  deposit  therein  and  if  the
Certificateholder  Collateral  Purchase  Option  or  the Bear Stearns Collateral
Purchase  Option  is  exercised apply such amounts against the Certificateholder
Purchase  Price  or  the  Bear  Stearns  Purchase  Price,  as  applicable,  and
otherwise,  shall  pay  such  amounts  to  the Certificate Distribution Account.

     Section  8.4     Optional Termination.  (a) On any Payment Date on or after
                      --------------------
the  date  on which the outstanding aggregate Loan Balance of the Mortgage Loans
is  equal  to  or  less  than  5%  of  the  Original Aggregate Loan Balance (the
"Optional Termination Date") and provided that the Swap Agreements are no longer
outstanding,  the  Servicer  may purchase from the Trust all (but not fewer than
all)  of  the  Mortgage  Loans,  the  Pooled  Certificates,  and  all  Property
theretofore  acquired in respect of any Mortgage by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust (the "Optional Termination
Right")  at  a  price (the "Optional Termination Price") equal to the sum of (i)
100%  of  the  aggregate  Loan  Balances  of the Mortgage Loans as of the day of
purchase  minus  amounts  remitted  from  the Servicer Collection Account to the
Trustee  Collection  Account,  representing  collections  of  principal  on  the
Mortgage  Loans  during the current Remittance Period, (ii) one month's interest
on such amount computed at the LIBOR Rate less the portion of Available Interest
Amounts  available  to pay interest on the Notes on such Payment Date, (iii) the
outstanding principal balance of the Pooled Certificates, the unpaid amounts due
and owing to the Note Insurer under the Insurance Agreement and reimbursement of
any  draws  under  the  Note  Insurance Policy, (iv) the aggregate amount of any
related  unreimbursed  Delinquency  Advances  and Servicing Advances and (v) any
LIBOR Interest Carryover Amount.  In connection with such purchase, the Servicer
shall  remit  to  the  Indenture Trustee all amounts then on deposit in Servicer
Collection  Account for deposit to the Trustee Collection Account, which deposit
shall  be  deemed  to  have  occurred  immediately  preceding  such  purchase.

     (b)  Promptly  following  any such  purchase,  the  Indenture  Trustee will
release the Files for the related Mortgage Loans with  appropriate  endorsements
and transfer documents,  to the extent provided by the Servicer, to the Servicer
or otherwise upon its order, and deliver the Pooled  Certificates  together with
executed bond powers in favor of the Servicer or its designee.

     (c) Notwithstanding the foregoing, the Servicer shall provide the Depositor
with 30 days' prior  written  notice of its  intention  to purchase the Mortgage
Loans, Pooled Certificates and such other Property and the Depositor may, at its
option, by notice to the Servicer and the Indenture Trustee to be given not less
than 10  Business  Days prior to the next  succeeding  Payment  Date,  receive a
preferential right in lieu of the Servicer to exercise the Optional  Termination
Right to purchase such Mortgage Loans, Pooled Certificates and other property on
the such Payment Date, at a price equal to Optional  Termination  Price.  If the
Depositor deposits the Optional  Termination Price with the Indenture Trustee on
such Payment Date, the Indenture  Trustee will release the Files for the related
Mortgage Loans with  appropriate  endorsements  and transfer  documents,  to the
Depositor  or  otherwise  upon its order,  and deliver  the Pooled  Certificates
together with executed bond powers in favor of the Depositor or its designee.

                                   ARTICLE IX

                            Miscellaneous Provisions

     Section  9.1  Amendment.  This  Agreement may be amended by the Issuer, the
                   ---------
Depositor,  the Servicer and the Indenture Trustee, with the consent of the Note
Insurer  (which  consent  may  not  be  unreasonably  withheld), but without the
consent  of  any  of  the  Noteholders  or  the  Certificateholders, to cure any
ambiguity  or  defect, to correct or supplement any provisions in this Agreement
or  for  the  purpose  of  adding any provisions to or changing in any manner or
eliminating  any  of  the  provisions  in  this Agreement or of modifying in any
manner  the  rights  of  the  Noteholders  or  the Certificateholders; provided,
however,  that  such  action  shall  not,  as evidenced by an opinion of counsel
delivered to the Indenture Trustee and the Note Insurer, adversely affect in any
material  respect  the  interests  of  the  Note  Insurer,  any  Noteholder  or
Certificateholder;  provided  further,  that no such opinion of counsel shall be
required  if the Person requesting such amendment furnishes the Issuer, the Note
Insurer  and  the Indenture Trustee with a letter from each Rating Agency to the
effect  that  such  amendment  will  not  cause  such Rating Agency to reduce or
withdraw  its  rating  of  the Notes without giving effect to the Note Insurance
Policy.

     This  Agreement  may  also  be amended from time to time by the Issuer, the
Depositor,  the Servicer and the Indenture Trustee, with the consent of the Note
Insurer, the consent of the Holders of Notes evidencing not less than a majority
of  the  principal balance of each class of Notes and the consent of the Holders
of  Certificates  evidencing not less than a majority of the Certificate Balance
of  the  Certificates  (if such Holders are adversely affected thereby), for the
purpose of adding any provisions to or changing in any manner or eliminating any
of  the provisions of this Agreement or of modifying in any manner the rights of
the  Noteholders  or  the  Certificateholders;  provided,  however, that no such
amendment  shall  (a)  increase  or  reduce  in  any  manner  the  amount of, or
accelerate  or  delay  the timing of, distributions that shall be required to be
made  for the benefit of the Noteholders or the Certificateholders or (b) reduce
the  aforesaid  percentages  of  the  Notes and the Certificates, the Holders of
which  are required to consent to any such amendment, without the consent of the
Holders  of  all the outstanding Notes and/or the Holders of all the outstanding
Certificates  affected  thereby.

     Promptly  after  its  execution  of any amendment pursuant to the preceding
paragraph,  the  Indenture  Trustee  shall  furnish  written notification of the
substance  of  such  amendment  or  consent  to  each  Rating  Agency  and  each
Certificateholder.

     It  shall  not  be  necessary  for the consent of the Certificateholders or
Noteholders  pursuant  to  this  Section  to  approve the particular form of any
proposed  amendment or consent, but it shall be sufficient if such consent shall
approve  the  substance  thereof.

     Section  9.2.     Notices  and  Copies  to  Rating  Agencies  and  the Note
                       ---------------------------------------------------------
Insurer.

     (a)  The  Indenture   Trustee  shall  notify  the  Rating   Agencies,   the
Certificateholder and the Note Insurer of the occurrence of any of the following
events, in the manner provided in Section 9.3:

          (i) the occurrence of a Servicer Termination Event pursuant to Section
     7.1; and
          (ii) the appointment of a successor Servicer pursuant to Section 7.2.
     (b) The Servicer  shall notify the Rating  Agencies and the Note Insurer of
the occurrence of any of the following  events, or in the case of clauses (iii),
(v) and (vi) promptly upon receiving  notice thereof,  in the manner provided in
Section 9.3:

          (i) any amendment of this Agreement pursuant to Section 9.1;

          (ii) the appointment of a successor  Indenture Trustee pursuant to the
     Indenture;

          (iii) any change in the location of the Servicer Collection Account or
     any Principal and Interest Account;

          (iv) [RESERVED];

          (v) the  repurchase  of any Mortgage  Loan pursuant to Sections 2.2 or
     under  Exhibit  D, or the  repurchase  of the  outstanding  Mortgage  Loans
     pursuant to Section 8.4;

          (vi) the  occurrence of the final Payment Date or the  termination  of
     the trust pursuant to Article VIII;

          (vii) the  failure of the  Servicer to make a  Delinquency  Advance in
     lieu  of the  related  Subservicer  following  a  determination  that  such
     Delinquency  Advance  would not be a  Nonrecoverable  Advance  pursuant  to
     Section 4.9A; and

          (viii)  the  failure of the  Servicer  to make a  determination  on or
     before the  Remittance  Date  regarding  whether it will make a Delinquency
     Advance in lieu of the related  Subservicer when a shortfall exists between
     (x) payments  scheduled  to be received in respect of the related  Mortgage
     Loans and (y) the amounts  actually  deposited in the  Servicer  Collection
     Account on account of such payments, pursuant to Section 4.9A.

     The Servicer shall provide copies of any other statements or reports to the
Rating  Agencies  and  the  Note  Insurer  in  such  time  and  manner that such
statements  or  determinations  are  required  to  be  provided  to Noteholders.

     Section  9.3  Notices.  All  notices  hereunder  shall be given as follows,
                   -------
until  any superseding instructions are given to all other Persons listed below:

  The Indenture Trustee: Bankers  Trust  Company  of
                         California,  N.A.
                         3  Park  Plaza;  16th  Floor
                         Irvine,  California  92614
                         Attention:  Corporate  Trust - TMA Mortgage Funding
                                     Trust  I
                         Tel:  (949)  253-7575
                         Fax:  (949)  253-7577
  The  Depositor:        Thornburg  Mortgage  Funding  Corporation
                         18881  Von  Karman  Avenue,  Suite  1450
                         Irvine,  CA  92612
                         Attention:  Richard  P.  Story
                         Tel:  (949)  660-0012
                         Fax:  (949)  660-7799
  The  Servicer:         PNC  Mortgage  Securities  Corp.
                         75  N.  Fairway  Dr.
                         Vernon  Hills,  IL  60061
                         (or such other address as may hereafter be furnished to
                          the Indenture Trustee in
                         writing  by  the  Servicer)
                         Attention:  General  Counsel,  with  a  copy  to the
                                       Master Servicing Department
                         Tel:  (847)  549-2315
                         Fax:  (847)  549-2967
  Note  Insurer:         Ambac  Assurance  Corporation
                         One  State  Street  Plaza,  17th  Floor
                         New  York,  NY  10004
                         Attention:  Structured  Finance-Mortgage-Backed
                                     Securities
                         Tel:  (212)  208-3387
                         Fax:  (212)  363-1459
  The  Issuer:           TMA  Mortgage  Funding  Trust  I
                         c/o  Wilmington  Trust  Company
                         Rodney  Square  North
                         1100  North  Market  Street
                         Wilmington,  Delaware  19890
                         Tel:  (302)  651-1000
                         Fax:  (302)  651-1576

  Moody's:               Moody's  Investors  Service
                         99  Church  Street
                         New  York,  New  York  10007
                         Attention:  ABS  Monitoring  Department

  S&P:                   Standard  &  Poor's
                         26  Broadway
                         15th  Floor
                         New  York,  New  York  10004
                         Attention:  ABS  Surveillance  Dept.

     Section 9.4  Limitations on Rights of Others.  Nothing in this Agreement or
                  -------------------------------
in  any  Note,  expressed  or  implied, shall give to any Person, other than the
parties  hereto  and their respective successors hereunder, the Note Insurer and
the  Noteholders,  any  benefit or any legal or equitable right, remedy or claim
under  this  Agreement.

     Section  9.5  Severability.  Any  provision  of  this  Agreement  that  is
                   ------------
prohibited  or unenforceable in any jurisdiction shall, as to such jurisdiction,
be  ineffective  to  the  extent of such prohibition or unenforceability without
invalidating  the  remaining  provisions  hereof,  and  any  such prohibition or
unenforceability  in  any  jurisdiction  shall  not  invalidate  or  render
unenforceable  such  provision  in  any  other  jurisdiction.

     Section  9.6  Separate Counterparts.  This Agreement may be executed by the
                   ---------------------
parties  hereto  in  separate  counterparts,  each of which when so executed and
delivered  shall  be  an  original,  but  all  such  counterparts shall together
constitute  but  one  and  the  same  instrument.

     Section  9.7  Headings.  The  headings of the various Articles and Sections
                   --------
herein  are  for convenience of reference only and shall not define or limit any
of  the  terms  or  provisions  hereof.

     Section 9.8 Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
                 -------------
WITH  THE  LAWS  OF  THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAWS  PROVISIONS,  AND  THE  OBLIGATIONS,  RIGHTS  AND  REMEDIES  OF THE PARTIES
HEREUNDER  SHALL  BE  DETERMINED  IN  ACCORDANCE  WITH  SUCH  LAWS.

     Section  9.9  Assignment  to  Indenture  Trustee.  The  Depositor  hereby
                   ----------------------------------
acknowledges  and  consents  to  any mortgage, pledge, assignment and grant of a
security  interest  by  the  Issuer  to  the  Indenture  Trustee pursuant to the
Indenture  for  the benefit of the Noteholders, the Certificateholders, the Note
Insurer and the Swap Counterparty of all right, title and interest of the Issuer
in,  to  and  under the Trust Estate, including among other things, the Mortgage
Loans  and  the  Pooled  Certificates and/or the assignment of any or all of the
Issuer's  rights  and obligations hereunder, under the Collateral Sale Agreement
and  under  the  Swap  Agreements  to  the  Indenture  Trustee.

     Section  9.10  Limitation  of  Liability  of  Owner  Trustee  and Indenture
                    ------------------------------------------------------------
Trustee.
-------

     (a)     Notwithstanding  anything  contained  herein  to the contrary, this
Agreement  has  been executed by Wilmington Trust Company, not in its individual
capacity  but  solely  in its capacity as Owner Trustee of the Issuer, and in no
event  shall Wilmington Trust Company, in its individual capacity, or, except as
expressly  provided in the Trust Agreement, as Owner Trustee, have any liability
for  the representations, warranties, covenants, agreements or other obligations
of  the Issuer hereunder or under any of the certificates, notices or agreements
delivered  pursuant  hereto,  as to all of which recourse shall be had solely to
the  assets  of  the  Issuer.  For  all  purposes  of  this  Agreement,  in  the
performance  of its duties or obligations hereunder or in the performance of any
duties  or  obligations  of  the  Issuer  hereunder,  the Owner Trustee shall be
subject  to,  and  entitled  to  the  benefits  of,  the terms and provisions of
Articles  VI,  VII  and  VIII  of  the  Trust  Agreement.

     (b)     Notwithstanding  anything  contained  herein  to the contrary, this
Agreement  has been executed by Bankers Trust Company of California, N.A. not in
its  individual capacity but solely as Indenture Trustee and Paying Agent and in
no  event shall Bankers Trust Company of California, N.A. have any liability for
the  representations,  warranties, covenants, agreements or other obligations of
the  Issuer  hereunder  or  in  any  of  the certificates, notices or agreements
delivered  pursuant  hereto,  as to all of which recourse shall be had solely to
the  assets  of  the  Issuer.

     Section  9.11  Independence  of  the  Servicer.  For  all  purposes of this
                    -------------------------------
Agreement,  the  Servicer  shall  be  an independent contractor and shall not be
subject  to  the supervision of the Issuer or the Indenture Trustee with respect
to  the  manner  in  which  it  accomplishes  the performance of its obligations
hereunder.  Unless  expressly  authorized by the Issuer, the Servicer shall have
no  authority to act for or represent the Issuer or the Indenture Trustee in any
way  and  shall  not otherwise be deemed an agent of the Issuer or the Indenture
Trustee.

     Section  9.12   No  Joint Venture.  Nothing contained in this Agreement (i)
                     -----------------
shall  constitute the Servicer and either of the Issuer or the Indenture Trustee
as  members  of  any  partnership,  joint  venture,  association,  syndicate,
unincorporated  business  or  other  separate entity, (ii) shall be construed to
impose  any  liability as such on any of them or (iii) shall be deemed to confer
on  any  of  them  any  express,  implied  or  apparent  authority  to incur any
obligation  or  liability  on  behalf  of  the  others.

     Section  9.13   Note  Insurer.  Any  right  conferred  on  the Note Insurer
                     -------------
herein  shall  not  arise  until  the  issuance  by the Note Insurer of its Note
Insurance  Policy and may be suspended or terminated as provided in Section 9.14
below  (except that subrogation rights which have previously arisen shall not be
so suspended).  During the period of any such suspension, all such rights of the
Note  Insurer  shall vest in the Owners, and may be exercised by the Owners of a
majority  of  the  Class  Principal  Balance  of  the  Notes.

     Section  9.14     Rights  of  the  Note Insurer.  So long as there does not
                       -----------------------------
exist  a failure by the Note Insurer to make a required payment under either the
Note  Insurance Policy or the Swap Insurance Policy, the Note Insurer shall have
the  right  to exercise and may exercise, without the consent of the Noteholders
or  the  Certificateholders,  each  and  every  right of the Noteholders granted
pursuant  to  this  Indenture  and  the  Noteholders shall not exercise any such
rights  except  upon  the  prior  written consent of the Note Insurer hereunder;
provided,  however, that any right conferred on the Note Insurer hereunder shall
be  suspended  during  any period in which the Note Insurer is in default in its
payment obligations under either the Note Insurance Policy or the Swap Insurance
Policy.  At  such  time  as  the Notes are no longer outstanding, and no amounts
owed  to  the  Note  Insurer  remain unpaid, the Note Insurer's rights hereunder
shall  terminate.

     Section  9.15  Exhibits.  The  Exhibits referred to herein are incorporated
                    --------
herein  as  an  integral  part  hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

          IN  WITNESS  WHEREOF, the parties hereto have caused this Agreement to
be  duly  executed and delivered by their respective duly authorized officers as
of  the  day  and  year  first  above  written.

                            TMA  MORTGAGE  FUNDING  TRUST  I,
                            Issuer
                            By:     WILMINGTON  TRUST  COMPANY,
                                    not in its individual capacity but solely as
                                    Owner  Trustee


                            By:____________________________________
                                  Name:
                                  Title:
                            THORNBURG MORTGAGE FUNDING CORPORATION, Depositor



                            By:____________________________________
                                  Name:
                                  Title:

                            PNC  MORTGAGE  SECURITIES  CORP.,  Servicer


                            By:____________________________________
                                  Name:
                                  Title:

                            BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as
                            Indenture  Trustee


                            By:____________________________________
                                  Name:
                                  Title:

                                   APPENDIX A

                                   Definitions

                                    EXHIBIT A

                                   [Reserved]

                                    EXHIBIT B

                  INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
                  ---------------------------------------------

     Bankers  Trust Company of California, N.A., a national banking corporation,
in  its  capacity  as  Indenture  Trustee  (the  "Indenture Trustee") under that
certain Sale and Servicing Agreement dated as of December 1, 1998 (the "Sale and
Servicing  Agreement")  among  TMA  Mortgage  Funding  Trust  I,  as issuer (the
"Issuer"),  Thornburg  Mortgage  Funding  Corporation,  as  depositor  (the
"Depositor"),  PNC  Mortgage  Securities  Corp.,  as  master  servicer  (the
"Servicer"), and the Indenture Trustee, hereby acknowledges receipt of the items
required to be delivered to it pursuant to Section 2.2 of the Sale and Servicing
Agreement  with  respect  to the Mortgage Loans, the Pooled Certificates and the
Swap  Agreements.

     The  Schedules  of  Mortgage Loans, Pooled Certificates and Swap Agreements
are  attached  to  this  Receipt.

     The Indenture Trustee hereby additionally acknowledges that it shall review
such  items  as  required  by  Section  2.2 of the Sale and Servicing Agreement.
     BANKERS  TRUST  COMPANY  OF     CALIFORNIA,  N.A.,  as  Indenture  Trustee

                                   By:______________________________
                                        Name:____________________________
                                        Title:_____________________________

Dated:     December  __,  1998


                                    EXHIBIT C

                               POOL CERTIFICATION
                               ------------------

          WHEREAS,  the  undersigned  is an Authorized  Officer of Bankers Trust
Company of  California,  N.A.,  a national  banking  corporation,  acting in its
capacity as indenture  trustee (the  "Indenture  Trustee") of a pool of mortgage
loans (the  "Mortgage  Loans")  heretofore  conveyed  in trust to the  Indenture
Trustee,  pursuant to that  certain  Sale and  Servicing  Agreement  dated as of
December 1, 1998 (the "Sale and Servicing Agreement") among TMA Mortgage Funding
Trust I, as issuer (the "Issuer"),  Thornburg Mortgage Funding  Corporation,  as
depositor (the "Depositor"),  PNC Mortgage  Securities Corp., as master servicer
(the "Servicer"), and the Indenture Trustee; and

          WHEREAS, the Indenture Trustee is required, pursuant to Section 2.2 of
the Sale and Servicing  Agreement,  to review the Files relating to the Mortgage
Loans  within a specified  period  following  the Closing Date and to notify the
Depositor,  the Seller and the Note Insurer promptly of any defects with respect
to the  Mortgage  Loans,  and the  Depositor or the Seller is required to remedy
such defects or take certain  other  action,  all as set forth in Section 2.2 of
the Sale and Servicing Agreement; and

          WHEREAS,  Section 2.2 of the Sale and Servicing Agreement requires the
Indenture  Trustee to deliver this Pool  Certification  upon the satisfaction of
certain conditions set forth therein.

          NOW, THEREFORE, the Indenture Trustee hereby certifies that, except as
provided in the attached  exception  report, it has determined that all required
documents  (or certified  copies of documents  listed in Section 2.2 of the Sale
and Servicing Agreement) have been executed or received, and that such documents
relate to the  Mortgage  Loans  identified  in the  Schedule of  Mortgage  Loans
pursuant  to Section  2.2 of the Sale and  Servicing  Agreement.  The  Indenture
Trustee makes no representation or certification  hereby,  however, (i) that any
such document is genuine, valid, recordable,  sufficient,  suitable,  insurable,
collectable,  enforceable,  or appropriate for the  represented  purpose or that
they are other than what they  purport to be on their face and (ii) with respect
to any intervening assignments or assumption and modification agreements.

                                   By:______________________________
                                        Name:____________________________
                                        Title:_____________________________

Dated:  ______________,  199_

                                    EXHIBIT D

                         Part I.  Delivery Requirements


     (a)     On  or  prior  to the Closing Date, the Seller shall deliver to the
Indenture  Trustee,  as  designee of the Purchaser, the following documents with
respect  to  each  of  the  Mortgage  Loans  sold  by  it  on  the Closing Date:

          (i) the original  Mortgage Note,  endorsed  without  recourse,  to the
     order of the Indenture Trustee,  as designee of the Purchaser,  or in blank
     and showing an  unbroken  chain of  endorsements  from the  original  payee
     thereof to the person endorsing it to the Indenture Trustee, as designee of
     the purchaser;  provided however, that with respect to three Mortgage Notes
     with an  aggregate  outstanding  principal  balance of  $525,019  as of the
     Cut-off  Date with  respect to the  Mortgage  Loans,  the  Seller  will not
     provide  the  original  Mortgage  Notes.  In lieu  thereof  the Seller will
     provide lost note affidavits;

          (ii) either (1) the  original  Mortgage  with  evidence  of  recording
     thereon, (2) a copy of the Mortgage certified as a true copy by the related
     Originator,  a third party seller,  a title closer or a settlement agent or
     an attorney where the original  Mortgage has been transmitted for recording
     until such time as the original or certified copy is returned by the public
     recording  office or (3) a copy of the  Mortgage  certified  by the  public
     recording  office in those instances where the original  recorded  Mortgage
     has been retained by the public recording office or has been lost;

          (iii)  a copy  of an  assignment  of  the  Mortgage  to the  Indenture
     Trustee, as designee of the Purchaser, or in blank, in a form for recording
     or  filing,  as may be  appropriate  in the  state  where the  Property  is
     located;

          (iv) a copy of each title insurance  policy or, if such policy has not
     yet been issued, a commitment or binder therefor;

          (v)  originals  of  each  intervening   assignment  with  evidence  of
     recording  thereon showing a complete chain of title from the originator to
     the  Seller,  or if the  original  of any such  intervening  assignment  is
     unavailable,  a copy certified as a true copy by the related Originator,  a
     third party  seller,  a title closer or a  settlement  agent or an attorney
     until such time as the original or a copy certified by the public recording
     office is returned;

          (vi) originals of all assumptions and modification agreements, if any;

          (vii)  with  respect  to each  Mortgage  Loan  secured  by  Additional
     Collateral,  the  original  assignment  of  the  related  pledge  agreement
     concerning such Additional Collateral, together with a copy of such related
     pledge  agreement;  a copy of each related UCC-1 filing  statement,  and an
     original UCC-3 filing statement, where applicable,  together with a copy of
     all  applicable  and  executed  notices  of  assignment;  and  an  original
     assignment of all related servicing agreements,  mortgages,  guarantees and
     other  documents  executed and delivered to the Seller in  connection  with
     such Additional Collateral; and

          (viii) with respect to each Cooperative Loan, the related  Cooperative
     Note, the original security  agreement,  the proprietary lease or occupancy
     agreement,  the related stock  certificate and blank stock power and a copy
     of the original filed financing  statement together with assignments to the
     Indenture Trustee in a form sufficient for filing;

provided,  however,  that  the documents listed in clauses (ii)-(vii) above may,
--------   -------
but  need  not be delivered on the Closing Date and if not so delivered shall be
delivered  within  30  days  after  the  Closing  Date.

     (b) Within 30 days after the Closing Date, the Seller, at its sole cost and
expense,  shall  cause  assignments  of the  Mortgages  from the  Seller  to the
Indenture  Trustee,  as designee of the Purchaser,  promptly to be submitted for
recording in the appropriate jurisdictions;  provided,  however, that the Seller
is not required to submit an  assignment  for any Mortgage with respect to which
the original recording information is lacking or in states where, in the opinion
of counsel  acceptable  to the  Purchaser,  the Note  Insurer and the  Indenture
Trustee, such filing or recording is not required to protect the Purchaser's and
the Indenture  Trustee's  interest in the Mortgage  Loan against  sale,  further
assignment, satisfaction or discharge by the Purchaser, the Trust, the Servicer,
the related Subservicer or the Seller.

     (c) The Seller  shall  deliver  the  original  or  certified  copies of the
Mortgages,  as the case may be, and any such recorded  assignments  or certified
copies thereof,  together with originals or duly certified copies of any and all
prior recorded  assignments,  to the Indenture Trustee within 30 days of receipt
thereof by the Seller (but in any event within one year after the Closing Date).

     (d)  Notwithstanding  anything to the contrary contained in this Part I, in
those instances where the public recording office retains the original Mortgage,
the  assignment  of a Mortgage or the  intervening  assignments  of the Mortgage
after it has been  recorded,  the Seller shall be deemed to have  satisfied  its
obligations hereunder upon delivery to the Indenture Trustee, as the designee of
the Purchaser,  of a true and correct copy of such Mortgage,  such assignment or
assignments of Mortgage, duly certified by the applicable recorder's office.

     (e) The Seller  covenants and agrees with respect to the Mortgage Loans (i)
to  maintain  (or  cause to be  maintained  by the  applicable  Subservicer)  on
microfiche  (or other  permanent  storage  media) a copy of each original  title
insurance  policy and to furnish a copy  thereof  to the Note  Insurer  upon its
request or to the  Indenture  Trustee,  as  designee  of the  Purchaser,  or the
Servicer if  necessary in order to present  claims  under such  policy,  (ii) to
provide to the Indenture Trustee, as designee of the Purchaser,  or the Servicer
a  certified  copy of any  Mortgage  or  intervening  assignment  which  was not
delivered  on the  Closing  Date  and has not  been  subsequently  delivered  as
provided in (c) above if  necessary  to permit the Servicer to take actions with
respect to the  related  Mortgage  Loan and (iii) to take all  action  necessary
under  applicable  state law to transfer  the  benefits of the lien and security
interest in the related  Property to the Indenture  Trustee,  as the designee of
the Purchaser.

     (f) In the case of any  Mortgage  Loan which has been prepaid in full after
the Cut-off  Date with  respect to the  Mortgage  Loans and prior to the Closing
Date, the Seller,  in lieu of the foregoing,  will cause the Servicer to deliver
within 15 days  after  the  Closing  Date to the  Indenture  Trustee  and to the
Purchaser  a  certification  of an  Authorized  Officer in the form set forth as
Exhibit G hereto.

     (g)  At  the  direction  of  the  Indenture  Trustee,  as  designee  of the
Purchaser,  the  Seller  shall  (or shall cause an Affiliate to) sell, transfer,
assign,  set  over  and  otherwise  convey  without  recourse,  to the Indenture
Trustee,  as  designee  of  the  Purchaser, all right, title and interest of the
Seller  (or  of  such  Affiliate)  in  and to any Qualified Replacement Mortgage
delivered to the Indenture Trustee by the Seller (or such Affiliate) pursuant to
Section  3.1  of  the Collateral Sale Agreement (and Part III of this Exhibit D)
and  all  its  right,  title  and  interest  to principal collected and interest
accrued  on  such  Qualified  Replacement  Mortgage  on and after the applicable
Replacement Cut-off Date; provided, however, that the Seller (or such Affiliate)
                          --------  -------
shall  reserve  and  retain  all right, title and interest in and to payments of
principal  collected and interest accrued on such Qualified Replacement Mortgage
prior  to  the  applicable  Replacement  Cut-off  Date.

     (h)  As  to  each  Mortgage  Loan  reconveyed  by  the Indenture Trustee in
connection with the conveyance of a Qualified Replacement Mortgage therefor or a
required  repurchase  thereof, the Purchaser shall, or shall cause the Indenture
Trustee  to,  sell,  transfer,  assign,  set  over  and otherwise convey without
recourse,  on the Seller's order, all of its right, title and interest in and to
such  conveyed  Mortgage Loan and all the Purchaser's or the Indenture Trustee's
right,  title  and  interest to principal collected and interest accrued on such
released  Mortgage Loan after the applicable Replacement Cut-off Date; provided,
                                                                       --------
however,  that  the  Purchaser or the Indenture Trustee shall reserve and retain
-------
all  right,  title  and  interest  in and to payments of principal collected and
interest  accrued  on  such conveyed Mortgage Loan on or prior to the applicable
Replacement  Cut-off  Date.

     (i)  In  connection  with  any  transfer  and  assignment  of  a  Qualified
Replacement Mortgage to the Indenture Trustee, as designee of the Purchaser, the
Seller  agrees  with  respect to each Qualified Replacement Mortgage transferred
and  assigned  by it to (i) deliver or cause to be delivered without recourse to
the  Indenture  Trustee as designee of the Purchaser, on the date of delivery of
such  Qualified  Replacement  Mortgage  all documents required by Part I of this
Exhibit  D, (ii) in instances required by paragraph (b) above, cause promptly to
be  recorded  an  assignment  in  the  appropriate jurisdiction to the Indenture
Trustee,  and  (iii)  deliver  or  cause  to be delivered the original Qualified
Replacement  Mortgage  and such recorded assignment or certified copies of each,
together  with  original  or duly certified copies of any and all prior recorded
assignments,  to  the Indenture Trustee, as designee of the Purchaser, within 30
days  of  receipt  thereof by the Seller (but in any event within one year after
the  date  of  conveyance  of  such  Qualified  Replacement  Mortgage).

     (j)  As  to each Mortgage Loan reconveyed by the Purchaser or the Indenture
Trustee in connection with the conveyance of a Qualified Replacement Mortgage or
a  required repurchase of such Mortgage Loan, the Purchaser shall or shall cause
the  Indenture  Trustee  to  deliver on the date of conveyance of such Qualified
Replacement  Mortgage  and  on  the  order  of  the Seller (i) the original Note
relating  thereto,  endorsed  without  recourse, to the Seller (or to such other
party  as  the  Seller  directs)  (ii) the original Mortgage so released and all
recorded  assignments  relating  thereto, (iii) an assignment from the Indenture
Trustee to the Seller (or to such other party as the Seller directs) executed by
the  Indenture  Trustee in the same form as the assignment referred to in clause
(iii)  of  clause  (a)  above  of  this Part I, and (iv) such other documents as
constituted  the  File  with  respect  thereto.

     (k)  If  a  Mortgage assignment is lost during the process of recording, or
is  returned  from the recorder's office unrecorded due to a defect therein, the
Seller  shall  prepare  a substitute assignment or cure such defect, as the case
may  be,  and  thereafter  cause  each  such  assignment  to  be  duly recorded.

     (l)  If  the  Seller  receives  notice  from  the  Indenture  Trustee,  the
Purchaser,  the Servicer or the Note Insurer pursuant to Section 2.2 of the Sale
and  Servicing  Agreement that any required item has not been received, and such
item  materially and adversely affects the interest of the Noteholders or of the
Note  Insurer  in the related Mortgage Loan, the Seller agrees to use reasonable
efforts to remedy a material defect in a document constituting part of a File of
which  it  is  so  notified.  If,  however,  within  90  days after notice to it
respecting  such  defect  the Seller has not remedied, or caused to be remedied,
the  defect  and the defect materially and adversely affects the interest of the
Noteholders  and  the Note Insurer in the related Mortgage Loan, the Seller will
on  the  next succeeding Remittance Date (i) substitute in lieu of such Mortgage
Loan  a  Qualified  Replacement Mortgage and deliver the Substitution Adjustment
Amount  related  thereto  directly  to  the Servicer for deposit in the Servicer
Collection Account or (ii) purchase such Mortgage Loan at a purchase price equal
to  the  Loan  Purchase  Price  thereof, which purchase price shall be delivered
directly  to  the  Servicer  for  deposit  in  the  Servicer Collection Account.

     (m)  On  or  prior  to  the  Closing  Date, the Seller shall deliver to the
Indenture Trustee, as designee of the Purchaser the Pooled Certificates together
with  bond  powers  executed  in  favor of "BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.,  AS  INDENTURE  TRUSTEE  FOR  THORNBURG  MORTGAGE  FUNDING TRUST I, SERIES
1998-1"  together with any transferor documents and opinions of counsel required
by  the  Trust  Agreement,  dated as of October 29, 1993 between CS First Boston
Mortgage  Securities  Corp., as seller, and First Trust National Association, as
trustee,  regarding  the  Pooled Certificates sufficient to enable the Indenture
Trustee  to  effect  the  record  transfer  to  its  name.

     (n) On the Closing Date,  the Seller shall deliver to the Purchaser and the
Indenture Trustee a Confirmation of Assignment of the Swap Agreements,  executed
by the Swap Counterparty,  the Seller and the Trust, and dated as of the Closing
Date.

             Part II.  Representations and Warranties of the Seller
                          Concerning the Mortgage Loans


     The  Seller  hereby  represents  and  warrants  to  the Purchaser as of the
Closing  Date  or such other date as may be specified below with respect to each
Mortgage  Loan  being  sold  by  it:

     (a) The  information  set forth in the Schedule of Mortgage  Loans is true,
complete  and correct in all material  respects as of the Mortgage  Loan Cut-off
Date;

     (b) [Reserved].

     (c) As of the Mortgage Loan Cut-off Date, no Mortgage Loan is delinquent in
payment  more than 89 days,  no more  than 1  Mortgage  Loan  with an  aggregate
outstanding  principal  balance of $112,799 as of the Mortgage Loan Cut-Off Date
is 60 to 89 days delinquent and no more than 51 Mortgage Loans with an aggregate
outstanding  principal  balance of  $22,470,003  as of the Mortgage Loan Cut-Off
Date are 30 to 59 days  delinquent  and no  Mortgage  Loan has been  dishonored;
other than such payment delinquencies,  there are no defaults under the terms of
the Mortgage Loan; and the Seller has not advanced funds, or induced,  solicited
or knowingly  received any advance of funds from a party other than the owner of
the Property subject to the Mortgage, directly or indirectly, for the payment of
any amount required by the Mortgage Loan;

     (d) Except for those delinquent loans referenced in (c) above, there are no
delinquent taxes,  ground rents,  assessments or other  outstanding  charges and
with respect to Cooperative Loans, no delinquent maintenance charges,  affecting
the lien priority of the related Property;

     (e) The  Mortgage  Note and the  Mortgage  are not  subject to any right of
rescission,  set-off,  counterclaim or defense,  including the defense of usury,
nor  will  the  operation  of any of the  terms  of the  Mortgage  Note  and the
Mortgage,  or the exercise of any right thereunder,  render the Mortgage Note or
Mortgage  unenforceable,  in  whole  or in  part,  or  subject  to any  right of
rescission,  set-off,  counterclaim or defense,  including the defense of usury,
and no such right of  rescission,  set-off,  counterclaim  or  defense  has been
asserted with respect thereto;

     (f) As of the Closing Date, the Mortgage has not been  satisfied,  canceled
or  subordinated,  in whole or in part, or  rescinded,  and the Property has not
been released from the lien of the  Mortgage,  in whole or in part,  except with
respect to certain  releases in part that do not materially  affect the value of
the Property,  nor has any  instrument  been executed that would effect any such
satisfaction, release, cancellation, subordination or rescission;

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

     (h) Except for those  delinquent  Mortgage  Loans referred to in (c) above,
there is no default,  breach,  violation or event of acceleration existing under
the Mortgage or the related Mortgage Note and no event,  which, with the passage
of time or with notice and the  expiration  of any grace or cure  period,  would
constitute a default, breach,  violation or event permitting  acceleration;  and
neither  the Seller nor any prior  mortgagee  has  waived any  default,  breach,
violation or event permitting acceleration;

     (i) There are no  mechanics,  or  similar  liens or claims  which have been
filed for work,  labor or material  affecting the related  Property which are or
may be liens prior to or equal to the lien of the related Mortgage;

     (j)  All  improvements  subject  to the  Mortgage  lie  wholly  within  the
boundaries and building restriction lines of the Property (and wholly within the
project with respect to a condominium unit) except for de minimus  encroachments
                                                       -- -------
permitted by the Fannie Mae Guide (MBS Special  Servicing  Option) and which has
been  noted  on the  appraisal,  and no  improvements  on  adjoining  properties
encroach  upon the Property  except  those which are insured  against by a title
insurance policy and all improvements on the property comply with all applicable
zoning and subdivision laws and ordinances;

     (k) The Property (and in the case of a Cooperative  Loan,  the  Cooperative
Unit related  thereto)  currently is free of damage and waste or any such damage
and waste is adequately  covered by an insurance policy, and there currently is,
no proceeding pending for the total or partial condemnation thereof;

     (l) Except with respect to nine Mortgage Loans aggregating $4,077,764.75 as
of the Mortgage  Loan Cut-off Date as to which  primary  mortgage  insurance was
subsequently  purchased  and which will be  maintained  until the  Loan-to-Value
Ratio of such Mortgage  Loans is reduced to 80.00%,  the original  Loan-to-Value
Ratio of each  Mortgage  Loan either was not more than 95.00% or the excess over
80.00% is insured as to payments defaults by a Primary Mortgage Insurance Policy
issued by a primary  mortgage  insurer  acceptable to Fannie Mae and Freddie Mac
until the Loan-to-Value Ratio of such Mortgage Loan is reduced to 80.00%;

     (m) (I) With respect to each Mortgage  Loan other than a Cooperative  Loan,
the Mortgage is a valid and enforceable  first lien on the property securing the
related Mortgage Note.  Where the Property  consists of residential real estate,
the lien  includes  all  buildings on the  Property  and all  installations  and
mechanical,  electrical,  plumbing, heating and air conditioning systems located
in or annexed to such building, and all additions, alterations, and replacements
made at any time with respect to the  foregoing.  Each  Property is owned by the
Mortgagor  in fee simple  (except  with  respect to common  areas in the case of
condominiums,  PUDs and de minimis  PUDs) or by leasehold for a term longer than
                        ----------
the term of the related  Mortgage,  subject only to (i) the lien of current real
property taxes and  assessments,  (ii) covenants,  conditions and  restrictions,
rights of way,  easements  and other  matters of public record as of the date of
recording of such Mortgage, such exceptions being acceptable to mortgage lending
institutions  generally or specifically  reflected in the appraisal  obtained in
connection with the  origination of the related  Mortgage Loan or referred to in
the lender's title insurance  policy  delivered to the originator of the related
Mortgage  Loan and (iii) other  matters to which like  properties  are  commonly
subject  which do not  materially  interfere  with the  benefits of the security
intended  to be provided  by such  Mortgage.  Any  security  agreement,  chattel
mortgage or equivalent  document related to and delivered in connection with the
Mortgage  Loan  and  Additional  Collateral  establishes  and  creates  a valid,
subsisting and enforceable  first lien and first priority  security  interest on
the Property and any Additional  Collateral for the Mortgage Loan and the Seller
has full  right to sell and  assign  the same to the  Purchaser;  and (II)  with
respect to each  Cooperative  Loan,  the Mortgage  creates a first lien or first
priority  interest on the property  securing the related Mortgage Note, free and
clear of all adverse  claims,  liens and  encumbrances  having priority over the
first  lien  of the  Mortgage,  subject  only to (1)  the  lien  of the  related
Cooperative  housing  corporation  for  unpaid  assessments,   (2)  the  related
proprietary lease being subordinated or otherwise subject to the mortgage on the
related Cooperative building, and (3) other matters to which like properties are
commonly  subject  which do not  materially  interfere  with the benefits of the
security  intended to be provided by the Mortgage or the value or  marketability
of the related Property;

     (n) The terms of the Mortgage Note and the Mortgage have not been impaired,
waived, altered or modified in any respect,  except by written instruments which
have been recorded to the extent any such  recordation is required by applicable
law, and copies of which written  instruments are included in the File. No other
instrument  of waiver,  alteration or  modification  has been  executed,  and no
Mortgage has been released,  in whole or in part,  from the terms thereof except
in connection with an assumption  agreement,  which assumption agreement is part
of the File and the terms of which are  reflected  in the  Schedule  of Mortgage
Loans;

     (o) All buildings  upon the Property are insured by a generally  acceptable
insurer  pursuant to standard hazard policies  conforming to the requirements of
the Sale and  Servicing  Agreement.  All such  standard  hazard  policies are in
effect and on the date of  origination  contained  a standard  mortgagee  clause
naming  the  related  originator  or the  Seller,  as the case may be, and their
respective  successors  in  interest  as loss payee and such  clause is still in
effect and all premiums  due thereon have been paid.  If the Property is located
in an area  identified  by the  Federal  Emergency  Management  Agency as having
special  flood  hazards  under the Flood  Disaster  Protection  Act of 1973,  as
amended,  such  Property is covered by flood  insurance  as set forth in Section
4.11(d)  of the  Sale  and  Servicing  Agreement.  The  Mortgage  obligates  the
Mortgagor  thereunder to maintain all such insurance at the Mortgagor's cost and
expense,  and on the Mortgagor's  failure to do so, authorizes the holder of the
Mortgage to maintain such insurance at the  Mortgagor's  cost and expense and to
seek reimbursement therefor from the Mortgagor;

     (p) Any and all requirements of any federal,  state or local law including,
without limitation, usury, truth-in-lending,  real estate settlement procedures,
consumer  credit  protection,   equal  credit  opportunity  or  disclosure  laws
applicable  to the  Mortgage  Loan  have  been  complied  with  in all  material
respects;

     (q) [Reserved].

     (r) The  Mortgage  Note and the related  Mortgage  are original and genuine
(including  in the case of a  Cooperative  Loan,  the  Cooperative  Shares,  the
related  proprietary  lease and  recognition  agreement)  and each is the legal,
valid and binding  obligation of the maker thereof,  enforceable in all respects
in accordance with its terms subject to bankruptcy, insolvency and other laws of
general application affecting the rights of creditors,  and the Seller has taken
all action necessary to transfer such rights of enforceability to the Purchaser.
All parties to the  Mortgage  Note and the  Mortgage  had the legal  capacity to
enter into the Mortgage  Loan and to execute and deliver the  Mortgage  Note and
the Mortgage,  and with respect to a Cooperative  Loan, the related  proprietary
lease and  recognition  agreement.  The Mortgage Note and the Mortgage have been
duly and properly  executed by such  parties.  The proceeds of the Mortgage Loan
have been  fully  disbursed  and there is no  requirement  for  future  advances
thereunder,  and any and all  requirements  as to  completion  of any on-site or
off-site  improvements and as to disbursements of any escrow funds therefor have
been complied with;

     (s) The Mortgage Loan is covered by an ALTA lender's title insurance policy
or other  generally  acceptable  form of policy of insurance,  issued by a title
insurer  qualified  to do business  in the  jurisdiction  where the  Property is
located,  insuring  (subject to the exceptions  contained in (m)(i) (1), (2) and
(3) or (ii)(1),  (2) and (3) above) the  related  Originator  or the Seller,  as
applicable,  and  their  respective  successors  and  assigns,  as to the  first
priority lien of the Mortgage in the original  principal  amount of the Mortgage
Loan. The related Originator or the Seller, as applicable,  and their respective
successors  and assigns,  is the sole insured of such lender's  title  insurance
policy,  such lender's  title  insurance  policy is in full force and effect and
will be in full  force and  effect  upon the  consummation  of the  transactions
contemplated  by the Sale and Servicing  Agreement  and this  Agreement and will
inure to the benefit of the Purchaser and its successors and assigns without any
further  act.  No claims  have been made under  such  lender's  title  insurance
policy,  and no  prior  holder  of the  related  Mortgage  has  done,  by act or
omission,  anything  which  would  impair the  coverage of such  lender's  title
insurance policy;

     (t) Each Mortgage Loan was originated by or for an Originator and purchased
by the Seller. Each Mortgage Loan complies in all material respects with all the
terms,  conditions and requirements of such Originator's  underwriting standards
in effect at the time of  origination  of such  Mortgage  Loan;  provided,  that
certain  Mortgage Loans may have  characteristics  outside of such  underwriting
guidelines  where  compensating  factors are present  acceptable to the mortgage
banking  industry.  The  Mortgage  Notes and  Mortgages  are on  uniform  Fannie
Mae/Freddie Mac instruments or are on forms  acceptable to Fannie Mae or Freddie
Mac. The Mortgage Loan bears interest at a the rate as set forth in the Schedule
of Mortgage Loans,  and monthly payments under the related Mortgage Note are due
and payable on the first day of each month. The Mortgage Loan contains the usual
and enforceable  provisions of the Originator at the time of origination for the
acceleration  of the  payment  of the  unpaid  principal  amount if the  related
Property is sold without the prior consent of the mortgagee thereunder;

     (u) The related Mortgage contains customary and enforceable provisions such
as to render the rights and  remedies  of the holder  thereof  adequate  for the
realization  against the  Property  of the  benefits  of the  security  provided
thereby, including, (1) in the case of a Mortgage designated as a deed of trust,
by  trustee's  sale,  and (2)  otherwise  by judicial  foreclosure.  There is no
homestead or other  exemption  available to the Mortgagor  which would interfere
with  the  right  to sell  the  Property  at a  trustee's  sale or the  right to
foreclose the Mortgage;

     (v) If the Mortgage constitutes a deed of trust, a trustee,  duly qualified
if required under  applicable  law to act as such, has been properly  designated
and  currently so serves and is named in the  Mortgage,  and no fees or expenses
are or will become  payable by the  Purchaser  to the trustee  under the deed of
trust, except in connection with a trustees sale or attempted sale after default
by the Mortgagor;

     (w) The File contains an appraisal of the related  Property made and signed
prior to the final  approval of the  mortgage  loan  application  by a qualified
appraiser,  approved  by  the  originator  of the  related  Mortgage  Loan.  The
appraisal is in a form generally acceptable to Fannie Mae or Freddie Mac;

     (x) The  related  Mortgage  Note is not and  has not  been  secured  by any
collateral except the lien of the corresponding Mortgage, any related Additional
Collateral,  and the security interest of any applicable  security  agreement or
chattel  mortgage  referred  to above  and  such  collateral  does not  serve as
security for any other obligation;

     (y) The related Mortgagor has received all disclosure materials required by
applicable law with respect to the making of such mortgage loans;

     (z) [Reserved];

     (aa) Each  Mortgage  Loan has an original term to maturity of not more than
30 years with  interest  payable in arrears on the first day of each  month.  No
Mortgage  Loan  contains  terms or  provisions  which  would  result in negative
amortization;

     (bb) Each of the Mortgaged  Properties  consists of a single parcel of real
property  with  a  single-family   residence  erected  thereon,  or  a  two-  to
four-family dwelling, or an individual condominium unit in a condominium project
or an individual  unit in a planned unit  development or a single parcel of real
property with a cooperative housing development erected thereon;

     (cc) The Mortgage Loans were originated  with full,  alternative or reduced
documentation;

     (dd) The Assignment of Mortgage is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Property is located;

     (ee)  Each  Mortgage  Loan  was  originated  by,  (i) a  savings  and  loan
association,  savings bank, commercial bank, credit union,  insurance company or
similar  institution  which is  supervised  and  examined  by a federal or State
authority,  (ii) a  mortgagee  approved  by the  Secretary  of Housing and Urban
Development pursuant to Section 203 and 211 of the National Housing Act or (iii)
a  mortgage  banker or broker  licensed  or  authorized  to do  business  in the
jurisdiction  in which  the  related  Property  is  located,  applying  the same
standards and procedures used by the applicable  seller in originating  Mortgage
Loans directly;

     (ff) Except for 18 Mortgage Loans with an aggregate  outstanding  principal
balance as of the Cut-off Date of  $5,847,863,  no Mortgage Loan is secured by a
leasehold estate,  and with respect to each Mortgage Loan secured by a leasehold
estate,  the term of the leasehold  exceeds the term of the related  mortgage by
not less than 24 months;

     (gg) The Coupon Rate on each ARM, and each 5/1 ARM Mortgage  Loan which has
reached its Change Date,  has been adjusted in accordance  with the terms of the
related Mortgage Note;

     (hh) No  Mortgage  Loan  has  been  selected  in a  manner  adverse  to the
interests of the Noteholders or the Note Insurer;

     (ii) Any escrow  agreements  with respect to each Mortgage Loan comply with
applicable law and the terms of the related Mortgage Note;

     (jj) With respect to each Cooperative Loan (i) there is no provision in the
related  proprietary  lease which  requires the  Mortgagor to offer for sale the
shares owned by such Mortgagor  first to the  Cooperative  for a price less than
the outstanding amount of the Cooperative Loan, and (ii) there is no prohibition
in the related  proprietary  lease against pledging such shares or assigning the
proprietary  lease that has been violated in connection  with the origination of
the Cooperative Loan;

     (kk) With  respect  to each  Cooperative  Loan,  as of the  closing of such
Cooperative  Loan,  the related  Subservicer,  obtained  evidence  that,  if the
Cooperative  Building is in a federally designated flood area, a flood insurance
policy  has been  obtained  in an  amount  equal to at least  that  required  by
applicable  law, which insurance the Cooperative is obligated to maintain at the
Cooperative's cost and expense;

     (ll) With respect to each Cooperative Loan, as of the Mortgage Loan Closing
Date, such Cooperative Loan is secured by shares held by a  "tenant-stockholder"
of a corporation that qualifies as a "cooperative  housing  corporation" as such
terms are defined in section 216 (b) (1) of the  Internal  Revenue Code of 1986,
as amended, and to the best of the Seller's knowledge, no Cooperative is subject
to proceedings which would, if adversely determined,  result in such Cooperative
losing its status as a "cooperative  housing  corporation" under Section 216 (b)
(1) of the Internal Revenue Code of 1986, as amended; and

     (mm) With respect to each Cooperative  Loan, the related Mortgage creates a
first-priority security interest in the stock in the Cooperative and the related
proprietary  lease of the related  Cooperative Unit which were pledged to secure
such Cooperative  Loan, and the Cooperative owns the Cooperative  Building as an
estate in fee simple in real  property or pursuant to a leasehold  acceptable to
Fannie Mae.

                          Part III.  Certain Covenants.

          (a)     Upon  the  discovery by the Seller, the Indenture Trustee, the
Purchaser, the Servicer or the Note Insurer that any statement set forth in Part
II  of  Exhibit  D  was  untrue  (disregarding any qualification with respect to
knowledge)  as  of  the  Closing Date, with the result that the interests of the
Noteholders or the Note Insurer are materially and adversely affected, the party
discovering  such  breach  shall give prompt written notice to the other parties
and the Note Insurer.  Upon the earliest to occur of the Seller's discovery, its
receipt  of  notice  of  breach,  or  such time as a situation resulting from an
existing  statement  which  is  untrue  materially  and  adversely  affects  the
interests  of  the  Noteholders or the Note Insurer, the Seller hereby covenants
and  warrants  that  it shall promptly cure such breach in all material respects
or,  unless  otherwise  directed  by  the  Indenture Trustee, as designee of the
Purchaser, it shall (or shall cause an Affiliate of the Seller to) on the second
Remittance  Date  next succeeding such discovery, receipt of notice or such time
(i)  substitute  in  lieu  of  each  Mortgage  Loan  which has given rise to the
requirement  for  action  by  the  Seller,  a Qualified Replacement Mortgage and
deliver  the  Substitution Adjustment Amount applicable thereto to the Indenture
Trustee  for  deposit  in  the  Trustee Collection Account or (ii) purchase such
Mortgage  Loan  from  the  Indenture  Trustee at a purchase price equal the Loan
Purchase Price thereof, which purchase price shall be delivered to the Indenture
Trustee  for  deposit  in  the Trustee Collection Account.  It is understood and
agreed  that the obligation of the Seller so to cure, substitute or purchase any
Mortgage Loan as to which such a representation or warranty contained in Part II
of  this  Exhibit  D is untrue in any material respect and has not been remedied
shall  constitute  the  sole remedy respecting a discovery of any such statement
which  is  untrue in any material respect in Part II of this Exhibit D available
to  the  Purchaser  or  the  Indenture  Trustee,  as  designee of the Purchaser.

          (b)     In  the  event  that  any  Qualified  Replacement  Mortgage is
delivered  by  the  Seller  to  the Indenture Trustee pursuant to Section 2.1 or
Section  3.1  of the Collateral Sale Agreement, the Seller shall be obligated to
take  the  actions described in clause (a) of Part III of Exhibit D with respect
to  such  Qualified  Replacement Mortgage upon the discovery by  the Seller, the
Purchaser,  the  Depositor  or  the Note Insurer that any statement set forth in
Part  II  of Exhibit D is untrue (disregarding any qualification with respect to
knowledge)  on  the  date such Qualified Replacement Mortgage is conveyed to the
Indenture  Trustee such that the interests of Noteholders or the Note Insurer in
the  related  Qualified  Replacement  Mortgage  are  materially  and  adversely
affected;  provided,  however,  that for the purposes of this subsection (b) the
           --------   -------
statements  in  Part II of Exhibit D referring to items "as of the Cut-off Date"
or  "as  of  the  Closing Date" shall be deemed to refer to such items as of the
date such a Qualified Replacement Mortgage is conveyed to the Indenture Trustee.

                                    EXHIBIT E
                                   [Reserved]

                                    EXHIBIT F
                          CERTIFICATE RE: PREPAID LOANS

          I,  _______________, ________________ of PNC Mortgage Securities Corp.
as  Servicer,  hereby certify that between the "Cut-Off Date" (as defined in the
Sale  and  Servicing  Agreement  dated as of December 1, 1998 among PNC Mortgage
Securities  Corp.,  as  Servicer,  TMA  Mortgage  Funding  Trust  I,  as Issuer,
Thornburg  Mortgage Funding Corporation, as Depositor, and Bankers Trust Company
of California, N.A., as Indenture Trustee (the "Sale and Servicing Agreement")),
and  the  Closing  Date  (as  defined  in  the Sale and Servicing Agreement) the
following  schedule  of  Mortgage  Loans  (as  defined in the Sale and Servicing
Agreement)  have  been  prepaid  in  full.

Dated:  December  __,  1998


                                   By:______________________________
                                        Name:
                                        Title:

                                    EXHIBIT G

                        FORM OF SERVICER'S TRUST RECEIPT

To:  Bankers  Trust  Company  of  California,  N.A.
     3  Park  Plaza;  16th  Floor
     Irvine,  California  92614

     Attn.:  Corporate  Trust  -  TMA  Mortgage  Funding  Trust I, Series 1998-1

                                             Date:

          In  connection  with the administration of the Mortgage Loans serviced
by  PNC  Mortgage  Securities  Corp.  (the  "Servicer")  pursuant  to a Sale and
Servicing  Agreement  dated  as  of  December  1,  1998 (the "Sale and Servicing
Agreement"),  among  the  Servicer,  you,  as  Indenture  Trustee, and Thornburg
Mortgage  Funding  Trust I, as Issuer, the Servicer hereby requests a release of
the  File  held  by  you  as  Indenture  Trustee  with  respect to the following
described  Mortgage  Loan  for  the  reason  indicated  below.

Mortgagor's  Name:

Loan  No.:

Reason  for  requesting  file:

_______     1.     Mortgage  Loan  paid  in  full.

               (The  Servicer  hereby  certifies  that  all  amounts received in
connection  with  the  loan and required to be remitted to the Indenture Trustee
have  been or will be remitted to the Indenture Trustee pursuant to the Sale and
Servicing  Agreement.)

_______     2.     The  Mortgage  Loan  is  being  foreclosed.

_______     3.     Other.  (Describe)

          The  undersigned  acknowledges that the above File will be held by the
undersigned  in  accordance  with  the  provisions  of  the  Sale  and Servicing
Agreement and will be returned to you, except if the Mortgage Loan has been paid
in  full  (in which case the File will be retained by us permanently) and except
if  the  Mortgage  Loan  is  being  foreclosed  (in  which case the File will be
returned  when  no  longer  required  by  us  for  such  purpose).


          Capitalized terms used herein shall have the meanings ascribed to them
in  the  Sale  and  Servicing  Agreement.

                              PNC  MORTGAGE  SECURITIES  CORP.


                              By:___________________________________
                                    Name:
                                    Title:


                                    EXHIBIT H

                  NOTICE OF CHARGE-OFFS/LIQUIDATION LOAN REPORT

     I,                    ,  hereby  certify  that  I  am  the  duly  elected
of PNC Mortgage Securities Corp. (the "Servicer") acting as servicer pursuant to
a  Sale and Servicing Agreement dated as of December 1, 1998 among the Servicer,
Thornburg Mortgage Funding Corporation, as Depositor, TMA Mortgage Funding Trust
I,  as  Issuer,  and  Bankers  Trust  Company  of California, N.A., as Indenture
Trustee,  and further certify, to the best of my knowledge and after due inquiry
that  the  following is a summary of the facts and circumstances surrounding the
"charge-off"  of  any  Mortgage  Loans  during  the  Remittance  Period  from
______________  through  ____________;

Insert  the  following  information  for  each  "charged-off"  Mortgage  Loan:

Loan  #
Borrower  Name
Property  Address
Date  of  "charge-off"/onset  of foreclosure proceedings and date of foreclosure
sale
Original  Mortgage  Loan  Principal  Balance
Outstanding  Mortgage  Loan  Principal  Balance
Coupon  Rate
Accrued  Interest  at  time  of  "charge  off"  or  foreclosure  sale
Unreimbursed  Servicing  Advances  at  time  of "charge off" or foreclosure sale
Unreimbursed  Delinquency  Advances  at time of "charge off" or foreclosure sale
#  days  in  default  at  time  of  "charge  off"  or  foreclosure  sale
Original  appraised  value
Current  appraised  value  based  upon  "drive  by"
Estimate  of  Foreclosure  Costs/Actual  Foreclosure  Costs
          Broker  Fees
          Legal  Fees
          Repair  and  Miscellaneous  Expenses
Projected  Marketing  Period/Actual  Marketing  Period
Estimate  of  Loss  on  Foreclosure  and  Liquidation

     Capitalized  terms not otherwise defined herein have the meanings set forth
in  the  Sale  and  Servicing  Agreement.

     IN  WITNESS  WHEREOF,  I  have  certified  the foregoing to the best of the
knowledge  of  the  Servicer.

Dated:                          By:___________________________________
                                    Name:
                                    Title:


                                    EXHIBIT I

                FORM OF MONTHLY REPORT TO THE CERTIFICATE HOLDER


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