Exhibit 10(M)
      ___________________________________________________________________









                      MASTER CREDIT AND SECURITY AGREEMENT

                                      among

                                    SKY BANK

                                       and

                     FRANKLIN CREDIT MANAGEMENT CORPORATION

                                       and

               THOSE SUBSIDIARIES WHICH RECEIVE ADVANCES HEREUNDER




                          Dated as of October 13, 2004













         __________________________________________________________________


                                       <PAGE>

                      Master Credit and Security Agreement

          This Master Credit and Security Agreement (the "Agreement") is entered
     into  as  of  October  13,  2004,   between   Franklin  Credit   Management
     Corporation,  a Delaware corporation (the "Company" ), having its principal
     office at Six Harrison  Street,  New York, New York 10013, and Sky Bank, an
     Ohio banking  corporation  (the "Bank"),  having an office at 110 East Main
     Street,  Salineville,  Ohio 43945.  The  Subsidiaries  of the Company which
     receive  Company  Subsidiary  Loans  under  this  Agreement  or which  have
     heretofore  received  Company  Subsidiary  Loans will also  become  parties
     hereto.
          Whereas,  the Bank, the Company and certain Company  Subsidiaries have
     previously entered into loan arrangements, whereby Bank and the Company and
     each respective  Company  Subsidiary  entered into a separate term loan and
     security agreement and a promissory note;

          Whereas the Bank, the Company and each Company  Subsidiary  which have
     previously entered into a loan and security  agreement,  other than Tribeca
     Lending  Corporation,  desire  to amend  and  restate  each  such  loan and
     security agreement;

          Whereas, at the request of the Company, the Bank has from time to time
     extended credit to Company  subsidiaries and to additional  Subsidiaries of
     the Company (i) to finance the purchase of residential  mortgage  loans, or
     (ii) to consolidate and refinance such extensions of credit made earlier by
     the Bank,  with such  extensions of credit having been secured by the loans
     purchased by those  Subsidiaries with the Bank's  financing,  and a list of
     all such  outstanding  extensions  of credit  from the Bank is set forth on
     Schedule I attached hereto; and

          Whereas,  the Company has requested the Bank, and the Bank is willing,
     to amend and restate each such loan and security  agreement and to continue
     to  extend  credit  to  Subsidiaries  of the  Company  from time to time to
     finance the purchasing of residential  mortgage  loans,  such extensions of
     credit  to be  secured  by  the  loans  to be  purchased  with  the  Bank's
     financing;  and the  parties  now desire to set forth  herein the terms and
     conditions  to which  all such  prior  extensions  of  credit  shall now be
     subject,  and under  which all such future  extensions  of credit for those
     purposes  shall  be  made,  and the  security  provided  for the  repayment
     thereof;

          Now,  Therefore,  the parties hereby agree to amended and restate each
     previously existing loan and security  agreement,  other than any warehouse
     arrangement   or  loan  and  security   agreement   with  Tribeca   Lending
     Corporation, as follows:

                                    Article ~ I

                                   Definitions

          Section~1.1.   Defined  Terms.  Capitalized  terms  defined  below  or
     elsewhere in this Agreement  (including the Exhibits hereto) shall have the
     following meanings:

     "Administrative  Services  Agreement"  has the meaning set forth in Section
     10.1 hereof.

     "Administrative  Servicing  Fee" means an amount to be agreed to in writing
     from time to time between the Bank and the Company in  consideration of the
     services  provided under its  Administrative  Servicing  Agreement with its
     Company Subsidiary.

     "Advance" means a disbursement by the Bank under a Company Subsidiary Loan.

     "Affiliate"  has the meaning set forth in  Rule~12b-2  of the General Rules
     and Regulations under the Exchange Act.

     "Agreement"  means this Master  Credit and  Security  Agreement,  either as
     originally  executed  or as it may  from  time  to  time  be  supplemented,
     modified or amended.

     "Bank" has the meaning set forth in the first paragraph of this Agreement.

     Business  Day" means any day excluding  Saturday,  Sunday and any day which
     the principal  offices of the Bank in Salineville,  Ohio, or the Company in
     New York, New York are closed for business.

     "Collateral" has the meaning set forth in Section~3 hereof.

     "Collateral  Documents"  has the meaning set forth in  Exhibit~D.  The Bank
     shall have the right,  on not less than  thirty (30)  Business  Days' prior
     written  notice to the  Company  to modify  Exhibit D to conform to current
     legal  requirements or Bank practices,  and, as so modified,  said Exhibits
     shall be deemed a part hereof

     "Commitment" has the meaning set forth in Section~2.1(a) hereof.

     "Company"  has  the  meaning  set  forth  in the  first  paragraph  of this
     Agreement.

     "Company Subsidiary"  means any  Subsidiary  of the  Company,  whether now
     existing or hereafter organized and created,  which becomes a party to this
     Agreement and which has heretofore  received or which hereafter  receives a
     Company  Subsidiary  Loan,  provided,  however,  it is recognized  that the
     Company has as of the date of this Agreement at least one other  Subsidiary
     which has a "warehouse  line of credit"  facility from the Bank not covered
     by this  Agreement,  and may in the  future  have one or more  Subsidiaries
     which do not have extensions of credit from the Bank.

     "Company Subsidiary Loan" means a now existing or hereafter arising loan to
     a Company  Subsidiary  pursuant to this  Agreement and the related Note, to
     finance the purchase of residential  mortgage  loans or to consolidate  and
     refinance  loans  which  were  granted  by  Bank  to  one or  more  Company
     Subsidiaries to finance the purchase of residential mortgage loans.

     "Company Subsidiary Loan Request" means the current form in use by the Bank
     as set forth in  Exhibit~B  hereto.  The Bank shall have the right,  on not
     less than thirty (30) Business  Days' prior written  notice to the Company,
     to modify  Exhibit B to  conform  to  current  legal  requirements  or Bank
     practices,  and,  as so  modified,  said  Exhibits  shall be  deemed a part
     hereof.

     "Consolidated"  refers to the  consolidation of accounts in accordance with
     GAAP.

     "Conventional Mortgage Loan" means a Mortgage Loan other than a FHA-insured
     or VA-guaranteed Mortgage Loan.

     "Corporate Advances" means all customary,  reasonable and necessary "out of
     pocket" costs and expenses  incurred in the  performance  by the Company or
     any  subservicer  of  its  servicing   obligations   with  respect  to  the
     preservation, restoration and protection of the mortgaged property.

     "Custodial  Agreement" means that certain  Custodial  Agreement dated as of
     October 22, 2003,  among the Company,  U.S.  Bank National  Association  as
     Custodian,  the Bank, and those Subsidiaries of the Company who have become
     parties to that  Agreement and who may become  parties to it in the future.
     Furthermore, each Company Subsidiary that becomes a party to this Agreement
     by executing a counterpart  signature page shall also thereby become and be
     deemed to be a party to the  Custodial  Agreement  to the same extent as if
     such Company  Subsidiary  had executed a counterpart  signature page to the
     Custodial  Agreement,  and such  Company  Subsidiary  shall be bound by the
     terms and provisions of the Custodial Agreement.

     "Custodian"  means  the  organization   which  holds  documents  under  the
     Custodial  Agreement  relating to Mortgage Loans on the Company's behalf or
     on behalf of a Company Subsidiary.
     "Debt" means, with respect to any Person, at any date (a)~all  indebtedness
     or other  obligations of such Person which, in accordance with GAAP,  would
     be included in determining  total  liabilities as shown on the  liabilities
     side of a balance sheet of such Person at such date;  (b)~all  indebtedness
     or other  obligations of such Person for borrowed money or for the deferred
     purchase  price of  property or  services;  (c)~all  indebtedness  or other
     obligations  of any other  Person for  borrowed  money or for the  deferred
     purchase  price of  property or services in respect of which such Person is
     liable,  contingently or otherwise,  to pay or advance money or property as
     guarantor,  endorser,  or  otherwise  (except  as  endorser  of  negotiable
     instruments  for collection in the ordinary  course of business),  or which
     such  Person has agreed to  purchase  or  otherwise  acquire;  and  (d)~all
     indebtedness  for  borrowed  money or for the  deferred  purchase  price of
     property  or  services  secured  by a Lien on any  property  owned or being
     purchased  by such  Person  (even  though  such  Person has not  assumed or
     otherwise become liable for the payment of such indebtedness).

     "Default"  means the  occurrence of any event or existence of any condition
     which,  but for the giving of  notice,  the lapse of time,  or both,  would
     constitute an Event of Default.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
     amended from time to time and any successor statute.

     "Escrow   Payment"  With  respect  to  any  Mortgage   Loan,   the  amounts
     constituting  ground rents, taxes,  assessments,  water rates, sewer rents,
     municipal charges,  mortgage insurance premiums,  fire and hazard insurance
     premiums,  condominium  charges,  and any  other  payments  required  to be
     escrowed by the mortgagor  with the  mortgagee  pursuant to the Mortgage or
     any other document.

     "Event of  Default"  means  any of the  conditions  or events  set forth in
     Section~8.1 hereof.

     "Exchange Act" means the  Securities  Exchange Act of 1934, as amended from
     time to time, and any successor statute.

     "FHA"  means  The  Federal  Housing  Administration  of the  United  States
     Department of Housing and Urban Development and any successor thereto.

     "FHLMC" means The Federal Home Loan Mortgage  Corporation and any successor
     thereto.

     "Floating Rate" has the meaning set forth in Section~2.4(a) hereof.

     "FNMA" means The Federal  National  Mortgage  Association and any successor
     thereto.

     "GAAP" means  generally  accepted  accounting  principles  set forth in the
     opinions and  pronouncements  of the  Accounting  Principles  Board and the
     American  Institute of Certified  Public  Accountants  and  statements  and
     pronouncements of the Financial Accounting Standards Board or in such other
     statements by such other entity as may be approved by a significant segment
     of the accounting profession,  which are applicable to the circumstances as
     of the date of determination.

     "GNMA" means  Government  National  Mortgage  Association  or any successor
     thereto.

     "HUD" means the United States  Department of Housing and Urban  Development
     or any successor thereto.

     "Indemnified Liabilities" has the meaning set forth in Section~9.3 hereof.

     "Index" has the meaning set forth in Section ~ 2.4(a) hereof.

     "Insurer" means FHA, VA or a private mortgage insurer, as applicable.

     "Internal  Revenue Code" means the Internal  Revenue Code of 1986,  or any
     subsequent  federal  income tax law or laws, as any of the  foregoing  have
     been or may from time to time be amended.

     "Investor" means a financially  responsible institution purchasing Mortgage
     Loans from the Company or from a Company Subsidiary  pursuant to a Purchase
     Commitment.

     "Lien" means any lien, mortgage,  deed of trust, pledge, security interest,
     charge  or  encumbrance  of any  kind,  including  without  limitation  any
     conditional  sale or other  title  retention  agreement,  any  lease in the
     nature thereof, and any agreement to give any security interest.

     "Lock-box Agreement" has the meaning set forth in Section 3.4 hereof.

     "Margin Stock" has the meaning assigned to that term in Regulation~U of the
     Board of Governors of the Federal  Reserve System as in effect from time to
     time.

     "Mortgage" means either (1)~a first-lien mortgage,  deed of trust, security
     deed or similar instrument on improved real property;  or (2)~a second-lien
     mortgage,  deed of trust,  security deed or similar  instrument on improved
     real property.

     "Mortgage  Loan" means any loan  evidenced  by a Mortgage  Note. A Mortgage
     Loan,  unless  otherwise  expressly  stated  herein,  means  a  Residential
     Mortgage Loan.

     "Mortgage Loan  Documents"  means the Mortgage,  Mortgage Note,  credit and
     closing packages, disclosures, and all other files, records and documents.

     "Mortgage Loan Principal Balance" means, as of any date of  determination,"
     the  outstanding  principal  balance of such  Mortgage  Loan as  calculated
     pursuant to the Mortgage Loan Documents.

     "Mortgage  Note"  means a note  secured  by a  Mortgage  and  evidencing  a
     Mortgage Loan.

     "Multiemployer   Plan"   means  a   "multiemployer   plan"  as  defined  in
     Section~4001(a)(3)  of  ERISA  which is  maintained  for  employees  of the
     Company or a Subsidiary of the Company.

     "Net Worth" mean,  with respect to the Company and its  Subsidiaries at any
     date of determination, (a) Consolidated total assets of the Company and its
     Subsidiaries  at such  date  less  (b) the  sum of (i)  Consolidated  total
     liabilities of the Company and its  Subsidiaries  at such date and (ii) the
     liquidation value of any redeemable  preferred stock of the Company and its
     Subsidiaries  at such date, in each case as  determined in accordance  with
     GAAP.

     "Note" has the meaning set forth in Section~2.3 hereof.

     "Notices" has the meaning set forth in Section~11.3 hereof.

     "Officers'  Certificate"  means a  certificate  executed  on  behalf of the
     Company or of a Company Subsidiary by its vice president,  cashier or other
     appropriate officer.

     "Person"  means  and  includes  natural  persons,   corporations,   limited
     liability companies,  partnerships,  joint stock companies, joint ventures,
     associations,  companies, trusts, banks, trust land trusts, business trusts
     or other  organizations,  whether  or not legal  entities,  and  companies,
     governmental agencies and political subdivisions thereof.

     "Plans" has the meaning set forth in Section ~ 5.1(l) hereof.

     "Pledged  Mortgage  Loans"  has the meaning set forth in  Section ~ 3.1(a)
     hereof.

     "Post-Default Rate" means in respect of any day (a "Post-Default Day") an
     Event of Default has occurred and is continuing hereunder, a rate per annum
     on a 360 day per year  basis  equal  to 2% per  annum  plus the  applicable
     Floating Rate on such Post-Default Day.

     "Purchase Commitment" means a written  commitment,  issued in favor of the
     Company or of a Company  Subsidiary  by an Investor  pursuant to which that
     Investor  commits to purchase  one or more  Mortgage  Loans,  or whole loan
     purchase  agreement by and between the Company or a Company  Subsidiary and
     the Investor, governing the terms and conditions of any such purchases.

     "Redemption Amount" has the meaning set forth in Section ~ 3.3 hereof.

     "Residential  Mortgage  Loan" means a Mortgage  Loan  secured by a Mortgage
     covering improved real property containing a one- to four-family residence.

     "Statement  Date"  has  the  meaning  set forth  in  Sections ~ 4.1(h) and
     6.1(b)(ii) hereof.

     "Subsidiary" means any corporation, association or other business entity in
     which more than fifty  percent (50%) of the total voting power or shares of
     stock  entitled to vote in the election of directors,  managers or trustees
     thereof is at the time owned or controlled,  directly or indirectly, by any
     Person  or one or more  of the  other  Subsidiaries  of  that  Person  or a
     combination thereof.

     "Success Fees" has the meaning set forth in Section 2.10.

     "Taxes"  means an  amount  to be  agreed  to in  writing  from time to time
     between  the Bank and the  Company to be used to pay  income  taxes for the
     Company and/or Company Subsidiary.

     "Underwriting  Standards" has the meaning set forth in Exhibits C. The Bank
     shall have the right,  on not less than  thirty (30)  Business  Days' prior
     written  notice to the  Company to modify  Exhibits C to conform to current
     legal  requirements or Bank practices,  and, as so modified,  said Exhibits
     shall be deemed a part hereof

     "VA" means the Department of Veterans Affairs and any successor thereto.

     Section~1.2.  Other  Definitional  Provisions.  (a)~  Accounting  terms not
     otherwise defined herein shall have the meanings given them under GAAP.

     (b) Defined terms may be used in the singular or the plural, as the context
     requires.


                                   Article~II

                                   The Credit

          Section~2.1.  The Commitment. (a)~ Subject to the terms and conditions
     of this  Agreement and the  Conditions  Precedent  described in Section 4.1
     below,  and provided no Default has occurred  and is  continuing,  the Bank
     agrees,  from time to time  during the period  from the date  hereof to the
     expiration  date  as  provided  in  Section ~2.6  hereof, to make Company
     Subsidiary  Loans to,  or on behalf  of,  Company  Subsidiaries,  provided,
     however,  that the total aggregate principal amount which is outstanding at
     any one time of all such  Company  Subsidiary  Loans  shall not  exceed the
     lesser  of (i) the  aggregate  approved  principal  amount  of all  Company
     Subsidiary Loans which have been approved by Bank under this Agreement from
     time to time,  or (ii) the amount  permitted  by the lesser of (a) the loan
     policy  guidelines  adopted  by the  Bank  from  time  to  time  or (b) any
     regulatory limitations applicable to the Bank which are now or hereafter in
     effect (the "Commitment").

          (b)  Company  Subsidiary  Loans  approved by Bank from time to time as
     provided  herein  shall  be used by  Company  Subsidiaries  solely  for the
     purpose of funding or financing the purchase of Mortgage  Loans, or for the
     consolidation  and refinancing of then existing  Company  Subsidiary  Loans
     against the pledge of such Mortgage Loans.

          (c) All Company Subsidiary Loans outstanding prior to the date of this
     Agreement  for the purpose of funding or financing  the purchase of Pledged
     Mortgage  Loans shall be treated as having been issued under,  and shall be
     subject to the covenants of, this Agreement. The Company shall cause all of
     its Subsidiaries  which have such Company  Subsidiary Loans  outstanding to
     become parties to this Agreement by executing  counterpart  signature pages
     in the form of  Exhibit  E. In the event  that the terms of this  Agreement
     shall conflict with the terms of the loan  documentation for such a Company
     Subsidiary  Loan,  the terms of this Agreement  shall  prevail,  except for
     interest  rate  terms,  which  shall not be  affected  by the terms of this
     Agreement,  and except that any Default under any such loan,  which has not
     been cured or waived, shall remain in effect.

          (d) The  warehousing  credit  line  extended  by the  Bank to  Tribeca
     Lending Corporation, a New York corporation and a Subsidiary of the Company
     shall be separate from and shall not be subject to this Agreement except as
     specifically otherwise provided in this Agreement.

          Section~2.2.   Procedures   for  Obtaining   Advances.   Each  Company
     Subsidiary Loan Request is subject to Bank's  approval.  Such Bank approval
     is subject to the Conditions Precedent set forth in Section 4.1. Bank shall
     reasonably endeavor to provide a conditional approval or denial within four
     (4) Business Days for requests of less than  $1,000,000.00  and within five
     (5) Business Days for requests of $1,000,000.00  or more.  Before providing
     final approval and funding any Company Subsidiary Loan, the Bank shall have
     a  reasonable  amount of time (not  less  than five (5)  Business  Days) to
     examine the  Collateral  Documents  required to be  delivered to Bank or to
     Custodian,  as set forth in Section  4.1, and may reject such of them as do
     not meet the  requirements of this Agreement,  and/or may reduce the amount
     of such Company Subsidiary Loan. Bank, in all events, reserves the right to
     reject any Company  Subsidiary  Loan Request to finance the purchase of, or
     which  includes  Advances  for the  purchase of a "high cost  mortgage"  as
     defined in Section 152(a) of the Home  Ownership and Equity  Protection Act
     of 1994, or if it is in violation of any corresponding state or local law.

          Section~2.3. Note. Each Company Subsidiary Loan, and the corresponding
     Company  Subsidiary's  obligation  to pay the principal of, and interest on
     the Company  Subsidiary  Loan to it made by the Bank,  shall  hereafter  be
     evidenced by a  promissory  note of the Company  Subsidiary  payable to the
     Bank, and being substantially in the form of Exhibit~A attached hereto. All
     existing  promissory notes evidencing  Company  Subsidiary Loans heretofore
     granted  by Bank to a Company  Subsidiary  shall  remain in full  force and
     effect.  The term "Note" or "Notes"  shall mean each and all such  existing
     promissory notes  evidencing a Company  Subsidiary Loan, and all promissory
     notes hereafter  executed and delivered by a Company Subsidiary to evidence
     Company  Subsidiary  Loans  granted   hereunder,   and  shall  include  all
     extensions, renewals and modifications, and all substitutions therefor.

          Section~2.4.  Interest and Transaction Fees. (a)~ The unpaid principal
     balance  of each  Company  Subsidiary  Loan shall  bear  interest,  payable
     monthly,  on the  fifth  (5th)  day of each  month,  from  the date of such
     Advance  until paid in full,  at a floating per annum rate of interest (the
     "Floating Rate")  based upon an index which will be the Federal  Home Loan
     Bank of Cincinnati 30 day advance rate (the "Index"),  plus the applicable
     margin in accordance with the following matrix:


                          Base Rate Index     Bank Margin

                              <201               350
                            201 - 475            325
                        Greater than 300         475


          The interest rate charged herein shall be adjusted monthly,  effective
     on the first (1st) day of each month, based upon the Index in effect on the
     last  Business Day of the then prior  month.  The Federal Home Loan Bank of
     Cincinnati  30 day advance  rate shall mean the highest rate of interest as
     published  daily by  Bloomberg  under  the  symbol  FHL5LBR1.  If the Index
     becomes  unavailable  during  the  term of this  Agreement,  the  Bank  may
     designate a substitute Index which is reasonably comparable after notice to
     the Company and each Company Subsidiary. Interest will be calculated on the
     basis of actual  days  elapsed  over a 360 day year  (365/360  basis),  and
     principal and interest  payments will be billed  monthly and will be due on
     the fifth day of each month.

          If an Event of Defaults has occurred and is continuing hereunder,  the
     Company and Company  Subsidiary  shall be obligated to pay to Bank interest
     on the outstanding  principal balance of each Company  Subsidiary Loan at a
     rate per annum equal to the Post-Default Rate until such Company Subsidiary
     Loan is paid in full or such  Event of  Default  is cured or  waived by the
     Bank.

          (b) At the time of  closing  of each  Company  Subsidiary  Loan,  such
     Company  Subsidiary  or the Company  shall pay the Bank a  transaction  fee
     equal to one percent (1.0%) of the amount of such Company  Subsidiary  Loan
     (unless otherwise mutually agreed to by Bank and such Company Subsidiary).

          (c) The  books and  records  of Bank,  absent  manifest  error,  shall
     constitute  prima facie  evidence of the principal  balance of each Company
     Subsidiary  Loan and the date and amount of each payment of  principal  and
     interest and applicable  interest rates and other  information with respect
     thereto.


          Section~2.5.  Payments.  (a)~The  Company and each Company  Subsidiary
     which  becomes  a party to this  Agreement  shall  ensure  that any and all
     payments  on the  Pledged  Mortgage  Loans  shall be made as  specified  in
     Section 3.4. The Bank shall  receive,  record and forward to the Company or
     the Company  Subsidiary the record of all payments made by Pledged Mortgage
     Loan  obligors in  accordance  with the Lock Box  Agreement.  So long as no
     Event of Default shall have occurred and be  continuing,  Pledged  Mortgage
     Loan payments with the  exception of any Escrow  Payments  deposited in the
     lockbox or  otherwise  received by the  Company or the  Company  Subsidiary
     shall be delivered  to the Bank and shall be applied,  on or about the 5th,
     12th, 19th and 26th day of each month as follows:

     First,  (i) all amounts  received in respect of a particular  Mortgage Pool
     shall be distributed to the related Mortgage Pool in the following order up
     to an amount equal to:

               (A) the  related  Pool  Percentage  Interest  of any  accrued and
          unpaid Taxes, Administrative Servicing Fees and any Corporate Advances
          for such month;

               (B) any accrued and unpaid  interest  and Success Fees due on all
          Company Subsidiary Loans related to such Mortgage Pool; and

               (C) the required Principal Payment for such Mortgage Pool;

              (ii) all remaining  amounts after the  allocations  set forth in
     clauses 2.5(a)(i)(A) through (C) above from all Mortgage Pools in the
     aggregate shall be distributed to all Mortgage Pools in the following order
     , in each case to the extent not distributed to such Mortgage Pool
     pursuant to clause 2.5(a)(i) above, up to an amount equal to:

               (A) any accrued and unpaid Taxes,  Administrative  Servicing Fees
          and any Corporate  Advances for such month for each Mortgage Pool, pro
          rata  based  on  their  remaining   entitlement   pursuant  to  clause
          2.5(a)(i)(A)   above   after  all   allocations   pursuant  to  clause
          2.5(a)(i)(A) above;

               (B) any accrued and unpaid  interest  and Success Fees due on all
          Company  Subsidiary  Loans for each Mortgage  Pool,  pro rata based on
          their  remaining  entitlement  pursuant to clause  2.5(a)(i)(B)  above
          after all allocations pursuant to clause 2.5(a)(i)(B) above; and

               (C) the required  Principal  Payment for such Mortgage  Pool, pro
          rata  based  on  their  remaining   entitlement   pursuant  to  clause
          2.5(a)(i)(C)   above   after  all   allocations   pursuant  to  clause
          2.5(a)(i)(C) above;

              (iii) all remaining  amounts  after the  allocations set forth in
     clauses 2.5(a)(i) through 2.5(a)(ii) above from all Mortgage Pools in the
     aggregate shall be applied to pay all other accrued and unpaid sums due to
     the Bank hereunder, and

               (iv) all  remaining  amounts after the  allocations  set forth in
          clauses 2.5(a)(i) through 2.5(a)(iii) above from all Mortgage Pools in
          the  aggregate  shall  be  paid  as  determined  by  the  Bank  in its
          reasonable discretion exercised in good faith and then,

     Second,  all amounts  distributed to each Mortgage Pool pursuant to clauses
     2.5(a)(i)  through  2.5(a)(ii)  above  shall then be applied to the Company
     Subsidiary  Loans related to such  Mortgage Pool in the following  order to
     pay:

               (i) any accrued and unpaid  interest and Success Fees due on each
          Company  Subsidiary  Loan related to such Mortgage Pool pro rata based
          on their entitlement thereto; and

               (ii) to each Company  Subsidiary Loan, the greater of the related
          Required      Amortization      Payment     and     the     Subsidiary
          Undercollateralization  Amount,  pro rata,  based on their  respective
          entitlement thereto.

     "Pool  Percentage  Interest" means the related Mortgage Pool Value over the
     aggregate Mortgage Pool Value of all Mortgage Pools.

          "Principal  Payment" for the related month and any Mortgage Pool means
          an  amount  equal  to the  greater  of (i) the  Required  Amortization
          Payment on all Company  Subsidiary Loans related to such Mortgage Pool
          and (ii) the Pool Undercollateralization Amount.

          "Company   Subsidiary   Loan   Value"   means,   as  of  any  date  of
          determination,  the aggregate  Mortgage Loan Principal  Balance of all
          Pledged Mortgage Loans owned by the related Company Subsidiary less an
          amount equal to all Reserves in respect of such Company Subsidiary.

          "Mortgage  Pool" means the pool of  Mortgage  Loans  comprised  of the
          Pledged Mortgage Loans owned by the Company  Subsidiaries set forth on
          Exhibit G.

          "Mortgage  Pool Value"  means,  as of any date of  determination,  the
          aggregate  Mortgage  Loan  Principal  Balance of all Pledged  Mortgage
          Loans  in the  related  Mortgage  Pool  less an  amount  equal  to all
          Reserves  in respect of the Pledged  Mortgage  Loans  comprising  such
          Mortgage Pool.

          "Mortgage Pool Loan Amount" means the outstanding principal balance of
          all Company  Subsidiary  Loans made by Company  Subsidiaries  that own
          Pledged Mortgaged Loans in such Mortgage Pool.

          "Pool LTV" means,  as of any date of  determination,  the ratio of the
          applicable Mortgage Pool Value to the outstanding principal balance of
          all Notes that were  funded in respect of Advances  for such  Mortgage
          Pool.

         "Pool Undercollateralization Amount" for each Mortgage Pool shall mean
          the  amount,  if any,  by which  the (i)  Mortgage  Pool  Loan  Amount
          immediately  prior to  making  distributions  on any  payment  date as
          described above,  exceeds (ii) the product of the applicable  Required
          Pool LTV  multiplied by the Mortgage  Pool Value,  taking into account
          all payments made and applied on the underlying Pledged Mortgage Loans
          on or prior to such payment date.

          "Required  Amortization  Payment"  means a payment of principal on the
          related Company Subsidiary Loan as specified in the Note.

          "Required  Pool LTV" for each  Mortgage  Pool shall be as specified on
          Exhibit G. On the 5th day of each  calendar  quarter  (i.e.,  April 5,
          July 5, October 5 and January 5) or if such day is not a Business Day,
          the next  succeeding  Business  Day,  the  Required  Pool LTV for each
          Mortgage Pool shall be reset (and Exhibit G  automatically  amended in
          accordance  herewith) as the weighted average of the Required Pool LTV
          as of the last day of the  preceding  calendar  month and the Required
          Subsidiary LTV for each Company  Subsidiary that was joined to Exhibit
          G since the last reset of the Required Pool LTV's,  weighted  based on
          the Mortgage  Pool Value of the related  Mortgage  Pool as of the last
          day of the preceding  calendar month and the Company  Subsidiary  Loan
          Value  as of the date the  related  Advance  was  made,  in each  case
          subject to the approval of the Bank with respect to such calculations.

          "Required Subsidiary LTV" for each Company Subsidiary Loan shall be as
          specified  on Exhibit  G. In the event any  Company  Subsidiary  not a
          party hereto on the date hereof  becomes a party  hereto,  the Company
          Subsidiary  Loan  Request  in the form  attached  hereto as Exhibit B,
          shall set forth the Required  Subsidiary LTV as a percentage  equal to
          (A) (1) the  amount of the  Advance  less (2) all  accrued  and unpaid
          interest on such Mortgage Loans included in the purchase price of such
          Mortgage Loan upon  acquisition by the Company  Subsidiary (or, in the
          case of  Mortgage  Loans  assigned to the  Company  Subsidiary  by the
          Company, by the Company) divided by (B) (1) the outstanding  principal
          balance of the  Mortgage  Loans in respect of which an Advance will be
          made less (2) all Reserves for such  Mortgage  Loans in the  aggregate
          minus (C) if the  Company  Subsidiary  Loan is to  become  part of the
          Mortgage  Pool  designated  as  "A" or  "B",  2%,  (2) if the  Company
          Subsidiary  Loan is to become part of the Mortgage Pool  designated as
          "C",  3% and (3) if the Company  Subsidiary  Loan is to become part of
          any other Mortgage Pool, a percentage to be determined by the Bank and
          the  Company.  Upon the making of the Advance with respect to any such
          new Company  Subsidiary,  Exhibit G shall be automatically  amended to
          include such Company Subsidiary,  the designation of the Mortgage Pool
          (as set forth on the Company Subsidiary Loan Request) and the Required
          Subsidiary  LTV, as set forth on the Company  Subsidiary  Loan Request
          and as calculated  above,  in each case subject to the approval of the
          Bank with respect to such calculations.

          "Reserves"  means all reserve amounts in respect of a Pledged Mortgage
          Loan as determined monthly.

          "Subsidiary Undercollateralization Amount" for each Company Subsidiary
          shall mean the amount, if any, by which the (i) outstanding  principal
          balance of the applicable Company Subsidiary Loan immediately prior to
          making  distributions on any payment date as described above,  exceeds
          (ii) the product of the applicable  Required Subsidiary LTV multiplied
          by  the  outstanding  principal  balance  of  the  applicable  Company
          Subsidiary  Loan Value,  taking into  account  all  payments  made and
          applied on the underlying  Pledged  Mortgage Loans on or prior to such
          payment date.

          Notwithstanding  the foregoing,  the outstanding  principal  amount of
          each Company Subsidiary Loan shall be payable:  (i) in part, upon~the
          occurrence  of any  event  described  in  Section~2.5(c)  hereof  with
          respect to such Company  Subsidiary  Loan;  or (ii)~in  full,  upon an
          uncured  Event of  Default.  Furthermore,  if an Event of Default  has
          occurred and is then  continuing,  the provisions of Section 8.3 shall
          apply.

          Notwithstanding the foregoing, for purposes of determining Defaults in
          the payment of amounts due under this Agreement, (i) it shall not be a
          Default  in payment of  principal  so long as the amount of  principal
          paid to the Company  Subsidiary Loans in the aggregate in any calendar
          month is at least equal to the Required  Amortization  Payments due in
          the aggregate on the Company  Subsidiary Loans for such month and (ii)
          it shall not be a payment  Default  under  this  Agreement  unless all
          amounts paid pursuant to the foregoing waterfalls in the aggregate for
          all  payment  dates  for  such  month  are not at  least  equal to the
          Administrative  Servicing Fees due for such month, interest due on the
          Company Subsidiary Loans for such month and the Required  Amortization
          Payments due for such month.

          (b) Notwithstanding the general order of payments set forth in Section
          2.5 above,  and so long as the provisions of Sections 2.5(c) or 8.3 do
          not apply,  the Company or a Company  Subsidiary  may prepay a Company
          Subsidiary  Loan,  in whole  or in part at any  time and from  time to
          time,  without  premium or penalty (but  subject to the Success  Fee),
          provided,  however,  the  Bank  may,  at  its  reasonable  discretion,
          determine in which order of priority that the then outstanding Company
          Subsidiary Loans are prepaid so as not to have a detrimental impact on
          any remaining Company Subsidiary Loans.

          (c) The Company and the Company  Subsidiary  shall be obligated to pay
          to the  Bank,  and the  Company  and  the  Company  Subsidiary  hereby
          authorize  the Bank to  charge  its  account  for,  the  amount of the
          Advance for the purchase of such  Mortgage  Loan if the Company or the
          Company  Subsidiary  (i) fails,  to deliver the  Collateral  Documents
          relating to the  Mortgage  Loan  against  which such  Advance was made
          within  sixty  (60) days  after  written  notice by the Bank,  or (ii)
          fails,  within  sixty (60) days after the  delivery of any  Collateral
          Documents to the Company  Subsidiary  for  correction  or  completion,
          without  being   returned  to  the  Bank  corrected  or  completed  as
          instructed  by the  Bank,  or from  the  date a  Collateral  Document,
          following  examination  by the Bank,  is found not to be in compliance
          with the requirements of this Agreement.

          Section~2.6.  Expiration and/or Termination of Commitment. (a)~ Unless
          terminated earlier as permitted hereunder, the Commitment shall expire
          of its own term,  and without the necessity of action by the Bank, two
          (2) years following the date of execution of this  Agreement.  No such
          expiration,  however, shall in and of itself operate to accelerate the
          due date of any  outstanding  Company  Subsidiary  Loan,  or otherwise
          terminate the obligations,  terms and covenants herein with respect to
          any then outstanding Company Subsidiary Loans.

          (b) Either party shall have the right,  without cause,  at any time to
          terminate  this  Commitment  on not less  than six (6)  months'  prior
          written notice to the other party. No such termination, however, shall
          in and of itself operate to accelerate the due date of any outstanding
          Company Subsidiary Loan, or otherwise terminate the obligations, terms
          and  covenants  herein with  respect to any then  outstanding  Company
          Subsidiary Loans.

          (c) The Bank  shall,  furthermore,  have the  right to  terminate  the
          Commitment  upon or following the  occurrence of a Event of Default as
          specified in Section 8. No such termination,  however, shall in and of
          itself operate to accelerate the due date of any  outstanding  Company
          Subsidiary  Loan, or otherwise  terminate the  obligations,  terms and
          covenants  herein  with  respect  to  any  then  outstanding   Company
          Subsidiary Loans.

          (d) The Bank  shall  have the right  from time to time and in its sole
          discretion,  to extend the term of this  Agreement  with prior written
          agreement with the Company and each Company Subsidiary.  The length of
          any  such  extension  shall  also be  determined  in the  Bank's  sole
          discretion. Such extension may be made subject to the renegotiation of
          the terms  hereunder and to any other such  conditions as the Bank may
          deem necessary.  Under no circumstances shall such an extension by the
          Bank be  interpreted  or  construed as the Bank's  waiver,  release or
          forfeiture  of any of its rights,  entitlements  or interests  created
          hereunder.  The Company and each Company  Subsidiary  acknowledges and
          understands that the Bank is under no obligation  whatsoever to extend
          the term of this Agreement  beyond its  expiration  date as originally
          stated in this Agreement.

          Section~2.7.   Method  of  Making   Payments.   Except  as   otherwise
          specifically  provided  herein,  all  payments  under a Note  shall be
          received  by the Bank on the date when due and shall be made in lawful
          money of the United States of America in immediately  available  funds
          at the office of the Bank,  or such other  place as the Bank from time
          to time shall designate;  provided that in any event such payments are
          received  no later than 12:00 p.m.  New York City time.  Whenever  any
          payment  to be made  under a Note  shall be  stated to be due on a day
          which is not a Business Day, the due date thereof shall be extended to
          the next  succeeding  Business  Day,  and, with respect to payments of
          principal,  the interest  thereon  shall be payable at the  applicable
          rate during such extension. Funds received by the Bank after 4:00 p.m.
          New York City time on a Business Day shall be deemed to have been paid
          on the next succeeding Business Day.

          Section~2.8.  Net  Payments.  All payments with respect to any Company
          Subsidiary Loan shall be made without offset or counterclaim  and free
          from any present or future  taxes,  levies,  imports,  duties or other
          similar charges of whatsoever  nature imposed by any government or any
          political subdivision or taxing authority hereof, other than any taxes
          on or measured by the net income of the Bank.

          Section~2.9.  Direct  Payments.  Any and all payments  received by the
          Company or a Company Subsidiary on Pledged Mortgage Loans with respect
          to which a  Company  Subsidiary  Loan is made  shall be deemed to have
          been  delivered in trust for the benefit of Bank and shall be promptly
          delivered to the Bank for application to the Company  Subsidiary Loans
          and such other specified  purposes in accordance with and as set forth
          in Section 2.5.


          Section~2.10.  Success  Fees.  The Company or the  Company  Subsidiary
          shall pay to Bank a "Success Fee"  amounting to the lesser of (i) one
          half of one percent (0.50%) of the original  principal  balance of the
          Company  Subsidiary  Loan  (provided  further,  however,  that Company
          Subsidiary  acknowledges and agrees that the Success Fee for a Company
          Subsidiary  Loan  listed on Schedule I attached  hereto,  shall be one
          percent  (1.0%) of the  original  principal  balance  of such  Company
          Subsidiary  Loan),  or  (ii)  fifty  percent  (50%)  of the  remaining
          cashflows  of the  Pledged  Mortgage  Loans  related  to such  Company
          Subsidiary  Loan received after the payoff of such Company  Subsidiary
          Loan.


                                   Article ~ III

                                   Collateral

          Section~3.1.  Assignments  and Grants of Security  Interest by Company
          and Company  Subsidiary.  In  consideration  of the  Commitment and as
          security  for  (i)  the  payment  of  the  Note  made  by it  and  the
          performance of all of such Company Subsidiary's obligations under this
          Agreement,  (ii) the obligations of such Company Subsidiary under this
          Agreement,  (iii) the  obligations  of any other  Company  Subsidiary,
          under that other Company  Subsidiary's  Note and under this Agreement,
          whether such other Company  Subsidiary is now existing or is hereafter
          created,  and whether such other  Company  Subsidiary's  Loan was made
          prior  to  or  after  the  Company  Subsidiary  Loan  to  the  Company
          Subsidiary  granting this security interest,~ the Company does hereby,
          each Company  Subsidiary  which  contemporaneously  herewith becomes a
          party to this Agreement does hereby, and each Company Subsidiary which
          hereafter  becomes a party to this  Agreement  shall,  by  executing a
          counterpart signature page to this Agreement thereby, grant and convey
          to the Bank a security interest in all rights,  titles and interest of
          the Company and the Company  Subsidiary,  respectively,  in and to the
          following  described property  (collectively,  the "Collateral"),  and
          each Company Subsidiary which becomes a party hereto contemporaneously
          herewith  does  hereby  confirm  and  reaffirm  its  prior  grant  and
          conveyance  to the Bank of a  security  interest  in all of its right,
          title, and interest in the following described Collateral:

          (a) All Mortgage  Loans,  including  all Mortgage  Notes and Mortgages
          evidencing  or  securing  such  Mortgage  Loans and all other  related
          Mortgage  Loan  Documents  which from time to time are  delivered,  or
          caused to be delivered, or which heretofore have been delivered to the
          Bank  (including  delivery  to a third  party on  behalf  of the Bank)
          pursuant  hereto or in  respect  of which an  Advance  under a Company
          Subsidiary  Loan has been made by the Bank or which is hereafter  made
          by the Bank hereunder  (the "Pledged Mortgage  Loans");  each Company
          Subsidiary hereafter obtaining a Company Subsidiary Loan shall deliver
          a schedule,  in form and detail  acceptable  to Bank,  of the Mortgage
          Loans being  purchased  from the proceeds of such  Company  Subsidiary
          Loan and  pledged  hereunder,  which  schedule  shall  attached to the
          Company Subsidiary's  counterpart signature page to this Agreement and
          shall be deemed to be a part of this Agreement.

          (b) All  rights,  but not any  obligations  or  liabilities  under all
          purchase  agreements  relating to the acquisition of Pledged  Mortgage
          Loans  under  which  the  Company  or the  Company  Subsidiary  is the
          purchaser,  and all rights,  but not any  obligations  or  liabilities
          under all assignments to the Company  Subsidiary by the Company of the
          Company's  rights  under  such  agreements  where the  Company  is the
          purchaser.

          (c) All mortgage  insurance and all commitments  issued by Insurers to
          insure or  guarantee  any Pledged  Mortgage  Loans;  and all  personal
          property,  contract  rights,  servicing and servicing fees and income,
          accounts and general  intangibles  of whatsoever  kind relating to the
          Pledged  Mortgage  Loans,  said Insurer  commitments  and the Purchase
          Commitments,  and all other documents or instruments  delivered to the
          Bank in respect of the  Pledged  Mortgage  Loans,  including,  without
          limitation,   the  right  to  receive  all   insurance   proceeds  and
          condemnation  awards  which may be payable in respect of the  premises
          encumbered by any Pledged Mortgage Loan;

          (d) All right,  title and  interest of the Company  and/or the Company
          Subsidiary in and to all files, surveys, certificates, correspondence,
          appraisals,   computer  programs,   tapes,  discs,  cards,  accounting
          records,  information  and  data of the  Company  and/or  the  Company
          Subsidiary relating to the Pledged Mortgage Loans;

          (e) All property of the Company and/or the Company Subsidiary,  in any
          form or capacity  now or at any time  hereafter in the  possession  or
          direct  or  indirect  control  of the  Bank  relating  to the  Pledged
          Mortgage Loans (including possession by a parent company, affiliate or
          subsidiary of the Bank);

          (f) The  Company  and the  Company  Subsidiary's  rights  (but not any
          obligations or  liabilities of the Company or the Company  Subsidiary)
          under all Purchase  Commitments now held or hereafter  acquired by the
          Company and/or the Company Subsidiary  covering Pledged Mortgage Loans
          and all proceeds  resulting from the sale of Pledged Mortgage Loans to
          Investors pursuant thereto;

          (g) All rights (but not any obligations or liabilities) of the Company
          and  of the  Company  Subsidiary  under  the  Administrative  Services
          Agreements and under the Custodial Agreements; and

          (h) All  replacements,  products  and  proceeds  of any and all of the
          foregoing.

              Without  limiting the foregoing,  it is the express  intention of
          the  Company,  and of each  Company  Subsidiary  that now or hereafter
          becomes a party to this Agreement,  that the security interest granted
          above is and shall be a continuing  security interest covering all now
          present (or then present),  and all future  obligations of the Company
          to Bank hereunder or arising  hereunder;  and all now present (or then
          present),  and all  future  obligations  of  each  and  every  Company
          Subsidiary  to Bank  hereunder  or  arising  hereunder,  and  that the
          security  interests  granted  herein by the Company  and each  Company
          Subsidiary  shall  remain in effect  until  all  indebtedness  secured
          hereby  has been paid in full and the  Commitment  has  expired or has
          been otherwise terminated.

               Upon  the  request  of the  Bank,  the  Company  and the  Company
          Subsidiaries   shall  execute  any  further   document  or  instrument
          reasonably requested by the Bank to further evidence or effectuate the
          assignments  and  security   interests  set  forth  in  this  Section.
          Furthermore,  the  Company  and the  Company  Subsidiaries  (a) hereby
          authorize Bank to sign (if required) and file financing  statements at
          any time with respect to any of the Collateral, without such financing
          statements  being  executed  by, or on behalf of,  the  Company or the
          Company  Subsidiaries,  (b)  shall,  at any time on  request  of Bank,
          execute or cause to be executed financing statements in respect of any
          Collateral  and  (c)  shall   reasonably   cooperate  to  provide  any
          information  reasonably  required by the Bank in  connection  with the
          filing of financing  statements  with respect to the  Collateral.  The
          Company and the  Company  Subsidiaries  agree to pay all filing  fees,
          including fees for filing  continuation  statements in connection with
          such  financing  statements,  and to  reimburse  Bank  for  all  costs
          incurred in connection therewith.

               Section  3.2  Mandatory  Prepayment.  In the event  that the Bank
          shall in good faith  determine  at any time that any Pledged  Mortgage
          Loan  materially  and  adversely  breaches  the   representations  and
          warranties contained in this Agreement, and the Company or the Company
          Subsidiary  fails to cure such breach of  compliance  upon thirty (30)
          Business Days prior written  notice from the Bank,  the Company or the
          Company  Subsidiary shall partially prepay the Company Subsidiary Loan
          Advance by paying the Bank the Redemption  Amount with respect to such
          Pledged Mortgage Loan and the Bank shall release such Pledged Mortgage
          Loan from the Pledge of this Agreement.

               Section~3.3. Right of Redemption from Pledge. Provided no Default
          or Event of Default has occurred and is  continuing,  a Company and/or
          Company  Subsidiary may redeem a Pledged Mortgage Loan from pledge, by
          either  (i)~paying,  or causing an Investor  to pay, to the Bank,  for
          application  to prepayment  of the  principal  balance of the Note, an
          amount  (the  "Redemption  Amount")  equal to the price at which  such
          Mortgage  Loan could  readily be sold as  determined  by the Bank,  or
          (ii)delivering  substitute  Collateral  which,  in  addition  to being
          acceptable to the Bank in its sole discretion, will when included with
          the  Collateral,  result in an LTV for the  applicable  Mortgage  Pool
          which is equal to or less  than the LTV of such  Mortgage  Pool at the
          time of the redemption request.

               Section~3.4.  Collection  and Servicing  Rights.  (a) The Company
          Subsidiary  and the Bank  agree that the "Lock Box Terms" set forth on
          Exhibit F shall be utilized by Company  Subsidiary  for the receiving,
          collecting,  and  processing  of  all  sums  payable  to  the  Company
          Subsidiary in respect of the Collateral  (the  "Lock-box  Agreement").
          Under that Lock-box  Agreement,  the Bank shall be entitled to receive
          all  sums  payable  to  the  Company  Subsidiary  in  respect  of  the
          Collateral.  All  amounts  payable to the Company  Subsidiary  for the
          purchase by any Investor  under a Purchase  Commitment  of any Pledged
          Mortgage  Loans shall also be paid  directly to the Bank.  The Company
          Subsidiary shall instruct each Pledged Mortgage Loan obligor to direct
          all payments due under the Pledged  Mortgage  Loans,  and shall direct
          each  Investor  to pay the amounts  payable  for the  purchase of such
          Pledged Mortgage Loans, directly to the Lockbox address at the Bank.

               (b) In the  event  of  any  conflict  between  the  terms  of the
          Lock-box  Agreement  and  the  terms  of the  Administrative  Services
          Agreement,  the Lock-box Agreement terms shall prevail. The Bank shall
          have the right on not less than thirty  (30) days prior  notice to the
          Company and each Company  Subsidiary to reasonably modify the Lock-box
          Agreement  to conform to then current Bank  practices  and/or  banking
          regulations.

               Section~3.5.  Return  of  Collateral.  If no  Company  Subsidiary
          Loans,  interest or other  amounts  evidenced by a Note or due under a
          Company  Subsidiary  Loan or under this Agreement shall be outstanding
          and unpaid,  the Bank shall promptly deliver or release all Collateral
          in its  possession to the Company or to the Company  Subsidiaries,  as
          appropriate.  The Bank shall also execute and deliver such assignments
          and  other  instruments  and  documents  reasonably  requested  by the
          Company or by the Company Subsidiaries to vest title in the Collateral
          to the  Company  or the  Company  Subsidiaries,  as  appropriate.  The
          receipt of the Company or of Company Subsidiaries, as appropriate, for
          any Collateral released or delivered pursuant to any provision of this
          Agreement shall be a complete and full  acquittance for the Collateral
          so  returned,  and the Bank shall  hereafter  be  discharged  from any
          liability or responsibility therefor.


                                   Article IV

                              Conditions Precedent

               Section~4.1.  Relating  to  a  Company  Subsidiary  Advance.  The
          obligation of the Bank to fund an approved Company  Subsidiary Loan is
          subject  to (i) the  receipt  by the  Bank by the  date of an  Advance
          thereunder  of  the  following   documents,   all  of  which  must  be
          satisfactory  in  form  and  content  to the  Bank  in its  reasonable
          discretion,  and (ii) the  satisfaction  of the  following  conditions
          precedent:
               a) Requests for a Company  Subsidiary  Loan shall be initiated by
          the Company or by a Company  Subsidiary  by  delivering  to the Bank a
          completed and signed a Company Subsidiary Loan Request. The Bank shall
          review such Company  Subsidiary  Loan Request and if the Bank does not
          approve such  designation  of a Mortgage  Pool, the Company or Company
          Subsidiary  shall revise such request and deliver a new  completed and
          signed Company Subsidiary Loan Request with a revised designation of a
          Mortgage Pool for the Bank's approval.

               b) The Company and/or the Company Subsidiary shall have delivered
          the  Collateral  Documents to the Custodian  within three (3) Business
          Days after the date of the closing of the Company Subsidiary Loan;

              c) The Bank shall have received the Tax Identification  number of
          each Company  Subsidiary,  as the case may be, and, when  specifically
          requested  for a  particular  Company  Subsidiary  Loan,  file-stamped
          copies of the Company Subsidiary's articles of incorporation (dated no
          less  recently  than one (1) month prior to the date of the  Advance),
          and operating agreement or by-laws;

               d)  When   specifically   requested  for  a  particular   Company
          Subsidiary  Loan, the Bank shall have received an original  resolution
          of the members/manager,  or directors, of the Company and each Company
          Subsidiary,  as the case may be,  certified  by its  manager  or chief
          executive officer authorizing the execution,  delivery and performance
          of this Agreement, the Note, and all other instruments or documents to
          be delivered by the Company Subsidiary pursuant to this Agreement;

               e)  When   specifically   requested  for  a  particular   Company
          Subsidiary  Loan,  the Bank shall have received a  certificate  of the
          Company's  and each Company  Subsidiary's  manager or chief  executive
          officer as to the incumbency and authenticity of the signatures of the
          officers  of the Company and the  Company  Subsidiary  executing  this
          Agreement,  the Note,  the Company  Subsidiary  Loan Request,  and all
          other  instruments or documents to be delivered  pursuant  hereto (the
          Bank being entitled to rely thereon until a new such  certificate  has
          been furnished to the Bank);

               f) The Bank shall have received an original independently audited
          financial  statements  of the  Company  for  the  most  recent  fiscal
          year-end  for which  reports  on Form 10-K  have been  filed  with the
          Securities and Exchange Commission (the "Statement Date") containing a
          balance sheet and related  statements of income and retained  earnings
          and  changes  in  financial  position  for  the  period  ended  on the
          Statement  Date,  all  prepared in  accordance  with GAAP applied on a
          basis  consistent with prior periods and reasonably  acceptable to the
          Bank;

               g) [Reserved];

               h) [Reserved];

               i) The Bank shall have  satisfied  itself,  in its discretion and
          following due  diligence,  that the  Underwriting  Standards have been
          satisfied.  The Bank shall have received each of the following,  which
          must be satisfactory in form and content to the Bank in its reasonable
          discretion:  (i) The purchase agreement relating to the acquisition of
          the Mortgage  Loans,  and the assignment to the Company  Subsidiary by
          the Company of the Company's rights under such purchase agreement when
          the  Company is the  purchaser;  (ii) a  schedule,  in form and detail
          acceptable to Bank of the Mortgage  Loans being  purchased,  (iii) the
          Note,  substantially in the form of Exhibit A hereto, duly executed by
          the  Company  Subsidiary;  (iv)  counterpart  signature  page for this
          Agreement,  substantially  in the  form  of  Exhibit  E  hereto,  duly
          executed by the Company  Subsidiary;  and (v) if the Company,  not the
          Company  Subsidiary,  is the party to the purchase  agreement covering
          the Mortgage  Loans and Mortgage Loan  Documents to be acquired by the
          Company  Subsidiary  and pledged to the Bank to secure the Advance,  a
          duly executed  assignment by the Company to the Company  Subsidiary of
          all of the  Company's  rights  in the  purchase  agreement  and in the
          Mortgage Loans and Mortgage Loan Documents covered by that agreement;

               j) [Reserved];

               k) The representations and warranties of the Company contained in
          Article V hereof shall be true and correct in all material respects as
          if made on and as of the date of each Advance  unless the same relates
          to an earlier date;

               l) The  representations  and warranties of the Company Subsidiary
          contained  in  Article  V  hereof  shall be true  and  correct  in all
          material  respects  as if  made on and as of the  date of the  Advance
          unless the same relates to an earlier date;

               m) The Company Subsidiary shall have performed all obligations to
          be performed by it hereunder, and after giving effect to the requested
          Advance, there shall exist no Default or Event of Default hereunder;

               n) The  Company  Subsidiary  shall  have  become  a party to this
          Agreement,  shall have performed all obligations to be performed by it
          under this Agreement,  and under the Note, and, after giving effect to
          the  requested  Advance,  there  shall  exist no  Default  or Event of
          Default under this Agreement or under any Note;

               o) The  Company  shall not have  experienced  any other  material
          adverse change in its business or operations as reasonably  determined
          by the Bank in its reasonable discretion exercised in good faith; and

               p) The Company Subsidiary,  as reasonably  determined by the Bank
          in its reasonable  discretion  exercised in good faith, shall not have
          (i) incurred any material  liabilities,  direct or  contingent,  other
          than in the ordinary  course of its business and other than under this
          Agreement,  or (ii)  experienced any other material  adverse change in
          its business or operations as reasonably determined by the Bank in its
          reasonable discretion exercised in good faith.

               Section 4.2.  Acceptance of Proceeds.  Acceptance of the proceeds
          of the requested  Advance by the Company  Subsidiary shall be deemed a
          representation  by the  Company and the  Company  Subsidiary  that all
          conditions  set forth in this Article IV shall have been  satisfied as
          of the date of such Advance.


                                    Article ~ V

                         Representations and Warranties

               Section 5.1. By the Company. In order to induce the Bank to enter
          into this Agreement and make each Company Subsidiary Loan, the Company
          hereby  represents  and  warrants to the Bank,  as of the date of this
          Agreement and as of the date of each Company  Subsidiary  Loan Request
          and of each Company Subsidiary Loan, that:

               (a)  Organization;  Good  Standing.  The Company is a corporation
          duly organized,  validly existing, and in good standing under the laws
          of the State of Delaware and is duly  registered to do business and is
          in good standing under the laws of the State of New York, has the full
          legal  power and  authority  to own its  property  and to carry on its
          business as currently  conducted,  and is duly  qualified as a foreign
          corporation  to do  business  in  and  is in  good  standing  in  each
          jurisdiction  in which the  transaction  of its  business  makes  such
          qualification  necessary,  except in  jurisdictions,  if any,  where a
          failure to be in good standing has no material  adverse  effect on the
          business, operations, assets or financial condition of the Company.

               (b) Authorization and  Enforceability.  The Company has the power
          and authority to execute,  deliver and perform this  Agreement and all
          other  documents   contemplated  hereby  or  thereby.  The  execution,
          delivery  and  performance  by the Company of this  Agreement  and all
          other  documents  contemplated  hereby or thereby,  have been duly and
          validly  authorized by all necessary  corporate  action on the part of
          the Company  (none of which  actions have been  modified or rescinded,
          and all of which  actions are in full force and effect) and do not and
          will not  conflict  with or  violate  any  provision  of law or of the
          articles of  organization  or bylaws of the Company,  conflict with or
          result in a breach of or  constitute  a default or require any consent
          under,  or result in the  creation  of any Lien upon any  property  or
          assets of the Company  (other than  pursuant  to this  Agreement),  or
          result in or  require  the  acceleration  of any  indebtedness  of the
          Company  pursuant to any  agreement,  instrument or indenture to which
          the Company is a party or by which the Company or its  property may be
          bound or affected. This Agreement and all other documents contemplated
          hereby or thereby constitute legal,  valid, and binding obligations of
          the Company  enforceable in accordance  with their  respective  terms,
          except as limited by  bankruptcy,  insolvency  or other  similar  laws
          affecting  the  enforcement  of  creditors'   rights  and  by  general
          principles of equity.

               (c)Approvals.  The execution  and delivery of this  Agreement and
          all other documents contemplated hereby or thereby and the performance
          of the Company's  obligations  hereunder and thereunder do not require
          any license, consent, approval or other action of any state or federal
          agency or governmental or regulatory authority.

               (d)Financial  Condition.  The balance  sheet of the Company as at
          the  Statement  Date,  and the related  statements  of income and cash
          flows for the fiscal  year  ended on the  Statement  Date,  heretofore
          furnished to the Bank,  fairly present the financial  condition of the
          Company as at the Statement Date and the results of its operations for
          the fiscal period ended on the Statement Date. The Company had, on the
          Statement  Date, no known  liabilities,  direct or indirect,  fixed or
          contingent,  matured or unmatured, or liabilities for taxes, long-term
          leases or unusual  forward or long-term  commitments not disclosed by,
          or reserved  against in, said  balance  sheet and related  statements,
          except as heretofore  disclosed to the Bank in writing, and except for
          the Bank's extension(s) of credit to the Company and its Subsidiaries.
          Except for financial  statements  prepared for interim periods between
          the  fiscal  year-end,  all  financial  statements  were  prepared  in
          accordance  with GAAP applied on a  consistent  basis  throughout  the
          periods involved. Since the Statement Date, there has been no material
          adverse  change  in the  business,  operations,  assets  or  financial
          condition  of the  Company,  nor is the Company  aware of any state of
          facts  which  (with or without  notice or lapse of time or both) could
          reasonably be expected to result in any such material adverse change.

               (e)  Litigation.   There  are  no  actions,   claims,   suits  or
          proceedings  pending,  or to the knowledge of the Company,  threatened
          against or affecting the Company in any court or before any arbitrator
          or  before  any  government   commission,   board,   bureau  or  other
          administrative agency which, if adversely  determined,  may reasonably
          be  expected  to  result in any  material  and  adverse  change in the
          business,  operations,  assets, licenses,  qualifications or financial
          condition of the Company.

               (f) Compliance  with Laws. The Company is not in violation of any
          provision of any law, or of any  judgment,  award,  rule,  regulation,
          order,  decree,  writ or injunction of any court or public  regulatory
          body  or  authority  which  could  reasonably  be  expected  to have a
          material  adverse  effect  on  the  business,  operations,  assets  or
          financial  condition,  assets,  licenses,  qualifications or financial
          condition of the Company.

               (g)  Regulation~U.  No part of the proceeds of any Advances  made
          hereunder  will be used to  purchase  or carry any Margin  Stock or to
          extend  credit to others for the purpose of purchasing or carrying any
          Margin Stock.

               (h)  Investment  Company Act.  The Company is not an  "investment
          company," or a company  controlled by an "investment  company," within
          the meaning of the Investment Company Act of 1940, as amended.

               (i) Payment of Taxes. The Company has filed or caused to be filed
          all federal,  state, and local income, excise,  property and other tax
          returns  with  respect to the  operations  of the  Company,  which are
          required  to be filed,  all such  returns  are true and correct in all
          material  respects,  and the Company has paid or caused to be paid all
          taxes as shown on such returns or on any assessment to the extent that
          such taxes have  become  due,  except in cases  where the  Company has
          disputed in good faith the amount of said taxes.

               (j)  Agreements.  The  Company  is not a party to any  agreement,
          instrument or indenture or subject to any  restriction  materially and
          adversely  affecting  its  business,  operations,  assets or financial
          condition,  except as disclosed in the financial  statements described
          in  Section~5.1(d)  hereof.  The  Company  is  not in  default  in the
          performance,  observance  or  fulfillment  of any of the  obligations,
          covenants or conditions  contained in any  agreement,  instrument,  or
          indenture  which  default  could  reasonably  be  expected  to  have a
          material  adverse  effect on the business,  operations,  properties or
          financial  condition of the Company.  No holder of any indebtedness of
          the Company has given notice of any asserted default  thereunder,  and
          no  liquidation  or  dissolution  of the Company and no  receivership,
          insolvency,  bankruptcy,  reorganization or other similar  proceedings
          relative to the Company or any of its properties is pending, or to the
          knowledge of the Company, threatened.

               (k) Title to Properties.  The Company or the  applicable  Company
          Subsidiary has good,  valid,  insurable (in the case of real property)
          and  marketable  title to all material  portions of its properties and
          assets (whether real or personal, tangible or intangible) reflected on
          the financial  statements described in Section~5.1(d)  hereof,  except
          for such properties and assets as have been disposed of since the date
          of such  financial  statements  as no  longer  used or  useful  in the
          conduct of its  business or as have been  disposed of in the  ordinary
          course of business,  and all such  properties  and assets are free and
          clear of all Liens except as disclosed in such financial statements.

               (l)  ERISA.   All  plans   ("Plans")  of  a  type   described  in
          Section~3(3)   of  ERISA  in  respect  of  which  the  Company  is  an
          "Employer," as defined in  Section~3(8)  of ERISA,  are in substantial
          compliance  with  ERISA,  and none of such  Plans is  insolvent  or in
          reorganization, has an accumulated or waived funding deficiency within
          the meaning of  Section~412  of the  Internal  Revenue  Code,  and the
          Company  has  not  incurred  any  material  liability  (including  any
          material  contingent  liability)  to or on  account  of any such  Plan
          pursuant to Sections 4062,  4063,  4064, 4201 or 4204 of ERISA; and no
          proceedings  have been  instituted to terminate any such plan,  and no
          condition  exists  which  presents a material  risk to the  Company of
          incurring  a  material  liability  to or on  account  of any such Plan
          pursuant to any of the foregoing  Sections of ERISA.  No Plan or trust
          forming a part thereof has been terminated since September 1, 1974.

               (m)  Eligibility.  The Company  has all state and local  permits,
          licenses,  approvals,  registrations  and  qualifications  which it is
          required to have,  in order to  purchase,  sell or service the Pledged
          Mortgage Loans.


               Section  5.2. By the Company  Subsidiary.  In order to induce the
          Bank to make a Company  Subsidiary Loan, each Company  Subsidiary does
          represent  and  warrant  to the Bank,  as of the date of each  Company
          Subsidiary Loan Request and each Company Subsidiary Loan, that:

               (a)  Organization;  Good  Standing;  Subsidiaries.  Such  Company
          Subsidiary is a duly organized,  validly existing and in good standing
          under the laws of the state of its jurisdiction of incorporation,  and
          is duly registered to do business in and is in good standing under the
          laws of the state of its  jurisdiction of  incorporation,  and has the
          full legal power and authority to own its property and to carry on its
          business as currently  conducted,  and is duly  qualified as a foreign
          corporation  Company  Subsidiary  to do  business  in and  is in  good
          standing in each jurisdiction in which the transaction of its business
          makes such qualification necessary,  except in jurisdictions,  if any,
          where a failure to be in good standing has no material  adverse effect
          on the  business,  operations,  assets or  financial  condition of the
          Company Subsidiary. Such Company Subsidiary has no Subsidiaries.

               (b)Authorization and Enforceability.  Such Company Subsidiary has
          the  power  and  authority  to  execute,   deliver  and  perform  this
          Agreement,   and  all  other  documents   contemplated   thereby.  The
          execution,  delivery and performance by such Company Subsidiary of the
          Note, this Agreement and all other documents  contemplated thereby and
          the making of the  borrowing  thereunder,  have been duly and  validly
          authorized  by all  necessary  corporate  action  on the  part of such
          Company  Subsidiary  (none of which  actions  have  been  modified  or
          rescinded,  and all of which actions are in full force and effect) and
          do not and will not conflict  with or violate any  provision of law or
          of the articles of organization, bylaws or operating agreement of such
          Company  Subsidiary,  conflict  with  or  result  in a  breach  of  or
          constitute  a default or require any consent  under,  or result in the
          creation  of any Lien upon any  property  or  assets  of such  Company
          Subsidiary  (other than pursuant to this  Agreement),  or result in or
          require  the   acceleration  of  any   indebtedness  of  such  Company
          Subsidiary pursuant to any agreement, instrument or indenture to which
          such Company Subsidiary is a party or by which such Company Subsidiary
          or its  property  may be bound or affected.  This  Agreement,  and all
          other documents  contemplated  hereby  constitute  legal,  valid,  and
          binding   obligations  of  such  Company  Subsidiary   enforceable  in
          accordance  with  their  respective   terms,   except  as  limited  by
          bankruptcy, insolvency or other similar laws affecting the enforcement
          of creditors' rights and by general principles of equity.

               (c)  Approvals.  The  execution  and  delivery of the Note,  this
          Agreement,  and  all  other  documents  contemplated  thereby  and the
          performance of such Company Subsidiary's obligations thereunder do not
          require any license, consent, approval or other action of any state or
          federal agency or governmental or regulatory authority.

               (d)  Financial  Condition.  Any  balance  sheet  of such  Company
          Subsidiary as at the  Statement  Date,  and the related  statements of
          income and cash flows for the fiscal year ended on the Statement Date,
          theretofore  furnished  to the  Bank,  fairly  present  the  financial
          condition of such Company  Subsidiary as at the Statement Date and the
          results of its operations for the fiscal period ended on the Statement
          Date.  Such Company  Subsidiary  had, on the Statement  Date, no known
          liabilities,  direct or  indirect,  fixed or  contingent,  matured  or
          unmatured,  or  liabilities  for  taxes,  long-term  leases or unusual
          forward or long-term commitments not disclosed by, or reserved against
          in, said balance sheet and related  statements  except as  theretofore
          disclosed  to  the  Bank  in  writing,   and  except  for  the  Bank's
          extension(s)  of  credit  to  such  Company  Subsidiary.   Except  for
          financial  statements  prepared for interim periods between the fiscal
          year end, all financial  statements  were prepared in accordance  with
          GAAP applied on a consistent  basis  throughout the periods  involved.
          Since the Statement Date, there has been no material adverse change in
          the  business,  operations,  assets  or  financial  condition  of such
          Company Subsidiary,  nor is such Company Subsidiary aware of any state
          of facts which (with or without notice or lapse of time or both) would
          or could result in any such material adverse change.

               (e)  Litigation.   There  are  no  actions,   claims,   suits  or
          proceedings  pending,  or to the knowledge of such Company Subsidiary,
          threatened  against or affecting such Company  Subsidiary in any court
          or before any arbitrator or before any government  commission,  board,
          bureau or other administrative  agency which, if adversely determined,
          may  reasonably  be  expected  to result in any  material  and adverse
          change in the business, operations,  assets, licenses,  qualifications
          or financial condition of such Company Subsidiary.

               (f)  Compliance  with Laws.  Such  Company  Subsidiary  is not in
          violation  of any  provision  of any law, or of any  judgment,  award,
          rule,  regulation,  order,  decree, writ or injunction of any court or
          public  regulatory  body or  authority  which  might  have a  material
          adverse  effect  on the  business,  operations,  assets  or  financial
          condition, assets, licenses,  qualifications or financial condition of
          such Company Subsidiary.

               (g) Regulation~U.  No part of the proceeds of any Advance will be
          used to  purchase  or carry any  Margin  Stock or to extend  credit to
          others for the purpose of purchasing or carrying any Margin Stock.

               (h)  Investment  Company Act.  Such Company  Subsidiary is not an
          "investment  company,"  or a  company  controlled  by  an  "investment
          company," within the meaning of the Investment Company Act of 1940, as
          amended.

               (i) Payment of Taxes. Such Company Subsidiary has filed or caused
          to be filed all federal, state, and local income, excise, property and
          other tax  returns  with  respect to the  operations  of such  Company
          Subsidiary,  which are required to be filed, all such returns are true
          and correct in all material respects,  and such Company Subsidiary has
          paid or caused to be paid all taxes as shown on such returns or on any
          assessment  to the extent that such taxes have  become due,  except in
          cases where such  Company  Subsidiary  has  disputed in good faith the
          amount of said taxes.

               (j)  Agreements.  Such Company  Subsidiary  is not a party to any
          agreement,  instrument  or  indenture  or subject  to any  restriction
          materially and adversely affecting its business, operations, assets or
          financial  condition,  except as disclosed in the financial statements
          described in Section~5.2(d). Such Company Subsidiary is not in default
          in  the   performance,   observance  or  fulfillment  of  any  of  the
          obligations,  covenants  or  conditions  contained  in any  agreement,
          instrument, or indenture which default could reasonably be expected to
          have a material adverse effect on the business, operations, properties
          or financial  condition of such Company  Subsidiary.  No holder of any
          indebtedness  of such  Company  Subsidiary  has  given  notice  of any
          asserted default thereunder, and no liquidation or dissolution of such
          Company  Subsidiary  and  no  receivership,   insolvency,  bankruptcy,
          reorganization or other similar  proceedings  relative to such Company
          Subsidiary or any of its properties is pending, or to the knowledge of
          such Company Subsidiary, threatened.

               (k) Title to Properties. Such Company Subsidiary has good, valid,
          insurable (in the case of real property) and  marketable  title to all
          material  portions  of its  properties  and  assets  (whether  real or
          personal,   tangible  or   intangible)   reflected  on  the  financial
          statements described in Section~5.2(d), except for such properties and
          assets  as have  been  disposed  of since  the date of such  financial
          statements  as no longer used or useful in the conduct of its business
          or as have been  disposed of in the ordinary  course of business,  and
          all such  properties and assets are free and clear of all Liens except
          as disclosed in such financial statements.

               (l) Eligibility.  Such Company Subsidiary has all state and local
          permits, licenses,  approvals,  registrations and qualifications which
          it is required to have, in order to purchase or sell Pledged  Mortgage
          Loans.

               (m) Security Interest. No authorization, approval or other action
          by, and no notice to or filing  with,  any  governmental  authority or
          regulatory  body is required (and has not been obtained,  delivered or
          filed,  as  applicable)  either  (i)~for  the  grant  by such  Company
          Subsidiary of the security  interest  granted under this  Agreement or
          for the  execution,  delivery or performance of this Agreement by such
          Company  Subsidiary  or (ii)~for the  perfection of or the exercise by
          the Bank of its rights and remedies under this  Agreement,  other than
          the filing of a financing statement.

               Section 5.3 Special  Representations  Concerning Collateral.  The
          Company and each Company Subsidiary shall represent and warrant to the
          Bank  as of the  date  of  this  Agreement  and as of the  date of the
          Advance Request and of the Advance, that:

               (i) The Company  Subsidiary owns the Collateral free and clear of
          any Lien,  except for the security interest created by this Agreement.
          No financing  statement or other instrument similar in effect covering
          all or any part of the Collateral is on file in any recording  office,
          except  such as may have been filed in favor of Bank  relating to this
          Agreement. The Company Subsidiary has no trade names.

               (ii) Except as is  disclosed  to Bank in writing,  to the best of
          Company and Company  Subsidiary's  knowledge  based upon due diligence
          conducted by the Company and/or Company Subsidiary, each Mortgage Loan
          conforms  in  all  material  respects  to  the  requirements  and  the
          specifications  set forth in the attached  Exhibit~C  constituting the
          Underwriting Standards.

               (iii) The Mortgage Loan  Documents have been duly executed by the
          mortgagor  and create  valid and legally  binding  obligations  of the
          mortgagor,  enforceable in accordance with their terms,  except as may
          be  limited  by  bankruptcy  or  other  similar  laws   affecting  the
          enforcement of creditors' rights generally,  and general principles of
          equity,  and to the knowledge of the Company  Subsidiary  there are no
          rights of rescission,  set-offs,  counterclaims or other defenses with
          respect  thereto.  To the best  knowledge  of the  Company and Company
          Subsidiaries,  other than home equity line of credit  loans,  the full
          original principal amount of each Mortgage Loan (net of any discounts)
          has been fully  advanced or disbursed to the mortgagor  named therein.
          To the best  knowledge  of the Company  and the Company  Subsidiaries,
          other than home equity line of credit loans,  there is no  requirement
          for future  advances  and  except for  Mortgage  Loans  insured  under
          Section~203(k)  of the National  Housing Act, any and all requirements
          as to  completion  of any on-site or off-site  improvements  and as to
          disbursements of any escrow funds therefore have been satisfied.

               (iv) Except as is  disclosed  to Bank in writing,  to the best of
          the  Company  and  Company  Subsidiary's   knowledge  based  upon  due
          diligence conducted by the Company and/or the Company Subsidiary, each
          of the  Mortgage  Loans  has been  originated,  made and  serviced  in
          material compliance with all industry  standards,  applicable Investor
          and Insurer  requirements and all applicable federal,  state and local
          statutes,  regulations and rules, including,  without limitation,  the
          Federal  Truth-in-Lending  Act of 1968, as amended,  and  Regulation Z
          thereunder,  the Federal Fair Credit  Reporting Act, the Federal Equal
          Credit Opportunity Act, the Federal Real Estate Settlement  Procedures
          Act of  1974,  as  amended,  and  Regulation~X  thereunder,  the  Home
          Ownership  and Equity  Protection  Act of 1994,  as  amended,  and all
          applicable usury,  licensing,  real property,  consumer protection and
          other laws.

               (v) Except as is disclosed to Bank in writing, to the best of the
          Company and Company  Subsidiary's  knowledge  based upon due diligence
          conducted by the Company  and/or the Company  Subsidiary,  no Mortgage
          Loan is a "high cost  mortgage"  as  defined in Section  152(a) of the
          Home Ownership and Equity Protection Act of 1994. Further, no Mortgage
          Loan is "high cost home loan" or other such  corresponding term within
          the meaning of corresponding state laws, including but not limited to,
          the  Georgia  Fair  Lending  Act,  the New York  State  Anti-Predatory
          Lending Law, and the New Jersey Homeownership Security Act.

               (vi) Reserved

               (vii) Reserved

               (viii) A title  opinion or a valid and  enforceable  title policy
          currently  in full force and effect has been issued for each  Mortgage
          Loan  which  is a  first  mortgage  lien,  and in the  case  of  title
          insurance, in an amount not less than the original principal amount of
          such  Mortgage  Loan,  and which title  opinion  opines or which title
          policy  insures  that the  Mortgage  relating  thereto is either (i)~a
          valid  first  lien on the  property  therein  described  and  that the
          mortgaged  property  is free and clear of all  encumbrances  and liens
          having  priority over the first lien of the Mortgage  except for taxes
          not yet due and  payable and minor  title  irregularities  that do not
          have a  material  adverse  effect on the use or  marketability  of the
          mortgaged property,  and otherwise in compliance with the requirements
          of the  applicable  Investor;  or (ii)~if the Mortgage Loan is insured
          under Title I of the National  Housing Act, a valid second lien on the
          property therein described and that the mortgaged property is free and
          clear of all encumbrances and liens (other than the first lien) having
          priority over the second lien of the Mortgage except for taxes not yet
          due and  payable  and minor  title  irregularities  that do not have a
          material  adverse effect on the use or  marketability of the mortgaged
          property,  and otherwise in compliance  with the  requirements  of the
          applicable Investor.

               (ix) All  escrow/custodial  accounts  have  been  established  in
          accordance  with  the  requirements  of  FHA,  VA and  the  applicable
          Investor and Insurer and all other applicable laws and by the terms of
          the related Mortgages.

               (x)To  the  best  of  the  Company  and/or  Company  Subsidiary's
          knowledge, the Company,  Company Subsidiary,  all prior servicers and,
          if  different,   the   originating   mortgagee,   have  performed  all
          obligations required of them to be performed under or pursuant to each
          of the servicing contracts and related  requirements of the applicable
          Investor and Insurer and each other document or agreement  relating to
          the Mortgage Loans by which the Company  and/or Company  Subsidiary is
          bound,  and no event has occurred and is continuing  which,  under the
          provisions of any such servicing contracts and related requirements of
          the applicable  Investor or other  document or agreement,  but for the
          passage of time or in, giving of notice,  or both, would constitute an
          event of default thereunder.

               (xi) Any and all  payments  made with  respect to the  individual
          Mortgage  Loans have been and will be applied to such Mortgage Loan in
          accordance with the terms of the Mortgage Note and Mortgage evidencing
          and securing  that Mortgage  Loan.  The books,  records,  accounts and
          reports of the Company and the Company  Subsidiary with respect to the
          Mortgage Loans and servicing  contracts have been and will be prepared
          and maintained in accordance with all applicable  Investor and Insurer
          requirements, if any.


                                   Article VI

                              Affirmative Covenants

               Section 6.1. Of the Company.  The Company  agrees that so long as
          the  Commitment is  outstanding or there remains any obligation of the
          Company or any Company Subsidiary to be paid or performed hereunder or
          under any Note, the Company shall:

               (a) Payment of Note.  Punctually  cause to be paid by the Company
          Subsidiary the principal and interest on and all other amounts due and
          payable  hereunder  and  under the Note in  accordance  with the terms
          hereof and thereof.

               (b) Financial  Statements and Other Reports.  Deliver or cause to
          be delivered or make available to the Bank:

               (i) Upon reasonable request by the Bank, as soon as available and
          in any event  within  thirty  (30) days after each  calendar  quarter,
          statements of income and cash flows of the Company for the immediately
          preceding  quarter,  and  related  balance  sheet as of the end of the
          immediately  preceding quarter, all in reasonable detail and certified
          by the chief  financial  officer or other  appropriate  officer of the
          Company, subject, however, to year-end audit adjustments.

               (ii) As soon as  available  and in any event  within one  hundred
          twenty~(120)  days  after  the  close of each  fiscal  year:  original
          independently audited financial statements of the Company for the most
          recent fiscal  year-end (the  "Statement  Date")  containing a balance
          sheet and  related  statements  of income and  retained  earnings  and
          changes in financial  position  for the period ended on the  Statement
          Date,  all  prepared  in  accordance  with  GAAP  applied  on a  basis
          consistent  with prior periods and  reasonably  acceptable to the Bank
          and  accompanied  by an  opinion  of  an  accounting  firm  reasonably
          satisfactory to the Bank, or other independent  public  accountants of
          recognized  standing  selected by the Company  and  acceptable  to the
          Bank, as to said financial  statements and a certificate signed by the
          chief financial  officer or other  appropriate  officer of the Company
          stating that said  financial  statements  fairly present the financial
          condition  and results of  operations of the Company as at the end of,
          and for, such year.

               (iii)  Together  with  each  delivery  of  financial   statements
          pursuant  to  Sections~6.1(b)   (i)  and  (ii)  hereof,  an  officer's
          certificate  stating that the  signatory or  signatories  thereto have
          reviewed the terms of this  Agreement  and have made,  or caused to be
          made under their  supervision,  a review in  reasonable  detail of the
          transactions  and  conditions  of the  Company  during the  accounting
          period covered by such  financial  statements and that such review has
          not disclosed the  existence  during or at the end of such  accounting
          period,  and that the  signatory  or  signatories  thereto do not have
          knowledge  of  the   existence  as  of  the  date  of  the   Officer's
          Certificate,  of any  Default  or if any  Default  existed  or exists,
          specifying  the nature and period of the  existence  thereof  and what
          action the  Company  has taken,  is taking and  proposes  to take with
          respect thereto.

               (iv) Such other reports in respect of the Mortgage  Loans pledged
          as  collateral,  in such  detail  and at such times as the Bank in its
          reasonable discretion may request at any time or from time to time.

               (v)  Copies  of all  regular  or  periodic  financial  and  other
          reports,  if any, which the Company shall file with the Securities and
          Exchange Commission or any governmental agency successor thereto.

               (vi) Upon request by the Bank, copies of audits, examinations and
          reports  concerning  the  operations of the Company from any Investor,
          Insurer  or   licensing   authority  to  the  extent  not  subject  to
          restrictions on disclosure.

               (vii) From time to time, with reasonable promptness, such further
          information   regarding  the  business,   operations,   properties  or
          financial  condition  of the  Company or of any one or more of Company
          Subsidiaries as the Bank may reasonably request.

               Except for financial  statements and reports prepared for interim
          periods  between the fiscal year end,  all  financial  statements  and
          reports   furnished  to  the  Bank  hereunder  shall  be  prepared  in
          accordance with GAAP,  applied on a basis consistent with that applied
          in preparing the financial statements as at, and for the period ended,
          the Statement Date (except to the extent otherwise required to conform
          to good accounting practice).

               (c)Maintenance  of Existence;  Conduct of Business.  Preserve and
          maintain  its  corporate  existence  in good  standing  and all of its
          rights, privileges, licenses,  qualifications and franchises necessary
          or desirable in the normal conduct of its business, including, without
          limitation,  as described  under  Section~5.1(n)  hereof;  and make no
          material  change in the nature or  character of its business or engage
          in any  business  in  which  it was not  engaged  on the  date of this
          Agreement.

               (d) Compliance with Applicable Laws. Comply with the requirements
          of  all  applicable  laws,  rules,   regulations  and  orders  of  any
          governmental  authority and customary industry standards,  a breach of
          which could reasonably be expected to materially  adversely affect its
          business,  operations,  assets, or financial  condition or which could
          reasonably be expected to materially  adversely  impair the ability of
          Company to perform its obligation hereunder, except where contested in
          good faith and by appropriate proceedings.

               (e) Inspection of Books, Records, Systems, Properties,  Advances,
          Mortgage Loans, and Collateral.  Permit authorized  representatives of
          the Bank, its parent  company or affiliates,  upon prior notice to the
          Company, (i) to discuss the business, operations, assets and financial
          condition of the Company and its Subsidiaries  with their officers and
          employees,  (ii) to examine  their  books,  records,  information  and
          service  systems and properties,  and make copies or extracts  thereof
          subject to applicable laws with respect to confidentiality of customer
          records,  including without limitation access to Company Subsidiaries'
          and  the  custodian's  books,  records,   systems,   properties,   and
          documents,  (iii) to examine and audit the Company  Subsidiaries' Loan
          accounts,  individual  Mortgage Loans, and related  documentation  and
          Collateral,  and (iv) for those  purposes,  to visit the Company's and
          all Company Subsidiaries' offices, all at such reasonable times as the
          Bank  may  request.   The  Company  shall  provide  its  internal  and
          independent  accountants with a copy of this Agreement  promptly after
          the execution  hereof and shall  instruct them to answer  candidly and
          fully  any and all  questions  that  the  officers  of the Bank or any
          authorized  representatives  of  the  Bank  may  address  to  them  in
          reference to the financial condition or affairs of the Company and the
          Company Subsidiaries.  In addition to the foregoing, the Company shall
          provide, or cause to be provided, live, "real time" access to the data
          system(s)  for all  records  maintained  by the  Company  and/or  each
          Company Subsidiary related to the Mortgage Loans. The purposes or uses
          for which  the Bank may use the  right of  access to such data  system
          records,  and the  rights of  inspection,  examination,  and audit set
          forth  in  this  Section  shall  include,   without  limitation,   the
          following:  (i) to ensure that the  Company  Subsidiary  Loans,  their
          administration, and their payment processing remain in compliance with
          the  terms  of  this  Agreement;  (ii)  to  enable  the  Bank  (w)  to
          periodically  sample or test the flow of  payments  received  from its
          Mortgage Loan  obligors to ensure that monies are being  received from
          its Mortgage Loan obligors and not from other  sources,  (x) to see if
          there  is any  rise in  defaults  and  bankruptcy  filings  among  its
          Mortgage  Loan  obligors,  (y) to confirm that  payments on particular
          Mortgage  Loans are being  properly  credited to the  related  Company
          Subsidiary  Loan, and (z) to determine the extent to which  individual
          Company  Subsidiary  Mortgage  Loan  "pools"  are being  supported  by
          payments from other Company Subsidiary Mortgage Loan pools, and to the
          extent to which such  payments are  correspondingly  supporting  other
          outstanding Company Subsidiary Loans issued under this Agreement;  and
          (iii) to enable the Bank to  periodically  determine  the value of the
          Bank's  Collateral from time to time and to ensure that the Collateral
          continues to meet the Bank's  underwriting  standards  throughout  the
          life of those Mortgage Loans.

               (f)  Notice.  Give prompt  written  notice to the Bank of (i)~any
          action,  suit or  proceeding  instituted  against  the  Company in any
          federal or state court or before any  commission  or other  regulatory
          body (federal,  state or local, domestic or foreign) seeking specified
          damages  of One  Hundred  Thousand  Dollars  ($100,000)  or  more in a
          writing containing the details thereof,  (ii)~the filing, recording or
          assessment of any federal,  state or local tax lien against it, or any
          of its  assets,  which has a material  adverse  affect on the  Company
          (iii)~the  occurrence  of any  Default or Event of Default  hereunder,
          (iv)~[Reserved],  (v)~the suspension, revocation or termination of any
          existing  credit  or  Investor  relationship  made to the  Company  to
          facilitate the sale and/or origination of residential  mortgages which
          has a material  adverse  affect on the Company,  (vi)~the  transfer or
          loss of any  servicing  contract to which the  Company is a party,  or
          which is held for the benefit of the Company,  and the reason for such
          transfer  or loss,  if  known to the  Company,  which  has a  material
          adverse  affect on the  Company  (vii)~any  demand by any  Investor or
          Insurer   for  either   the   repurchase   of  a   Mortgage   Loan  or
          indemnification  which has a material  adverse  affect on the Company,
          and  (viii)~any  other action,  event or condition of any nature which
          has a material adverse effect upon the business,  operations,  assets,
          or financial condition of the Company or which, with or without notice
          or lapse of time or both,  would  constitute a default under any other
          material agreement,  instrument or indenture to which the Company is a
          party or to  which  the  Company,  its  properties  or  assets  may be
          subject.

               (g) Payment of Debt,  Taxes, etc. Pay and perform all obligations
          of the Company  promptly and in accordance  with the terms thereof and
          pay and  discharge  or cause to be paid and  discharged  promptly  all
          taxes, assessments and governmental charges or levies imposed upon the
          Company or upon its  income,  receipts or  properties  before the same
          shall  become  past  due,  as well as all  lawful  claims  for  labor,
          materials and supplies or otherwise  which, if unpaid,  might become a
          Lien or charge upon such  properties  or any part  thereof;  provided,
          however,  that  the  Company  shall  not be  required  to  pay  taxes,
          assessments  or  governmental  charges  or levies or claims for labor,
          materials  or supplies  for which the Company  shall have  obtained an
          adequate  bond or adequate  insurance or which are being  contested in
          good faith and by proper  proceedings  which are being  reasonably and
          diligently pursued.

               (h) Insurance.  Maintain  (i)~errors  and omissions  insurance or
          mortgage  impairment  insurance and blanket bond  coverage,  with such
          companies  and in such  amounts as satisfy  prevailing  FNMA,  GNMA or
          FHLMC  requirements  applicable  to a qualified  mortgage  originating
          institution,  and  (ii)~liability  insurance and fire and other hazard
          insurance on its properties,  with responsible insurance companies, in
          such  amounts  and  against  such risks as is  customarily  carried by
          similar  businesses  operating in the same vicinity,  and (iii)~within
          thirty  (30)  days  after  notice  from the  Bank,  will  obtain  such
          additional  insurance as the Bank shall reasonably require, all at the
          sole  expense of the  Company.  Copies of all such  policies  shall be
          furnished to the Bank without  charge upon the  reasonable  request of
          the Bank.

               (i)  Purchased  Loans.  Indemnify and hold the Bank harmless from
          and against any loss, including reasonable  attorneys' fees and costs,
          attributable to the failure of any seller of the Mortgage Loans to the
          Company or the Company Subsidiary, or any escrow agent, to comply with
          the disbursement or instruction letter or letters of the Company,  the
          Company Subsidiary or of the Bank relating to Mortgage Loans purchased
          by the  Company or the  Company  Subsidiary  with an  Advance  under a
          Company Subsidiary Loan.

               (j) Other Loan Obligations.  Perform in all material respects all
          obligations  under the terms of each loan agreement,  note,  mortgage,
          security  agreement or debt instrument by which the Company Subsidiary
          is bound or to which any of its property is subject, and will promptly
          notify the Bank in writing of the  cancellation or reduction of any of
          its other mortgage  warehousing lines of credit or agreements with any
          other lender.

               (k) Use of  Proceeds  of  Advances.  Cause the  proceeds  of each
          Company Subsidiary Loan to be used solely for the purpose of financing
          the purchase or origination of Mortgage Loans or to refinance  Company
          Subsidiary Loans.

               (l) Due Diligence by Bank.  Assist the Bank in the performance of
          the Bank's due  diligence  in  response  to  Company  Subsidiary  Loan
          Requests  in order for the Bank to gain  assurance  that the terms and
          conditions  of this  Agreement  will  be met,  and  that  the  product
          standards  set forth in Exhibit C will be  satisfied,  with respect to
          the  requested  Company  Subsidiary  Loan,  and also  shall  cause its
          Company Subsidiaries to provide such assistance.

               (m) Due Diligence by Company.  Perform  reasonable  due diligence
          when  agreeing  to purchase  Mortgage  Loans to be assigned to Company
          Subsidiaries  and to be financed by Advances from the Bank in order to
          ensure that those  Mortgage Loans comply with the terms and conditions
          of this Agreement and with the product  standards set forth in Exhibit
          C.

               (n) Loan Purchase Agreement. Use its best commercially reasonable
          efforts,   reasonably  and  in  good  faith,  to  include   covenants,
          representations,  and warranties  covering the following  items in its
          Mortgage Loan purchase agreements with its sellers,  and cause Company
          Subsidiaries to use the same efforts in their purchase agreements with
          their sellers:  (i) standard  representations and warranties as to the
          due organization of the seller and the seller's  authorization to sell
          the loans; (ii)  representations and warranties regarding the mortgage
          loans being purchased,  and the  documentation for the same consistent
          with  general  commercial   standards,   but  in  any  event,   having
          representations  and warranties  consistent with the  requirements for
          Mortgage Loans set forth in this  Agreement;  (iii) standard  remedies
          for breach of contract;  (iv)  covenant  that the seller will buy back
          from the Company  Subsidiary  (or any assignee,  including the Company
          Subsidiary)   any   mortgage   loan  which   does  not   comply   with
          representations  and  warranties  regarding it; and (vi) covenant that
          the seller will  indemnify  and hold the Company  Subsidiary,  and any
          assignee,  including the Company Subsidiary,  harmless against any and
          all damages which the  indemnified  party may suffer on account of any
          mortgage loan which does not meet representations and warranties.

               (o) Minimum Net Worth.  The  Company and its  Subsidiaries  shall
          together maintain a minimum Net Worth of not less than $10,000,000.


               (p) Administrative Services Agreement. Within a reasonable period
          of time  following the execution of the  Agreement,  the Company shall
          enter into and maintain in effect an Administrative Services Agreement
          with each Company Subsidiary, reasonably acceptable to the Bank, under
          which the Company  provides  the Company  Subsidiary  with any and all
          administrative,  document,  and payment processing  services which the
          Company Subsidiary may need in connection with its business, and under
          which the Company Subsidiary compensates the Company for the provision
          of those services.

               (q)  Custodial  Agreement.   Maintain  in  effect  the  Custodial
          Agreement,  or another custodial agreement with another custodian with
          substantially the same terms as the Custodial  Agreement.  The Company
          shall cause each Company Subsidiary to become a party to the Custodial
          Agreement or other custodial agreement.


               (r) Company Subsidiary  Compliance.  The Company shall cause each
          Company  Subsidiary  to full comply with the terms of this  Agreement,
          its Note,  and all related  agreements  or  instruments  executed  and
          delivered  to Bank in  connection  herewith  or in  connection  with a
          Company Subsidiary Loan.

               Section 6.2. Of the Company  Subsidiary.  Each Company Subsidiary
          that  becomes  a party to this  Agreement  agrees  that so long as the
          Commitment  or its Company  Subsidiary  Loan is  outstanding  or there
          remains  any  obligations  of the  Company  Subsidiary  to be  paid or
          performed under its Note, or any of its Pledged  Mortgage Loans remain
          subject to this Agreement, the Company Subsidiary shall:

               (a) Payment of Note. Punctually pay the principal and interest on
          and all other amounts due and payable under this Agreement or the Note
          in accordance with the terms thereof.

               (b) Reports. Make available,  deliver or cause to be delivered to
          the Bank such reports as set forth below:

              (i) Such other reports in respect of the Pledged  Mortgage Loans,
          in  such  detail  and at such  times  as the  Bank  in its  reasonable
          discretion may request at any time or from time to time.

               (iii) Upon request,  make available to the Bank copies of audits,
          examinations  and reports  concerning  the  operations  of the Company
          Subsidiary  from any Investor,  Insurer or licensing  authority to the
          extent not subject to restrictions on disclosure.

               (iv)  Make  available  to  the  Bank  from  time  to  time,  with
          reasonable   promptness,   such  further  information   regarding  the
          business, operations, properties or financial condition of the Company
          Subsidiary as the Bank may reasonably request.

          All financial  statements and reports  furnished to the Bank hereunder
          shall  be  prepared  in  accordance  with  GAAP,  applied  on a  basis
          consistent with that applied in preparing the financial  statements as
          at, and for the period ended, the statement date (except to the extent
          otherwise required to conform to good accounting practice).

               (c) Maintenance of Existence;  Conduct of Business.  Preserve and
          maintain its Company Subsidiary  existence in good standing and all of
          its  rights,  privileges,  licenses,   qualifications  and  franchises
          necessary  or  desirable  in  the  normal  conduct  of  its  business,
          including,  without limitation,  its eligibility as an approved lender
          and  issuer as  described  under  Section~5.2(l)  hereof;  and make no
          material  change in the nature or  character of its business or engage
          in any  business  in  which  it was not  engaged  on the  date of this
          Agreement.

               (d) Compliance with Applicable Laws. Comply with the requirements
          of  all  applicable  laws,  rules,   regulations  and  orders  of  any
          governmental  authority and customary industry standards,  a breach of
          which could reasonably be expected to materially  adversely affect its
          business,  operations,  assets, or financial  condition or which could
          reasonably be expected to materially  adversely  impair the ability of
          Company Subsidiary to perform its obligations under this Agreement and
          the Note,  except  where  contested  in good faith and by  appropriate
          proceedings.

               (e) Inspection of Books, Records, Systems, and Properties. Permit
          authorized  representatives of the Bank, its parent Company Subsidiary
          or  affiliates,  upon prior notice to the Company  Subsidiary,  (i) to
          discuss the business,  operations,  assets and financial  condition of
          the  Company  Subsidiary  with the  officers  and  employees,  (ii) to
          examine  its books,  records,  information  and service  systems,  and
          properties,  and make copies or extracts thereof subject to applicable
          laws with respect to  confidentiality  of customer records,  including
          without limitation access to the Custodian's books, records,  systems,
          properties,  and  documents,  (iii) to examine  and audit its  Company
          Subsidiary  Loan Advances,  individual  Pledged  Mortgage  Loans,  and
          related documentation and Collateral,  and (iv) for those purposes, to
          visit the Company  Subsidiary's  offices, all at such reasonable times
          as the Bank may  request.  The Company  Subsidiary  shall  provide its
          internal and  independent  accountants  with a copy of this  Agreement
          promptly after the execution thereof and shall instruct them to answer
          candidly and fully any and all questions that the officers of the Bank
          or any authorized  representatives  of the Bank may address to them in
          reference  to the  financial  condition  or  affairs  of  the  Company
          Subsidiary.  The purposes or uses for which the Bank may use the right
          of inspection,  examination, and audit set forth in this Section shall
          include,  without  limitation,  the following:  (i) to ensure that the
          Company  Subsidiary's  Loan,  its  administration,   and  its  payment
          processing  remain  in  compliance  with the  terms of this  Agreement
          generally;  (ii) to enable the Bank (w) to periodically sample or test
          the flow of payments  received from its Pledged Mortgage Loan obligors
          and  not  from  other  sources,  (x) to see if  there  is any  rise in
          bankruptcy  filings among its Pledged  Mortgage Loan obligors,  (y) to
          see if  payments  on  particular  Pledged  Mortgage  Loans  are  being
          credited  to  that  Company  Subsidiary's  Loan  properly,  and (z) to
          determine  the  extent to which such  payments  are  supporting  other
          outstanding Company Subsidiary Loans issued under this Agreement;  and
          (iii)  to  enable  the  Bank  to  periodically  apply  its  collateral
          eligibility  standards to the Company  Subsidiary's  Pledged  Mortgage
          Loans in order to determine the value of the Bank's  Collateral and to
          ensure that the Collateral  continues to meet the Bank's  underwriting
          standards throughout the life of those Pledged Mortgage Loans.

               (f)  Notice.  Give prompt  written  notice to the Bank of (i)~any
          action,  suit or proceeding  instituted against the Company Subsidiary
          in any  federal  or state  court or  before  any  commission  or other
          regulatory body (federal, state or local, domestic or foreign) seeking
          specified  damages of One Hundred Thousand Dollars  ($100,000) or more
          in  a  writing  containing  the  details  thereof,   (ii)~the  filing,
          recording  or  assessment  of any  federal,  state or  local  tax lien
          against it, or any of its assets,  which has a material adverse affect
          on the Company Subsidiary (iii)~the occurrence of any Default or Event
          of  Default  hereunder,  (iv)~the  actual  or  threatened  suspension,
          revocation or termination of the Company Subsidiary's eligibility,  in
          any respect,  as an approved  lender,  and issuer as  described  under
          Section~5.1(m)  hereof  which  has a  material  adverse  affect on the
          Company Subsidiary,  (v)~the suspension,  revocation or termination of
          any  existing  credit or  Investor  relationship  made to the  Company
          Subsidiary to facilitate  the sale and/or  origination  of residential
          mortgages  which  has  a  material   adverse  affect  on  the  Company
          Subsidiary,  (vi)~the  transfer or loss of any  servicing  contract to
          which  the  Company  Subsidiary  is a party,  or which is held for the
          benefit of the Company Subsidiary, and the reason for such transfer or
          loss, if known to the Company Subsidiary, which has a material adverse
          affect on the Company  Subsidiary  (vii)~any demand by any Investor or
          Insurer  for  either  the  repurchase  of a Pledged  Mortgage  Loan or
          indemnification  which has a material  adverse  affect on the  Company
          Subsidiary,  and  (viii)~any  other action,  event or condition of any
          nature  which  has  a  material  adverse  effect  upon  the  business,
          operations,  assets, or financial  condition of the Company Subsidiary
          or  which,  with or  without  notice  or lapse of time or both,  would
          constitute a default under any other material agreement, instrument or
          indenture to which the Company  Subsidiary  is a party or to which the
          Company Subsidiary, its properties or assets may be subject.

               (g) Payment of Debt,  Taxes, etc. Pay and perform all obligations
          of the Company  Subsidiary  promptly and in accordance  with the terms
          thereof  and pay and  discharge  or cause  to be paid  and  discharged
          promptly all taxes,  assessments  and  governmental  charges or levies
          imposed upon the Company  Subsidiary  or upon its income,  receipts or
          properties  before  the same  shall  become  past due,  as well as all
          lawful claims for labor, materials and supplies or otherwise which, if
          unpaid, might become a Lien or charge upon such properties or any part
          thereof;  provided,  however, that the Company Subsidiary shall not be
          required to pay taxes,  assessments or governmental  charges or levies
          or claims for  labor,  materials  or  supplies  for which the  Company
          Subsidiary shall have obtained an adequate bond or adequate  insurance
          or which are being  contested in good faith and by proper  proceedings
          which are being reasonably and diligently pursued.

               (h)  Insurance.  Maintain~or  cause  to be  maintained  liability
          insurance and fire and other hazard insurance on its properties,  with
          responsible  insurance  companies,  in such  amounts and against  such
          risks as is customarily carried by similar businesses operating in the
          same vicinity, and (iii)~within thirty (30) days after notice from the
          Bank,  will  obtain  such  additional  insurance  as  the  Bank  shall
          reasonably require, all at the sole expense of the Company Subsidiary.
          Copies of all such  policies  shall be  furnished  to the Bank without
          charge upon request of the Bank.

               (j)  Purchased  Loans.  Indemnify and hold the Bank harmless from
          and against any loss, including reasonable  attorneys' fees and costs,
          attributable  to the  failure  of any seller of the  Pledged  Mortgage
          Loans to the Company or the Company  Subsidiary,  or any escrow agent,
          Company  Subsidiary  to comply with the  disbursement  or  instruction
          letter or letters of the  Company,  the Company  Subsidiary  or of the
          Bank  relating  to  Mortgage  Loans  purchased  by the  Company or the
          Company  Subsidiary  with  the  Company  Subsidiary  Loan  under  this
          Agreement.

               (k) Other Loan Obligations.  Perform in all material respects all
          obligations  under the terms of each loan agreement,  note,  mortgage,
          security  agreement or debt instrument by which the Company Subsidiary
          is bound or to which any of its property is subject, and will promptly
          notify the Bank in writing of the  cancellation or reduction of any of
          its other mortgage  warehousing lines of credit or agreements with any
          other lender.

               (l) Use of Proceeds of Advances.  Use the proceeds of the Company
          Subsidiary  Loan solely for the purpose of  financing  the purchase or
          origination of Pledged Mortgage Loans.

               (m) Administrative Services Agreement. Within a reasonable period
          of  time  following  the  execution  of  the  Agreement,  the  Company
          Subsidiary  shall enter into and maintain in effect an  Administrative
          Services  Agreement  with the Company,  reasonably  acceptable  to the
          Bank, under which the Company provides the Company Subsidiary with any
          and all  administrative,  document,  and payment  processing  services
          which the Company  Subsidiary  may need in connection its business and
          under which the Company  compensates  the Company  Subsidiary  for the
          provision of those services.

               (o) [Reserved]

               (p) Due Diligence by Bank.  Assist the Bank in the performance of
          the Bank's due  diligence in response to the Company  Subsidiary  Loan
          Request  by the  Company  Subsidiary  in  order  for the  Bank to gain
          assurance that the terms and conditions of this Agreement will be met,
          and  that  the  product  standards  set  forth  in  Exhibit  C will be
          satisfied, with respect to the requested Advance.

          6.3 Special Affirmative Covenants Concerning Collateral.

               (i) The Company and/or the Company  Subsidiary  warrants and will
          defend the right, title and interest of the Bank in and to the Pledged
          Mortgage   Loans  against  the  claims  and  demands  of  all  persons
          whomsoever.

               (ii) The Company and/or the Company  Subsidiary  shall service or
          cause to be serviced in all  material  respects  all Pledged  Mortgage
          Loans in accordance  with the standard  requirements of the issuers of
          the  respective  Purchase   Commitments  covering  the  same  and  all
          applicable  governmental  requirements,  including without  limitation
          taking  all  actions  necessary  to  enforce  the  obligations  of the
          obligors under such Pledged  Mortgage  Loans.  The Company  Subsidiary
          shall hold all escrow funds  collected in respect of Pledged  Mortgage
          Loans in trust, without commingling the same with non-custodial funds,
          and  apply  the  same for the  purposes  for  which  such  funds  were
          collected.

               (iii) The  Company  and/or  the  Company  Subsidiary  shall  also
          execute and deliver to the Bank such  instruments  of sale,  pledge or
          assignment  or transfer,  and such powers of attorney,  as  reasonably
          required by the Bank,  and shall do and perform all matters and things
          necessary  or  desirable  to be done or  observed,  for the purpose of
          effectively  creating,  maintaining  and  preserving  the security and
          benefits  intended to be afforded the Bank under this  Agreement.  The
          Bank shall have all the rights and  remedies of a secured  party under
          the  Uniform  Commercial  Code of the State of New York,  or any other
          applicable law, in addition to all rights provided for herein.

               (iv) The Company  and/or the  Company  Subsidiary  will  promptly
          comply in all material  respects with the terms and  conditions of all
          Purchase Commitments,  and all extensions,  renewals and modifications
          or  substitutions  thereof or thereto.  The Company and/or the Company
          Subsidiary  will cause to be  delivered  to the  Investor  the Pledged
          Mortgage  Loans to be sold under each  Purchase  Commitment  not later
          than the earlier of three (3)  Business  Days prior to the  expiration
          thereof  or  three  (3)  Business  Days  prior  to  the  deadline  for
          acquisition of the Pledged Mortgage Loan by the Investor thereunder.

               (v) The Company and/or the Company Subsidiary shall maintain,  at
          its  principal  office,  or in the office of the  custodian  under the
          Custodial  Agreement,  or in the office of a computer  service  bureau
          engaged  by  the  Company  and/or  the  Company  Subsidiary  or by the
          custodian  and approved by the Bank,  and,  upon  request,  shall make
          available to the Bank the  originals,  or copies in any case where the
          original  has been  delivered to the Bank,  or to an Investor,  of its
          Mortgage  Notes and  Mortgages  included  in Pledged  Mortgage  Loans,
          Purchase Commitments,  and all related Pledged Mortgage Loan documents
          and instruments, and all files, surveys, certificates, correspondence,
          appraisals, computer programs, tapes, discs, cards, accounting records
          and other information and data relating to the Collateral.

               (vi) Any and all  payments  made with  respect to the  individual
          Pledged  Mortgage  Loans  have been will be  applied  to such  Pledged
          Mortgage  Loan in  accordance  with the terms of the Mortgage Note and
          Mortgage  evidencing and securing that Pledged  Mortgage Loan, and the
          books, records, accounts and reports of the Company and/or the Company
          Subsidiary  with respect to the Pledged  Mortgage  Loans and servicing
          contracts have will be prepared and maintained in accordance  with all
          applicable Investor and Insurer requirements.


                                   Article~VII

                               Negative Covenants

          Section  7.1. Of the Company.  The Company  agrees that so long as the
          Commitment  is  outstanding  or there  remains any  obligation  of the
          Company or any Company Subsidiary to be paid or performed hereunder or
          under any Note, the Company shall not,  either directly or indirectly,
          without  the prior  written  consent of the Bank,  which  shall not be
          unreasonably withheld:

               (a)  Merger;  Sale of Assets;  Acquisitions;  Change in  Control.
          Except for the sale or purchase of loans in the ordinary course of the
          business, liquidate,  dissolve, consolidate or merge or sell, transfer
          or  otherwise  dispose  of, any  substantial  part of its  assets,  or
          acquire   substantially   all   of   the   assets   of   another,   or
          permit~ownership  beneficially  or of  record of the  voting  stock of
          Company  which  results  in Thomas J.  Axon  having a  non-controlling
          ownership interest of the voting stock of the Company. For purposes of
          this section, "control" shall have the meaning set forth in Rule 12b-2
          under the Exchange Act.

               (b) Distributions or Payments of Company.  Without the consent of
          Bank, cause to be paid any dividends which exceed in the aggregate the
          amount permitted in Section 2.5(a).

               (c) Distributions or Payments From Company  Subsidiary.  Cause to
          be paid to itself, or receive, or accept any payments,  distributions,
          or dividends from any of its Company  Subsidiaries which exceed in the
          aggregate the amount  permitted in Section 2.5(a);  provided that if a
          Default has  occurred  and is  continuing,  the Bank may  withhold its
          consent in its reasonable discretion exercised in good faith.

               (d) Special Negative Covenants Concerning Collateral.  Except for
          actions  taken in the ordinary  course of servicing  Pledged  Mortgage
          Loans,  the  Company  shall not do,  and shall not cause or permit any
          Company  Subsidiary  to grant any option with respect to, or pledge or
          otherwise  encumber  (except  pursuant to this  Agreement  or sales to
          Investors  for  fair  value)  any of the  Collateral  or any  interest
          therein.

          Section  7.2.  Covenants  Of  the  Company  Subsidiary.  Each  Company
          Subsidiary that becomes a party to this Agreement  agrees that so long
          as the  Commitment or its Company  Subsidiary  Loan is  outstanding or
          there remains any obligations of the Company  Subsidiary to be paid or
          performed under its Note, or any of its Pledged  Mortgage Loans remain
          subject to this Agreement,  the Company  Subsidiary shall not take the
          following actions which could reasonably be expected to materially and
          adversely  impact  the  Company  or  Company  Subsidiary's  ability to
          perform under this Agreement,  either directly or indirectly,  without
          the prior written consent of the Bank:

               (a)  Contingent  Liabilities.   Assume,  guarantee,  endorse,  or
          otherwise  become  liable for the  obligation  of any Person except by
          endorsement of negotiable instruments for deposit or collection in the
          ordinary course of business.

               (b)  Merger;  Sale of Assets;  Acquisitions;  Change in  Control.
          Except for the sale or purchase of loans in the ordinary course of the
          business, liquidate,  dissolve, consolidate or merge or sell, transfer
          or  otherwise  dispose  of, any  substantial  part of its  assets,  or
          acquire  substantially  all  of  the  assets  of  another,  or  permit
          ownership  beneficially  or of record of the  voting  stock of Company
          Subsidiary  which results in the Company having an ownership  interest
          of less than one  hundred  percent  (100%) of the voting  stock of the
          Company Subsidiary.

               (c) Additional  Indebtedness.  Create, incur, assume or suffer to
          exist any  indebtedness  other than  indebtedness  permitted under the
          this Agreement.

               (d) Related Party Transactions.  Enter into, or be a party to any
          transaction  with any  affiliate  of the  Company,  except for (a)~the
          transactions  contemplated  by the this Agreement,  including  without
          limitation,   the  transactions  contemplated  by  the  Administrative
          Services  Agreement and the servicing  agreement  with the Company and
          (b)~to the extent not otherwise prohibited under this Agreement, other
          transactions  in the nature of  employment  contracts  and  directors'
          fees, upon fair and reasonable  terms  materially no less favorable to
          it than would be obtained  in a  comparable  arm's-length  transaction
          with a person not an affiliate.

               (e) Collateral and  Agreements.  Except in the ordinary course of
          business,  cancel or  terminate  any of the  Collateral  Documents  or
          Purchase Agreements to which it is party (in any capacity), or consent
          to  or  accept  any   cancellation  or  termination  of  any  of  such
          agreements,  or  materially  amend  or  otherwise  modify  any term or
          condition of any of the Collateral Documents or Purchase Agreements to
          which it is party (in any  capacity)  or give any  consent,  waiver or
          approval  under  any such  agreement,  or waive any  default  under or
          breach of any of the  Collateral  Documents or Purchase  Agreements to
          which it is party (in any capacity) or take any other action under any
          such  agreement  not  required by the terms  thereof,  unless (in each
          case) the Bank shall have  consented  thereto (which consent shall not
          unreasonably  be withheld  to the extent set forth in such  Collateral
          Documents or Purchase Agreements); provided that no such consent shall
          be  required  to the extent  that any such  action is in the  ordinary
          course  of  business  of  servicing  the  Pledged  Mortgage  Loans  in
          accordance  with reasonable and customary  servicing  practices in the
          industry for the same type of mortgage  loans as the Pledged  Mortgage
          Loan.

               (f) Investments & Subsidiaries.  form, or cause to be formed, any
          subsidiaries;  or make or suffer to exist any loans or advances to, or
          extend any credit to, or make any  investments  (by way of transfer of
          property, contributions to capital, purchase of stock or securities or
          evidences of indebtedness,  acquisition of the business or assets,  or
          otherwise) in, any affiliate or any other person.

              (g) Distributions or Payments of Company Subsidiary.  Without the
          consent of Bank, cause to be paid to itself, or receive, or accept any
          payments or distributions from the Pledged Mortgage Loans which exceed
          in the aggregate the amount permitted in Section 2.5(a).

               (h) Special Negative Covenants Concerning Collateral.  Except for
          actions  taken in the ordinary  course of servicing  Pledged  Mortgage
          Loans,  grant any  option  with  respect  to,  or pledge or  otherwise
          encumber  (except pursuant to this Agreement or sales to Investors for
          fair value) any of the Collateral or any interest therein.


                                  Article VIII

                               Defaults; Remedies

          Section~8.1.  Events of Default by the Company.  The occurrence of any
          of the  following  conditions  or events  shall be an event of default
          ("Event of Default") under this Agreement:

               (a) Failure of any Company  Subsidiary to pay any  installment of
          principal  and/or interest when due or required under its Note or this
          Agreement,  and  whether  at  stated  maturity,  by  acceleration,  or
          otherwise;  or failure of the  Company or any  Company  Subsidiary  to
          otherwise  pay any other sum when due by the  Company or such  Company
          Subsidiary  under this Agreement or under any other agreement  related
          hereto,  and such default shall have continued  unremedied for fifteen
          days; or

               (b) Failure of the Company or any Company  Subsidiary  to pay, or
          any  default  in the  payment of any  principal  or  interest  on, any
          indebtedness or in the payment of any contingent  obligation which are
          in the aggregate amount of One Hundred Thousand Dollars  ($100,000.00)
          or more; or breach or default with respect to any other  material term
          of any indebtedness or of any loan agreement, note, mortgage, security
          agreement,  indenture  or other  agreement  relating  thereto,  if the
          effect of such  failure,  default or breach is to cause,  or to permit
          the holder or holders  thereof  (or a trustee on behalf of such holder
          or  holders)  to  cause,  indebtedness  of the  Company,  the  Company
          Subsidiary or any other  Subsidiaries  of the Company in the aggregate
          amount of more than One Hundred Thousand Dollars ($100,000.00) or more
          to become or be declared due prior to its stated maturity; or

               (c) (i) Failure of the Company to perform or comply with any term
          or  condition  applicable  to it  contained  in  Sections  7.1 of this
          Agreement,  or failure of the Company  Subsidiary to perform or comply
          with any term or condition  applicable to it contained in Sections 7.2
          of this Agreement,  or with any like provision  contained in the Note;
          or (ii)  failure of the  Company to perform or comply with any term or
          condition applicable to it contained in Section 6.1 of this Agreement,
          or failure of the  Company  Subsidiary  to perform or comply  with any
          term or  condition  applicable  to it contained in Section 6.2 of this
          Agreement,  or with any like  provision  contained  in the Note  after
          receipt of notice of such Default from the Bank.

               (d)  Any  of  the  Company's  or  the  Company   Subsidiaries'
          representations  or  warranties  made  herein or in any  statement  or
          certificate at any time given by the Company or any Company Subsidiary
          in writing pursuant hereto or in connection herewith shall be false in
          any material respect on the date as of which made; or

               (e) The Company or any Company  Subsidiary  shall  default in the
          performance of or compliance with any term contained in this Agreement
          other than those referred to above in Sections 8.1 (a), (b) or (c) and
          such default shall not have been remedied or waived within thirty (30)
          days after receipt of notice from the Bank of such default; or

               (f) (i)~A court having jurisdiction shall enter a decree or order
          for relief in respect of the Company or any Company  Subsidiary  in an
          involuntary case under any applicable bankruptcy,  insolvency or other
          similar law now or hereafter  in effect,  which decree or order is not
          stayed;  or (ii)~any  other similar  relief shall be granted under any
          applicable  federal  or state  law;  or a  decree  or order of a court
          having  jurisdiction  for the  appointment of a receiver,  liquidator,
          sequestrator,  trustee,  custodian  or other  officer  having  similar
          powers over the Company or any  Company  Subsidiary,  or over all or a
          substantial  part of their  respective  properties,  shall  have  been
          entered;  or  the  involuntary  appointment  of an  interim  receiver,
          trustee or other  custodian  of the Company or any Company  Subsidiary
          for all or a  substantial  part  of its  respective  property;  or the
          issuance  of a warrant of  attachment,  execution  or similar  process
          against any substantial  part of the property of the Company or of any
          Company  Subsidiary,  and the  continuance  of any such events in this
          clause~(ii)  for  sixty  (60) days  unless  dismissed,  bonded  off or
          discharged; or

               (g) The Company or any Company Subsidiary shall have an order for
          relief  entered with respect to it or commence a voluntary  case under
          any  applicable  bankruptcy,  insolvency  or other  similar law now or
          hereafter  in  effect,  or shall  consent to the entry of an order for
          relief in an involuntary  case, or to the conversion to an involuntary
          case,  under any such law, or shall consent to the  appointment  of or
          taking possession by a receiver, trustee or other custodian for all or
          a substantial  part of its property;  the making by the Company or any
          Company Subsidiary of any assignment for the benefit of creditors;  or
          the inability or failure of the Company or any Company Subsidiary,  or
          the  admission by the Company or any Company  Subsidiary in writing of
          its inability, to pay its debts as such debts become due; or

               (h) Any money judgment, writ or warrant of attachment, or similar
          process  involving  in any case an amount  in  excess  of One  Hundred
          Thousand Dollars  ($100,000.00)  shall be entered or filed against the
          Company or any Company  Subsidiary or any of their  respective  assets
          and shall remain undischarged,  unvacated,  unbonded or unstayed for a
          period of sixty  (60) days or in any  event  later  than five (5) days
          prior to the date of any proposed sale thereunder; or

               (i) Any order,  judgment or decree  shall be entered  against the
          Company  or  any  Company   Subsidiary   decreeing  the   dissolution,
          liquidation  or split up of the Company or any Company  Subsidiary and
          such order  shall  remain  undischarged  or  unstayed  for a period in
          excess of thirty (30) days; or

               (j) Any Plan maintained by the Company shall be terminated within
          the meaning of Title IV of ERISA or a trustee shall be appointed by an
          appropriate  United States  district  court to administer any Plan, or
          the Pension Benefit  Guaranty  Corporation (or any successor  thereto)
          shall  institute  proceedings  to  terminate  any Plan or to appoint a
          trustee to administer any Plan if as of the date thereof the Company's
          liability (after giving effect to the tax consequences thereof) to the
          Pension Benefit  Guaranty  Corporation (or any successor  thereto) for
          unfunded  guaranteed  vested  benefits under the Plan exceeds the then
          current  value of  assets  accumulated  in such  Plan by more than One
          Hundred and Fifty Thousand Dollars  ($150,000.00) (or in the case of a
          termination  involving  the Company as a  "substantial  employer"  (as
          defined in  Section~4001(a)(2)  of ERISA) the  withdrawing  employer's
          proportionate share of such excess shall exceed such amount); or

               (k) The Company as employer under a Multiemployer Plan shall have
          made a complete or partial withdrawal from such Multiemployer Plan and
          the plan sponsor of such  Multiemployer  Plan shall have notified such
          withdrawing  employer  that such  employer  has  incurred a withdrawal
          liability in an annual amount exceeding One Hundred and Fifty Thousand
          Dollars ($150,000.00); or

               (l) The  Company  or any  Company  Subsidiary  shall  purport  to
          disavow its  obligations  hereunder  or shall  contest the validity or
          enforceability  hereof; or the Bank's security interest in any portion
          of the Collateral shall become unenforceable or otherwise impaired; or

               (m) An event of default  shall occur under the terms of any note,
          instrument or agreement  evidencing,  securing or related to any other
          indebtedness,  whether now existing or hereafter arising, of any other
          Subsidiary,  whether  now  existing  or  hereafter  created,  to Bank,
          including,  without limitation,  any now existing or hereafter arising
          indebtedness of Tribeca  Lending  Corporation to Bank if the effect of
          such default is to cause, or to permit the Bank to cause, indebtedness
          of such other  Subsidiary  to become or be  declared  due prior to its
          stated maturity; provided that Bank shall have give the Company notice
          of such default and such default shall have  continued  unremedied for
          at least 5 Business Days.

               Section~8.2. Remedies Relating to Events of Default. (a)~Upon the
          occurrence of any Event of Default described in Sections~8.1(f) or (g)
          the unpaid  principal amount of and accrued interest on any obligation
          owed by the Company  hereunder to the Bank,  and the unpaid  principal
          amount of and accrued  interest on any and all outstanding  Notes from
          each  Company  Subsidiary  and any other sums  otherwise  due from the
          Company  Subsidiaries  hereunder  shall  automatically  become due and
          payable,  without  presentment,  demand or other  requirements  of any
          kind, all of which are hereby expressly waived by the Company and each
          Company  Subsidiary,  and the  obligation  of the Bank to make Company
          Subsidiary Loans or Advances there-under shall thereupon terminate.

               (b) Upon the  occurrence of any Event of Default other than those
          described in  Sections~8.1(f)  or (g), the Bank may, by written notice
          to the Company  declare all or any portion of any  obligation  owed by
          the  Company  to  the  Bank,  and  all or any  portion  of the  unpaid
          principal  amount of and  accrued  interest  on any one or more or all
          outstanding Notes from any one or more of the Company Subsidiaries and
          any other sums otherwise due from the Company  Subsidiaries  hereunder
          to be due and payable  whereupon the same shall  forthwith  become due
          and  payable,  together  with all accrued  interest  thereon,  and the
          obligation  of the Bank to make Company  Subsidiary  Loans or advances
          there-under shall thereupon terminate.

               (c) Upon the  occurrence  of any Event of  Default,  the Bank may
          also do any one or more or all of the  following  with  respect to any
          Collateral,  whether individual items of Collateral relate directly to
          a particular Company Subsidiary Loan to a Company Subsidiary,  or to a
          now  existing  or  hereafter  granted  Company   Subsidiary  Loan,  or
          otherwise:

               i) Foreclose upon or otherwise  enforce its security  interest in
          and Lien on all of the Collateral or on any portion  thereof to secure
          all payments and performance of obligations  owed by the Company or by
          any  Company  Subsidiary  under  this  Agreement  or  by  any  Company
          Subsidiary under any Note.

               (ii)  Notify  all  obligors  of  Collateral,  or on  any  portion
          thereof,  that the  Collateral  has been assigned to the Bank and that
          all payments  thereon are to be made  directly to the Bank, or to such
          other party as may be designated by the Bank; settle,  compromise,  or
          release,  in whole or in part,  any amounts owing on the Collateral by
          any such obligor or  Investor,  or any portion of the  Collateral,  on
          terms acceptable to the Bank; enforce payment and prosecute any action
          or proceeding  with respect to any and all  Collateral;  and where any
          such  Collateral  is in default,  foreclose  on and  enforce  security
          interests in, such Collateral by any available  judicial procedure or,
          if permitted by  applicable  law,  without  judicial  process and sell
          property acquired as a result of any such foreclosure.

               (iii) Act, or contract  with a third party to act, as servicer of
          all or any item of  Collateral  requiring  servicing  and  perform all
          obligations  required in connection  with Purchase  Commitments,  such
          third party's fees to be paid by the Company.

               (iv) Exercise all rights and remedies of a secured creditor under
          the Uniform  Commercial  Code of the State of New York or the state in
          which the Collateral is located,  including but not limited to selling
          the  collateral  at public or  private  sale.  The Bank shall give the
          Company not less than sixty (60) days'  notice of any such public sale
          or of the date  after  which  private  sale may be held.  The  Company
          agrees that sixty (60) days' notice shall be reasonable notice. At any
          such sale the  Collateral  may be sold as an  entirety  or in separate
          parts,  as the Bank may  determine.  The Bank may,  without  notice or
          publication,  adjourn any public or private  sale or cause the same to
          be adjourned from time to time by  announcement  at the time and place
          fixed for the sale,  and such sale may be made at any time or place to
          which the same may be so adjourned.  In case of any sale of all or any
          part  of  the  Collateral  on  credit  or  for  future  delivery,  the
          Collateral so sold may be retained by the Bank until the selling price
          is paid by the  purchaser  thereof,  but the Bank  shall not incur any
          liability in case of the failure of such  purchaser to take up and pay
          for the  Collateral  so sold and,  in case of any such  failure,  such
          Collateral may again be sold upon like notice.  The Bank may, however,
          instead of  exercising  the power of sale  herein  conferred  upon it,
          proceed by a suit or suits at law or in equity to collect  all amounts
          due upon all or any  portion of the  Collateral  or to  foreclose  the
          pledge and sell all or any portion of the Collateral  under a judgment
          or decree of a court or courts of competent jurisdiction, or both.

               (v) Proceed  against the  Company on any  obligation  owed by the
          Company  to the  Bank or  proceed  against  any  one or  more  Company
          Subsidiary under the Notes.

               (vi) Pursue any rights  and/or  remedies  available  at law or in
          equity against the Company and/or the Company Subsidiaries.

               (d)  Notwithstanding  anything  herein to the contrary,  upon any
          sale or other disposition of the Collateral, all proceeds of such sale
          or  disposition  will be  applied  among  each  Mortgage  Pool and the
          related Company Subsidiary Loans in accordance with Section 2.5(a).

               (e) [Reserved]

               (f) The Bank may, but shall not be obligated to, advance any sums
          or do any act or thing  necessary  to uphold and  enforce the Lien and
          priority of, or the  security  intended to be afforded by, any Pledged
          Mortgage Loan,  including,  without limitation,  payment of delinquent
          taxes or assessments and insurance  premiums.  All advances,  charges,
          costs  and  expenses,   including   reasonable   attorneys'  fees  and
          disbursements,  incurred or paid by the Bank in exercising  any right,
          power or remedy  conferred by this  Agreement,  or in the  enforcement
          hereof, shall be paid by the Company or the Company Subsidiary,  shall
          be secured by the Collateral, and until paid, shall bear interest from
          the date of  expenditure  at the  rate of  interest  specified  by the
          obligation due to the Bank.

               (g) No failure on the part of the Bank to exercise,  and no delay
          in exercising,  any right, power or remedy provided hereunder,  at law
          or in equity shall operate as a waiver  thereof;  nor shall any single
          or partial exercise by the Bank of any right, power or remedy provided
          hereunder,  at law or in equity preclude any other or further exercise
          thereof or the  exercise  of any other  right,  power or  remedy.  The
          remedies  herein  provided are cumulative and are not exclusive of any
          remedies provided at law or in equity.

               (h) Notice to the Company for  purposes of this Section 8.2 shall
          be  deemed to be notice  to each and  every  Company  Subsidiary  that
          becomes, now or hereafter, a party to this Agreement.

               Section~8.3.  Application of Proceeds.  Unless otherwise required
          by applicable  law, the proceeds of any sale or other  enforcement  of
          the  Bank's  security  interest  in all or any part of the  Collateral
          shall be applied by the Bank in such order of priority as the Bank may
          determine at its sole discretion,  including,  without limitation, the
          following:

               (a) To the  payment  of the  costs and  expenses  of such sale or
          enforcement,  including  reasonable  compensation to the Bank's agents
          and  counsel,  and all  expenses,  liabilities  and  advances  made or
          incurred by or on behalf of the Bank in connection therewith;

               (b) To the payment of any other amounts due under any one or more
          of the Notes (whether for principal or interest or otherwise), in such
          order and manner as the Bank elects;

               (c) To the payment of any other  amounts due by the Company or by
          any one or more of the Company  Subsidiaries under this Agreement,  in
          such order and manner as the Bank elects;
          If the Proceeds of any such sale are  insufficient  to cover the costs
          and expenses of such sale,  as  aforesaid,  and the payment in full of
          the Note(s),  of all amounts due under this  Agreement,  and all other
          amounts due  thereunder  or  hereunder,  the  Company  Subsidiary(ies)
          and/or  the  Company,  as  appropriate,  shall  remain  liable for any
          deficiency.

          Notwithstanding  anything  herein  to the  contrary,  upon any sale or
          other  disposition  of the  Collateral,  all  proceeds of such sale or
          disposition  will be applied  among each Mortgage Pool and the related
          Company Subsidiary Loans in accordance with Section 2.5(a).

          Section~8.4.  Bank  Appointed  Attorney-in-Fact.  The  Bank is  hereby
          appointed  the  attorney-in-fact  of the Company,  and of each Company
          Subsidiary  which  becomes  a  party  to  this  Agreement,  after  the
          occurrence  and  during  the   continuance  of  an  Event  of  Default
          hereunder,  with  full  power  of  substitution,  for the  purpose  of
          carrying  out the  provisions  hereof,  and of the Company  Subsidiary
          Loans and Notes of parties hereto, and taking any action and executing
          any  instruments  which the Bank may deem  necessary  or  advisable to
          accomplish  the purposes  hereof or thereof,  after the occurrence and
          during  the  continuance  of an  Event  of  Default  hereunder,  which
          appointment as  attorney-in-fact  is  irrevocable  and coupled with an
          interest.  Without limiting the generality of the foregoing,  the Bank
          shall  have the  right  and  power  to give  notices  of its  security
          interest in the  Collateral  to any Person,  either in the name of the
          Company,  in the name of the Company  Subsidiary,  or in its own name,
          after the occurrence and during the continuance of an Event of Default
          hereunder to endorse all Pledged  Mortgage  Loans payable to the order
          of the Company or the Company Subsidiary, or, after the occurrence and
          during the continuance of an Event of Default  hereunder,  to receive,
          endorse  and  collect  all  checks  made  payable  to the order of the
          Company or the Company Subsidiary, representing any payment on account
          of the principal of or interest on, or the proceeds of sale of, any of
          the Pledged Mortgage Loans and to give full discharge for the same and
          execute any and all  instruments in writing  whatever kind and nature,
          if they be  necessary,  and be necessary  and deemed proper by Bank to
          effectively assure its appropriate lien position in the Collateral and
          in the Pledged Mortgage Loans.

          Section~8.5.  Right  of  Set-off.  If the  Company  Subsidiary  or the
          Company  shall  default in the payment of the Note or this  Agreement,
          any  interest  accrued  thereon,  or any other  sums  which may become
          payable hereunder or thereunder when due, or in the performance of any
          of its  or  their  other  obligations  or  liabilities  thereunder  or
          hereunder, the Bank shall have the right, at any time and from time to
          time,  without notice,  to set-off and to appropriate or apply any and
          all  deposits of money or property  or any other  indebtedness  at any
          time  held or owing by the Bank or a  parent  company,  affiliate,  or
          subsidiary  to or for the credit of the  account of the Company or the
          Company  Subsidiary  against  and on  account of the  obligations  and
          liabilities  of the  Company  or the  Company  Subsidiary  under  this
          Agreement,  or  under  the  Note or this  Agreement,  irrespective  of
          whether  or not the Bank  shall  have made any  demand  thereunder  or
          hereunder and whether or not said  obligations and  liabilities  shall
          have matured,  provided,  however, that the aforesaid right of set-off
          shall not apply to any deposits of escrow  monies or other funds being
          held on behalf of the  mortgagors  under Mortgage Loans or other third
          parties.

          Section~8.6. Reasonable Assurances. If, at any time during the term of
          the Agreement,  the Bank has reasonably and in good faith believe that
          the Company or the Company  Subsidiary is not  conducting its business
          in  accordance  with,  or otherwise is not  satisfying in all material
          respects: (a)~all applicable statutes, regulations, rules, and notices
          of   federal,    state,    or   local    governmental    agencies   or
          instrumentalities,  or (b)~all applicable requirements of Bank, as set
          forth in this  Agreement,  the or the Note,  then, Bank shall have the
          right to demand,  pursuant to written  notice from Bank to the Company
          or  to  the  Company   Subsidiary  as  appropriate,   specifying  with
          particularity,  the  alleged  act,  error  or  omission  in  question,
          reasonable assurances from Company or the Company Subsidiary that such
          a belief is in fact unfounded.

                                   Article ~ IX

                      Reimbursement of Expenses; Indemnity

         The Company or the Company Subsidiary, as appropriate, shall:

               Section~9.1.  Cost of Enforcement.  Pay all costs and expenses of
          the Bank, including reasonable attorney's fees, in connection with the
          enforcement of this  Agreement,  the Note, the and other documents and
          instruments related hereto and thereto.

               Section~9.2.  Payments of Taxes.  Pay,  and hold the Bank and any
          holder of the Note  harmless from and against,  any, and all,  present
          and future stamp,  documentary and other similar taxes with respect to
          the  foregoing  matters and save the Bank and the holder or holders of
          the  Note  harmless  from and  against  any and all  liabilities  with
          respect to or resulting from any delay or omission to pay such taxes.

               Section~9.3.  Indemnification.  Indemnify,  pay and hold harmless
          the Bank and any of its officers,  directors,  employees or agents and
          any  subsequent  holder  of the  Note  from  and  against  any and all
          liabilities,   obligations,  losses,  damages,  penalties,  judgments,
          suits,  costs,  expenses and disbursements of any kind whatsoever (the
          "Indemnified Liabilities") (excluding any such Indemnified Liabilities
          resulting  from failure by the Bank to perform any of its  obligations
          under this Agreement,  or any Note, or any other document  referred to
          herein or therein as  established in a suit between the Company and/or
          the  Company  Subsidiary  and the Bank  which  may be the same suit in
          which  indemnification  is being sought  hereunder by the Bank and any
          liabilities arising from the Bank's negligence,  gross negligence,  or
          willful misconduct) which may be imposed upon, incurred by or asserted
          against the Bank or such holder in any way  relating to or arising out
          of this Agreement,  any Note, or any other document referred to herein
          or therein or any of the transactions  contemplated  hereby or thereby
          to the extent that any such Indemnified  Liabilities  result (directly
          or  indirectly)  from  (a)~the  inaccuracy  or  incompleteness  of any
          representation  or  warranty  made by the  Company  or by the  Company
          Subsidiary in this Agreement, or in any schedule,  statement,  exhibit
          or certificate furnished by the Company pursuant to this Agreement, or
          any  Note,  or  (b)~the  failure  by the  Company  or by  any  Company
          Subsidiary  to  observe  or  perform  any  term or  provision  of this
          Agreement, or of any agreement executed in connection herewith, or any
          Note,  including  without  limitation any claims made, or any actions,
          suits or proceedings  commenced or threatened,  by or on behalf of any
          creditor  (excluding  the Bank and the holder or holders of the Note),
          security holder, shareholder,  mortgagor, customer (including, without
          limitation,  any person or entity having any dealings of any kind with
          the Company or the Company Subsidiary),  trustee,  director,  officer,
          employee and/or agent of the Company or the Company  Subsidiary acting
          in  such  capacity,  the  Company,  the  Company  Subsidiary,  or  any
          governmental regulatory body or authority.


                                    Article ~ X

             Administrative Services; Payment Processing; Servicing

               Section 10.1.  Administrative  Services  Agreement.  (a) Within a
          reasonable  period of time  following the execution of the  Agreement,
          the  Company and the Company  Subsidiary  shall enter into,  and shall
          maintain  in  effect,  an  administrative   services   agreement  (the
          "Administrative  Services  Agreement")  reasonably  acceptable  to the
          Bank,  which  covers  the  provision  by the  Company  of any  and all
          administrative   services   necessary   or  helpful  for  the  Company
          Subsidiary  to operate its business and for the payment by the Company
          Subsidiary  to  the  Company  of  reasonable  compensation  for  those
          services.  Those  services  shall  include,  without  limitation,  the
          handling of such matters as:  closing of purchases of Mortgage  Loans;
          safe-keeping and administration of Mortgage Loan Documents; processing
          of  and   record-keeping   for  Mortgage  Loan  payments;   insurance;
          government reporting; Mortgage Loan administration and collection; and
          compliance with this Agreement.

               (b) In the event  that the terms of the  Administrative  Security
          Agreement should conflict with the terms of this Agreement or with the
          terms of the Lock-box Agreement, the terms of this Agreement or of the
          Lock-box Agreement shall prevail.

               (c) The Company is the  servicer of the  Pledged  Mortgage  Loans
          pursuant to a servicing agreement between the Company and each Company
          Subsidiary. Upon an Event of Default, (i) Bank shall have the right to
          terminate  the  servicing  agreement  and  transfer  servicing  to its
          designee,  (ii) the Company will servicer the Pledged  Mortgage  Loans
          for the  benefit  of the  Bank as if the  Bank  was the  owner  of the
          Pledged  Mortgage  Loans  until such time as the Bank  terminates  the
          servicing agreement,  (ii) the Company will cooperate with the Bank to
          effect a transfer of the  servicing of the Pledged  Mortgage  Loans in
          connection with the Bank's termination of the servicing agreement.

               (d) The Company  covenants to maintain or cause the  servicing of
          the  Pledged  Mortgage  Loans  to be  maintained  in  conformity  with
          reasonable and customary  servicing  practices in the industry for the
          same type of  mortgage  loans as the Pledged  Mortgage  Loans and in a
          manner at least equal in quality to the servicing the Company provides
          for  mortgage  loans  which it owns.  In the event that the  preceding
          language  is  interpreted  as  constituting   one  or  more  servicing
          contracts,  each such servicing contract shall terminate automatically
          upon the earliest of (i) an Event of Default or (ii) the date on which
          this Agreement terminates.


                                   Article XI

                                  Miscellaneous

               Section~11.1.  Relationships of Parties. The relationship between
          the  Bank  each  Company  Subsidiary  which  becomes  a party  to this
          Agreement  is limited to that of  creditor/secured  party,  on the one
          hand, and borrower,  on the other hand. The  relationship  between the
          Bank and the Company is limited to that of creditor/secured  party, on
          the one hand, and contract obligor and parent of Company Subsidiaries,
          on the other hand. The provisions herein for compliance with financial
          covenants and delivery of financial statements are intended solely for
          the benefit of the Bank to protect its interests as lender in assuring
          performance of the obligations  hereunder and thereunder,  and nothing
          contained  herein or  therein  shall be  construed  as  permitting  or
          obligating  Bank  to  act  as  a  financial  or  business  advisor  or
          consultant  to the Company or a Company  Subsidiary,  as permitting or
          obligating the Bank to control the Company or a Company Subsidiary, or
          to conduct the Company's or to a Company Subsidiary's  operations,  as
          creating  any joint  venture,  agency,  fiduciary,  trustee,  or other
          relationship   among  the  parties  other  than  as   explicitly   and
          specifically  stated  herein.  The Company and the Company  Subsidiary
          acknowledge that they have had the opportunity to obtain the advice of
          experienced  counsel  of their own  choosing  in  connection  with the
          negotiation  and execution of this  Agreement and to obtain the advice
          of such  counsel  with respect to all matters  contained  herein.  The
          Company and the Company Subsidiary  further  acknowledge that they are
          experienced  with respect to financial and credit matters and has made
          their own independent decisions to execute and deliver this Agreement.

               Section~11.2.  Recourse.  The Company and each Company Subsidiary
          each  acknowledge  and  agree  that  they are each  fully  liable  for
          repayment  of all Advances  made to them,  and/or all sums due by them
          hereunder,  or under the Note and for  performance of all  obligations
          contained in this Agreement and in the Note. Furthermore,  the Company
          and each Company  Subsidiary  jointly and  severally  acknowledge  and
          agree that the Advances hereunder are made, were made and will be made
          by the Bank, in addition to other requirements set forth herein, based
          upon the condition precedent,  and in consideration of (in addition to
          any other consideration), the granting of the security interest in the
          Collateral  by the Company and each Company  Subsidiary to jointly and
          severally  secure the  repayment  of all  Advances,  now  existing  or
          hereafter granted by Bank, to all Company  Subsidiaries.  Each Company
          Subsidiary  and the Company  unconditionally  and  irrevocably  waives
          until the  payment  in full of the  Advances  and all  other  sums due
          hereunder or under any Note the following:

               (i) Any defense, counterclaim,  claim or right to bring any third
          party actions in any  proceedings or action brought by Bank to enforce
          its rights under this Agreement against any one or more of the Company
          or Company Subsidiary based on joinder of any other Company Subsidiary
          and/or the Company,  contribution,  subrogation,  reimbursement or any
          other legal or equitable claims involving the liability of any Company
          Subsidiary or the Company to another;

               (ii) Any claim based on marshalling of assets; and

               (iii) Any  benefits  or  rights  under  Section  105 or any other
          provisions of the U.S.  Bankruptcy  Code to invoke the automatic  stay
          resulting from the  bankruptcy of any other Company  Subsidiary or the
          Company.

               Section~11.3.  Notices. All notices, demands, consents,  requests
          and other  communications  required or,  permitted to be given or made
          hereunder   (collectively,   "Notices")  shall,  except  as  otherwise
          expressly provided hereunder,  be in writing and shall be delivered in
          person  or  telegraphed  or  mailed,   first  class,   return  receipt
          requested,  postage  prepaid,  or by overnight  delivery service or by
          telecopy  or  other   telecommunications   device   addressed  to  the
          respective  parties hereto at their respective  addresses  hereinafter
          set forth or, as to any such  party,  at such other  address as may be
          designated  by it in a  Notice  to the  other.  All  Notices  shall be
          conclusively  deemed  to have  been  properly  given or made when duly
          delivered,  in person or by overnight  delivery service or by telecopy
          or other telecommunications device, or if mailed on the third Business
          Day  after  being  deposited  in the  mails or when  delivered  to the
          telegraph company, addressed as follows:

               If to the Company or to any Company Subsidiary:

                  Franklin Credit Management Corporation
                  Six Harrison Street
                  New York, New York 10013
                  Attn: John M. Collins
                        General Counsel
                  Facsimile No.: 212.925.1971


         If to the Bank:

                  Sky Bank
                  110 East Main Street
                  Salineville, Ohio 43945
                  Attn:  Mr. Jerry S. Sutherin
                         Vice President
                  Facsimile No.:  330.679.0028

         With a Copy To:

                  Sky Bank
                  2221 South Church Street
                  Bowling Green, Ohio 43402
                  Attention: W. Granger Souder, Jr., General Counsel
                  Facsimile Number: (419) 254-6345

               Section~11.4.  Terms Binding Upon Successors; Survival. The terms
          and  provisions of this  Agreement  shall be binding upon and inure to
          the benefit of the parties hereto and their respective  successors and
          permitted  assigns.  All  representations,  warranties,  covenants and
          agreements  herein  contained  on the  part of the  Company  or of any
          Company  Subsidiary  that  becomes  a party  to this  Agreement  shall
          survive the making of any Company Subsidiary Loan and the execution of
          any  Note,  and  shall  be  effective  so  long as the  Commitment  is
          outstanding or there remains any obligation of the Company  hereunder,
          or any obligation of a Company Subsidiary under the Note to be paid or
          under this Agreement to be performed. All representations, warranties,
          covenants,  and agreements contained in the Note and in this Agreement
          on the part of a Company  Subsidiary  shall  survive  the making of an
          Advance  under the Company  Subsidiary  Loan and the  execution of the
          Note and this Agreement, and shall be effective so long as the Company
          Subsidiary Loan is outstanding or there remains any obligations of the
          Company  Subsidiary  under the Note to be paid or under this Agreement
          to be performed.

               Section~11.5.  Assignment.  This Agreement may not be assigned by
          the Company or by the Company  Subsidiary.  This Agreement,  the Note,
          along  with  the  Bank's  security  interest  in  any  or  all  of the
          Collateral,  may be transferred  or assigned,  in whole or in part, by
          the Bank in its sole  discretion  and any such  transferee or assignee
          thereof  may  enforce  this  Agreement,  the Note,  and such  security
          interest.

               Section~11.6.  Amendments.  This Agreement may not be modified or
          amended or waived unless such modification,  waiver or amendment is in
          writing  signed  by  the  Bank  and  the  Company.  All  such  written
          amendments,  modifications  and  extensions  to  this  Agreement,  the
          Custodial Agreement,  and any other agreements related hereto executed
          by the Company shall be binding upon each Company  Subsidiary that now
          or hereafter  becomes a party to this  Agreement to the same extent as
          if such amendment, modification or extension had been executed by each
          such  Company  Subsidiary,  and each  such  Company  Subsidiary  shall
          thereafter  be  bound  by  any  such  amendments,   modifications  and
          extensions.

               Section~11.7. No Waiver; Remedies Cumulative. No failure or delay
          on the part of the Company, the Company Subsidiary, or the Bank or any
          holder  of the  Note in  exercising  any  right,  power  or  privilege
          hereunder,  or under the Note,  and no course of  dealing  between  or
          among the Company, the Company Subsidiary,  and the Bank or the holder
          of the Note,  shall operate as a waiver thereof;  nor shall any single
          or partial  exercise of any right,  power or  privilege  hereunder  or
          there-under  preclude  any other or  further  exercise  thereof or the
          exercise  of  any  other  right,  power  or  privilege   hereunder  or
          there-under.  The rights and  remedies  herein and  therein  expressly
          provided are  cumulative  and not  exclusive of any rights or remedies
          which the Company,  the Company Subsidiary,  or the Bank or the holder
          of the Note  would  otherwise  have.  No  notice  to or  demand on the
          Company  or the  Company  Subsidiary  in any case  shall  entitle  the
          Company or the Company  Subsidiary  to any other or further  notice or
          demand in similar or other circumstances or constitute a waiver of the
          rights of the Bank or the  holder of the Note to any other or  further
          action in any circumstances without notice or demand.

               Section~11.8.  Invalidity.  In  case  any  one  or  more  of  the
          provisions  contained  in this  Agreement,  the Note,  or in any other
          agreement or instrument related hereto shall for any reason be held to
          be invalid, illegal, or unenforceable in any respect, such invalidity,
          illegality or  unenforceability  shall not affect any other provisions
          hereof  or  thereof,  and this  Agreement,  the Note,  and such  other
          instruments  or  agreements  shall be  construed  as if such  invalid,
          illegal or unenforceable provision had not been included.

               Section~11.9. Participations. The Bank may from time to time sell
          or otherwise grant  participations  in the Note, and the holder of any
          such  participation,  if  the  participation  agreement  so  provides,
          (a)~shall,  with respect to its  participation,  be entitled to all of
          the rights of the Bank,  and  (b)~may  exercise  any and all rights of
          setoff or banker's lien with respect thereto, in each case as fully as
          though the Company or the Company Subsidiary were directly indebted to
          the holder of such participation in the amount of such  participation;
          provided,  however,  that the Company or the Company  Subsidiary shall
          not be  required to send or deliver to any of the  participants  other
          than the Bank any of the  materials or notices  required to be sent or
          delivered by it under the terms of this  Agreement,  nor shall it have
          to act except in compliance with the instructions of the Bank.

               Section~11.10.  Integration.  This  Agreement,  together with the
          Note and other  documents  executed  pursuant to the terms  hereof and
          thereof,  constitute the entire agreement between or among the parties
          hereto, with respect to the subject matter hereof and thereof.

               Section~11.11.  Additional Instruments,  etc. The Company and the
          Company Subsidiary shall execute and deliver such further instruments,
          and shall do and perform all matters and things necessary or expedient
          to be done or  observed,  for the  purpose  of  effectively  creating,
          maintaining  and preserving  the security and benefits  intended to be
          afforded by this Agreement.

               Section~11.12.  Governing  Law. This Agreement and the rights and
          obligations of the parties  hereunder,  under the Note and under other
          documents  executed  pursuant to the terms hereof and thereof shall be
          construed in accordance  with and governed by the laws of the State of
          Ohio.

               Section~11.13.  Company and Company Subsidiary  Information.  The
          Company  and the  Company  Subsidiary  hereby  authorize  the  Bank to
          provide any  Affiliate of the Bank with  information  regarding  them,
          including copies of documents, financial statements, corporate records
          and reports, obtained by the Bank from them or any other entity during
          the course of the negotiation or administration of this Agreement.

          Section~11.14. Counterparts; Execution by Company Subsidiaries.

               (a)  This  Agreement  may  initially  be  executed  in one or one
          counterparts by the Bank, the Company, and the Company Subsidiaries in
          existence  as of the date  hereof on  separate  counterpart  signature
          pages,  each of  which  when so  executed  and  delivered  shall be an
          original,  but all of which together shall constitute one and the same
          instrument.

               (b) Each Company  Subsidiary which receives a Company  Subsidiary
          Loan under this  Agreement  after the date hereof shall become a party
          to this  Agreement  and shall  execute a  counterpart  signature  page
          substantially  in  the  form  Exhibit  E  hereto.  Each  such  Company
          Subsidiary  shall be deemed to become a party hereto no later than the
          receipt  of its  first  Advance  regardless  of when or if it  signs a
          counterpart  signature page hereto.  The Company shall cause each such
          Company  Subsidiary to become a party to this Agreement by executing a
          counterpart signature page as required by this Section.

               (c) Each  Subsidiary of the Company,  except for Tribeca  Lending
          Corporation,  which  has  received  an  Advance  from the Bank for the
          purpose of funding or financing  the purchase of Mortgage  Loans,  any
          part of the principal of which is still outstanding, or any collateral
          for which is still in effect as of the date of this  Agreement,  shall
          be treated as a Company  Subsidiary  hereunder,  shall  become a party
          hereto,  and shall execute a counterpart  signature page substantially
          in the form of Exhibit E. Each such Company Subsidiary shall be deemed
          to become a party hereto as of the date hereof  regardless  of when or
          if it signs a  counterpart  signature  page hereto.  The Company shall
          cause each such Company Subsidiary to become a party to this Agreement
          by executing a counterpart signature page as required by this Section.
          In the event that the terms of this Agreement  shall conflict with the
          terms of the loan  documentation for such loan to such a Subsidiary of
          the Company,  the terms of this Agreement  shall  prevail,  except for
          interest  rate terms  which shall not be affected by the terms of this
          Agreement,  and except that any default under any such loan, which has
          not been cured or waived, shall remain in effect.



                [ Signatures are located on the following page.]





                                       17
<PAGE>




          In Witness Whereof,  the parties have caused this Agreement to be duly
          executed as of the date first above written.


                             Company:
                             Franklin Credit Management Corporation


                             By___________________________________
                                 Printed Name:
                                        Title:


                             Bank:
                             Sky Bank

                             By____________________________________
                                   Jerry S. Sutherin
                                     Vice President



                                       <PAGE>


                                    Exhibit~A

                                 PROMISSORY NOTE

$________________                                           New York, New York

                                                          ___________, 20_____

          FOR VALUE  RECEIVED,  ____________________________  (the  "Borrower"),
          hereby  unconditionally  promises to pay to the order of Sky Bank (the
          "Bank"),  at P.O.  Box 159,  10 East Main  Street,  Salineville,  Ohio
          43945, the sum of ______________________________________  AND ____/100
          DOLLARS  ($_____________),  together with an initial  interest rate of
          __________% per annum.  The interest rate will be adjusted  monthly on
          the first day of each month,  based upon the following Index:  Federal
          Home Loan Bank of  Cincinnati  30 day advance  rate,  plus  __________
          basis points.
          This Note  shall be for a term of Thirty  Six (36)  months,  amortized
          over  a  term  of  Two   Hundred   Forty   (240)   months.   Beginning
          __________________,   20______,   there  shall  be  monthly  principal
          payments   of   ___________________________________________________AND
          _____/100 DOLLARS ($________________), plus interest as billed monthly
          until maturity.

          The interest rate charged herein shall be adjusted  monthly as changes
          in the  above-referenced  index  occur.  The Federal Home Loan Bank of
          Cincinnati 30 day advance rate shall mean the highest rate of interest
          as published daily by Bloomberg under the symbol FHL5LBR1.

          Amounts payable on this Note are payable in lawful money of the United
          States  of  America  in good and  immediately  available  funds at the
          offices  of the Bank,  or at such  other  address as the holder of the
          Note may designate in writing.

          If this Note or any  installment  hereof  becomes due and payable on a
          Saturday,  Sunday  or  public  holiday  under the laws of the State of
          Ohio,  the due date thereof  shall be extended to the next  succeeding
          full Business Day.

          This  Note  is a  Note  referred  to in and is  subject  to the  term,
          conditions  and covenants of, and is secured by certain  collateral as
          more fully  described  and  provided in, a certain  Master  Credit and
          Security  Agreement,  dated as of October  13,  2004,  among the Bank,
          Franklin  Credit  Management  Corporation,  and other  subsidiaries of
          Franklin  Credit  Management  Corporation,  and to which  Borrower has
          become  a  party  to  on or  about  even  date  herewith,  (the  "Loan
          Agreement"), including, without limitation, being subject to mandatory
          payment in whole or in part as  provided  in the Loan  Agreement,  and
          Borrower acknowledges receiving a copy of and becoming a party to said
          Loan Agreement),  provided,  however,  reference to the Loan Agreement
          and to the  collateral  does not  affect or impair  the  absolute  and
          unconditional  obligation  of the Borrower to pay the principal of and
          interest on this Note when due.

          Upon  the  occurrence  of any  one or more of the  Events  of  Default
          specified in the Loan Agreement,  all amounts then remaining unpaid on
          this  Note  may be  declared  to be  immediately  due and  payable  as
          provided in the Loan Agreement.



<PAGE>




Promissory Note
Page 2
_________________, 20______

          Prepayment of this Loan is subject to the terms as more fully outlined
          in the Loan Agreement referred to above.

          This Note shall be  construed in  accordance  with and governed by the
          laws of the State of Ohio  without  giving  effect  to the  principles
          thereof  relating  to the  conflict of laws.  For any dispute  arising
          under  this  Note  or in  connection  herewith,  the  Borrower  hereby
          irrevocably  submits to, consents to, and waives any objection to, the
          jurisdiction  of the courts of the State of Ohio or the United  States
          Courts for the Northern  District of Ohio.  Trial by jury is waived by
          the Borrower for collection hereof.

          In the event that any one or more of the provisions of this Note shall
          for any reason be held to be  invalid,  illegal or  unenforceable,  in
          whole or in part,  or in any respect,  or in the event that any one or
          more  of  the  provisions  of  this  Note  shall  operate,   or  would
          prospectively  operate, to invalidate this Note, then, and in any such
          event,  such  provision or provisions  only shall be deemed to be null
          and void and of no force or  effect  and shall  not  affect  any other
          provision  of this Note,  and the  remaining  provisions  of this Note
          shall  remain  operative  and in full force and effect and shall in no
          way be affected, prejudiced or disturbed thereby.

          It is the intention of the parties hereto to comply  strictly with the
          usury laws of the State of Ohio and applicable Federal law; therefore,
          it is agreed that  notwithstanding  any  provision  to the contrary in
          this Note, no such  provision  shall require the payment or permit the
          collection  of interest in excess of the maximum  amount  permitted by
          law.


                                              _______________________________




By:

                                               Its: _________________________





<PAGE>


                                   SCHEDULE I
      Schedule of All Existing Company Subsidiary Loans and Success Fee Due





<PAGE>

{                                     Exhibit B

                      Company Subsidiary Loan Request Form


                                                               [Date]
Sky Bank
110 East Main Street
Salineville, Ohio 43945
Attn: Mr. Jerry S. Sutherin
      Vice President

Ladies/Gentlemen:

          This  letter is a request  for you to make an Advance to us in respect
          of the  Mortgage  Loans  listed in Appendix I hereto,  pursuant to the
          Master Credit And Security Agreement (the "Agreement") is entered into
          as of October 13, 2004, between Franklin Credit Management Corporation
          (the "Company") and Sky Bank (the  "Bank")and each Company  subsidiary
          that is a party thereto as follows:

         Company Subsidiary:

         Requested funding date:

         Mortgage Loans requested to be funded in respect of such Advance:
         See Appendix I hereto.

         [Appendix I to Transaction Request Letter will list Mortgage Loans]

         Requested Advance Amount:

         Requested Mortgage Pool:

         Requested Required Subsidiary LTV:

         Anticipated, adjusted Required Pool LTV:

          All  capitalized  terms used herein  shall have the  meaning  assigned
          thereto in the Agreement.



                                               [COMPANY SUBSIDIARY]



                                      By: _____________________________
                                       Name:
                                      Title:



<PAGE>


                                    Exhibit C

                      Product Standards For Mortgage Loans



                                       23
<PAGE>




                                   Exhibit D

                              Collateral Documents

               With  respect  to each  Pledged  Mortgage  Loan,  the  Collateral
          Documents  shall include each of the following  items,  which shall be
          available  for  inspection by the Bank and which shall be delivered to
          the  Custodian  pursuant to  Section~4.1(a)  of the Master  Credit and
          Security   Agreement   to  which   this   Exhibit~is   attached   (the
          "Agreement"):

               (a)______the  original  Mortgage  Note  bearing  all  intervening
          endorsements  evidencing  a  complete  chain  of  assignment  from the
          originator  to the  last  endorsee,  endorsed  "Pay  to the  order  of
          _________,  without  recourse"  and  signed  in the  name of the  last
          endorsee by an authorized officer. To the extent that there is no room
          on the face of the Mortgage Notes for  endorsements,  the  endorsement
          may be  contained  on an  allonge,  if  state  law so  allows  and the
          Custodian  is so advised by the Company  Subsidiary  that state law so
          allows;

               (b)______the  original of any  guarantee  executed in  connection
          with the Mortgage Note;

               (c)______the   original   Mortgage  with  evidence  of  recording
          thereon.  If  in  connection  with  any  Mortgage  Loan,  the  Company
          Subsidiary  cannot  deliver  or cause  to be  delivered  the  original
          Mortgage with evidence of recording thereon on or prior to the Closing
          Date  because of a delay caused by the public  recording  office where
          such  Mortgage  has been  delivered  for  recordation  or because such
          Mortgage has been lost or because such public recording office retains
          the original recorded  Mortgage,  the Company Subsidiary shall deliver
          or  cause  to be  delivered  to the  Custodian,  a  photocopy  of such
          Mortgage,  together  with  (i) in the  case of a delay  caused  by the
          public  recording  office,  an  officer's  certificate  of the Company
          Subsidiary  stating  that such  Mortgage  has been  dispatched  to the
          appropriate  public  recording  office  for  recordation  and that the
          original  recorded  Mortgage or a copy of such  Mortgage  certified by
          such public  recording  office to be a true and  complete  copy of the
          original recorded Mortgage will be promptly delivered to the Custodian
          upon receipt thereof by the Company Subsidiary; or (ii) in the case of
          a  Mortgage  where a public  recording  office  retains  the  original
          recorded  Mortgage  or in the  case  where a  Mortgage  is lost  after
          recordation  in a public  recording  office,  a copy of such  Mortgage
          certified  by such public  recording  office to be a true and complete
          copy of the original recorded Mortgage;

               (d)______the   originals   of   all   assumption,   modification,
          consolidation  or  extension  agreements,  if any,  with  evidence  of
          recording thereon;

               (e)______the  original  assignment  of Mortgage for each Mortgage
          Loan, in form and substance  acceptable for recording.  The assignment
          of Mortgage shall be delivered in blank;

               (f)______the   originals  of  all   intervening   assignments  of
          mortgage,   evidencing  a  complete  chain  of  assignment   from  the
          originator to the last endorsee,  with evidence of recording  thereon,
          or if any such  intervening  assignment has not been returned from the
          applicable  recording  office  or has  been  lost  or if  such  public
          recording  office  retains  the  original   recorded   assignments  of
          mortgage,  the  Company  Subsidiary  shall  deliver  or  cause  to  be
          delivered  to  the   Custodian,   a  photocopy  of  such   intervening
          assignment,  together  with (i) in the case of a delay  caused  by the
          public  recording  office,  an  officers  certificate  of the  Company
          Subsidiary  stating that such  intervening  assignment of mortgage has
          been  dispatched  to  the  appropriate  public  recording  office  for
          recordation and that such original recorded intervening  assignment of
          mortgage  or  a  copy  of  such  intervening  assignment  of  mortgage
          certified by the appropriate  public recording office to be a true and
          complete  copy of the  original  recorded  intervening  assignment  of
          mortgage  will be promptly  delivered  to the  Custodian  upon receipt
          thereof  by  the  Company  Subsidiary;  or  (ii)  in  the  case  of an
          intervening  assignment  where a public  recording  office retains the
          original  recorded  intervening  assignment  or in the  case  where an
          intervening assignment is lost after recordation in a public recording
          office, a copy of such intervening assignment certified by such public
          recording  office  to be a true  and  complete  copy  of the  original
          recorded intervening assignment;

               (g)______the  original mortgagee policy of title insurance or, in
          the event such original title policy is unavailable,  a certified true
          copy of the related policy binder or commitment for title certified to
          be true and complete by the title insurance company; and

               (h)______security   agreement,  chattel  mortgage  or  equivalent
          document executed in connection with the Mortgage, if any.

               From  time to time,  the  Company  subsidiary  shall  cause to be
          forwarded to the Custodian  additional original documents,  additional
          documents  evidencing an assumption,  modification,  consolidation  or
          extension of a Mortgage Loan. All such mortgage  documents held by the
          Custodian as to each Mortgage Loan shall  constitute  the  "Collateral
          Documents"



<PAGE>


{

                                    Exhibit E

                         Counterpart Signature Page Form




                           Counterpart Signature Page

                                       for

                      Master Credit and Security Agreement

                                     between

    Sky Bank and Franklin Credit Management Corporation and its Subsidiaries



               The  undersigned   subsidiary  of  Franklin   Credit   Management
          Corporation  hereby  agrees  to be  bound  by the  terms,  conditions,
          covenants and  provisions of the  above-referenced  Agreement to which
          this Counterpart Signature Page will be attached,  including,  without
          limitation,  the granting of the  security  interest in Article III of
          the  Agreement  and the rights and remedies  with respect  thereto set
          forth in  Article  VIII.  By signing  below,  the  undersigned  hereby
          executes and becomes a "Company Subsidiary" (as defined therein) party
          to the  Agreement  and grants such  security  interest.  Such security
          interest  covers,  among the items of  "Collateral"  listed in Article
          III, the "Mortgage  Loans" set forth on the Schedule  attached to this
          Counterpart Signature Page.


                                              [name of Company Subsidiary here]


Date: __________________________               By:____________________________

                                                    Printed Name:
                                                    Title:





<PAGE>




                                  SCHEDULE E-1

                   List Of Mortgage Loans Pledged to Bank By:

                          ____________________________
                          (Name of Company Subsidiary)


                                       26
<PAGE>

                                    EXHIBIT F

                                 LOCK BOX TERMS

               A. Lockbox  Service.  The lockbox  service (the  "Service")  will
          operate through a U.S. Postal Service box in the Company  Subsidiary's
          name (the "Lockbox") and Company Subsidiary demand deposit accounts at
          Bank (the  "Accounts")  which are designated  herein below,  and which
          Accounts are subject to Bank's standard  deposit  account  agreements.
          Company Subsidiary authorizes Bank and its employees,  representatives
          or authorized agents to (i) pick up and transport from the Post Office
          mail addressed to the Lockbox, and (ii) open such mail and process its
          contents according to the Lockbox processing  procedures which will be
          agreed to by Bank and the Company Subsidiary.

               B. Company Subsidiary's Obligations. Company Subsidiary agrees to
          provide Bank, its employees, representatives or authorized agents with
          unrestricted and exclusive access to the Lockbox.  Company  Subsidiary
          agrees to follow the  recommendations  and specifications  outlined in
          the Processing  Procedures relating,  without limitation,  to document
          specifications  for the  remittance  documents  to be submitted to the
          Lockbox.  Insofar as the  performance of Services under this Agreement
          by Bank  requires  data,  documents,  information  or materials of any
          nature  to be  furnished  by  Company  Subsidiary,  or for  personnel,
          Company  Subsidiary  hereby  agrees to  furnish  all data,  documents,
          information,  and  materials  and to perform all such acts and to make
          appropriate  personnel,  records  and  facilities  available  to Bank,
          within  such  time and in such form or  manner  as may  reasonably  be
          necessary  in order to enable  Bank to perform the  required  Services
          promptly and in a workmanlike manner.

               C.  Deposits.  Bank will  deposit all items which comply with the
          processing  procedures  agreed to by Bank and  Customer  for credit to
          Company Subsidiary's Account with Bank. Company Subsidiary  authorizes
          Bank to endorse  checks and other  payment  instruments  received (the
          "Remittances") and to deposit such instruments in the Accounts. If any
          payee  is a  legal  entity  other  than  Company  Subsidiary,  Company
          Subsidiary represents and warrants to Bank that Company Subsidiary has
          the proper  authorization  from such payee to have such check endorsed
          for deposit,  and deposited into the Account,  and Company  Subsidiary
          agrees to  indemnify  Bank against any losses,  liabilities,  damages,
          claims, demands,  obligations,  actions, suits, judgments,  penalties,
          costs or  expenses,  including,  but not limited to,  attorneys'  fees
          (collectively "Losses and Liabilities"),  suffered or incurred by Bank
          as a result of, or in connection with, Company Subsidiary's failure to
          have such authorization. Further, the Bank may accept checks and other
          instruments  for deposit to the Account without  endorsement.  Company
          Subsidiary  represents and warrants to Bank that the  endorsements  of
          all items received  through this Service are proper and valid and that
          Company  Subsidiary  has a right to receive  such items for deposit to
          the Account.  Company  Subsidiary  agrees to notify Bank no later than
          ten (10) calendar days after Company Subsidiary  receives an advice of
          deposit,  if there  is any  error in such  advice,  and no later  than
          thirty (30)  calendar days after  Company  Subsidiary  receives a bank
          statement on the Account, if such statement contains an error or fails
          to show a deposit  that  should  have been made during the time period
          covered by such statement.

               C. Account  Documentation.  Company  Subsidiary  understands that
          this Agreement  covers Lockbox  Services as described  herein and does
          not cover the handling of the Accounts  and the  processing  of checks
          drawn on the Account or the  availability  of the deposits made to the
          Accounts. The Accounts will be subject to, and Bank's operation of the
          Accounts  will be in  accordance  with,  the terms and  provisions  of
          Bank's   deposit   account   agreements  and  the  account  rules  and
          regulations   governing  the  Accounts   (collectively   the  "Account
          Agreements"),  copies of which Company Subsidiary  acknowledges having
          received, and shall be subject to the Master Credit Agreement to which
          this Lock Box Terms agreement is attached.

               D Reasonable Care. As to property of Company Subsidiary in Bank's
          possession  Bank shall be liable only for the  exercise of  reasonable
          care in  safekeeping  the same and  restricting  access to  authorized
          persons of information  relating to Company  Subsidiary's  business or
          the  business of any of Company  Subsidiary's  customers  which may be
          received in the course of rendering the Service hereunder.

             E. Mail  Collection.  Bank shall collect the mail from the Lockbox
          in accordance with Bank's post office  schedule,  as such schedule may
          change from time to time.

               F.  Limitation  of  Liability,  Indemnity.  The Bank will only be
          liable for damages arising from the Bank's  intentional  misconduct or
          gross negligence in the performance of this Service. The Bank will not
          be responsible  for any loss,  delay,  costs or liability which arise,
          directly or indirectly,  in whole or part, from, Company  Subsidiary's
          actions or omissions, negligence or breach of any agreement with Bank;
          any   ambiguity,   inaccuracy  or  omission  in  any   instruction  or
          information  provided to Bank;  accidents,  strikes,  labor  disputes,
          civil unrest,  fire, flood,  water damage (e.g., from fire suppression
          systems),  or acts of God; or the actions of others or causes that are
          beyond Bank's  reasonable  control.  The Bank will not be  responsible
          under  any  circumstances  for  special,  indirect,  or  consequential
          damages, which the Company Subsidiary incurs as a result of the Bank's
          actions or omissions, even if the Bank is aware of the possibility for
          such damage. Any claim, action or proceeding by the Company Subsidiary
          to  enforce  the  terms  of  this  Agreement  or to  recover  for  any
          Service-related  loss  or for  any  losses  or  liabilities,  must  be
          commenced  within one year from the date that the event giving rise to
          the claim,  action, or proceeding first occurs. The Company Subsidiary
          agrees to cooperate with the Bank in any loss recovery effort the Bank
          undertakes  to reduce any loss or liability  that arises in connection
          with the Bank's  Services.  Company  Subsidiary  agrees to  indemnify,
          defend, hold Bank harmless from and against any claim,  damage,  loss,
          liability and cost (including, without limitation, attorneys' fees) of
          any kind whatsoever which results directly or indirectly,  in whole or
          in part  from:  (a)  Bank's  actions  or  omissions,  if  they  are in
          accordance with the Company Subsidiary's  instructions or the terms of
          this  Agreement;  or (b)  the  actions  or  omissions  of the  Company
          Subsidiary,  its agents or  employees.  This clause shall  survive the
          termination of this Agreement.

          Account Information:

          Depository Account Number:
          Other:

          Any  correspondence  between  the  Company  Subsidiary  and  the  Bank
          concerning  normal  operations of the Payments  Processing and Control
          service shall be addressed as follows:

          Account Name:

          Address:




          Primary Contact:                    Telephone:
                                              Fax:

          Special Instructions or Comments:




<PAGE>
                                   Exhibit G
                 Required Subsidiary LTV and Required Pool LTV