Document:

EXHIBIT 4.1

                                                             [EXECUTION VERSION]

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                       MORGAN STANLEY ABS CAPITAL I INC.,

                                  as Depositor,

                             OCWEN FEDERAL BANK FSB,

                                  as Servicer,

                           CDC MORTGAGE CAPITAL INC.,

                             as Unaffiliated Seller,

                                       and

                      Deutsche Bank National Trust Company,

                                   as Trustee,

                         POOLING AND SERVICING AGREEMENT

                            Dated as of April 1, 2002

                       CDC MORTGAGE CAPITAL TRUST 2002-HE1

                       MORTGAGE PASS-THROUGH CERTIFICATES,
                                 SERIES 2002-HE1

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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                   <C>                                                                                       <C>
ARTICLE I DEFINITIONS.............................................................................................5

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES..........................................37

     Section 2.01     Conveyance of Mortgage Loans...............................................................37
     Section 2.02     Acceptance by the Trustee of the Mortgage Loans............................................42
     Section 2.03     Representations, Warranties and Covenants of the Unaffiliated Seller
                      and the Servicer...........................................................................43
     Section 2.04     The Depositor and the Mortgage Loans.......................................................47
     Section 2.05     Delivery of Opinion of Counsel in Connection with Substitutions and
                      Non-Qualified Mortgages....................................................................47
     Section 2.06     Execution and Delivery of Certificates.....................................................47
     Section 2.07     REMIC Matters..............................................................................48
     Section 2.08     Representations and Warranties of the Depositor............................................48

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.......................................................49

     Section 3.01     Servicer to Service Mortgage Loans.........................................................49
     Section 3.02     Subservicing Agreements Between the Servicer and Subservicers..............................51
     Section 3.03     Successor Subservicers.....................................................................52
     Section 3.04     Liability of the Servicer..................................................................52
     Section 3.05     No Contractual Relationship Between Subservicers and the Trustee...........................53
     Section 3.06     Assumption or Termination of Subservicing Agreements by Trustee............................53
     Section 3.07     Collection of Certain Mortgage Loan Payments; Establishment of Certain Accounts............53
     Section 3.08     Subservicing Accounts......................................................................56
     Section 3.09     Collection of Taxes, Assessments and Similar Items; Escrow Accounts........................56
     Section 3.10     Collection Account.........................................................................57
     Section 3.11     Withdrawals from the Collection Account....................................................59
     Section 3.12     Investment of Funds in the Account.........................................................60
     Section 3.13     Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage.............61
     Section 3.14     Enforcement of Due-On-Sale Clauses Assumption Agreements...................................63
     Section 3.15     Realization Upon Defaulted Mortgage Loans..................................................64
     Section 3.16     Release of Mortgage Files..................................................................65
     Section 3.17     Title, Conservation and Disposition of REO Property........................................66
     Section 3.18     Notification of Adjustments................................................................68
     Section 3.19     Access to Certain Documentation and Information Regarding the Mortgage Loans...............68
     Section 3.20     Documents, Records and Funds in Possession of the Servicer to be Held for the Trustee......68
     Section 3.21     Servicing Compensation.....................................................................69
</TABLE>

                                        i
<PAGE>

<TABLE>
<S>                   <C>                                                                                       <C>
     Section 3.22     Annual Statement as to Compliance..........................................................69
     Section 3.23     Annual Independent Public Accountants' Servicing Statement; Financial Statements...........70
     Section 3.24     Trustee to Act as Servicer.................................................................70
     Section 3.25     Compensating Interest......................................................................71
     Section 3.26     Credit Reporting; Gramm-Leach-Bliley Act...................................................71
     Section 3.27     Advance Facilities.........................................................................71

ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE SERVICER............................................................73

     Section 4.01     Advances...................................................................................73
     Section 4.02     Priorities of Distribution.................................................................74
     Section 4.03     Monthly Statements to Certificateholders...................................................77
     Section 4.04     Certain Matters Relating to the Determination of LIBOR.....................................81
     Section 4.05     The Class A Insurance Policy...............................................................81
     Section 4.06     Effect of Payments by the Class A Certificate Insurer; Subrogation.........................83

ARTICLE V THE CERTIFICATES.......................................................................................84

     Section 5.01     The Certificates...........................................................................84
     Section 5.02     Certificate Register; Registration of Transfer and Exchange of Certificates................84
     Section 5.03     Mutilated, Destroyed, Lost or Stolen Certificates..........................................89
     Section 5.04     Persons Deemed Owners......................................................................89
     Section 5.05     Access to List of Certificateholders' Names and Addresses..................................90
     Section 5.06     Maintenance of Office or Agency............................................................90
     Section 5.07     Rights of the Class A Certificate Insurer to Exercise Rights of Class A
                      Certificateholders.........................................................................90
     Section 5.08     Trustee To Act Solely with Consent of the Class A Certificate Insurer......................91
     Section 5.09     Mortgage Loans, Trust Fund and Accounts Held for Benefit of the Class A
                      Certificate Insurer........................................................................91
     Section 5.10     Class A Certificate Insurer Default........................................................92

ARTICLE VI THE DEPOSITOR AND THE SERVICER........................................................................92

     Section 6.01     Respective Liabilities of the Depositor and the Servicer...................................92
     Section 6.02     Merger or Consolidation of the Depositor or the Servicer...................................92
     Section 6.03     Limitation on Liability of the Depositor, the Servicer and Others..........................93
     Section 6.04     Limitation on Resignation of the Servicer..................................................94
     Section 6.05     Additional Indemnification by the Servicer; Third Party Claims.............................94

ARTICLE VII DEFAULT..............................................................................................94

     Section 7.01     Events of Default..........................................................................94
     Section 7.02     Trustee to Act; Appointment of Successor...................................................96
     Section 7.03     Notification to Certificateholders.........................................................97

ARTICLE VIII CONCERNING THE TRUSTEE..............................................................................98

     Section 8.01     Duties of the Trustee......................................................................98
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                   <C>                                                                                       <C>
     Section 8.02     Certain Matters Affecting the Trustee......................................................99
     Section 8.03     Trustee Not Liable for Certificates or Mortgage Loans.....................................100
     Section 8.04     Trustee May Own Certificates..............................................................100
     Section 8.05     Trustee's Fees and Expenses...............................................................100
     Section 8.06     Eligibility Requirements for the Trustee..................................................101
     Section 8.07     Resignation and Removal of the Trustee....................................................101
     Section 8.08     Successor Trustee.........................................................................102
     Section 8.09     Merger or Consolidation of the Trustee....................................................102
     Section 8.10     Appointment of Co-Trustee or Separate Trustee.............................................102
     Section 8.11     Tax Matters...............................................................................104
     Section 8.12     Periodic Filings..........................................................................106
     Section 8.13     Tax Classification of Certain Accounts....................................................106

ARTICLE IX TERMINATION..........................................................................................107

     Section 9.01     Termination upon Liquidation or Purchase of the Mortgage Loans............................107
     Section 9.02     Final Distribution on the Certificates....................................................107
     Section 9.03     Additional Termination Requirements.......................................................108

ARTICLE X MISCELLANEOUS PROVISIONS..............................................................................109

     Section 10.01    Amendment.................................................................................109
     Section 10.02    Recordation of Agreement; Counterparts....................................................111
     Section 10.03    Governing Law.............................................................................111
     Section 10.04    Intention of Parties......................................................................111
     Section 10.05    Notices...................................................................................112
     Section 10.06    Severability of Provisions................................................................113
     Section 10.07    Assignment................................................................................113
     Section 10.08    Limitation on Rights of Certificateholders................................................113
     Section 10.09    Inspection and Audit Rights...............................................................114
     Section 10.10    Certificates Nonassessable and Fully Paid.................................................114
     Section 10.11    The Class A Certificate Insurer Default...................................................114
     Section 10.12    Third Party Beneficiary...................................................................115
     Section 10.13    Waiver of Jury Trial......................................................................115

SCHEDULES
---------

Schedule I            Mortgage Loan Schedule

Schedule II           Representations and Warranties of the Servicer

Schedule III          Representations and Warranties as to the Unaffiliated Seller
</TABLE>

                                      iii
<PAGE>

EXHIBITS
--------

Exhibit A         Form of Class A, Class M and Class B Certificate
Exhibit B         Form of Class P Certificate
Exhibit C         Form of Class R Certificate
Exhibit D         Form of Class X Certificate
Exhibit E         Form of Initial Certification of Trustee
Exhibit F         Form of Final Certification of Trustee
Exhibit G         Form of Transfer Affidavit
Exhibit H         Form of Transferor Certificate
Exhibit I         Form of Rule 144A Letter
Exhibit J         Form of Request for Release
Exhibit K         Form of Subsequent Transfer Agreement
Exhibit L         Form of FDIC Claim

                                       iv
<PAGE>

                  THIS  POOLING AND  SERVICING  AGREEMENT,  dated as of April 1,
2002,  among  MORGAN  STANLEY ABS  CAPITAL I INC.,  a Delaware  corporation,  as
depositor  (the  "DEPOSITOR"),  OCWEN  FEDERAL  BANK FSB, a federally  chartered
savings  bank, as servicer (the  "Servicer"),  CDC MORTGAGE  CAPITAL INC., a New
York  corporation,  as  unaffiliated  seller  (the  "UNAFFILIATED  SELLER")  and
DEUTSCHE BANK NATIONAL TRUST COMPANY (f/k/a Bankers Trust Company of California,
N.A.), a national banking association, as trustee (the "TRUSTEE"),

                                W I T N E S S E T H:
                                - - - - - - - - - -

                  In consideration of the mutual  agreements  herein  contained,
the parties hereto agree as follows:

                              PRELIMINARY STATEMENT

                  The Trustee shall elect that two segregated asset pools within
the Trust Fund be treated for federal  income tax  purposes  as  comprising  two
REMICs  (each a "REMIC"  or, in the  alternative,  the Lower  Tier REMIC and the
Upper Tier REMIC,  respectively).  Each Certificate,  other than the Class P and
Class R Certificates,  represents  ownership of a regular  interest in the Upper
Tier  REMIC for  purposes  of the  REMIC  Provisions.  The  Class R  Certificate
represents ownership of the sole class of residual interest in each of the Lower
Tier REMIC and the Upper Tier REMIC for  purposes of the REMIC  Provisions.  The
Startup  Day for each REMIC  described  herein is the Closing  Date.  The latest
possible maturity date for each regular interest is the date referenced for such
regular interests in this preliminary statement. The Upper Tier REMIC shall hold
as assets the several classes of  uncertificated  Lower Tier Regular  Interests,
set out below.  Each such Lower Tier Regular Interest is hereby  designated as a
regular interest in the Lower Tier REMIC.  Class LT-A, Class LT-M and Class LT-B
are hereby designated the LT Accretion Directed Classes. The Class P Certificate
represents beneficial ownership of the Prepayment Charges,  which portion of the
Trust Fund shall be treated as a grantor trust.

<TABLE>
<CAPTION>
                                                                                           CORRESPONDING
     LOWER TIER            LOWER TIER                  INITIAL LOWER TIER                   UPPER TIER          LATEST POSSIBLE
 CLASS DESIGNATION       INTEREST RATE                 PRINCIPAL AMOUNT                     REMIC CLASS          MATURITY DATE
 -----------------       -------------   ------------------------------------------        ------------        ----------------
<S>                          <C>         <C>                                                     <C>           <C>
Class LT-A                   (1)         1/2 initial Corresponding Upper Tier REMIC              A             January 25, 2033
                                         initial principal balance
Class LT-M                   (1)         1/2 initial Corresponding Upper Tier REMIC              M             January 25, 2033
                                         initial principal balance
Class LT-B                   (1)         1/2  initial Corresponding Upper Tier REMIC             B             January 25, 2033
                                         initial principal balance
Class LT-Accrual             (1)         1/2 Pool Balance plus 1/2  Subordinated Amount                        January 25, 2033
Class LT-R                   (2)         (2)
</TABLE>

(1) The interest rate with respect to any Distribution  Date for these interests
    is a per annum variable rate equal to the WAC Cap.

<PAGE>

(2) The Class LT-R Interest is the sole class of residual  interest in the Lower
    Tier REMIC and it does not have a principal amount or an interest rate.

                  The Lower  Tier  REMIC  shall hold as assets all of the assets
included in the Trust Fund other than  Prepayment  Charges,  the Excess  Reserve
Fund Account, and the Lower Tier Regular Interests.

                  On  each  Distribution  Date,  50%  of  the  increase  in  the
Subordinated  Amount will be payable as a reduction of the principal balances of
the LT Accretion  Directed Classes (each such Class will be reduced by an amount
equal to 50% of any increase in the Subordinated  Amount that is attributable to
a reduction in the  principal  balance of its  Corresponding  Class) and will be
accrued  and added to the  principal  balance of the LT Accrual  Class.  On each
Distribution Date, the increase in the principal balance of the LT Accrual Class
may not exceed interest  accruals for such  Distribution Date for the LT Accrual
Class.  In the event that:  (i) 50% of the increase in the  Subordinated  Amount
exceeds (ii)  interest  accruals on the LT Accrual  Class for such  Distribution
Date, the excess for such  Distribution Date (accumulated with all such excesses
for  all  prior  Distribution  Dates)  will  be  added  to any  increase  in the
Subordinated  Amount for purposes of determining the amount of interest  accrual
on the LT  Accrual  Class  payable as  principal  on the LT  Accretion  Directed
Classes on the next  Distribution  Date  pursuant to the first  sentence of this
paragraph.  All payments of scheduled  principal  and  prepayments  of principal
generated by the Mortgage  Loans shall be allocated 50% to the LT Accrual Class,
and 50% to the LT  Accretion  Directed  Classes  (principal  payments  shall  be
allocated among such LT Accretion  Directed Classes in an amount equal to 50% of
the principal  amounts  allocated to their  respective  Corresponding  Classes),
until paid in full.  Notwithstanding the above,  principal payments allocated to
the Class X Certificates that result in the reduction in the Subordinated Amount
shall be allocated to the LT Accrual Class (until paid in full). Realized losses
shall  be  applied  so that  after  all  distributions  have  been  made on each
Distribution  Date  (i) the  principal  balances  of  each  of the LT  Accretion
Directed Class is equal to 50% of the principal  balance of their  Corresponding
Class, and (ii) the LT Accrual Class is equal to 50% of the aggregate  principal
balance of the Mortgage Pool plus 50% of the Subordinated Amount.

                  The Upper  Tier REMIC  shall  issue the  following  classes of
interests and each Upper Tier Interest,  other than the Class UT-R Interest,  is
hereby designated as a regular interest in the Upper Tier REMIC.

<TABLE>
<CAPTION>
                        UPPER TIER
    UPPER TIER           INTEREST         INITIAL UPPER TIER        CORRESPONDING
 CLASS DESIGNATION         RATE            PRINCIPAL AMOUNT          CERTIFICATE            LATEST POSSIBLE MATURITY DATE
------------------      -----------       -------------------       -------------           -----------------------------
<S>                         <C>             <C>                              <C>                  <C>
Class A                     (1)             $   449,238,000           Class A(5)                  January 25, 2033
Class M                     (2)             $    25,381,000           Class M(5)                  January 25, 2033
Class B                     (2)             $    25,381,000           Class B(5)                  January 25, 2033
Class X                     (3)                          (3)          Class X(3)                  January 25, 2033
Class UT-R                  (4)                                       Class R                     January 25, 2033
</TABLE>

(1) The Class A Interests will bear interest during each Interest Accrual Period
    thereafter  at a per  annum  rate  equal to (a) on or prior to the  Optional
    Termination Date, the least of (i)

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<PAGE>

    LIBOR plus 0.31%,  (ii) 16%, and (iii) the WAC Cap or (b) after the Optional
    Termination Date, the least of (i) LIBOR plus 0.62%, (ii) 16%, and (iii) the
    WAC Cap.

(2) The Class M and Class B Interests  will bear  interest  during each Interest
    Accrual  Period  thereafter  at a per annum rate equal to (a) on or prior to
    the Optional  Termination Date, the least of (i) LIBOR plus 1.25% and 2.75%,
    respectively,  (ii) 16%,  and  (iii)  the WAC Cap or (b) after the  Optional
    Termination   Date,   the  least  of  (i)  LIBOR  plus  1.875%  and  4.125%,
    respectively, (ii) 16%, and (iii) the WAC Cap.

(3) The Class X Interest has an initial principal balance of $7,614,113,  but it
    will not accrue  interest  on such  balance  but will  accrue  interest on a
    notional  principal  balance.  As of any  Distribution  Date,  the  Class  X
    Interest shall have a notional  principal  balance equal to the aggregate of
    the principal  balances of the Lower Tier Regular  Interests as of the first
    day of the related  Interest  Accrual  Period.  With respect to any Interest
    Accrual Period,  the Class X Interest shall bear interest at a rate equal to
    the  excess,  if any,  of the WAC Cap over the product of (i) 2 and (ii) the
    weighted average Pass-Through Rate of the Lower Tier REMIC Interests,  where
    the LT Accrual Class is subject to a cap equal to zero and each LT Accretion
    Directed  Class is  subject to a cap equal to the  Pass-Through  Rate on its
    Corresponding Class. With respect to any Distribution Date, interest that so
    accrues on the notional  principal  balance of the Class X Interest shall be
    deferred in an amount  equal to any increase in the  Subordinated  Amount on
    such  Distribution  Date.  Such  deferred  interest  shall not  itself  bear
    interest.

(4) The Class UT-R Interest is the sole class of residual  interest in the Upper
    Tier REMIC. The Class UT-R Interest does not have an interest rate.

(5) Each of these  Certificates  will  represent  not only the  ownership of the
    Corresponding  Class of Upper Tier  Regular  Interest  but also the right to
    receive  payments  from the Excess  Reserve  Fund  Account in respect of any
    Basis Risk  CarryForward  Amounts.  For  federal  income tax  purposes,  the
    Trustee will treat a Certificateholder's  right to receive payments from the
    Excess  Reserve Fund Account as payments  made  pursuant to an interest rate
    cap contract written by the Class X Certificateholder.

                  The minimum denomination for each Class of Certificates, other
than the Class P, Class R and the Class X  Certificates,  will be  $25,000.  The
Class  P,  Class R and the  Class X  Certificates  will  each  represent  a 100%
Percentage Interest in such class.

                  Set forth below are designations of Classes of Certificates to
the categories used herein:

<TABLE>
<S>                                         <C>
Book-Entry Certificates.................    All Classes of Certificates other than the Physical
                                            Certificates.

Subordinated Certificates...............    Class M and Class B Certificates.

Delay Certificates......................    None.

ERISA-Restricted Certificates...........    Class R Certificates, Class P Certificate and Class X
                                            Certificate; any certificate with a rating below the lowest
</TABLE>

                                       3
<PAGE>

<TABLE>
<S>                                         <C>
                                            applicable permitted rating under the Underwriters'
                                            Exemption.

Floating Rate Certificates..............    Class A and Subordinated Certificates.

LIBOR Certificates......................    Class A and Subordinated Certificates.

Non-Delay Certificates..................    Class A, Class X and Subordinated Certificates.

Offered Certificates....................    All Classes of Certificates other than the Private Certificates.

Physical Certificates...................    Class P, Class X and Class R Certificates.

Private Certificates....................    Class P, Class X and Class R Certificates.

Rating Agencies.........................    Moody's, Fitch, Inc. and Standard & Poor's.

Regular Certificates....................    All Classes of Certificates other than the Class P and Class R
                                            Certificates.

Residual Certificates...................    Class R Certificates.
</TABLE>

                                       4
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

                  Whenever  used in this  Agreement,  the  following  words  and
phrases,  unless  the  context  otherwise  requires,  shall  have the  following
meanings:

                  60+ DAY  DELINQUENT  LOAN:  Each Mortgage Loan with respect to
which any portion of a Scheduled Payment is, as of the last day of the prior Due
Period, two months or more past due (without giving effect to any grace period),
each Mortgage Loan in  foreclosure,  all REO Property and each Mortgage Loan for
which the Mortgagor has filed for bankruptcy.

                  ACCEPTED  SERVICING  PRACTICES:  With  respect to any Mortgage
Loan,  those  mortgage  servicing  practices  set forth in Section  3.01 of this
Agreement.

                  ACCOUNT:   Any  of  the  Capitalized   Interest  Account,  the
Collection  Account,  the Simple Interest Excess  Sub-Account,  the Distribution
Account,  any Escrow  Account,  the Excess  Reserve  Fund  Account,  the Class A
Insurance Payment Account or the Pre-Funding  Account.  Each Account shall be an
Eligible Account.

                  ACCRUED CERTIFICATE INTEREST DISTRIBUTION AMOUNT: With respect
to any Distribution Date for each Class of Certificates  (other than the Class X
Certificate), the amount of interest accrued during the related Interest Accrual
Period at the  applicable  Pass-Through  Rate on the related  Class  Certificate
Balance  immediately prior to such Distribution Date, as reduced by such Class's
share of Net Prepayment  Interest  Shortfalls and Relief Act Interest Shortfalls
for the related Due Period allocated to such Class pursuant to Section 4.02.

                  ADDITION NOTICE: A written notice from the Unaffiliated Seller
to the Trustee, the Rating Agencies and the Class A Certificate Insurer that the
Unaffiliated Seller desires to make a Subsequent Transfer.

                  ADJUSTABLE   RATE  MORTGAGE  LOAN:  A  Mortgage  Loan  bearing
interest at an adjustable rate.

                  ADJUSTED  MORTGAGE  RATE:  As to each Mortgage Loan and at any
time, the per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.

                  ADJUSTED NET MORTGAGE  RATE:  As to each  Mortgage Loan and at
any time,  the per annum rate equal to the  Mortgage  Rate less the  Expense Fee
Rate.

                  ADJUSTMENT  DATE: As to any Mortgage  Loan, the first Due Date
on which the related  Mortgage Rate adjusts as set forth in the related Mortgage
Note and each Due Date  thereafter  on which the  Mortgage  Rate  adjusts as set
forth in the related Mortgage Note.

                  ADVANCES:   Collectively,   the  P&I  Advances  and  Servicing
Advances.

                  ADVANCE FACILITY:  As defined in Section 3.27.

                                       5
<PAGE>

                  ADVANCE FACILITY TRUSTEE:  As defined in Section 3.27.

                  ADVANCE REIMBURSEMENT AMOUNT:  As defined in Section 3.27.

                  ADVANCING PERSON:  As defined in Section 3.27.

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

                  AGREEMENT:  This  Pooling  and  Servicing  Agreement  and  all
amendments or supplements hereto.

                  AMOUNT HELD FOR FUTURE DISTRIBUTION: As to the Certificates on
any Distribution  Date, the aggregate  amount held in the Collection  Account at
the close of  business  on the  related  Determination  Date on  account  of (i)
Principal  Prepayments and  Liquidation  Proceeds on the Mortgage Loans received
after the end of the related  Prepayment Period and (ii) all Scheduled  Payments
on the Mortgage Loans due after the end of the related Due Period.

                  APPLIED REALIZED LOSS AMOUNT: With respect to any Distribution
Date, the amount,  if any, by which the aggregate Class  Certificate  Balance of
the Regular  Certificates after  distributions of principal on such Distribution
Date exceeds the aggregate  Stated  Principal  Balance of the Mortgage Loans for
such Distribution Date.

                  APPRAISED  VALUE:  The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.

                  ASSIGNMENT  AND  RECOGNITION  AGREEMENT:  The  BNC  Assignment
Agreement,  the CIT Assignment Agreement,  the IFC Assignment Agreement,  the NC
Assignment Agreement or the Superior Assignment Agreement, as applicable.

                  ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage,  notice
of  transfer  or  equivalent  instrument  in  recordable  form,  (other than the
assignee's  name and recording  information  not yet returned from the recording
office), reflecting the sale of the Mortgage to the Trustee.

                  BALLOON  LOAN:  Any Mortgage Loan that provided on the date of
origination for an amortization  schedule  extending  beyond its stated maturity
date.

                  BASIC  PRINCIPAL  DISTRIBUTION  AMOUNT:  With  respect  to any
Distribution  Date, the excess of (i) the Principal  Remittance  Amount for such
Distribution  Date over (ii) the Excess  Subordinated  Amount,  if any, for such
Distribution Date.

                  BASIS RISK CARRYFORWARD  AMOUNT: With respect to each Class of
Regular  Certificates,  as of any  Distribution  Date, the sum of (A) if on such
Distribution Date the Pass-Through Rate for any Class of Regular Certificates is
based upon the WAC Cap, the excess

                                       6
<PAGE>

of (i) the amount of interest  such Class of  Certificates  would  otherwise  be
entitled to receive on such  Distribution  Date had such rate been calculated as
the sum of  LIBOR  and the  applicable  Pass-Through  Margin  on such  Class  of
Certificates  for such  Distribution  Date,  up to 16% over  (ii) the  amount of
interest  payable on such Class of  Certificates  calculated  at the WAC Cap for
such Distribution Date and (B) the Basis Risk CarryForward Amount for such Class
of  Certificates  for all  previous  Distribution  Dates  not  previously  paid,
together  with  interest  thereon  at a rate  equal to the sum of LIBOR  and the
applicable   Pass-Through  Margin  for  such  Class  of  Certificates  for  such
Distribution Date, up to 16%.

                  BASIS RISK PAYMENT: For any Distribution Date, an amount equal
to any Basis Risk CarryForward Amount,  provided,  however, that with respect to
any  Distribution   Date,  the  payment  cannot  exceed  the  amounts  otherwise
distributable on the Class X Certificates.

                  BEST'S:  Best's Key Rating Guide, as the same shall be amended
from time to time.

                  BNC:  BNC Mortgage, Inc., a Delaware corporation.

                  BNC  ASSIGNMENT  AGREEMENT:  The  Assignment  and  Recognition
Agreement, dated as of April 30, 2002, by and among the Unaffiliated Seller, the
Depositor and BNC, and each other  Assignment and  Recognition  Agreement by and
among the  Unaffiliated  Seller,  the Depositor  and BNC in connection  with any
Subsequent Transfer of BNC Mortgage Loans.

                  BNC MORTGAGE LOAN: A Mortgage Loan which was acquired from BNC
by the Unaffiliated Seller pursuant to the BNC Purchase Agreement, and which has
been acquired by the Trust Fund.

                  BNC  PURCHASE  AGREEMENT:   The  Mortgage  Loan  Purchase  and
Warranties  Agreement,  dated  as of  February  26,  2002,  by and  between  the
Unaffiliated Seller and BNC.

                  BOOK-ENTRY  CERTIFICATES:  As  specified  in  the  Preliminary
Statement.

                  BUSINESS  DAY: Any day other than (i)  Saturday or Sunday,  or
(ii) a day on which banking and savings and loan institutions,  in (a) the State
of New York,  New  Jersey  and  Florida,  (b) the state in which the  Servicer's
servicing  operations  are  located,  or (c) the  State in which  the  Trustee's
operations are located, are authorized or obligated by law or executive order to
be closed.

                  CAPITALIZED  INTEREST  ACCOUNT:  The separate Eligible Account
created and maintained by the Trustee pursuant to Section 3.07(e) in the name of
the Trustee for the benefit of the  Offered  Certificateholders  and  designated
"Deutsche Bank National Trust  Company,  in trust for registered  holders of CDC
Mortgage  Capital Trust 2002-HE1,  Mortgage  Pass-Through  Certificates,  Series
2002-HE1".

                  CAPITALIZED   INTEREST   REQUIREMENT:   With  respect  to  the
Distribution  Dates  occurring in May 2002, June 2002 and July 2002, the excess,
if any, of (x) the Accrued  Certificate  Interest  Distribution  Amounts for all
classes of the Offered  Certificates for such Distribution Date over (y) the sum
of (i) all scheduled  installments of interest (net of the related

                                       7
<PAGE>

Expense Fees) due on the Mortgage  Loans in the related Due Period plus (ii) the
Pre-Funding  Earnings available for deposit to the Distribution  Account on such
Distribution Date. In no event will the Capitalized Interest Requirement be less
than zero.

                  CERTIFICATE:  Any  one of  the  Certificates  executed  by the
Trustee in substantially the forms attached hereto as exhibits.

                  CERTIFICATE   BALANCE:   With   respect   to  any   Class   of
Certificates,  other  than the Class R  Certificate,  at any date,  the  maximum
dollar  amount  of  principal  to which  the  Holder  thereof  is then  entitled
hereunder,  such  amount  being  equal to the  Denomination  thereof  minus  all
distributions of principal  previously made with respect thereto and in the case
of any Subordinated  Certificates,  reduced by any Applied Realized Loss Amounts
applicable to such Class of Subordinated  Certificates.  The Class R Certificate
has no Certificate Balance.

                  CERTIFICATE INSURANCE POLICY: The Financial Guaranty Insurance
Policy No. 51276-N,  and all endorsements thereto dated the Closing Date, issued
by  the  Class  A   Certificate   Insurer   for  the  benefit  of  the  Class  A
Certificateholders.

                  CERTIFICATE  OWNER: With respect to a Book-Entry  Certificate,
the Person who is the beneficial owner of such Book-Entry Certificate.

                  CERTIFICATE  REGISTER:  The  register  maintained  pursuant to
Section 5.02.

                  CERTIFICATEHOLDER  OR  HOLDER:  The  person  in  whose  name a
Certificate is registered in the Certificate  Register,  except that, solely for
the purpose of giving any consent  pursuant to this  Agreement,  any Certificate
registered in the name of the Depositor or any affiliate of the Depositor  shall
be deemed not to be Outstanding and the Percentage  Interest  evidenced  thereby
shall not be taken into account in determining  whether the requisite  amount of
Percentage  Interests  necessary  to  effect  such  consent  has been  obtained;
PROVIDED,  HOWEVER,  that if any such Person (including the Depositor) owns 100%
of  the  Percentage  Interests  evidenced  by  a  Class  of  Certificates,  such
Certificates  shall be deemed to be  Outstanding  for purposes of any  provision
hereof that requires the consent of the Holders of  Certificates of a particular
Class as a  condition  to the taking of any  action  hereunder.  The  Trustee is
entitled  to  rely  conclusively  on a  certification  of the  Depositor  or any
affiliate of the Depositor in determining  which  Certificates are registered in
the name of an affiliate of the Depositor.

                  CIT:  Collectively,  The CIT Group/Consumer  Finance,  Inc., a
Delaware  corporation,  The CIT  Group/Consumer  Finance,  Inc. (NY), a New York
corporation,   and  The  CIT  Group/Consumer  Finance,  Inc.  (TN),  a  Delaware
corporation.

                  CIT  ASSIGNMENT  AGREEMENT:  The  Assignment  and  Recognition
Agreement, dated as of April 30, 2002, by and among the Unaffiliated Seller, the
Depositor and CIT, and each other  Assignment and  Recognition  Agreement by and
among the  Unaffiliated  Seller,  the Depositor  and CIT in connection  with any
Subsequent Transfer of CIT Mortgage Loans.

                  CIT MORTGAGE LOAN: A Mortgage Loan which was acquired from CIT
by the Unaffiliated Seller pursuant to the CIT Purchase Agreement, and which has
been acquired by the Trust Fund.

                                       8
<PAGE>

                  CIT  PURCHASE  AGREEMENT:   The  Mortgage  Loan  Purchase  and
Warranties  Agreement,  dated  as of  February  23,  2002,  by and  between  the
Unaffiliated Seller and CIT.

                  CLASS: All Certificates  bearing the same class designation as
set forth in the Preliminary Statement.

                  CLASS A  CERTIFICATE  INSURER:  Financial  Security  Assurance
Inc., a monoline stock insurance company organized and created under the laws of
the State of New York, and any successors thereto.

                  CLASS  A  CERTIFICATE  INSURER  DEFAULT:   The  existence  and
continuance of any of the following:

                  (a) the Class A Certificate  Insurer shall have failed to make
         a required payment when due under the Class A Insurance Policy;

                  (b) the Class A  Certificate  Insurer  shall  have (i) filed a
         petition or commenced  any case or  proceeding  under any  provision or
         chapter  of the  United  States  Bankruptcy  Code,  the New York  State
         Insurance  Law or any other  similar  federal or state law  relating to
         insolvency, bankruptcy, rehabilitation, liquidation, or reorganization,
         (ii) made a general  assignment  for the  benefit of its  creditors  or
         (iii) had an order  for  relief  entered  against  it under the  United
         States  Bankruptcy  Code, the New York State Insurance Law or any other
         similar  federal  or state  law  relating  to  insolvency,  bankruptcy,
         rehabilitation,  liquidation,  or  reorganization  that  is  final  and
         nonappealable; or

                  (c) a court of competent jurisdiction, the New York Department
         of Insurance or any other  competent  regulatory  authority  shall have
         entered  a final  and  nonappealable  order,  judgment  or  decree  (i)
         appointing a custodian, trustee, agent, or receiver for the Certificate
         Insurer  or for all or any  material  portion of its  property  or (ii)
         authorizing the taking of possession by a custodian, trustee, agent, or
         receiver of the Certificate  Insurer or of all or any material  portion
         of its property.

                  CLASS A  CERTIFICATES:  All  Certificates  bearing  the  class
designation of "Class A Certificates".

                  CLASS A DEFICIENCY:  With respect to any Distribution Date and
the Class A Certificates, an amount equal to the excess of the sum of:

                  (i)      the  excess of (x) the Accrued  Certificate  Interest
Distribution Amount for the Class A Certificates on such Distribution Date, over
(y) the Interest Amount Available,  less the Premium Amount and the Trustee Fee,
in each case for such Distribution Date; plus

                  (ii)     the Class A Principal Parity Amount, if any, for such
Distribution Date.

                                       9
<PAGE>

                  CLASS A  INSURANCE  PAYMENT  ACCOUNT:  The  separate  Eligible
Account created and maintained by the Trustee pursuant to Section 4.05(c) in the
name of the Trustee for the  benefit of the Class A  Certificateholders  and the
Class A Certificate  Insurer,  and  designated  "Deutsche  Bank  National  Trust
Company,  in trust for  Financial  Security  Assurance  Inc. and the  registered
holders  of  CDC  Mortgage   Capital  Trust  2002-HE1,   Mortgage   Pass-Through
Certificates, Series 2002-HE1."

                  CLASS A PRINCIPAL  DISTRIBUTION  AMOUNT:  With  respect to any
Distribution Date, the excess of (i) the aggregate Class Certificate Balances of
the Class A Certificates  immediately  prior to such Distribution Date over (ii)
the lesser of (A)  77.00%,  of the  aggregate  Stated  Principal  Balance of the
Mortgage Loans for that Distribution Date and (B) the Stated Principal  Balances
of the Mortgage Loans for that Distribution Date minus the Floor Amount.

                  CLASS  A  PRINCIPAL   PARITY  AMOUNT:   With  respect  to  any
Distribution  Date, the excess,  if any, of (i) the aggregate Class  Certificate
Balance of the Class A Certificates on that Distribution Date, after taking into
account any reduction  therein on such Distribution Date from sources other than
the Class A  Insurance  Policy  over (ii) the sum of the Pool  Stated  Principal
Balance  plus the  Pre-Funding  Amount,  as of the last day of the  related  Due
Period.

                  CLASS B  CERTIFICATES:  All  Certificates  bearing  the  class
designation of "Class B Certificates".

                  CLASS B PRINCIPAL  DISTRIBUTION  AMOUNT:  With  respect to any
Distribution  Date,  the  excess  of (i)  the  sum of (A)  the  aggregate  Class
Certificate  Balances of the Class A  Certificates  (after  taking into  account
distribution of the Class A Principal  Distribution  Amount on such Distribution
Date),  (B) the Class  Certificate  Balance of the Class M  Certificates  (after
taking into account distribution of the Class M Principal Distribution Amount on
such Distribution  Date), and (C) the Class  Certificate  Balance of the Class B
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 97.00% of the aggregate Stated  Principal  Balance of the Mortgage Loans for
that  Distribution  Date and (B) the Stated  Principal  Balances of the Mortgage
Loans for that Distribution Date MINUS the Floor Amount; PROVIDED, HOWEVER, that
with respect to any Distribution Date on which the Class Certificate Balances of
the Class A and Class M  Certificates  have been  reduced  to zero,  the Class B
Principal Distribution Amount is the lesser of (x) the Class Certificate Balance
of the Class B Certificates and (y) the Principal Distribution Amount.

                  CLASS CERTIFICATE BALANCE: With respect to any Class and as to
any date of  determination,  the  aggregate of the  Certificate  Balances of all
Certificates of such Class as of such date.

                  CLASS M  CERTIFICATES:  All  Certificates  bearing  the  class
designation of "Class M Certificates".

                  CLASS M PRINCIPAL  DISTRIBUTION  AMOUNT:  With  respect to any
Distribution  Date,  the  excess  of (i)  the  sum of (A)  the  aggregate  Class
Certificate  Balances of the Class A  Certificates  (after  taking into  account
distribution of the Class A Principal  Distribution  Amount on such Distribution
Date),  and  (B) the  Class  Certificate  Balance  of the  Class M  Certificates

                                       10
<PAGE>

immediately  prior to such  Distribution Date over (ii) the lesser of (A) 87.00%
of the  aggregate  Stated  Principal  Balance  of the  Mortgage  Loans  for that
Distribution  Date and (B) the Stated  Principal  Balances of the Mortgage Loans
for that Distribution Date minus the Floor Amount.

                  CLASS P  CERTIFICATES:  All  Certificates  bearing  the  class
designation of "Class P Certificates".

                  CLASS R  CERTIFICATES:  All  Certificates  bearing  the  class
designation of "Class R Certificates".

                  CLASS X CERTIFICATES: All Certificates bearing the designation
of "Class X Certificates".

                  CLASS X DISTRIBUTABLE  AMOUNT:  On any Distribution  Date, the
sum of (i) the  amount  of  interest  that has  accrued  on the  Class X Regular
Interest  and not  applied  as an Extra  Principal  Distribution  Amount on such
Distribution Date, plus any such accrued interest  remaining  undistributed from
prior  Distribution  Dates, and (ii) any portion of the principal balance of the
Class X Regular  Interest which is  distributable  as a Subordination  Reduction
Amount, less any amounts paid as a Basis Risk Payment.

                  CLOSING DATE:  April 30, 2002.

                  CODE:  The  Internal  Revenue  Code  of  1986,  including  any
successor or amendatory provisions.

                  COLLECTION ACCOUNT:  As defined in Section 3.10(a).

                  COMPENSATING  INTEREST:  For any Distribution Date, the lesser
of (a) the Prepayment Interest Shortfall, if any, for the Distribution Date, and
(b)  the  amount  of  the  Servicing  Fee  payable  to  the  Servicer  for  such
Distribution Date.

                  CONDEMNATION PROCEEDS: All awards of settlements in respect of
a Mortgaged  Property,  whether  permanent or temporary,  partial or entire,  by
exercise of the power of eminent domain or condemnation.

                  CORPORATE TRUST OFFICE:  The designated  office of the Trustee
in the State of California at which at any particular  time its corporate  trust
business  with respect to this  Agreement is  administered,  which office at the
date of the  execution  of this  Agreement  is located  at 1761 East St.  Andrew
Place, Santa Ana, California 92705, Attn: Trust Administration-DC02M1, facsimile
no.  (714)   247-6478  and  which  is  the  address  to  which  notices  to  and
correspondence with the Trustee should be directed.

                  CORRESPONDING  CLASS:  The  class of  interests  in any  REMIC
created  under this  Agreement  that  correspond  to the Class of  interests  in
another such REMIC or to a Class of Certificates in the manner set out below:

                                       11
<PAGE>

              LOWER TIER               UPPER TIER            CORRESPONDING
           CLASS DESIGNATION            INTEREST              CERTIFICATE
          -------------------        --------------         ----------------
              Class LT-A                 Class A                Class A
              Class LT-M                 Class M                Class M
              Class LT-B                 Class B                Class B

                  CUMULATIVE LOSS  PERCENTAGE:  With respect to any Distribution
Date,  the  percentage  equivalent of a fraction,  the numerator of which is the
aggregate amount of Applied Realized Loss Amounts incurred from the Cut-off Date
to the last day of the preceding  calendar month and the denominator of which is
the Scheduled Principal Balance of the Mortgage Loans as of the Cut-off Date.

                  CUSTODIAL  FILE:  With respect to each Mortgage Loan, the file
retained by the Trustee consisting of items (i) - (viii) of Section 2.01(c).

                  CUT-OFF  DATE:  With  respect to the Initial  Mortgage  Loans,
April 1, 2002,  and with respect to each  Subsequent  Mortgage Loan, the related
Subsequent Cut-off Date.

                  CUT-OFF DATE POOL  PRINCIPAL  BALANCE:  The  aggregate  Stated
Principal Balances of all Mortgage Loans as of the Cut-off Date.

                  CUT-OFF DATE PRINCIPAL  BALANCE:  As to any Mortgage Loan, the
Stated  Principal  Balance  thereof as of the close of  business  on the Cut-off
Date.

                  DATA  TAPE  INFORMATION:   The  information  provided  by  the
Unaffiliated  Seller  as of April 1,  2002 to the  Depositor  setting  forth the
following  information  with respect to each Mortgage Loan: (1) the  Mortgagor's
name; (2) as to each Mortgage Loan,  the Scheduled  Principal  Balance as of the
Cut-off Date;  (3) the Mortgage Rate Cap; (4) the Index;  (5) a code  indicating
whether the  Mortgaged  Property is  owner-occupied;  (6) the type of  Mortgaged
Property;  (7) the  first  date on  which  the  Monthly  Payment  was due on the
Mortgage Loan and, if such date is not consistent with the Due Date currently in
effect,  such Due Date;  (8) the "paid through date" based on payments  received
from the related  Mortgagor;  (9) the original  principal amount of the Mortgage
Loan; (10) with respect to Adjustable Rate Mortgage Loans,  the Maximum Mortgage
Rate; (11) the type of Mortgage Loan (I.E., fixed, adjustable, simple interest);
(12) a code  indicating the purpose of the loan (I.E.,  purchase,  rate and term
refinance,  equity take-out refinance); (13) a code indicating the documentation
style   (I.E.,   full,   asset   verification,   income   verification   and  no
documentation);  (14) the credit risk score (FICO  score);  (15) the loan credit
grade  classification (as described in the Underwriting  Guidelines);  (16) with
respect to each Adjustable  Rate Mortgage Loan, the Minimum  Mortgage Rate; (17)
the Mortgage  Rate at  origination;  (18) with respect to each  Adjustable  Rate
Mortgage Loan, the first Adjustment Date immediately following the Cut-off Date;
(19) the Value of the Mortgaged  Property;  (20) a code  indicating  the type of
Prepayment  Charges  applicable  to such  Mortgage  Loan,  if any; and (21) with
respect to each Adjustable  Rate Mortgage Loan, the Periodic  Mortgage Rate Cap.
With respect to the Mortgage Loans in the aggregate,  the Data Tape  Information
shall set forth the  following  information,  as of the  Cut-off  Date:  (1) the
number of  Mortgage  Loans;  (2) the  current  aggregate  outstanding  principal
balance of the Mortgage  Loans;

                                       12
<PAGE>

(3) the  weighted  average  Mortgage  Rate of the  Mortgage  Loans;  and (4) the
weighted average maturity of the Mortgage Loans.

                  DEBT SERVICE  REDUCTION:  With respect to any Mortgage Loan, a
reduction  by a court  of  competent  jurisdiction  in a  proceeding  under  the
Bankruptcy  Code in the  Scheduled  Payment for such  Mortgage Loan which became
final and  non-appealable,  except such a reduction  resulting  from a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.

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

                  DEFINITIVE  CERTIFICATES:   Any  Certificate  evidenced  by  a
Physical  Certificate  and  any  Certificate  issued  in  lieu  of a  Book-Entry
Certificate pursuant to Section 5.02(e).

                  DELAY CERTIFICATES: As specified in the Preliminary Statement.

                  DELETED MORTGAGE LOAN:  As defined in Section 2.03.

                  DELINQUENCY TRIGGER EVENT: With respect to a Distribution Date
after the Stepdown Date, the event that is in effect if the quotient  (expressed
as a  percentage)  of (x) the three month  rolling  daily  average of the Stated
Principal  Balance of 60+ Day Delinquent Loans as of the last day of the related
Due Period,  over (y) the Pool Stated Principal Balance of the Mortgage Loans as
of the last day of the  related  Due Period  exceeds  67% of the prior  period's
Senior Enhancement Percentage.

                  DELINQUENT:  A mortgage  loan is  "Delinquent"  if any monthly
payment  due on a due date is not  made by the  close  of  business  on the next
scheduled  due date for that  mortgage  loan  (including  all Mortgage  Loans in
foreclosure,  Mortgage Loans in respect of REO Properties and Mortgage Loans for
which the related  Mortgagor  has declared  bankruptcy).  A mortgage loan is "30
days  Delinquent"  if the monthly  payment has not been received by the close of
business on the corresponding day of the month immediately  succeeding the month
in which that  monthly  payment was due or, if there was no  corresponding  date
(E.G.,  as when a 30-day  month  follows a 31-day month in which the payment was
due on the 31st  day of that  month),  then on the last day of that  immediately
preceding   month;   and  similarly  for  "60  days  Delinquent"  and  "90  days
Delinquent," etc.

                  DELIVERY DATE: With respect to the Initial Mortgage Loans, the
Closing  Date;  with  respect to any  Subsequent  Mortgage  Loans,  the  related
Subsequent Transfer Date therefor.

                  DENOMINATION: With respect to each Certificate, the amount set
forth  on  the  face  thereof  as  the  "Initial  Certificate  Balance  of  this
Certificate" or the Percentage Interest appearing on the face thereof.

                  DEPOSITOR:  Morgan  Stanley  ABS  Capital I Inc.,  a  Delaware
corporation, or its successor in interest.

                                       13
<PAGE>

                  DEPOSITORY:  The initial  Depository  shall be The  Depository
Trust Company,  the nominee of which is CEDE & Co., as the registered  Holder of
the Book-Entry  Certificates.  The Depository  shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code of
the State of New York.

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

                  DETERMINATION  DATE: With respect to each Remittance Date, the
Business Day immediately preceding such Remittance Date.

                  DISTRIBUTION  ACCOUNT:  The separate  Eligible Account created
and  maintained  by the Trustee  pursuant to Section  3.07(d) in the name of the
Trustee for the benefit of the  Certificateholders and designated "Deutsche Bank
National Trust Company,  in trust for registered holders of CDC Mortgage Capital
Trust 2002-HE1, Mortgage Pass-Through Certificates, Series 2002-HE1".

                  DISTRIBUTION  DATE:  The 25th day of each calendar month after
the initial issuance of the Certificates,  or if such day is not a Business Day,
the next succeeding Business Day, commencing in May 2002.

                  DOCUMENT  EXCEPTION  REPORT:  The report attached to Exhibit F
hereto.

                  DUE DATE: The day of the month on which the Scheduled  Payment
is due on a Mortgage Loan, exclusive of any days of grace.

                  DUE PERIOD: With respect to each Distribution Date, the period
commencing on the second day of the calendar month  preceding the month in which
such  Distribution Date occurs and ending on the first day of the calendar month
in which such Distribution Date occurs.

                  ELIGIBLE ACCOUNT:  Either (i) a demand account maintained with
an Eligible  Institution or (ii) a trust account or accounts  maintained  with a
federal or state chartered depository institution or trust company acting in its
fiduciary  capacity or (iii) any other account acceptable to each Rating Agency.
Eligible  Accounts may bear interest,  and may include,  if otherwise  qualified
under this definition, accounts maintained with the Trustee.

                  ELIGIBLE INSTITUTION:  A federal or state chartered depository
institution  or trust company,  which (x) with respect to any Eligible  Account,
the amounts on deposit in which will be held for 30 days or less, the commercial
paper,  short term debt obligations,  or other short-term  deposits of which are
rated at least A-1 by Fitch, A-1 by Standard & Poor's and "P-1" by Moody's (or a
comparable  rating if another  Rating  Agency is specified  by the  Depositor by
written  notice to the  Servicer  and the  Trustee)  or (y) with  respect to any
Eligible Account,  the amounts on deposit in which will be held for more than 30
days, the long-term  unsecured debt  obligations of which are rated at least AA-
by Fitch, AA- by Standard & Poor's and Aa3 by Moody's (or a comparable rating if
another  Rating  Agency is specified by the  Depositor by written  notice to the
Servicer and the Trustee).

                                       14
<PAGE>

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

                  ERISA-QUALIFYING   UNDERWRITING:   A  best   efforts  or  firm
commitment  underwriting  or private  placement that meets the  requirements  of
Prohibited  Transaction  Exemption 97-34, 62 Fed. Reg. 39021 (1997),  as amended
(or  any  successor  thereto),  or  any  substantially  similar   administrative
exemption granted by the U.S. Department of Labor.

                  ERISA-RESTRICTED  CERTIFICATE: As specified in the Preliminary
Statement.

                  ESCROW ACCOUNT:  The Eligible Account or Accounts  established
and maintained pursuant to Section 3.09(b).

                  ESCROW  PAYMENTS:  As  defined  in  Section  3.09(b)  of  this
Agreement.

                  EVENT OF DEFAULT:  As defined in Section 7.01.

                  EXCESS  RESERVE FUND ACCOUNT:  The separate  Eligible  Account
created and maintained by the Trustee  pursuant to Sections  3.07(b) and 3.07(c)
in the name of the Trustee for the benefit of the Offered Certificateholders and
designated  "Deutsche  Bank  National  Trust  Company,  in trust for  registered
holders  of  CDC  Mortgage   Capital  Trust  2002-HE1,   Mortgage   Pass-Through
Certificates, Series 2002-HE1".

                  EXCESS  SUBORDINATED  AMOUNT: With respect to any Distribution
Date, the excess,  if any, of (a) the Subordinated  Amount on such  Distribution
Date over (b) the Specified Subordinated Amount for such Distribution Date.

                  EXPENSE  FEES:  As to  each  Mortgage  Loan,  the  sum  of the
Servicing Fee and the Trustee Fee.

                  EXPENSE FEE RATE: As to each  Mortgage  Loan, a per annum rate
equal to the sum of the Servicing Fee Rate and the Trustee Fee Rate.

                  EXTRA PRINCIPAL  DISTRIBUTION  AMOUNT:  As of any Distribution
Date,  the  lesser of (x) the  related  Total  Monthly  Excess  Spread  for such
Distribution  Date and (y) the  Subordination  Deficiency for such  Distribution
Date.

                  FANNIE MAE: The Federal National Mortgage Association,  or any
successor thereto.

                  FANNIE  MAE  GUIDES:  The Fannie  Mae  Sellers'  Guide and the
Fannie Mae Servicers' Guide and all amendments or additions thereto.

                  FDIC:  The  Federal  Deposit  Insurance  Corporation,  or  any
successor thereto.

                  FDIC GUARANTY: The Amended Corporate Guaranty Agreement, dated
April 26, 2002, by the FDIC in favor of the Unaffiliated  Seller with respect to
the FDIC's limited guarantee of the Superior Mortgage Loans, which guarantee was
assigned to the Trustee pursuant to the FDIC consent, dated April 26, 2002.

                                       15
<PAGE>

                  FDIC GUARANTY CLAIM LOAN:  As defined in Section 2.03(d).

                  FDIC  GUARANTY  NOTICE  DATE:  The  earlier  to  occur  of (i)
February  21,  2005  and (ii) the  date on  which  the  FDIC  has  paid,  in the
aggregate,  an amount equal to 10% of the Cut-off Date Principal Balances of the
Superior Mortgage Loans pursuant to the terms of the FDIC Guaranty.

                  FDIC  GUARANTY  TERMINATION  DATE:  With  respect  to any FDIC
Guaranty Claim Loan, three years from the applicable FDIC Notice Date.

                  FDIC NOTICE DATE:  As defined in Section 2.03(d).

                  FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

                  FINAL CERTIFICATION:  A certification submitted by the Trustee
in substantially the form of Exhibit F hereto.

                  FINAL  RECOVERY  DETERMINATION:  With respect to any defaulted
Mortgage  Loan or any REO Property  (other than a Mortgage  Loan or REO Property
purchased by an Originator as  contemplated  by the Assignment  and  Recognition
Agreements,  a determination  made by the Servicer that all Insurance  Proceeds,
Liquidation Proceeds and other payments or recoveries which the Servicer, in its
reasonable  good faith  judgment,  expects to be finally  recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared by
a Servicing Officer, of each Final Recovery Determination made thereby.

                  FINAL  SCHEDULED   DISTRIBUTION   DATE:  The  Final  Scheduled
Distribution  Date for each Class of  Certificates is the  Distribution  Date in
each of the following months:

                                                             FINAL SCHEDULED
                                                            DISTRIBUTION DATE
                                                           -------------------
Class A Certificates.................................       January 25, 2033
Class M Certificates.................................       January 25, 2033
Class B Certificates.................................       January 25, 2033
Class X Certificates.................................       January 25, 2033
Class P Certificates.................................       January 25, 2033
Class R Certificates.................................       January 25, 2033

                  FITCH:  Fitch,  Inc. If Fitch is designated as a Rating Agency
in the Preliminary  Statement,  for purposes of Section 10.05(b) the address for
notices to Fitch shall be Fitch,  Inc., One State St. Plaza,  New York, New York
10004,  Attention:  Residential Mortgage Surveillance Group - Morgan Stanley ABS
Capital I Inc. 2002-HE1, or such other address as Fitch may hereafter furnish to
the Depositor and the Servicer

                  FIXED RATE MORTGAGE LOAN: A Mortgage Loan bearing  interest at
a fixed rate.

                  FLOATING RATE  CERTIFICATES:  As specified in the  Preliminary
Statement.

                                       16
<PAGE>

                  FLOOR AMOUNT:  An amount equal to the product of (x) 0.50% and
(y) the Maximum Pool Principal Balance.

                  GROSS MARGIN:  With respect to each  Adjustable  Rate Mortgage
Loan, the fixed  percentage  amount set forth in the related Mortgage Note to be
added to the applicable Index to determine the Mortgage Rate.

                  IFC:  IMPAC Funding Corporation, a California corporation.

                  IFC  ASSIGNMENT  AGREEMENT:  The  Assignment  and  Recognition
Agreement, dated as of April 30, 2002, by and among the Unaffiliated Seller, the
Depositor and IFC, and each other  Assignment and  Recognition  Agreement by and
among the  Unaffiliated  Seller,  the Depositor  and IFC in connection  with any
Subsequent Transfer of IFC Mortgage Loans.

                  IFC MORTGAGE LOAN: A Mortgage Loan which was acquired from IFC
by the Unaffiliated Seller pursuant to the IFC Purchase Agreement, and which has
been acquired by the Trust Fund.

                  IFC  PURCHASE  AGREEMENT:   The  Mortgage  Loan  Purchase  and
Warranties Agreement,  dated as of July 10, 2001 by and between the Unaffiliated
Seller and IFC.

                  I&I  PAYMENTS:  Payments due and owing under the Insurance and
Indemnity Agreement.

                  INITIAL CUT-OFF DATE:  The close of business on April 1, 2002.

                  INITIAL  MORTGAGE  LOANS:  The Mortgage Loans delivered by the
Depositor on the Startup Date.

                  INSURANCE AND INDEMNITY AGREEMENT: The Insurance and Indemnity
Agreement dated as of April 1, 2002 among the Class A Certificate  Insurer,  the
Servicer  and the  Unaffiliated  Seller,  as such  agreement  may be  amended or
supplemented in accordance with the provisions thereof.

                  INSURED PAYMENT:  With respect to any  Distribution  Date, the
Class A Deficiency for that Distribution Date.

                  INDEX:  As to each  Adjustable  Rate Mortgage  Loan, the index
from time to time in effect for the adjustment of the Mortgage Rate set forth as
such on the related Mortgage Note.

                  INSURANCE  POLICY:  With respect to any Mortgage Loan included
in the Trust Fund, any insurance  policy,  including all riders and endorsements
thereto  in  effect,  including  any  replacement  policy  or  policies  for any
Insurance Policies.

                  INSURANCE  PROCEEDS:  With  respect  to  each  Mortgage  Loan,
proceeds  of  insurance  policies  insuring  the  Mortgage  Loan or the  related
Mortgaged Property.

                                       17
<PAGE>

                  INTEREST  ACCRUAL  PERIOD:  With  respect  to  each  Class  of
Non-Delay  Certificates  and the  Corresponding  Class  of  Lower  Tier  Regular
Interests and any  Distribution  Date, the period  commencing on the 25th day of
the immediately  preceding month and ending on the 24th day of the current month
(or in the case of the first  Distribution  Date,  the period from and including
the Closing Date to but excluding such first Distribution Date). For purposes of
computing  interest  accruals  on each  Class of  Non-Delay  Certificates,  each
Interest  Accrual  Period has the  actual  number of days in such month and each
year is assumed to have 360 days.

                  INTEREST AMOUNT  AVAILABLE:  With respect to any  Distribution
Date, the sum of (i) the Interest Remittance Amount received by the Trustee from
the Servicer on the related Remittance Date, (ii) the Pre-Funding  Earnings,  if
any,  deposited to the Distribution  Account on such Distribution Date and (iii)
the Capitalized  Interest  Requirement,  if any,  deposited to the  Distribution
Account on such Distribution Date.

                  INTEREST RATE ADJUSTMENT DATE: With respect to each Adjustable
Rate Mortgage  Loan,  the date,  specified in the related  Mortgage Note and the
Mortgage Loan Schedule, on which the Mortgage Rate is adjusted.

                  INTEREST  REMITTANCE  AMOUNT:  With respect to any  Remittance
Date, the sum, without duplication, of:

                  (i)      all scheduled installments  of  interest  due  on the
         Mortgage  Loans  during the  related  Due  Period  (other  than  Simple
         Interest Excess, if any) and received or advanced by the Servicer on or
         prior to the related Remittance Date;

                  (ii)     Compensating  Interest  paid by the  Servicer on such
         Remittance Date;

                  (iii)    the  interest component  of all related  Substitution
                  Adjustment Amounts and Repurchase Prices;

                  (iv)     the  interest component of all Condemnation Proceeds,
         Insurance  Proceeds and Liquidation  Proceeds  received by the Servicer
         during the related  Prepayment Period (in each case, net (but not to be
         reduced  below zero) of  unreimbursed  expenses  incurred in connection
         with a liquidation or foreclosure and unreimbursed Advances, if any);

                  (v)      any amounts withdrawn from the Simple Interest Excess
         Sub-Account  to pay interest on the  Certificates  with respect to such
         Remittance Date; and

                  (vi)     the  interest   component  of  the  proceeds  of  any
         termination of the Trust Fund.

REDUCED by the Servicing  Fee for the related Due Period,  together with amounts
in reimbursement for Advances previously made with respect to the Mortgage Loans
and other amounts as to which the Servicer is entitled to be reimbursed pursuant
to the Agreement.

                  INVESTMENT ACCOUNT:  As defined in Section 3.12(a).

                                       18
<PAGE>

                  LATE  COLLECTIONS:  With respect to any Mortgage  Loan and any
Due  Period,   all  amounts  received   subsequent  to  the  Determination  Date
immediately  following  such Due  Period,  whether as late  payments  of Monthly
Payments or as Insurance  Proceeds,  Liquidation  Proceeds or  otherwise,  which
represent late payments or collections of principal and/or interest due (without
regard to any  acceleration of payments under the related  Mortgage and Mortgage
Note) but delinquent for such Due Period and not previously recovered.

                  LATE PAYMENT  RATE:  Has the meaning  ascribed  thereto in the
Insurance and Indemnity Agreement.

                  LIBOR:  With  respect to any Interest  Accrual  Period for the
LIBOR  Certificates,  the rate  determined  by the Trustee on the related  LIBOR
Determination  Date on the basis of the offered rate for one-month  U.S.  dollar
deposits  as such rate  appears on Telerate  Page 3750 as of 11:00 a.m.  (London
time) on such date;  provided that if such rate does not appear on Telerate Page
3750,  the rate for such  date will be  determined  on the basis of the rates at
which  one-month  U.S.  dollar  deposits are offered by the  Reference  Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank  market.  In such event, the Trustee will request the principal London
office of each of the Reference  Banks to provide a quotation of its rate. If at
least  two such  quotations  are  provided,  the rate for that  date will be the
arithmetic mean of the quotations  (rounded  upwards if necessary to the nearest
whole  multiple  of  1/16%).  If  fewer  than two  quotations  are  provided  as
requested,  the rate for that  date  will be the  arithmetic  mean of the  rates
quoted  by  major  banks  in  New  York  City,  selected  by  the  Servicer,  at
approximately  11:00 a.m. (New York City time) on such date for  one-month  U.S.
dollar loan to leading European banks.

                  LIBOR CERTIFICATES: As specified in the Preliminary Statement.

                  LIBOR DETERMINATION DATE: With respect to any Interest Accrual
Period  (other  than  the  initial   Interest  Accrual  Period)  for  the  LIBOR
Certificates,  the second London Business Day preceding the commencement of such
Interest Accrual Period.

                  LIQUIDATED  MORTGAGE  LOAN:  With respect to any  Distribution
Date,  a  defaulted  Mortgage  Loan  (including  any  REO  Property)  which  was
liquidated in the calendar month preceding the month of such  Distribution  Date
and as to which the Servicer has certified (in accordance  with this  Agreement)
that it has  received all amounts it expects to receive in  connection  with the
liquidation  of such Mortgage Loan  including  the final  disposition  of an REO
Property.

                  LIQUIDATION  EVENT:  With respect to any Mortgage Loan, any of
the  following  events:  (i) such  Mortgage  Loan is paid in full;  (ii) a Final
Recovery  Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is  removed  from  coverage  under  this  Agreement  by reason of its being
purchased,  sold or replaced  pursuant to or as  contemplated by this Agreement.
With respect to any REO Property,  either of the following  events:  (i) a Final
Recovery  Determination  is made as to  such  REO  Property;  or (ii)  such  REO
Property is removed from  coverage  under this  Agreement by reason of its being
purchased pursuant to this Agreement.

                                       19
<PAGE>

                  LIQUIDATION  PROCEEDS:  Cash received in  connection  with the
liquidation  of a defaulted  Mortgage  Loan,  whether  through  trustee's  sale,
foreclosure sale or otherwise.

                  LOAN-TO-VALUE RATIO or LTV: With respect to any Mortgage Loan,
the ratio  (expressed as a  percentage)  of the original  outstanding  principal
amount of the Mortgage Loan as of the Cut-off Date (unless otherwise indicated),
to  the  lesser  of  (a)  the  Appraised  Value  of the  Mortgaged  Property  at
origination, and (b) if the Mortgage Loan was made to finance the acquisition of
the related Mortgaged Property, the purchase price of the Mortgaged Property.

                  LONDON  BUSINESS DAY: Any day on which dealings in deposits of
United States dollars are transacted in the London interbank market.

                  LOSS TRIGGER EVENT: With respect to any Distribution Date, the
event that is in effect if the aggregate amount of Applied Realized Loss Amounts
incurred  since the  related  Cut-off  Date  through the last day of the related
Prepayment  Period divided by the Stated Principal Balance of the Mortgage Loans
as of the related Cut-off Date exceeds the applicable percentage as follows with
respect  to  such  Distribution  Date:  (a)  3.50%  commencing  with  the  first
Distribution  Date, plus an additional  1/12th of 1.75% for each month after May
2005 for Distribution Dates occurring from May 2005 to April 2006; (b) 5.25% for
the first month,  plus an additional  1/12th of 1.00% for each month  thereafter
for the Distribution  Dates occurring from May 2006 to April 2007; (c) 6.25% for
the first month,  plus an additional  1/12th of 0.75% for each month  thereafter
for Distribution  Dates occurring from May 2007 to April 2008; (d) 7.00% for the
first month,  plus an additional  1/12th of 0.25% for each month  thereafter for
Distribution  Dates  occurring  from May 2008 to April  2009;  and (e) 7.25% for
Distribution Dates occurring in May 2009 and thereafter.

                  LOWER TIER  REGULAR  INTEREST:  Each of the Class LT-A,  Class
LT-M, Class LT-B and Class LT-Accrual  Interests as described in the Preliminary
Statement.

                  LOWER TIER REMIC:  As described in the Preliminary Statement

                  MAXIMUM  MORTGAGE RATE:  With respect to each  Adjustable Rate
Mortgage Loan, a rate that (i) is set forth on the Data Tape  Information and in
the related  Mortgage  Note and (ii) is the maximum  interest  rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be increased  during the
lifetime of such Mortgage Loan.

                  MAXIMUM POOL PRINCIPAL BALANCE: The aggregate Stated Principal
Balances of all  Mortgage  Loans (both  Initial  Mortgage  Loans and  Subsequent
Mortgage Loans) as of their respective Cut-off Dates.

                  MINIMUM  MORTGAGE RATE:  With respect to each  Adjustable Rate
Mortgage Loan, a rate that (i) is set forth on the Data Tape  Information and in
the related  Mortgage  Note and (ii) is the minimum  interest  rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be decreased  during the
lifetime of such Mortgage Loan.

                  MONTHLY   STATEMENT:    The   statement   delivered   to   the
Certificateholders pursuant to Section 4.03.

                                       20
<PAGE>

                  MOODY'S:   Moody's  Investors  Service,  Inc.  If  Moody's  is
designated  as a Rating  Agency in the  Preliminary  Statement,  for purposes of
Section  10.05(b) the address for notices to Moody's shall be Moody's  Investors
Service,  Inc.,  99  Church  Street,  New  York,  New  York  10007,   Attention:
Residential  Mortgage  Pass-Through  Group, or such other address as Moody's may
hereafter furnish to the Depositor and the Servicer.

                  MORTGAGE:  The  mortgage,  deed of trust  or other  instrument
identified on the Mortgage Loan Schedule as securing a Mortgage Note.

                  MORTGAGE FILE: The items  pertaining to a particular  Mortgage
Loan contained in either the Servicing File or Custodial File.

                  MORTGAGE LOAN PURCHASE AGREEMENT:  The BNC Purchase Agreement,
the  CIT  Purchase  Agreement,  the  IFC  Purchase  Agreement,  the NC  Purchase
Agreement or the Superior Purchase Agreement, as applicable.

                  MORTGAGE  LOANS:  An  individual  Mortgage  Loan  which is the
subject of this  Agreement,  each Mortgage Loan  originally  sold and subject to
this Agreement  being  identified on the Mortgage Loan Schedule,  which Mortgage
Loan includes,  without  limitation,  the Mortgage File, the Scheduled Payments,
Principal Prepayments,  Liquidation Proceeds,  Condemnation Proceeds,  Insurance
Proceeds, REO Disposition proceeds, and all other rights, benefits, proceeds and
obligations  arising from or in connection  with such Mortgage  Loan,  excluding
replaced or repurchased Mortgage Loans.

                  MORTGAGE LOAN  SCHEDULE:  A schedule of Mortgage Loans annexed
hereto as Schedule I, such schedule setting forth the following information with
respect to each  Mortgage  Loan:  (1) the  Unaffiliated  Seller's  Mortgage Loan
number; (2) the city, state and zip code of the Mortgaged  Property;  (3) a code
indicating  whether  the  Mortgaged  Property  is  a  single  family  residence,
two-family residence,  three-family  residence,  four-family  residence,  PUD or
condominium;  (4) the  current  Mortgage  Interest  Rate;  (5) the  current  net
Mortgage Rate; (6) the current Monthly  Payment;  (7) the Gross Margin;  (8) the
original term to maturity;  (9) the scheduled  maturity date; (10) the principal
balance of the Mortgage Loan as of the Cut-off Date after  deduction of payments
of principal  due on or before the Cut-off Date whether or not  collected;  (11)
the  Loan-to-Value  Ratio; (12) the next Interest Rate Adjustment Date; (13) the
lifetime  Mortgage  Interest  Rate  Cap;  (14)  whether  the  Mortgage  Loan  is
convertible  or not;  (15) a code  indicating  the mortgage  guaranty  insurance
company;  (16) the Servicing Fee; (17) the identity of the related Originator of
such Mortgage Loan; (18) the  Mortgagor's  name; (19) whether such Mortgage Loan
is a Simple Interest Mortgage Loan; and (20) the  "paid-through"  date (based on
payments received from the related Mortgagor) as of the Cut-off Date.

                  MORTGAGE NOTE: The note or other evidence of the  indebtedness
of a Mortgagor under a Mortgage Loan.

                  MORTGAGE RATE: The annual rate of interest borne on a Mortgage
Note,  which shall be adjusted from time to time with respect to Adjustable Rate
Mortgage Loans.

                                       21
<PAGE>

                  MORTGAGE  RATE  CAPS:  With  respect  to  an  Adjustable  Rate
Mortgage  Loan, the Periodic  Mortgage Rate Cap, the Maximum  Mortgage Rate, and
the Minimum Mortgage Rate for such Mortgage Loan.

                  MORTGAGED PROPERTY: The real property (or leasehold estate, if
applicable)  identified on the Mortgage  Loan Schedule as securing  repayment of
the debt evidenced by a Mortgage Note.

                  MORTGAGOR:  The obligor(s) on a Mortgage Note.

                  NC:  NC Capital Corporation, a California corporation.

                  NC  ASSIGNMENT  AGREEMENT:   The  Assignment  and  Recognition
Agreement, dated as of April 30, 2002, by and among the Unaffiliated Seller, the
Depositor and NC, and each other  Assignment  and  Recognition  Agreement by and
among the  Unaffiliated  Seller,  the Depositor  and NC in  connection  with any
Subsequent Transfer of NC Mortgage Loans.

                  NC MORTGAGE  LOAN: A Mortgage  Loan which was acquired from NC
by the Unaffiliated Seller pursuant to the NC Purchase Agreement,  and which has
been acquired by the Trust Fund.

                  NC  PURCHASE   AGREEMENT:   The  Mortgage  Loan  Purchase  and
Warranties  Agreement,  dated  as of  February  26,  2002,  by and  between  the
Unaffiliated Seller and NC.

                  NET MONTHLY  EXCESS CASH FLOW: For any  Distribution  Date the
amount  remaining  for  distribution  pursuant to subsection  4.02(iii)  (before
giving effect to distributions pursuant to such subsection).

                  NET PREPAYMENT INTEREST SHORTFALL:  For any Distribution Date,
the amount by which the sum of the Prepayment  Interest  Shortfalls  exceeds the
sum of the Compensating Interest payments made on such Distribution Date.

                  NET SIMPLE INTEREST EXCESS: As of any Determination  Date, the
excess,  if any,  of the  aggregate  amount of Simple  Interest  Excess  (net of
reimbursement  to the Servicer for Advances on Simple  Interest  Mortgage Loans)
over the amount of Simple Interest Shortfall.

                  NET SIMPLE INTEREST  SHORTFALL:  As of any Determination Date,
the excess,  if any, of the aggregate  amount of Simple Interest  Shortfall over
the amount of Simple Interest Excess.

                  NIMS TRUST: CDC Mortgage  Capital Inc. NIM Trust 2002-HE1N,  a
Delaware business trust.

                  NON-DELAY  CERTIFICATES:   As  specified  in  the  Preliminary
Statement.

                  NONRECOVERABLE ADVANCE: Any Servicing Advances previously made
or proposed to be made in respect of a Mortgage Loan or REO Property,  which, in
the good faith business judgment of the Servicer,  will not or, in the case of a
proposed  Servicing Advance,  would not, be ultimately  recoverable from related
Insurance Proceeds,  Liquidation Proceeds or otherwise. The

                                       22
<PAGE>

determination by the Servicer that it has made a Nonrecoverable  Advance or that
any proposed  Servicing  Advances,  if made,  would  constitute a Nonrecoverable
Advance,  shall  be  evidenced  by an  Officers'  Certificate  delivered  to the
Trustee.

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

                  NOTICE  OF  FINAL  DISTRIBUTION:  The  notice  to be  provided
pursuant  to Section  9.02 to the effect that final  distribution  on any of the
Certificates shall be made only upon presentation and surrender thereof.

                  OFFERED   CERTIFICATES:   As  specified  in  the   Preliminary
Statement.

                  OFFICER'S  CERTIFICATE:  A certificate signed by an officer of
the Servicer with  responsibility  for the  servicing of the Mortgage  Loans and
listed on a list delivered to the Trustee pursuant to this Agreement.

                  OPINION OF COUNSEL:  A written opinion of counsel,  who may be
in-house counsel for the Servicer or the Subservicer,  reasonably  acceptable to
the Trustee and to the Class A Certificate Insurer, provided that any Opinion of
Counsel  relating to (a)  qualification  of the Mortgage Loans in a REMIC or (b)
compliance with the REMIC  Provisions,  must be (unless otherwise stated in such
Opinion of Counsel) an opinion of counsel who (i) is in fact  independent of the
Servicer  of the  Mortgage  Loans,  (ii)  does not have any  material  direct or
indirect  financial  interest  in the  Servicer of the  Mortgage  Loans or in an
affiliate of either and (iii) is not connected with the Servicer of the Mortgage
Loans as an officer, employee, director or person performing similar functions.

                  OPTIONAL TERMINATION DATE: means:

                  (i)      For  so  long as  the Class X  Certificates  are 100%
         owned, either directly or indirectly, by the Unaffiliated Seller or any
         Affiliate thereof, then the Servicer may cause the Optional Termination
         Date to occur  on any  Distribution  Date  when  the  aggregate  Stated
         Principal  Balance  of the  Mortgage  Loans  is  10.00%  or less of the
         Maximum Pool Principal Balance; and

                  (ii)     If  the  Class X  Certificates   are  not 100% owned,
         either  directly  or  indirectly,  by the  Unaffiliated  Seller  or any
         Affiliate thereof,  then the Holders of a majority in Class Certificate
         Balance of the Class X Certificates may cause the Optional  Termination
         Date to occur  on any  Distribution  Date  when  the  aggregate  Stated
         Principal  Balance  of the  Mortgage  Loans  is  10.00%  or less of the
         Maximum Pool Principal Balance, and, if such Class X Certificateholders
         do not do so, then the Servicer shall also have such right.

                  ORIGINAL PRE-FUNDED AMOUNT:  $82,870,341.68.

                                       23
<PAGE>

                  ORIGINATOR:  The party that  originated or acquired a Mortgage
Loan and, more  specifically,  (i) with respect to any BNC Mortgage  Loan,  BNC,
(ii) with  respect to any IFC  Mortgage  Loan,  IFC,  (iii) with  respect to any
Superior Mortgage Loan, Superior,  (iv) with respect to any NC Mortgage Loan, NC
and (v) with respect to any CIT Mortgage Loan, CIT.

                  OTS: Office of Thrift Supervision, and any successor thereto.

                  OUTSTANDING:  With respect to the  Certificates as of any date
of determination,  all Certificates theretofore executed and authenticated under
this Agreement except:

                  (i)      Certificates theretofore canceled by the  Trustee  or
         delivered to the Trustee for cancellation; and

                  (ii)     Certificates  in exchange  for which or  in  lieu  of
         which  other  Certificates  have been  executed  and  delivered  by the
         Trustee pursuant to this Agreement.

                  OUTSTANDING MORTGAGE LOAN: As of any Due Date, a Mortgage Loan
with a Stated Principal Balance greater than zero which was not the subject of a
Principal  Prepayment  in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.

                  OWNERSHIP  INTEREST:  As  to  any  Residual  Certificate,  any
ownership   interest  in  such  Certificate   including  any  interest  in  such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial.

                  P&I ADVANCE:  As to any  Mortgage  Loan or REO  Property,  any
advance made by the Servicer in respect of any Remittance Date  representing (i)
with respect to any Mortgage Loan other than a Simple  Interest  Mortgage  Loan,
the aggregate of all payments of principal  and interest on such Mortgage  Loan,
and (ii) with respect to any Simple Interest Mortgage Loan, the aggregate of all
payments of interest on such Simple Interest Mortgage Loan, in each case, net of
the related  Servicing  Fee,  that were due,  or in the case of Simple  Interest
Mortgage Loans, accrued, during the related Due Period on such Mortgage Loan and
that were delinquent or unpaid on the related  Determination  Date, plus certain
amounts  representing  assumed payments not covered by any current net income on
the Mortgaged  Properties acquired by foreclosure or deed in lieu of foreclosure
as determined pursuant to Section 4.01.

                  PASS-THROUGH  MARGIN:  With  respect  to each Class of Regular
Certificates,   prior  to  the  first   Distribution  Date  after  the  Optional
Termination Date the following percentages: Class A Certificates, 0.31%; Class M
Certificates,  1.25% and Class B Certificates,  2.75%. On the first Distribution
Date  after the  Optional  Termination  Date,  the  Pass-Through  Margins  shall
increase to: Class A Certificates, 0.62%, Class M Certificates, 1.875% and Class
B Certificates, 4.125%.

                  PASS-THROUGH  RATE:  For each Class of  Certificates  and each
Lower Tier Regular  Interest,  the per annum rate set forth or calculated in the
manner described in the Preliminary Statement.

                  PERCENTAGE  INTEREST:  As to any  Certificate,  the percentage
interest  evidenced thereby in distributions  required to be made on the related
Class, such percentage  interest being

                                       24
<PAGE>

set forth on the face  thereof or equal to the  percentage  obtained by dividing
the  Denomination of such  Certificate by the aggregate of the  Denominations of
all Certificates of the same Class.

                  PERIODIC MORTGAGE RATE CAP: With respect to an Adjustable Rate
Mortgage Loan, the periodic limit on each Mortgage  Interest Rate  adjustment as
set forth in the related Mortgage Note.

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

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

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

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

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

                  (v)      commercial paper (including both non-interest-bearing
         discount obligations and interest-bearing obligations payable on demand
         or on a  specified  date  not  more  than 30  days  after  the  date of
         acquisition  thereof)  that is rated by each  Rating  Agency that rates
         such  securities  in  its  highest  short-term  unsecured  debt  rating
         available at the time of such investment;

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

                  (vii)    if previously confirmed in writing to the Trustee and
         to the Class A Certificate  Insurer,  any other demand, money market or
         time deposit, or any other obligation,  security or investment,  as may
         be acceptable to the Rating Agencies as a permitted investment of funds
         backing "Aaa" or "AAA" rated securities;

PROVIDED,  HOWEVER, that no instrument described hereunder shall evidence either
the  right  to  receive  (a)  only  interest  with  respect  to the  obligations
underlying such instrument or (b) both principal and interest  payments  derived
from  obligations  underlying  such  instrument  and the

                                       25
<PAGE>

interest and principal  payments with respect to such instrument provide a yield
to  maturity  at par  greater  than 120% of the yield to  maturity at par of the
underlying obligations.

                  PERMITTED  TRANSFEREE:  Any  person  other than (i) the United
States,  any  State  or  political   subdivision   thereof,  or  any  agency  or
instrumentality   of  any  of  the   foregoing,   (ii)  a  foreign   government,
International  Organization  or any agency or  instrumentality  of either of the
foregoing, (iii) an organization (except certain farmers' cooperatives described
in section 521 of the Code) which is exempt from tax imposed by Chapter 1 of the
Code (including the tax imposed by section 511 of the Code on unrelated business
taxable  income) on any excess  inclusions (as defined in section  860E(c)(1) of
the Code) with  respect to any  Residual  Certificate,  (iv) rural  electric and
telephone  cooperatives  described in section  1381(a)(2)(C)  of the Code, (v) a
Person that is not a U.S. Person,  (vi) an "electing large  partnership"  within
the meaning of section 775 of the Code and (vii) any other Person so  designated
by the  Depositor  based  upon an Opinion of  Counsel  that the  Transfer  of an
Ownership Interest in a Residual  Certificate to such Person may cause the REMIC
hereunder  to fail to qualify as a REMIC at any time that the  Certificates  are
outstanding. The terms "United States," "State" and "International Organization"
shall  have the  meanings  set forth in  section  7701 of the Code or  successor
provisions.  A  corporation  will not be  treated as an  instrumentality  of the
United  States  or of any  State or  political  subdivision  thereof  for  these
purposes if all of its  activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its board of directors
is not selected by such government unit.

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

                  PHYSICAL   CERTIFICATES:   As  specified  in  the  Preliminary
Statement.

                  POOL STATED PRINCIPAL  BALANCE:  As to any Distribution  Date,
the aggregate of the Stated  Principal  Balances of the Mortgage  Loans for such
Distribution  Date which were  Outstanding  Mortgage Loans as of the last day of
the related Due Period.

                  PREFERENCE AMOUNT:  Any amounts  distributed in respect of the
Class  A  Certificates  which  are  recovered  from  any  Holder  of a  Class  A
Certificate as a voidable  preference by a trustee in bankruptcy pursuant to the
United States  Bankruptcy  Code or other similar law in accordance with a final,
nonappealable order of a court having competent  jurisdiction and which have not
theretofore been repaid to such Holder.

                  PREFERENCE CLAIM:  As defined in Section 4.05(f) hereof.

                  PRE-FUNDING ACCOUNT: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(f) in the name of the Trustee
for  the  benefit  of the  Certificateholders,  and  designated  "Deutsche  Bank
National Trust Company,  in trust for registered holders of CDC Mortgage Capital
Trust 2002-HE1, Mortgage Pass-Through Certificates, Series 2002-HE1".

                  PRE-FUNDING  AMOUNT:  With respect to any date,  the amount on
deposit in the Pre-Funding Account.

                                       26
<PAGE>

                  PRE-FUNDING EARNINGS:  The actual investment earnings realized
on amounts deposited in the Pre-Funding Account.

                  PRE-FUNDING  PERIOD: The period commencing on the Startup Date
and  ending  on the  earliest  to occur of (i) the date on which  the  amount on
deposit in the  Pre-Funding  Account  (exclusive of any investment  earnings) is
less than $100,000, (ii) the date on which any Event of Default occurs and (iii)
July 24, 2002.

                  PREMIUM  AMOUNT:  The  product  of the  Premium  Rate  and the
Certificate  Balance  of the  Class A  Certificates  immediately  prior  to such
Distribution Date.

                  PREMIUM RATE: The rate at which the "Premium" is determined as
described in the letter dated April 30, 2002 between the Unaffiliated Seller and
the Class A Certificate Insurer.

                  PREPAYMENT CHARGE: Any prepayment  premium,  penalty or charge
collected  by the Servicer  with respect to a Mortgage  Loan from a Mortgagor in
connection with any voluntary Principal Prepayment in full pursuant to the terms
of the related Mortgage Note.

                  PREPAYMENT INTEREST SHORTFALL:  With respect to any Remittance
Date, the sum of, for each Mortgage Loan that was during the related  Prepayment
Period the  subject of a  Principal  Prepayment  in Full that was applied by the
Servicer to reduce the outstanding  principal balance of such Mortgage Loan on a
date preceding the Due Date in the succeeding Prepayment Period, an amount equal
to the product of (a) the Mortgage  Rate net of the  Servicing Fee Rate for such
Mortgage  Loan,  (b) the amount of the  Principal  Prepayment  for such Mortgage
Loan, (c) 1/360 and (d) the number of days  commencing on the date on which such
Principal  Prepayment  was  applied  and  ending on the last day of the  related
Prepayment Period.

                  PREPAYMENT PERIOD:  With respect to any Distribution Date, the
calendar  month  preceding the calendar  month in which such  Distribution  Date
occurs.

                  PRINCIPAL  DISTRIBUTION AMOUNT: For any Distribution Date, the
sum of (i) the Basic Principal  Distribution  Amount for such  Distribution Date
and (ii) the Extra Principal Distribution Amount for such Distribution Date.

                  PRINCIPAL  PREPAYMENT:  Any full or  partial  payment or other
recovery of  principal  on a Mortgage  Loan  (including  upon  liquidation  of a
Mortgage Loan) which is received in advance of its scheduled Due Date, excluding
any  prepayment  penalty or premium  thereon and which is not  accompanied by an
amount of interest  representing  scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.

                  PRINCIPAL PREPAYMENT IN FULL: Any Principal Prepayment made by
a Mortgagor of the entire principal balance of a Mortgage Loan.

                  PRINCIPAL  REMITTANCE  AMOUNT:  With respect to any Remittance
Date, the sum, without duplication, of:

                                       27
<PAGE>

                  (i)      uring the related Due Period and received or advanced
         by the Servicer on or prior to the related Remittance Date;

                  (ii)     the principal component of all Condemnation Proceeds,
         Insurance   Proceeds  and  Liquidation   Proceeds  during  the  related
         Prepayment  Period (in each case, net of remaining  (I.E., not deducted
         from the Interest Remittance Amount) unreimbursed  expenses incurred in
         connection with a liquidation or foreclosure and unreimbursed Advances,
         if any);

                  (iii)    all partial or full prepayments on the Mortgage Loans
         received during the related Prepayment Period;

                  (iv)     the principal  component of all related  Substitution
         Adjustment Amounts or Repurchase Prices;

                  (v)      proceeds  received  by the  Servicer  or the  Trustee
         under the FDIC Guaranty during the related Prepayment Period; and

                  (vi)     the  principal  component  of  the  proceeds  of  any
         termination of the Trust Fund.

reduced by remaining  amounts (I.E.,  not deducted from the Interest  Remittance
Amount)  in  reimbursement  for  Advances  previously  made with  respect to the
Mortgage  Loans and other  amounts as to which the  Servicer  is  entitled to be
reimbursed pursuant to this Agreement.

                  PRIVATE   CERTIFICATES:   As  specified  in  the   Preliminary
Statement.

                  PROSPECTUS SUPPLEMENT: The Prospectus Supplement,  dated April
22, 2002, relating to the Offered Certificates.

                  PTCE 95-60:  As defined in Section 5.02(b).

                  PUD:  Planned Unit Development.

                  QUALIFIED  INSURER: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each state  having  jurisdiction  over such insurer in  connection  with the
insurance  policy issued by such insurer,  duly  authorized and licensed in such
states to transact a mortgage guaranty  insurance business in such states and to
write the insurance provided by the insurance policy issued by it, approved as a
FNMA- or  FHLMC-approved  mortgage  insurer  or having a claims  paying  ability
rating  of at  least  "AA"  or  equivalent  rating  by a  nationally  recognized
statistical  rating  organization.  Any  replacement  insurer  with respect to a
Mortgage Loan must have at least as high a claims paying  ability  rating as the
insurer it replaces had on the Closing Date.

                  RATING AGENCY:  Each of the Rating  Agencies  specified in the
Preliminary  Statement.  If such  organization  or a  successor  is no longer in
existence,  "Rating  Agency"  shall be such  nationally  recognized  statistical
rating  organization,  or  other  comparable  Person,  as is

                                       28
<PAGE>

designated by the Depositor,  notice of which  designation shall be given to the
Trustee.  References  herein to a given  rating or rating  category  of a Rating
Agency shall mean such rating  category  without giving effect to any modifiers.
For  purposes  of Section  10.05(b),  the  addresses  for notices to each Rating
Agency shall be the address specified  therefor in the definition  corresponding
to the name of such Rating  Agency,  or such other address as either such Rating
Agency may hereafter furnish to the Depositor and the Servicer.

                  RECORD DATE: With respect to any Distribution  Date, the close
of business on the Business Day immediately  preceding such  Distribution  Date;
PROVIDED,  HOWEVER,  that for any  Certificate  issued in Definitive  Form,  the
Record Date shall be the close of business on the last Business Day of the month
immediately preceding such applicable Distribution Date.

                  REFERENCE BANK:  As defined in Section 4.04.

                  REGULAR   CERTIFICATES:   As  specified  in  the   Preliminary
Statement.

                  REIMBURSEMENT  AMOUNT: As of any Distribution Date, the sum of
(a)(i)  all  Insured  Payments  previously  received  by  the  Trustee  and  all
Preference  Amounts  previously  paid by the Class A Certificate  Insurer and in
each case not previously  repaid to the Class A Certificate  Insurer pursuant to
Sections  6.05(a)(ii)  hereof plus (ii)  interest  accrued on each such  Insured
Payment and  Preference  Amounts not  previously  repaid  calculated at the Late
Payment Rate from the date the Trustee  received the related  Insured Payment or
Preference  Amounts were paid by the Class A Certificate  Insurer and (b)(i) any
amounts  then  due and  owing  to the  Class A  Certificate  Insurer  under  the
Insurance  and Indemnity  Agreement  (excluding  the Premium  Amount due on such
Distribution  Date),  as  certified  to the  Trustee by the Class A  Certificate
Insurer  plus  (ii)  interest  on such  amounts  at the  rate  specified  in the
Insurance and Indemnity Agreement.  The Class A Certificate Insurer shall notify
the  Trustee  and the  Unaffiliated  Seller of the  amount of any  Reimbursement
Amount.

                  REMIC TRUST:  The segregated pool of assets  consisting of the
Trust Fund, exclusive of Prepayment Charges and the Excess Reserve Fund Account.

                  RELIEF   ACT   INTEREST   SHORTFALL:   With   respect  to  any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible  on such Mortgage  Loan for the most recently  ended Due Period as a
result of the  application  of the  Soldiers'  and Sailors'  Civil Relief Act of
1940, as amended.

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

                  REMIC  PROVISIONS:  Provisions  of the federal  income tax law
relating to real estate mortgage investment  conduits,  which appear at sections
860A  through  860G of  Subchapter  M of  Chapter  1 of the  Code,  and  related
provisions,  and regulations promulgated thereunder,  as the foregoing may be in
effect from time to time as well as provisions of applicable state laws.

                  REMITTANCE  DATE:  The 18th day (or if such  18th day is not a
Business Day, the first Business Day immediately preceding) of any month.

                                       29
<PAGE>

                  REO  DISPOSITION:  The final sale by the  Servicer  of any REO
Property.

                  REO IMPUTED INTEREST: As to any REO Property,  for any period,
an amount  equivalent to interest (at the Mortgage Rate net of the Servicing Fee
Rate that would have been  applicable  to the related  Mortgage Loan had it been
outstanding) on the unpaid principal balance of the Mortgage Loan as of the date
of acquisition  thereof (as such balance is reduced  pursuant to Section 3.17 by
any income from the REO Property treated as a recovery of principal).

                  REO PROPERTY:  A Mortgaged Property acquired by the Trust Fund
through  foreclosure  or  deed-in-lieu  of  foreclosure  in  connection  with  a
defaulted Mortgage Loan.

                  REPRESENTATIVE:   Morgan  Stanley  &  Co.   Incorporated,   as
representative on behalf of itself, Lehman Brothers and Bear Stearns & Co.

                  REPURCHASE PRICE: With respect to any Mortgage Loan, an amount
equal to the sum of (i) the unpaid principal balance of such Mortgage Loan as of
the date of repurchase  and (ii) (x) if such Mortgage Loan is being  repurchased
by the  Unaffiliated  Seller,  the sum of (A) interest on such unpaid  principal
balance of such  Mortgage  Loan at the Mortgage  Rate from the last date through
which  interest has been paid and  distributed to the Trustee to the last day of
the  month in which  such  repurchase  occurs,  (B) all  unreimbursed  Servicing
Advances and (C) all expenses reasonably incurred by the Servicer,  the Trustee,
the Class A Certificate Insurer or the Unaffiliated  Seller, as the case may be,
in  respect  of a breach or  defect,  including,  without  limitation,  expenses
arising  out of any such  party's  enforcement  of the  Originator's  repurchase
obligation,  to the extent not included in (B), or (y) if such  Mortgage Loan is
being repurchased by the related  Originator,  all other amounts payable by such
Originator  in accordance  with the terms of the related  Mortgage Loan Purchase
Agreement.

                  REQUEST FOR RELEASE:  The Request for Release submitted by the
Servicer to the Trustee, substantially in the form of Exhibit J.

                  RESIDUAL   CERTIFICATES:   As  specified  in  the  Preliminary
Statement.

                  RESPONSIBLE  OFFICER:  When used with  respect to the Trustee,
any Vice President,  any Assistant Vice President,  any Assistant Secretary, any
Assistant Treasurer or any other officer of the Trustee  customarily  performing
functions similar to those performed by any of the above designated officers who
at such time shall be officers to whom,  with  respect to a  particular  matter,
such matter is referred  because of such officer's  knowledge of and familiarity
with the  particular  subject and who shall have direct  responsibility  for the
administration of this Agreement.

                  RULE 144A LETTER:  As defined in Section 5.02(b).

                  SCHEDULED PAYMENT: The scheduled monthly payment on a Mortgage
Loan due on any Due Date allocable to principal and/or interest on such Mortgage
Loan which, unless otherwise specified herein,  shall give effect to any related
Debt Service  Reduction and any Deficient  Valuation  that affects the amount of
the monthly payment due on such Mortgage Loan.

                                       30
<PAGE>

                  SCHEDULED  PRINCIPAL  BALANCE:  With  respect to any  Mortgage
Loan:  (a) as of the Cut-off Date,  the  outstanding  principal  balance of such
Mortgage  Loan as of such  date,  net of the  principal  portion  of all  unpaid
Monthly  Payments,  if any,  due on or before such date;  (b) as of any Due Date
subsequent  to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation  Event occurs with respect to such  Mortgage  Loan,
the  Scheduled  Principal  Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the  principal  portion of each  Monthly  Payment due on or
before  such  Due  Date but  subsequent  to the  Cut-off  Date,  whether  or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date,  (iii) the principal  portion of all Liquidation  Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion  thereof that  represents  principal  due (without  regard to any
acceleration of payments under the related  Mortgage and Mortgage Note) on a Due
Date  occurring on or before the date on which such  proceeds  were received and
(iv) any reduction in the principal  balance of such Mortgage Loan incurred with
respect thereto as a result of a Deficient  Valuation  occurring before such Due
Date,  but only to the extent such reduction in principal  balance  represents a
reduction in the portion of principal of such Mortgage Loan not yet due (without
regard to any  acceleration of payments under the related  Mortgage and Mortgage
Note) as of the  date of such  Deficient  Valuation;  and (c) as of any Due Date
subsequent  to the  occurrence  of a  Liquidation  Event  with  respect  to such
Mortgage Loan, zero.

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

                  SENIOR   ENHANCEMENT   PERCENTAGE:   With   respect   to   any
Distribution  Date, the  percentage  obtained by dividing (x) the sum of (i) the
aggregate Class  Certificate  Balance of the Subordinated  Certificates and (ii)
the   Subordinated   Amount  (in  each  case  after   taking  into  account  the
distributions of the Principal  Distribution  Amount for such Distribution Date)
by (y) the aggregate  Stated  Principal  Balance of the Mortgage Loans as of the
last day of the related Due Period.

                  SENIOR  SPECIFIED  ENHANCEMENT  PERCENTAGE:  As of any date of
determination, 23.00%.

                  SERVICER:  Ocwen  Federal  Bank  FSB,  a  federally  chartered
savings  bank,  and its  successors  and  assigns,  in its  capacity as servicer
hereunder.

                  SERVICER  TERMINATION  TEST: With respect to any  Distribution
Date, the Servicer  Termination Test will be failed with respect to the Servicer
if either:

                  (a) the  Cumulative  Loss  Percentage  exceeds (i) in months 1
through  24,  2.50%,  (ii) in months 25 through  36,  4.00%,  (iii) in months 37
through 48, 5.25% and (iv) in month 49 and thereafter, 6.70%; or

                  (b) the quotient (expressed as a percentage) of (x) the Stated
Principal  Balance of Mortgage Loans 60 days Delinquent or more as of the end of
the related Due Period (including  Mortgage Loans in bankruptcy,  foreclosure or
represented by an REO Property) over (y) the aggregate Stated Principal  Balance
of the Mortgage Loans as of the end of the related Due Period, exceeds 20%.

                                       31
<PAGE>

                  SERVICING ADVANCES:  The reasonable  "out-of-pocket" costs and
expenses  (including  legal fees) incurred by the Servicer in the performance of
its servicing  obligations  in connection  with a default,  delinquency or other
unanticipated  event,  including,  but  not  limited  to,  the  cost  of (i) the
preservation,  restoration  and  protection  of a Mortgaged  Property,  (ii) any
enforcement or judicial proceedings,  including foreclosures and litigation,  in
respect  of  a  particular  Mortgage  Loan,  (iii)  the  management   (including
reasonable fees in connection therewith) and liquidation of any REO Property and
(iv) the  performance  of its  obligations  under  Section  3.01,  Section 3.09,
Section 3.13 and Section 3.15 hereof. The Servicer shall not be required to make
any Nonrecoverable Advances.

                  SERVICING  FEE: With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's  interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which  interest on such Mortgage Loan accrues for such calendar  month.  Such
fee shall be payable monthly,  and shall be pro rated for any portion of a month
during which the Mortgage Loan is serviced by the Servicer under this Agreement.
The  Servicing  Fee is payable  solely  from,  the interest  portion  (including
recoveries  with  respect to interest  from  Liquidation  Proceeds  and proceeds
received  with  respect to REO  Properties,  to the extent  permitted by Section
3.11)  of such  Monthly  Payment  collected  by the  Servicer,  or as  otherwise
provided under Section 3.11.

                  SERVICING FEE RATE: With respect to each Mortgage Loan,  0.50%
per annum.

                  SERVICING  FILE:  With respect to each Mortgage Loan, the file
retained by the Servicer  consisting  of originals or copies of all documents in
the Mortgage File which are not  delivered to the Trustee in the Custodial  File
and copies of each of the other Mortgage Loan documents required to be delivered
by the related  Originator  pursuant to the terms of the related  Mortgage  Loan
Purchase Agreement.

                  SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible  for, the  administration  and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this  Agreement,  as
such list may from time to time be amended.

                  SIMILAR LAW:  As defined in Section 5.02(b).

                  SIMPLE  INTEREST  EXCESS:  As of any Remittance  Date for each
Simple Interest  Qualifying Loan, the excess,  if any, of (i) the portion of the
monthly payment  received from the Mortgagor for such Mortgage Loan allocable to
interest with respect to the related Due Period,  over (ii) 30 days' interest on
the Stated Principal Balance of such Mortgage Loan at the Mortgage Rate for such
Mortgage Loan.

                  SIMPLE  INTEREST  EXCESS  SUB-ACCOUNT:  The sub-account of the
Collection Account established by the Servicer pursuant to Section 3.10(b).  The
Simple Interest Excess Sub-Account shall be an Eligible Account.

                                       32
<PAGE>

                  SIMPLE INTEREST MORTGAGE LOAN: Any Mortgage Loan for which the
interest due thereon is  calculated  based on the actual  number of days elapsed
between the date on which  interest  was last paid through the date on which the
most current payment is received.

                  SIMPLE INTEREST QUALIFYING LOAN: As of any Determination Date,
any Simple  Interest  Mortgage Loan that was neither  prepaid in full during the
related Due Period,  nor  delinquent  with  respect to a payment that became due
during the related  Due Period as of the close of business on the  Determination
Date following such Due Period.

                  SIMPLE INTEREST  SHORTFALL:  As of any  Distribution  Date for
each  Simple  Interest  Qualifying  Loan,  the  excess,  if any, of (i) 30 days'
interest on the Stated  Principal  Balance of such Mortgage Loan at the Mortgage
Rate for such  Mortgage  Loan,  over (ii) the  portion  of the  monthly  payment
received from the  Mortgagor  for such Mortgage Loan  allocable to interest with
respect to the related Due Period.

                  SPECIFIED  SUBORDINATED AMOUNT: Prior to the Stepdown Date, an
amount equal to 1.50% of the Maximum Pool Principal Balance plus the Pre-Funding
Amount,  if any, on the applicable date of  determination,  and on and after the
Stepdown  Date,  an  amount  equal to 3.00% of the  aggregate  Stated  Principal
Balance of the  Mortgage  Loans as of the last day of the  related  Due  Period,
subject to a minimum amount equal to the Floor Amount;  PROVIDED,  HOWEVER, that
if, on any  Distribution  Date,  a Trigger  Event has  occurred,  the  Specified
Subordinated  Amount shall not be reduced to the  applicable  percentage  of the
then current  aggregate Stated Principal Balance of the Mortgage Loans until the
Distribution Date on which a Trigger Event is no longer occurring.

                  STANDARD  & POOR'S:  Standard  & Poor's  Ratings  Services,  a
division of the McGraw-Hill  Companies,  Inc. If Standard & Poor's is designated
as a Rating  Agency  in the  Preliminary  Statement,  for  purposes  of  Section
10.05(b)  the  address  for  notices to  Standard & Poor's  shall be  Standard &
Poor's,  55 Water,  New York, New York 10041,  Attention:  Residential  Mortgage
Surveillance Group - Morgan Stanley ABS Capital I Inc.  2002-HE1,  or such other
address as  Standard & Poor's may  hereafter  furnish to the  Depositor  and the
Servicer.

                  STARTUP DAY:  The Closing Date.

                  STATED  PRINCIPAL  BALANCE:  As to each Mortgage Loan, (i) the
principal  balance of the Mortgage  Loan at the Cut-off Date after giving effect
to payments of  principal  due on or before  such date,  to the extent  actually
received,  minus (ii) all amounts  previously  distributed  to the Trustee  with
respect to the related  Mortgage  Loan  representing  payments or  recoveries of
principal, including Advances in respect of scheduled payments of principal. For
purposes of any Distribution  Date, the Stated Principal Balance of any Mortgage
Loan will  give  effect to any  scheduled  payments  of  principal  received  or
advanced  prior to the related  Remittance  Date and any  unscheduled  principal
payments and other unscheduled principal collections received during the related
Prepayment Period.

                  STEPDOWN  DATE: The later to occur of (i) the earlier to occur
of (a) the Distribution  Date in May 2005 and (b) the Distribution Date on which
the aggregate  Class  Certificate  Balances of the Class A Certificates  is less
than  $32,995,000  and (ii) the  first

                                       33
<PAGE>

Distribution  Date on which the Senior  Enhancement  Percentage  (calculated for
this  purpose  only after  taking  into  account  payments of  principal  on the
Mortgage  Loans on the last  day of the  related  Due  Period  but  prior to any
applications of Principal  Distribution  Amount to the  Certificates) is greater
than or equal to the Senior Specified Enhancement Percentage.

                  SUBORDINATED  AMOUNT: As of any Distribution Date, the excess,
if any, of (a) the aggregate Stated Principal  Balance of the Mortgage Loans for
that Distribution Date plus the Pre-Funding Amount, if any, on such Distribution
Date (after taking into account any withdrawals  therefrom on such  Distribution
Date), over (b) the aggregate of the Class  Certificate  Balances of the Class A
and Subordinated  Certificates as of such Distribution Date (after giving effect
to the payment of the Principal  Remittance  Amount on such Certificates on such
Distribution Date).

                  SUBORDINATED  CERTIFICATES:  As specified  in the  Preliminary
Statement.

                  SUBORDINATION  DEFICIENCY:  With  respect to any  Distribution
Date, the excess, if any, of (a) the Specified Subordinated Amount applicable to
such  Distribution  Date over (b) the  Subordinated  Amount  applicable  to such
Distribution Date.

                  SUBORDINATION   REDUCTION   AMOUNT:   With   respect   to  any
Distribution Date, an amount equal to the lesser of (a) the Excess  Subordinated
Amount and (b) the Total Monthly Excess Spread.

                  SUBSERVICER:  As defined in Section 3.02(a).

                  SUBSERVICING ACCOUNT:  As defined in Section 3.08.

                  SUBSERVICING AGREEMENT:  As defined in Section 3.02 hereof.

                  SUBSEQUENT CUT-OFF DATE: As to any Subsequent  Mortgage Loans,
the date  specified in the Addition  Notice  delivered in connection  therewith,
which date shall be the close of business on the first day of the month in which
such Subsequent Mortgage Loans will be conveyed to the Trust Fund.

                  SUBSEQUENT   MORTGAGE  LOANS:  The  Mortgage  Loans  hereafter
transferred and assigned to the Trust Fund pursuant to Section 2.01(d),  each of
which shall have been purchased by the Unaffiliated Seller under a Mortgage Loan
Purchase Agreement.

                  SUBSEQUENT  TRANSFER:  The  transfer  and  assignment  by  the
Depositor to the Trust of the  Subsequent  Mortgage  Loans pursuant to the terms
hereof.

                  SUBSEQUENT TRANSFER AGREEMENT: A subsequent transfer agreement
in substantially the form of Exhibit K.

                  SUBSEQUENT   TRANSFER  DATE:  The  Business  Day  on  which  a
Subsequent Transfer occurs.

                                       34
<PAGE>

                  SUBSTITUTE  MORTGAGE LOAN: A Mortgage Loan  substituted by the
Unaffiliated  Seller or an Originator for a Deleted  Mortgage Loan in accordance
with  the  terms  of  this  Agreement  or the  related  Mortgage  Loan  Purchase
Agreement,  which must,  on the date of such  substitution,  as  confirmed  in a
Request for Release,  substantially  in the form of Exhibit J, (i) have a Stated
Principal  Balance,  after  deduction of the principal  portion of the Scheduled
Payment  due in the month of  substitution,  not in excess of, and not more than
10% less than, the Stated  Principal  Balance of the Deleted Mortgage Loan; (ii)
be  accruing  interest  at a rate no lower  than and not more  than 1% per annum
higher than, that of the Deleted Mortgage Loan; (iii) have a Loan-to-Value Ratio
no higher than that of the Deleted  Mortgage Loan; (iv) have a remaining term to
maturity  no  greater  than  (and not more  than one year less than that of) the
Deleted Mortgage Loan; and (v) comply with each  representation and warranty set
forth in the Unaffiliated  Seller's  Agreement (if applicable) or the applicable
Mortgage Loan Purchase Agreement.

                  SUBSTITUTION  ADJUSTMENT  AMOUNT: The meaning ascribed to such
term pursuant to Section 2.03.

                  SUPERIOR:  Superior Federal Bank FSB, a federal savings bank.

                  SUPERIOR ASSIGNMENT AGREEMENT:  The Assignment and Recognition
Agreement, dated as of April 30, 2002, by and among the Unaffiliated Seller, the
Depositor and Superior,  and each other Assignment and Recognition  Agreement by
and among the Unaffiliated Seller, the Depositor and Superior in connection with
any Subsequent Transfer of Superior Mortgage Loans.

                  SUPERIOR  MORTGAGE  LOAN:  A Mortgage  Loan which was acquired
from  Superior by the  Unaffiliated  Seller  pursuant to the  Superior  Purchase
Agreement, and which has been acquired by the Trust Fund.

                  SUPERIOR  PURCHASE  AGREEMENT:  The Mortgage Loan Purchase and
Warranties  Agreement,  dated  as of  February  1,  2002,  by  and  between  the
Unaffiliated Seller and Superior.

                  TAX SERVICE CONTRACT:  As defined in Section 3.09(a).

                  TELERATE PAGE 3750:  The display page  currently so designated
on the Bridge  Telerate  Service (or such other page as may replace that page on
that service for displaying comparable rates or prices).

                  TOTAL MONTHLY EXCESS SPREAD:  As to any Distribution  Date, an
amount equal to the excess if any, of (i) the interest  collected  (prior to the
Remittance  Date) or advanced  on the  Mortgage  Loans for Due Dates  during the
related  Due  Period  (net of Expense  Fees,  Premium  Amount and  Reimbursement
Amounts,  if any) over (ii) the sum of the  interest  payable to the  Classes of
Floating Rate Certificates on such Distribution Date.

                  TRANSFER:  Any  direct  or  indirect  transfer  or sale of any
Ownership Interest in a Residual Certificate.

                  TRANSFER AFFIDAVIT:  As defined in section 5.02(b).

                                       35
<PAGE>

                  TRANSFEROR CERTIFICATE:  As defined in Section 5.02(b).

                  TRIGGER EVENT: The occurrence of either a Delinquency  Trigger
Event or a Loss Trigger Event.

                  TRUST  FUND:  The  corpus  of  the  trust  created   hereunder
consisting of (i) the Mortgage Loans and all interest and principal  received on
or with respect thereto after the related Cut-off Date,  other than such amounts
which were due on the Mortgage Loans on or before the related Cut-off Date; (ii)
each  Account,  and all amounts  deposited  therein  pursuant to the  applicable
provisions of this  Agreement;  (iii)  property that secured a Mortgage Loan and
has been acquired by foreclosure, deed-in-lieu of foreclosure or otherwise; (iv)
all  rights  of  the  Depositor  against  the  Unaffiliated   Seller  under  the
Unaffiliated  Seller's  Agreement;  (v) all rights of the Depositor against each
Originator  under the  related  Assignment  and  Recognition  Agreement  and the
related  Mortgage Loan Purchase  Agreement;  (vi) the Class A Insurance  Policy;
(vii) the FDIC Guaranty; and (viii) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing.

                  TRUSTEE:   Deutsche  Bank  National   Trust  Company  and  its
successors and, if a successor trustee is appointed hereunder, such successor.

                  TRUSTEE FEE: As to any  Distribution  Date, an amount equal to
the sum of (a) the product of  one-twelfth of the Trustee Fee Rate times the sum
of (i) the aggregate Stated Principal  Balances of the Mortgage Loans at the end
of the prior Due  Period,  and (ii) the  amount on  deposit  in the  Pre-Funding
Account at the end of such prior Due Period and (b) any reasonable  compensation
and expenses of a separate  trustee or co-trustee to be paid pursuant to Section
8.10(d).

                  TRUSTEE FEE RATE: With respect to each Mortgage Loan,  0.0055%
per annum.

                  UNAFFILIATED  SELLER'S  AGREEMENT:  The Unaffiliated  Seller's
Agreement,  dated as of the date hereof,  among the Unaffiliated  Seller and the
Depositor  relating  to the sale of the  Mortgage  Loans  from the  Unaffiliated
Seller to the Depositor.

                  UNPAID INTEREST  AMOUNTS:  As of any Distribution Date and any
Class of  Certificates,  the sum of (a) the excess of (i) the sum of the Accrued
Certificate  Interest  Distribution  Amount for such  Distribution  Date and any
portion of such  Accrued  Certificate  Interest  Distribution  Amount from prior
Distribution  Dates remaining unpaid over (ii) the amount in respect of interest
on such Class of Certificates actually distributed on the preceding Distribution
Date and (b) 30 days'  interest  on such excess at the  applicable  Pass-Through
Rate (to the extent permitted by applicable law).

                  UNPAID  REALIZED  LOSS  AMOUNT:  With  respect to any Class of
Subordinated  Certificates and as to any Distribution Date, is the excess of (i)
Applied  Realized  Loss  Amounts with respect to such Class over (ii) the sum of
all  distributions  in reduction of such  Applied  Realized  Loss Amounts on all
previous  Distribution Dates. Any amounts distributed to a Class of Subordinated
Certificates  in respect of any Unpaid  Realized Loss Amount will not be applied
to reduce the Class Certificate Balance of such Class.

                                       36
<PAGE>

                  UPPER TIER REGULAR  INTEREST:  As described in the Preliminary
Statement.

                  UPPER TIER REMIC:  As described in the Preliminary Statement.

                  U.S.  PERSON:  Shall  mean (i) a citizen  or  resident  of the
United States;  (ii) a corporation  (or entity treated as a corporation  for tax
purposes)  created or  organized  in the United  States or under the laws of the
United States or of any state thereof, including, for this purpose, the District
of Columbia;  (iii) a partnership  (or entity  treated as a partnership  for tax
purposes)  organized in the United States or under the laws of the United States
or of any state thereof,  including,  for this purpose, the District of Columbia
(unless provided otherwise by future Treasury regulations); (iv) an estate whose
income is  includible  in gross  income for United  States  income tax  purposes
regardless of its source; or (v) a trust, if a court within the United States is
able to exercise primary  supervision over the  administration  of the trust and
one or more U.S. Persons have authority to control all substantial  decisions of
the trust.  Notwithstanding  the last clause of the preceding  sentence,  to the
extent provided in Treasury  regulations,  certain trusts in existence on August
20, 1996, and treated as U.S.  Persons prior to such date, may elect to continue
to be U.S. Persons.

                  VOTING RIGHTS:  The portion of the voting rights of all of the
Certificates  which  is  allocated  to  any  Certificate.  As  of  any  date  of
determination,  (a) 1% of all Voting  Rights  shall be  allocated to the Class X
Certificates,  if any (such Voting  Rights to be allocated  among the holders of
Certificates of each such Class in accordance with their  respective  Percentage
Interests),  (b) 1% of all  Voting  Rights  shall be  allocated  to the  Class P
Certificates,  if any, and (c) the  remaining  Voting  Rights shall be allocated
among  Holders of the  remaining  Classes of  Certificates  in proportion to the
Certificate Balances of their respective Certificates on such date.

                  WAC  CAP:  With  respect  to  the  Mortgage  Loans  as of  any
Distribution  Date, the product of (i) the weighted  average of the Adjusted Net
Mortgage  Rates then in effect on the beginning of the related Due Period on the
Mortgage  Loans,  minus in the case of the WAC Cap as it  applies to the Class A
Certificates only, the Premium Rate, and (ii) a fraction, the numerator of which
is 30 and the  denominator of which is the actual number of days in the Interest
Accrual Period related to such Distribution Date.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;

                         REPRESENTATIONS AND WARRANTIES

                  Section 2.01      CONVEYANCE OF MORTGAGE LOANS.

                  (a)  The  Depositor,   concurrently  with  the  execution  and
delivery  hereof,  hereby  sells,  transfers,  assigns,  sets over and otherwise
conveys  to the  Trustee  for the  benefit  of the  Certificateholders,  without
recourse, all the right, title and interest of the Depositor in and to the Trust
Fund,  other  than  any  Subsequent  Mortgage  Loans,  which  will  be so  sold,
transferred,  assigned, set-over and conveyed on the related Subsequent Transfer
Date.

                  (b) In  connection  with the transfer and  assignment  of each
Mortgage Loan, the  Unaffiliated  Seller has delivered or caused to be delivered
to the Trustee for the benefit of the

                                       37
<PAGE>

Certificateholders  the following  documents or instruments with respect to each
Mortgage  Loan so assigned  (to the extent such  documents  or  instruments  are
required to be  delivered by the related  Originator  under each  Mortgage  Loan
Purchase Agreement):

                  (i)      the original  Mortgage  Note bearing all  intervening
         endorsements  evidencing  a  complete  chain  of  assignment  from  the
         originator  to the related  Originator,  endorsed  "Pay to the order of
         _________,  without  recourse"  and  signed in the name of the  related
         Originator  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 Trustee is so advised by the related  Originator  that state law so
         allows. If the Mortgage Loan was acquired by an Originator in a merger,
         the endorsement must be by "[related  Originator],  successor by merger
         to  [name of  predecessor]".  If the  Mortgage  Loan  was  acquired  or
         originated by the related Originator while doing business under another
         name, the endorsement must be by "[related Originator],  formerly known
         as [previous name]";

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

                  (iii)    the  original  Mortgage  with  evidence of  recording
         thereon. If in connection with any Mortgage Loan, the original Mortgage
         with evidence of recording  thereon can not be delivered on or prior to
         the  related  Delivery  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,  then  the  related
         Originator,  as  required  by the terms of the  related  Mortgage  Loan
         Purchase  Agreement,  will be  required  to  deliver  to the  Trustee a
         photocopy of such Mortgage and (i) 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 promptly upon
         receipt thereof by the related  Originator (but in any event within 360
         days from the related Delivery Date); 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;

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

                  (v)      the original Assignment of Mortgage for each Mortgage
         Loan, in form and substance acceptable for recording;

                  (vi)     the  originals  of  all  intervening  assignments  of
         mortgage, evidencing a complete chain of assignment from the originator
         to the related Originator, 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;

                                       38
<PAGE>

                  (vii)    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

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

                  From time to time,  the Servicer  shall forward to the Trustee
additional original documents,  additional  documents  evidencing an assumption,
modification,  consolidation  or  extension of a Mortgage  Loan  approved by the
Servicer,  in  accordance  with the terms of this  Agreement.  All such mortgage
documents  held by the Trustee as to each  Mortgage  Loan shall  constitute  the
"CUSTODIAL FILE".

                  On or prior to the related  Delivery  Date,  the  Unaffiliated
Seller shall deliver, or cause the related Originator to deliver, to the Trustee
Assignments  of Mortgages,  in blank,  for each Mortgage Loan. The Trustee shall
promptly forward such Assignments of Mortgage to the Servicer for recording.  No
later than thirty (30) Business Days following the later of the related Delivery
Date and the date of receipt by the Servicer of the recording  information for a
Mortgage,  the  Servicer  shall  promptly  submit or cause to be  submitted  for
recording, at the expense of the Unaffiliated Seller (the Unaffiliated Seller to
seek  reimbursement  from the related  Originator under the applicable  Mortgage
Loan  Purchase  Agreement)  in the  appropriate  public office for real property
records,  each  Assignment of Mortgage  referred to in Section  2.01(b)(v).  The
Mortgage  shall be  assigned  from the related  Originator,  to  "Deutsche  Bank
National  Trust  Company,  as trustee under the Pooling and Servicing  Agreement
dated as of April 1, 2002, Morgan Stanley ABS Capital I Inc. Trust 2002-HE1." In
the event that any such assignment is lost or returned  unrecorded  because of a
defect therein,  the Unaffiliated  Seller shall cause the related  Originator to
promptly  prepare a  substitute  assignment  to cure such defect and  thereafter
cause each such  assignment to be duly recorded.  In the event the  Unaffiliated
Seller does not pay or otherwise reimburse the Servicer for any of the foregoing
costs of  recording  any such  Assignment  of Mortgage,  the  Servicer  shall be
entitled  to be  reimbursed  from the Trust Fund from  amounts on deposit in the
Collection  Account.  In the event the related Originator fails to reimburse the
Unaffiliated  Seller for the recording  costs described  above,  upon receipt of
written  direction from the  Unaffiliated  Seller,  the Trustee shall assign its
rights under the applicable Mortgage Loan Purchase Agreement solely with respect
to payment of such expenses to the Unaffiliated Seller.

                  On or prior to the Closing Date, the Unaffiliated Seller shall
deliver  to the  Trustee  a copy of the Data  Tape  Information  in  electronic,
machine readable medium in a form mutually acceptable to the Trustee.

                  In the  event  that  such  original  or copy  of any  document
submitted for recordation to the appropriate  public  recording office is not so
delivered to the Trustee within 90 days following the related Delivery Date, and
in the event that the  Originator  does not cure such failure  within 30 days of
discovery or receipt of written notification of such failure from the Depositor,
the Trustee or the Class A  Certificate  Insurer,  the Trustee  shall notify the
related  Originator  to  repurchase  the Mortgage  Loan  pursuant to the related
Mortgage Loan Purchase

                                       39
<PAGE>

Agreement,  upon the  request  of the  Depositor,  the  Trustee  or the  Class A
Certificate  Insurer,  at the  Repurchase  Price and in the manner  specified in
Section 2.03. The foregoing  repurchase  provision  shall not apply in the event
that the related Originator cannot deliver such original or copy of any document
submitted for recordation to the appropriate  public recording office within the
specified period due to a delay caused by the recording office in the applicable
jurisdiction;  PROVIDED that the related Originator shall instead be required to
deliver a  recording  receipt of such  recording  office  or, if such  recording
receipt is not available, an officer's certificate of a servicing officer of the
Originator confirming that such document has been accepted for recording.

                  (c)  PURCHASE  AND  SALE OF  SUBSEQUENT  MORTGAGE  LOANS.  (i)
Subject to the satisfaction of the conditions set forth in paragraph (ii) below,
and upon the Trustee's receipt of a Subsequent  Transfer  Agreement  executed by
all other parties thereto,  in  consideration  of the Trustee's  delivery on the
related  Subsequent  Transfer Dates to or upon the order of the Depositor of all
or a portion of the balance of funds in the Pre-Funding  Account,  the Depositor
shall on any  Subsequent  Transfer  Date sell,  transfer,  assign,  set over and
convey to the Trustee  without  recourse but subject to terms and  provisions of
this Agreement,  all of the right, title and interest of the Depositor in and to
the  Subsequent  Mortgage  Loans,  including  the  outstanding  principal of and
interest due on such  Subsequent  Mortgage  Loans,  and all other related assets
included or to be included in the Trust Fund with respect thereto.

                  The amount released from the Pre-Funding  Account with respect
to a transfer of Subsequent  Mortgage Loans shall be one-hundred  percent (100%)
of the aggregate Stated Principal  Balances as of the related Subsequent Cut-off
Date of the Subsequent Mortgage Loans so transferred.

                  (ii) The Subsequent  Mortgage Loans and the other property and
rights related thereto  described in paragraph (a) above shall be transferred by
the  Depositor  to the  Trust  Fund only  upon the  satisfaction  of each of the
following conditions on or prior to the related Subsequent Transfer Date:

                       (a) the  Unaffiliated  Seller  shall  have  provided  the
         Depositor, the Trustee, the Rating Agencies and the Class A Certificate
         Insurer with a timely Addition  Notice,  which shall include a Mortgage
         Loan  Schedule,  listing the  Subsequent  Mortgage Loans and shall have
         provided  any  other  information  reasonably  requested  by any of the
         foregoing with respect to the Subsequent Mortgage Loans;

                       (b) the Servicer  shall have  deposited in the Collection
         Account all  collections  of (x) principal in respect of the Subsequent
         Mortgage  Loans received and due after the related  Subsequent  Cut-off
         Date and (y) interest due on the  Subsequent  Mortgage  Loans after the
         related Subsequent Cut-off Date;

                       (c) as of each Subsequent Transfer Date, the Unaffiliated
         Seller was not  insolvent  nor will be made  insolvent by such transfer
         nor is the Unaffiliated Seller aware of any pending insolvency;

                                       40
<PAGE>

                       (d)  such  addition  will  not  result  in a  "prohibited
         transaction" (as defined in the REMIC Provisions) for any REMIC held by
         the Trust Fund,  and will not cause any REMIC held by the Trust Fund to
         cease to qualify as a REMIC, as evidenced by an Opinion of Counsel with
         respect  to such  matters  (which  may be a blanket  opinion  dated the
         Closing Date);

                       (e) the Pre-Funding Period shall not have terminated;

                       (f) the  Unaffiliated  Seller shall have delivered to the
         Trustee an executed  Assignment and Recognition  Agreement with respect
         to each related Originator of Subsequent  Mortgage Loans to be added to
         the Trust Fund on such Subsequent Transfer Date;

                       (g) the  Unaffiliated  Seller shall have delivered to the
         Trustee an Officer's  Certificate  confirming the  satisfaction of each
         condition  precedent  specified in this paragraph (ii), and the Opinion
         of Counsel referenced in clause (d); and

                       (h) the Unaffiliated  Seller and the Depositor shall have
         delivered  to the Trustee an  executed  copy of a  Subsequent  Transfer
         Agreement, substantially in the form of Exhibit L hereto.

                  (iii)    The  obligation  of the Trust  Fund to  purchase  the
         Subsequent  Mortgage Loans on a Subsequent  Transfer Date is subject to
         the  requirements  that,  following  the  purchase  of such  Subsequent
         Mortgage Loans, and with respect to the entire mortgage loan pool:

                  (a)      no more than 6% may be second liens;

                  (b)      no more than 43% may be Fixed Rate Mortgage Loans;

                  (c)      the weighted  average  original  term to maturity may
         not exceed 360 months;

                  (d)      the weighted  average gross Mortgage Rate must not be
         less than 8.75%, or more than 9.25%;

                  (e)      the weighted  average LTV must not exceed 80%, and no
         more than 47% of the Mortgage Loans may have LTVs in excess of 80%;

                  (f)      no Mortgage Loan may have a Stated Principal  Balance
         in excess of $725,000 as of the related Cut-off Date;

                  (g)      at  least  80%  of  the  Mortgage   Loans  must  have
         prepayment penalties;

                  (h)      the weighted  average Gross Margin for the Adjustable
         Rate Mortgage Loans must be at least 6.25%; and

                  (i)      the weighted  average  credit score (FICO score) must
         be at least 590,  and not more than 3% of the  Mortgage  Loans may have
         credit scores below 500.

                                       41
<PAGE>

                  Any of the above requirements may be waived or modified in any
respect by the Class A Certificate Insurer.

                  (iv) In  connection  with the transfer and  assignment  of the
Subsequent  Mortgage Loans, the  Unaffiliated  Seller shall satisfy the document
delivery requirements set forth in Section 2.01(b).

                  Section 2.02      ACCEPTANCE BY THE TRUSTEE OF THE MORTGAGE
LOANS.

                  The Trustee shall acknowledge,  on each Delivery Date, receipt
of the  documents  identified in the Initial  Certification  in the form annexed
hereto as Exhibit E, and declares that it holds and will hold such documents and
the other documents  delivered to it pursuant to Section 2.01, and that it holds
or will hold such other assets as are  included in the Trust Fund,  in trust for
the exclusive use and benefit of all present and future  Certificateholders  and
the Class A Certificate  Insurer. The Trustee acknowledges that it will maintain
possession  of the related  Mortgage  Notes in the State of  California,  unless
otherwise permitted by the Rating Agencies and the Class A Certificate Insurer.

                  In connection  with each  Delivery,  the Trustee shall deliver
via facsimile  (with original to follow the next Business Day) to the Depositor,
the  Unaffiliated  Seller  and  the  Class  A  Certificate  Insurer  an  Initial
Certification  on or prior to the related Delivery Date,  certifying  receipt of
the related Mortgage Notes and Assignments of Mortgage for each related Mortgage
Loan. The Trustee shall not be  responsible to verify the validity,  sufficiency
or genuineness of any document in any Custodial File.

                  Within 90 days after the related  Delivery  Date,  the Trustee
shall  ascertain  that all  documents  required to be delivered to it are in its
possession,  and shall deliver to the Depositor, the Unaffiliated Seller and the
Class A Certificate Insurer a Final Certification to the effect that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically  identified in such certification
as an  exception  and not  covered  by such  certification):  (i) all  documents
required to be delivered to it are in its  possession;  (ii) such documents have
been reviewed by it and appear regular on their face and relate to such Mortgage
Loan; (iii) based on its examination and only as to the foregoing documents, the
information  set forth in items (1), (2) and (18) of the Mortgage  Loan Schedule
and  items  (1),  (9) and  (17) of the Data  Tape  Information  respecting  such
Mortgage  Loan is  correct;  and (iv) each  Mortgage  Note has been  endorsed as
provided in Section 2.01 of this Agreement. The Trustee shall not be responsible
to verify the  validity,  sufficiency  or  genuineness  of any  document  in any
Custodial File. Upon receipt of such Final Certification,  if the Depositor, the
Unaffiliated  Seller  or the Class A  Certificate  Insurer  determines  that any
noncompliance  identified  by the  Trustee  is a breach of a  representation  or
warranty  relating to such Mortgage Loan , such party shall give written  notice
to the Trustee thereof.

                  The  Trustee  shall  retain  possession  and  custody  of each
Custodial  File in accordance  with and subject to the terms and  conditions set
forth  herein.  The Servicer  shall  promptly  deliver to the Trustee,  upon the
execution  or  receipt  thereof,  the  originals  of  such  other  documents  or
instruments  constituting  the Custodial File as come into the possession of the
Servicer from time to time.

                                       42
<PAGE>

                  Section 2.03      REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE UNAFFILIATED SELLER AND THE SERVICER.

                  (a)  The  Servicer  hereby  makes  the   representations   and
warranties set forth in Schedule II hereto to the Depositor and the Trustee,  as
of the Closing Date.

                  (b)  CDC  Mortgage  Capital  Inc.,  in  its  capacity  as  the
Unaffiliated  Seller,  hereby makes the representations and warranties set forth
in Schedule III hereto, as of the Closing Date.

                  (c) It is  understood  and  agreed  by the  Servicer  and  the
Unaffiliated Seller that the representations and warranties set forth in Section
2.03 shall  survive the  transfer of the Mortgage  Loans to the Trust Fund,  and
shall inure to the benefit of the Trust Fund  notwithstanding any restrictive or
qualified  endorsement  on any Mortgage  Note or  Assignment  of Mortgage or the
examination  or failure to examine any Mortgage  File.  Upon discovery by any of
the Depositor,  the Unaffiliated  Seller, the Class A Certificate  Insurer,  the
Trustee or the  Servicer  of a breach by the  Unaffiliated  Seller of any of the
foregoing  representations  or any of the  representations  and warranties  made
pursuant to the  Unaffiliated  Seller's  Agreement or by any  Originator  of the
representations  and  warranties  made  pursuant to the related  Assignment  and
Recognition  Agreement,  the party  discovering  such  breach  shall give prompt
written notice to the others.

                  (d) Within 90 days of the  earlier of either  discovery  by or
notice to the Unaffiliated  Seller of any breach of a representation or warranty
set forth in the Unaffiliated  Seller's  Agreement that materially and adversely
affects the value of the  Mortgage  Loans or the  interest of the  Trustee,  the
Class A Certificate Insurer or the Certificateholders  therein, the Unaffiliated
Seller shall use its best  efforts to cure such breach in all material  respects
and, if such breach cannot be remedied,  the  Unaffiliated  Seller shall, (i) if
such 90 day  period  expires  prior to the  second  anniversary  of the  related
Delivery Date,  remove such Mortgage Loan (a "DELETED  MORTGAGE  LOAN") from the
Trust Fund and substitute in its place a Substitute Mortgage Loan, in the manner
and subject to the conditions set forth in this Section 2,03; or (ii) repurchase
such Mortgage Loan at the Repurchase  Price;  PROVIDED,  HOWEVER,  that any such
substitution  pursuant to (i) above shall not be effected  prior to the delivery
to the Trustee of the Opinion of Counsel required by Section 2.05, if any, and a
Request for  Release  substantially  in the form of Exhibit K, and the  Mortgage
File for any such Substitute Mortgage Loan

                  With respect to any  Substitute  Mortgage  Loan or Loans,  the
Unaffiliated  Seller  shall  deliver  to the  Trustee  for  the  benefit  of the
Certificateholders  the Mortgage Note, the Mortgage,  the related  Assignment of
the Mortgage, and such other documents and agreements as are required by Section
2.01,  with the Mortgage Note endorsed and the Mortgage  assigned as required by
Section  2.01.  No  substitution  is permitted to be made in any calendar  month
after the Determination Date for such month. Scheduled Payments due with respect
to Substitute Mortgage Loans in the Due Period of substitution shall not be part
of the Trust Fund and will be  retained by the  related  Originator  on the next
succeeding Distribution Date. For the Due Period of substitution,  distributions
to  Certificateholders  will  include  the  monthly  payment  due on any Deleted
Mortgage Loan for such Due Period and thereafter the related Originator shall be
entitled to retain all  amounts  received  in respect of such  Deleted  Mortgage
Loan.

                                       43
<PAGE>

                  For any month in which the Unaffiliated Seller substitutes one
or more Substitute  Mortgage Loans for one or more Deleted  Mortgage Loans,  the
Servicer will  determine  the amount (if any) by which the  aggregate  principal
balance of all such Substitute  Mortgage Loans as of the date of substitution is
less than the aggregate  Stated  Principal  Balance of all such Deleted Mortgage
Loans  (after  application  of the  scheduled  principal  portion of the monthly
payments due in the Due Period of substitution).  The Unaffiliated  Seller shall
deposit the amount of such shortage (the "SUBSTITUTION ADJUSTMENT AMOUNT") plus,
an amount equal to the  aggregate of any  unreimbursed  Advances and accrued and
unpaid  Servicing  Fees with  respect to such  Deleted  Mortgage  Loans into the
Collection  Account on or before the  Distribution  Account Deposit Date for the
Distribution  Date in the month  succeeding  the calendar month during which the
related Mortgage Loan became required to be purchased or replaced hereunder.

                  Upon  discovery  that any  document  does not comply  with the
requirements  set forth in clauses (i) through (iv) of the  Trustee's  review of
the Custodial  Files  pursuant to Section 2.02 or receipt of written notice of a
breach of a  representation  and warranty or written notice that a Mortgage Loan
does not  constitute  a  "qualified  mortgage"  within  the  meaning  of Section
860G(a)(3) of the Code, the Trustee shall in turn promptly notify the applicable
Originator (with a copy to the Servicer, the Class A Certificate Insurer and the
Unaffiliated  Seller) in writing of such non  compliance  or breach and  request
that the related  Originator  cure such non compliance or breach within the time
period set forth in the applicable  Mortgage Loan Purchase Agreement (but in any
event,  within 60 days from the date the related  Originator is notified of such
non compliance or breach) and if the related  Originator  does not cure such non
compliance or breach in all material  respects  during such period,  the Trustee
shall notify such  Originator  to  repurchase  such Mortgage Loan from the Trust
Fund at the Repurchase  Price,  and such repurchase must occur no later than the
90th day following the Trustee's original notice of such noncompliance or breach
if such  noncompliance or breach is a failure of the Mortgage Loan to constitute
a "qualified  mortgage"  within the meaning of Section  860G(a)(3)  of the Code;
PROVIDED,  HOWEVER,  that notwithstanding  anything to the contrary set forth in
this  Agreement and  notwithstanding  the FDIC  Guaranty,  if Superior  fails to
repurchase  any  Superior  Mortgage  Loan that does not  constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code within 30 days of
receiving notice of such noncompliance or breach, the Unaffiliated  Seller shall
use commercially reasonable efforts to sell such Superior Mortgage Loan prior to
the 90th day following the Trustee's  original notice of such  noncompliance  or
breach.  If the  Unaffiliated  Seller does not sell such Superior  Mortgage Loan
prior to such 90th day, the Unaffiliated  Seller shall repurchase from the Trust
Fund such Superior  Mortgage Loan on such 90th day by depositing  the Repurchase
Price into the Collection  Account on such date. The  Unaffiliated  Seller shall
not be liable to the Trustee, the  Certificateholders or any other party for any
failure to maximize  proceeds  with  respect to any Superior  Mortgage  Loan for
which it is required to sell pursuant to this  Agreement,  provided such sale is
conducted in a commercially reasonable manner.

                  Upon delivery of the Final  Certification with respect to each
Mortgage Loan, the Trustee will notify the related  Originator within 5 Business
Days of such delivery of any missing  documents  from the Custodial  File and if
the related  Originator does not deliver such missing  documents  within 60 days
from the date the  related  Originator  is  notified  of such  noncompliance  or
breach,  the Trustee shall notify such  Originator  to repurchase  such Mortgage
Loan from the Trust Fund at the Repurchase Price.

                                       44
<PAGE>

                  If  the  missing   document,   non  compliance  or  breach  is
discovered  prior to the FDIC  Guaranty  Notice  Date and if the  Originator  is
Superior  and  Superior  fails or is unable to deliver the missing  documents or
correct or cure the non  compliance  or breach  within 30 days of notice of such
missing  document,  non compliance or breach,  the Trustee shall promptly notify
the Depositor,  the Servicer,  the Class A Certificate Insurer, the Unaffiliated
Seller  and the FDIC (in  accordance  with the  terms of the FDIC  Guaranty)  in
writing of such failure to correct or cure such missing document, non compliance
or breach (the date of such notice to the FDIC,  the "FDIC  NOTICE  DATE").  The
Trustee  shall pursue all legal  remedies  available to the Trustee  against the
related  Originator  (excluding  Superior until  subsequent to the FDIC Guaranty
Termination  Date) under the related  Mortgage  Loan  Purchase  Agreement if the
Trustee has received written notice from the Depositor,  the Class A Certificate
Insurer or the Unaffiliated Seller directing the Trustee to pursue such remedies
and received reasonable indemnity satisfactory to the Trustee in accordance with
Sections 6.03 and 8.02.

                  With respect to any Mortgage  Loan for which the FDIC has been
notified of  Superior's  failure to cure or  repurchase  such  Mortgage Loan (an
"FDIC  GUARANTY  CLAIM  LOAN"),  the  Trustee  shall  notify the  Servicer,  the
Unaffiliated  Seller and the Class A Certificate  Insurer in writing on the 90th
day prior to the FDIC  Guaranty  Termination  Date that the FDIC  Guaranty  with
respect to such Mortgage  Loan will expire  within 90 days.  With respect to any
FDIC Guaranty Claim Loan that is a  non-performing  Mortgage Loan (i.e., 60 days
or more  Delinquent as of the beginning of such period),  the Servicer shall use
commercially  reasonable  efforts to sell or liquidate such Mortgage Loan within
such 90 day  period.  The  Servicer  shall  not be liable  to the  Trustee,  the
Certificateholders  or any other party for any failure to maximize proceeds with
respect to any FDIC  Guaranty  Claim Loan for which it is required to sell prior
to the FDIC Guaranty Termination Date pursuant to this Agreement,  provided such
sale is conducted in a commercially  reasonable manner. With respect to any FDIC
Guaranty  Claim Loan that is a performing  Mortgage Loan (i.e.,  59 days or less
Delinquent as of the beginning of such period),  the  Unaffiliated  Seller shall
use  commercially  reasonable  efforts to sell such Mortgage Loan within such 90
day period.  The  Unaffiliated  Seller shall not be liable to the  Trustee,  the
Certificateholders  or any other party for any failure to maximize proceeds with
respect to any FDIC Guaranty  Claim Loans for which it is required to sell prior
to the FDIC Guaranty Termination Date pursuant to this Agreement,  provided such
sale is conducted  in a  commercially  reasonable  manner.  If the  Unaffiliated
Seller fails to sell the FDIC Guaranty Claim Loan within such 90 day period, the
Unaffiliated  Seller  shall  repurchase  the  FDIC  Guaranty  Claim  Loan at the
Repurchase  Price. In connection with such repurchase,  the Unaffiliated  Seller
shall deposit the Repurchase Price with respect to such FDIC Guaranty Claim Loan
into the  Collection  Account  on or prior to the  Remittance  Date  immediately
following the applicable  FDIC Guaranty  Termination  Date. If the  Unaffiliated
Seller (or any  successor  thereto) is no longer in  business  or has  otherwise
ceased its  operations as in effect on the Closing Date, the Class A Certificate
Insurer may direct the Servicer to sell the performing  FDIC Guaranty Claim Loan
(giving the Servicer at least 90 days written notice to execute such sale).  Any
sale of any Superior  Mortgage Loan by the Servicer or the Unaffiliated  Seller,
as  applicable,  shall in all  circumstances,  be without  recourse to the Trust
Fund. The Class A Certificate Insurer, in its sole discretion, may direct either
the Servicer or the Unaffiliated  Seller in writing not to sell or liquidate (in
the case of the Servicer) any FDIC Guaranty Claim Loan. The Unaffiliated  Seller

                                       45
<PAGE>

will not be liable to deposit  the  Repurchase  Price  with  respect to any FDIC
Guaranty  Claim  Loan that the Class A  Certificate  Insurer  has  directed  the
Unaffiliated Seller not to sell.

                  Upon the sale or  liquidation  of any such  Superior  Mortgage
Loan  prior  to  the  FDIC  Guaranty  Termination  Date,  the  Servicer  or  the
Unaffiliated  Seller,  as  applicable,   shall  promptly  deliver  an  officer's
certificate to the Trustee as to any loss that has occurred with respect to such
sale or  liquidation,  the  amount of such loss,  if any  (taking  into  account
unreimbursed Advances and accrued and unpaid Servicing Fees with respect to such
Mortgage Loan, and the expenses of such sale),  and the supporting  calculations
with respect thereto.  Upon receipt of such officer's  certificate,  the Trustee
shall promptly,  but in any event prior to the FDIC Guaranty  Termination  Date,
make a claim for  reimbursement  of such loss  pursuant to the terms of the FDIC
Guaranty by submitting a claim  substantially  in the form of Exhibit L attached
hereto.  All payments  received by the Trustee in  immediately  available  funds
under the FDIC Guaranty by the Business Day immediately preceding a Distribution
Date shall be  distributed  on such  Distribution  Date.  In no event  shall the
Trustee be  obligated  to advance all or any portion of such loss or any amounts
to be received if not  received  by the close of  business on the  Business  Day
immediately preceding such Distribution Date.

                  Based  solely on  information  received  with  respect  to any
Substitute Mortgage Loan from the Unaffiliated Seller or the related Originator,
as  applicable,  the Servicer  shall amend the Mortgage Loan Schedule to reflect
the removal of such Deleted Mortgage Loan and the substitution of the Substitute
Mortgage Loan or Loans and the Servicer shall deliver the amended  Mortgage Loan
Schedule to the Trustee. Upon such substitution, the Substitute Mortgage Loan or
Loans shall be subject to the terms of this  Agreement in all respects,  and the
Unaffiliated Seller shall be deemed to have made with respect to such Substitute
Mortgage Loan or Loans, as of the date of substitution,  the representations and
warranties (if any) made pursuant to the  Unaffiliated  Seller's  Agreement with
respect to such Mortgage Loan. Upon any such substitution and the deposit to the
Collection  Account of the amount required to be deposited therein in connection
with such  substitution  as described in the  following  paragraph,  the Trustee
shall release the Mortgage  File  relating to such Deleted  Mortgage Loan to the
Unaffiliated Seller or the related Originator, as applicable,  and shall execute
and deliver at the Unaffiliated  Seller's or the related Originator's  direction
such instruments of transfer or assignment  prepared by such party, in each case
without recourse, as shall be necessary to vest title in the Unaffiliated Seller
or the  related  Originator,  or its  designee,  as  applicable,  the  Trustee's
interest in any Deleted  Mortgage Loan  substituted for pursuant to this Section
2.03.

                  Subject  to  the  foregoing  paragraphs  with  respect  to the
Superior  Mortgage  Loans,  in the  event  that the  Unaffiliated  Seller or the
related Originator,  as applicable,  shall have repurchased a Mortgage Loan, the
Repurchase Price therefor shall be deposited in the Collection  Account pursuant
to Section 3.10 on or before the Remittance  Date for the  Distribution  Date in
the month  following  the month  during  which  the  Unaffiliated  Seller or the
related  Originator  became  obligated  hereunder to  repurchase or replace such
Mortgage Loan and upon such deposit of the Repurchase Price, the delivery of the
Opinion of Counsel required by Section 2.05 and receipt of a Request for Release
in the form of Exhibit J hereto, the Trustee shall release the related Custodial
File to such Person as directed by the  Servicer,  and the Trustee shall execute
and  deliver  at  such  Person's  direction  such  instruments  of  transfer  or
assignment  prepared by such Person, in each case without recourse,  as shall be
necessary to transfer  title from the

                                       46
<PAGE>

Trustee. It is understood and agreed that the obligation under this Agreement of
any Person to cure, repurchase or replace any Mortgage Loan (other than Superior
Mortgage  Loans)  as to which a breach  has  occurred  and is  continuing  shall
constitute the sole remedy against such Persons respecting such breach available
to  Certificateholders,  the Depositor,  the  Unaffiliated  Seller,  the Class A
Certificate  Insurer or the Trustee on their behalf.  In the event such required
repurchase or replacement does not occur, the Trustee shall take such actions as
directed  upon written  direction  from the Depositor or the Class A Certificate
Insurer and the provision of reasonable indemnity satisfactory to the Trustee in
accordance with Sections 6.03 and 8.02.

                  If the  Unaffiliated  Seller  is  required  to  repurchase  or
replace a Mortgage Loan  pursuant to the terms  hereof,  upon receipt of written
direction  from  the  Unaffiliated  Seller  the  Trustee  shall  assign  to  the
Unaffiliated  Seller  its  rights  under  the  related  Mortgage  Loan  Purchase
Agreement solely with respect to such Mortgage Loan.

                    The  representations  and  warranties  made pursuant to this
Section 2.03 shall survive  delivery of the  respective  Custodial  Files to the
Trustee.

                  Section 2.04      THE DEPOSITOR AND THE MORTGAGE LOANS.

                  The Depositor  hereby  represents  and warrants to the Trustee
and to the Class A Certificate  Insurer with respect to each Mortgage Loan as of
the date  hereof or such  other  date set forth  herein  that as of the  related
Delivery  Date,  and following  the transfer of the Mortgage  Loans to it by the
Unaffiliated  Seller, the Depositor had good title to the Mortgage Loans and the
Mortgage Notes were subject to no offsets, defenses or counterclaims.

                  The  Depositor  hereby  assigns,  transfers and conveys to the
Trustee all of its rights with respect to the Initial  Mortgage Loans and shall,
on each subsequent  Transfer Date,  convey all of its right,  title and interest
with respect to the related subsequent Mortgage Loans.

                  Section 2.05      DELIVERY OF OPINION OF COUNSEL IN CONNECTION
WITH SUBSTITUTIONS AND NON-QUALIFIED MORTGAGES.

                  Notwithstanding  any contrary provision of this Agreement,  no
substitution  pursuant to Section 2.03 shall be made more than 30 days after the
related  Delivery Date unless the Unaffiliated  Seller  delivers,  or causes the
related  Originator  to deliver,  to the  Trustee an Opinion of Counsel,  at the
expense of the Unaffiliated Seller, addressed to the Trustee, to the effect that
such  substitution  will  not  (i)  result  in  the  imposition  of  the  tax on
"prohibited  transactions" on the Trust Fund or contributions  after the Startup
Date, as defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively or
(ii)  cause the Trust  Fund to fail to  qualify  as a REMIC at any time that any
Certificates are outstanding.

                  Section 2.06      EXECUTION AND DELIVERY OF CERTIFICATES.

                  The Trustee  acknowledges the transfer and assignment to it of
the Trust Fund and, concurrently with such transfer and assignment, has executed
and  delivered  to or upon  the  order of the  Depositor,  the  Certificates  in
authorized  denominations evidencing directly or indirectly the entire ownership
of the Trust Fund.  The Trustee  agrees to hold the Trust Fund and  exercise

                                       47
<PAGE>

the rights  referred to above for the benefit of all present and future  Holders
of the Certificates, and for the benefit of the Class A Certificate Insurer.

                  Section 2.07      REMIC MATTERS.

                  The  Preliminary  Statement  sets forth the  designations  for
federal income tax purposes of all interests  created hereby.  The "Startup Day"
for  purposes of the REMIC  Provisions  shall be the Closing  Date.  The "latest
possible  maturity  date" is January 25, 2033,  which is the sixth  Distribution
Date following the latest Mortgage Loan maturity date.

                  Section 2.08      REPRESENTATIONS AND WARRANTIES OF THE
DEPOSITOR.

                  The Depositor hereby represents, warrants and covenants to the
Trustee,  the Servicer and to the Class A Certificate Insurer and the that as of
the date of this Agreement or as of such date specifically provided herein:

                  (a) The Depositor is a  corporation  duly  organized,  validly
existing and in good standing under the laws of the State of Delaware;

                  (b) The  Depositor  has the  corporate  power and authority to
convey the Mortgage Loans and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by, this Agreement;

                  (c) This  Agreement  has been  duly  and  validly  authorized,
executed and delivered by the Depositor,  all requisite  corporate action having
been taken, and, assuming the due  authorization,  execution and delivery hereof
by the other parties hereto, constitutes or will constitute the legal, valid and
binding  agreement  of the  Depositor,  enforceable  against  the  Depositor  in
accordance  with  its  terms,  except  as such  enforcement  may be  limited  by
bankruptcy,  insolvency,  reorganization,   moratorium  or  other  similar  laws
relating  to or  affecting  the rights of  creditors  generally,  and by general
equity  principles  (regardless  of whether such  enforcement is considered in a
proceeding in equity or at law);

                  (d)  No  consent,  approval,  authorization  or  order  of  or
registration or filing with, or notice to, any  governmental  authority or court
is required for the execution,  delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any of the
transactions  contemplated  hereby,  except as have been made on or prior to the
Closing Date;

                  (e) None of the execution and delivery of this Agreement,  the
consummation  of  the  transactions  contemplated  hereby  or  thereby,  or  the
fulfillment of or compliance  with the terms and  conditions of this  Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes  or will  constitute  a  default  or  results  or will  result in an
acceleration  under (A) the  charter or bylaws of the  Depositor,  or (B) of any
term, condition or provision of any material indenture,  deed of trust, contract
or  other  agreement  or  instrument  to  which  the  Depositor  or  any  of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will  result in a  violation  of any law,  rule,  regulation,  order,
judgment or decree  applicable  to the  Depositor  of any court or  governmental
authority having  jurisdiction over the Depositor or its subsidiaries;  or (iii)
results in the creation or imposition of any lien,  charge or

                                       48
<PAGE>

encumbrance  which would have a material  adverse effect upon the Mortgage Loans
or any documents or instruments evidencing or securing the Mortgage Loans;

                  (f)  There  are no  actions,  suits or  proceedings  before or
against or investigations of, the Depositor pending,  or to the knowledge of the
Depositor,   threatened,  before  any  court,  administrative  agency  or  other
tribunal, and no notice of any such action, which, in the Depositor's reasonable
judgment, might materially and adversely affect the performance by the Depositor
of its obligations  under this Agreement,  or the validity or  enforceability of
this Agreement;

                  (g) The  Depositor is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state,
municipal or  governmental  agency that may materially and adversely  affect its
performance hereunder; and

                  (h)  Immediately  prior to the transfer and  assignment by the
Depositor to the Trustee,  the Depositor had, or, with respect to the subsequent
Mortgage Loans, will have, good title to, and was, or will be, the sole owner of
each Mortgage Loan, free of any interest of any other Person,  and the Depositor
has  transferred,  or shall  transfer,  all right,  title and  interest  in each
Mortgage Loan to the Trustee. The transfer of the Mortgage Note and the Mortgage
as and in the manner  contemplated  by this  Agreement is sufficient  either (i)
fully to transfer to the Trustee, for the benefit of the  Certificateholders and
for the  benefit  of the Class A  Certificate  Insurer,  all right,  title,  and
interest of the Depositor  thereto as note holder and mortgagee or (ii) to grant
to the Trustee, for the benefit of the Certificateholders and for the benefit of
the Class A Certificate  Insurer,  the security  interest referred to in Section
10.04 hereof.

                  It  is  understood   and  agreed  that  the   representations,
warranties  and covenants set forth in this Section 2.08 shall survive  delivery
of the respective Custodial Files to the Trustee or to a custodian,  as the case
may be, and shall inure to the benefit of the Trustee.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING

                                OF MORTGAGE LOANS

                  Section 3.01      SERVICER TO SERVICE MORTGAGE LOANS.

                  (a) For and on  behalf of the  Certificateholders  and for the
benefit of the Class A  Certificate  Insurer,  the  Servicer  shall  service and
administer the Mortgage Loans in accordance with the terms of this Agreement and
the respective  Mortgage Loans and, to the extent consistent with such terms, in
the same manner in which it services and administers  similar mortgage loans for
its own portfolio,  giving due consideration to customary and usual standards of
practice of mortgage lenders and loan servicers  administering  similar mortgage
loans but without regard to:

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

                                       49
<PAGE>

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

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

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

                  To the extent  consistent  with the  foregoing,  the  Servicer
shall seek to  maximize  the timely  and  complete  recovery  of  principal  and
interest on the Mortgage Notes.  Subject only to the  above-described  servicing
standards and the terms of this Agreement and of the respective  Mortgage Loans,
the  Servicer  shall  have full  power and  authority,  acting  alone or through
Subservicers  as provided in Section 3.02, to do or cause to be done any and all
things in connection  with such servicing and  administration  which it may deem
necessary or desirable.  Without  limiting the generality of the foregoing,  the
Servicer in its own name or in the name of a  Subservicer  is hereby  authorized
and empowered by the Trustee when the Servicer  believes it  appropriate  in its
best judgment in accordance  with the  servicing  standards set forth above,  to
execute and deliver any and all instruments of satisfaction or cancellation,  or
of partial or full release or discharge,  and all other comparable  instruments,
with respect to the Mortgage Loans and the Mortgaged Properties and to institute
foreclosure proceedings or obtain a deed-in-lieu of foreclosure so as to convert
the ownership of such properties,  and to hold or cause to be held title to such
properties,  on behalf of the Trustee. The Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors  any reports  required to be provided to them thereby.
The Servicer  shall also comply in the  performance  of this  Agreement with all
reasonable  rules and  requirements  of each insurer  under any standard  hazard
insurance  policy.  Subject to Section 3.15, the Trustee shall  execute,  at the
written request of the Servicer, and furnish to the Servicer and any Subservicer
such  documents as are  necessary or  appropriate  to enable the Servicer or any
Subservicer to carry out their servicing and  administrative  duties  hereunder,
and the  Trustee  hereby  grants  to the  Servicer,  and  this  Agreement  shall
constitute,  a power of attorney  to carry out such duties  including a power of
attorney to take title to Mortgaged  Properties  after  foreclosure on behalf of
the Trustee.  The Trustee shall execute a separate power of attorney in favor of
the  Servicer  for the  purposes  described  herein to the extent  necessary  or
desirable  to enable the Servicer to perform its duties  hereunder.  The Trustee
shall not be liable for the actions of the  Servicer or any  Subservicers  under
such powers of attorney.

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

                                       50
<PAGE>

                  (c)   Notwithstanding   anything  in  this  Agreement  to  the
contrary,  the  Servicer  may not make any  future  advances  with  respect to a
Mortgage  Loan (except as provided in Section  4.01) and the Servicer  shall not
(i) permit any modification  with respect to any Mortgage Loan that would change
the  Mortgage  Rate,  reduce or  increase  the  principal  balance  (except  for
reductions  resulting  from actual  payments of  principal)  or change the final
maturity date on such Mortgage Loan or (ii) permit any  modification,  waiver or
amendment  of any term of any  Mortgage  Loan  that  would  both (A)  effect  an
exchange or  reissuance of such Mortgage Loan under Section 1001 of the Code (or
final,  temporary or proposed Treasury regulations  promulgated  thereunder) and
(B)  cause  any  REMIC  to fail to  qualify  as a REMIC  under  the  Code or the
imposition of any tax on "prohibited  transactions" or "contributions  after the
startup date" under the REMIC Provisions, or (iii) except as provided in Section
3.07(a), waive any Prepayment Charges.

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

                  Section 3.02      SUBSERVICING AGREEMENTS BETWEEN THE SERVICER
AND SUBSERVICERS.

                  (a) The Servicer may enter into  Subservicing  Agreements with
Subservicers, for the servicing and administration of the Mortgage Loans.

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

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<PAGE>

                  (b)  As  part  of  its  servicing  activities  hereunder,  the
Servicer (except as otherwise  provided in the last sentence of this paragraph),
for  the  benefit  of  the  Trustee,  shall  enforce  the  obligations  of  each
Subservicer  under  the  related  Subservicing  Agreement,   including,  without
limitation, any obligation to make advances in respect of delinquent payments as
required by a  Subservicing  Agreement.  Such  enforcement,  including,  without
limitation,  the  legal  prosecution  of  claims,  termination  of  Subservicing
Agreements, and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as the Servicer,  in its good
faith business judgment, would require were it the owner of the related Mortgage
Loans.  The Servicer shall pay the costs of such enforcement at its own expense,
and shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement,  to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs,  expenses  or  attorneys'  fees  against  the  party  against  whom  such
enforcement is directed.

                  Section 3.03      SUCCESSOR SUBSERVICERS.

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

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

                  Section 3.04      LIABILITY OF THE SERVICER.

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

                                       52
<PAGE>

                  Section 3.05  NO CONTRACTUAL RELATIONSHIP BETWEEN SUBSERVICERS
AND THE TRUSTEE.

                  Any  Subservicing  Agreement  that may be entered into and any
transactions or services  relating to the Mortgage Loans involving a Subservicer
in its  capacity as such shall be deemed to be between the  Subservicer  and the
Servicer alone, and the Trustee (or any successor  Servicer) shall not be deemed
a party  thereto  and  shall  have no  claims,  rights,  obligations,  duties or
liabilities with respect to the Subservicer except as set forth in Section 3.06.
The Servicer shall be solely liable for all fees owed by it to any  Subservicer,
irrespective of whether the Servicer's  compensation  pursuant to this Agreement
is sufficient to pay such fees.

                  Section 3.06    ASSUMPTION  OR  TERMINATION  OF   SUBSERVICING
AGREEMENTS BY TRUSTEE.

                  In the event the  Servicer at any time shall for any reason no
longer be the  Servicer  (including  by reason of the  occurrence  of a Event of
Default),  the Trustee or its designee shall thereupon  assume all of the rights
and  obligations  of the Servicer  under each  Subservicing  Agreement  that the
Servicer  may have entered  into,  with copies  thereof  provided to the Trustee
prior to the Trustee  assuming such rights and  obligations,  unless the Trustee
elects to terminate any  Subservicing  Agreement in accordance with its terms as
provided in Section 3.03.

                  Upon  such  assumption,  the  Trustee,  its  designee  or  the
successor servicer shall be deemed, subject to Section 3.03, to have assumed all
of the Servicer's  interest therein and to have replaced the Servicer as a party
to each  Subservicing  Agreement  to the  same  extent  as if each  Subservicing
Agreement had been assigned to the assuming party,  except that (i) the Servicer
shall  not  thereby  be  relieved  of any  liability  or  obligations  under any
Subservicing  Agreement  that arose before it ceased to be the Servicer and (ii)
none of the Depositor,  the Trustee,  their designees or any successor  Servicer
shall be deemed to have assumed any liability or obligation of the Servicer that
arose before it ceased to be the Servicer.

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

                  Section 3.07  COLLECTION OF CERTAIN  MORTGAGE  LOAN  PAYMENTS;
ESTABLISHMENT OF CERTAIN ACCOUNTS.

                  (a)      The Servicer shall make reasonable efforts to collect
all payments  called for under the terms and  provisions of the Mortgage  Loans,
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any applicable  insurance policies,  follow such
collection  procedures  as it  would  follow  with  respect  to  mortgage  loans
comparable to the Mortgage Loans and held for its own account.  Consistent  with
the  foregoing,  the  Servicer  may (i) waive  any late  payment  charge  or, if
applicable, any penalty interest, or (ii) extend the due dates for the Scheduled
Payments  due on a  Mortgage  Note for a period  of not  greater  than 180 days;
provided that any  extension  pursuant to clause (ii) above shall not affect the
amortization  schedule of any  Mortgage  Loan for  purposes  of any  computation
hereunder,  except  as  provided  below.  In the  event of any such  arrangement
pursuant to clause (ii)

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<PAGE>

above, the Servicer shall make timely advances on such Mortgage Loan during such
extension  pursuant  to Section  4.01 and in  accordance  with the  amortization
schedule of such  Mortgage Loan without  modification  thereof by reason of such
arrangements,  subject to Section  4.01(d)  pursuant to which the Servicer shall
not be required to make any such advances that are  Nonrecoverable P&I Advances.
Notwithstanding the foregoing,  the Servicer may not waive, in whole or in part,
a Prepayment Charge, except under the following  circumstances:  (i) such waiver
relates to a default  or a  reasonably  foreseeable  default  and would,  in the
reasonable judgment of the Servicer,  maximize recovery of total proceeds taking
into account the value of such Prepayment  Charge and the related Mortgage Loan,
and doing so is standard and  customary in servicing  mortgage  loans similar to
the Mortgage Loans  (including  any waiver of a Prepayment  Charge in connection
with a  refinancing  of a  Mortgage  Loan  that is  related  to a  default  or a
reasonably  foreseeable  default),  and in no event  will the  Servicer  waive a
Prepayment  Charge in connection  with a refinancing  of a Mortgage Loan that is
not  related  to a default  or a  reasonably  foreseeable  default  or (ii) such
Prepayment  Charge is not  permitted  to be collected  by  applicable  law. If a
Prepayment Charge is waived other than as permitted by the prior sentence,  then
the Servicer is required to pay the amount of such waived Prepayment Charge, for
the  benefit of the  Holders of the Class P  Certificates,  by  depositing  such
amount into the Collection Account together with and at the time that the amount
prepaid on the  related  Mortgage  Loan is  required  to be  deposited  into the
Collection Account.

                  (b)      (i)      The Trustee shall establish and maintain the
Excess  Reserve Fund Account,  on behalf of the Class X  Certificateholders,  to
secure  their  limited   recourse   obligation  to  pay  to  the  Floating  Rate
Certificateholders Basis Risk CarryForward Amounts.

                           (ii)     On each Distribution Date, the Trustee shall
         deposit  the  amount of any Basis Risk  Payment  for such date into the
         Excess Reserve Fund Account.

                  (c)      (i)      On each  Distribution  Date on  which  there
exists a Basis  Risk  CarryForward  Amount  on any  Class of  Certificates,  the
Trustee  shall (1)  withdraw  from the  Distribution  Account and deposit in the
Excess Reserve Fund Account, as set forth in Section 4.02(a)(iii)(f), the lesser
of the Class X  Distributable  Amount  (without  regard to the  reduction in the
definition  thereof with respect to the Basis Risk CarryForward  Amount) (to the
extent    remaining    after   the    distributions    specified   in   Sections
4.02(a)(iii)(a)-(e))  and the Basis Risk  CarryForward  Amount and (2)  withdraw
from the Excess Reserve Fund Account  amounts  necessary to pay to such Class or
Classes of Certificates the Basis Risk CarryForward  Amount. Such payments shall
be allocated to those Classes on a pro rata basis based upon the amount of Basis
Risk  CarryForward  Amount  owed to each  such  Class  and  shall be paid in the
priority set forth in Section 4.02(a)(iii)(g) hereof.

                           (ii)     The  Trustee  shall  account  for the Excess
         Reserve Fund  Account as an outside  reserve fund within the meaning of
         Treasury  regulation  1.860G-2(h)  and  not as an  asset  of any  REMIC
         created pursuant to this Agreement.  The beneficial owner of the Excess
         Reserve Fund Account is the Class X Certificateholder.  For all federal
         tax purposes, amounts transferred by the Upper Tier REMIC to the Excess
         Reserve Fund Account shall be treated as  distributions  by the Trustee
         to the Class X Certificateholder.

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<PAGE>

                           (iii)    Any Basis Risk CarryForward  Amounts paid by
         the Trustee to the Floating Rate Certificateholders  shall be accounted
         for by the Trustee as amounts  paid first to the Holders of the Class X
         Certificate  and then to the  respective  Class or Classes of  Floating
         Rate  Certificates.  In  addition,  the Trustee  shall  account for the
         Floating Rate  Certificateholders'  rights to receive payments of Basis
         Risk CarryForward Amounts as rights in a limited recourse interest rate
         cap contract written by the Class X Certificateholders  in favor of the
         Floating Rate Certificateholders.

                           (iv)     Notwithstanding  any provision  contained in
         this Agreement,  the Trustee shall not be required to make any payments
         from the Excess  Reserve Fund Account  except as expressly set forth in
         this Section 3.07(c).

                  (d)      The  Trustee   shall   establish   and  maintain  the
Distribution  Account on behalf of the  Certificateholders.  The Trustee  shall,
promptly upon receipt,  deposit in the  Distribution  Account and retain therein
the following:

                           (i)      the   aggregate   amount   remitted  by  the
         Servicer to the Trustee pursuant to 3.11;

                           (ii)     any  amount   deposited   by  the   Servicer
         pursuant to Section  3.10 in  connection  with any losses on  Permitted
         Investments; and

                           (iii)    any other amounts deposited  hereunder which
         are required to be deposited in the Distribution Account.

                  In the event  that the  Servicer  shall  remit any  amount not
required  to be  remitted,  it may at any time  direct the Trustee in writing to
withdraw such amount from the Distribution  Account, any provision herein to the
contrary  notwithstanding.  Such  direction  may be  accomplished  by delivering
notice to the Trustee  which  describes  the amounts  deposited  in error in the
Distribution  Account.  All funds deposited in the Distribution Account shall be
held by the  Trustee  in trust for the  Certificateholders  until  disbursed  in
accordance  with this Agreement or withdrawn in accordance with Section 4.02. In
no event shall the Trustee incur liability for withdrawals from the Distribution
Account at the direction of the Servicer.

                  (e)      The  Trustee   shall   establish   and  maintain  the
Capitalized  Interest  Account,  on  behalf  of the  Certificateholders.  On the
Closing Date,  the Trustee shall deposit  $348,382 to the  Capitalized  Interest
Account from the proceeds of the sale of the Offered  Certificates.  Withdrawals
from the Capitalized  Interest Account shall be made in accordance with Sections
4.02(c) and (d) hereof.  The Trustee shall account for the Capitalized  Interest
Account as an outside  reserve  fund within the  meaning of Treasury  Regulation
1.860G-2(h) and not as an asset of any REMIC created pursuant to this Agreement.
The  beneficial  owner  of  the  Capitalized   Interest  Account  shall  be  the
Unaffiliated Seller.

                  (f)      The  Trustee   shall   establish   and  maintain  the
Pre-Funding Account, on behalf of the  Certificateholders.  On the Closing Date,
the Trustee  shall  deposit the Original  Pre-Funded  Amount to the  Pre-Funding
Account from the proceeds of the sale of the Offered  Certificates.  Withdrawals
from the Pre-Funding  Account shall be made in accordance with Sections 4.02(e),
(f) and (g) hereof.

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<PAGE>

                  (g)      The Trustee  may invest the funds in the  Accounts if
directed in writing by the Servicer,  with respect to the Collection Account and
the  Distribution  Account or by the  Unaffiliated  Seller,  with respect to the
Pre-Funding  Account  and the  Capitalized  Interest  Account in each  case,  in
Permitted  Investments,  which  directions  shall be in accordance  with Section
3.12.

                  (h)      The Servicer  shall give notice to the Trustee,  each
Rating  Agency and the  Depositor of any proposed  change of the location of the
Collection Account not later than 30 days and not more than 45 days prior to any
change thereof.

                  Section 3.08  SUBSERVICING ACCOUNTS.

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

                  Section  3.09  COLLECTION  OF TAXES,  ASSESSMENTS  AND SIMILAR
ITEMS; ESCROW ACCOUNTS.

                  (a)      The  Servicer  shall ensure that each of the Mortgage
Loans shall be covered by a paid-in-full,  life-of-the-loan tax service contract
with a nationally  recognized  provider acceptable to the Servicer (each, a "TAX
SERVICE CONTRACT").  Each Tax Service Contract shall be assigned to the Trustee,
or its  designee,  at the  Servicer's  expense in the event that the Servicer is
terminated as Servicer of the related Mortgage Loan.

                  (b)      To the extent  that the  services  described  in this
paragraph (b) are not otherwise  provided  pursuant to the Tax Service Contracts
described  in paragraph  (a) hereof,  the  Servicer  undertakes  to perform such
functions. The Servicer shall establish and maintain, or cause to be established
and  maintained,  one or more accounts (the "ESCROW  ACCOUNTS"),  which shall be
Eligible  Accounts.  The Servicer  shall deposit in the clearing  account (which
account must be an Eligible  Account) in which it customarily  deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities  on a daily  basis,  and in no event more than one Business Day after
the Servicer's receipt thereof,  all collections from the Mortgagors (or related
advances from Subservicers) for the payment of taxes, assessments,

                                       56
<PAGE>

hazard insurance premiums and comparable items for the account of the Mortgagors
("ESCROW  PAYMENTS")  collected  on  account  of the  Mortgage  Loans  and shall
thereafter deposit such Escrow Payments in the Escrow Accounts, in no event more
than two Business Days after the deposit of such funds in the clearing  account,
for the purpose of effecting the payment of any such items as required under the
terms of this  Agreement.  Withdrawals  of amounts from an Escrow Account may be
made  only  to (i)  effect  payment  of  taxes,  assessments,  hazard  insurance
premiums, and comparable items; (ii) reimburse the Servicer (or a Subservicer to
the  extent  provided  in the  related  Subservicing  Agreement)  out of related
collections  for any advances  made  pursuant to Section  3.01 (with  respect to
taxes and  assessments)  and Section  3.13 (with  respect to hazard  insurance);
(iii) refund to Mortgagors  any sums as may be  determined to be overages;  (iv)
pay interest,  if required and as described  below, to Mortgagors on balances in
the  Escrow  Account;  (v)  clear  and  terminate  the  Escrow  Account  at  the
termination of the Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement or (vi) recover amounts  deposited in error.
As part of its servicing duties,  the Servicer or Subservicers  shall pay to the
Mortgagors  interest on funds in Escrow Accounts,  to the extent required by law
and,  to the extent  that  interest  earned on funds in the Escrow  Accounts  is
insufficient,  to pay such  interest  from its or their own funds,  without  any
reimbursement  therefor.  To the extent  that a Mortgage  does not  provide  for
Escrow Payments, the Servicer shall determine whether any such payments are made
by the Mortgagor in a manner and at a time that avoids the loss of the Mortgaged
Property  due to a tax  sale or the  foreclosure  of a tax  lien.  The  Servicer
assumes full  responsibility  for the payment of all such bills within such time
and shall  effect  payments of all such bills  irrespective  of the  Mortgagor's
faithful performance in the payment of same or the making of the Escrow Payments
and shall make  advances from its own funds to effect such  payments;  PROVIDED,
HOWEVER, that such advances are deemed to be Servicing Advances.

                  Section 3.10 COLLECTION ACCOUNT.

                  (a)      On  behalf  of  the  Trustee,   the  Servicer   shall
establish and maintain,  or cause to be established and maintained,  one or more
Eligible Accounts (such account or accounts, the "COLLECTION ACCOUNT"),  held in
trust for the benefit of the  Trustee.  On behalf of the  Trustee,  the Servicer
shall deposit or cause to be deposited in the clearing  account  (which  account
must be an  Eligible  Account) in which it  customarily  deposits  payments  and
collections  on mortgage  loans in connection  with its mortgage loan  servicing
activities  on a daily  basis,  and in no event more than one Business Day after
the Servicer's  receipt thereof,  and shall thereafter deposit in the Collection
Account, in no event more than two Business Days after the deposit of such funds
into  the  clearing  account,  as and when  received  or as  otherwise  required
hereunder,  the  following  payments  and  collections  received  or  made by it
subsequent  to the related  Cut-off  Date (other than in respect of principal or
interest on the  related  Mortgage  Loans due on or before the  related  Cut-off
Date,  and except for  $633,421.80  in interest,  which is being retained by the
Unaffiliated Seller), or payments (other than Principal Prepayments) received by
it on or  prior  to the  related  Cut-off  Date but  allocable  to a Due  Period
subsequent thereto:

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

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

                                       57
<PAGE>

                           (iii)    all  Insurance  Proceeds  to the extent such
         Insurance  Proceeds  are not to be  applied to the  restoration  of the
         related  Mortgaged  Property or released  to the related  Mortgagor  in
         accordance  with the express  requirements of law or in accordance with
         prudent and customary servicing practices and Liquidation Proceeds;

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

                           (v)      any amounts  required to be deposited by the
         Servicer pursuant to the second paragraph of Section 3.13(a) in respect
         of any blanket policy deductibles;

                           (vi)     all   proceeds   of   any   Mortgage    Loan
         repurchased or purchased in accordance with this Agreement; and

                           (vii)    all  Prepayment  Charges  collected  by  the
         Servicer.

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

                  (b)      No later than the  Closing  Date,  the  Servicer,  on
behalf of the  Trustee,  shall  establish  and  maintain  a  sub-account  of the
Collection  Account,  in  the  name  of  the  Trustee  for  the  benefit  of the
Certificateholders and designated "Deutsche Bank National Trust Company in trust
for registered  holders of CDC Date Mortgage  Capital Trust  2002-HE1,  Mortgage
Pass-Through  Certificates,  Series  2002-HE1".  On behalf of the  Trustee,  the
Servicer shall, on each  Determination Date transfer from the Collection Account
to the Simple Interest Excess  Sub-Account  all Net Simple Interest  Excess,  if
any,  pursuant to Section  3.11(a)(x),  and shall  maintain a record of all such
deposits.  On behalf of the Trustee,  the  Servicer  shall  withdraw  amounts on
deposit in the Simple  Interest  Excess  Sub-Account on each Remittance Date for
deposit to the Distribution  Account in an amount equal to the lesser of (i) the
amount on deposit therein,  and (ii) the Net Simple Interest  Shortfall for such
Remittance Date.

                  (c)      The Servicer shall remit to the Trustee,  which shall
thereupon distribute to the Class X Certificateholder, 90% of the balance in the
Simple Interest  Excess  Sub-Account on the Remittance Date occurring in October
of each year,  commencing in October 2002, after making any other  distributions
therefrom on such Remittance Date. Such distributions shall be deemed to be made
on a first-in, first-out basis.

                  (d)      Funds  in  the  Collection  Account  and  the  Simple
Interest  Excess  Sub-Account  may  be  invested  in  Permitted  Investments  in
accordance  with the  provisions  set forth in Section 3.12.  The Servicer shall
give notice to the Trustee and the  Depositor of the

                                       58
<PAGE>

location of the Collection  Account  maintained by it when established and prior
to any change thereof.

                  Section 3.11 WITHDRAWALS FROM THE COLLECTION ACCOUNT.

                  (a)      The  Servicer   shall,   from  time  to  time,   make
withdrawals from the Collection Account or, to the extent specifically set forth
herein, the Simple Interest Excess  Sub-Account,  as applicable,  for any of the
following purposes or as described in Section 4.01:

                           (i)      On or prior to the Remittance Date, to remit
         to the Trustee (i) the  Trustee Fee with  respect to such  Distribution
         Date  and  (ii)  the  Interest  Remittance  Amount  and  the  Principal
         Remittance Amount in respect of the related  Distribution Date together
         with all amounts  representing  Prepayment  Charges  from the  Mortgage
         Loans received during the related Prepayment Period;

                           (ii)     to reimburse  the Servicer for P&I Advances,
         but  only to the  extent  of  amounts  received  which  represent  Late
         Collections (net of the related  Servicing Fees) of Monthly Payments on
         Mortgage  Loans with  respect to which such P&I  Advances  were made in
         accordance with the provisions of Section 4.01;

                           (iii)    to pay the Servicer or any  Subservicer  (a)
         any unpaid  Servicing Fees or (b) any unreimbursed  Servicing  Advances
         with respect to each Mortgage  Loan, but only to the extent of any Late
         Collections,  Liquidation Proceeds, Insurance Proceeds or other amounts
         as may be  collected by the  Servicer  from a  Mortgagor,  or otherwise
         received  with  respect  to such  Mortgage  Loan  (or the  related  REO
         Property);

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

                           (v)      to  pay to the  Unaffiliated  Seller  or the
         related Originator,  as applicable,  with respect to each Mortgage Loan
         that has  previously  been  purchased  or replaced by the  Unaffiliated
         Seller or such Originator,  as applicable,  pursuant to this Agreement,
         all  amounts  received  thereon  subsequent  to the date of purchase or
         substitution, as the case may be;

                           (vi)     to  reimburse   the  Servicer  for  any  P&I
         Advance or  Servicing  Advance  previously  made which the Servicer has
         determined  to  be  a  Nonrecoverable  P&I  Advance  or  Nonrecoverable
         Servicing Advance in accordance with the provisions of Section 4.01;

                           (vii)    to pay, or to  reimburse  the  Servicer  for
         advances  in respect  of,  expenses  incurred  in  connection  with any
         Mortgage Loan pursuant to Section 3.15;

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

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                           (ix)     to reimburse the Servicer,  the Unaffiliated
         Seller, the Depositor,  the Class A Certificate Insurer or the Trustee,
         as the case may be, for expenses  reasonably incurred in respect of the
         breach or defect giving rise to the purchase  obligation  under Section
         2.03 of this Agreement  that were included in the  Repurchase  Price of
         the  Mortgage  Loan,   including  any  expenses   arising  out  of  the
         enforcement of the purchase obligation to the extent not otherwise paid
         pursuant to the terms hereof;

                           (x)      to  deposit to the  Simple  Interest  Excess
         Sub-Account  any amount  required to be deposited  therein  pursuant to
         Section 3.10(b);

                           (xi)     to  withdraw  any amounts  deposited  in the
         Collection  Account or the Simple Interest Excess Sub-Account in error;
         and

                           (xii)    to  clear  and  terminate   the   Collection
         Account and the Simple Interest Excess  Sub-Account upon termination of
         this Agreement.

                  (b)      The  Servicer   shall  keep  and  maintain   separate
accounting,  on a Mortgage  Loan by  Mortgage  Loan  basis,  for the  purpose of
justifying any withdrawal from the Collection  Account, to the extent held by or
on behalf of it, pursuant to subclauses (a)(ii), (iii), (v), (vi), (vii), (viii)
and (ix) above. The Servicer shall provide written  notification to the Trustee,
on or prior to the next succeeding  Remittance Date, upon making any withdrawals
from the Collection Account pursuant to subclause (a)(vii) above.

                  Section 3.12     INVESTMENT   OF   FUNDS   IN   THE   ACCOUNT.

                  (a)      The  Servicer  may direct  the  Trustee to invest the
funds in the Collection Account,  the Simple Interest Excess Sub-Account and the
Distribution  Account,  and the  Unaffiliated  Seller may direct the  Trustee to
invest the funds in the Pre-Funding Account and the Capitalized Interest Account
(each of such  Accounts,  for  purposes of this  Section  3.12,  an  "INVESTMENT
ACCOUNT"),  in one or more Permitted  Investments  bearing interest or sold at a
discount, and maturing,  unless payable on demand no later than the Business Day
immediately  preceding the date on which such funds are required to be withdrawn
from such account  pursuant to this  Agreement.  All such Permitted  Investments
shall be held to maturity,  unless payable on demand. Any investment of funds in
an  Investment  Account  shall be made in the name of the  Trustee.  The Trustee
shall  be  entitled  to sole  possession  (except  with  respect  to  investment
direction of funds held in the related  Account and any income and gain realized
thereon) over each such  investment,  and any  certificate  or other  instrument
evidencing any such investment shall be delivered directly to the Trustee or its
agent,  together  with any document of transfer  necessary to transfer  title to
such investment to the Trustee. In the event amounts on deposit in an Investment
Account are at any time  invested in a Permitted  Investment  payable on demand,
the Trustee may:

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

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<PAGE>

                  (y)      demand  payment of all  amounts due  thereunder  that
                           such  Permitted  Investment  would not  constitute  a
                           Permitted  Investment in respect of funds  thereafter
                           on deposit in the Investment Account.

                  (b)      (i)      All  income  and  gain   realized  from  the
investment of funds  deposited in the Collection  Account,  the Simple  Interest
Excess  Sub-Account  and the  Distribution  Account  held by or on behalf of the
Servicer,  shall be for the benefit of the  Servicer and shall be subject to its
withdrawal  in the manner set forth in Section 3.11 in the case of income in the
Collection  Account  or the  Simple  Interest  Excess  Sub-Account,  and on each
Distribution Date, the Trustee shall withdraw from the Distribution Account, and
remit to the  Servicer  all  amounts in  respect of such  income and gain in the
Distribution  Account.  Whether in regard to the Collection Account,  the Simple
Interest  Excess  Sub-Account or the  Distribution  Account,  the Servicer shall
deposit in the Collection Account, the Simple Interest Excess Sub-Account or the
Distribution  Account,  as  applicable,  the  amount  of any  loss of  principal
incurred  in respect of any such  Permitted  Investment  made with funds in such
accounts immediately upon realization of such loss.

                           (ii)     All  income  and  gain   realized  from  the
         investment  of  funds  deposited  in the  Pre-Funding  Account  and the
         Capitalized  Interest  Account held by or on behalf of the Unaffiliated
         Seller  shall  be  retained  in such  Investment  Account,  subject  to
         withdrawal  as  provided  in  Section  4.02.  Whether  in regard to the
         Pre-Funding   Account  or  the  Capitalized   Interest   Account,   the
         Unaffiliated  Seller shall  deposit in the  Pre-Funding  Account or the
         Capitalized Interest Account, as applicable,  the amount of any loss of
         principal  incurred in respect of any such  Permitted  Investment  made
         with funds in such accounts immediately upon realization of such loss.

                  (c)      Except  as  otherwise   expressly  provided  in  this
Agreement,  if any  default  occurs in the  making  of a  payment  due under any
Permitted  Investment,  or if a default occurs in any other performance required
under any  Permitted  Investment,  the Trustee  shall take such action as may be
appropriate to enforce such payment or  performance,  including the  institution
and prosecution of appropriate proceedings.  The Trustee shall not be liable for
the  amount  of any  loss  incurred  in  respect  of any  investment  or lack of
investment of funds held in any Investment  Account or the Distribution  Account
if made in accordance with this Section 3.12.

                  Section 3.13    MAINTENANCE OF HAZARD INSURANCE AND ERRORS AND
OMISSIONS AND FIDELITY COVERAGE.

                  (a)      The Servicer  shall cause to be  maintained  for each
Mortgage Loan fire  insurance  with extended  coverage on the related  Mortgaged
Property  in an amount  which is at least  equal to the least of (i) the current
principal  balance of such  Mortgage  Loan,  (ii) the amount  necessary to fully
compensate  for any damage or loss to the  improvements  that are a part of such
property on a replacement  cost basis and (iii) the maximum  insurable  value of
the improvements which are a part of such Mortgaged Property, in each case in an
amount not less than such amount as is necessary to avoid the application of any
coinsurance  clause  contained  in the  related  hazard  insurance  policy.  The
Servicer shall also cause to be maintained fire insurance with extended coverage
on each REO  Property in an amount  which is at least equal to the lesser of (i)
the  maximum  insurable  value  of the  improvements  which  are a part  of such
property and (ii) the

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<PAGE>

outstanding principal balance of the related Mortgage Loan at the time it became
an REO  Property,  plus  accrued  interest  at the  Mortgage  Rate  and  related
Servicing  Advances.  The  Servicer  will  comply  in the  performance  of  this
Agreement with all reasonable  rules and  requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Servicer under any such
policies  (other than amounts to be applied to the  restoration or repair of the
property  subject to the  related  Mortgage  or amounts  to be  released  to the
Mortgagor in accordance  with the  procedures  that the Servicer would follow in
servicing loans held for its own account, subject to the terms and conditions of
the related  Mortgage  and Mortgage  Note) shall be deposited in the  Collection
Account,  subject to withdrawal  pursuant to Section 3.11.  Any cost incurred by
the Servicer in  maintaining  any such  insurance  shall not, for the purpose of
calculating  distributions  to the  Trustee,  be added to the  unpaid  principal
balance of the related  Mortgage  Loan,  notwithstanding  that the terms of such
Mortgage Loan so permit. It is understood and agreed that no earthquake or other
additional  insurance is to be required of any Mortgagor  other than pursuant to
such  applicable  laws and  regulations  as shall at any time be in force and as
shall  require  such  additional  insurance.  If the  Mortgaged  Property or REO
Property is at any time in an area  identified  in the  Federal  Register by the
Federal  Emergency  Management  Agency as having special flood hazards and flood
insurance  has been made  available,  the Servicer will cause to be maintained a
flood insurance policy in respect  thereof.  Such flood insurance shall be in an
amount  equal to the lesser of (i) the unpaid  principal  balance of the related
Mortgage Loan and (ii) the maximum  amount of such  insurance  available for the
related Mortgaged  Property under the national flood insurance program (assuming
that the area in which such Mortgaged  Property is located is  participating  in
such program).

                  In the event that the  Servicer  shall  obtain and  maintain a
blanket  policy with an insurer  having a General Policy Rating of A:X or better
in Best's (or such other  rating that is  comparable  to such  rating)  insuring
against hazard losses on all of the Mortgage  Loans,  it shall  conclusively  be
deemed to have satisfied its obligations as set forth in the first two sentences
of this  Section  3.13,  it being  understood  and agreed  that such  policy may
contain a deductible clause, in which case the Servicer shall, in the event that
there shall not have been  maintained on the related  Mortgaged  Property or REO
Property a policy  complying  with the first two sentences of this Section 3.13,
and there  shall have been one or more losses  which would have been  covered by
such policy, deposit to the Collection Account from its own funds the amount not
otherwise payable under the blanket policy because of such deductible clause. In
connection  with its  activities as  administrator  and servicer of the Mortgage
Loans,  the  Servicer  agrees to prepare and present,  on behalf of itself,  the
Trustee  claims under any such blanket  policy in a timely fashion in accordance
with the terms of such policy.

                  (b)      The  Servicer  shall keep in force during the term of
this Agreement a policy or policies of insurance  covering  errors and omissions
for  failure  in  the  performance  of the  Servicer's  obligations  under  this
Agreement,  which policy or policies shall be in such form and amount that would
meet the  requirements  of Fannie Mae or Freddie Mac if it were the purchaser of
the  Mortgage  Loans,  unless  the  Servicer  has  obtained  a  waiver  of  such
requirements  from Fannie Mae or Freddie Mac. The Servicer shall also maintain a
fidelity bond in the form and amount that would meet the  requirements of Fannie
Mae or  Freddie  Mac,  unless  the  Servicer  has  obtained  a  waiver  of  such
requirements  from Fannie Mae or Freddie  Mac. The  Servicer  shall  provide the
Trustee  with copies of any such  insurance  policies  and  fidelity  bond.  The
Servicer shall be deemed to have complied with this provision if an Affiliate of
the Servicer has such

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<PAGE>

errors and  omissions  and  fidelity  bond  coverage  and,  by the terms of such
insurance policy or fidelity bond, the coverage afforded  thereunder  extends to
the Servicer.  Any such errors and  omissions  policy and fidelity bond shall by
its terms not be cancelable  without  thirty days' prior  written  notice to the
Trustee.  The Servicer shall also cause each Subservicer to maintain a policy of
insurance  covering  errors and  omissions  and a fidelity bond which would meet
such requirements.

                  Section 3.14     ENFORCEMENT OF DUE-ON-SALE CLAUSES ASSUMPTION
AGREEMENTS.

                  The  Servicer  will,  to the  extent it has  knowledge  of any
conveyance or prospective  conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute  conveyance or by contract of sale,  and whether or not the
Mortgagor  remains or is to remain  liable  under the  Mortgage  Note and/or the
Mortgage),  exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto;  PROVIDED,  HOWEVER,
that the  Servicer  shall not be  required  to take such  action if, in its sole
business judgment,  the Servicer believes it is not in the best interests of the
Trust Fund and shall not  exercise  any such  rights if  prohibited  by law from
doing so. If the Servicer  reasonably believes it is unable under applicable law
to enforce such "due-on-sale" clause or if any of the other conditions set forth
in the proviso to the preceding  sentence apply, the Servicer will enter into an
assumption  and  modification  agreement  from or with the  person  to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person  becomes  liable under the Mortgage Note and, to the extent  permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original  Mortgagor is released  from  liability  and such
person is  substituted  as the Mortgagor  and becomes  liable under the Mortgage
Note,  provided that no such substitution  shall be effective unless such person
satisfies the underwriting criteria of the Servicer, has a credit risk rating at
least  equal  to  that  of  the  original  Mortgagor.  In  connection  with  any
assumption,   modification  or  substitution,  the  Servicer  shall  apply  such
underwriting  standards  and follow such  practices  and  procedures as shall be
normal and usual in its general mortgage servicing  activities and as it applies
to other mortgage loans owned solely by it. The Servicer shall not take or enter
into any assumption and modification  agreement,  however, unless (to the extent
practicable  in the  circumstances)  it shall  have  received  confirmation,  in
writing,  of the continued  effectiveness  of any  applicable  hazard  insurance
policy,  or a new policy meeting the  requirements  of this Section is obtained.
Any fee collected by the Servicer in respect of an assumption or substitution of
liability  agreement  will be retained by the Servicer as  additional  servicing
compensation.  In connection with any such  assumption,  no material term of the
Mortgage Note (including,  but not limited to, the related Mortgage Rate and the
amount of the Scheduled Payment) may be amended or modified, except as otherwise
required  pursuant to the terms  thereof.  The Servicer shall notify the Trustee
that  any such  substitution,  modification  or  assumption  agreement  has been
completed  by  forwarding   to  the  Trustee  the  executed   original  of  such
substitution  or  assumption  agreement,  which  document  shall be added to the
related Mortgage File and shall, for all purposes,  be considered a part of such
Mortgage  File  to the  same  extent  as all  other  documents  and  instruments
constituting a part thereof.

                  Notwithstanding the foregoing paragraph or any other provision
of this Agreement,  the Servicer shall not be deemed to be in default, breach or
any other violation of its

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<PAGE>

obligations  hereunder  by  reason  of any  assumption  of a  Mortgage  Loan  by
operation of law or by the terms of the Mortgage  Note or any  assumption  which
the Servicer may be restricted by law from preventing,  for any reason whatever.
For  purposes of this  Section  3.14,  the term  "assumption"  is deemed to also
include a sale (of the Mortgaged  Property)  subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.

                  Section 3.15 REALIZATION UPON DEFAULTED MORTGAGE LOANS.

                  The  Servicer  shall  use its best  efforts,  consistent  with
customary servicing practices as described in Section 3.01, to foreclose upon or
otherwise  comparably convert (which may include an acquisition of REO Property)
the ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent  payments  pursuant to Section 3.07,  and which are not
released  from this  Agreement  pursuant  to any  other  provision  hereof.  The
Servicer  shall use reasonable  efforts to realize upon such defaulted  Mortgage
Loans in such manner as will  maximize the receipt of principal  and interest by
the Trustee,  taking into account, among other things, the timing of foreclosure
proceedings.  The  foregoing is subject to the  provisions  that, in any case in
which Mortgaged Property shall have suffered damage from an uninsured cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such property  unless it shall  determine in its sole  discretion  (i) that such
restoration  will  increase  the net  proceeds  of  liquidation  of the  related
Mortgage Loan to the Trustee,  after  reimbursement to itself for such expenses,
and  (ii)  that  such  expenses  will be  recoverable  by the  Servicer  through
Insurance Proceeds or Liquidation  Proceeds from the related Mortgaged Property,
as contemplated in Section 3.11. The Servicer shall be responsible for all other
costs and expenses  incurred by it in any such proceedings;  PROVIDED,  HOWEVER,
that it shall be entitled to reimbursement thereof from the related property, as
contemplated in Section 3.11.

                  The proceeds of any liquidation or REO Disposition, as well as
any  recovery  resulting  from a partial  collection  of  Insurance  Proceeds or
Liquidation Proceeds or any income from an REO Property,  will be applied in the
following order of priority: first, to reimburse the Servicer or any Subservicer
for any related  unreimbursed  Servicing  Advances,  pursuant to Section 3.11 or
3.17; second, to accrued and unpaid interest on the Mortgage Loan or REO Imputed
Interest,  at  the  Mortgage  Rate,  to  the  date  of  the  liquidation  or REO
Disposition,  or to the Due Date  prior  to the  Remittance  Date on which  such
amounts are to be  distributed  if not in connection  with a liquidation  or REO
Disposition;  third, to reimburse the Servicer for any related  unreimbursed P&I
Advances,  pursuant to Section 3.11;  and fourth,  as a recovery of principal of
the  Mortgage  Loan.  If the amount of the  recovery so allocated to interest is
less than a full  recovery  thereof,  that amount will be  allocated as follows:
first, to unpaid  Servicing  Fees; and second,  as interest at the Mortgage Rate
(net of the  Servicing  Fee Rate).  The portion of the  recovery so allocated to
unpaid  Servicing  Fees shall be reimbursed  to the Servicer or any  Subservicer
pursuant to Section  3.11 or 3.17.  The portions of the recovery so allocated to
interest at the Mortgage  Rate (net of the  Servicing Fee Rate) and to principal
of the  Mortgage  Loan shall be applied as  follows:  first,  to  reimburse  the
Servicer or any Subservicer for any related  unreimbursed  Servicing Advances in
accordance  with Section 3.11 or 3.17, and second,  to the Trustee in accordance
with the  provisions of Section 4.02,  subject to the last  paragraph of Section
3.17 with respect to certain excess recoveries from an REO Disposition.

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                  Notwithstanding  anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Servicer has received actual notice of, or has actual knowledge of
the  presence  of,  hazardous  or toxic  substances  or  wastes  on the  related
Mortgaged  Property,  or if the Trustee otherwise  requests,  the Servicer shall
cause an  environmental  inspection or review of such  Mortgaged  Property to be
conducted by a qualified  inspector.  Upon  completion  of the  inspection,  the
Servicer  shall  promptly  provide  the  Trustee  with a  written  report of the
environmental inspection.

                  After  reviewing  the  environmental  inspection  report,  the
Servicer shall determine how to proceed with respect to the Mortgaged  Property.
In the  event  (a)  the  environmental  inspection  report  indicates  that  the
Mortgaged  Property is contaminated  by hazardous or toxic  substances or wastes
and (b) the Servicer  determines to proceed with  foreclosure or acceptance of a
deed in lieu of foreclosure, the Servicer shall be reimbursed for all reasonable
costs  associated  with  such  foreclosure  or  acceptance  of a deed in lieu of
foreclosure and any related  environmental  clean-up costs, as applicable,  from
the  related  Liquidation   Proceeds,   or  if  the  Liquidation   Proceeds  are
insufficient to fully reimburse the Servicer,  the Servicer shall be entitled to
be reimbursed  from amounts in the Collection  Account  pursuant to Section 3.11
hereof. In the event the Servicer  determines not to proceed with foreclosure or
acceptance of a deed in lieu of  foreclosure,  the Servicer  shall be reimbursed
from general  collections  for all  Servicing  Advances made with respect to the
related Mortgaged  Property from the Collection Account pursuant to Section 3.11
hereof.

                  Section 3.16    RELEASE OF MORTGAGE FILES.

                  (a)      Upon the payment in full of any Mortgage Loan, or the
receipt by the Servicer of a notification that payment in full shall be escrowed
in a manner  customary for such  purposes,  the Servicer  will,  within five (5)
Business  Days of the  payment in full,  notify the  Trustee by a  certification
(which  certification  shall  include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited  in the  Collection  Account  pursuant to Section 3.10 have been or
will be so deposited) of a Servicing Officer and shall request delivery to it of
the Custodial File. Upon receipt of such certification and request,  the Trustee
shall promptly release the related Custodial File to the Servicer within two (2)
Business  Days.  No  expenses  incurred in  connection  with any  instrument  of
satisfaction  or deed of  reconveyance  shall be  chargeable  to the  Collection
Account.

                  (b)      From  time  to  time  and  as  appropriate   for  the
servicing or  foreclosure  of any Mortgage  Loan,  including,  for this purpose,
collection  under any  insurance  policy  relating to the  Mortgage  Loans,  the
Trustee  shall,  upon request of the Servicer and delivery to the Trustee,  of a
Request for Release, release the related Custodial File to the Servicer, and the
Trustee shall, at the direction of the Servicer, execute such documents as shall
be necessary to the  prosecution of any such  proceedings and the Servicer shall
retain the Mortgage  File in trust for the benefit of the Trustee.  Such Request
for Release  shall  obligate  the  Servicer  to return  each and every  document
previously  requested  from  the  Custodial  File to the  Trustee  when the need
therefor by the Servicer no longer  exists,  unless the  Mortgage  Loan has been
liquidated and the Liquidation  Proceeds relating to the Mortgage Loan have been
deposited in the  Collection  Account or the Mortgage  File or such document has
been delivered to an attorney,  or to a public trustee or other public  official
as required by law, for purposes of initiating or pursuing legal action or other

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proceedings for the foreclosure of the Mortgaged  Property either  judicially or
non-judicially, and the Servicer has delivered to the Trustee a certificate of a
Servicing  Officer  certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such  Mortgage  Loan  was  liquidated  and that all  amounts  received  or to be
received in connection with such  liquidation  that are required to be deposited
into the Collection  Account have been so deposited,  or that such Mortgage Loan
has become an REO Property, a copy of the Request for Release of Documents shall
be released by the Trustee to the Servicer or its designee.

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

                  Section 3.17    TITLE,  CONSERVATION  AND  DISPOSITION  OF REO
PROPERTY.

                  (a)      This  Section  shall  apply  only  to REO  Properties
acquired  for the account of the Trustee and shall not apply to any REO Property
relating to a Mortgage Loan which was purchased or repurchased  from the Trustee
pursuant  to any  provision  hereof.  In the  event  that  title to any such REO
Property is  acquired,  the deed or  certificate  of sale shall be issued to the
Servicer, or to its nominee, on behalf of the Trustee.

                  (b)      The  Servicer  shall  manage,  conserve,  protect and
operate each REO  Property for the Trustee  solely for the purpose of its prompt
disposition  and sale. The Servicer,  either itself or through an agent selected
by the Servicer, shall manage, conserve, protect and operate the REO Property in
the  same  manner  that it  manages,  conserves,  protects  and  operates  other
foreclosed  property  for its own  account,  and in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer shall
attempt  to sell the same (and may  temporarily  rent the same for a period  not
greater  than one year,  except as otherwise  provided  below) on such terms and
conditions as the Servicer deems to be in the best interest of the Trustee.  The
Servicer shall notify the Trustee from time to time as to the status of each REO
Property.

                  (c)      The Servicer shall use its best efforts to dispose of
the REO Property as soon as possible (subject to the Trustee's right to veto any
proposed  sale of REO  Property)  and shall sell such REO  Property in any event
within one year  after  title has been  taken to such REO  Property,  unless the
Servicer  determines,  and gives an  appropriate  notice to the  Trustee to such
effect,  that a longer period is necessary for the orderly  liquidation  of such
REO Property.  If a

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period  longer than one year is permitted  under the  foregoing  sentence and is
necessary to sell any REO  Property,  the Servicer  shall report  monthly to the
Trustee  as  to  the  progress   being  made  in  selling  such  REO   Property.
Notwithstanding  its veto rights,  the Trustee has no obligation with respect to
REO dispositions.

                  (d)      [Reserved].

                  (e)      The  Servicer  shall  segregate  and hold  all  funds
collected  and  received in  connection  with the  operation of any REO Property
separate and apart from its own funds and general  assets and shall deposit such
funds in the Collection Account.

                  (f)      The Servicer  shall deposit net of  reimbursement  to
the Servicer for any related outstanding Servicing Advances and unpaid Servicing
Fees provided in Section 3.11 hereof, or cause to be deposited, on a daily basis
in the Collection  Account all revenues received with respect to the related REO
Property and shall withdraw  therefrom funds necessary for the proper operation,
management and maintenance of the REO Property.

                  (g)      The  Servicer,  upon  an REO  Disposition,  shall  be
entitled to reimbursement  for any related  unreimbursed  Servicing  Advances as
well as any unpaid Servicing Fees from proceeds  received in connection with the
REO Disposition, as further provided in Section 3.11.

                  (h)      Any  net   proceeds   which  are  in  excess  of  the
applicable Stated Principal Balance plus all unpaid REO Imputed Interest thereon
through the date of the REO  Disposition  shall be  retained by the  Servicer as
additional servicing compensation.

                  (i)      The Servicer shall use its reasonable best efforts to
sell, or cause the  Subservicer  to sell,  any REO Property as soon as possible,
but in no event later than the  conclusion of the third  calendar year beginning
after the year of its  acquisition by the REMIC unless (i) the Servicer  applies
for an extension of such period from the Internal  Revenue  Service  pursuant to
the  REMIC  Provisions  and Code  Section  856(e)(3),  in which  event  such REO
Property  shall be sold  within the  applicable  extension  period,  or (ii) the
Servicer  obtains  for the  Trustee  an  Opinion of  Counsel,  addressed  to the
Depositor,  the Trustee and the Servicer,  to the effect that the holding by the
REMIC of such REO  Property  subsequent  to such  period  will not result in the
imposition of taxes on "prohibited  transactions"  as defined in Section 860F of
the Code or cause  the  REMIC to fail to  qualify  as a REMIC  under  the  REMIC
Provisions or  comparable  provisions  of relevant  state laws at any time.  The
Servicer shall manage,  conserve,  protect and operate each REO Property for the
Trustee  solely for the purpose of its prompt  disposition  and sale in a manner
which  does not cause  such REO  Property  to fail to  qualify  as  "foreclosure
property"  within the meaning of Section  860G(a)(8) or result in the receipt by
the REMIC of any  "income  from  non-permitted  assets"  within  the  meaning of
Section  860F(a)(2)(B) of the Code or any "net income from foreclosure property"
which is subject to taxation under Section  860G(a)(1) of the Code.  Pursuant to
its efforts to sell such REO  Property,  the  Servicer  shall  either  itself or
through an agent selected by the Servicer protect and conserve such REO Property
in the same manner and to such extent as is customary in the locality where such
REO Property is located and may,  incident to its conservation and protection of
the interests of the Trustee on behalf of the Certificateholders, rent the same,
or any part thereof, as the Servicer

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<PAGE>

deems  to  be  in  the  best   interest   of  the   Trustee  on  behalf  of  the
Certificateholders  for the  period  prior  to the  sale of such  REO  Property;
provided,  however,  that any rent  received or accrued with respect to such REO
Property qualifies as "rents from real property" as defined in Section 856(d) of
the Code.

                  Section 3.18   NOTIFICATION OF ADJUSTMENTS.

                  With  respect  to each  Adjustable  Rate  Mortgage  Loan,  the
Servicer shall adjust the Mortgage Rate on the related  Interest Rate Adjustment
Date and shall  adjust the  Scheduled  Payment on the related  mortgage  payment
adjustment  date,  if  applicable,   in  compliance  with  the  requirements  of
applicable  law and the related  Mortgage and Mortgage  Note. The Servicer shall
execute and deliver any and all necessary  notices required under applicable law
and the terms of the related  Mortgage Note and Mortgage  regarding the Mortgage
Rate and  Scheduled  Payment  adjustments.  The Servicer  shall  promptly,  upon
written  request  therefor,  deliver to the Trustee such  notifications  and any
additional  applicable  data regarding such  adjustments and the methods used to
calculate and implement such adjustments.  Upon the discovery by the Servicer or
the receipt of notice from the Trustee  that the Servicer has failed to adjust a
Mortgage Rate or Scheduled  Payment in accordance  with the terms of the related
Mortgage Note, the Servicer shall deposit in the Collection Account from its own
funds the amount of any interest loss caused as such interest loss occurs.

                  Section 3.19   ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS.

                  The  Servicer  shall  provide,  or cause  the  Subservicer  to
provide,  to the Depositor,  the  Unaffiliated  Seller,  the Class A Certificate
Insurer,  the Trustee,  the OTS or the FDIC and the  examiners  and  supervisory
agents thereof access to the  documentation  regarding the Mortgage Loans in its
possession.  Such  access  shall be  afforded  without  charge,  but  only  upon
reasonable  and prior written  request and during normal  business  hours at the
offices  of the  Servicer  or any  Subservicer.  Nothing in this  Section  shall
derogate  from the  obligation of any such party to observe any  applicable  law
prohibiting  disclosure of information  regarding the Mortgagors and the failure
of any such party to provide  access as provided in this  Section as a result of
such obligation shall not constitute a breach of this Section.

                  Section 3.20   DOCUMENTS, RECORDS AND FUNDS IN  POSSESSION  OF
THE SERVICER TO BE HELD FOR THE TRUSTEE.

                  The Servicer  shall account fully to the Trustee for any funds
received by the  Servicer or which  otherwise  are  collected by the Servicer as
Liquidation  Proceeds or Insurance Proceeds in respect of any Mortgage Loan. All
Mortgage  Files and funds  collected  or held by, or under the  control  of, the
Servicer  in respect of any  Mortgage  Loans,  whether  from the  collection  of
principal and interest payments or from Liquidation Proceeds,  including but not
limited to, any funds on deposit in the Collection Account, shall be held by the
Servicer  for and on behalf of the  Trustee and shall be and remain the sole and
exclusive property of the Trustee,  subject to the applicable provisions of this
Agreement.  The Servicer also agrees that it shall not create,  incur or subject
any Mortgage File or any funds that are  deposited in any Account,  or any funds
that  otherwise  are or may become due or payable to the Trustee for the benefit
of the

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Certificateholders,  to any claim, lien, security interest, judgment, levy, writ
of attachment or other  encumbrance,  or assert by legal action or otherwise any
claim or right of setoff against any Mortgage File or any funds collected on, or
in connection with, a Mortgage Loan, except, however, that the Servicer shall be
entitled to set off against and deduct from any such funds any amounts  that are
properly due and payable to the Servicer under this Agreement.

                  Section 3.21   SERVICING COMPENSATION.

                  (a)      As  compensation  for its activities  hereunder,  the
Servicer  shall,  with respect to each Mortgage Loan, be entitled to retain from
deposits to the  Collection  Account and from  Liquidation  Proceeds,  Insurance
Proceeds and REO Proceeds  related to such Mortgage Loan, the Servicing Fee with
respect to each Mortgage Loan (less any portion of such amounts  retained by any
Subservicer).  In  addition,  the Servicer  shall be entitled to recover  unpaid
Servicing  Fees out of  related  late  collections  to the extent  permitted  in
Section 3.11.  The right to receive the Servicing Fee may not be  transferred in
whole or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement;  PROVIDED,  HOWEVER, that
the Servicer  may pay from the  Servicing  Fee any amounts due to a  Subservicer
pursuant to a Subservicing Agreement entered into under Section 3.02.

                  (b)      Additional  servicing  compensation  in the  form  of
assumption or modification  fees, late payment charges,  NSF fees,  reconveyance
fees and other similar fees and charges (other than Prepayment Charges) shall be
retained by the Servicer only to the extent such fees or charges are received by
the  Servicer.   The  Servicer  shall  also  be  entitled  pursuant  to  Section
3.11(a)(iv)  to  withdraw  from  the  Collection  Account  and the  Distribution
Account, as additional servicing  compensation,  interest or other income earned
on deposits therein.

                  (c)      The  Servicer  shall be required to pay all  expenses
incurred by it in connection with its servicing  activities hereunder (including
payment of premiums  for any  blanket  policy  insuring  against  hazard  losses
pursuant to Section  3.13,  servicing  compensation  of the  Subservicer  to the
extent not retained by it and the fees and expenses of  independent  accountants
and any  agents  appointed  by the  Servicer),  and  shall  not be  entitled  to
reimbursement therefor except as specifically provided in Section 3.11.

                  Section 3.22   ANNUAL STATEMENT AS TO COMPLIANCE.

                  The  Servicer  will  deliver or cause to be  delivered  to the
Depositor, the Rating Agencies, the Unaffiliated Seller, the Class A Certificate
Insurer, and the Trustee on or before April 15 of each calendar year, commencing
in 2003, an Officers'  Certificate  stating, as to each signatory thereof,  that
(i) a review of the  activities of the Servicer  during the  preceding  calendar
year and of  performance  under this  Agreement or a similar  agreement has been
made under such  officers'  supervision,  and (ii) to the best of such officers'
knowledge,  based  on  such  review,  the  Servicer  has  fulfilled  all  of its
obligations  under this Agreement  throughout such year, or, if there has been a
default in the fulfillment of any such obligation,  specifying each such default
known to such officers and the nature and status thereof.

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<PAGE>

                  Section 3.23  ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
STATEMENT; FINANCIAL STATEMENTS.

                  Not later than April 15th of each calendar year  commencing in
2003, the Servicer, at its expense,  shall cause a nationally recognized firm of
independent  certified  public  accountants  to  furnish to the  Depositor,  the
Unaffiliated  Seller, the Class A Certificate  Insurer,  the Rating Agencies and
the Trustee a report stating that (i) it has obtained a letter of representation
regarding  certain matters from the management of the Servicer which includes an
assertion  that the  Servicer  has complied  with  certain  minimum  residential
mortgage loan servicing standards,  identified in the Uniform Single Attestation
Program for Mortgage Bankers  established by the Mortgage Bankers Association of
America,  with respect to the servicing of residential mortgage loans during the
most  recently  completed  fiscal  year and (ii) on the basis of an  examination
conducted by such firm in accordance with standards  established by the American
Institute of Certified Public Accountants,  such representation is fairly stated
in all material  respects,  subject to such exceptions and other  qualifications
that may be  appropriate.  In  rendering  its report  such firm may rely,  as to
matters  relating  to the direct  servicing  of  residential  mortgage  loans by
Subservicers,  upon comparable reports of firms of independent  certified public
accountants  rendered on the basis of examinations  conducted in accordance with
the same  standards  (rendered  within one year of such  report) with respect to
those Subservicers.

                  Section 3.24  TRUSTEE TO ACT AS SERVICER.

                  In the event that the Servicer  shall for any reason no longer
be the Servicer  hereunder  (including  by reason of an Event of  Default),  the
Trustee  or  its  successor  shall  thereupon  assume  all  of  the  rights  and
obligations  of the  Servicer  hereunder  arising  thereafter  (except  that the
Trustee  shall not be (i) liable for losses of the Servicer  pursuant to Section
3.10 or any  acts or  omissions  of the  predecessor  Servicer  hereunder,  (ii)
obligated to make Advances if it is prohibited  from doing so by applicable law,
(iii)  obligated to effectuate  repurchases or  substitutions  of Mortgage Loans
hereunder, including but not limited to repurchases or substitutions pursuant to
Section 2.03, (iv) responsible for expenses of the Servicer  pursuant to Section
2.03 or (v)  deemed  to have  made any  representations  and  warranties  of the
Servicer hereunder). Any such assumption shall be subject to Section 7.02.

                  Every  subservicing  agreement  entered  into by the  Servicer
shall contain a provision giving the successor  Servicer the option to terminate
such agreement in the event a successor Servicer is appointed.

                  If the Servicer shall for any reason no longer be the Servicer
(including  by  reason  of any  Event of  Default),  the  Trustee  (or any other
successor Servicer) may, at its option, succeed to any rights and obligations of
the  Servicer  under any  subservicing  agreement in  accordance  with the terms
thereof;  provided that the Trustee (or any other successor  Servicer) shall not
incur  any  liability  or have any  obligations  in its  capacity  as  successor
Servicer  under a  subservicing  agreement  arising  prior  to the  date of such
succession  unless it expressly  elects to succeed to the rights and obligations
of the Servicer  thereunder;  and the Servicer  shall not thereby be relieved of
any liability or obligations  under the subservicing  agreement arising prior to
the date of such succession.

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                  The Servicer  shall,  upon request of the Trustee,  but at the
expense of the Servicer, deliver to the assuming party all documents and records
relating to each  subservicing  agreement  (if any) and the Mortgage  Loans then
being serviced  thereunder and an accounting of amounts collected held by it and
otherwise use its best efforts to effect the orderly and  efficient  transfer of
the subservicing agreement to the assuming party.

                  Section 3.25  COMPENSATING INTEREST.

                  The  Servicer  shall remit to the  Trustee on each  Remittance
Date an amount  from its own  funds  equal to the  lesser of (a) the  Prepayment
Interest Shortfall,  if any, for such Remittance Date, and (b) the amount of the
Servicing Fee payable to the Servicer for such Remittance Date.

                  Section 3.26  CREDIT REPORTING; GRAMM-LEACH-BLILEY ACT.

                  (a)      The Servicer  agrees to  accurately  and fully report
its borrower credit files with respect to the Mortgage Loans to all three credit
repositories in a timely manner.

                  (b)      The  Servicer  shall  comply  with  Title  V  of  the
Gramm-Leach-Bliley  Act of  1999  and  all  applicable  regulations  promulgated
thereunder,  relating to the Mortgage Loans and the related  borrowers and shall
provide all required notices thereunder.

                  Section 3.27  ADVANCE FACILITIES.

                  With the prior  written  consent  of the  Class A  Certificate
Insurer,  the Servicer is hereby  authorized  to enter into a financing or other
facility (an "ADVANCE FACILITY") under which (l) the Servicer sells,  assigns or
pledges to another  Person (an "ADVANCING  PERSON") the Servicer's  rights under
this Agreement to be reimbursed for any Advances and/or (2) an Advancing  Person
agrees to fund some or all P&I  Advances or  Servicing  Advances  required to be
made by the  Servicer  pursuant  to this  Agreement.  Except as  provided in the
preceding sentence,  no consent of any party is required before the Servicer may
enter into an Advance  Facility.  Notwithstanding  the  existence of any Advance
Facility  under which an Advancing  Person  agrees to fund P&I  Advances  and/or
Servicing Advances on the Servicer's behalf, the Servicer shall remain obligated
pursuant to this Agreement to make P&I Advances and Servicing  Advances pursuant
to and as  required  by  this  Agreement,  and  shall  not be  relieved  of such
obligations by virtue of such Advance Facility.

                  Reimbursement amounts ("ADVANCE  REIMBURSEMENT AMOUNTS") shall
consist solely of amounts in respect of P&I Advances and/or  Servicing  Advances
made  with  respect  to the  Mortgage  Loans for  which  the  Servicer  would be
permitted to reimburse  itself in accordance with this  Agreement,  assuming the
Servicer had made the related P&I Advance(s) and/or Servicing Advance(s).

                  The  Servicer  shall  maintain  and  provide to any  successor
Servicer a detailed  accounting on a loan-by-loan  basis as to amounts  advanced
by,  pledged or  assigned  to,  and  reimbursed  to any  Advancing  Person.  The
successor Servicer shall be entitled to rely on any such information provided by
the predecessor Servicer, and the successor Servicer shall not be liable for any
errors in such information.

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<PAGE>

                  An Advancing Person who purchases or receives an assignment or
pledge  of the  rights  to be  reimbursed  for  P&I  Advances  and/or  Servicing
Advances,  and/or whose obligations  hereunder are limited to the funding of P&I
Advances  and/or  Servicing  Advances shall not be required to meet the criteria
for qualification of a subservicer set forth in this Agreement.

                  The  documentation  establishing  any Advance  Facility  shall
require  that Advance  Reimbursement  Amounts  distributed  with respect to each
Mortgage Loan be allocated to outstanding unreimbursed P&I Advances or Servicing
Advances  (as the case may be) made  with  respect  to that  Mortgage  Loan on a
"first-in,  first out" (FIFO) basis. Such  documentation  shall also require the
Servicer to provide to the related Advancing Person or its designee loan-by-loan
information  with respect to each Advance  Reimbursement  Amount  distributed to
such  Advancing  Person or to a  trustee  or  custodian  (an  "ADVANCE  FACILITY
TRUSTEE") on each  Distribution  Date, to enable the Advancing Person or Advance
Facility  Trustee  to make the FIFO  allocation  of each  Advance  Reimbursement
Amount with respect to each Mortgage Loan. The Servicer shall remain entitled to
be  reimbursed  pursuant to the  Advance  Facility  by the  Advancing  Person or
Advance Facility  Trustee for all P&I Advances and Servicing  Advances funded by
the Servicer to the extent the related rights to be reimbursed therefor have not
been sold, assigned or pledged to an Advancing Person.

                  Any  amendment to this Section 3.27 or to any other  provision
of this Agreement that may be necessary or appropriate to effect the terms of an
Advance  Facility  as  described  generally  in  this  Section  3.27,  including
amendments to add provisions  relating to a successor  Servicer,  may be entered
into by the Trustee,  the Depositor,  the  Unaffiliated  Seller and the Servicer
without the consent of any Certificateholder,  but with the consent of the Class
A  Certificate  Insurer,  notwithstanding  anything  to  the  contrary  in  this
Agreement. Prior to entering into an Advance Facility, the Servicer shall notify
the lender under such  facility in writing  that:  (a) the Advances  financed by
and/or  pledged  to  the  lender  are  obligations  owed  to the  Servicer  on a
non-recourse  basis payable only from the cash flows and proceeds received under
this Agreement for  reimbursement  of such Advances only to the extent  provided
herein,  and the  Trustee  is not  otherwise  obligated  or  liable to repay any
Advances  financed by the  lender;  (b) the  Servicer  will be  responsible  for
remitting to the lender the applicable  amounts collected by it as reimbursement
for Advances funded by the lender,  subject to the  restrictions  and priorities
created in this Agreement;  (c) the Trustee shall not have any responsibility to
track or monitor the  administration  of the financing  arrangement  between the
Servicer  and  the  lender;  (d) if the  Servicer  is  replaced  by a  successor
servicer,  the lender shall continue to be entitled to receive reimbursements as
provided  in clause (a) above but shall have no further  right to make  advances
with  respect  to the  transaction  subject to this  Agreement;  and (e) (i) the
pledge, if any, of Servicer's rights to the lender under the facility conveys no
rights  (such as a right to fees after the removal of the  Servicer or the right
to become a  substitute  servicer)  under this  Agreement,  or against the Trust
Fund, any investor in or guarantor of securities issued hereunder, or any person
other than the Servicer,  (ii) the Servicer is only  pledging  assets and rights
that it owns and any  purported  pledge of any  assets  or  rights  that are not
property of the Servicer  shall be of force and effect and will not be deemed to
create any additional  rights or assets of either the lender or the Servicer and
(iii) the lender shall take such steps as are reasonably necessary to confirm to
a successor  servicer that it has no rights in any  collateral due or payable on
or after the date of  servicing  transfer  other than the  Servicer's  rights to
reimbursement of Advances (to be repaid pursuant to the terms of this Agreement)
for Advances made prior to such servicing transfer.

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                                   ARTICLE IV

                                DISTRIBUTIONS AND
                            ADVANCES BY THE SERVICER

                  Section 4.01  ADVANCES.

                  (a)      The amount of P&I Advances to be made by the Servicer
for any Remittance Date shall equal,  subject to Section 4.01(c), the sum of (i)
(a) with  respect to the Mortgage  Loans,  other than Simple  Interest  Mortgage
Loans,  the aggregate  amount of Scheduled  Payments (with each interest portion
thereof  net of the  related  Servicing  Fee),  due on the Due Date  immediately
preceding such Remittance  Date in respect of such Mortgage Loans,  and (b) with
respect to the Simple  Interest  Mortgage  Loans, 30 days' interest on each such
Mortgage Loan (net of the related  Servicing Fee),  which Scheduled  Payments or
interest payment,  as applicable,  were not received as of the close of business
on the last Business Day of the immediately  preceding calendar month, plus (ii)
with respect to each REO  Property,  which REO  Property was acquired  during or
prior to the related  Prepayment Period and as to which such REO Property an REO
Disposition did not occur during the related  Prepayment Period, an amount equal
to the excess,  if any, of the Scheduled  Payments  (with each interest  portion
thereof net of the related  Servicing  Fee) (or with  respect to an REO Property
related to a Simple Interest Mortgage Loan, 30 days' interest thereon net of the
related  Servicing  Fee) that  would  have been due on the  related  Due Date in
respect  of the  related  Mortgage  Loans,  over the net  income  from  such REO
Property  transferred  to  the  Collection  Account  for  distribution  on  such
Remittance Date.

                  (b)      On the  Remittance  Date, the Servicer shall remit in
immediately  available  funds to the  Trustee an amount  equal to the  aggregate
amount of P&I Advances,  if any, to be made in respect of the Mortgage Loans and
REO  Properties for the related  Remittance  Date either (i) from its own funds,
(ii) with respect to Simple Interest  Mortgage  Loans,  from the Simple Interest
Sub-Account,  in accordance with Section  3.10(b),  or (iii) from the Collection
Account,  to the extent of funds held therein for future  distribution (in which
case, it will cause to be made an appropriate entry in the records of Collection
Account  that Amounts Held For Future  Distribution  have been,  as permitted by
this Section 4.01, used by the Servicer in discharge of any such P&I Advance) or
(iv) in the form of any combination of (i), (ii) and (iii) aggregating the total
amount of P&I Advances to be made by the  Servicer  with respect to the Mortgage
Loans and REO Properties.  Any Amounts Held For Future  Distribution and so used
shall be appropriately  reflected in the Servicer's  records and replaced by the
Servicer by deposit in the Collection Account on or before any future Remittance
Date to the extent required.

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

                  (d)      Notwithstanding  anything herein to the contrary,  no
P&I Advance

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<PAGE>

or Servicing  Advance shall be required to be made  hereunder by the Servicer if
such  P&I  Advance  or  Servicing   Advance   would,   if  made,   constitute  a
Nonrecoverable P&I Advance or Nonrecoverable  Advance.  The determination by the
Servicer  that it has made a  Nonrecoverable  P&I  Advance  or a  Nonrecoverable
Advance or that any proposed P&I Advance or Servicing  Advance,  if made,  would
constitute  a   Nonrecoverable   P&I  Advance  or  a   Nonrecoverable   Advance,
respectively,  shall be evidenced by an  Officers'  Certificate  of the Servicer
delivered to the Trustee.

                  (e)      Except as  otherwise  provided  herein,  the Servicer
shall be entitled to reimbursement pursuant to Section 3.11 hereof for Servicing
Advances  from  recoveries  from the related  Mortgagor or from all  Liquidation
Proceeds and other  payments or  recoveries  (including  Insurance  Proceeds and
Condemnation Proceeds) with respect to the related Mortgage Loan.

                  Section 4.02  PRIORITIES OF DISTRIBUTION.

                  (a)      On each Distribution  Date, the Trustee will make the
disbursements  and  transfers  from amounts then on deposit in the  Distribution
Account in the following order of priority:

                           (i)      (x) from the Interest Amount  Available,  to
         the Class A Certificate  Insurer, the Premium Amount and to the Trustee
         the  Trustee  Fee,  in each  case for such  Distribution  Date;  to the
         holders  of each  Class  of  Certificates,  in the  following  order of
         priority:

                                    (y)  from  the  remaining   Interest  Amount
         Available, plus in the case of clause (a) below, the related portion of
         any Insured Payment,

                           (a)      to the  Class A  Certificates,  the  Accrued
                  Certificate  Interest  Distribution  Amount for such Class and
                  any  Unpaid   Interest   Amounts   for  such  Class  for  such
                  Distribution Date, as described in Section 4.02(a);

                           (b)      to the  Class  A  Certificate  Insurer,  the
                  amount of any Reimbursement Amount then owing to it on account
                  of a  prior  drawing  relating  to  interest  on the  Class  A
                  Certificates;

                           (c)      to the  Class M  Certificates,  the  Accrued
                  Certificate  Interest  Distribution  Amount  for such Class on
                  such Distribution Date;

                           (d)      to the  Class B  Certificates,  the  Accrued
                  Certificate  Interest  Distribution  Amount  for such Class on
                  such Distribution Date;

                           (ii)     (A)      on  each   Distribution   Date  (1)
         before the Stepdown  Date or (2) with respect to which a Trigger  Event
         is in effect, to the holders of the related Class or Classes of Offered
         Certificates  then entitled to  distributions of principal as set forth
         below,  from the  amounts  remaining  on  deposit  in the  Distribution
         Account  after making  distributions  pursuant to clause (i) above,  an
         amount  equal to the  Principal  Distribution  Amount in the  following
         order of priority:

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                           (a)      to the Class A Certificates, until the Class
                  Certificate Balance thereof is reduced to zero;

                           (b)      to the  Class  A  Certificate  Insurer,  the
                  amount of any Reimbursement Amount then owing to it on account
                  of a  prior  drawing  relating  to  principal  on the  Class A
                  Certificates; and

                           (c)      sequentially  to the  Class  M and  Class  B
                  Certificates,  in  that  order,  until  the  respective  Class
                  Certificate Balances are reduced to zero;

                                    (B)      on each  Distribution  Date  (1) on
and after the Stepdown Date and (2) as long as a Trigger Event is not in effect,
to the  holders of the  related  Class or Classes of Offered  Certificates  then
entitled to distribution of principal,  from amounts remaining on deposit in the
Distribution Account after making distributions pursuant to clause (i) above, an
amount equal to, in the  aggregate,  the  Principal  Distribution  Amount in the
following amounts and order of priority:

                           (a)      the lesser of (x) the Principal Distribution
                  Amount and (y) the Class A  Principal  Distribution  Amount to
                  the Class A Certificates,  until the Class Certificate Balance
                  thereof is reduced to zero;

                           (b)      the  lesser  of (x)  the  excess  of (i) the
                  Principal Distribution Amount over (ii) the amount distributed
                  to the Class A  Certificateholders  in clause (ii)(B)(a) above
                  and (y) the amount of any  Reimbursement  Amount then owing to
                  the Class A Certificate  Insurer on account of a prior drawing
                  relating to principal on the Class A Certificates;

                           (c)      the  lesser  of (x)  the  excess  of (i) the
                  Principal Distribution Amount over (ii) the amount distributed
                  to the Class A  Certificateholders  in clause (ii)(B)(a) above
                  and to the Class A  Certificate  Insurer in clause  (ii)(B)(b)
                  above and (y) the Class M Principal Distribution Amount to the
                  Class  M  Certificateholders,   until  the  Class  Certificate
                  Balance thereof has been reduced to zero;

                           (d)      the  lesser  of (x)  the  excess  of (i) the
                  Principal Distribution Amount over (ii) the amount distributed
                  to the Class A Certificateholders  in clause (ii)(B)(a) above,
                  to the Class A Certificate Insurer in clause (ii)(B)(b) above,
                  and to the Class M Certificates in clause (ii)(B)(c) above and
                  (y) the Class B Principal  Distribution  Amount to the Class B
                  Certificateholders,   until  the  Class  Certificate   Balance
                  thereof has been reduced to zero;

                           (iii)    any  amount  remaining  in the  Distribution
         Account after the  distributions in clauses (i) and (ii) above, plus as
         specifically  indicated  below,  from  amounts on deposit in the Excess
         Reserve Fund Account,  shall be distributed  in the following  order of
         priority:

                           (a)      to the Class A Certificate  Insurer,  to the
                  extent of any remaining Reimbursement Amount then owing to it;

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                           (b)      to the holders of the Class M  Certificates,
                  any Unpaid Interest Amounts for such Class;

                           (c)      to the holders of the Class M  Certificates,
                  any Unpaid Realized Loss Amount for such Class;

                           (d)      to the holders of the Class B  Certificates,
                  any Unpaid Interest Amounts for such Class;

                           (e)      to the holders of the Class B  Certificates,
                  any Unpaid Realized Loss Amount for such Class;

                           (f)      to the  Excess  Reserve  Fund  Account,  the
                  amount of any Basis Risk Payment for such Distribution Date;

                           (g)      from   amounts  on  deposit  in  the  Excess
                  Reserve  Fund  Account,  an  amount  equal to any  Basis  Risk
                  CarryForward   Amount  with  respect  to  any  Floating   Rate
                  Certificate  for such  Distribution  Date to the Floating Rate
                  Certificates  in the same order and priority in which  Accrued
                  Certificate  Interest  Distribution  Amount is allocated among
                  those Classes of Certificates;

                           (h)      to the holders of the Class X  Certificates,
                  the  remainder  of  the  Class  X  Distributable   Amount  not
                  distributed pursuant to Sections 4.02(a)(iii)(a)-(g); and

                           (iv)     to the holders of the Class R  Certificates,
         any remaining amount.

                  (b)      On each Distribution  Date, all amounts  representing
Prepayment   Charges  from  the  Mortgage  Loans  received  during  the  related
Prepayment   Period  will  be   distributed  to  the  holders  of  the  Class  P
Certificates.

                  (c)      On the May 2002, June 2002 and July 2002 Distribution
Dates,  the Trustee shall transfer from the Capitalized  Interest Account to the
Distribution  Account the  Capitalized  Interest  Requirement,  if any, for such
Distribution Date.

                  (d)      On the  Distribution  Date following either the final
Subsequent Transfer Date or July 24, 2002 whichever date is earlier, any amounts
remaining in the  Capitalized  Interest  Account,  after taking into account the
transfers  in respect of the  Distribution  Date  described in clause (c) above,
shall be paid to the Unaffiliated Seller.

                  (e)      On each  Subsequent  Transfer Date, the  Unaffiliated
Seller shall  instruct in writing the Trustee to withdraw  from the  Pre-Funding
Account an amount equal to 100% of the aggregate Stated Principal Balances as of
the related Subsequent Cut-off Date of the Subsequent Mortgage Loans sold to the
Trust Fund on such  Subsequent  Transfer Date and pay such amount to or upon the
order of the Unaffiliated  Seller upon  satisfaction of the conditions set forth
in Section  2.01(c)  hereof  with  respect to such  transfer.  The  Trustee  may
conclusively rely on such written instructions from the Unaffiliated Seller.

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<PAGE>

                  (f)      If the Pre-Funding  Amount  (exclusive of Pre-Funding
Earnings)  has been reduced to $100,000 or less by the close of business on June
1, 2002 then, on the June 25, 2002 Distribution Date, after giving effect to any
reductions in the  Pre-Funding  Amount on such date,  the Trustee shall withdraw
from the  Pre-Funding  Account  on such  date and  deposit  in the  Distribution
Account  the  amount  on  deposit  in the  Pre-Funding  Account  other  than any
Pre-Funding  Earnings; if the Pre-Funding Amount has not been reduced to zero by
the close of business on July 24,  2002,  the Trustee  shall  withdraw  from the
Pre-Funding  Account the amount on deposit  therein,  other than the Pre-Funding
Earnings,  and deposit such amount on the July 25, 2002  Distribution  Date into
the Distribution  Account.  Each amount so deposited to the Distribution Account
pursuant to the preceding  sentence  shall be  distributed to the Holders of the
Offered  Certificates,  PRO  RATA,  based on their  relative  Class  Certificate
Balances  immediately  prior to the  related  Distribution  Date,  as a separate
payment of principal, on the related Distribution Date.

                  (g)      On the May 25, June 25 and July 25 2002  Distribution
Dates,  the  Trustee  shall  transfer  from  the  Pre-Funding   Account  to  the
Distribution Account the Pre-Funding  Earnings,  if any, applicable to each such
date.

                  (h)      On any  Distribution  Date, any Relief Act Shortfalls
and Net  Prepayment  Interest  Shortfalls  for such  Distribution  Date  will be
allocated as a reduction in the following order:

                           (1)      First, to the amount of interest  payable to
                                    the Class X Certificates; and

                           (2)      Second,  pro  rata,  as a  reduction  of the
                                    Accrued  Certificate  Interest  Distribution
                                    Amount  for the Class A, Class M and Class B
                                    Certificates,   based  on  the   amount   of
                                    interest   to  which  such   classes   would
                                    otherwise be entitled.

                  Section 4.03   MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.

                  (a)      Not later than each  Distribution  Date,  the Trustee
shall make available to each Certificateholder, the Servicer, the Depositor, the
Unaffiliated  Seller,  the Class A Certificate  Insurer and each Rating Agency a
statement setting forth with respect to the related distribution:

                           (i)      the amount  thereof  allocable to principal,
         separately   identifying   the   aggregate   amount  of  any  Principal
         Prepayments and Liquidation Proceeds included therein;

                           (ii)     the amount  thereof  allocable  to interest,
         any Unpaid  Interest  Amounts  included  in such  distribution  and any
         remaining   Unpaid  Interest   Amounts  after  giving  effect  to  such
         distribution,  any Basis Risk CarryForward Amount for such Distribution
         Date and the amount of all Basis Risk  CarryForward  Amount  covered by
         withdrawals  from the Excess Reserve Fund Account on such  Distribution
         Date;

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<PAGE>

                           (iii)    if the  distribution  to the Holders of such
         Class  of  Certificates  is less  than the full  amount  that  would be
         distributable  to such Holders if there were sufficient funds available
         therefor,  the amount of the  shortfall and the  allocation  thereof as
         between  principal and interest,  including any Basis Risk CarryForward
         Amount not covered by amounts in the Excess Reserve Fund Account;

                           (iv)     the Class Certificate  Balance of each Class
         of Certificates after giving effect to the distribution of principal on
         such Distribution Date;

                           (v)      the Pool  Stated  Principal  Balance for the
         following Distribution Date;

                           (vi)     the amount of the Servicing  Fees paid to or
         retained  by  the  Servicer  or   Subservicer   (with  respect  to  the
         Subservicers, in the aggregate) with respect to such Distribution Date;

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

                           (viii)   the  amount  of  Advances  included  in  the
         distribution  on such  Distribution  Date and the  aggregate  amount of
         Advances  reported by the  servicer as  outstanding  as of the close of
         business on such Distribution Date;

                           (ix)     the number and aggregate Scheduled Principal
         Balances of  Mortgage  Loans (1) as to which the  Scheduled  Payment is
         delinquent  1 to 30 days,  31 to 59 days,  60 to 89 days and 90 or more
         days,  (2) as to which the  Scheduled  Payment is  delinquent  31 to 60
         days,  61 to 90 days and 91 or more  days,  (3) that  have  become  REO
         Property,  (4) that are in foreclosure  and (5) that are in bankruptcy,
         in each case as of the close of  business on the last  Business  Day of
         the immediately preceding month;

                           (x)      For  each  of  the   preceding  12  calendar
         months,  or  all  calendar  months  since  the  related  Cut-off  Date,
         whichever  is  less,  the  aggregate  dollar  amount  of the  Scheduled
         Payments (A) due on all  Outstanding  Mortgage Loans on each of the Due
         Dates in each such month and (B)  delinquent 60 days or more on each of
         the Due Dates in each such month;

                           (xi)     with  respect  to  any  Mortgage  Loan  that
         became an REO Property during the preceding  calendar  month,  the loan
         number and Stated  Principal  Balance of such  Mortgage  Loan as of the
         close of business on the Determination Date preceding such Distribution
         Date and the date of acquisition thereof;

                           (xii)    the total  number and  principal  balance of
         any REO Properties  (and market value, if available) as of the close of
         business on the Determination Date preceding such Distribution Date;

                           (xiii)   whether a Trigger  Event has occurred and is
         continuing  (including  the  calculation  of thereof and the  aggregate
         outstanding balance of all 60+ Day Delinquent Loans)

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                           (xiv)    the amount on deposit in the Excess  Reserve
         Fund Account (after giving effect to distributions on such Distribution
         Date);

                           (xv)     the  aggregate  amount of  Applied  Realized
         Loss Amounts incurred during the preceding calendar month and aggregate
         Applied Realized Loss Amounts through such Distribution Date;

                           (xvi)    the amount of any Net  Monthly  Excess  Cash
         Flow on  such  Distribution  Date  and the  allocation  thereof  to the
         Certificateholders  with respect to Applied  Realized Losses and Unpaid
         Interest Amounts;

                           (xvii)   the   Subordinated   Amount   and   Required
         Subordinated Amount;

                           (xviii)  the   Interest    Remittance   Amount,   the
         Principal  Remittance  Amount and the  Prepayment  Charges  remitted by
         Servicer with respect to that Distribution Date;

                           (xix)    the  Pre-Funded  Amount as of the end of the
         prior Due Period;

                           (xx)     the amount of any  principal  prepayment  on
         the Certificates  resulting from the application of unused  Pre-Funding
         Account moneys;

                           (xxi)    the  Class  A  Deficiency   Amount  and  the
         Insured Payment for such Distribution Date;

                           (xxii)   the Reimbursement  Amount  immediately prior
         to such Distribution  Date, and the amount of any payments to the Class
         A Certificate Insurer on account thereof on such Distribution Date; and

                           (xxiii)  with respect to the Superior  Mortgage Loans
         only,  as identified  in each  Mortgage  Loan  Schedule,  (a) the total
         number and  aggregate  Scheduled  Principal  Balances  of the  Superior
         Mortgage  Loans,  (b) the  number  and  aggregate  Scheduled  Principal
         Balances  of  Superior  Mortgage  Loans (1) as to which  the  Scheduled
         Payment is delinquent 1 to 30 days, 31 to 59 days, 60 to 89 days and 90
         or more days, (2) as to which the Scheduled Payment is delinquent 31 to
         60 days,  61 to 90 days and 91 or more days,  (3) that have  become REO
         Property,  (4) that are in foreclosure  and (5) that are in bankruptcy,
         in each case as of the close of  business on the last  Business  Day of
         the  immediately  preceding  month,  (c)  the  loan  number,  Scheduled
         Principal  Balance and FDIC Guaranty  Termination Date of each Superior
         Mortgage Loan not yet repurchased by Superior for which the Trustee has
         submitted a repurchase  notice  pursuant to Section 2.03(d) and (d) (i)
         the  amounts  paid by the FDIC  under  the FDIC  Guaranty  for that Due
         Period and (ii) the  aggregate  amount of claims paid by the FDIC under
         the FDIC Guaranty.

                  (b)      The Trustee's  responsibility for providing the above
statement  is  limited  to the  availability,  timeliness  and  accuracy  of the
information  derived  from the  Servicer  or,  in the case of the  Reimbursement
Amount,  from  the  Class A  Certificate  Insurer  or,  in the  case of the FDIC
Guaranty,  from information  otherwise received by the Trustee. The Trustee will
provide the above statement via the Trustee's internet website,  except that the
Trustee shall deliver a hard

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copy of such statement to the Class A Certificate  Insurer on each  Distribution
Date.    The    Trustee's    website    will    initially    be    located    at
http:\\www-apps.gis.deutsche-bank.com\invr  and  assistance in using the website
can  be  obtained  by  calling  the  Trustee's   investor   relations   desk  at
1-800-735-7777.  A paper copy of the statement  will also be made available upon
request.

                  (c)      Within a  reasonable  period of time after the end of
each calendar  year,  the Trustee shall cause to be furnished to each Person who
at any time  during  the  calendar  year was a  Certificateholder,  a  statement
containing the information set forth in clauses (a)(i),  (a)(ii) and (a)(vii) of
this  Section 4.03  aggregated  for such  calendar  year or  applicable  portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that  substantially
comparable  information  shall  be  provided  by  the  Trustee  pursuant  to any
requirements of the Code as from time to time in effect.

                  (d)      Not later than the  Determination  Date, the Servicer
shall furnish to the Trustee a monthly  remittance  advice statement  containing
such information as shall be reasonably  requested by the Trustee to provide the
reports  required by Section 4.03(a) as to the  accompanying  remittance and the
period  ending  on the  close  of  business  on  the  last  Business  Day of the
immediately preceding month.

                  The Servicer  shall furnish to the Trustee an individual  loan
accounting  report,  as of the last  Business  Day of each  month,  to  document
Mortgage  Loan  payment  activity on an  individual  Mortgage  Loan basis.  With
respect to each month, the  corresponding  individual loan accounting report (in
electronic  format)  shall be  received by the Trustee no later than the related
Determination Date, which report shall contain the following:

                           (i)      with respect to each Scheduled Payment,  the
         amount of such remittance  allocable to principal (including a separate
         breakdown  of any  Principal  Prepayment,  including  the  date of such
         prepayment,  and any  prepayment  penalties or  premiums,  along with a
         detailed report of interest on principal prepayment amounts remitted in
         accordance with Section 3.25);

                           (ii)     with respect to each Scheduled Payment,  the
         amount of such remittance allocable to interest and assumption fees;

                           (iii)    the   amount   of   servicing   compensation
         received by the Servicer during the prior distribution period;

                           (iv)     the   individual   and   aggregate    Stated
         Principal Balance of the Mortgage Loans;

                           (v)      the  individual   and  aggregate   Scheduled
         Principal Balances of the Mortgage Loans;

                           (vi)     the aggregate of any expenses  reimbursed to
         the Servicer during the prior  distribution  period pursuant to Section
         3.05; and

                           (vii)    the   number   and   aggregate   outstanding
         principal  balances of Mortgage Loans (a) delinquent (1) 30 to 59 days,
         (2) 60 to 89 days, (3) 90 days or more;

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<PAGE>

         (b) as to which  foreclosure  has  commenced;  and (c) as to which  REO
         Property has been acquired.

                  Section 4.04  CERTAIN MATTERS RELATING TO THE DETERMINATION OF
LIBOR.

                  Until  all of the  LIBOR  Certificates  are paid in full,  the
Trustee will at all times retain at least four  Reference  Banks for the purpose
of  determining  LIBOR with respect to each  Interest  Determination  Date.  The
Servicer  initially shall designate the Reference  Banks.  Each "REFERENCE BANK"
shall be a leading bank engaged in  transactions  in Eurodollar  deposits in the
international  Eurocurrency  market,  shall not control, be controlled by, or be
under common control with,  the Trustee and shall have an  established  place of
business in London.  If any such Reference Bank should be unwilling or unable to
act as such or if the Servicer  should  terminate its  appointment  as Reference
Bank,  the Servicer  shall  promptly  appoint or cause to be  appointed  another
Reference  Bank.  The Trustee shall have no liability or  responsibility  to any
Person for (i) the selection of any Reference  Bank for purposes of  determining
LIBOR or (ii) any  inability  to retain at least four  Reference  Banks which is
caused by circumstances beyond its reasonable control.

                  The Pass-Through Rate for each Class of LIBOR Certificates for
each  Interest  Accrual  Period shall be determined by the Trustee on each LIBOR
Determination  Date so long as the LIBOR  Certificates  are  outstanding  on the
basis of LIBOR and the respective formulae appearing in footnotes  corresponding
to the LIBOR  Certificates  in the table  relating  to the  Certificates  in the
Preliminary   Statement.   The  Trustee   shall  not  have  any   liability   or
responsibility  to  any  Person  for  its  inability,   following  a  good-faith
reasonable effort, to obtain quotations from the Reference Banks or to determine
the arithmetic mean referred to in the definition of LIBOR,  all as provided for
in this Section 4.04 and the definition of LIBOR. The establishment of LIBOR and
each Pass-Through  Rate for the LIBOR  Certificates by the Trustee shall (in the
absence of manifest error) be final,  conclusive and binding upon each Holder of
a Certificate and the Trustee.

                  Section 4.05  THE CLASS A INSURANCE POLICY.

                  (a)      Within two (2) days following each  Remittance  Date,
the  Trustee  shall  determine  with  respect  to  the   immediately   following
Distribution  Date, the amount to be on deposit in the  Distribution  Account on
such  Distribution  Date as a result  of the (i)  Servicer's  remittance  of the
Interest  Remittance  Amount and the Principal  Remittance Amount on the related
Remittance  Date, and (ii) any transfers to the  Distribution  Account made from
the Capitalized Interest Account and/or the Pre-Funding Account relating to such
Distribution  Date pursuant to Section 4.02 hereof,  excluding the amount of any
Insured Payment.

                  (b)      If on  any  Distribution  Date  there  is a  Class  A
Deficiency,  the Trustee shall complete a Notice in the form of Exhibit A to the
Class A  Insurance  Policy and  submit  such  notice to the Class A  Certificate
Insurer no later than 12:00 noon New York City time on the second  Business  Day
preceding such  Distribution Date as a claim for an Insured Payment in an amount
equal to such Class A Deficiency.

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<PAGE>

                  (c)      The  Trustee  shall  establish  a  separate  Eligible
Account for the benefit of Holders of the Class A  Certificates  and the Class A
Certificate  Insurer  referred  to  herein  as the  "Class A  Insurance  Payment
Account" over which the Trustee shall have  exclusive  control and sole right of
withdrawal.  The Trustee  shall  deposit  upon receipt any amount paid under the
Class A Insurance  Policy in the Insurance  Payment  Account and distribute such
amount  only for  purposes of payment to the Class A  Certificateholders  of the
Class A Insured  Amount and such amount may not be applied to satisfy any costs,
expenses or liabilities of the Servicer,  the Trustee or the Trust Fund. Amounts
paid under the Class A Insurance Policy, to the extent needed to pay the Class A
Insured Amount shall be transferred to the  Distribution  Account on the related
Distribution  Date  and  disbursed  by  the  Class  A  Trustee  to the  Class  A
Certificateholders  in  accordance  with Section 4.02. It shall not be necessary
for such  payments  to be made by checks  or wire  transfers  separate  from the
checks  or  wire  transfers  used  to pay  other  distributions  to the  Class A
Certificateholders with other funds available to make such payment. However, the
amount of any payment of principal or of interest on the Class A Certificates to
be paid from funds  transferred from the Class A Insurance Payment Account shall
be noted as provided in paragraph (d) below in the  Certificate  Register and in
the statement to be furnished to Holders of the Class A Certificates pursuant to
Section 4.03(a).  Funds held in the Class A Insurance  Payment Account shall not
be invested. Any funds remaining in the Class A Insurance Payment Account on the
first Business Day following a Distribution  Date shall be returned to the Class
A  Certificate  Insurer  pursuant  to the  written  instructions  of the Class A
Certificate Insurer by the end of such Business Day.

                  (d)      The Trustee shall keep a complete and accurate record
of the  amount  of  interest  and  principal  paid  in  respect  of any  Class A
Certificate from moneys received under the Class A Insurance Policy. The Class A
Certificate  Insurer  shall have the right to inspect such records at reasonable
times during normal  business  hours upon one Business Day's prior notice to the
Trustee.

                  (e)      In  the  event  that  the  Trustee  has   received  a
certified copy of an order of the appropriate court that any Insured Payment has
been  voided  in  whole  or in part as a  preference  payment  under  applicable
bankruptcy  law, the Trustee  shall so notify the Class A  Certificate  Insurer,
shall  comply  with the  provisions  of the Class A  Insurance  Policy to obtain
payment by the Class A Certificate  Insurer of such voided Insured Payment,  and
shall,  at the time it  provides  notice  to the  Class A  Certificate  Insurer,
notify, by mail to the Class A Certificateholders  of the affected  Certificates
that,  in the  event  any  Class A  Certificateholder's  Insured  Payment  is so
recovered,  such Class A Certificateholder  will be entitled to payment pursuant
to the Class A Insurance Policy, a copy of which shall be made available through
the  Trustee,  the  Class A  Certificate  Insurer  or the  Class  A  Certificate
Insurer's  fiscal  agent,  if any, and the Trustee  shall furnish to the Class A
Certificate  Insurer or its fiscal  agent,  if any, its records  evidencing  the
payments which have been made by the Trustee and subsequently recovered from the
Class A Certificateholders, and dates on which such payments were made.

                  (f)      The  Trustee  shall  promptly   notify  the  Class  A
Certificate Insurer of any proceeding or the institution of any action, of which
a Responsible Officer of the Trustee has actual knowledge, seeking the avoidance
as a preferential transfer under applicable bankruptcy, insolvency, receivership
or similar law (a "PREFERENCE  CLAIM") of any distribution  made with respect to
the Class A  Certificates.  Each Class A  Certificateholder,  by its purchase of
Class A

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Certificates,  the Servicer and the Trustee agree that,  the Class A Certificate
Insurer (so long as no Class A Certificate  Insurer  Default  exists) may at any
time during the  continuation of any proceeding  relating to a Preference  Claim
direct  all  matters  relating  to such  Preference  Claim,  including,  without
limitation,  (i) the  direction  of any  appeal  of any order  relating  to such
Preference  Claim and (ii) the posting of any surety,  supersedes or performance
bond  pending  any such  appeal.  In  addition  and  without  limitation  of the
foregoing,  the Class A Certificate  Insurer  shall be  subrogated  to, and each
Class A Certificateholder, the Trustee hereby delegates and assigns to the Class
A Certificate  Insurer,  to the fullest extent  permitted by law, the rights the
Trustee and each Class A Certificateholder in the conduct of any such Preference
Claim, including,  without limitation,  all rights of any party to any adversary
proceeding or action with respect to any court order issued in  connection  with
any such Preference Claim.

                  (g)      The Trustee  shall,  upon  retirement  of the Class A
Certificates,  furnish  to the  Class A  Certificate  Insurer  a notice  of such
retirement,  and, upon retirement of the Class A Certificates and the expiration
of the term of the Class A  Insurance  Policy,  surrender  the Class A Insurance
Policy to the Class A Certificate Insurer for cancellation.

                  Section 4.06  EFFECT OF  PAYMENTS  BY THE CLASS A  CERTIFICATE
INSURER; SUBROGATION.

                  Anything herein to the contrary  notwithstanding,  any payment
with respect to principal  of or interest on the Class A  Certificates  which is
made with moneys received  pursuant to the terms of the Class A Insurance Policy
shall not be considered payment of the Class A Certificates from the Trust Fund.
The Depositor, the Servicer and the Trustee acknowledge,  and each Holder by its
acceptance  of a Class A  Certificate  agrees,  that  without  the  need for any
further  action on the part of the Class A Certificate  Insurer,  the Depositor,
the  Servicer,  the Trustee or the  Certificate  Registrar (a) to the extent the
Class A Certificate Insurer makes payments,  directly or indirectly,  on account
of principal of or interest on the Class A  Certificates  to the Holders of such
Class A Certificates,  the Class A Certificate  Insurer will be fully subrogated
to, and each Class A  Certificateholder,  the  Servicer  and the Trustee  hereby
delegate and assign to the Class A Certificate  Insurer,  to the fullest  extent
permitted  by law,  the rights of such  Holders to receive  such  principal  and
interest from the Trust Fund, including,  without limitation, any amounts due to
the Class A  Certificateholders  in respect of securities law violations arising
from  the  offer  and  sale of the  Class A  Certificates,  and (b) the  Class A
Certificate  Insurer  shall be paid such  amounts  from the  sources  and in the
manner  provided  herein for the payment of such  amounts and as provided in the
Insurance and Indemnity Agreement.  The Trustee and the Servicer shall cooperate
in all respects with any reasonable  request by the Class A Certificate  Insurer
for action to preserve or enforce the Class A  Certificate  Insurer's  rights or
interests  under this  Agreement  without  limiting the rights or affecting  the
interests of the Holders as otherwise set forth herein.

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                                   ARTICLE V

                                THE CERTIFICATES

                  Section 5.01  THE CERTIFICATES.

                  The Certificates  shall be substantially in the forms attached
hereto as exhibits.  The  Certificates  shall be issuable in registered form, in
the minimum denominations, integral multiples in excess thereof (except that one
Certificate  in each Class may be issued in a different  amount which must be in
excess of the applicable minimum  denomination) and aggregate  denominations per
Class set forth in the Preliminary Statement.

                  The Depositor hereby directs the Trustee to register the Class
X and the  Class P  Certificates  as  follows:  "Deutsche  Bank  National  Trust
Company,  as Indenture  Trustee on behalf of the Noteholders of the CDC Mortgage
Capital  NIM  Trust  2002-HE1N",  and  to  deliver  such  Class  X and  Class  P
Certificates  to Deutsche Bank  National  Trust  Company,  as trustee of the NIM
Trust.

                  Subject to Section 9.02  respecting the final  distribution on
the Certificates, on each Distribution Date the Trustee shall make distributions
to each  Certificateholder  of record on the preceding Record Date either (x) by
wire transfer in immediately  available funds to the account of such holder at a
bank or other entity having appropriate  facilities therefor, if such Holder has
so notified the Trustee at least five Business Days prior to the related  Record
Date or (y) by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register.

                  The  Certificates  shall be  executed  by manual or  facsimile
signature  on behalf  of the  Trustee  by an  authorized  officer.  Certificates
bearing the manual or facsimile  signatures of individuals who were, at the time
such signatures were affixed,  authorized to sign on behalf of the Trustee shall
bind the  Trustee,  notwithstanding  that such  individuals  or any of them have
ceased to be so  authorized  prior to the  countersignature  and delivery of any
such  Certificates or did not hold such offices at the date of such Certificate.
No  Certificate  shall be entitled to any benefit  under this  Agreement,  or be
valid for any purpose,  unless countersigned by the Trustee by manual signature,
and such countersignature upon any Certificate shall be conclusive evidence, and
the only evidence,  that such  Certificate  has been duly executed and delivered
hereunder.  All Certificates shall be dated the date of their  countersignature.
On the Closing Date, the Trustee shall countersign the Certificates to be issued
at the direction of the Depositor, or any affiliate thereof.

                  The Depositor shall provide,  or cause to be provided,  to the
Trustee  on a  continuous  basis,  an  adequate  inventory  of  Certificates  to
facilitate transfers.

                  Section 5.02  CERTIFICATE  REGISTER;  REGISTRATION OF TRANSFER
AND EXCHANGE OF CERTIFICATES.

                  (a)      The Trustee shall maintain, or cause to be maintained
in accordance  with the  provisions of Section 5.06, a Certificate  Register for
the Trust Fund in which,  subject to the provisions of  subsections  (b) and (c)
below and to such reasonable regulations as it may

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prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein  provided.  Upon surrender for
registration  of transfer of any  Certificate,  the  Trustee  shall  execute and
deliver,  in the name of the designated  transferee or transferees,  one or more
new Certificates of the same Class and aggregate Percentage Interest.

                  At the  option  of a  Certificateholder,  Certificates  may be
exchanged for other  Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest upon surrender of the
Certificates  to be exchanged  at the office or agency of the Trustee.  Whenever
any  Certificates  are so surrendered  for exchange,  the Trustee shall execute,
authenticate,  and deliver the Certificates which the  Certificateholder  making
the exchange is entitled to receive.  Every Certificate presented or surrendered
for  registration  of  transfer or exchange  shall be  accompanied  by a written
instrument of transfer in form  satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.

                  No service charge to the Certificateholders  shall be made for
any registration of transfer or exchange of  Certificates,  but payment of a sum
sufficient  to cover  any tax or  governmental  charge  that may be  imposed  in
connection with any transfer or exchange of Certificates may be required.

                  All  Certificates  surrendered for registration of transfer or
exchange  shall be  cancelled  and  subsequently  destroyed  by the  Trustee  in
accordance with the Trustee's customary procedures.

                  (b)      No  transfer of a Private  Certificate  shall be made
unless such  transfer is made  pursuant to an effective  registration  statement
under the Securities Act and any applicable  state  securities laws or is exempt
from the  registration  requirements  under said Act and such  state  securities
laws.  Except  with  respect  to  the  transfer  of  the  Class  X and  Class  P
Certificates to the NIMs Trust on the Closing Date, in the event that a transfer
is to be made in reliance  upon an exemption  from the  Securities  Act and such
laws, in order to assure  compliance  with the Securities Act and such laws, the
Certificateholder  desiring to effect such transfer shall certify to the Trustee
in writing the facts  surrounding  the  transfer in  substantially  the form set
forth in Exhibit H (the "TRANSFEROR  CERTIFICATE") and either (i) there shall be
delivered  to the Trustee a letter in  substantially  the form of Exhibit I (the
"RULE 144A  LETTER")  or (ii) there  shall be  delivered  to the  Trustee at the
expense of the  transferor  an Opinion of Counsel that such transfer may be made
without  registration  under the Securities  Act. The Depositor shall provide to
any Holder of a Private Certificate and any prospective transferee designated by
any such Holder, information regarding the related Certificates and the Mortgage
Loans and such other  information as shall be necessary to satisfy the condition
to eligibility set forth in Rule 144A(d)(4) for transfer of any such Certificate
without   registration   thereof  under  the  Securities  Act  pursuant  to  the
registration exemption provided by Rule 144A. The Trustee and the Servicer shall
cooperate with the Depositor in providing the Rule 144A  information  referenced
in the preceding sentence, including providing to the Depositor such information
regarding the  Certificates,  the Mortgage Loans and other matters regarding the
Trust Fund as the  Depositor  shall  reasonably  request to meet its  obligation
under the preceding sentence.  Each Holder of a Private Certificate  desiring to
effect such transfer shall,  and does hereby agree to, indemnify the

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Trustee and the Depositor and the Servicer against any liability that may result
if the transfer is not so exempt or is not made in accordance  with such federal
and state laws.

                  Except with respect to the transfer of the Class X and Class P
Certificates  to  the  NIMs  Trust  on  the  Closing  Date,  no  transfer  of an
ERISA-Restricted  Certificate  shall  be made  unless  the  Trustee  shall  have
received  either (i) a  representation  from the transferee of such  Certificate
acceptable  to and in form and  substance  satisfactory  to the  Trustee (in the
event such Certificate is a Private Certificate or a Residual Certificate,  such
requirement  is  satisfied  only by the  Trustee's  receipt of a  representation
letter  from the  transferee  substantially  in the form of  Exhibit  I), to the
effect that such  transferee  is not an  employee  benefit  plan or  arrangement
subject to Section 406 of ERISA, a plan subject to Section 4975 of the Code or a
plan  subject to any  Federal,  state or local law  ("SIMILAR  LAW")  materially
similar to the foregoing provisions of ERISA or the Code, nor a person acting on
behalf of any such plan or arrangement  nor using the assets of any such plan or
arrangement to effect such transfer, or (ii) if the ERISA-Restricted Certificate
is a  Private  Certificate  other  than a  Residual  Certificate  or a  Class  P
Certificate that has been the subject of an ERISA-Qualifying  Underwriting,  and
the purchaser is an insurance company, a representation that the purchaser is an
insurance  company that is purchasing such  Certificates with funds contained in
an "insurance  company general account" (as such term is defined in Section V(e)
of Prohibited  Transaction  Class  Exemption  95-60 ("PTCE  95-60") and that the
purchase and holding of such  Certificates  are covered under Sections I and III
of PTCE  95-60 or (iii)  in the  case of any such  ERISA-Restricted  Certificate
other  than  a  Residual  Certificate  or  Class  P  Certificate  presented  for
registration  in the name of an  employee  benefit  plan  subject  to Title I of
ERISA, a plan or arrangement  subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a plan subject to Similar Law, or a
trustee of any such plan or any other  person  acting on behalf of any such plan
or  arrangement  or using such  plan's or  arrangement's  assets,  an Opinion of
Counsel  satisfactory to the Trustee and the Servicer,  which Opinion of Counsel
shall  not be an  expense  of the  Trustee,  the  Servicer  or the  Trust  Fund,
addressed  to the  Trustee,  to the effect that the  purchase or holding of such
ERISA-Restricted  Certificate  will not  result in the  assets of the Trust Fund
being  deemed to be "plan  assets"  and  subject to the  prohibited  transaction
provisions  of ERISA and the Code or similar  violation  of Similar Law and will
not subject the Trustee or the Servicer to any  obligation  in addition to those
expressly undertaken in this Agreement or to any liability.  For purposes of the
preceding sentence, with respect to an ERISA-Restricted  Certificate that is not
a Private Certificate or a Residual Certificate, in the event the representation
letter   referred  to  in  the  preceding   sentence  is  not  furnished,   such
representation  shall  be  deemed  to  have  been  made  to the  Trustee  by the
transferee's    (including   an   initial   acquiror's)    acceptance   of   the
ERISA-Restricted   Certificates.  In  the  event  that  such  representation  is
violated, or any attempt to transfer to a plan or arrangement subject to Section
406 of ERISA,  a plan  subject to Section  4975 of the Code or a plan subject to
Similar  Law, or a person  acting on behalf of any such plan or  arrangement  or
using the  assets of any such  plan or  arrangement,  without  such  Opinion  of
Counsel, such attempted transfer or acquisition shall be void and of no effect.

                  To the extent permitted under  applicable law (including,  but
not limited to,  ERISA),  the Trustee  shall be under no liability to any Person
for any registration of transfer of any ERISA-Restricted  Certificate that is in
fact not  permitted  by this  Section  5.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action

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<PAGE>

with respect to such Holder under the  provisions  of this  Agreement so long as
the transfer was  registered  by the Trustee in  accordance  with the  foregoing
requirements.

                  (c)      Each  Person who has or who  acquires  any  Ownership
Interest  in a  Residual  Certificate  shall  be  deemed  by the  acceptance  or
acquisition  of such  Ownership  Interest  to have  agreed  to be  bound  by the
following  provisions,  and the rights of each Person  acquiring  any  Ownership
Interest  in a Residual  Certificate  are  expressly  subject  to the  following
provisions:

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

                           (ii)     No   Ownership   Interest   in  a   Residual
         Certificate  may  be  registered  on the  Closing  Date  or  thereafter
         transferred,  and the Trustee  shall not  register  the Transfer of any
         Residual  Certificate unless, in addition to the certificates  required
         to be  delivered  to the  Trustee  under  subparagraph  (b) above,  the
         Trustee  shall  have been  furnished  with an  affidavit  (a  "TRANSFER
         AFFIDAVIT") of the initial owner or the proposed transferee in the form
         attached hereto as Exhibit G.

                           (iii)    Each  Person   holding  or   acquiring   any
         Ownership Interest in a Residual  Certificate shall agree (A) to obtain
         a Transfer Affidavit from any other Person to whom such Person attempts
         to Transfer its Ownership  Interest in a Residual  Certificate,  (B) to
         obtain a Transfer  Affidavit  from any  Person for whom such  Person is
         acting as nominee,  trustee or agent in connection with any Transfer of
         a Residual  Certificate and (C) not to Transfer its Ownership  Interest
         in a Residual  Certificate  or to cause the  Transfer  of an  Ownership
         Interest in a Residual Certificate to any other Person if it has actual
         knowledge that such Person is not a Permitted Transferee.

                           (iv)     Any  attempted or purported  Transfer of any
         Ownership  Interest  in a  Residual  Certificate  in  violation  of the
         provisions of this Section  5.02(c)  shall be absolutely  null and void
         and shall vest no rights in the purported Transferee.  If any purported
         transferee shall become a Holder of a Residual Certificate in violation
         of the  provisions  of this Section  5.02(c),  then the last  preceding
         Permitted  Transferee shall be restored to all rights as Holder thereof
         retroactive  to the date of  registration  of Transfer of such Residual
         Certificate.  The Trustee shall be under no liability to any Person for
         any registration of Transfer of a Residual  Certificate that is in fact
         not permitted by Section 5.02(b) and this Section 5.02(c) or for making
         any payments due on such  Certificate  to the Holder  thereof or taking
         any other action with respect to such Holder  under the  provisions  of
         this Agreement so long as the Transfer was registered  after receipt of
         the related  Transfer  Affidavit,  Transferor  Certificate and the Rule
         144A Letter. The Trustee shall be entitled but not obligated to recover
         from  any  Holder  of a  Residual  Certificate  that  was in fact not a
         Permitted  Transferee  at the  time it  became  a  Holder  or,  at such
         subsequent  time as it became  other than a Permitted  Transferee,  all
         payments  made on such  Residual  Certificate  at and after either such
         time.  Any such  payments so recovered by the Trustee shall be paid and
         delivered by the Trustee to the last preceding Permitted  Transferee of
         such Certificate.

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<PAGE>

                           (v)      The Depositor  shall use its best efforts to
         make available,  upon receipt of written request from the Trustee,  all
         information  necessary to compute any tax imposed under Section 860E(e)
         of the Code as a result of a Transfer  of an  Ownership  Interest  in a
         Residual Certificate to any Holder who is not a Permitted Transferee.

                  The  restrictions  on Transfers of a Residual  Certificate set
forth in this Section 5.02(c) shall cease to apply (and the applicable  portions
of the  legend  on a  Residual  Certificate  may be  deleted)  with  respect  to
Transfers  occurring  after  delivery  to the  Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trust Fund, the Trustee,
the Unaffiliated  Seller or the Servicer,  to the effect that the elimination of
such  restrictions will not cause the Trust Fund hereunder to fail to qualify as
a REMIC at any time  that the  Certificates  are  outstanding  or  result in the
imposition of any tax on the Trust Fund, a Certificateholder  or another Person.
Each  Person  holding  or  acquiring  any  Ownership   Interest  in  a  Residual
Certificate  hereby consents to any amendment of this Agreement which,  based on
an Opinion of Counsel furnished to the Trustee,  is reasonably  necessary (a) to
ensure that the record  ownership of, or any beneficial  interest in, a Residual
Certificate is not transferred,  directly or indirectly, to a Person that is not
a Permitted  Transferee and (b) to provide for a means to compel the Transfer of
a  Residual  Certificate  which  is held  by a  Person  that is not a  Permitted
Transferee to a Holder that is a Permitted Transferee.

                  (d)      The preparation and delivery of all  certificates and
opinions  referred to above in this Section  5.02 in  connection  with  transfer
shall be at the expense of the parties to such transfers.

                  (e)      Except as provided below, the Book-Entry Certificates
shall  at all  times  remain  registered  in the name of the  Depository  or its
nominee  and at all  times:  (i)  registration  of the  Certificates  may not be
transferred  by the Trustee  except to another  Depository;  (ii) the Depository
shall maintain  book-entry  records with respect to the  Certificate  Owners and
with respect to ownership and transfers of such Book-Entry  Certificates;  (iii)
ownership and transfers of  registration  of the Book-Entry  Certificates on the
books of the Depository shall be governed by applicable rules established by the
Depository;  (iv) the  Depository  may  collect  its usual and  customary  fees,
charges and expenses  from its  Depository  Participants;  (v) the Trustee shall
deal with the Depository,  Depository  Participants  and indirect  participating
firms  as   representatives   of  the  Certificate   Owners  of  the  Book-Entry
Certificates  for  purposes  of  exercising  the  rights of  holders  under this
Agreement,  and requests and  directions  for and votes of such  representatives
shall  not be  deemed  to be  inconsistent  if they are  made  with  respect  to
different  Certificate  Owners; and (vi) the Trustee may rely and shall be fully
protected in relying upon  information  furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect  participating  firms and persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners.

                  All transfers by Certificate Owners of Book-Entry Certificates
shall be made in accordance  with the  procedures  established by the Depository
Participant  or  brokerage  firm  representing  such  Certificate   Owner.  Each
Depository   Participant   shall  only  transfer   Book-Entry   Certificates  of
Certificate  Owners it  represents  or of  brokerage  firms for which it acts as
agent in accordance with the Depository's normal procedures.

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<PAGE>

                  If (x) (i) the Depository or the Depositor advises the Trustee
in  writing  that  the  Depository  is no  longer  willing  or able to  properly
discharge  its  responsibilities  as  Depository,  and (ii) the  Trustee  or the
Depositor is unable to locate a qualified  successor,  (y) the  Depositor at its
option advises the Trustee in writing that it elects to terminate the book-entry
system  through  the  Depository  or (z)  after  the  occurrence  of an Event of
Default, Certificate Owners representing at least 51% of the Certificate Balance
of the Book-Entry  Certificates  together  advise the Trustee and the Depository
through  the  Depository  Participants  in writing  that the  continuation  of a
book-entry  system  through the Depository is no longer in the best interests of
the Certificate Owners, the Trustee shall notify all Certificate Owners, through
the Depository,  of the occurrence of any such event and of the  availability of
definitive,  fully-registered  Certificates  (the "DEFINITIVE  CERTIFICATES") to
Certificate  Owners  requesting  the same.  Upon surrender to the Trustee of the
related Class of Certificates by the Depository, accompanied by the instructions
from the  Depository  for  registration,  the Trustee shall issue the Definitive
Certificates.  Neither the  Servicer,  the  Depositor  nor the Trustee  shall be
liable for any delay in delivery of such  instruction and each may  conclusively
rely on, and shall be protected in relying on, such instructions.  The Depositor
shall  provide  the  Trustee  with an  adequate  inventory  of  certificates  to
facilitate  the  issuance  and  transfer of  Definitive  Certificates.  Upon the
issuance of Definitive Certificates all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon and
performed  by the  Trustee,  to the  extent  applicable  with  respect  to  such
Definitive  Certificates  and the  Trustee  shall  recognize  the Holders of the
Definitive  Certificates as  Certificateholders  hereunder;  PROVIDED,  that the
Trustee shall not by virtue of its assumption of such obligations  become liable
to any party for any act or failure to act of the Depository.

                  Section 5.03     MUTILATED,    DESTROYED,   LOST   OR   STOLEN
CERTIFICATES.

                  If  (a)  any  mutilated  Certificate  is  surrendered  to  the
Trustee,   or  the  Trustee  receives   evidence  to  its  satisfaction  of  the
destruction,  loss or theft of any Certificate and (b) there is delivered to the
Depositor,  the Servicer,  the Class A Certificate  Insurer and the Trustee such
security or indemnity as may be required by them to hold each of them  harmless,
then,  in the absence of notice to the Trustee  that such  Certificate  has been
acquired by a bona fide  purchaser,  the Trustee shall execute,  countersign and
deliver,  in exchange for or in lieu of any such mutilated,  destroyed,  lost or
stolen  Certificate,  a new  Certificate  of like  Class,  tenor and  Percentage
Interest.  In  connection  with the issuance of any new  Certificate  under this
Section 5.03,  the Trustee may require the payment of a sum  sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses  (including  the fees and expenses of the Trustee)  connected
therewith.  Any  replacement  Certificate  issued  pursuant to this Section 5.03
shall  constitute  complete  and  indefeasible  evidence  of  ownership,  as  if
originally  issued,  whether or not the lost,  stolen or  destroyed  Certificate
shall be found at any time.

                  Section 5.04   PERSONS DEEMED OWNERS.

                  The  Servicer,  the  Trustee,  the  Depositor,   the  Class  A
Certificate  Insurer and any agent of the Servicer,  the Depositor,  the Class A
Certificate  Insurer  or the  Trustee  may  treat the  Person in whose  name any
Certificate  is registered as the owner of such  Certificate  for the purpose of
receiving distributions as provided in this Agreement and for all other purposes

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<PAGE>

whatsoever,  and neither the Servicer,  the Trustee, the Depositor,  the Class A
Certificate  Insurer nor any agent of the Servicer,  the Depositor,  the Class A
Certificate  Insurer  or the  Trustee  shall be  affected  by any  notice to the
contrary.

                  Section 5.05  ACCESS TO LIST OF CERTIFICATEHOLDERS'  NAMES AND
ADDRESSES.

                  If  three  or  more   Certificateholders   (a)  request   such
information in writing from the Trustee, (b) state that such  Certificateholders
desire to communicate with other Certificateholders with respect to their rights
under this  Agreement or under the  Certificates,  and (c) provide a copy of the
communication  which  such  Certificateholders  propose to  transmit,  or if the
Depositor  or  Servicer  shall  request  such  information  in writing  from the
Trustee,  then the Trustee shall,  within ten Business Days after the receipt of
such request,  provide the Depositor, the Servicer or such Certificateholders at
such recipients' expense the most recent list of the  Certificateholders of such
Trust   Fund  held  by  the   Trustee,   if  any.   The   Depositor   and  every
Certificateholder,  by  receiving  and  holding a  Certificate,  agree  that the
Trustee shall not be held  accountable  by reason of the  disclosure of any such
information as to the list of the  Certificateholders  hereunder,  regardless of
the source from which such information was derived.

                  Section 5.06  MAINTENANCE OF OFFICE OR AGENCY.

                  The Trustee  will  maintain or cause to be  maintained  at its
expense  an office or  offices  or agency  or  agencies  in New York City  where
Certificates  may be surrendered for  registration of transfer or exchange.  The
Trustee initially  designates the offices of its agent for such purposes located
at c/o DTC Transfer Agent Services, 55 Water Street, Jeanette Park Entrance, New
York,  New York  10041.  The  Trustee  will give  prompt  written  notice to the
Certificateholders of any change in such location of any such office or agency.

                  Section 5.07   RIGHTS OF THE CLASS A  CERTIFICATE  INSURER  TO
EXERCISE RIGHTS OF CLASS A CERTIFICATEHOLDERS.

                  By   accepting   its  Class  A   Certificate,   each  Class  A
Certificateholder  agrees  that  unless a Class A  Certificate  Insurer  Default
exists,  the  Class A  Certificate  Insurer  shall be  deemed  to be the Class A
Certificateholders  for all purposes  (other than with respect to the receipt of
payment on the Class A  Certificates)  and shall have the right to exercise  all
rights of the Class A  Certificateholders  under  this  Agreement  and under the
Class  A   Certificates   without   any   further   consent   of  the   Class  A
Certificateholders, including, without limitation:

                  (a)      the  right to  require  the  Unaffiliated  Seller  to
repurchase  Mortgage  Loans  pursuant  to Section  2.03 hereof to the extent set
forth in such Section;

                  (b)      the right to give  notices of breach or to  terminate
the rights and obligations of the Servicer as servicer  pursuant to Section 7.01
hereof;

                  (c)      the right to direct the actions of the Trustee during
the continuance of a Servicer  default  pursuant to Sections 3.24, 7.01 and 7.02
hereof;

                  (d)      the  right  to  institute   proceedings  against  the
Servicer pursuant to Section 7.01 hereof;

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<PAGE>

                  (e)      the  right  to  direct  the  Trustee  to  investigate
certain matters pursuant to Sections 8.01 and 8.02 hereof;

                  (f)      the right to remove the  Trustee  pursuant to Section
8.07 hereof;

                  (g)      any rights or  remedies  expressly  given the Class A
Certificateholders.

                  In addition,  each  Certificateholder  agrees that, subject to
Section 10.11,  unless a Class A Certificate  Insurer Default exists, the rights
specifically  enumerated  above may only be exercised by the  Certificateholders
with the prior written consent of the Class A Certificate Insurer.

                  Section 5.08 TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CLASS A
CERTIFICATE INSURER.

                  Unless  a Class A  Certificate  Insurer  Default  exists,  the
Trustee shall not, without the Class A Certificate  Insurer's  consent or unless
directed by the Class A Certificate Insurer:

                  (a)      terminate the rights and  obligations of the Servicer
as Servicer pursuant to Section 7.01 hereof;

                  (b)      agree to any  amendment  pursuant  to  Section  10.01
hereof; or

                  (c)      undertake any litigation.

                  The Class A  Certificate  Insurer  may,  in writing and in its
sole  discretion  renounce all or any of its rights under this  Agreement or any
requirement  for the Class A  Certificate  Insurer's  consent  for any period of
time.

                  Section 5.09  MORTGAGE LOANS, TRUST FUND AND ACCOUNTS HELD FOR
BENEFIT OF THE CLASS A CERTIFICATE INSURER.

                  (a)      The  Trustee  shall  hold  the  Trust  Fund  and  the
Custodial  Files  for the  benefit  of the  Certificateholders  and the  Class A
Certificate Insurer and all references in this Agreement and in the Certificates
to the  benefit of Holders of the  Certificates  shall be deemed to include  the
Class A  Certificate  Insurer.  The Trustee  shall  cooperate in all  reasonable
respects  with any  reasonable  request by the Class A  Certificate  Insurer for
action to  preserve  or  enforce  the Class A  Certificate  Insurer's  rights or
interests under this Agreement and the Class A Certificates unless, as stated in
an Opinion of  Counsel  addressed  to the  Trustee  and the Class A  Certificate
Insurer,   such   action  is   adverse   to  the   interests   of  the  Class  A
Certificateholders or diminishes the rights of the Class A Certificateholders or
imposes additional burdens or restrictions on the Class A Certificateholders.

                  (b)      The Servicer hereby  acknowledges  and agrees that it
shall service the Mortgage Loans for the benefit of the  Certificateholders  and
for the benefit of the Class A Certificate  Insurer,  and all references in this
Agreement to the benefit of or actions on behalf of the Certificateholders shall
be deemed to include the Class A Certificate Insurer.

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                  Section 5.10  CLASS A CERTIFICATE INSURER DEFAULT.

                  Notwithstanding anything elsewhere in this Agreement or in the
Certificates to the contrary,  if a Class A Certificate  Insurer Default exists,
or if and to the  extent  the Class A  Certificate  Insurer  has  delivered  its
written  renunciation of all of its rights under this Agreement,  all provisions
of this Agreement  which (a) permit the Class A Certificate  Insurer to exercise
rights  of the Class A  Certificateholders,  (b)  restrict  the  ability  of the
Certificateholders,  the  Servicer  or the Trustee to act without the consent or
approval of the Class A Certificate  Insurer,  (c) provide that a particular act
or thing must be acceptable to the Class A Certificate  Insurer,  (d) permit the
Class A  Certificate  Insurer to direct (or otherwise to require) the actions of
the Trustee, the Servicer or the Certificateholders, (e) provide that any action
or omission  taken with the consent,  approval or  authorization  of the Class A
Certificate Insurer shall be authorized hereunder or shall not subject the party
taking or omitting to take such action to any  liability  hereunder or (f) which
have a similar  effect,  shall be of no further force and effect and the Trustee
shall administer the Trust Fund and perform its obligations hereunder solely for
the  benefit  of the  Holders  of the  Certificates.  Nothing  in the  foregoing
sentence,  nor any action taken  pursuant  thereto or in  compliance  therewith,
shall be  deemed  to have  released  the Class A  Certificate  Insurer  from any
obligation   or  liability  it  may  have  to  any  party  or  to  the  Class  A
Certificateholders hereunder, under any other agreement,  instrument or document
(including,   without  limitation,  the  Class  A  Insurance  Policy)  or  under
applicable law.

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

                  Section 6.01  RESPECTIVE  LIABILITIES OF THE DEPOSITOR AND THE
SERVICER.

                  The  Depositor  and  the  Servicer  shall  each be  liable  in
accordance  herewith  only to the  extent of the  obligations  specifically  and
respectively imposed upon and undertaken by them herein.

                  Section 6.02  MERGER OR CONSOLIDATION  OF THE DEPOSITOR OR THE
SERVICER.

                  The  Depositor  and the Servicer will each keep in full effect
its existence,  rights and franchises as a corporation or federal  savings bank,
as the case may be, under the laws of the United States or under the laws of one
of the states thereof and will each obtain and preserve its  qualification to do
business  as  a  foreign   corporation  in  each   jurisdiction  in  which  such
qualification   is  or  shall  be   necessary   to  protect  the   validity  and
enforceability  of this  Agreement,  or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

                  Any Person into which the  Depositor  or the  Servicer  may be
merged or consolidated, or any Person resulting from any merger or consolidation
to  which  the  Depositor  or the  Servicer  shall  be a  party,  or any  person
succeeding  to the  business  of the  Depositor  or the  Servicer,  shall be the
successor  of the  Depositor  or the  Servicer,  as the case may be,  hereunder,
without the  execution  or filing of any paper or any further act on the part of
any of the parties  hereto,  anything  herein to the  contrary  notwithstanding;
PROVIDED,  HOWEVER, that the successor or

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surviving  Person to the Servicer  shall be qualified to sell mortgage loans to,
and to service mortgage loans on behalf of, Fannie Mae or FHLMC.

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

                  Neither the  Depositor,  the Servicer,  the Trustee nor any of
their  respective  directors,  officers,  employees or agents shall be under any
liability to the  Certificateholders for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement, or for errors
in  judgment;  PROVIDED,  HOWEVER,  that this  provision  shall not  protect the
Depositor,  the Servicer,  the Trustee or any such Person  against any breach of
representations  or warranties  made by it herein or protect the Depositor,  the
Servicer,  the  Trustee  or any such  Person  from  any  liability  which  would
otherwise  be imposed by  reasons  of  willful  misfeasance,  bad faith or gross
negligence  (or with respect to the Servicer or the Trustee,  negligence) in the
performance  of duties or by reason of reckless  disregard  of  obligations  and
duties hereunder. The Depositor and any director,  officer, employee or agent of
the  Depositor  may rely in good faith on any  document  of any kind PRIMA FACIE
properly  executed and submitted by any Person  respecting  any matters  arising
hereunder. The Depositor,  the Servicer, the Trustee and any director,  officer,
employee  or  agent of the  Depositor,  the  Servicer  or the  Trustee  shall be
indemnified by the Trust Fund and held harmless  against any loss,  liability or
expense  incurred  in  connection  with  any  audit,   controversy  or  judicial
proceeding  relating to a  governmental  taxing  authority  or any legal  action
relating to this Agreement or the  Certificates  (including,  as to the Trustee,
the undertaking of actions as directed by the Unaffiliated Seller or the Class A
Certificate Insurer pursuant to Section 2.03), other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
(or with respect to the Servicer or the Trustee,  negligence) in the performance
of their respective duties hereunder or by reason of reckless disregard of their
respective  obligations and duties  hereunder.  The Depositor shall not be under
any  obligation  to appear in,  prosecute or defend any legal action that is not
incidental  to its  respective  duties  hereunder  and which in its  opinion may
involve it in any expense or liability;  PROVIDED,  HOWEVER,  that the Depositor
may in its  discretion  undertake  any such  action (or  direct  the  Trustee to
undertake  any such  actions  pursuant to Section 2.03 hereof for the benefit of
the  Certificateholders)  that it may deem  necessary or desirable in respect of
this  Agreement and the rights and duties of the parties hereto and interests of
the  Trustee and the  Certificateholders  hereunder.  In such  event,  the legal
expenses and costs of such action and any liability resulting therefrom shall be
expenses,  costs and  liabilities of the Trust Fund, and the Depositor  shall be
entitled to be reimbursed therefor out of the Collection Account.

                  Neither the  Servicer  nor any of the  officers,  employees or
agents  of the  Servicer  shall be under any  liability  to the  Trustee  or the
Depositor for any action taken or for  refraining  from the taking of any action
in good faith pursuant to this Agreement; PROVIDED, HOWEVER, that this provision
shall  not  protect  the  Servicer  or any such  person  against  any  breach of
warranties or representations made herein, or failure to perform its obligations
in compliance  with the terms of this  Agreement,  or any liability  which would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement.  The Servicer and any officer,  employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising  hereunder.  The Servicer
shall not be under any  obligation  to appear in,  prosecute or defend any legal
action which is not  incidental  to its duties to service the Mortgage  Loans in
accordance with this Agreement and which in its

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opinion may involve it in any expenses or liability; PROVIDED, HOWEVER, that the
Servicer may undertake any such action which it may deem  necessary or desirable
in respect to this Agreement and the rights and duties of the parties hereto. In
such  event,  the legal  expenses  and costs of such  action  and any  liability
resulting therefrom shall be expenses,  costs and liabilities of the Trust Fund,
and  the  Servicer  shall  be  entitled  to be  reimbursed  therefor  out of the
Collection Account.

                  Section 6.04  LIMITATION ON RESIGNATION OF THE SERVICER.

                  The  Servicer  shall not assign this  Agreement or resign from
the  obligations and duties hereby imposed on it except by mutual consent of the
Servicer,  the  Depositor  and the  Trustee or upon the  determination  that its
duties  hereunder  are no  longer  permissible  under  applicable  law and  such
incapacity cannot be cured by the Servicer.  Any such  determination  permitting
the  resignation  of the Servicer shall be evidenced by an Opinion of Counsel to
such effect  delivered to the Depositor and the Trustee which Opinion of Counsel
shall be in form and substance  acceptable to the Depositor and the Trustee.  No
such resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder.

                  Section 6.05 ADDITIONAL INDEMNIFICATION BY THE SERVICER; THIRD
PARTY CLAIMS.

                  The Servicer shall indemnify the Depositor,  the  Unaffiliated
Seller  and the  Trustee  and hold them  harmless  against  any and all  claims,
losses, damages, penalties,  fines, forfeitures,  reasonable and necessary legal
fees and related costs,  judgments,  and any other costs, fees and expenses that
any of them may sustain in any way related to any breach by the Servicer, of any
of its  representations  and  warranties  referred to in Section  2.03(a) or the
failure of the Servicer to perform its duties and service the Mortgage  Loans in
compliance  with the terms of this  Agreement.  The Servicer  immediately  shall
notify the Depositor, the Unaffiliated Seller and the Trustee if a claim is made
by a third  party  with  respect to any such  breach or failure by the  Servicer
under this  Agreement,  assume (with the prior written consent of the Depositor,
the  Unaffiliated  Seller and the Trustee) the defense of any such claim and pay
all expenses in connection  therewith,  including  reasonable  counsel fees, and
promptly pay,  discharge and satisfy any judgment or decree which may be entered
against it or the Depositor,  the Unaffiliated  Seller or the Trustee in respect
of such  claim;  provided,  that if it is  determined  that the  Servicer is not
obligated to indemnify such parties in accordance  with this Section 6.05,  each
such party (or the Trust Fund,  if  applicable)  shall  promptly  reimburse  the
Servicer in connection with each of the foregoing payments made to such party by
the Servicer.

                                  ARTICLE VII

                                     DEFAULT

                  Section 7.01  EVENTS OF DEFAULT.

                  "EVENT OF DEFAULT," wherever used herein, means any one of the
following events:

                  (a)      any  failure by the  Servicer to remit to the Trustee
any  payment  required  to be made  under  the  terms  of this  Agreement  which
continues  unremedied for a period of one Business Day after the date upon which
written notice of such failure, requiring the same to be

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remedied, shall have been given to the Servicer by the Depositor, by the Class A
Certificate  Insurer or by the Trustee or to the  Trustee by  Certificateholders
evidencing percentage interests of at least 25% in the Certificates; or

                  (b)      failure on the part of the  Servicer  duly to observe
or perform in any material  respect any other of the  covenants or agreements on
the part of the Servicer set forth in this Agreement which continues  unremedied
for a period  of  forty-five  days  (except  that such  number of days  shall be
fifteen in the case of a failure to pay any  premium  for any  insurance  policy
required to be  maintained  under this  Agreement)  after the earlier of (i) the
date on which written notice of such failure, requiring the same to be remedied,
shall  have  been  given  to the  Servicer  by the  Depositor,  by the  Class  A
Certificate Insurer, or by the Trustee, or to the Trustee by  Certificateholders
of  Certificates  evidencing  percentage  interests  of  at  least  25%  in  the
Certificates and (ii) actual knowledge of such failure by a Servicing Officer of
the Servicer; or

                  (c)      a decree or order of a court or agency or supervisory
authority  having  jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency,  bankruptcy,  readjustment of debt, marshalling
of assets and  liabilities  or similar  proceedings,  or for the  winding-up  or
liquidation  of its affairs,  shall have been  entered  against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or

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

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

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

                  (g)      any  failure of the  Servicer to make any P&I Advance
on any  Remittance  Date  required  to be made  from its own funds  pursuant  to
Section  4.01  which  continues  unremedied  for one  Business  Day  immediately
following the Remittance Date; or

                  (h)      a breach of any  representation  and  warranty of the
Servicer referred to in Section 2.03(a),  which materially and adversely affects
the interests of the  Certificateholders  and which  continues  unremedied for a
period of thirty days after the date upon which written notice of such breach is
given to the Servicer by the Trustee, by the Class A Certificate  Insurer, or by
the Depositor, or to the Trustee by Certificateholders  entitled to at least 25%
of the Voting Rights in the Certificates.

                  If an Event of Default described in clauses (a) through (h) of
this Section 7.01 shall occur, then, and in each and every such case, so long as
such Event of Default shall not have been  remedied,  the Trustee may, or at the
direction of the Class A Certificate Insurer, or of Holders holding at least 51%
of the Voting Rights, the Trustee shall, by notice in writing to the

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Servicer  (with a copy to each Rating  Agency),  terminate all of the rights and
obligations  of the  Servicer  under this  Agreement  and in and to the Mortgage
Loans and the  proceeds  thereof,  other than its rights as a  Certificateholder
hereunder;  PROVIDED,  HOWEVER,  that the Trustee  shall not be required to give
written  notice  to the  Servicer  of the  occurrence  of an  Event  of  Default
described  in clauses (b) through  (h) of this  Section  7.01 unless and until a
Responsible  Officer of the Trustee has actual  knowledge of the  occurrence  of
such an Event of  Default.  On and after the  receipt  by the  Servicer  of such
written notice, all authority and power of the Servicer hereunder,  whether with
respect to the Mortgage  Loans or otherwise,  shall pass to and be vested in the
Trustee.  The Trustee  shall make any P&I Advance  which the Servicer  failed to
make subject to Section  4.01,  whether or not the  obligations  of the Servicer
have been terminated pursuant to this Section.  The Trustee is hereby authorized
and  empowered  to  execute  and  deliver,   on  behalf  of  the  Servicer,   as
attorney-in-fact or otherwise, any and all documents and other instruments,  and
to do or accomplish all other acts or things  necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement  or  assignment  of the  Mortgage  Loans and related  documents,  or
otherwise. Unless expressly provided in such written notice, no such termination
shall affect any  obligation  of the  Servicer to pay amounts  owed  pursuant to
Article VIII. The Servicer agrees to cooperate with the Trustee in effecting the
termination of the Servicer's responsibilities and rights hereunder,  including,
without limitation,  the transfer to the Trustee of all cash amounts which shall
at the time be credited to the  Collection  Account,  or  thereafter be received
with respect to the Mortgage Loans.

                  Notwithstanding  any  termination  of  the  activities  of the
Servicer hereunder,  the Servicer shall be entitled to receive,  out of any late
collection of a Scheduled  Payment on a Mortgage Loan which was due prior to the
notice  terminating such Servicer's rights and obligations as Servicer hereunder
and received  after such notice,  that  portion  thereof to which such  Servicer
would have been entitled pursuant to Section 3.11, and any other amounts payable
to  such  Servicer  hereunder  the  entitlement  to  which  arose  prior  to the
termination of its activities  hereunder in accordance  with Section 3.11 and in
the time period specified in Section 3.11.

                  Section 7.02  TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

                  On and  after  the  time the  Servicer  receives  a notice  of
termination  pursuant to Section 3.24 or Section 7.01, the Trustee shall, unless
the Class A  Certificate  Insurer  shall  have  named an  alternative  successor
Servicer  and given  written  notice  thereof to the Trustee of at least 30 days
prior to the  effective  date of the transfer of  servicing  to such  successor,
subject to and to the extent  provided in Section  3.05, be the successor to the
Servicer in its capacity as servicer under this  Agreement and the  transactions
set  forth  or   provided   for   herein   and  shall  be  subject  to  all  the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and  provisions  hereof and applicable law including the obligation
to make P&I  Advances  or  Servicing  Advances  pursuant  to  Section  4.01.  As
compensation  therefor,  the Trustee shall be entitled to all funds  relating to
the Mortgage  Loans that the Servicer  would have been entitled to charge to the
Collection Account or Distribution  Account if the Servicer had continued to act
hereunder  including,  if the  Servicer was  receiving  the  Servicing  Fee, the
Servicing Fee and the income on  investments  or gain related to the  Collection
Account and Distribution Account.

                  Notwithstanding  the foregoing,  if the Trustee has become the
successor to the Servicer in accordance  with Section 7.01,  the Trustee may, if
it shall be unwilling to so act, or

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shall,  if it is  prohibited  by  applicable  law from making P&I  Advances  and
Servicing  Advances  pursuant to Section 4.01 or if it is otherwise unable to so
act,  appoint,  or petition a court of competent  jurisdiction  to appoint,  any
established  mortgage loan servicing  institution  the appointment of which does
not adversely  affect the then current rating of the Certificates by each Rating
Agency,  as the successor to the Servicer  hereunder in the assumption of all or
any  part  of the  responsibilities,  duties  or  liabilities  of  the  Servicer
hereunder.  Any  successor to the Servicer  shall be an  institution  which is a
Fannie Mae and FHLMC approved  seller/servicer in good standing, which has a net
worth of at least  $30,000,000,  which is willing to service the Mortgage  Loans
and which  executes and delivers to the  Depositor  and the Trustee an agreement
accepting  such  delegation  and  assignment,  containing  an assumption by such
Person  of  the  rights,  powers,  duties,  responsibilities,   obligations  and
liabilities  of the  Servicer  (other than  liabilities  of the  Servicer  under
Section 6.03 incurred  prior to termination of the Servicer under Section 7.01),
with like effect as if originally  named as a party to this Agreement;  PROVIDED
that each Rating  Agency  acknowledges  that its rating of the  Certificates  in
effect immediately prior to such assignment and delegation will not be qualified
or reduced,  as a result of such assignment and delegation.  Pending appointment
of a successor to the  Servicer  hereunder,  the Trustee,  unless the Trustee is
prohibited by law from so acting,  shall,  subject to Section 3.05,  act in such
capacity as  hereinabove  provided.  In  connection  with such  appointment  and
assumption,  the Trustee may make such arrangements for the compensation of such
successor  out of  payments  on Mortgage  Loans as it and such  successor  shall
agree;  PROVIDED,  HOWEVER,  that no such compensation shall be in excess of the
Servicing  Fee Rate and  amounts  paid to the  Servicer  from  investments.  The
Trustee  and such  successor  shall  take  such  action,  consistent  with  this
Agreement, as shall be necessary to effectuate any such succession.  Neither the
Trustee  nor any other  successor  servicer  shall be  deemed  to be in  default
hereunder  by  reason  of any  failure  to make,  or any  delay in  making,  any
distribution  hereunder or any portion thereof or any failure to perform, or any
delay in performing,  any duties or responsibilities  hereunder,  in either case
caused by the failure of the  Servicer  to deliver or  provide,  or any delay in
delivering or providing, any cash, information, documents or records to it.

                  Any successor to the Servicer as servicer shall give notice to
the  Mortgagors  of such  change of servicer  and shall,  during the term of its
service as servicer,  maintain in force the policy or policies that the Servicer
is required to maintain pursuant to Section 6.05.

                  Section 7.03  NOTIFICATION TO CERTIFICATEHOLDERS.

                  (a)      Upon any termination of or appointment of a successor
to the  Servicer,  the  Trustee  shall give  prompt  written  notice  thereof to
Certificateholders, the Class A Certificate Insurer, the Unaffiliated Seller and
to each Rating Agency.

                  (b)      Within 60 days after the  occurrence  of any Event of
Default, the Trustee shall transmit by mail to all Certificateholders, the Class
A Certificate  Insurer, the Unaffiliated Seller and each Rating Agency notice of
each such Event of Default hereunder known to the Trustee,  unless such Event of
Default shall have been cured or waived.

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                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

                  Section 8.01  DUTIES OF THE TRUSTEE.

                  The Trustee,  before the occurrence of an Event of Default and
after  the  curing  of all  Events  of  Default  that may have  occurred,  shall
undertake  to perform such duties and only such duties as are  specifically  set
forth in this  Agreement.  In case an Event of Default has  occurred and remains
uncured,  the Trustee shall  exercise such of the rights and powers vested in it
by this  Agreement,  and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.

                  The Trustee,  upon receipt of all  resolutions,  certificates,
statements,  opinions, reports, documents, orders or other instruments furnished
to the Trustee that are  specifically  required to be furnished  pursuant to any
provision of this Agreement shall examine them to determine  whether they are in
the form required by this  Agreement.  The Trustee shall not be responsible  for
the  accuracy or content of any  resolution,  certificate,  statement,  opinion,
report, document, order, or other instrument.

                  No provision of this  Agreement  shall be construed to relieve
the Trustee from  liability  for its own  negligent  action,  its own  negligent
failure to act or its own willful misconduct.

                  Unless an Event of Default  known to the Trustee has  occurred
and is continuing,

                  (a)      the duties and  obligations  of the Trustee  shall be
determined solely by the express provisions of this Agreement, the Trustee shall
not be  liable  except  for  the  performance  of  the  duties  and  obligations
specifically  set forth in this Agreement,  no implied  covenants or obligations
shall be read into this  Agreement  against  the  Trustee,  and the  Trustee may
conclusively  rely, as to the truth of the statements and the correctness of the
opinions expressed  therein,  upon any certificates or opinions furnished to the
Trustee and conforming to the  requirements  of this Agreement which it believed
in good  faith to be  genuine  and to have  been  duly  executed  by the  proper
authorities respecting any matters arising hereunder;

                  (b)      the  Trustee  shall  not be  liable  for an  error of
judgment made in good faith by a Responsible Officer or Responsible  Officers of
the  Trustee,  unless it is finally  proven that the Trustee  was  negligent  in
ascertaining the pertinent facts; and

                  (c)      the Trustee  shall not be liable with  respect to any
action taken, suffered, or omitted to be taken by it in good faith in accordance
with  the  direction  of the  Class A  Certificate  Insurer,  or of  Holders  of
Certificates  evidencing not less than 25% of the Voting Rights of  Certificates
relating to the time,  method,  and place of conducting  any  proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee under this Agreement.

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                  Section 8.02  CERTAIN MATTERS AFFECTING THE TRUSTEE.

                  Except as otherwise provided in Section 8.01:

                  (a)      the  Trustee  may  request and rely upon and shall be
protected in acting or  refraining  from acting upon any  resolution,  Officer's
Certificate,  certificate  of  auditors  or any  other  certificate,  statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document  believed by it to be genuine and to have been signed or
presented  by the  proper  party  or  parties  and  the  Trustee  shall  have no
responsibility  to ascertain or confirm the  genuineness of any signature of any
such party or parties;

                  (b)      the  Trustee  may  consult  with  counsel,  financial
advisers or accountants and the advice of any such counsel,  financial  advisers
or  accountants   and  any  Opinion  of  Counsel  shall  be  full  and  complete
authorization  and  protection  in respect of any action  taken or  suffered  or
omitted by it  hereunder  in good faith and in  accordance  with such Opinion of
Counsel;

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

                  (d)      the   Trustee   shall   not  be  bound  to  make  any
investigation  into the facts or matters stated in any resolution,  certificate,
statement,   instrument,  opinion,  report,  notice,  request,  consent,  order,
approval, bond or other paper or document,  unless requested in writing so to do
by the Class A Certificate Insurer, or by Holders of Certificates evidencing not
less than 25% of the Voting Rights allocated to each Class of Certificates;

                  (e)      the  Trustee  may execute any of the trusts or powers
hereunder  or perform  any duties  hereunder  either  directly  or by or through
agents,  accountants or attorneys and the Trustee shall not be  responsible  for
any misconduct or negligence on the part of any agents, accountants or attorneys
appointed with due care by it hereunder;

                  (f)      the  Trustee  shall not be required to risk or expend
its own funds or otherwise  incur any financial  liability in the performance of
any of its duties or in the exercise of any of its rights or powers hereunder if
it shall have  reasonable  grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not assured to it;

                  (g)      the  Trustee  shall not be liable for any loss on any
investment  of funds  pursuant  to this  Agreement  (other than as issuer of the
investment security);

                  (h)      the Trustee shall not be deemed to have  knowledge of
an Event of  Default  until a  Responsible  Officer  of the  Trustee  shall have
received written notice thereof; and

                  (i)      the Trustee  shall be under no obligation to exercise
any of the  trusts,  rights  or  powers  vested  in it by this  Agreement  or to
institute,  conduct or defend any litigation  hereunder or in relation hereto at
the request,  order or direction of any of the  Certificateholders,  pursuant to
this Agreement, unless such Certificateholders shall have offered to the Trustee

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reasonable security or indemnity  satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred therein or thereby.

                  Section 8.03  TRUSTEE NOT LIABLE FOR CERTIFICATES  OR MORTGAGE
LOANS.

                  The recitals contained herein and in the Certificates shall be
taken  as  the   statements  of  the  Depositor  and  the  Trustee   assumes  no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement or of the  Certificates  or of any
Mortgage  Loan or  related  document  other than with  respect to the  Trustee's
execution and  countersignature  of the  Certificates.  The Trustee shall not be
accountable  for the use or  application by the Depositor or the Servicer of any
funds paid to the Depositor or the Servicer in respect of the Mortgage  Loans or
deposited in or withdrawn  from the  Collection  Account by the Depositor or the
Servicer.

                  The  Trustee  shall  have  no  responsibility  for  filing  or
recording  any financing or  continuation  statement in any public office at any
time or to otherwise perfect or maintain the perfection of any security interest
or lien  granted to it  hereunder  (unless  the  Trustee  shall have  become the
successor Servicer).

                  The Trustee  executes the  Certificates  not in its individual
capacity but solely as Trustee of the Trust Fund created by this  Agreement,  in
the  exercise  of the powers and  authority  conferred  and vested in it by this
Agreement.  Each of the  undertakings  and  agreements  made on the  part of the
Trustee on behalf of the Trust Fund in the Certificates is made and intended not
as a personal  undertaking  or agreement by the Trustee but is made and intended
for the purpose of binding only the Trust Fund.

                  Section 8.04  TRUSTEE MAY OWN CERTIFICATES.

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

                  Section 8.05  TRUSTEE'S FEES AND EXPENSES.

                  (a)      As  compensation   for  its  activities   under  this
Agreement,  the  Trustee  may  withdraw  from the  Distribution  Account on each
Distribution Date the Trustee Fee for the Distribution Date. The Trustee and any
director, officer, employee, or agent of the Trustee shall be indemnified by the
Servicer  against  any  loss,   liability,   or  expense  (including  reasonable
attorney's  fees)  resulting  from any  failure by the  Servicer  to perform its
obligations  under this Agreement.  This indemnity shall survive the termination
of this  Agreement  or the  resignation  or  removal of the  Trustee  under this
Agreement.

                  The Trustee shall not be entitled to payment or  reimbursement
from the Unaffiliated  Seller for any routine ongoing  expenses  incurred by the
Trustee in the ordinary  course of its duties as Trustee,  Registrar,  or paying
agent under this Agreement or for any other expenses,  including indemnification
payments, except as set forth herein.

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                  Section 8.06  ELIGIBILITY REQUIREMENTS FOR THE TRUSTEE.

                  The Trustee  hereunder  shall at all times be a corporation or
association organized and doing business under the laws of a state or the United
States of  America,  authorized  under  such laws to  exercise  corporate  trust
powers,  having a combined capital and surplus of at least $50,000,000,  subject
to supervision  or  examination by federal or state  authority and with a credit
rating  which  would not cause  either of the Rating  Agencies  to reduce  their
respective  then current  ratings of the  Certificates  (or having provided such
security  from  time  to time as is  sufficient  to  avoid  such  reduction)  as
evidenced in writing by each Rating Agency.  If such  corporation or association
publishes  reports of  condition  at least  annually,  pursuant to law or to the
requirements of the aforesaid  supervising or examining authority,  then for the
purposes  of  this  Section  8.06  the  combined  capital  and  surplus  of such
corporation  or  association  shall be deemed  to be its  combined  capital  and
surplus as set forth in its most recent  report of  condition so  published.  In
case at any time the Trustee shall cease to be eligible in accordance  with this
Section 8.06,  the Trustee shall resign  immediately  in the manner and with the
effect  specified in Section 8.07. The entity serving as Trustee may have normal
banking and trust  relationships  with the Depositor  and its  affiliates or the
Servicer and its affiliates;  provided,  however,  that such entity cannot be an
affiliate of the Depositor,  the Unaffiliated  Seller or the Servicer other than
the Trustee in its role as successor to the Servicer.

                  Section 8.07  RESIGNATION AND REMOVAL OF THE TRUSTEE.

                  The Trustee may at any time resign and be discharged  from the
trusts hereby  created by giving written notice of resignation to the Depositor,
the Servicer,  the Class A Certificate  Insurer,  the Unaffiliated  Seller, each
Rating  Agency not less than 60 days before the date  specified  in such notice,
when,  subject  to  Section  8.08,  such  resignation  is to  take  effect,  and
acceptance by a successor  trustee in  accordance  with Section 8.08 meeting the
qualifications  set forth in Section 8.06. If no successor  trustee meeting such
qualifications shall have been so appointed and have accepted appointment within
30 days after the giving of such notice or  resignation,  the resigning  Trustee
may  petition  any court of  competent  jurisdiction  for the  appointment  of a
successor trustee.

                  If at any time the  Trustee  shall  cease  to be  eligible  in
accordance  with  Section 8.06 and shall fail to resign  after  written  request
thereto by the Depositor,  or if at any time the Trustee shall become  incapable
of acting,  or shall be adjudged as bankrupt or insolvent,  or a receiver of the
Trustee or of its property shall be appointed,  or any public officer shall take
charge or control of the  Trustee or of its  property or affairs for the purpose
of rehabilitation, conservation or liquidation, or a tax is imposed with respect
to the Trust Fund by any state in which the Trustee or the Trust Fund is located
and the  imposition  of such  tax  would  be  avoided  by the  appointment  of a
different trustee, then the Depositor or the Servicer may remove the Trustee and
appoint a successor  trustee  reasonably  acceptable  to the Class A Certificate
Insurer  by  written  instrument,  in  triplicate,  one copy of  which  shall be
delivered to the Trustee, one copy to the Servicer and one copy to the successor
trustee.

                  The Class A Certificate Insurer or the Holders of Certificates
entitled to at least 51% of the Voting Rights may at any time remove the Trustee
and  appoint a  successor  trustee  by written  instrument  or  instruments,  in
triplicate,  signed by such Holders or their  attorneys-in-fact

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duly  authorized,  one complete set of which shall be delivered by the successor
Trustee to the  Servicer,  one  complete  set to the  Trustee so removed and one
complete set to the successor so appointed.  The successor  trustee shall notify
each Rating Agency of any removal of the Trustee.

                  Any resignation or removal of the Trustee and appointment of a
successor  trustee  pursuant to this Section 8.07 shall  become  effective  upon
acceptance of appointment by the successor trustee as provided in Section 8.08.

                  Section 8.08  SUCCESSOR TRUSTEE.

                  Any  successor  trustee  appointed as provided in Section 8.07
shall execute,  acknowledge  and deliver to the Depositor and to its predecessor
trustee and the Servicer an instrument accepting such appointment  hereunder and
thereupon the  resignation  or removal of the  predecessor  trustee shall become
effective  and  such  successor  trustee,  without  any  further  act,  deed  or
conveyance,  shall become fully vested with all the rights,  powers,  duties and
obligations of its predecessor hereunder,  with the like effect as if originally
named as trustee herein.  The Depositor,  the Class A Certificate  Insurer,  the
Servicer and the predecessor  trustee shall execute and deliver such instruments
and do such  other  things as may  reasonably  be  required  for more  fully and
certainly  vesting and  confirming  in the  successor  trustee all such  rights,
powers, duties, and obligations.

                  No successor  trustee shall accept  appointment as provided in
this Section 8.08 unless at the time of its acceptance, the successor trustee is
eligible under Section 8.06 and its  appointment  does not adversely  affect the
then current rating of the Certificates.

                  Upon  acceptance  of  appointment  by a  successor  trustee as
provided in this Section 8.08, the Depositor shall mail notice of the succession
of such trustee hereunder to all Holders of Certificates. If the Depositor fails
to mail such  notice  within 10 days  after  acceptance  of  appointment  by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Depositor.

                  Section 8.09  MERGER OR CONSOLIDATION OF THE TRUSTEE.

                  Any  corporation  into  which  the  Trustee  may be  merged or
converted or with which it may be consolidated or any corporation resulting from
any merger,  conversion or  consolidation to which the Trustee shall be a party,
or any  corporation  succeeding  to the  business of the  Trustee,  shall be the
successor of the Trustee  hereunder,  provided  that such  corporation  shall be
eligible  under  Section  8.06  without the  execution or filing of any paper or
further act on the part of any of the  parties  hereto,  anything  herein to the
contrary notwithstanding.

                  Section 8.10  APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

                  Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal  requirements of any  jurisdiction in
which any part of the Trust Fund or property  securing any Mortgage  Note may at
the time be located,  the Servicer and the Trustee acting jointly shall have the
power and shall  execute  and  deliver  all  instruments  to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and

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to vest in such Person or Persons,  in such  capacity and for the benefit of the
Certificateholders,  such title to the Trust Fund or any part thereof, whichever
is applicable,  and,  subject to the other provisions of this Section 8.10, such
powers, duties,  obligations,  rights and trusts as the Servicer and the Trustee
may  consider  appropriate.  If the  Servicer  shall  not  have  joined  in such
appointment  within 15 days after the receipt by it of a request to do so, or in
the case an Event of Default shall have occurred and be continuing,  the Trustee
alone shall have the power to make such  appointment.  No co-trustee or separate
trustee  hereunder  shall be  required  to meet the  terms of  eligibility  as a
successor trustee under Section 8.06 and no notice to  Certificateholders of the
appointment  of any  co-trustee  or separate  trustee  shall be  required  under
Section 8.08.

                  Every  separate  trustee and co-trustee  shall,  to the extent
permitted by law, be appointed and act subject to the following  provisions  and
conditions:

                  (a)      To the extent necessary to effectuate the purposes of
this Section  8.10,  all rights,  powers,  duties and  obligations  conferred or
imposed upon the Trustee,  except for the  obligation  of the Trustee under this
Agreement  to advance  funds on behalf of the  Servicer,  shall be  conferred or
imposed upon and exercised or performed by the Trustee and such separate trustee
or  co-trustee  jointly  (it being  understood  that such  separate  trustee  or
co-trustee is not  authorized to act separately  without the Trustee  joining in
such act),  except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed  (whether as Trustee hereunder or
as successor to the Servicer  hereunder),  the Trustee shall be  incompetent  or
unqualified  to perform such act or acts,  in which event such  rights,  powers,
duties and obligations  (including the holding of title to the applicable  Trust
Fund or any portion  thereof in any such  jurisdiction)  shall be exercised  and
performed  singly by such  separate  trustee  or  co-trustee,  but solely at the
direction of the Trustee;

                  (b)      No trustee  hereunder shall be held personally liable
because  of any  act or  omission  of  any  other  trustee  hereunder  and  such
appointment  shall not, and shall not be deemed to, constitute any such separate
trustee or co-trustee as agent of the Trustee;

                  (c)      The Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee; and

                  (d)      The Trustee,  and not the  Servicer,  shall be liable
for the payment of  reasonable  compensation  and expenses to any such  separate
trustee or  co-trustee  from the  Trustee  Fee  payable  to the  Trustee on each
Distribution Date.

                  Any  notice,  request or other  writing  given to the  Trustee
shall  be  deemed  to have  been  given  to each of the  separate  trustees  and
co-trustees,  when  and as  effectively  as if  given  to  each of  them.  Every
instrument  appointing  any separate  trustee or co-trustee  shall refer to this
Agreement and the  conditions of this Article  VIII.  Each separate  trustee and
co-trustee,  upon its acceptance of the trusts  conferred,  shall be vested with
the estates or property  specified  in its  instrument  of  appointment,  either
jointly with the Trustee or separately,  as may be provided therein,  subject to
all the provisions of this Agreement,  specifically including every provision of
this  Agreement  relating to the  conduct of,  affecting  the  liability  of, or
affording protection and indemnity to, the Trustee.  Every such instrument shall
be filed with the  Trustee  and a copy  thereof  given to the  Servicer  and the
Depositor.

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                  Any  separate   trustee  or  co-trustee   may,  at  any  time,
constitute  the  Trustee  its agent or  attorney-in-fact,  with  full  power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting,  resign or be removed,  all
of its  estates,  properties,  rights,  remedies and trusts shall vest in and be
exercised  by  the  Trustee,  to  the  extent  permitted  by  law,  without  the
appointment of a new or successor trustee.

                  Section 8.11  TAX MATTERS.

                  It is intended that the assets with respect to which any REMIC
election  pertaining  to the  Trust  Fund is to be  made,  as set  forth  in the
Preliminary  Statement,  shall  constitute,  and that  the  conduct  of  matters
relating  to such  assets  shall be such as to qualify  such  assets as, a "real
estate  mortgage  investment  conduit" as defined in and in accordance  with the
REMIC  Provisions.  In furtherance of such intention,  the Trustee covenants and
agrees that it shall act as agent (and the Trustee is hereby appointed to act as
agent) on behalf of any the REMIC and that in such capacity it shall:

                  (a)      prepare  and file in a  timely  manner,  a U.S.  Real
Estate Mortgage Investment Conduit Income Tax Return (Form 1066 or any successor
form  adopted by the  Internal  Revenue  Service)  and prepare and file with the
Internal  Revenue Service and applicable  state or local tax authorities  income
tax or  information  returns  for each  taxable  year with  respect to any REMIC
described in the Preliminary  Statement  containing such  information and at the
times  and in the  manner as may be  required  by the Code or state or local tax
laws,  regulations,  or rules, and furnish to Certificateholders  the schedules,
statements  or  information  at such times and in such manner as may be required
thereby;

                  (b)      within  thirty days of the Closing  Date,  furnish to
the Internal  Revenue  Service on Forms 8811 or as otherwise  may be required by
the Code, the name, title,  address, and telephone number of the person that the
holders of the  Certificates may contact for tax information  relating  thereto,
together with such  additional  information as may be required by such Form, and
update such information at the time or times in the manner required by the Code;

                  (c)      make an  election  that each of the Lower  Tier REMIC
and the Upper Tier REMIC be treated as a REMIC on the federal tax return for its
first taxable year (and, if necessary, under applicable state law);

                  (d)      prepare and forward to the  Certificateholders and to
the Internal  Revenue  Service and, if  necessary,  state tax  authorities,  all
information  returns and reports as and when  required to be provided to them in
accordance with the REMIC Provisions,  including the calculation of any original
issue  discount  using the  Prepayment  Assumption (as defined in the Prospectus
Supplement);

                  (e)      provide information  necessary for the computation of
tax imposed on the transfer of a Residual  Certificate to a Person that is not a
Permitted  Transferee,  or an  agent  (including  a  broker,  nominee  or  other
middleman) of a Non-Permitted  Transferee,  or a pass-through  entity in which a
Non-Permitted Transferee is the record holder of an interest (the

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reasonable cost of computing and furnishing  such  information may be charged to
the Person liable for such tax);

                  (f)      to the  extent  that  they  are  under  its  control,
conduct matters  relating to such assets at all times that any  Certificates are
outstanding so as to maintain the status as a REMIC under the REMIC Provisions;

                  (g)      not  knowingly  or  intentionally  take any action or
omit to take any action that would cause the  termination of the REMIC status of
any REMIC created hereunder;

                  (h)      pay, from the sources specified in the last paragraph
of this  Section  8.11,  the  amount  of any  federal  or state  tax,  including
prohibited  transaction  taxes as described below,  imposed on any REMIC created
hereunder  before its termination  when and as the same shall be due and payable
(but such  obligation  shall not prevent  the  Trustee or any other  appropriate
Person from  contesting  any such tax in appropriate  proceedings  and shall not
prevent the Trustee from  withholding  payment of such tax, if permitted by law,
pending the outcome of such proceedings);

                  (i)      cause   federal,   state  or  local   income  tax  or
information  returns to be signed by the Trustee or such other  person as may be
required to sign such returns by the Code or state or local laws, regulations or
rules;

                  (j)      maintain  records  relating  to  each  REMIC  created
hereunder,  including the income, expenses, assets, and liabilities thereof on a
calendar year basis and on the accrual  method of accounting and the fair market
value and adjusted  basis of the assets  determined at such  intervals as may be
required by the Code,  as may be  necessary  to prepare the  foregoing  returns,
schedules, statements or information; and

                  (k)      as and when necessary and appropriate, represent each
REMIC created hereunder in any administrative or judicial  proceedings  relating
to an  examination or audit by any  governmental  taxing  authority,  request an
administrative  adjustment  as  to  any  taxable  year  of  each  REMIC  created
hereunder, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations  relating to any tax item of any REMIC created
hereunder,  and  otherwise  act on behalf of the  REMIC in  relation  to any tax
matter or controversy involving it.

                  The   Trustee   shall   treat  the   rights  of  the  Class  P
Certificateholders   to  Prepayment  Charges  as  the  beneficial  ownership  of
interests in a grantor  trust,  and not as an  obligation  of any REMIC  created
hereunder, for federal income tax purposes.

                  To enable  the  Trustee  to  perform  its  duties  under  this
Agreement,  the Depositor shall provide to the Trustee within ten days after the
Closing Date all  information  or data that the Trustee  requests in writing and
determines to be relevant for tax purposes to the valuations and offering prices
of the Certificates,  including the price,  yield,  prepayment  assumption,  and
projected cash flows of the Certificates and the Mortgage Loans.  Moreover,  the
Depositor shall provide  information to the Trustee concerning the value to each
Class of  Certificates of the right to receive Basis Risk  CarryForward  Amounts
from the Excess Reserve Fund Account. Thereafter, the Depositor shall provide to
the Trustee promptly upon written request therefor any

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additional  information  or data  that  the  Trustee  may,  from  time to  time,
reasonably  request to enable  the  Trustee  to  perform  its duties  under this
Agreement.  The  Depositor  hereby  indemnifies  the  Trustee  for  any  losses,
liabilities, damages, claims, or expenses of the Trustee arising from any errors
or  miscalculations of the Trustee that result from any failure of the Depositor
to provide,  or to cause to be  provided,  accurate  information  or data to the
Trustee on a timely basis.

                  If any tax is  imposed  on  "prohibited  transactions"  of any
REMIC  created  hereunder as defined in Section  860F(a)(2)  of the Code, on the
"net  income  from  foreclosure  property"  of such  REMIC as defined in Section
860G(c) of the Code,  on any  contribution  to the REMIC  after the  Startup Day
pursuant to Section 860G(d) of the Code, or any other tax is imposed,  including
any minimum tax imposed on the REMIC pursuant to Sections 23153 and 24874 of the
California  Revenue and Taxation  Code,  if not paid as  otherwise  provided for
herein,  the tax shall be paid by (i) the  Trustee  if such tax arises out of or
results  from  negligence  of  the  Trustee  in  the  performance  of any of its
obligations under this Agreement, (ii) the Servicer if such tax arises out of or
results  from a breach by the  Servicer  of any of its  obligations  under  this
Agreement,  (iii) the Unaffiliated Seller shall pay if such tax arises out of or
results from the Unaffiliated  Seller's obligation to repurchase a Mortgage Loan
pursuant to Section  2.03,  or (iv) in all other cases,  or if the Trustee,  the
Servicer or the  Unaffiliated  Seller fails to honor its  obligations  under the
preceding  clauses (i) or (ii), any such tax will be paid with amounts otherwise
to be distributed to the Certificateholders, as provided in Section 4.02(a).

                  Section 8.12      PERIODIC FILINGS.

                  Pursuant  to  written  instructions  from the  Depositor,  the
Trustee shall prepare,  execute and file all periodic reports required under the
Securities  Exchange  Act of 1934 in  conformity  with the  terms of the  relief
granted to issuers similar to the Trust Fund. In connection with the preparation
and filing of such periodic reports, the Depositor and the Servicer shall timely
provide to the  Trustee  all  material  information  available  to them which is
required  to be  included  in such  reports  and not  known to them to be in the
possession of the Trustee and such other  information as the Trustee  reasonably
may request from either of them and otherwise  reasonably  shall  cooperate with
the Trustee.  The Trustee shall have no liability with respect to any failure to
properly prepare or file such periodic reports resulting from or relating to the
Trustee's  inability or failure to obtain any information not resulting from its
own negligence or willful misconduct.

                  Section 8.13      TAX CLASSIFICATION OF CERTAIN ACCOUNTS.

                  For federal  income tax purposes,  the Trustee shall treat the
Excess  Reserve Fund Account as an outside  reserve fund,  within the meaning of
Treasury Regulation ss. 1.860G-2(h), that is beneficially owned by the holder of
the Class X  Certificate.  ThE Trustee shall treat the rights that each Class of
Certificates has to receive payments of Basis Risk CarryForward Amounts from the
Excess Reserve Fund Account as rights to receive payments under an interest rate
cap contract  written by the Class X  Certificateholder  in favor of each Class.
Accordingly,  each  Class of  Certificates  (excluding  the Class X, Class P and
Class R  Certificates)  will  comprise  two  components  - an Upper Tier Regular
Interest and an interest in a cap contract. The Trustee shall allocate the issue
price  for a Class of  Certificates  between  two  components  for  purposes  of

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determining the issue price of the Upper Tier Regular  Interest  component based
on information received from the Depositor.

                                   ARTICLE IX

                                   TERMINATION

                  Section 9.01      TERMINATION UPON LIQUIDATION OR PURCHASE  OF
 THE MORTGAGE LOANS.

                  Subject to Section 9.03, the obligations and  responsibilities
of the  Depositor,  the Servicer and the Trustee  created hereby with respect to
the Trust Fund shall terminate upon the earlier of (a) the purchase, on or after
the  applicable  Optional  Termination  Date,  by the  Servicer  or the  Class X
Certificateholders of all Mortgage Loans (and REO Properties) at the price equal
to the sum of (i) 100% of the Stated  Principal  Balance of each  Mortgage  Loan
(other  than in respect  of REO  Property)  plus one  month's  accrued  interest
thereon at the applicable  Adjusted Mortgage Rate and (ii) the lesser of (x) the
appraised  value  of  any  REO  Property  as  determined  by the  higher  of two
appraisals  completed by two independent  appraisers selected by the Servicer at
the  expense  of the  Servicer  and (y) the  Stated  Principal  Balance  of each
Mortgage Loan related to any REO Property,  in each case plus accrued and unpaid
interest thereon at the applicable  Adjusted Net Mortgage Rate and (b) the later
of (i) the maturity or other  liquidation (or any Advance with respect  thereto)
of the last Mortgage Loan remaining in the Trust Fund and the disposition of all
REO  Property and (ii) the  distribution  to  Certificateholders  of all amounts
required to be distributed to them pursuant to this Agreement. In no event shall
the trusts  created hereby  continue  beyond the expiration of 21 years from the
death  of the  survivor  of the  descendants  of  Joseph  P.  Kennedy,  the late
Ambassador of the United States to the Court of St. James's,  living on the date
hereof.

                  No such purchase will be permitted  without the consent of the
Class A  Certificate  Insurer,  unless no draw on the Class A  Insurance  Policy
would be made or unreimbursed on the final Distribution Date.

                  Section 9.02      FINAL DISTRIBUTION ON THE CERTIFICATES.

                  If on any  Determination  Date, the Servicer  determines  that
there are no  Outstanding  Mortgage  Loans  and no other  funds or assets in the
Trust Fund other than the funds in the  Collection  Account,  the Servicer shall
direct  the  Trustee  promptly  to send a  Notice  of  Final  Distribution  each
Certificateholder.  If the Servicer or the Class X  Certificateholder  elects to
terminate  the Trust Fund  pursuant to clause (a) of Section  9.01,  at least 20
days prior to the date the Notice of Final  Distribution  is to be mailed to the
affected  Certificateholders  such electing party shall notify the Depositor and
the Trustee of the date the Servicer or the Class X Certificateholder intends to
terminate the Trust Fund and of the applicable  repurchase price of the Mortgage
Loans and REO Properties.

                  A Notice of Final  Distribution,  specifying the  Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation,  shall be given promptly by the Trustee
by letter to  Certificateholders  mailed not  earlier  than the 15th day and not
later  than the 10th day of the month  next  preceding  the month

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of such final distribution.  Any such Notice of Final Distribution shall specify
(a) the Distribution Date upon which final distribution on the Certificates will
be made upon  presentation  and surrender of  Certificates at the office therein
designated,  (b) the amount of such final distribution,  (c) the location of the
office or agency at which such  presentation and surrender must be made, and (d)
that the Record  Date  otherwise  applicable  to such  Distribution  Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified.  The Trustee will give such Notice
of Final  Distribution  to each  Rating  Agency at the time such Notice of Final
Distribution is given to Certificateholders.

                  In the event such Notice of Final  Distribution is given,  the
Servicer shall cause all funds in the  Collection  Account to be remitted to the
Trustee for deposit in the Distribution Account on the Business Day prior to the
applicable  Distribution  Date in an amount equal to the final  distribution  in
respect of the  Certificates.  Upon such final deposit with respect to the Trust
Fund and the  receipt by the  Trustee of a Request  for  Release  therefor,  the
Trustee  shall  promptly  release to the  Servicer the  Custodial  Files for the
Mortgage Loans.

                  Upon  presentation  and  surrender  of the  Certificates,  the
Trustee shall cause to be distributed to the  Certificateholders  of each Class,
in each  case on the  final  Distribution  Date and in the  order  set  forth in
Section  4.02,  in proportion to their  respective  Percentage  Interests,  with
respect to  Certificateholders  of the same Class,  an amount equal to (i) as to
each  Class of  Regular  Certificates  (except  the  Class X  Certificate),  the
Certificate Balance thereof plus for each such Class and the Class X Certificate
accrued interest thereon in the case of an interest-bearing Certificate and (ii)
as to the Residual Certificates, the amount, if any, which remains on deposit in
the Distribution  Account (other than the amounts retained to meet claims) after
application pursuant to clause (i) above.

                  In the event that any  affected  Certificateholders  shall not
surrender  Certificates  for  cancellation  within  six  months  after  the date
specified in the above mentioned written notice, the Trustee shall give a second
written  notice  to  the  remaining   Certificateholders   to  surrender   their
Certificates for cancellation  and receive the final  distribution  with respect
thereto.  If within  six  months  after the  second  notice  all the  applicable
Certificates  shall not have been surrendered for cancellation,  the Trustee may
take appropriate  steps, or may appoint an agent to take  appropriate  steps, to
contact  the  remaining   Certificateholders   concerning   surrender  of  their
Certificates,  and the cost  thereof  shall be paid out of the  funds  and other
assets  which  remain a part of the Trust  Fund.  If within  one year  after the
second notice all Certificates shall not have been surrendered for cancellation,
the Class R  Certificateholders  shall be  entitled to all  unclaimed  funds and
other assets of the Trust Fund which remain subject hereto.

                  Section 9.03      ADDITIONAL TERMINATION REQUIREMENTS.

                  In the event the Servicer or the Class X Certificateholder, as
applicable,  exercises its purchase option with respect to the Mortgage Loans as
provided in Section 9.01, the Trust Fund shall be terminated in accordance  with
the following additional requirements, unless the Trustee has been supplied with
an  Opinion  of  Counsel,  at  the  expense  of the  Servicer  or  the  Class  X
Certificateholder,  as applicable, to the effect that the failure to comply with
the  requirements  of this Section 9.03 will not (i) result in the imposition of
taxes on "prohibited transactions" on either REMIC as defined in Section 860F of
the Code,  or (ii) cause  either the Lower Tier REMIC

                                      108
<PAGE>

or the  Upper  Tier  REMIC to fail to  qualify  as a REMIC at any time  that any
Certificates are outstanding:

                  (a) The Trustee shall sell all of the assets of the Trust Fund
to the Servicer or the Class X Certificateholder,  as applicable, and, within 90
days of such sale,  shall distribute to the  Certificateholders  the proceeds of
such sale in complete  liquidation of each of the Lower Tier REMIC and the Upper
Tier REMIC.

                  (b) The Trustee  shall attach a statement to the final federal
income  tax  return  for each of the Lower  Tier  REMIC and the Upper Tier REMIC
stating that pursuant to Treasury Regulation ss. 1.860F-1,  the first day of the
90-day  liquidation period for each sucH REMIC was the date on which the Trustee
sold  the   assets  of  the  Trust  Fund  to  the   Servicer   or  the  Class  X
Certificateholder, as applicable.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

                  Section 10.01     AMENDMENT.

                  This  Agreement  may be  amended  from time to time (x) by the
Depositor,  the Servicer and the Trustee,  with the prior written consent of the
Class A Certificate  Insurer,  (y) with the consent of the  Unaffiliated  Seller
unless the  Trustee  receives  an Opinion of Counsel  (which  Opinion of Counsel
shall not be an  expense  of the  Trustee or the Trust  Fund)  stating  that the
amendment will not adversely affect the Unaffiliated Seller, but (z) without the
consent of any of the  Certificateholders  (i) to cure any ambiguity or mistake,
(ii) to correct any defective  provision  herein or to supplement  any provision
herein which may be inconsistent with any other provision  herein,  (iii) to add
to the duties of the Depositor or the Servicer, (iv) to add any other provisions
with respect to matters or questions arising hereunder or (v) to modify,  alter,
amend,  add to or  rescind  any of the  terms or  provisions  contained  in this
Agreement; PROVIDED, that any action pursuant to clauses (iv) or (v) above shall
not, as evidenced by an Opinion of Counsel  (which  Opinion of Counsel shall not
be an  expense  of the  Trustee  or the  Trust  Fund),  adversely  affect in any
material respect the interests of any Certificateholder;  and PROVIDED, FURTHER,
that the  amendment  shall  not be deemed to  adversely  affect in any  material
respect the interests of the  Certificateholders  if the Person  requesting  the
amendment  obtains a letter from each Rating  Agency  stating that the amendment
would not result in the downgrading or withdrawal of the respective ratings then
assigned  to the  Certificates;  it being  understood  and agreed  that any such
letter in and of itself will not represent a determination as to the materiality
of any such amendment and will represent a  determination  only as to the credit
issues affecting any such rating.

                  In addition,  this  Agreement may also be amended from time to
time (x) by the Trustee, the Depositor and the Servicer,  with the prior written
consent  of the Class A  Certificate  Insurer,  and (y) with the  consent of the
Unaffiliated  Seller  unless the Trustee  receives an Opinion of Counsel  (which
Opinion of Counsel  shall not be an  expense of the  Trustee or the Trust  Fund)
stating that the amendment will not adversely  affect the  Unaffiliated  Seller,
but (z) without the consent of the Certificateholders,  to modify,  eliminate or
add to any of its  provisions to such

                                      109
<PAGE>

extent as shall be necessary or helpful to (i) maintain the qualification of the
Lower Tier REMIC and the Upper Tier REMIC under the Code, (ii) avoid or minimize
the risk of the  imposition of any tax on the Lower Tier REMIC or the Upper Tier
REMIC  pursuant to the Code that would be a claim at any time prior to the final
redemption of the  Certificates  or (iii) comply with any other  requirements of
the Code;  PROVIDED,  that the Trustee has been  provided an Opinion of Counsel,
which  opinion shall be an expense of the party  requesting  such opinion but in
any case shall not be an expense of the Trustee or the Trust Fund, to the effect
that such action is necessary or helpful to, as  applicable,  (i) maintain  such
qualification,  (ii) avoid or minimize the risk of the  imposition of such a tax
or (iii) comply with any such requirements of the Code.

                  This  Agreement  may also be amended  from time to time (x) by
the Depositor,  the Servicer and the Trustee,  with the prior written consent of
the Class A Certificate Insurer, (y) with the consent of the Unaffiliated Seller
unless the  Trustee  receives  an Opinion of Counsel  (which  Opinion of Counsel
shall not be an  expense  of the  Trustee or the Trust  Fund)  stating  that the
amendment will not adversely affect the Unaffiliated  Seller, and (z), except as
set forth in  Section  3.27,  with the  consent of the  Holders of  Certificates
evidencing  Percentage Interests aggregating not less than 66-2/3% of each Class
of Certificates  (based on the aggregate  outstanding  principal balance of such
class at such time) affected  thereby,  for the purpose of adding any provisions
to or  changing  in any  manner or  eliminating  any of the  provisions  of this
Agreement  or  of  modifying  in  any  manner  the  rights  of  the  Holders  of
Certificates;  PROVIDED, HOWEVER, that no such amendment shall (i) reduce in any
manner  the  amount  of,  or  delay  the  timing  of,  payments  required  to be
distributed  on any  Certificate  without  the  consent  of the  Holder  of such
Certificate,  (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing,  as
to such Class,  Percentage Interests aggregating not less than 66-2/3%, or (iii)
reduce  the  aforesaid  percentages  of  Certificates  the  Holders of which are
required to consent to any such amendment, without the consent of the Holders of
all such Certificates then outstanding.

                  Notwithstanding any contrary provision of this Agreement,  the
Trustee  shall not consent to any  amendment to this  Agreement  unless it shall
have first received an Opinion of Counsel, which opinion shall not be an expense
of the Trustee or the Trust Fund,  to the effect  that such  amendment  will not
cause the imposition of any tax on any REMIC or the  Certificateholders or cause
any REMIC to fail to  qualify as a REMIC at any time that any  Certificates  are
outstanding.

                  Notwithstanding  the  foregoing  provisions  of  this  Section
10.01, with respect to any amendment that  significantly  modifies the permitted
activities of the Trustee or the Servicer, any Certificate beneficially owned by
the Depositor,  the Unaffiliated  Seller or any of their  respective  Affiliates
shall  be  deemed  not to be  outstanding  (and  shall  not be  considered  when
determining the percentage of Certificateholders  consenting or when calculating
the  total  number  of  Certificates   entitled  to  consent)  for  purposes  of
determining if the requisite consents of  Certificateholders  under this Section
10.01 have been obtained.

                  Promptly   after  the  execution  of  any  amendment  to  this
Agreement requiring the consent of Certificateholders, the Trustee shall furnish
written  notification  of the  substance  or a copy  of such  amendment  to each
Certificateholder and each Rating Agency.

                                      110
<PAGE>

                  It   shall   not   be    necessary    for   the   consent   of
Certificateholders  under this Section 10.01 to approve the  particular  form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance  thereof.  The manner of obtaining such consents and of evidencing
the  authorization  of the  execution  thereof  by  Certificateholders  shall be
subject to such reasonable regulations as the Trustee may prescribe.

                  Nothing in this  Agreement  shall require the Trustee to enter
into an amendment  without  receiving an Opinion of Counsel (which Opinion shall
not be an expense of the Trustee or the Trust Fund), satisfactory to the Trustee
that (i) such amendment is permitted and is not prohibited by this Agreement and
that all  requirements  for amending this Agreement have been complied with; and
(ii) either (A) the amendment does not adversely  affect in any material respect
the interests of any  Certificateholder  or (B) the  conclusion set forth in the
immediately  preceding clause (A) is not required to be reached pursuant to this
Section 10.01.

                  Section 10.02     RECORDATION OF AGREEMENT; COUNTERPARTS.

                  This Agreement is subject to  recordation  in all  appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated,  and in any other  appropriate  public  recording office or elsewhere,
such  recordation  to be effected by the Servicer at its expense,  but only upon
receipt of an Opinion of Counsel to the effect that such recordation  materially
and beneficially affects the interests of the Certificateholders.

                  For  the  purpose  of  facilitating  the  recordation  of this
Agreement  as herein  provided and for other  purposes,  this  Agreement  may be
executed   simultaneously   in  any  number  of  counterparts,   each  of  which
counterparts  shall be deemed to be an  original,  and such  counterparts  shall
constitute but one and the same instrument.

                  Section 10.03     GOVERNING LAW.

                  THIS  AGREEMENT  SHALL BE  CONSTRUED  IN  ACCORDANCE  WITH AND
GOVERNED  BY THE  SUBSTANTIVE  LAWS  OF THE  STATE  OF NEW  YORK  APPLICABLE  TO
AGREEMENTS  MADE  AND  TO BE  PERFORMED  IN  THE  STATE  OF  NEW  YORK  AND  THE
OBLIGATIONS,   RIGHTS   AND   REMEDIES   OF   THE   PARTIES   HERETO   AND   THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                  Section 10.04     INTENTION OF PARTIES.

                  It is the  express  intent  of the  parties  hereto  that  the
conveyance (i) of the Mortgage Loans by the Depositor and (ii) of the Trust Fund
by the  Depositor to the Trustee each be, and be construed  as, an absolute sale
thereof. It is, further,  not the intention of the parties that such conveyances
be deemed a pledge  thereof.  However,  in the event that,  notwithstanding  the
intent of the parties, such assets are held to be the property of the Depositor,
as the case may be, or if for any other reason this  Agreement is held or deemed
to create a security  interest in either such  assets,  then (i) this  Agreement
shall be deemed to be a security  agreement  within the  meaning of the  Uniform
Commercial Code of the State of New York and (ii) the  conveyances  provided for
in this  Agreement  shall  be  deemed  to be an  assignment  and a grant  by the
Depositor

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<PAGE>

to the  Trustee,  for  the  benefit  of the  Certificateholders,  of a  security
interest  in all of the  assets  transferred,  whether  now  owned or  hereafter
acquired.

                  The Depositor for the benefit of the Certificateholders and of
the Class A  Certificate  Insurer  shall,  to the  extent  consistent  with this
Agreement,  take  such  actions  as may be  necessary  to ensure  that,  if this
Agreement  were deemed to create a security  interest  in the Trust  Fund,  such
security  interest would be deemed to be a perfected  security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement.  The Depositor shall arrange for filing any Uniform Commercial
Code continuation statements in connection with any security interest granted or
assigned to the Trustee for the benefit of the Certificateholders.

                  Section 10.05  NOTICES.

                  (a)      The  Trustee  shall use its best  efforts to promptly
provide  notice to each Rating  Agency with respect to each of the  following of
which it has actual knowledge:

                  1.       Any material change or amendment to this Agreement;

                  2.       The  occurrence  of any Event of Default that has not
been cured;

                  3.       The resignation or termination of the Servicer or the
Trustee and the appointment of any successor;

                  4.       The  repurchase  or  substitution  of Mortgage  Loans
pursuant to Section 2.03; and

                  5.       The final payment to Certificateholders.

                  (b)      In addition,  the Trustee shall  promptly  furnish to
each Rating Agency copies of the following:

                  1.       Each  report  to   Certificateholders   described  in
Section 4.03; and

                  2.       Any notice of a purchase of a Mortgage  Loan pursuant
to Section 2.02, 2.03 or 3.11.

                  All  directions,  demands  and notices  hereunder  shall be in
writing and shall be deemed to have been duly given when delivered to (a) in the
case of the Depositor or the  Representative,  Morgan Stanley ABS Capital I Inc.
or Morgan Stanley & Co. Incorporated,  1585 Broadway,  New York, New York 10036,
Attention:  Michelle Wilke, Esq., (b) in the case of the Servicer, Ocwen Federal
Bank FSB,  1675 Palm Beach Lakes  Blvd.,  Suite 10A,  West Palm  Beach,  Florida
33401, Attention: Secretary, or such other address as may be hereafter furnished
to the  parties  hereto  in  writing,  (c) in the  case  of the  Trustee  to the
Corporate  Trust Office,  Deutsche Bank National  Trust  Company,  1761 East St.
Andrew Place, Santa Ana, California 92705-4934,  Attention: Trust Administration
DC02M1,  or such  other  address as the  Trustee  may  hereafter  furnish to the
parties  hereto,  (d) in the  case  of the  Unaffiliated  Seller,  CDC  Mortgage
Capital,  Inc., 9 West 57th Street, New York, New York 10019,  Attention General

                                      112
<PAGE>

Counsel,  or such other address as the Unaffiliated Seller may hereafter furnish
to the  parties  hereto,  (e) in the case of each of the  Rating  Agencies,  the
address specified  therefor in the definition  corresponding to the name of such
Rating  Agency  and (f) in the case of any  Originator,  the  address  specified
therefor  in  the  applicable  Mortgage  Loan  Purchase  Agreement.  Notices  to
Certificateholders  shall be deemed  given  when  mailed,  first  class  postage
prepaid, to their respective addresses appearing in the Certificate Register.

                  Section 10.06 SEVERABILITY OF PROVISIONS.

                  If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason  whatsoever  held invalid,  then
such covenants,  agreements,  provisions or terms shall be deemed severable from
the remaining covenants,  agreements,  provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.

                  Section 10.07 ASSIGNMENT.

                  Notwithstanding  anything to the  contrary  contained  herein,
except as provided in Section  6.02,  this  Agreement may not be assigned by the
Servicer  without  the  prior  written  consent  of the  Trustee,  the  Class  A
Certificate Insurer and Depositor;  PROVIDED,  HOWEVER, that, subject to Section
3.27, the Servicer may pledge or sell its interest in any reimbursements for P&I
Advances or Servicing Advances hereunder.

                  Section 10.08 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.

                  The death or  incapacity  of any  Certificateholder  shall not
operate to terminate  this  Agreement or the trust created  hereby,  nor entitle
such Certificateholder's legal representative or heirs to claim an accounting or
to take any action or  commence  any  proceeding  in any court for a petition or
winding  up of the  trust  created  hereby,  or  otherwise  affect  the  rights,
obligations and liabilities of the parties hereto or any of them.

                  No  Certificateholder  shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto,  nor shall anything
herein set forth or contained in the terms of the  Certificates  be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third  party by reason of any  action  taken by the  parties  to this  Agreement
pursuant to any provision hereof.

                  No  Certificateholder  shall  have any  right by  virtue or by
availing  itself of any  provisions  of this  Agreement to  institute  any suit,
action or  proceeding  in equity or at law upon or under or with respect to this
Agreement,  unless  such  Holder  previously  shall have given to the  Trustee a
written notice of an Event of Default and of the continuance  thereof, as herein
provided, and unless the Holders of Certificates evidencing not less than 25% of
the Voting  Rights  evidenced by the  Certificates,  and the Class A Certificate
Insurer,  shall also have made written  request to the Trustee to institute such
action,  suit or proceeding in its own name as Trustee  hereunder and shall have
offered to the Trustee such  reasonable  indemnity as it may require against the
costs,  expenses,  and  liabilities to be incurred  therein or thereby,  and the

                                      113
<PAGE>

Trustee,  for 60 days after its  receipt of such  notice,  request  and offer of
indemnity shall have neglected or refused to institute any such action,  suit or
proceeding;  it being understood and intended, and being expressly covenanted by
each Certificateholder with every other  Certificateholder and the Trustee, that
no one or more  Holders  of  Certificates  shall  have any  right in any  manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates,  or to obtain or seek to obtain priority over or preference
to any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 10.08, each
and every  Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.

                  Section 10.09 INSPECTION AND AUDIT RIGHTS.

                  The Servicer agrees that, on reasonable prior notice,  it will
permit any representative of the Depositor, the Unaffiliated Seller, the Class A
Certificate  Insurer or the Trustee during the Servicer's normal business hours,
to examine all the books of account,  records,  reports and other  papers of the
Servicer relating to the Mortgage Loans, to make copies and extracts  therefrom,
to cause such books to be audited by independent  certified  public  accountants
selected by the party  conducting  the  inspection  and to discuss its  affairs,
finances  and  accounts  relating  to the  Mortgage  Loans  with  its  officers,
employees and independent public accountants (and by this provision the Servicer
hereby  authorizes  said  accountants to discuss with such  representative  such
affairs,  finances and accounts),  all at such reasonable  times and as often as
may be reasonably requested.  Any out-of-pocket expense of the Servicer incident
to the  exercise  by  the  Depositor,  the  Unaffiliated  Seller,  the  Class  A
Certificate  Insurer or the Trustee of any right under this Section  10.09 shall
be borne by the Servicer.

                  Section 10.10 CERTIFICATES NONASSESSABLE AND FULLY PAID.

                  It is the intention of the Depositor  that  Certificateholders
shall not be  personally  liable for  obligations  of the Trust  Fund,  that the
interests  in  the  Trust  Fund  represented  by  the   Certificates   shall  be
nonassessable for any reason  whatsoever,  and that the  Certificates,  upon due
authentication thereof by the Trustee pursuant to this Agreement,  are and shall
be deemed fully paid.

                  Section 10.11 THE CLASS A CERTIFICATE INSURER DEFAULT.

                  Any right  conferred to the Class A Certificate  Insurer shall
be suspended  during any period in which a Class A Certificate  Insurer  Default
exists.  At such time as the  Class A  Certificates  are no  longer  outstanding
hereunder,  and no amounts  owed to the Class A  Certificate  Insurer  hereunder
remain  unpaid,  the  Class  A  Certificate  Insurer's  rights  hereunder  shall
terminate.

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<PAGE>

                  Section 10.12 THIRD PARTY BENEFICIARY.

                  The  parties  agree  that the Class A  Certificate  Insurer is
intended  and  shall  have  all  rights  of a  third-party  beneficiary  of this
Agreement.

                  Section 10.13 WAIVER OF JURY TRIAL.

                  EACH PARTY HEREBY  KNOWINGLY,  VOLUNTARILY AND  INTENTIONALLY,
WAIVES (TO THE EXTENT  PERMITTED BY  APPLICABLE  LAW) ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE  ARISING  UNDER OR RELATING TO THIS  AGREEMENT  AND
AGREES THAT ANY SUCH  DISPUTE  SHALL BE TRIED BEFORE A JUDGE  SITTING  WITHOUT A
JURY.

                  Section 10.14  LIMITATION OF DAMAGES.

                  NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE
PARTIES  HERETO  AGREE THAT NO PARTY  HERETO  SHALL BE LIABLE TO ANY OTHER PARTY
HERETO FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER, WHETHER IN
CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR ANY OTHER LEGAL OR
EQUITABLE PRINCIPLES;  PROVIDED THAT, THE FOREGOING PROVISION SHALL NOT LIMIT OR
RELIEVE ANY PARTY HERETO OF ANY OBLIGATION UNDER THIS AGREEMENT TO INDEMNIFY ANY
OTHER PARTY HERETO AGAINST ANY DAMAGES  IMPOSED UPON SUCH PARTY BY A FINAL ORDER
OF ANY COURT OF  COMPETENT  JURISDICTION  IN  CONNECTION  WITH ANY LEGAL  ACTION
BROUGHT AGAINST SUCH PARTY BY ANY THIRD PARTY.

                                     *******

                                      115
<PAGE>

                  IN  WITNESS   WHEREOF,   the  Depositor,   the  Trustee,   the
Unaffiliated Seller and the Servicer have caused their names to be signed hereto
by their  respective  officers  thereunto duly authorized as of the day and year
first above written.

                           MORGAN STANLEY ABS CAPITAL I INC.,
                               as Depositor

                           By:
                              -------------------------------------------------
                              Name:
                              Title:

                           DEUTSCHE BANK NATIONAL TRUST COMPANY,
                               solely as Trustee and not in its individual
                               capacity

                           By:
                              -------------------------------------------------
                              Name:
                              Title:

                           By:
                              -------------------------------------------------
                              Name:
                              Title:

                           OCWEN FEDERAL BANK FSB,
                               as Servicer

                           By:
                              -------------------------------------------------
                              Name:
                              Title:

                           CDC MORTGAGE CAPITAL INC.,
                               as Unaffiliated Seller

                           By:
                              -------------------------------------------------
                              Name:
                              Title:

                           By:
                              -------------------------------------------------
                              Name:
                              Title:

<PAGE>

                                   SCHEDULE I

                             Mortgage Loan Schedule

          [See Exhibit A to the Unaffiliated Seller's Agreement, Tab 2]

                                      S-I-1

<PAGE>

                                   SCHEDULE II

                       CDC MORTGAGE CAPITAL TRUST 2002-HE1

                       Mortgage Pass-Through Certificates,

                                 Series 2002-HE1

                 REPRESENTATIONS AND WARRANTIES OF THE SERVICER

                  OCWEN  FEDERAL  BANK FSB (the  "SERVICER"")  hereby  makes the
representations  and  warranties set forth in this Schedule II to the Depositor,
the Unaffiliated  Seller, the Class A Certificate Insurer and the Trustee, as of
the  Closing  Date.  Capitalized  terms used but not  otherwise  defined in this
Schedule  II  shall  have the  meanings  ascribed  thereto  in the  Pooling  and
Servicing  Agreement  (the  "POOLING AND SERVICING  AGREEMENT")  relating to the
above-referenced Series.

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

                  (2)      The  Servicer  has the full  power and  authority  to
         service each Mortgage Loan, and to execute, deliver and perform, and to
         enter into and consummate the transactions contemplated by this Pooling
         and Servicing Agreement and has duly authorized by all necessary action
         on the part of the Servicer the execution,  delivery and performance of
         this Pooling and  Servicing  Agreement;  and this Pooling and Servicing
         Agreement,  assuming  the due  authorization,  execution  and  delivery
         thereof by the other parties  thereto,  constitutes a legal,  valid and
         binding obligation of the Servicer, enforceable against the Servicer in
         accordance  with  its  terms,   except  to  the  extent  that  (a)  the
         enforceability  thereof  may  be  limited  by  bankruptcy,  insolvency,
         moratorium,  receivership and other similar laws relating to creditors'
         rights  generally  and (b)  the  remedy  of  specific  performance  and
         injunctive  and other forms of  equitable  relief may be subject to the
         equitable  defenses and to the discretion of the court before which any
         proceeding therefor may be brought;

                  (3)      The  execution  and  delivery  of  this  Pooling  and
         Servicing  Agreement  by the  Servicer,  the  servicing of the Mortgage
         Loans by the Servicer  hereunder,  the  consummation by the Servicer of
         any other of the transactions herein contemplated,  and the fulfillment
         of or  compliance  with the terms hereof are in the ordinary  course of
         business  of the  Servicer  and will not (A)  result in a breach of any
         term or  provision of the  organizational  documents of the Servicer or
         (B) conflict with, result in a breach, violation or acceleration of, or
         result in a default under, the terms of any other material agreement

                                     S-II-1
<PAGE>

         or  instrument  to which the  Servicer is a party or by which it may be
         bound, or any statute,  order or regulation  applicable to the Servicer
         of any court,  regulatory body,  administrative  agency or governmental
         body having  jurisdiction over the Servicer;  and the Servicer is not a
         party to, bound by, or in breach or violation of any indenture or other
         agreement or instrument,  or subject to or in violation of any statute,
         order or  regulation  of any  court,  regulatory  body,  administrative
         agency  or  governmental  body  having   jurisdiction  over  it,  which
         materially and adversely affects or, to the Servicer's knowledge, would
         in the future materially and adversely  affect,  (x) the ability of the
         Servicer to perform its  obligations  under this Pooling and  Servicing
         Agreement  or  (y)  the  business,  operations,   financial  condition,
         properties or assets of the Servicer taken as a whole;

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

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

                  (6)      No consent,  approval,  authorization or order of any
         court or  governmental  agency or body is required  for the  execution,
         delivery  and  performance  by the Servicer  of, or  compliance  by the
         Servicer with, this Pooling and Servicing Agreement or the consummation
         by the Servicer of the  transactions  contemplated  by this Pooling and
         Servicing   Agreement,    except   for   such   consents,    approvals,
         authorizations  or orders, if any, that have been obtained prior to the
         Closing Date; and

                  (7)      The  Servicer  covenants  that its computer and other
         systems used in servicing  the Mortgage  Loans operate in a manner such
         that the Servicer can service the Mortgage Loans in accordance with the
         terms of this Pooling and Servicing Agreement.

                                     S-II-2

<PAGE>

                                  SCHEDULE III

                  CDC Mortgage Capital Inc. hereby makes the representations and
warranties  set  forth  in  this  Schedule  III to the  Depositor,  the  Class A
Certificate Insurer and the Trustee, as of the Closing Date.

(a)      DUE   ORGANIZATION  AND  AUTHORITY.   The  Unaffiliated   Seller  is  a
         corporation duly organized, validly existing and in good standing under
         the laws of the  state of New York and has all  licenses  necessary  to
         carry on its business as now being conducted and is licensed, qualified
         and in good  standing  in each  state  wherein  it owns or  leases  any
         material  properties or where a Mortgaged  Property is located,  if the
         laws of such  state  require  licensing  or  qualification  in order to
         conduct business of the type conducted by the Unaffiliated  Seller, and
         in any event the Unaffiliated  Seller is in compliance with the laws of
         any such state to the extent necessary; the Unaffiliated Seller has the
         full corporate power,  authority and legal right to execute and deliver
         this Agreement and to perform its obligations hereunder; the execution,
         delivery and performance of this Agreement by the  Unaffiliated  Seller
         and the consummation of the transactions  contemplated hereby have been
         duly  and  validly  authorized;   this  Agreement  and  all  agreements
         contemplated   hereby  have  been  duly   executed  and  delivered  and
         constitute the valid, legal, binding and enforceable obligations of the
         Unaffiliated  Seller,  regardless of whether such enforcement is sought
         in a proceeding in equity or at law; and all requisite corporate action
         has been taken by the  Unaffiliated  Seller to make this  Agreement and
         all  agreements   contemplated   hereby  valid  and  binding  upon  the
         Unaffiliated Seller in accordance with their terms;

(b)      NO CONFLICTS. Neither the execution and delivery of this Agreement, the
         consummation  of  the  transactions   contemplated   hereby,   nor  the
         fulfillment  of or  compliance  with the terms and  conditions  of this
         Agreement,  will  conflict  with or  result  in a breach  of any of the
         terms, conditions or provisions of the Unaffiliated Seller's charter or
         by-laws or any legal  restriction  or any  agreement or  instrument  to
         which the  Unaffiliated  Seller is now a party or by which it is bound,
         or constitute a default or result in an  acceleration  under any of the
         foregoing,  except  such  unfulfillment,  non-compliance  or default or
         acceleration  does not in the aggregate have a material  adverse effect
         on the operation,  business,  condition  (business or otherwise) of the
         Unaffiliated  Seller  or  result  in the  violation  of any law,  rule,
         regulation,  order, judgment or decree to which the Unaffiliated Seller
         or its  property is  subject,  except  such  violation  does not in the
         aggregate have a material  adverse  effect on the operation,  business,
         condition  (business or otherwise) of the Unaffiliated Seller or result
         in the creation or imposition of any lien,  charge or encumbrance  that
         would have an adverse effect upon any of its properties pursuant to the
         terms of any mortgage, contract, deed of trust or other instrument;

(c)      NO  LITIGATION  PENDING.  There  is  no  action,  suit,  proceeding  or
         investigation  pending  nor, to the  Unaffiliated  Seller's  knowledge,
         threatened   against  the  Unaffiliated   Seller,   before  any  court,
         administrative  agency or other  tribunal  asserting the  invalidity of
         this  Agreement,  seeking to  prevent  the  consummation  of any of the
         transactions contemplated by this Agreement or which, either in any one
         instance or in the aggregate, may result in any material adverse change
         in the business, operations,  financial condition, properties or

                                     S-III-1

<PAGE>

         assets of the Unaffiliated Seller, or in any material impairment of the
         right or ability of the  Unaffiliated  Seller to carry on its  business
         substantially  as now conducted,  or which would draw into question the
         validity  of this  Agreement  or of any action  taken or to be taken in
         connection with the obligations of the Unaffiliated Seller contemplated
         herein,  or which would be likely to impair  materially  the ability of
         the Unaffiliated Seller to perform under the terms of this Agreement;

(d)      NO CONSENT REQUIRED. No consent,  approval,  authorization or order of,
         or  registration or filing with, or notice to any court or governmental
         agency or body  including  HUD,  the FHA or the VA is required  for the
         execution,  delivery and performance by the  Unaffiliated  Seller of or
         compliance  by the  Unaffiliated  Seller  with  this  Agreement  or the
         consummation of the transactions  contemplated by this Agreement, or if
         required, such approval has been obtained prior to the Closing Date;

                                     S-III-2

<PAGE>

                                    EXHIBIT A

Unless this  Certificate  is presented by an  authorized  representative  of the
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer,  exchange,  or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized  representative  of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE  REPRESENTS AN
INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE  TERMS ARE  DEFINED,  RESPECTIVELY,  IN  SECTIONS  860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER ASSETS.

Certificate No.                             :            [A-1/M-1//B]

Cut-off Date                                :            April 1, 2002

First Distribution Date                     :            May 28, 2002

Initial Certificate Balance of
this Certificate

("Denomination")                            :            A        $449,238,000

                                                         M        $25,381,000

                                                         B        $25,381,000

Initial Certificate Balances of all

Certificates of this Class                  :            A        $449,238,000

                                                         M        $25,381,000

                                                         B        $25,381,000

CUSIP                                       :            A 12506YAF6

                                                         M 12506YAG4

                                                         B 12506YAH2

                                       A-1

<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.

                       CDC Mortgage Capital Trust 2002-HE1

               Mortgage Pass-Through Certificates, Series 2002-HE1

                           [Class A][Class M][Class B]

                  evidencing a percentage  interest in the distributions
                  allocable to the Certificates of the above-referenced Class.

                  Principal  in respect  of this  Certificate  is  distributable
monthly as set forth herein.  Accordingly,  the Certificate  Balance at any time
may be less than the Certificate  Balance as set forth herein.  This Certificate
does not evidence an obligation  of, or an interest in, and is not guaranteed by
the Depositor,  the  Unaffiliated  Seller,  any Originator,  the Servicer or the
Trustee  referred to below or any of their respective  affiliates.  Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality  (other than the Superior Mortgage Loans in accordance
with the FDIC Guaranty).

                  This certifies that CEDE & CO. is the registered  owner of the
Percentage  Interest  evidenced  by this  Certificate  (obtained by dividing the
denomination of this  Certificate by the aggregate of the  denominations  of all
Certificates of the Class to which this Certificate  belongs) in certain monthly
distributions  pursuant to a Pooling  and  Servicing  Agreement  dated as of the
Cut-off Date specified above (the "AGREEMENT")  among MORGAN STANLEY ABS CAPITAL
I INC., as depositor (the "DEPOSITOR"), Ocwen Federal Bank FSB, as servicer (the
"SERVICER"),   CDC  Mortgage   Capital   Inc.,  as   unaffiliated   seller  (the
"UNAFFILIATED SELLER") and Deutsche Bank National Trust Company, as trustee (the
"TRUSTEE").  To the extent not defined herein, the capitalized terms used herein
have the meanings  assigned in the Agreement.  This  Certificate is issued under
and is subject to the terms,  provisions  and  conditions of the  Agreement,  to
which  Agreement  the  Holder of this  Certificate  by virtue of the  acceptance
hereof assents and by which such Holder is bound.

                  Reference  is hereby  made to the further  provisions  of this
Certificate set forth on the reverse hereof,  which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This  Certificate  shall not be entitled to any benefit  under
the Agreement or be valid for any purpose unless  manually  countersigned  by an
authorized signatory of the Trustee.

                                      * * *

                                       A-2

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

                          DEUTSCHE BANK NATIONAL TRUST COMPANY,
                             not in its individual capacity, but solely as
                             Trustee

                          By:
                             --------------------------------------------------

Countersigned:

By:
   -----------------------------------------------------------
   Authorized Signatory of
   DEUTSCHE BANK NATIONAL TRUST COMPANY,
   not in its individual capacity,
   but solely as Trustee

                                       A-3

<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2002-HE1

               Mortgage Pass-Through Certificates, Series 2002-HE1

                  This  Certificate  is  one  of  a  duly  authorized  issue  of
Certificates   designated  as  CDC  Mortgage  Capital  Trust  2002-HE1  Mortgage
Pass-Through  Certificates,  Series  2002-HE1  (herein  collectively  called the
"CERTIFICATES"),  and representing a beneficial  ownership interest in the Trust
Fund created by the Agreement.

                  The Certificateholder,  by its acceptance of this Certificate,
agrees  that it will look  solely to the funds on  deposit  in the  Distribution
Account  for  payment  hereunder  and  that the  Trustee  is not  liable  to the
Certificateholders  for  any  amount  payable  under  this  Certificate  or  the
Agreement  or,  except as expressly  provided in the  Agreement,  subject to any
liability under the Agreement.

                  This  Certificate  does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights,  benefits,  obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each  month or, if such day is not a Business  Day,  the
Business Day immediately following (the "DISTRIBUTION DATE"),  commencing on the
first  Distribution  Date  specified on the face hereof,  to the Person in whose
name this  Certificate  is registered at the close of business on the applicable
Record  Date in an  amount  equal  to the  product  of the  Percentage  Interest
evidenced  by this  Certificate  and the amount  required to be  distributed  to
Holders of Certificates of the Class to which this  Certificate  belongs on such
Distribution Date pursuant to the Agreement.  The Record Date applicable to each
Distribution  Date is the Business Date immediately  preceding such Distribution
Date, provided,  however, that for any Definitive Certificates,  the Record Date
shall be the last  Business  Day of the month next  preceding  the month of such
Distribution Date.

                  Distributions  on  this  Certificate  shall  be  made  by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank  or  other  entity  having  appropriate   facilities   therefor,   if  such
Certificateholder  shall have so  notified  the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder  shall
satisfy  the  conditions  to  receive  such  form of  payment  set  forth in the
Agreement,  or, if not,  by check  mailed by first  class mail to the address of
such  Certificateholder   appearing  in  the  Certificate  Register.  The  final
distribution  on each  Certificate  will be made in like  manner,  but only upon
presentment and surrender of such  Certificate at the offices  designated by the
Trustee for such  purposes,  or such other  location  specified in the notice to
Certificateholders of such final distribution.

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the Trustee and the rights of the  Certificateholders  under the
Agreement at any time by the parties thereto,  and Financial  Security Assurance
Inc.,  as Class A  Certificate  Insurer,  with the  consent  of the  Holders  of
Certificates  affected by such  amendment  evidencing  the requisite  Percentage
Interest,  as provided in the

                                       A-4

<PAGE>

Agreement.  Any  such  consent  by the  Holder  of  this  Certificate  shall  be
conclusive  and  binding  on such  Holder  and upon all  future  Holders of this
Certificate  and of any  Certificate  issued  upon  the  transfer  hereof  or in
exchange  therefor or in lieu hereof  whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances,  without the consent of the Holders of any of the
Certificates.

                  As   provided  in  the   Agreement   and  subject  to  certain
limitations  therein set forth,  the transfer of this Certificate is registrable
in the  Certificate  Register of the Trustee upon surrender of this  Certificate
for  registration of transfer at the offices  designated by the Trustee for such
purposes,  accompanied by a written  instrument of transfer in form satisfactory
to the Trustee and the Certificate  Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing,  and thereupon one or more
new  Certificates of the same Class in authorized  denominations  and evidencing
the same aggregate  Percentage  Interest in the Trust Fund will be issued to the
designated transferee or transferees.

                  The Certificates are issuable only as registered  Certificates
without coupons in denominations  specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest,  as requested by the
Holder surrendering the same.

                  No service  charge will be made for any such  registration  of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor,  the Servicer,  the  Unaffiliated  Seller,  the
Class A  Certificate  Insurer  and the  Trustee and any agent of any of them may
treat the  Person in whose  name this  Certificate  is  registered  as the owner
hereof for all  purposes,  and no such party  shall be affected by any notice to
the contrary.

                  On  any  Distribution  Date  on  which  the  aggregate  Stated
Principal  Balance  of the  Mortgage  Loans is less  than or equal to 10% of the
Maximum   Pool   Principal   Balance,   the   Servicer   and/or   the   Class  X
Certificateholders will have the option to repurchase,  in whole, from the Trust
Fund all remaining  Mortgage  Loans and all property  acquired in respect of the
Mortgage Loans at a purchase price determined as provided in the Agreement.  The
obligations  and  responsibilities  created by the Agreement  will  terminate as
provided in Section 9.01 of the Agreement.

                  Any term used  herein that is defined in the  Agreement  shall
have the meaning  assigned in the Agreement,  and nothing herein shall be deemed
inconsistent with that meaning.

                                       A-5

<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s),  assign(s)
and  transfer(s)  unto
                        --------------------------------------------------------

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

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

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

(Please  print  or  typewrite  name and  address  including  postal  zip code of
assignee)

the  Percentage   Interest  evidenced  by  the  within  Certificate  and  hereby
authorizes the transfer of registration of such Percentage  Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further  direct the Trustee to issue a new  Certificate
of a like  denomination  and Class, to the above named assignee and deliver such
Certificate to the following address: .

--------------------------------------------------------------.

Dated:

                                    --------------------------------------------
                                    Signature by or on behalf of assignor

                                      A-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to

                                                                               ,
--------------------------------------------------------------------------------
                                                                               ,
--------------------------------------------------------------------------------
for the account of                                                             ,
                   -------------------------------------------------------------
account number _______, or, if mailed by check, to
                                                   -----------------------------
Applicable statements should be mailed to                                      ,
                                          --------------------------------------
                                                                               ,
-------------------------------------------------------------------------------

                  This information is provided by                              ,
                                                  ------------------------------
the assignee named above, or                                                   ,
                            ----------------------------------------------------
as its agent.

                                      A-7
<PAGE>

                                    EXHIBIT B

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
PROPOSED  TRANSFEROR  DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT  H TO THE  AGREEMENT  REFERRED  TO HEREIN  AND  EITHER  (I) THE  TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE  AGREEMENT  REFERRED
TO HEREIN OR (II) THE TRUSTEE  RECEIVES AN OPINION OF COUNSEL,  DELIVERED AT THE
EXPENSE OF THE TRANSFEROR,  THAT SUCH TRANSFER MAY BE MADE WITHOUT  REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION  LETTER TO THE EFFECT
THAT SUCH  TRANSFEREE  IS NOT AN EMPLOYEE  BENEFIT  PLAN  SUBJECT TO THE TITLE I
EMPLOYEE  RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED,  OF A PLAN SUBJECT
TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO  APPLICABLE  FEDERAL,  STATE OR
LOCAL LAW ("SIMILAR  LAW")  MATERIALLY  SIMILAR TO THE  FOREGOING  PROVISIONS OF
ERISA OR THE CODE,  OR A PERSON  INVESTING  ON BEHALF OF OR WITH PLAN  ASSETS OF
SUCH A PLAN, OR A REPRESENTATION OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO
THE CONTRARY HEREIN,  ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF
OF AN EMPLOYEE  BENEFIT  PLAN  SUBJECT TO TITLE I OF ERISA,  SECTION 4975 OF THE
CODE OR SIMILAR LAW WITHOUT THE REPRESENTATION  LETTER OR THE OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.

Certificate No.                             :                      1

Cut-off Date                                :                      April 1, 2002

First Distribution Date                     :                      May 28, 2002

Percentage Interest of this Certificate ("DENOMINATION")           :        100%
                                          ------------

Principal Balance                           :                      $100

CUSIP                                       :                      N/A

                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2002-HE1
               Mortgage Pass-Through Certificates, Series 2002-HE1

                                      B-1
<PAGE>

                                     Class P

                  evidencing   a  percentage   interest  in  the   distributions
                  allocable to the Certificates of the above-referenced Class.

                  Distributions in respect of this Certificate are distributable
monthly as set forth herein.  This  Certificate  does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor,  the Unaffiliated
Seller, the Servicer or the Trustee referred to below or any of their respective
affiliates.  Neither this  Certificate  nor the Mortgage Loans are guaranteed or
insured by any governmental  agency or instrumentality  (other than the Superior
Mortgage Loans in accordance with the FDIC Guaranty).

                  This certifies  that Deutsche Bank National Trust Company,  as
Indenture Trustee,  is the registered owner of the Percentage Interest evidenced
by this  Certificate  (obtained by dividing the denomination of this Certificate
by the aggregate of the  denominations of all Certificates of the Class to which
this Certificate belongs) in certain monthly distributions pursuant to a Pooling
and  Servicing  Agreement  dated as of the  Cut-off  Date  specified  above (the
"AGREEMENT")  among  MORGAN  STANLEY  ABS  CAPITAL  I INC.,  as  depositor  (the
"DEPOSITOR"), Ocwen Federal Bank FSB, as servicer (the "SERVICER"), CDC Mortgage
Capital Inc., as unaffiliated  seller (the  "UNAFFILIATED  SELLER") and Deutsche
Bank  National  Trust  Company,  as trustee (the  "TRUSTEE").  To the extent not
defined herein,  the capitalized terms used herein have the meanings assigned in
the  Agreement.  This  Certificate  is issued under and is subject to the terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of the  acceptance  hereof assents and by which such
Holder is bound.

                  This Certificate does not have a Pass-Through Rate and will be
entitled  to  distributions  only to the extent set forth in the  Agreement.  In
addition,  any distribution of the proceeds of any remaining assets of the Trust
will be made only upon  presentment  and  surrender of this  Certificate  at the
offices  designated  by the  Trustee for such  purpose,  or the office or agency
maintained by the Trustee.

                  No  transfer  of a  Certificate  of this  Class  shall be made
unless such  disposition  is exempt from the  registration  requirements  of the
Securities Act of 1933, as amended (the "1933 ACT"),  and any  applicable  state
securities laws or is made in accordance with the 1933 Act and such laws. In the
event of any such transfer,  the Trustee shall require the transferor to execute
a transferor  certificate (in substantially the form attached to the Pooling and
Servicing  Agreement) and deliver either (i) a Rule 144A Letter,  in either case
substantially  in the form attached to the Agreement,  or (ii) a written Opinion
of  Counsel  to the  Trustee  that  such  transfer  may be made  pursuant  to an
exemption,  describing the applicable exemption and the basis therefor, from the
1933 Act or is being made  pursuant  to the 1933 Act,  which  Opinion of Counsel
shall be an expense of the transferor.

                  No  transfer  of a  Certificate  of this  Class  shall be made
unless  the  Trustee  shall  have  received  a  representation  letter  from the
transferee  of  such  Certificate,  acceptable  to and  in  form  and  substance
satisfactory  to the  Trustee,  to the  effect  that such  transferee  is not an
employee benefit plan subject to Section 406 of ERISA,  Section 4975 of the Code
or Similar

                                      B-2
<PAGE>

Law, or a person acting on behalf of or investing  plan assets of any such plan,
which representation letter shall not be an expense of the Trustee.

                  Reference  is hereby  made to the further  provisions  of this
Certificate set forth on the reverse hereof,  which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This  Certificate  shall not be entitled to any benefit  under
the Agreement or be valid for any purpose unless  manually  countersigned  by an
authorized signatory of the Trustee.

                                      * * *

                                      B-3
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

                                           DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                             not in its individual capacity, but
                                             solely as Trustee

                                           By:
                                              ----------------------------------

     Countersigned:

By:
   -----------------------------------------------------------
   Authorized Signatory of
   DEUTSCHE BANK NATIONAL TRUST COMPANY,
   not in its individual capacity,
   but solely as Trustee

                                      B-4
<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2002-HE1
               Mortgage Pass-Through Certificates, Series 2002-HE1

                  This  Certificate  is  one  of  a  duly  authorized  issue  of
Certificates   designated  as  CDC  Mortgage  Capital  Trust  2002-HE1  Mortgage
Pass-Through  Certificates,  Series  2002-HE1  (herein  collectively  called the
"CERTIFICATES"),  and representing a beneficial  ownership interest in the Trust
Fund created by the Agreement.

                  The Certificateholder,  by its acceptance of this Certificate,
agrees  that it will look  solely to the funds on  deposit  in the  Distribution
Account  for  payment  hereunder  and  that the  Trustee  is not  liable  to the
Certificateholders  for  any  amount  payable  under  this  Certificate  or  the
Agreement  or,  except as expressly  provided in the  Agreement,  subject to any
liability under the Agreement.

                  This  Certificate  does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights,  benefits,  obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately following (the "DISTRIBUTION DATE"),  commencing on
the first Distribution Date specified on the face hereof, to the Person in whose
name this  Certificate  is registered at the close of business on the applicable
Record  Date in an  amount  equal  to the  product  of the  Percentage  Interest
evidenced  by this  Certificate  and the amount  required to be  distributed  to
Holders of Certificates of the Class to which this  Certificate  belongs on such
Distribution Date pursuant to the Agreement.  The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

                  Distributions  on  this  Certificate  shall  be  made  by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank  or  other  entity  having  appropriate   facilities   therefor,   if  such
Certificateholder  shall have so  notified  the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder  shall
satisfy  the  conditions  to  receive  such  form of  payment  set  forth in the
Agreement,  or, if not,  by check  mailed by first  class mail to the address of
such  Certificateholder   appearing  in  the  Certificate  Register.  The  final
distribution  on each  Certificate  will be made in like  manner,  but only upon
presentment and surrender of such  Certificate at the offices  designated by the
Trustee for such  purposes  or such other  location  specified  in the notice to
Certificateholders of such final distribution.

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the Trustee and the rights of the  Certificateholders  under the
Agreement at any time by the parties thereto,  and Financial  Security Assurance
Inc.,  as  Class A  Certificate  Insurer  with the  consent  of the  Holders  of
Certificates  affected by such  amendment  evidencing  the requisite  Percentage
Interest,  as provided in the Agreement.  Any such consent by the Holder of this
Certificate  shall be conclusive  and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon

                                      B-5
<PAGE>

the  transfer  hereof or in exchange  therefor or in lieu hereof  whether or not
notation  of such  consent is made upon this  Certificate.  The  Agreement  also
permits the amendment  thereof,  in certain limited  circumstances,  without the
consent of the Holders of any of the Certificates.

                  As   provided  in  the   Agreement   and  subject  to  certain
limitations  therein set forth,  the transfer of this Certificate is registrable
in the  Certificate  Register of the Trustee upon surrender of this  Certificate
for  registration of transfer at the offices  designated by the Trustee for such
purposes  or the office or agency  maintained  by the  Trustee in New York,  New
York,  accompanied by a written  instrument of transfer in form  satisfactory to
the Trustee and the Certificate  Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates  of the same Class in authorized  denominations  and evidencing the
same  aggregate  Percentage  Interest  in the  Trust  Fund will be issued to the
designated transferee or transferees.

                  The Certificates are issuable only as registered  Certificates
without coupons in denominations  specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest,  as requested by the
Holder surrendering the same.

                  No service  charge will be made for any such  registration  of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor,  the Servicer,  the  Unaffiliated  Seller,  the
Class A  Certificate  Insurer  and the  Trustee and any agent of any of them may
treat the  Person in whose  name this  Certificate  is  registered  as the owner
hereof for all  purposes,  and no such party  shall be affected by any notice to
the contrary.

                  On  any  Distribution  Date  on  which  the  aggregate  Stated
Principal  Balance  of the  Mortgage  Loans is less  than or equal to 10% of the
Maximum   Pool   Principal   Balance,   the   Servicer   and/or   the   Class  X
Certificateholders will have the option to repurchase,  in whole, from the Trust
Fund all remaining  Mortgage  Loans and all property  acquired in respect of the
Mortgage Loans at a purchase price determined as provided in the Agreement.  The
obligations  and  responsibilities  created by the Agreement  will  terminate as
provided in Section 9.01 of the Agreement.

                  Any term used  herein that is defined in the  Agreement  shall
have the meaning  assigned in the Agreement,  and nothing herein shall be deemed
inconsistent with that meaning.

                                      B-6
<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s),  assign(s)
and  transfer(s)  unto
                       ---------------------------------------------------------

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

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

--------------------------------------------------------------------------------
(Please  print  or  typewrite  name and  address  including  postal  zip code of
assignee)

the  Percentage   Interest  evidenced  by  the  within  Certificate  and  hereby
authorizes the transfer of registration of such Percentage  Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further  direct the Trustee to issue a new  Certificate
of a like  denomination  and Class, to the above named assignee and deliver such
Certificate to the following address: .

Dated:

                                           -------------------------------------
                                           Signature by or on behalf of assignor

                                      B-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                                                                               ,
--------------------------------------------------------------------------------
                                                                               ,
--------------------------------------------------------------------------------
for the account of                                                             ,
                   -------------------------------------------------------------
account number _______, or, if mailed by check, to
                                                   -----------------------------
Applicable statements should be mailed to                                      ,
                                          --------------------------------------
                                                                               ,
-------------------------------------------------------------------------------

                  This information is provided by                              ,
                                                  ------------------------------
the assignee named above, or                                                   ,
                            ----------------------------------------------------
as its agent.

                                      B-8
<PAGE>

                                    EXHIBIT C

SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL  ESTATE  MORTGAGE  INVESTMENT  CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
PROPOSED  TRANSFEREE  DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS (i)
TO A PERMITTED  TRANSFEREE  AND THE TRANSFER IS MADE IN COMPLIANCE  WITH SECTION
5.02(c) OF THE AGREEMENT, AND (ii) THE TRANSFEREE DELIVERS TO THE TRUSTEE EITHER
A  REPRESENTATION  LETTER TO THE EFFECT THAT SUCH  TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE EMPLOYEE  RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED,  OR A PLAN  SUBJECT  TO SECTION  4975 OF THE CODE OR A PLAN  SUBJECT TO
MATERIALLY  SIMILAR  PROVISIONS  OF  APPLICABLE  FEDERAL,  STATE  OR  LOCAL  LAW
("SIMILAR LAW") OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF SUCH A
PLAN. IN THE EVENT THAT SUCH REPRESENTATION IS VIOLATED,  OR ANY ATTEMPT IS MADE
TO TRANSFER  TO A PLAN OR  ARRANGEMENT  SUBJECT TO SECTION 406 OF ERISA,  A PLAN
SUBJECT TO SECTION  4975 OF THE CODE OR A PLAN  SUBJECT  TO  SIMILAR  LAW,  OR A
PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR  ARRANGEMENT  OR USING THE ASSETS OF
ANY SUCH PLAN OR ARRANGEMENT,  SUCH ATTEMPTED  TRANSFER OR ACQUISITION  SHALL BE
VOID AND OF NO EFFECT.

Certificate No.                             :                      1

Cut-off Date                                :                      April 1, 2002

First Distribution Date                     :                      May 28, 2002

Percentage Interest of this

Certificate ("DENOMINATION")                :                      100%
              ------------

CUSIP                                       :                      N/A

                                      C-1
<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2002-HE1
               Mortgage Pass-Through Certificates, Series 2002-HE1

                                     Class R

                  evidencing   a  percentage   interest  in  the   distributions
                  allocable to the Certificates of the above-referenced Class.

                  Distributions  in respect of this Certificate is distributable
monthly as set forth herein. This Class R Certificate has no Certificate Balance
and is not entitled to distributions  in respect of principal or interest.  This
Certificate  does not evidence an  obligation  of, or an interest in, and is not
guaranteed  by the  Depositor,  the  Servicer,  the  Unaffiliated  Seller or the
Trustee  referred to below or any of their respective  affiliates.  Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality  (other than the Superior Mortgage Loans in accordance
with the FDIC Guaranty).

                  This  certifies   that  CDC  Mortgage   Capital  Inc.  is  the
registered  owner of the  Percentage  Interest  specified  above of any  monthly
distributions  due to  the  Class  R  Certificates  pursuant  to a  Pooling  and
Servicing   Agreement  dated  as  of  the  Cut-off  Date  specified  above  (the
"AGREEMENT")  among  MORGAN  STANLEY  ABS  CAPITAL  I INC.,  as  depositor  (the
"DEPOSITOR"), Ocwen Federal Bank FSB, as servicer (the "SERVICER"), CDC Mortgage
Capital Inc., as unaffiliated  seller (the  "UNAFFILIATED  SELLER") and Deutsche
Bank  National  Trust  Company,  as trustee (the  "TRUSTEE").  To the extent not
defined herein,  the capitalized terms used herein have the meanings assigned in
the  Agreement.  This  Certificate  is issued under and is subject to the terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of the  acceptance  hereof assents and by which such
Holder is bound.

                  Any  distribution  of the proceeds of any remaining  assets of
the Trust Fund will be made only upon  presentment and surrender of this Class R
Certificate  at the offices  designated  by the Trustee for such purposes or the
office or agency maintained by the Trustee in California.

                  No transfer of a Class R Certificate  shall be made unless the
Trustee shall have received a representation  letter from the transferee of such
Certificate,  acceptable  to and  in  form  and  substance  satisfactory  to the
Trustee,  to the effect that such transferee is not an employee  benefit plan or
arrangement  subject to Section 406 of ERISA, a plan or  arrangement  subject to
Section 4975 of the Code or a plan subject to Similar Law, or a person acting on
behalf of any such plan or arrangement  nor using the assets of any such plan or
arrangement to effect such transfer, which representation letter shall not be an
expense of the Trustee,  the Servicer or the Trust Fund.  In the event that such
representation  is  violated,  or any  attempt is made to  transfer to a plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section 4975 of
the Code or a plan subject to Similar  Law, or a person  acting on behalf of any
such plan or  arrangement  or using the assets of any such plan or  arrangement,
such attempted transfer or acquisition shall be void and of no effect.

                  Each Holder of this Class R Certificate shall be deemed by the
acceptance or acquisition  an Ownership  Interest in this Class R Certificate to
have agreed to be bound by the

                                      C-2
<PAGE>

following  provisions,  and the rights of each Person  acquiring  any  Ownership
Interest in this Class R  Certificate  are  expressly  subject to the  following
provisions:  (i) each Person holding or acquiring any Ownership Interest in this
Class R Certificate  shall be a Permitted  Transferee and shall promptly  notify
the  Trustee of any  change or  impending  change in its  status as a  Permitted
Transferee,  (ii) no  Ownership  Interest  in this  Class R  Certificate  may be
registered on the Closing Date or thereafter transferred,  and the Trustee shall
not  register  the  Transfer  of this  Certificate  unless,  in  addition to the
certificates  required to be delivered to the Trustee under  Section  5.02(b) of
the Agreement,  the Trustee shall have been furnished with a Transfer  Affidavit
of the initial owner or the proposed  transferee in the form attached as Exhibit
G to the  Agreement,  (iii) each  Person  holding  or  acquiring  any  Ownership
Interest  in this  Class R  Certificate  shall  agree (A) to  obtain a  Transfer
Affidavit  from any other  Person to whom such Person  attempts to Transfer  its
Ownership Interest this Class R Certificate,  (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as  nominee,  trustee or agent in
connection with any Transfer of this Class R Certificate and (C) not to Transfer
the Ownership  Interest in this Class R Certificate  or to cause the Transfer of
the Ownership Interest in this Class R Certificate to any other Person if it has
actual  knowledge  that such Person is not a Permitted  Transferee  and (iv) any
attempted  or  purported  Transfer  of the  Ownership  Interest  in this Class R
Certificate in violation of the provisions  herein shall be absolutely  null and
void and shall vest no rights in the purported Transferee.

                  Reference  is hereby  made to the further  provisions  of this
Certificate set forth on the reverse hereof,  which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This  Certificate  shall not be entitled to any benefit  under
the Agreement or be valid for any purpose unless  manually  countersigned  by an
authorized signatory of the Trustee.

                                      C-3
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

                                           DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                             not in its individual capacity, but
                                             solely as Trustee

                                           By:
                                              ----------------------------------

   Countersigned:

By:
   -----------------------------------------
   Authorized Signatory of
   DEUTSCHE BANK NATIONAL TRUST COMPANY,
   not in its individual capacity,
   but solely as Trustee

                                      C-4
<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2002-HE1

               Mortgage Pass-Through Certificates, Series 2002-HE1

                  This  Certificate  is  one  of  a  duly  authorized  issue  of
Certificates   designated  as  CDC  Mortgage  Capital  Trust  2002-HE1  Mortgage
Pass-Through  Certificates,  Series  2002-HE1  (herein  collectively  called the
"CERTIFICATES"),  and representing a beneficial  ownership interest in the Trust
Fund created by the Agreement.

                  The Certificateholder,  by its acceptance of this Certificate,
agrees  that it will look  solely to the funds on  deposit  in the  Distribution
Account  for  payment  hereunder  and  that the  Trustee  is not  liable  to the
Certificateholders  for  any  amount  payable  under  this  Certificate  or  the
Agreement  or,  except as expressly  provided in the  Agreement,  subject to any
liability under the Agreement.

                  This  Certificate  does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights,  benefits,  obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each  month or, if such day is not a Business  Day,  the
Business Day immediately following (the "DISTRIBUTION DATE"),  commencing on the
first  Distribution  Date  specified on the face hereof,  to the Person in whose
name this  Certificate  is registered at the close of business on the applicable
Record  Date in an  amount  equal  to the  product  of the  Percentage  Interest
evidenced  by this  Certificate  and the amount  required to be  distributed  to
Holders of Certificates of the Class to which this  Certificate  belongs on such
Distribution Date pursuant to the Agreement.  The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

                  Distributions  on  this  Certificate  shall  be  made  by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank  or  other  entity  having  appropriate   facilities   therefor,   if  such
Certificateholder  shall have so  notified  the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder  shall
satisfy  the  conditions  to  receive  such  form of  payment  set  forth in the
Agreement,  or, if not,  by check  mailed by first  class mail to the address of
such  Certificateholder   appearing  in  the  Certificate  Register.  The  final
distribution  on each  Certificate  will be made in like  manner,  but only upon
presentment and surrender of such  Certificate at the offices  designated by the
Trustee for such  purposes  or such other  location  specified  in the notice to
Certificateholders of such final distribution.

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the Trustee and the rights of the  Certificateholders  under the
Agreement at any time by the parties thereto,  and Financial  Security Assurance
Inc.,  as  Class A  Certificate  Insurer  with the  consent  of the  Holders  of
Certificates  affected by such  amendment  evidencing  the requisite  Percentage
Interest,  as provided in the Agreement.  Any such consent by the Holder of this
Certificate  shall be conclusive  and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon

                                      C-5
<PAGE>

the  transfer  hereof or in exchange  therefor or in lieu hereof  whether or not
notation  of such  consent is made upon this  Certificate.  The  Agreement  also
permits the amendment  thereof,  in certain limited  circumstances,  without the
consent of the Holders of any of the Certificates.

                  As   provided  in  the   Agreement   and  subject  to  certain
limitations  therein set forth,  the transfer of this Certificate is registrable
in the  Certificate  Register of the Trustee upon surrender of this  Certificate
for  registration of transfer at the offices  designated by the Trustee for such
purposes  or the  office or agency  maintained  by the  Trustee  in  California,
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's  attorney  duly  authorized  in writing,  and thereupon one or more new
Certificates  of the same Class in authorized  denominations  and evidencing the
same  aggregate  Percentage  Interest  in the  Trust  Fund will be issued to the
designated transferee or transferees.

                  The Certificates are issuable only as registered  Certificates
without coupons in denominations  specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest,  as requested by the
Holder surrendering the same.

                  No service  charge will be made for any such  registration  of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor,  the Servicer,  the  Unaffiliated  Seller,  the
Class A  Certificate  Insurer  and the  Trustee and any agent of any of them may
treat the  Person in whose  name this  Certificate  is  registered  as the owner
hereof for all  purposes,  and no such party  shall be affected by any notice to
the contrary.

                  On  any  Distribution  Date  on  which  the  aggregate  Stated
Principal  Balance  of the  Mortgage  Loans is less  than or equal to 10% of the
Maximum   Pool   Principal   Balance,   the   Servicer   and/or   the   Class  X
Certificateholder  will have the option to repurchase,  in whole, from the Trust
Fund all remaining  Mortgage  Loans and all property  acquired in respect of the
Mortgage Loans at a purchase price determined as provided in the Agreement.  The
obligations  and  responsibilities  created by the Agreement  will  terminate as
provided in Section 9.01 of the Agreement.

                  Any term used  herein that is defined in the  Agreement  shall
have the meaning  assigned in the Agreement,  and nothing herein shall be deemed
inconsistent with that meaning.

                                      C-6
<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s),  assign(s)
and transfer(s) unto
                    ------------------------------------------------------------

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

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

--------------------------------------------------------------------------------
(Please  print  or  typewrite  name and  address  including  postal  zip code of
assignee)

the  Percentage   Interest  evidenced  by  the  within  Certificate  and  hereby
authorizes the transfer of registration of such Percentage  Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further  direct the Trustee to issue a new  Certificate
of a like  denomination  and Class, to the above named assignee and deliver such
Certificate to the following address:

-------------------------------------------------------------------------------.

Dated:

                                           -------------------------------------
                                           Signature by or on behalf of assignor

                                      C-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to

                                                                               ,
--------------------------------------------------------------------------------
                                                                               ,
--------------------------------------------------------------------------------
for the account of                                                             ,
                   -------------------------------------------------------------
account number _______, or, if mailed by check, to
                                                   -----------------------------
Applicable statements should be mailed to                                      ,
                                          --------------------------------------
                                                                               ,
-------------------------------------------------------------------------------

                  This information is provided by                              ,
                                                  ------------------------------
the assignee named above, or                                                   ,
                            ----------------------------------------------------
as its agent.

                                      C-8
<PAGE>

<PAGE>

                                    EXHIBIT D

SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE  IS A "REGULAR
INTEREST" IN A "REAL  ESTATE  MORTGAGE  INVESTMENT  CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
PROPOSED  TRANSFEROR  DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT  H TO THE  AGREEMENT  REFERRED  TO HEREIN  AND  EITHER  (I) THE  TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE  AGREEMENT  REFERRED
TO HEREIN OR (II) THE TRUSTEE  RECEIVES AN OPINION OF COUNSEL,  DELIVERED AT THE
EXPENSE OF THE TRANSFEROR,  THAT SUCH TRANSFER MAY BE MADE WITHOUT  REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

EXCEPT  AS  PROVIDED  IN THE  POOLING  AND  SERVICING  AGREEMENT,  NEITHER  THIS
CERTIFICATE  NOR ANY INTEREST  HEREIN MAY BE  TRANSFERRED  UNLESS THE TRANSFEREE
DELIVERS  TO THE  TRUSTEE  A  REPRESENTATION  LETTER  TO THE  EFFECT  THAT  SUCH
TRANSFEREE  IS NOT AN EMPLOYEE  BENEFIT PLAN SUBJECT TO THE EMPLOYEE  RETIREMENT
INCOME  SECURITY ACT OF 1974,  AS AMENDED,  OR A PLAN SUBJECT TO SECTION 4975 OF
THE CODE,  OR A PLAN  SUBJECT TO SECTION  4975 OF THE CODE OR A PLAN  SUBJECT TO
MATERIALLY  SIMILAR  PROVISIONS  OF  APPLICABLE  FEDERAL,  STATE  OR  LOCAL  LAW
("SIMILAR LAW") OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF SUCH A
PLAN.  NOTWITHSTANDING  ANYTHING  ELSE TO THE  CONTRARY  HEREIN,  ANY  PURPORTED
TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN SUBJECT TO ERISA,  A
PLAN  SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO SIMILAR LAW, OR A
PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR USING THE ASSETS OF ANY SUCH PLAN IN
VIOLATION OF THE TRANSFER  RESTRICTIONS  SET FORTH IN THE POOLING AND  SERVICING
AGREEMENT SHALL BE VOID AND OF NO EFFECT.

Certificate No.                             :                      1

Cut-off Date                                :                      April 1, 2002

First Distribution Date                     :                      May 28, 2002

Percentage Interest of this

Certificate ("Denomination")                :                      100%

CUSIP                                       :                      N/A

                                      D-1
<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.

                       CDC Mortgage Capital Trust 2002-HE1
               Mortgage Pass-Through Certificates, Series 2002-HE1

                                     Class X

                  evidencing   a  percentage   interest  in  the   distributions
                  allocable to the Certificates of the above-referenced Class.

                  Distributions in respect of this Certificate are distributable
monthly as set forth herein.  This  Certificate  does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Servicer, the
Unaffiliated  Seller or the Trustee referred to below or any of their respective
affiliates.  Neither this  Certificate  nor the Mortgage Loans are guaranteed or
insured by any governmental  agency or instrumentality  (other than the Superior
Mortgage Loans in accordance with the FDIC Guaranty).

                  This certifies  that Deutsche Bank National Trust Company,  as
Indenture Trustee,  is the registered owner of the Percentage Interest evidenced
by this  Certificate  (obtained by dividing the denomination of this Certificate
by the aggregate of the  denominations of all Certificates of the Class to which
this Certificate belongs) in certain monthly distributions pursuant to a Pooling
and  Servicing  Agreement  dated as of the  Cut-off  Date  specified  above (the
"AGREEMENT")  among  MORGAN  STANLEY  ABS  CAPITAL  I INC.,  as  depositor  (the
"DEPOSITOR"), Ocwen Federal Bank FSB, as servicer (the "SERVICER"), CDC Mortgage
Capital Inc., as unaffiliated  seller (the  "UNAFFILIATED  SELLER") and Deutsche
Bank  National  Trust  Company,  as trustee (the  "TRUSTEE").  To the extent not
defined herein,  the capitalized terms used herein have the meanings assigned in
the  Agreement.  This  Certificate  is issued under and is subject to the terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of the  acceptance  hereof assents and by which such
Holder is bound.

                  This  Certificate  does  not  have a  Certificate  Balance  or
Pass-Through  Rate and will be entitled to distributions  only to the extent set
forth in the Agreement.  In addition,  any  distribution  of the proceeds of any
remaining  assets of the Trust will be made only upon  presentment and surrender
of this  Certificate at the offices  designated by the Trustee for such purposes
or the office or agency maintained by the Trustee.

                  No  transfer  of a  Certificate  of this  Class  shall be made
unless such  disposition  is exempt from the  registration  requirements  of the
Securities Act of 1933, as amended (the "1933 ACT"),  and any  applicable  state
securities laws or is made in accordance with the 1933 Act and such laws. In the
event of any such transfer,  the Trustee shall require the transferor to execute
a transferor  certificate (in substantially the form attached to the Pooling and
Servicing  Agreement) and deliver either (i) a Rule 144A Letter,  in either case
substantially  in the form attached to the Agreement,  or (ii) a written Opinion
of  Counsel  to the  Trustee  that  such  transfer  may be made  pursuant  to an
exemption,  describing the applicable exemption and the basis therefor, from the
1933 Act or is being made  pursuant  to the 1933 Act,  which  Opinion of Counsel
shall be an expense of the transferor.

                                      D-2
<PAGE>

                  No  transfer  of a  Certificate  of this  Class  shall be made
unless the Trustee shall have received either (i) a  representation  letter from
the  transferee  of such  Certificate,  acceptable  to and in form and substance
satisfactory  to the  Trustee,  to the  effect  that such  transferee  is not an
employee  benefit  plan  subject to Section 406 of ERISA or Section  4975 of the
Code or any materially similar provisions of applicable Federal,  state or local
law ("SIMILAR  LAW") or a person acting on behalf of or investing plan assets of
any such  plan,  which  representation  letter  shall not be an  expense  of the
Trustee,  or (ii) if the Certificate has been the subject of an ERISA-Qualifying
Underwriting,  and the purchaser is an insurance company, a representation  that
the purchaser is an insurance company which is purchasing such Certificates with
funds  contained  in an  "insurance  company  general  account" (as such term is
defined in Section V(e) of Prohibited  Transaction  Class Exemption 95-60 ("PTCE
95-60"))  and that the  purchase  and holding of such  Certificates  are covered
under  Sections I and III of PTCE 95-60,  or (iii) in the case of a  Certificate
presented for  registration  in the name of an employee  benefit plan subject to
ERISA,  or a plan  or  arrangement  subject  to  Section  4975 of the  Code  (or
comparable provisions of any subsequent enactments) or a plan subject to Similar
Law, or a trustee of any such plan or any other  person  acting on behalf of any
such plan or  arrangement  or using  such  plan's or  arrangement's  assets,  an
Opinion of Counsel  satisfactory to the Trustee and the Servicer,  which Opinion
of Counsel  shall not be an expense of the  Trustee,  the  Servicer or the Trust
Fund,  addressed to the  Trustee,  to the effect that the purchase or holding of
such Certificate will not result in the assets of the Trust Fund being deemed to
be "plan assets" and subject to the prohibited  transaction  provisions of ERISA
and the Code and will not subject the Trustee or the Servicer to any  obligation
in addition to those expressly undertaken in this Agreement or to any liability.

                  Reference  is hereby  made to the further  provisions  of this
Certificate set forth on the reverse hereof,  which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This  Certificate  shall not be entitled to any benefit  under
the Agreement or be valid for any purpose unless  manually  countersigned  by an
authorized signatory of the Trustee.

                                      * * *

                                      D-3
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

                                           DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                             not in its individual capacity, but
                                             solely as Trustee

                                             By:
                                                --------------------------------

   Countersigned:

By:
   -----------------------------------------------------------
   Authorized Signatory of
   DEUTSCHE BANK NATIONAL TRUST COMPANY,
   not in its individual capacity,
   but solely as Trustee

                                      D-4
<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2002-HE1
               Mortgage Pass-Through Certificates, Series 2002-HE1

                  This  Certificate  is  one  of  a  duly  authorized  issue  of
Certificates   designated  as  CDC  Mortgage  Capital  Trust  2002-HE1  Mortgage
Pass-Through  Certificates,  Series  2002-HE1  (herein  collectively  called the
"CERTIFICATES"),  and representing a beneficial  ownership interest in the Trust
Fund created by the Agreement.

                  The Certificateholder,  by its acceptance of this Certificate,
agrees  that it will look  solely to the funds on  deposit  in the  Distribution
Account  for  payment  hereunder  and  that the  Trustee  is not  liable  to the
Certificateholders  for  any  amount  payable  under  this  Certificate  or  the
Agreement  or,  except as expressly  provided in the  Agreement,  subject to any
liability under the Agreement.

                  This  Certificate  does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights,  benefits,  obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately following (the "DISTRIBUTION DATE"),  commencing on
the first Distribution Date specified on the face hereof, to the Person in whose
name this  Certificate  is registered at the close of business on the applicable
Record  Date in an  amount  equal  to the  product  of the  Percentage  Interest
evidenced  by this  Certificate  and the amount  required to be  distributed  to
Holders of Certificates of the Class to which this  Certificate  belongs on such
Distribution Date pursuant to the Agreement.  The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

                  Distributions  on  this  Certificate  shall  be  made  by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank  or  other  entity  having  appropriate   facilities   therefor,   if  such
Certificateholder  shall have so  notified  the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder  shall
satisfy  the  conditions  to  receive  such  form of  payment  set  forth in the
Agreement,  or, if not,  by check  mailed by first  class mail to the address of
such  Certificateholder   appearing  in  the  Certificate  Register.  The  final
distribution  on each  Certificate  will be made in like  manner,  but only upon
presentment and surrender of such  Certificate at the offices  designated by the
Trustee for such  purposes  or such other  location  specified  in the notice to
Certificateholders of such final distribution.

                  The  Agreement   permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the Trustee and the rights of the  Certificateholders  under the
Agreement at any time by the parties thereto,  and Financial  Security Assurance
Inc.,  as  Class A  Certificate  Insurer  with the  consent  of the  Holders  of
Certificates  affected by such  amendment  evidencing  the requisite  Percentage
Interest,  as provided in the Agreement.  Any such consent by the Holder of this
Certificate  shall be conclusive  and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon

                                      D-5
<PAGE>

the  transfer  hereof or in exchange  therefor or in lieu hereof  whether or not
notation  of such  consent is made upon this  Certificate.  The  Agreement  also
permits the amendment  thereof,  in certain limited  circumstances,  without the
consent of the Holders of any of the Certificates.

                  As   provided  in  the   Agreement   and  subject  to  certain
limitations  therein set forth,  the transfer of this Certificate is registrable
in the  Certificate  Register of the Trustee upon surrender of this  Certificate
for  registration of transfer at the offices  designated by the Trustee for such
purposes  or the office or agency  maintained  by the  Trustee in New York,  New
York,  accompanied by a written  instrument of transfer in form  satisfactory to
the Trustee and the Certificate  Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates  of the same Class in authorized  denominations  and evidencing the
same  aggregate  Percentage  Interest  in the  Trust  Fund will be issued to the
designated transferee or transferees.

                  The Certificates are issuable only as registered  Certificates
without coupons in denominations  specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest,  as requested by the
Holder surrendering the same.

                  No service  charge will be made for any such  registration  of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor,  the Servicer,  the  Unaffiliated  Seller,  the
Class A  Certificate  Insurer  and the  Trustee and any agent of any of them may
treat the  Person in whose  name this  Certificate  is  registered  as the owner
hereof for all  purposes,  and no such party  shall be affected by any notice to
the contrary.

                  On  any  Distribution  Date  on  which  the  aggregate  Stated
Principal  Balance  of the  Mortgage  Loans is less  than or equal to 10% of the
Maximum Principal  Balance,  the Servicer and/or the Class X  Certificateholders
will have the option to repurchase,  in whole, from the Trust Fund all remaining
Mortgage  Loans and all property  acquired in respect of the Mortgage Loans at a
purchase price  determined as provided in the  Agreement.  The  obligations  and
responsibilities  created by the Agreement will terminate as provided in Section
9.01 of the Agreement.

                  Any term used  herein that is defined in the  Agreement  shall
have the meaning  assigned in the Agreement,  and nothing herein shall be deemed
inconsistent with that meaning.

                                      D-6
<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s),  assign(s)
and transfer(s) unto
                    ------------------------------------------------------------

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

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

--------------------------------------------------------------------------------
(Please  print  or  typewrite  name and  address  including  postal  zip code of
assignee)

the  Percentage   Interest  evidenced  by  the  within  Certificate  and  hereby
authorizes the transfer of registration of such Percentage  Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further  direct the Trustee to issue a new  Certificate
of a like  denomination  and Class, to the above named assignee and deliver such
Certificate to the following address:

-------------------------------------------------------------------------------.

Dated:

                                           -------------------------------------
                                           Signature by or on behalf of assignor

                                      D-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to                                                 ,
                                ------------------------------------------------
                                                                               ,
-------------------------------------------------------------------------------
for the account of                                                             ,
                   ------------------------------------------------------------
account number _______, or, if mailed by check, to                             ,
                                                   -----------------------------
Applicable statements should be mailed to                                      ,
                                          -------------------------------------
                                                                               ,
--------------------------------------------------------------------------------

                  This information is provided by                              ,
                                                  ------------------------------
the assignee named above, or                                                   ,
                             ---------------------------------------------------

                                      D-8
<PAGE>

                                    EXHIBIT E

                    FORM OF INITIAL CERTIFICATION OF TRUSTEE

                                     [date]

[Depositor]

[Servicer]

[Originator]

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

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

                  Re:      Pooling and Servicing  Agreement among MORGAN STANLEY
                           ABS CAPITAL I INC., as Depositor,  Ocwen Federal Bank
                           FSB, as  Servicer,  CDC  Mortgage  Capital  Inc.,  as
                           Unaffiliated  Seller and Deutsche Bank National Trust
                           Company,  as  Trustee,  CDC  Mortgage  Capital  Trust
                           Series 2002-HE1

Gentlemen:

                  In accordance with Section 2.02 of the above-captioned Pooling
and  Servicing  Agreement  (the  "POOLING AND  SERVICING  AGREEMENT"),  for each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
listed in the attached schedule), it has received:

                  (i)      the original  Mortgage Note,  endorsed as provided in
the following form: "Pay to the order of ________, without recourse"; and

                  (ii)     a duly executed assignment of the Mortgage (which may
be included in a blanket assignment or assignments).

                  Based  on  its  review  and  examination  and  only  as to the
foregoing documents,  such documents appear regular on their face and related to
such Mortgage Loan.

                  The  Trustee  has  made  no  independent  examination  of  any
documents  contained  in each  Mortgage  File  beyond  the  review  specifically
required  in  the  Pooling  and  Servicing  Agreement.   The  Trustee  makes  no
representations as to: (i) the validity, legality,  sufficiency,  enforceability
or genuineness of any of the documents contained in each Mortgage File of any of
the  Mortgage  Loans  identified  on the  Mortgage  Loan  Schedule,  or (ii) the
collectability,  insurability, effectiveness or suitability of any such Mortgage
Loan.

                                      E-1
<PAGE>

                  Capitalized  words and  phrases  used  herein  shall  have the
respective meanings assigned to them in the Pooling and Servicing Agreement.

                                           DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                             as Trustee

                                           By:
                                              ----------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                      E-2
<PAGE>

                                    EXHIBIT F

                     FORM OF FINAL CERTIFICATION OF TRUSTEE

                                     [date]

[Depositor]

[Servicer]

[Originator]

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

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

                  Re:      Pooling and Servicing  Agreement among MORGAN STANLEY
                           ABS CAPITAL I INC., as Depositor,  Ocwen Federal Bank
                           FSB, as  Servicer,  CDC  Mortgage  Capital  Inc.,  as
                           Unaffiliated  Seller and Deutsche Bank National Trust
                           Company,  as  Trustee,  CDC  Mortgage  Capital  Trust
                           Series 2002-HE1

Gentlemen:

                  In accordance with Section 2.02 of the above-captioned Pooling
and  Servicing   Agreement   (the  "POOLING  AND  SERVICING   AGREEMENT"),   the
undersigned,  as Trustee,  hereby certifies that as to each Mortgage Loan listed
in the Mortgage  Loan  Schedule  (other than any  Mortgage  Loan paid in full or
listed on the attached Document Exception Report) it has received:

                  (i)      The  original  Mortgage  Note,  endorsed  in the form
provided  in Section  2.01 of the  Pooling  and  Servicing  Agreement,  with all
intervening  endorsements  showing  a  complete  chain of  endorsement  from the
originator to the last endorsee.

                  (ii)     The original recorded Mortgage.

                  (iii)    A duly  executed  assignment  of the  Mortgage in the
form provided in Section 2.01 of the Pooling and Servicing Agreement; or, if the
Unaffiliated  Seller  has  certified  or the  Trustee  otherwise  knows that the
related Mortgage has not been returned from the applicable  recording  office, a
copy of the assignment of the Mortgage (excluding  information to be provided by
the recording office).

                  (iv)     The   original   or   duplicate   original   recorded
assignment or assignments of the Mortgage showing a complete chain of assignment
from the originator to the last endorsee.

                  (v)      The original or  duplicate  original  lender's  title
policy and all  riders  thereto  or, any one of an  original  title  binder,  an
original  preliminary  title report or an original title  commitment,  or a copy
thereof certified by the title company.

                                      F-1
<PAGE>

                  Based  on  its  review  and  examination  and  only  as to the
foregoing documents, (a) such documents appear regular on their face and related
to such Mortgage Loan, and (b) the  information  set forth in items (1), (2) and
(18) of the Mortgage  Loan Schedule and items (1), (9) and (17) of the Data Tape
Information accurately reflects information set forth in the Custodial File.

                  The  Trustee  has  made  no  independent  examination  of  any
documents  contained in each  Mortgage  File beyond the review of the  Custodial
File specifically  required in the Pooling and Servicing Agreement.  The Trustee
makes  no  representations  as to:  (i)  the  validity,  legality,  sufficiency,
enforceability or genuineness of any of the documents contained in each Mortgage
File of any of the Mortgage Loans  identified on the Mortgage Loan Schedule,  or
(ii) the collectability,  insurability, effectiveness or suitability of any such
Mortgage Loan.  Notwithstanding anything herein to the contrary, the Trustee has
made no  determination  and  makes  no  representations  as to  whether  (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as Noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or sufficient to effect the assignment
of and  transfer  to the  assignee  thereof,  under  the  Mortgage  to which the
assignment relates.

                  Capitalized  words and  phrases  used  herein  shall  have the
respective meanings assigned to them in the Pooling and Servicing Agreement.

                                           DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                             as Trustee

                                           By:
                                              ----------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                      F-2
<PAGE>

                                    EXHIBIT G

                               TRANSFER AFFIDAVIT

                MORGAN STANLEY ABS CAPITAL I INC. Trust 2002-HE1,
                       Mortgage Pass-Through Certificates,

                                 Series 2002-HE1

STATE OF                            )

                                    ) ss.:

COUNTY OF                           )

                  The undersigned,  being first duly sworn,  deposes and says as
follows:

                  1.       The undersigned is an officer of ___________________,
the proposed  Transferee of an Ownership  Interest in a Class R Certificate (the
"CERTIFICATE")  issued  pursuant to the Pooling and  Servicing  Agreement,  (the
"AGREEMENT"),  relating  to the  above-referenced  Series,  by and among  MORGAN
STANLEY ABS CAPITAL I INC., as depositor (the  "DEPOSITOR"),  Ocwen Federal Bank
FSB, as  servicer,  CDC  Mortgage  Capital  Inc.,  as  unaffiliated  seller (the
"UNAFFILIATED  SELLER") and Deutsche Bank National  Trust  Company,  as Trustee.
Capitalized  terms used,  but not defined  herein or in Exhibit 1 hereto,  shall
have the meanings  ascribed to such terms in the  Agreement.  The Transferee has
authorized  the  undersigned  to make this affidavit on behalf of the Transferee
for the benefit of the Depositor and the Trustee.

                  2.       The  Transferee  is, as of the date hereof,  and will
be, as of the date of the Transfer,  a Permitted  Transferee.  The Transferee is
acquiring its Ownership  Interest in the  Certificate  for its own account.  The
Transferee has no knowledge that any such affidavit is false.

                  3.       The Transferee  has been advised of, and  understands
that (i) a tax will be imposed on Transfers of the  Certificate  to Persons that
are not Permitted Transferees;  (ii) such tax will be imposed on the transferor,
or, if such  Transfer is through an agent (which  includes a broker,  nominee or
middleman) for a Person that is not a Permitted  Transferee,  on the agent;  and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent  Transferee furnished to such Person an affidavit that
such  subsequent  Transferee  is a  Permitted  Transferee  and,  at the  time of
Transfer,  such Person  does not have actual  knowledge  that the  affidavit  is
false.

                  4.       The Transferee  has been advised of, and  understands
that a tax will be imposed on a "pass-through entity" holding the Certificate if
at any time during the taxable year of the pass-through  entity a Person that is
not a Permitted  Transferee  is the record holder of an interest in such entity.
The Transferee understands that such tax will not be imposed for any period with
respect to which the  record  holder  furnishes  to the  pass-through  entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual  knowledge that such  affidavit is false.  (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a

                                      G-1
<PAGE>

partnership,  trust or estate,  and certain  cooperatives  and, except as may be
provided in Treasury  Regulations,  persons  holding  interests in  pass-through
entities as a nominee for another Person.)

                  5.       The Transferee has reviewed the provisions of Section
5.02(c)  of  the  Agreement  and  understands  the  legal  consequences  of  the
acquisition  of an Ownership  Interest in the  Certificate,  including,  without
limitation,   the  restrictions  on  subsequent  Transfers  and  the  provisions
regarding  voiding the Transfer and mandatory  sales.  The Transferee  expressly
agrees to be bound by and to abide by the  provisions of Section  5.02(c) of the
Agreement  and  the  restrictions  noted  on the  face of the  Certificate.  The
Transferee  understands and agrees that any breach of any of the representations
included herein shall render the Transfer to the Transferee  contemplated hereby
null and void.

                  6.       The Transferee agrees to require a Transfer Affidavit
from any  Person to whom the  Transferee  attempts  to  Transfer  its  Ownership
Interest in the Certificate, and in connection with any Transfer by a Person for
whom the Transferee is acting as nominee,  trustee or agent,  and the Transferee
will not Transfer its Ownership  Interest or cause any Ownership  Interest to be
Transferred  to  any  Person  that  the  Transferee  knows  is  not a  Permitted
Transferee.  In  connection  with  any  such  Transfer  by the  Transferee,  the
Transferee  agrees to deliver to the Trustee a certificate  substantially in the
form set forth as Exhibit H to the Agreement (a "TRANSFEROR CERTIFICATE") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.

                  7.       The Transferee  does not have the intention to impede
the assessment or collection of any tax legally required to be paid with respect
to the Certificate.

                  8.       The Transferee's  taxpayer  identification  number is
__________.

                  9.       The  Transferee  is a U.S.  Person as defined in Code
Section 7701(a)(30).

                  10.      The Transferee is aware that the Certificate may be a
"noneconomic   residual  interest"  within  the  meaning  of  proposed  Treasury
regulations  promulgated  pursuant  to the Code and  that  the  transferor  of a
noneconomic  residual interest will remain liable for any taxes due with respect
to the income on such residual  interest,  unless no significant  purpose of the
transfer was to impede the assessment or collection of tax.

                  11.      *[The Transferee has computed any consideration  paid
to it to acquire the Class [R][LR]  Certificate in accordance with proposed U.S.
Treasury Regulations Sections  1.860E-1(a)(4)(iii) and 1.860E-1(c)(5) (or, after
they have been finalized,  the final  regulations)  by computing  present values
using a discount rate equal to the applicable Federal rate prescribed by Section
1274(d) of the Code, compounded semi-annually.]

----------------------------------
                  * Insert appropriate paragraph, if applicable.

                                      G-2
<PAGE>

                  [The Transferee has computed any  consideration  paid to it to
acquire the Class [R][LR]  Certificate in accordance with proposed U.S. Treasury
Regulations Sections 1.860E-1(a)(4)(iii) and 1.860E-1(c)(5) (or, after they have
been  finalized,  the final  regulations)  by computing  present  values using a
discount  rate at least  equal to the rate at  which  the  Transferee  regularly
borrows, in the ordinary course of its trade or business, substantial funds from
unrelated third parties.  The Transferee has provided all information  necessary
to demonstrate to the transferor that it regularly borrows at such rate.]

                  [The transfer of the Class [R][LR]  Certificate  complies with
Section 6 of Revenue Procedure 2001-12 (the "REVENUE PROCEDURE"),  2001-3 I.R.B.
335  (January 16,  2001) (or  comparable  provisions  of  applicable  final U.S.
Treasury Regulations) and, accordingly,

                  (i)      the  Transferee  is  an  "eligible  corporation,"  as
                           defined  in  Section  860L(a)(2)  of the Code,  as to
                           which income from Class [R][LR] Certificate will only
                           be taxed in the United States;

                  (ii)     at the time of the transfer,  and at the close of the
                           Transferee's  two fiscal years  preceding the year of
                           the  transfer,  the  Transferee  had gross assets for
                           financial    reporting   purposes    (excluding   any
                           obligation of a person related to the Investor within
                           the meaning of Section 860L(g) of the Code) in excess
                           of $100  million  and net  assets  in  excess  of $10
                           million;

                  (iii)    the  Transferee   will  transfer  the  Class  [R][LR]
                           Certificate only to another  "eligible  corporation,"
                           as  defined in Section  860(a)(2)  of the Code,  in a
                           transaction   that  satisfies  the   requirements  of
                           Section 4 of the Revenue Procedure; and

                  (iv)     the Transferee  determined the consideration  paid to
                           it to acquire the Class [R][LR]  Certificate based on
                           reasonable  market  assumptions  (including,  but not
                           limited   to,   borrowing   and   investment   rates,
                           prepayment   and  loss   assumptions,   expense   and
                           reinvestment assumptions, tax rates and other factors
                           specific to the Transferee) that it has determined in
                           good faith.]

                  [Reserved]

                  12.      The  Transferee is not an employee  benefit plan that
is subject to ERISA or a plan that is subject to Section  4975 of the Code,  and
the  Transferee  is not acting on behalf of or  investing  plan assets of such a
plan.

                                      * * *

                                      G-3
<PAGE>

                  IN WITNESS WHEREOF,  the Transferee has caused this instrument
to be executed on its behalf,  pursuant to authority of its Board of  Directors,
by its duly  authorized  officer and its corporate seal to be hereunto  affixed,
duly attested, this __ day of ________, 20__.

                                       -----------------------------------------
                                       Print Name of Transferee

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:

[Corporate Seal]

ATTEST:

------------------------------------
[Assistant] Secretary

                  Personally  appeared  before  me the  above-named  __________,
known  or  proved  to me to be  the  same  person  who  executed  the  foregoing
instrument and to be the ___________ of the Transferee, and acknowledged that he
executed  the  same as his  free  act and  deed and the free act and deed of the
Transferee.

          Subscribed and sworn before me this __ day of ________, 20__.

                                             -----------------------------------
                                             NOTARY PUBLIC

                                             My Commission expires the __ day
                                             of _________, 20__

                                      G-4
<PAGE>

                                    EXHIBIT H

                         FORM OF TRANSFEROR CERTIFICATE

                                                                __________, 20__

MORGAN STANLEY ABS CAPITAL I INC.
1585 Broadway
New York, New York 10036
Attention:  Michelle Wilke

Deutsche Bank National Trust Company,
as Trustee,
1761 East St. Andrew Place
Santa Ana, California 92705

                  Re:      CDC Mortgage Capital Trust, Series 2002-HE1, Mortgage
                           Pass-Through Certificates, Series 2002-HE1, Class ___

Ladies and Gentlemen:

                  In connection with our  disposition of the above  Certificates
we certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "ACT"), and are being disposed
by us in a transaction that is exempt from the registration  requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any  Certificates  from, any person,  or otherwise  approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other  action which would result in, a violation of Section 5 of the Act and
(c) to the  extent  we are  disposing  of a  Residual  Certificate,  we  have no
knowledge the Transferee is not a Permitted Transferee.

                                            Very truly yours,

                                            ------------------------------------
                                            Print Name of Transferor

                                            By:
                                               ---------------------------------
                                                              Authorized Officer

                                      H-1
<PAGE>

                                    EXHIBIT I

                            FORM OF RULE 144A LETTER

                                                              ____________, 20__

MORGAN STANLEY ABS CAPITAL I INC.
1585 Broadway
New York, New York 10036
Attention:  Michelle Wilke

Deutsche Bank National Trust Company,
as Trustee,
1761 East St. Andrew Place
Santa Ana, California 92705

                  Re:      CDC Mortgage  Capital  Trust 2002,  Series  2002-HE1,
                           Mortgage PASS-THROUGH CERTIFICATES,  SERIES 2002-HE1,
                           CLASS
                           -----------------------------------------------------

Ladies and Gentlemen:

                  In connection with our  acquisition of the above  Certificates
we certify that (a) we understand that the Certificates are not being registered
under  the  Securities  Act of  1933,  as  amended  (the  "ACT"),  or any  state
securities laws and are being  transferred to us in a transaction that is exempt
from the  registration  requirements  of the Act and any such laws,  (b) we have
such  knowledge and  experience  in financial  and business  matters that we are
capable of evaluating the merits and risks of  investments in the  Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor  concerning the purchase of the  Certificates and all matters relating
thereto or any  additional  information  deemed  necessary  to our  decision  to
purchase  the  Certificates,  (d) we are not an  employee  benefit  plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan or arrangement that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or arrangement
nor using the assets of any such plan or arrangement to effect such  acquisition
or, with respect to a Class X Certificate, the purchaser is an insurance company
that is  purchasing  this  certificate  with funds  contained  in an  "insurance
company general  account" (as such term is defined in Section V(e) of Prohibited
Transaction  Class  Exemption  95-60  ("PTCE  95-60") and that the  purchase and
holding of such Certificates are covered under Sections I and III of PTCE 95-60,
(e) we have not,  nor has  anyone  acting on our  behalf  offered,  transferred,
pledged,  sold or otherwise  disposed of the  Certificates,  any interest in the
Certificates or any other similar  security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Certificates, any interest
in the Certificates or any other similar security from, or otherwise  approached
or negotiated with respect to the Certificates, any interest in the Certificates
or any other  similar  security  with,  any  person in any  manner,  or made any
general  solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Certificates
under  the  Securities  Act  or  that  would  render  the   disposition  of  the
Certificates  a  violation  of  Section  5 of  the  Securities  Act  or  require
registration  pursuant  thereto,  nor  will  act,  nor  has  authorized  or will
authorize any person to act,

                                      I-1
<PAGE>

in such  manner  with  respect to the  Certificates,  (f) to the extent that the
Certificate  transferred  is a Class X Certificate,  we are a  bankruptcy-remote
entity and (g) we are a "qualified  institutional buyer" as that term is defined
in Rule 144A under the Securities Act and have completed  either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates  for our own  account  or for  resale  pursuant  to Rule  144A  and
further, understand that such Certificates may be resold, pledged or transferred
only (i) to a person reasonably  believed to be a qualified  institutional buyer
that  purchases  for  its  own  account  or  for  the  account  of  a  qualified
institutional buyer to whom notice is given that the resale,  pledge or transfer
is being made in reliance on Rule 144A,  or (ii)  pursuant to another  exemption
from registration under the Securities Act.

                                      I-2
<PAGE>

                                                            ANNEX 1 TO EXHIBIT I

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

                  The undersigned  (the "BUYER") hereby  certifies as follows to
the  parties  listed  in the Rule  144A  Transferee  Certificate  to which  this
certification relates with respect to the Certificates described therein:

                  1.       As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of the
Buyer.

                  2.       In connection with purchases by the Buyer,  the Buyer
is a "qualified  institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("RULE 144A") because (i) the Buyer owned
and/or invested on a discretionary  basis  $_________ in securities  (except for
the  excluded  securities  referred to below) as of the end of the Buyer's  most
recent fiscal year (such amount being  calculated  in accordance  with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.

                  ____     CORPORATION,  ETC. The Buyer is a corporation  (other
                           than a bank,  savings and loan association or similar
                           institution),   Massachusetts   or  similar  business
                           trust,   partnership,   or  charitable   organization
                           described  in  Section   501(c)(3)  of  the  Internal
                           Revenue Code of 1986, as amended.

                  ____     BANK.  The Buyer (a) is a  national  bank or  banking
                           institution  organized  under the laws of any  State,
                           territory or the  District of Columbia,  the business
                           of which is substantially  confined to banking and is
                           supervised  by  the  State  or  territorial   banking
                           commission  or similar  official or is a foreign bank
                           or equivalent institution, and (b) has an audited net
                           worth of at least  $25,000,000 as demonstrated in its
                           latest annual financial  statements,  a copy of which
                           is attached hereto.

                  ____     SAVINGS AND LOAN. The Buyer (a) is a savings and loan
                           association,    building   and   loan    association,
                           cooperative  bank,  homestead  association or similar
                           institution,  which is  supervised  and examined by a
                           State or Federal  authority  having  supervision over
                           any such  institutions  or is a foreign  savings  and
                           loan  association or equivalent  institution  and (b)
                           has an audited net worth of at least  $25,000,000  as
                           demonstrated   in   its   latest   annual   financial
                           statements, a copy of which is attached hereto.

                  ____     BROKER-DEALER.  The  Buyer  is  a  dealer  registered
                           pursuant to Section 15 of the Securities Exchange Act
                           of 1934.

                  ____     INSURANCE COMPANY.  The Buyer is an insurance company
                           whose primary and  predominant  business  activity is
                           the writing of insurance or the  reinsuring  of risks
                           underwritten  by  insurance  companies  and  which is

                                      I-3
<PAGE>

                           subject to supervision by the insurance  commissioner
                           or a similar official or agency of a State, territory
                           or the District of Columbia.

                  ____     STATE OR LOCAL PLAN. The Buyer is a plan  established
                           and   maintained   by   a   State,    its   political
                           subdivisions, or any agency or instrumentality of the
                           State or its political subdivisions,  for the benefit
                           of its employees.

                  ____     ERISA  PLAN.  The Buyer is an employee  benefit  plan
                           within  the  meaning  of  Title  I  of  the  Employee
                           Retirement Income Security Act of 1974.

                  ____     INVESTMENT  ADVISOR.   The  Buyer  is  an  investment
                           advisor registered under the Investment  Advisors Act
                           of 1940.

                  ____     SMALL BUSINESS INVESTMENT  COMPANY.  Buyer is a small
                           business  investment  company  licensed  by the  U.S.
                           Small Business Administration under Section 301(c) or
                           (d) of the Small Business Investment Act of 1958.

                  ____     BUSINESS  DEVELOPMENT  COMPANY.  Buyer is a  business
                           development  company as defined in Section 202(a)(22)
                           of the Investment Advisors Act of 1940.

                  3.       The term "SECURITIES" as used herein DOES NOT INCLUDE
(i) securities of issuers that are affiliated  with the Buyer,  (ii)  securities
that are part of an unsold  allotment to or  subscription  by the Buyer,  if the
Buyer is a dealer,  (iii)  securities  issued or  guaranteed  by the U.S. or any
instrumentality  thereof,  (iv) bank deposit notes and  certificates of deposit,
(v) loan participations,  (vi) repurchase agreements, (vii) securities owned but
subject  to a  repurchase  agreement  and  (viii)  currency,  interest  rate and
commodity swaps.

                  4.       For purposes of determining  the aggregate  amount of
securities  owned and/or  invested on a  discretionary  basis by the Buyer,  the
Buyer used the cost of such  securities  to the Buyer and did not include any of
the  securities  referred to in the  preceding  paragraph,  except (i) where the
Buyer reports its securities  holdings in its financial  statements on the basis
of their market value, and (ii) no current  information with respect to the cost
of those securities has been published. If clause (ii) in the preceding sentence
applies,  the securities may be valued at market.  Further,  in determining such
aggregate amount,  the Buyer may have included  securities owned by subsidiaries
of the Buyer, but only if such  subsidiaries are consolidated  with the Buyer in
its  financial   statements  prepared  in  accordance  with  generally  accepted
accounting  principles and if the investments of such  subsidiaries  are managed
under the Buyer's direction.  However,  such securities were not included if the
Buyer is a majority-owned, consolidated subsidiary of another enterprise and the
Buyer is not itself a reporting  company  under the  Securities  Exchange Act of
1934, as amended.

                  5.       The Buyer  acknowledges that it is familiar with Rule
144A and  understands  that the  seller to it and other  parties  related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.

                                      I-4
<PAGE>

                  6.       Until  the  date  of   purchase   of  the  Rule  144A
Securities,   the  Buyer  will   notify  each  of  the  parties  to  which  this
certification is made of any changes in the information and conclusions  herein.
Until such  notice is given,  the  Buyer's  purchase  of the  Certificates  will
constitute  a  reaffirmation  of  this  certification  as of the  date  of  such
purchase.  In  addition,  if the Buyer is a bank or savings and loan is provided
above,  the Buyer  agrees that it will furnish to such  parties  updated  annual
financial statements promptly after they become available.

                                        ----------------------------------------
                                        Print Name of Transferor

                                        By:
                                           -------------------------------------
                                            Name:
                                            Title:

                                        Date:
                                             -----------------------------------

                                      I-5
<PAGE>

                                                            ANNEX 2 TO EXHIBIT I

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

                  The undersigned  (the "BUYER") hereby  certifies as follows to
the  parties  listed  in the Rule  144A  Transferee  Certificate  to which  this
certification relates with respect to the Certificates described therein:

                  1.       As indicated below, the undersigned is the President,
Chief  Financial  Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified  institutional buyer" as that term is defined in Rule 144A under
the  Securities Act of 1933, as amended ("RULE 144A") because Buyer is part of a
Family of  Investment  Companies (as defined  below),  is such an officer of the
Adviser.

                 2.       In connection with purchases by Buyer, the Buyer is a
"qualified  institutional  buyer" as  defined in SEC Rule 144A  because  (i) the
Buyer is an investment  company  registered under the Investment  Company Act of
1940,  as amended  and (ii) as marked  below,  the Buyer  alone,  or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the  excluded  securities  referred  to below) as of the end of the Buyer's
most recent fiscal year.  For purposes of  determining  the amount of securities
owned by the Buyer or the Buyer's  Family of Investment  Companies,  the cost of
such  securities  was used,  except (i) where the Buyer or the Buyer's Family of
Investment Companies reports its securities holdings in its financial statements
on the basis of their market value, and (ii) no current information with respect
to the cost of  those  securities  has been  published.  If  clause  (ii) in the
preceding sentence applies, the securities may be valued at market.

                  ____     The Buyer owned $______ in securities (other than the
                           excluded  securities referred to below) as of the end
                           of the Buyer's  most recent  fiscal year (such amount
                           being calculated in accordance with Rule 144A).

                  ____     The Buyer is part of a Family of Investment Companies
                           which owned in the aggregate $ ________ in securities
                           (other  than  the  excluded  securities  referred  to
                           below)  as of  the  end of the  Buyer's  most  recent
                           fiscal  year  (such   amount  being   calculated   in
                           accordance with Rule 144A).

                  3.       The term  "FAMILY OF  INVESTMENT  COMPANIES"  as used
herein means two or more  registered  investment  companies (or series  thereof)
that have the same investment adviser or investment advisers that are affiliated
(by virtue of being  majority owned  subsidiaries  of the same parent or because
one investment adviser is a majority owned subsidiary of the other).

                  4.       The term "SECURITIES" as used herein does not include
(i) securities of issuers that are affiliated  with the Buyer or are part of the
Buyer's Family of Investment Companies,  (ii) securities issued or guaranteed by
the  U.S.  or  any  instrumentality   thereof,  (iii)  bank  deposit  notes  and
certificates of deposit,  (iv) loan participations,  (v) repurchase  agreements,

                                      I-6
<PAGE>

(vi) securities owned but subject to a repurchase  agreement and (vii) currency,
interest rate and commodity swaps.

                  5.       The Buyer is familiar with Rule 144A and  understands
that the parties  listed in the Rule 144A  Transferee  Certificate to which this
certification  relates are relying and will  continue to rely on the  statements
made  herein  because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

                  6.       Until the date of purchase of the  Certificates,  the
undersigned  will  notify  the  parties  listed  in  the  Rule  144A  Transferee
Certificate  to  which  this  certification   relates  of  any  changes  in  the
information  and  conclusions  herein.  Until such notice is given,  the Buyer's
purchase  of  the   Certificates   will  constitute  a  reaffirmation   of  this
certification by the undersigned as of the date of such purchase.

                                      ------------------------------------------
                                      Print Name of Transferor

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:

                                      IF AN ADVISER:

                                      ------------------------------------------
                                                 Print Name of Buyer

                                      Date:
                                           -------------------------------------

                                      I-7
<PAGE>

                                    EXHIBIT J

                               REQUEST FOR RELEASE
                                  (for Trustee)

To:      [Address]

            Re:

                  In connection  with the  administration  of the Mortgage Loans
held by you as the Trustee on behalf of the  Certificateholders,  we request the
release,  and acknowledge receipt, of the (Custodial  File/[specify  documents])
for the Mortgage Loan described below, for the reason indicated.

MORTGAGOR'S NAME, ADDRESS & ZIP CODE:

MORTGAGE LOAN NUMBER:

SEND CUSTODIAL FILE TO:

REASON FOR REQUESTING DOCUMENTS (CHECK ONE)

                  ____1.   Mortgage  Loan  Paid in  Full.  (The  Company  hereby
                           certifies  that all amounts  received  in  connection
                           therewith   have  been  credited  to  the  Collection
                           Account as  provided  in the  Pooling  and  Servicing
                           Agreement.)

                  ____2.   Mortgage Loan Repurchase  Pursuant to Subsection 2.03
                           of the Pooling and Servicing Agreement.  (The Company
                           hereby  certifies that the repurchase  price has been
                           credited to the Collection Account as provided in the
                           Pooling and Servicing Agreement.)

                  ____3.   Mortgage Loan Liquidated By  _________________.  (The
                           Company   hereby   certifies  that  all  proceeds  of
                           foreclosure,   insurance,   condemnation   or   other
                           liquidation  have been finally  received and credited
                           to the Collection Account pursuant to the Pooling and
                           Servicing Agreement.)

                  ____4.   Mortgage Loan in Foreclosure.

                  ____5.   Other (explain).

                  If box 1, 2 or 3 above is  checked,  and if all or part of the
Custodial File was previously  released to us, please release to us our previous
request  and receipt on file with you, as well as any  additional  documents  in
your possession relating to the specified Mortgage Loan.

                                      J-1
<PAGE>

                  If box 4 or 5 above is checked,  upon our return of all of the
above  documents  to you as the  Trustee,  please  acknowledge  your  receipt by
signing in the space indicated below, and returning this form.

                                            OCWEN FEDERAL BANK FSB

                                            By:
                                               ---------------------------------
                                            Name:
                                            Title:
                                            Date:

                                      J-2
<PAGE>

                                    EXHIBIT K

                      FORM OF SUBSEQUENT TRANSFER AGREEMENT

                       CDC MORTGAGE CAPITAL TRUST 2002-HE1

                  Pursuant to separate Mortgage Loan Purchase  Agreements,  [BNC
Mortgage, Inc. ("BNC"), IMPAC Funding Corporation ("IFC"), Superior Federal Bank
FSB   ("SUPERIOR"),   NC  Capital   Corporation   ("NC  CAPITAL")  and  The  CIT
Group/Consumer  Finance,  Inc. and its affiliates  ("CIT" and together with BNC,
IFC,  Superior and NC Capital,  the  "ORIGINATORS")]  have agreed to sell to CDC
Mortgage Capital Inc. (the "UNAFFILIATED  SELLER") certain mortgage loans (each,
a "MORTGAGE LOAN"). These Mortgage Loans may in turn be sold by the Unaffiliated
Seller to MORGAN STANLEY ABS CAPITAL I INC. (the  "DEPOSITOR")  and then sold by
the Depositor to the CDC Mortgage Capital Trust 2002-HE1 (the "TRUST FUND"). The
Trust Fund was established pursuant to a Pooling and Servicing Agreement,  dated
as  of  April  1,  2002  (the  "POOLING  AND  SERVICING  AGREEMENT")  among  the
Unaffiliated  Seller,  the  Depositor,  Ocwen Federal Bank FSB, as Servicer (the
"SERVICER")   and  Deutsche  Bank  National  Trust  Company,   as  trustee  (the
"TRUSTEE").  The Pooling and Servicing Agreement permits a pre-funding  feature,
allowing for the  acquisition  by the Trust Fund of  Subsequent  Mortgage  Loans
during the Pre-Funding  Period.  Representations  and warranties with respect to
the  Mortgage  Loans  have been made by the  Originators  pursuant  to  separate
Assignment and Recognition Agreements.

                  Capitalized  terms used  herein and not  defined  herein  have
their respective meanings as set forth in the Pooling and Servicing Agreement.

                  CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS.

                  The  Unaffiliated   Seller  does  hereby   irrevocably   sell,
transfer,  assign,  set over and  otherwise  convey  to the  Depositor,  without
recourse (except as otherwise  explicitly provided for herein) all of its right,
title and interest in and to the  Subsequent  Mortgage  Loans,  exclusive of the
obligations of the  Unaffiliated  Seller or any other Person with respect to the
Subsequent Mortgage Loans but including  specifically,  without limitation,  the
Mortgages, the Custodial Files and all other documents, materials and properties
appurtenant thereto and the Mortgage Notes, including all interest and principal
collected  by the  Unaffiliated  Seller  on or with  respect  to the  Subsequent
Mortgage Loans after the related Subsequent  Cut-off Date,  together with all of
its  right,  title and  interest  in and to the  proceeds  received  after  such
Subsequent  Cut-off  Date of any  related  insurance  policies  on behalf of the
Depositor.

                  The Depositor does hereby irrevocably sell, transfer,  assign,
set over and otherwise  convey to the Trust Fund,  without  recourse  (except as
otherwise  explicitly  provided for herein) all of its right, title and interest
in and to the Subsequent  Mortgage  Loans,  exclusive of the  obligations of the
Depositor or any other Person with respect to the Subsequent  Mortgage Loans but
including specifically,  without limitation,  the Mortgages, the Custodial Files
and all other documents,  materials and properties  appurtenant  thereto and the
Mortgage Notes,  including all interest and principal collected by the Depositor
on or with respect to the Subsequent Mortgage Loans after the related Subsequent
Cut-off Date,  together with all of its right,  title and

                                      K-1
<PAGE>

interest in and to the proceeds  received after such Subsequent  Cut-off Date of
any related insurance policies on behalf of the Trust Fund.

                  The  expenses  and  costs  relating  to  the  delivery  of the
Subsequent  Mortgage Loans specified in this Subsequent  Transfer  Agreement and
the Pooling and Servicing Agreement shall be borne by the Unaffiliated Seller.

                  The Unaffiliated Seller hereby affirms the representations and
warranties set forth in the Unaffiliated  Seller's  Agreement that relate to the
Subsequent  Mortgage Loans on the date hereof.  The  Unaffiliated  Seller hereby
delivers  notice and confirms that each of the  conditions  set forth in Section
2.01(c) of the Pooling and  Servicing  Agreement  are  satisfied  as of the date
hereof.

                  Additional terms of the sale are attached hereto as Attachment
A.

                  To the extent  permitted by applicable  law,  this  Subsequent
Transfer  Agreement,  or a memorandum thereof if permitted under applicable law,
is subject to  recordation in all  appropriate  public offices for real property
records in all counties or other comparable jurisdictions in which any or all of
the  properties  subject  to the  Mortgages  are  situated,  and  in  any  other
appropriate  public  recording  office  or  elsewhere,  such  recordation  to be
effected by the Servicer at the  Unaffiliated  Seller's  expense,  but only when
accompanied  by an  opinion  of  counsel  to the  effect  that such  recordation
materially and beneficially affects the interests of the  Certificateholders  or
is necessary for the administration or servicing of the Mortgage Loans.

                  This Agreement  shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder  shall be  determined  in accordance  with such laws,  without  giving
effect to the principles of conflicts of laws.

                  This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts,  together, shall
constitute one and the same Agreement.

                  All  terms  and   conditions  of  the  Pooling  and  Servicing
Agreement are hereby ratified, confirmed and incorporated herein; PROVIDED, that
in the  event  of any  conflict  the  provisions  of  this  Subsequent  Transfer
Agreement  shall  control  over the  conflicting  provisions  of the Pooling and
Servicing Agreement.

                  [Remainder of Page Intentionally Left Blank]

                                      K-2
<PAGE>

                                           CDC MORTGAGE CAPITAL INC.,
                                             as Unaffiliated Seller

                                           By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                           By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                           MORGAN STANLEY ABS CAPITAL I INC.,
                                             as Depositor

                                           By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                           OCWEN FEDERAL BANK FSB,
                                             as Servicer

                                           By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                           DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                             as Trustee

                                           By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                           By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                      K-3
<PAGE>

                                    EXHIBIT L

                               FORM OF FDIC CLAIM

                                                            [Date]

Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429

                  Re: CDC MORTGAGE CAPITAL TRUST 2002-HE1

Ladies and Gentlemen:

         Reference is made to (i) that certain Amended Corporate  Guaranty dated
April 26, 2002 by The Federal  Deposit  Insurance  Corporation  (the  "FDIC") in
favor of CDC  Mortgage  Capital Inc.  ("CDC")  with respect to certain  mortgage
loans  purchased by CDC from Superior  Federal Bank FSB (the "Superior  Mortgage
Loans")  pursuant to a Mortgage Loan Purchase and Warranties  Agreement dated as
of  February  1,  2002  (the  "FDIC  Guaranty")  and (ii)  that  certain  letter
agreement,  dated  April  26,  2002,  between  the  FDIC  and CDC  (the  "Letter
Agreement")  consenting to the  assignment of the FDIC Guaranty by CDC to Morgan
Stanley ABS Capital I Inc.  ("MSABS")  and by MSABS to  Deutsche  Bank  National
Trust Company,  as trustee on behalf of CDC Mortgage Capital Trust 2002-HE1 (the
"Trustee").

         The undersigned,  as Trustee,  hereby notifies you that with respect to
the following  Superior  Mortgage  Loan(s),  the Trustee has incurred a Loss (as
defined in the FDIC Guaranty) as described below:

         Mortgage Loan No(s).                        _________________
         Obligor Name(s)                             _________________
         Outstanding Principal Balance of
         Mortgage Loan prior to sale or liquidation  _________________
         Sale/Liquidation Proceeds
         (net of expenses)                           _________________
         Loss                                        _________________

         In  accordance  with the FDIC  Guaranty and the Letter  Agreement,  the
Trustee hereby makes a claim for such Loss and requests that the FDIC remit such
amount to the  Trustee  within 60 days of the date  hereof  for  deposit  in the
following account: [Collection Account Information].

                                DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee

                                By:
                                   ---------------------------------------------
                                   Name:
                                   Title:

                                      L-1EXHIBIT 4.2

                                                              [EXECUTED VERSION]

                        MORGAN STANLEY ABS CAPITAL I INC.
                                   Depositor,

                                       and

                           CDC MORTGAGE CAPITAL INC. ,
                               Unaffiliated Seller

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

                         UNAFFILIATED SELLER'S AGREEMENT

                            Dated as of April 1, 2002

<PAGE>

                                TABLE OF CONTENTS
                                                                            Page

                                    ARTICLE I

                                   DEFINITIONS

Section 1.01.  Definitions.....................................................1

                                ARTICLE II

               PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS

Section 2.01.  Agreement to Purchase the Mortgage Loans........................2
Section 2.02.  [Reserved]......................................................3
Section 2.03.  Purchase Price..................................................3
Section 2.04.  Conveyance of Mortgage Loans; Possession of Mortgage Files......3
Section 2.05.  Examination of Mortgage Files...................................3
Section 2.06.  Books and Records...............................................4
Section 2.07.  Cost of Delivery and Recordation of Documents...................4

                                ARTICLE III

                      REPRESENTATIONS AND WARRANTIES

Section 3.01.  Representations and Warranties as to the Unaffiliated Seller....4
Section 3.02.  Representations and Warranties of the Depositor.................6

                                ARTICLE IV

                          THE UNAFFILIATED SELLER

Section 4.01.  Covenants of the Unaffiliated Seller............................7
Section 4.02.  Merger or Consolidation.........................................7
Section 4.03.  Costs...........................................................7

                                 ARTICLE V

                           CONDITIONS OF CLOSING

Section 5.01.  Conditions of Depositor's Obligations...........................8
Section 5.02.  Conditions of Unaffiliated Seller's Obligations................10
Section 5.03.  Termination of Depositor's Obligations.........................11

                                       i
<PAGE>

                                ARTICLE VI

                               MISCELLANEOUS

Section 6.01.  Notices........................................................11
Section 6.02.  Severability of Provisions.....................................11
Section 6.03.  Agreement of Unaffiliated Seller...............................11
Section 6.04.  Survival.......................................................11
Section 6.05.  Effect of Headings and Table of Contents.......................12
Section 6.06.  Successors and Assigns.........................................12
Section 6.07.  Confirmation of Intent; Grant of Security Interest.............12
Section 6.08.  Miscellaneous..................................................12
Section 6.09.  Amendments.....................................................12
Section 6.10.  Third-Party Beneficiaries......................................13
SECTION 6.11.  GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL...13
Section 6.12.  Execution in Counterparts......................................14
Section 6.13.  Subsequent Mortgage Loans......................................14

Exhibit A - Mortgage Loan Schedule

Exhibit B - Representations and Warranties Regarding Superior Mortgage Loans
Exhibit C - Representations and Warranties Regarding NC Mortgage Loans

                                       ii
<PAGE>

                  THIS  UNAFFILIATED  SELLER'S  AGREEMENT,  dated as of April 1,
2002,  by and among MORGAN  STANLEY ABS CAPITAL I INC., a Delaware  corporation,
its successors and assigns (the  "Depositor"),  and CDC Mortgage Capital Inc., a
New York corporation and its successors (the "Unaffiliated Seller").

                  WHEREAS,  Exhibit A  attached  hereto  and made a part  hereof
lists certain first and second lien mortgage loans (the "Mortgage  Loans") owned
by the Unaffiliated  Seller and the  Unaffiliated  Seller desires to sell to the
Depositor and that the Depositor desires to purchase; and

                  WHEREAS,  it is the intention of the  Unaffiliated  Seller and
the Depositor that simultaneously  with the Unaffiliated  Seller's conveyance of
the Mortgage Loans to the Depositor on the Closing Date, (a) the Depositor shall
deposit  the  Mortgage  Loans in a trust  pursuant  to a Pooling  and  Servicing
Agreement  to be  dated  as  of  April  1,  2002  (the  "Pooling  and  Servicing
Agreement"),  to be entered into by and among the Depositor, as depositor, Ocwen
Federal  Bank  FSB,  as  servicer  (in  such  capacity,  the  "Servicer"),   the
Unaffiliated  Seller and Deutsche Bank National  Trust  Company  (f/k/a  Bankers
Trust Company of California,  N.A.),  as trustee and  collateral  agent (in each
such  capacity,  as  applicable,  the "Trustee") and (b) the Trustee shall issue
certificates  evidencing  beneficial  ownership interests in the property of the
trust fund formed by the Pooling and Servicing Agreement;

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

                  Section 1.01. DEFINITIONS. Whenever used herein, the following
words and  phrases,  unless  the  context  otherwise  requires,  shall  have the
meanings specified in this Article I:

                  "AGREEMENT" means this  Unaffiliated  Seller's  Agreement,  as
amended or supplemented in accordance with the provisions hereof.

                  "PROSPECTUS"  means the  Prospectus,  dated  November 8, 2001,
relating  to  the  offering  by  the   Depositor   from  time  to  time  of  its
Mortgage-Pass-through  Certificates (Issuable in Series) in the form in which it
was or will be filed  with the  Commission  pursuant  to Rule  424(b)  under the
Securities Act with respect to the offer and sale of the Certificates.

                  "PROSPECTUS SUPPLEMENT" means the Prospectus Supplement, dated
April 22,  2002,  relating to the  offering of the  Certificates  in the form in
which it was or will be filed with the Commission  pursuant to Rule 424(b) under
the Securities Act with respect to the offer and sale of the Certificates.

                  "REGISTRATION   STATEMENT"  means  that  certain  registration
statement on Form S-3, as amended  (Registration No. 333-65702)  relating to the
offering by the Depositor from time to time of its Mortgage-Backed  Certificates
(Issuable in Series) as heretofore declared effective by the Commission.

                  "TERMINATION  EVENT" means the existence of any one or more of
the following conditions:

                           (a) a stop order suspending the  effectiveness of the
         Registration  Statement shall have been issued or a proceeding for that
         purpose shall have been initiated or threatened by the Commission; or

<PAGE>

                           (b)  subsequent to the execution and delivery of this
         Agreement, a downgrading,  or public notification of a possible change,
         without  indication  of  direction,  shall have  occurred in the rating
         afforded any of the debt  securities  or claims  paying  ability of any
         person  providing  any  form  of  credit  enhancement  for  any  of the
         Certificates,   by  any  "nationally   recognized   statistical  rating
         organization,"  as that term is defined by the  Commission for purposes
         of Rule 436(g)(2) under the Securities Act; or

                           (c)  subsequent to the execution and delivery of this
         Agreement,   there  shall  have  occurred  an  adverse  change  in  the
         condition,   financial  or  otherwise,  earnings,  affairs,  regulatory
         situation or business  prospects of the Unaffiliated  Seller reasonably
         determined by the Depositor to be material; or

                           (d)  subsequent to the date of this  Agreement  there
         shall have occurred any of the following:  (i) a suspension or material
         limitation  in  trading  in  securities  substantially  similar  to the
         Certificates;   (ii)  a  general   moratorium  on  commercial   banking
         activities in the State of New York  declared by either  Federal or New
         York State authorities; or (iii) the engagement by the United States in
         hostilities,  or the escalation of such hostilities, or any calamity or
         crisis,  if the effect of any such event specified in this clause (iii)
         in the judgment of the Depositor makes it  impracticable or inadvisable
         to proceed with the public offering or the delivery of the Certificates
         on  the  terms  and  in  the  manner  contemplated  in  the  Prospectus
         Supplement.

                  "UNAFFILIATED  SELLER" means CDC Mortgage Capital Inc., in its
capacity as Unaffiliated Seller of the Mortgage Loans under this Agreement.

                  Capitalized  terms used herein that are not otherwise  defined
shall have the respective meanings ascribed thereto in the Pooling and Servicing
Agreement.

                                   ARTICLE II

                  PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS

                  Section 2.01. AGREEMENT TO PURCHASE THE MORTGAGE LOANS.

                  (a) Subject to the terms and conditions of this Agreement, the
Unaffiliated  Seller agrees to sell, and the Depositor  agrees to purchase,  the
Mortgage  Loans  having the  Cut-Off  Date  Aggregate  Principal  Balance or, in
accordance  with Section 2.08 hereof,  such other balance as is evidenced by the
actual Cut-Off Date Aggregate  Principal  Balance of the Mortgage Loans accepted
by the Depositor on the Closing Date and listed in the Mortgage Loan Schedule.

                  (b) The Depositor and the Unaffiliated Seller have agreed upon
which of the  Unaffiliated  Seller's  Mortgage  Loans are to be purchased by the
Depositor on the Closing Date pursuant to this Agreement,  and the  Unaffiliated
Seller has prepared a schedule describing the Mortgage Loans (the "MORTGAGE LOAN
SCHEDULE")  setting forth all of the Mortgage  Loans to be purchased  under this
Agreement,  which  schedule is attached  hereto as Exhibit A. The Mortgage  Loan
Schedule  shall  conform to the  definition of "Mortgage  Loan  Schedule" in the
Pooling and Servicing Agreement.

                  (c) The  closing  for the  purchase  and sale of the  Mortgage
Loans shall take place at the offices of Dewey  Ballantine  LLP,  New York,  New
York,  at 10:00 a.m.,  New York time,  on April 30, 2002 or such other place and
time as the  parties  shall  agree  (such time being  herein  referred to as the
"Closing Date").

                                       2
<PAGE>

                  Section 2.02. [RESERVED].

                  Section  2.03.   PURCHASE  PRICE.  On  the  Closing  Date,  as
consideration  for the  Unaffiliated  Seller's sale of the Mortgage Loans to the
Depositor,  the Depositor will deliver to the Unaffiliated  Seller (i) an amount
in cash equal to 99.5% of the aggregate principal balance as of the Closing Date
of the Offered Certificates, payable by wire transfer of same day funds and (ii)
the Class X, Class P and Class R Certificates.

                  The consideration  described in this Section 2.03 collectively
represents full consideration for the Unaffiliated Seller's sale of the Mortgage
Loans to the Depositor.

                  Section  2.04.  CONVEYANCE  OF MORTGAGE  LOANS;  POSSESSION OF
MORTGAGE FILES.

                  (a) On the Closing  Date the  Unaffiliated  Seller shall sell,
transfer,  assign,  set over and  convey  or cause to be  assigned,  set over or
conveyed,  to the Depositor,  without  recourse but subject to the terms of this
Agreement and each of the  Assignment  and  Recognition  Agreements,  all right,
title and  interest  in and to the  applicable  Mortgage  Loans,  including  all
principal outstanding as of, and all interest due after, the Cut-Off Date, after
giving effect to scheduled  principal  payments due on the Cut-off Date, whether
or not received (except for $633,421.80 in interest,  which is being retained by
the Unaffiliated  Seller), the Insurance Policies relating to each such Mortgage
Loan,  all right,  title and interest in and to the  proceeds of such  Insurance
Policies and all of its rights under this Agreement with respect to the Mortgage
Loans from and after the Cut-Off  Date.  Upon payment of the purchase  price for
such  Mortgage  Loans  as  provided  in  Section  2.03  of this  Agreement,  the
Unaffiliated Seller shall have hereby, and shall be deemed to have, or caused to
have sold, transferred, assigned, set over and conveyed such Mortgage Loans, the
Insurance  Policies  relating to each such Mortgage Loan,  all right,  title and
interest in and to the  proceeds  of such  Insurance  Policies  and all of their
rights under this  Agreement  with respect to the Mortgage  Loans from and after
the Cut-Off Date.

                  (b) Upon the sale of such  Mortgage  Loans,  the  ownership of
each  related  Mortgage  Note,  each  related  Mortgage  and the contents of the
related Mortgage File shall  immediately vest in the Depositor and the ownership
of all related records and documents with respect to each Mortgage Loan prepared
by  or  which  come  into  the  possession  of  the  Unaffiliated  Seller  shall
immediately  vest in the  Depositor.  The contents of any  Mortgage  File in the
possession  of the  Unaffiliated  Seller at any time after  such  sale,  and any
principal  and  interest  due on the  Mortgage  Loans after the Cut-Off Date and
received by or on behalf of the  Unaffiliated  Seller (except for $633,421.80 in
interest,  which is being retained by the Unaffiliated Seller), shall be held in
trust by the  Unaffiliated  Seller for the benefit of the Depositor as the owner
thereof,  and shall be promptly delivered by the Unaffiliated  Seller to or upon
the order of the Depositor.

                  (c)  Pursuant  to the  Pooling and  Servicing  Agreement,  the
Depositor  shall,  on the  Closing  Date,  assign  all of its  right,  title and
interest in and to the applicable Mortgage Loans, the related Insurance Policies
and any  proceeds  thereof  and all of its rights  under this  Agreement  to the
Trust.

                  Section  2.05.  EXAMINATION  OF MORTGAGE  FILES.  Prior to the
Closing Date, the Unaffiliated Seller shall make the Mortgage Files available to
the  Depositor or its  designee for  examination  at the  Unaffiliated  Seller's
offices or at such  other  place as the  Unaffiliated  Seller  shall  reasonably
specify.  Such  examination  may be made by the Depositor or its designee at any
time on or before the Closing Date. If the Depositor or its designee  makes such
examination  prior to the Closing Date and identifies any Mortgage Loans that do
not conform to the requirements of the Depositor as described in this Agreement,
such Mortgage  Loans shall be deleted from the Mortgage Loan Schedule and may be
replaced,  prior to the Closing Date, by substitute Mortgage Loans acceptable to
the Depositor.

                                       3
<PAGE>

The Depositor may, at its option and without notice to the Unaffiliated  Seller,
purchase all or part of the Mortgage  Loans  without  conducting  any partial or
complete  examination.  The fact that the Depositor or the Trustee has conducted
or has failed to conduct  any partial or complete  examination  of the  Mortgage
Files  shall not  affect the rights of the  Depositor  or the  Trustee to demand
repurchase or other relief as provided in this Agreement.

                  Section  2.06.  BOOKS AND RECORDS.  The sale of each  Mortgage
Loan  shall be  reflected  on the  Unaffiliated  Seller's  accounting  and other
records, balance sheet and other financial statements as a sale of assets by the
Unaffiliated  Seller  to  the  Depositor.   The  Unaffiliated  Seller  shall  be
responsible for  maintaining,  and shall  maintain,  a complete set of books and
records  for each  Mortgage  Loan which  shall be clearly  marked to reflect the
ownership  of  each  Mortgage  Loan  by  the  Trustee  for  the  benefit  of the
Certificateholders and the Class A Certificate Insurer.

                  Section 2.07.  COST OF DELIVERY AND  RECORDATION OF DOCUMENTS.
The costs relating to the delivery and recordation of the documents specified in
this  Article II in  connection  with the  Mortgage  Loans shall be borne by the
Originators.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

                  Section  3.01.   REPRESENTATIONS  AND  WARRANTIES  AS  TO  THE
UNAFFILIATED  SELLER. The Unaffiliated  Seller hereby represents and warrants to
the Depositor, as of the Closing Date, that:

                  (a) The  Unaffiliated  Seller is a corporation duly organized,
validly  existing and in good  standing  under the laws of the State of New York
and has all licenses  necessary to carry on its business as now being  conducted
and is licensed, qualified and in good standing in each state necessary in order
to conduct  business of the type  conducted  by the  Unaffiliated  Seller and to
perform its obligations as the Unaffiliated  Seller hereunder;  the Unaffiliated
Seller has the full power and authority, corporate and otherwise, to execute and
deliver this Agreement and each of the Assignment and Recognition Agreements and
to perform in accordance  herewith and therewith;  the  execution,  delivery and
performance  of this  Agreement  (including  all  instruments  of transfer to be
delivered pursuant to this Agreement) by the Unaffiliated Seller and each of the
Assignment and Recognition  Agreements and the  consummation of the transactions
contemplated  hereby and  thereby  have been duly and validly  authorized;  this
Agreement and each of the Assignment  and  Recognition  Agreements  evidence the
valid,  binding and enforceable  obligations of the Unaffiliated Seller; and all
requisite  corporate  action has been taken by the  Unaffiliated  Seller to make
this Agreement and each of the Assignment and Recognition  Agreements  valid and
binding upon the Unaffiliated Seller in accordance with their respective terms;

                  (b) No consent, approval,  authorization or order of any court
or  governmental  agency or body is required  for the  execution,  delivery  and
performance  by the  Unaffiliated  Seller of or compliance  by the  Unaffiliated
Seller with this Agreement and each of the Assignment and Recognition Agreements
or the sale of the Mortgage  Loans  pursuant to the terms of this  Agreement and
each of the Assignment and  Recognition  Agreements or the  consummation  of the
transactions  contemplated  by this  Agreement  and each of the  Assignment  and
Recognition Agreements, or if required, such approval has been obtained prior to
the Closing Date;

                  (c) Neither the execution and delivery of this Agreement, each
of the Assignment and Recognition Agreements, the acquisition nor origination of
the Mortgage Loans by the Unaffiliated Seller nor the transactions  contemplated
hereby or  thereby,  nor the  fulfillment  of or  compliance  with the terms and
conditions of this Agreement, has or will conflict with or result in a breach of
any of the terms,

                                       4
<PAGE>

conditions or provisions of the Unaffiliated  Seller's charter or by-laws or any
legal  restriction  or any  agreement or  instrument  to which the  Unaffiliated
Seller  is now a party or by which it is  bound  or to  which  its  property  is
subject,  or constitute a default or result in an acceleration  under any of the
foregoing, except such unfulfillment,  non-compliance or default or acceleration
does not in the  aggregate  have a  material  adverse  effect on the  operation,
business, condition (business or otherwise) of the Unaffiliated Seller or result
in the  violation of any law,  rule,  regulation,  order,  judgment or decree to
which the Unaffiliated Seller or its property is subject,  except such violation
does not in the  aggregate  have a  material  adverse  effect on the  operation,
business, condition (business or otherwise) of the Unaffiliated Seller or impair
the  ability of the Trustee  (or the  Servicer  as the agent of the  Trustee) to
realize on the Mortgage Loans, or impair the value of the Mortgage Loans;

                  (d) There is no  action,  suit,  proceeding  or  investigation
pending nor, to the knowledge of the Unaffiliated  Seller,  threatened  before a
court,  administrative  agency or government  tribunal  against the Unaffiliated
Seller which, either in any one instance or in the aggregate,  may result in any
material  adverse  change  in the  business,  operations,  financial  condition,
properties or assets of the Unaffiliated  Seller, or in any material  impairment
of the right or  ability  of the  Unaffiliated  Seller to carry on its  business
substantially  as now conducted,  or which would draw into question the validity
of this  Agreement and any of the  Assignment and  Recognition  Agreements,  the
Mortgage  Loans,  or of any action taken or to be taken in  connection  with the
obligations of the Unaffiliated  Seller contemplated herein or therein, or which
would impair materially the ability of the Unaffiliated  Seller to perform under
the terms of this Agreement or any of the Assignment and Recognition  Agreements
or that will prohibit its entering into this  Agreement or any of the Assignment
and  Recognition  Agreements  or the  consummation  of  any of the  transactions
contemplated hereby or under any subservicing agreements;

                  (e)  The  Unaffiliated  Seller  is not in  violation  of or in
default with respect to, and the execution and delivery of this Agreement by the
Unaffiliated  Seller and its performance of and compliance with the terms hereof
will not  constitute a violation or default with respect to, any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental  agency, which violation or default might have consequences that
would  materially  and adversely  affect the  condition  (financial or other) or
operations  of  the  Unaffiliated   Seller  or  its  properties  or  might  have
consequences   that  would  materially  and  adversely  affect  its  performance
hereunder or under any subservicing agreement;

                  (f) Upon the receipt of each  Trustee's  Mortgage  File by the
Depositor  (or  its  assignee)  under  this  Agreement,  the  Depositor  (or its
assignee) will own on behalf of the Trust Fund to each related Mortgage Loan and
such other items  comprising  the corpus of the Trust Fund free and clear of any
lien  created  by the  Unaffiliated  Seller  (other  than  liens  which  will be
simultaneously released);

                  (g) The consummation of the transactions  contemplated by this
Agreement  and each of the  Assignment  and  Recognition  Agreements  are in the
ordinary  course of  business  of the  Unaffiliated  Seller,  and the  transfer,
assignment  and  conveyance  of the  Mortgage  Notes  and the  Mortgages  by the
Unaffiliated  Seller  pursuant to this  Agreement and each of the Assignment and
Recognition  Agreements  are not  subject to the bulk  transfer  or any  similar
statutory provisions in effect in any applicable jurisdiction;

                  (h)  With  respect  to  any  Mortgage  Loan  purchased  by the
Unaffiliated Seller, the Unaffiliated Seller acquired title to the Mortgage Loan
in good faith, without notice of any adverse claim;

                  (i) The Unaffiliated Seller does not believe, nor does it have
any reason or cause to believe,  that it cannot  perform each and every covenant
contained  in  this  Agreement  and  each  of  the  Assignment  and  Recognition
Agreements.  The  Unaffiliated  Seller is solvent  and the sale of the  Mortgage

                                       5
<PAGE>

Loans by the  Unaffiliated  Seller  pursuant to the terms of this  Agreement and
each  of  the  Assignment  and   Recognition   Agreements  will  not  cause  the
Unaffiliated  Seller to become insolvent.  The sale of the Mortgage Loans by the
Unaffiliated  Seller  pursuant  to the terms of this  Agreement  and each of the
Assignment and  Recognition  Agreements  was not  undertaken  with the intent to
hinder, delay or defraud any of the Unaffiliated Seller's creditors;

                  (j) The  Mortgage  Loans are not  intentionally  selected in a
manner  so as to affect  adversely  the  interests  of the  Depositor  or of any
transferee of the Depositor (including the Trust and the Trustee);

                  (k) The Unaffiliated  Seller will treat the disposition of the
Mortgage  Loans  pursuant  to this  Agreement  and  each of the  Assignment  and
Recognition Agreements as a sale for accounting and tax purposes;

                  (l) The  Unaffiliated  Seller has not dealt with any broker or
agent or anyone else that may be entitled to any commission or  compensation  in
connection  with the sale of the Mortgage  Loans to the Depositor  other than to
the Depositor or an affiliate thereof; and

                  (m) The consideration received by the Unaffiliated Seller upon
the sale of the Mortgage  Loans under this  Agreement and each of the Assignment
and  Recognition   Agreements  constitutes  fair  consideration  and  reasonably
equivalent value for the Mortgage Loans.

                  Section 3.02. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor  hereby  represents,  warrants and  covenants to the  Unaffiliated
Seller,  as of the date of execution  of this  Agreement  and the Closing  Date,
that:

                  (a) The Depositor is a  corporation  duly  organized,  validly
existing and in good standing under the laws of the State of Delaware;

                  (b) The  Depositor  has the  corporate  power and authority to
purchase each Mortgage  Loan and to execute,  deliver and perform,  and to enter
into and consummate all the transactions contemplated by this Agreement and each
of the Assignment and Recognition Agreements;

                  (c) This  Agreement  has been  duly  and  validly  authorized,
executed and delivered by the Depositor,  and,  assuming the due  authorization,
execution  and delivery  hereof and thereof by the  Unaffiliated  Seller and the
Originators,  constitutes  the  legal,  valid  and  binding  agreements  of  the
Depositor, enforceable against the Depositor in accordance with their respective
terms,  except as such  enforcement  may be limited by  bankruptcy,  insolvency,
reorganization,  moratorium  or other  similar laws relating to or affecting the
rights of creditors generally,  and by general equity principles  (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

                  (d)  No  consent,  approval,  authorization  or  order  of  or
registration or filing with, or notice to, any  governmental  authority or court
is required for the execution,  delivery and performance of or compliance by the
Depositor  with  this  Agreement  or  any  of  the  Assignment  and  Recognition
Agreements  or the  consummation  by the  Depositor  of any of the  transactions
contemplated hereby or thereby, except such as have been made on or prior to the
Closing Date;

                  (e) The  Depositor has filed or will file the  Prospectus  and
Prospectus  Supplement  with the Commission in accordance with Rule 424(b) under
the Securities Act; and

                                       6
<PAGE>

                  (f) None of the  execution  and delivery of this  Agreement or
any of the Assignment and Recognition  Agreements,  the purchase of the Mortgage
Loans from the Unaffiliated  Seller,  the consummation of the other transactions
contemplated  hereby,  or the  fulfillment  of or compliance  with the terms and
conditions  of  this  Agreement  or  any  of  the  Assignment  and   Recognition
Agreements,  (i)  conflicts or will  conflict  with the charter or bylaws of the
Depositor  or  conflicts  or will  conflict  with or results or will result in a
breach of, or constitutes or will constitute a default or results or will result
in an  acceleration  under,  any term,  condition or provision of any indenture,
deed of trust,  contract or other  agreement  or other  instrument  to which the
Depositor  is a party  or by  which it is bound  and  which is  material  to the
Depositor,  or (ii)  results or will  result in a  violation  of any law,  rule,
regulation,  order,  judgment or decree of any court or  governmental  authority
having jurisdiction over the Depositor.

                  Section 3.03.  REPRESENTATIONS  AND  WARRANTIES  REGARDING THE
MORTGAGE LOANS

         The  Unaffiliated   Seller  hereby   represents  and  warrants  to  the
Depositor, as of the Closing Date, that (i) to the effect set forth in Exhibit B
attached  hereto with  respect to each  Superior  Mortgage  Loan and (ii) to the
effect set forth in Exhibit C attached  hereto with  respect to each NC Mortgage
Loan.

                                   ARTICLE IV

                             THE UNAFFILIATED SELLER

                  Section  4.01.  COVENANTS  OF  THE  UNAFFILIATED  SELLER.  The
Unaffiliated Seller covenants to the Depositor as follows:

                  (a) The Unaffiliated Seller shall cooperate with the Depositor
and the firm of independent  certified public accountants  retained with respect
to the issuance of the  Certificates  in making  available all  information  and
taking  all steps  reasonably  necessary  to  permit  the  accountants'  letters
required hereunder to be delivered within the times set for delivery herein.

                  (b) The  Unaffiliated  Seller agrees to satisfy or cause to be
satisfied  on or  prior  to the  Closing  Date,  all of  the  conditions  to the
Depositor's  obligations  set forth in Section  5.01  hereof that are within the
Unaffiliated Seller's (or its agents') control.

                  (c) The  Unaffiliated  Seller  hereby  agree  to do all  acts,
transactions,  and things and to execute and deliver all agreements,  documents,
instruments,  and  papers  by and on behalf  of the  Unaffiliated  Seller as the
Depositor  or its  counsel may  reasonably  request in order to  consummate  the
transfer of the Mortgage  Loans to the  Depositor  and the  subsequent  transfer
thereof to the Trustee, and the rating, issuance and sale of the Certificates.

                  Section 4.02. MERGER OR CONSOLIDATION. The Unaffiliated Seller
will keep in full effect its  existence,  rights and franchises as a corporation
and will  obtain and  preserve  its  qualification  to do  business as a foreign
corporation,  in each  jurisdiction  necessary  to perform its duties under this
Agreement.  Any Person into which the  Unaffiliated  Seller or the  Unaffiliated
Seller may be merged or  consolidated,  or any  corporation  resulting  from any
merger,  conversion or consolidation to which the Unaffiliated Seller shall be a
party,  or any Person  succeeding  to the business of the  Unaffiliated  Seller,
shall be approved by the  Depositor  which  approval  shall not be  unreasonably
withheld.  The  Unaffiliated  Seller  shall  send  notice of any such  merger or
consolidation to the Depositor.

                  Section  4.03.  COSTS.  In  connection  with the  transactions
contemplated under this Agreement and the Pooling and Servicing  Agreement,  the
Unaffiliated  Seller  shall  promptly  pay  (or  shall  promptly  reimburse  the
Depositor  to the  extent  that  the  Depositor  shall  have  paid or  otherwise
incurred):

                                       7
<PAGE>

(a) the fees and disbursements of the Depositor's and the Unaffiliated  Seller's
counsel;  (b) the fees of  Fitch,  S&P and  Moody's;  (c) any of the fees of the
Trustee and the fees and  disbursements of the Trustee's  counsel;  (d) expenses
incurred in connection with printing the Prospectus,  the Prospectus Supplement,
any  amendment  or  supplement  thereto,  any  preliminary  prospectus  and  the
Certificates; (e) fees and expenses relating to the filing of documents with the
Securities  and  Exchange  Commission  (including  without  limitation  periodic
reports under the Exchange Act); (f) the shelf registration  amortization fee of
0.092% of the  Certificate  Balance of the Offered  Certificates  on the Closing
Date, paid in connection with the issuance of Offered Certificates; (g) the fees
and disbursements for the accountants for the Unaffiliated  Seller;  and (h) all
of the initial expenses of the Class A Certificate  Insurer  including,  without
limitation,  legal fees and expenses,  accountant fees and expenses and expenses
in  connection  with due  diligence  conducted  on the  Custodial  Files but not
including the initial premium paid to the Class A Certificate  Insurer.  For the
avoidance of doubt,  the parties hereto  acknowledge that it is the intention of
the  parties  that the  Depositor  shall not pay any of the  Trustee's  fees and
expenses (other than amounts paid from Trust Fund cashflow under Section 4.02 of
the  Pooling  and  Servicing  Agreement)  in  connection  with the  transactions
contemplated  by the  Pooling  and  Servicing  Agreement.  All  other  costs and
expenses in connection  with the  transactions  contemplated  hereunder shall be
borne by the party incurring such expenses.

                                   ARTICLE V

                              CONDITIONS OF CLOSING

                  Section  5.01.  CONDITIONS  OF  DEPOSITOR'S  OBLIGATIONS.  The
obligations  of the Depositor to purchase the Mortgage  Loans will be subject to
the satisfaction on the Closing Date of the following  conditions.  Upon payment
of the purchase price for the Mortgage Loans,  such  conditions  shall be deemed
satisfied or waived.

                  (a) Each of the obligations of the Unaffiliated  Seller and of
the  Originators  required  to be  performed  by it or them on or  prior  to the
Closing  Date  pursuant  to the terms of this  Agreement,  each  Assignment  and
Recognition  Agreement or the Pooling and  Servicing  Agreement  shall have been
duly  performed and complied  with,  the  representations  and warranties of the
Unaffiliated  Seller  under  this  Agreement  and of the  Originators  under the
related Assignment and Recognition Agreement shall be true and correct as of the
Closing Date and no event shall have occurred which,  with notice or the passage
of time,  would  constitute a default  under this  Agreement,  and the Depositor
shall have  received a certificate  to the effect of the foregoing  signed by an
authorized officer of the Unaffiliated Seller and the Originators.

                  (b) The Depositor  shall have received a letter dated the date
of this  Agreement,  in form and  substance  acceptable to the Depositor and its
counsel,  prepared  by  Deloitte  & Touche  LLP,  independent  certified  public
accountants,  regarding the numerical  information  contained in the  Prospectus
Supplement  including,  but not limited to the  information  under the  captions
"Prepayment and Yield Considerations" and "The Mortgage Loan Pool" regarding any
numerical  information in any marketing  materials  relating to the Certificates
and regarding any other information as reasonably requested by the Depositor.

                  (c) The Mortgage Loans will be acceptable to the Depositor, in
its sole reasonable discretion.

                  (d) The Depositor shall have received the following additional
closing  documents,  in  form  and  substance  reasonably  satisfactory  to  the
Depositor and its counsel:

                                       8
<PAGE>

                  (i) the Mortgage Loan Schedule;

                  (ii)  this   Agreement,   each   Assignment  and   Recognition
Agreement,  the Pooling and Servicing Agreement,  the Insurance  Agreement,  the
Indemnification  Agreement and the Underwriting  Agreement dated as of April 22,
2002 between the Depositor  and the  Representative  and all documents  required
thereunder,  duly  executed and  delivered by each of the parties  thereto other
than the Depositor;

                  (iii) officer's certificates of an officer of the Unaffiliated
Seller,  dated as of the Closing Date, and attached  thereto  resolutions of the
board of directors and a copy of the Unaffiliated Seller's charter and by-laws;

                  (iv)  copies  of the  Unaffiliated  Seller's  charter  and all
amendments, revisions, and supplements thereof, certified by a secretary of each
entity;

                  (v) opinions of the counsel for each of the Originators (other
than Superior) and the Unaffiliated  Seller as to various corporate matters in a
form acceptable to the Depositor,  its counsel, the Class A Certificate Insurer,
Fitch,  S&P and  Moody's  (it being  agreed that each  opinion  shall  expressly
provide that the Trustee shall be entitled to rely on the opinion);

                  (vi) opinions of counsel for the Unaffiliated Seller, in forms
acceptable  to the  Depositor,  its counsel,  the Class A  Certificate  Insurer,
Fitch,  S&P  and  Moody's  as to such  matters  as  shall  be  required  for the
assignment of a rating to the Class A Certificates  of "AAA" by Fitch,  "AAA" by
S&P, and "Aaa" by Moody's (it being agreed that such  opinions  shall  expressly
provide that the Trustee shall be entitled to rely on such opinions);

                  (vii) a letter from Moody's to the effect that it has assigned
ratings  of  "Aaa,"  "A2"  and  "Baa3"  to the  Class  A,  Class  M and  Class B
Certificates, respectively;

                  (viii) a letter  from S&P to the effect  that it has  assigned
ratings  of  "AAA,"  "A"  and  "BBB-"  to the  Class  A,  Class  M and  Class  B
Certificates, respectively;

                  (ix) a letter  from Fitch to the effect  that it has  assigned
ratings  of  "AAA,"  "A"  and  "BBB-"  to the  Class  A,  Class  M and  Class  B
Certificates, respectively;

                  (x) an  opinion  of  counsel  for  the  Trustee  in  form  and
substance acceptable to the Depositor,  its counsel, Fitch, Moody's, the Class A
Certificate  Insurer and S&P (it being agreed that the opinion  shall  expressly
provide that the Unaffiliated Seller shall be entitled to rely on the opinion);

                  (xi) an opinion or opinions of counsel  for the  Servicer,  in
form and  substance  acceptable  to the  Depositor,  its  counsel,  the  Class A
Certificate  Insurer,  Fitch,  Moody's and S&P (it being agreed that the opinion
shall expressly  provide that the Unaffiliated  Seller shall be entitled to rely
on the opinion); and

                  (xii) an  opinion  or  opinions  of  counsel  for the  Class A
Certificate  Insurer,  in each  case in form  and  substance  acceptable  to the
Depositor, its counsel, Fitch, Moody's and S&P (it being agreed that the opinion
shall expressly  provide that the Unaffiliated  Seller shall be entitled to rely
on the opinion).

                                       9
<PAGE>

                  (e) The Class A Certificate  Insurance  Policy shall have been
duly executed, delivered and issued with respect to the Class A Certificates.

                  (f)  All  proceedings  in  connection  with  the  transactions
contemplated  by this  Agreement  and all  documents  incident  hereto  shall be
satisfactory in form and substance to the Depositor and its counsel.

                  (g) The Unaffiliated Seller shall have furnished the Depositor
with such other  certificates of its officers or others and such other documents
or opinions as the Depositor or its counsel may reasonably request.

                  Section 5.02. CONDITIONS OF UNAFFILIATED SELLER'S OBLIGATIONS.
The obligations of the Unaffiliated Seller under this Agreement shall be subject
to the satisfaction, on the Closing Date, of the following conditions:

                  (a) Each of the  obligations  of the Depositor  required to be
performed  by it at or prior to the Closing  Date  pursuant to the terms of this
Agreement  shall  have  been duly  performed  and  complied  with and all of the
representations  and  warranties  of the Depositor  contained in this  Agreement
shall be true and correct as of the  Closing  Date and the  Unaffiliated  Seller
shall have received a certificate to that effect signed by an authorized officer
of the Depositor.

                  (b) The Unaffiliated  Seller shall have received the following
additional documents:

                       (i) each of the  Assignment and  Recognition  Agreements,
the Pooling and Servicing Agreement,  and all documents required thereunder,  in
each case executed by the Depositor as applicable; and

                       (ii) a copy of a letter from Moody's to the  Depositor to
the effect that it has  assigned  ratings of "Aaa," "A2" and "Baa3" to the Class
A, Class M and Class B Certificates, respectively, a copy of a letter from Fitch
to the  Depositor to the effect that it has  assigned  ratings of "AAA," "A" and
"BBB-" to the Class A,  Class M and Class B  Certificates,  respectively,  and a
copy of a letter from S&P to the  Depositor  to the effect that it has  assigned
ratings  of  "AAA,"  "A"  and  "BBB-"  to the  Class  A,  Class  M and  Class  B
Certificates, respectively,.

                       (iii) an opinion of counsel  for the  Trustee in form and
substance acceptable to the Unaffiliated Seller and its counsel;

                       (iv) an opinion or  opinions  of counsel  for the Class A
Certificate  Insurer,  in each  case in form  and  substance  acceptable  to the
Unaffiliated Seller and its counsel.

                       (v) an opinion of the  counsel  for the  Depositor  as to
securities and tax matters in form and substance  acceptable to the Unaffiliated
Seller and its counsel; and

                       (vi) an opinion of the  counsel for the  Depositor  as to
true sale matters in form and  substance  acceptable  to the Class A Certificate
Insurer and its counsel.

                  (c) All legal opinion letters and accountant's comfort letters
delivered in connection with the transactions contemplated by this Agreement and
the other  agreements  referred to herein shall be addressed to the Unaffiliated
Seller  and  shall be in form and  substance  satisfactory  to the  Unaffiliated
Seller.

                                       10
<PAGE>

                  (d) The Depositor shall have furnished the Unaffiliated Seller
with such other  certificates of its officers or others and such other documents
to evidence  fulfillment  of the  conditions  set forth in this Agreement as the
Unaffiliated Seller may reasonably request.

                  Section 5.03.  TERMINATION  OF  DEPOSITOR'S  OBLIGATIONS.  The
Depositor may terminate its obligations  hereunder by notice to the Unaffiliated
Seller at any time before  delivery of and payment of the purchase price for the
Mortgage  Loans if: (a) any of the  conditions set forth in Section 5.01 are not
satisfied when and as provided therein; (b) there shall have been the entry of a
decree  or  order  by  a  court  or  agency  or  supervisory   authority  having
jurisdiction in the premises for the  appointment of a conservator,  receiver or
liquidator in any insolvency,  readjustment  of debt,  marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller, or
for the winding up or liquidation of the affairs of the Unaffiliated Seller; (c)
there shall have been the consent by the Unaffiliated  Seller to the appointment
of a conservator or receiver or liquidator in any  insolvency,  readjustment  of
debt,  marshalling  of assets  and  liabilities  or  similar  proceedings  of or
relating to the Unaffiliated  Seller or of or relating to  substantially  all of
the  property  of the  Unaffiliated  Seller;  (d) any  purchase  and  assumption
agreement with respect to the  Unaffiliated  Seller or the assets and properties
of the  Unaffiliated  Seller shall have been entered  into; or (e) a Termination
Event  shall have  occurred.  The  termination  of the  Depositor's  obligations
hereunder shall not terminate the Depositor's  rights  hereunder or its right to
exercise any remedy available to it at law or in equity.

                                   ARTICLE VI

                                  MISCELLANEOUS

                  Section 6.01. NOTICES. All demands, notices and communications
hereunder  shall be in  writing  and shall be deemed to have been duly  given if
personally  delivered  to or mailed by  registered  mail,  postage  prepaid,  or
transmitted by telex or telegraph and confirmed by a similar mailed writing, (i)
if to the Depositor,  addressed to the Depositor at Morgan Stanley ABS Capital I
Inc., 1585 Broadway,  New York, New York 10036,  Attention:  Managing Director -
Asset  Backed  Finance  Group,  or to such other  address as the  Depositor  may
designate  in  writing  to the  other  parties,  or (ii) if to the  Unaffiliated
Seller,  addressed to the  Unaffiliated  Seller at CDC Mortgage  Capital Inc., 9
West 57th Street, New York, New York 10009,  Attention:  General Counsel,  or to
such other  address as the  Unaffiliated  Seller may designate in writing to the
other parties.

                  Section 6.02. SEVERABILITY OF PROVISIONS. Any part, provision,
representation,  warranty or covenant of this  Agreement  which is prohibited or
which is held to be void or unenforceable  shall be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions hereof. Any part, provision, representation,  warranty or covenant of
this  Agreement  which is prohibited or  unenforceable  or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction   as  to  any  Mortgage   Loan  shall  not   invalidate  or  render
unenforceable such provision in any other jurisdiction.  To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.

                  Section   6.03.   AGREEMENT  OF   UNAFFILIATED   SELLER.   The
Unaffiliated Seller agrees to execute and deliver such instruments and take such
actions as the Depositor may, from time to time,  reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement.

                  Section 6.04.  SURVIVAL.  The parties to this Agreement  agree
that the representations,  warranties and agreements made by each of them herein
and in any certificate or other  instrument

                                       11
<PAGE>

delivered  pursuant  hereto shall be deemed to be relied upon by the other party
hereto,  notwithstanding any investigation  heretofore or hereafter made by such
other  party or on such  other  party's  behalf,  and that the  representations,
warranties and agreements made by the parties hereto in this Agreement or in any
such  certificate or other  instrument shall survive the delivery of and payment
for the Mortgage Loans.

                  Section  6.05.  EFFECT OF HEADINGS AND TABLE OF CONTENTS.  The
Article  and  Section  headings  herein  and  the  Table  of  Contents  are  for
convenience only and shall not affect the construction hereof.

                  Section 6.06.  SUCCESSORS AND ASSIGNS.  This  Agreement  shall
inure to the  benefit  of and be  binding  upon the  parties  hereto  and  their
respective  successors and permitted assigns.  Except as expressly  permitted by
the terms hereof, this Agreement may not be assigned, pledged or hypothecated by
any party hereto to a third party without the written consent of the other party
to this Agreement.

                  Section  6.07.  CONFIRMATION  OF  INTENT;  GRANT  OF  SECURITY
INTEREST.  It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the  Unaffiliated  Seller to the Depositor as contemplated
by this Agreement and each of the Assignment and Recognition  Agreements be, and
be  treated  for all  purposes  as, a sale of the  Mortgage  Loans  and that the
conveyance of the Mortgage Loans by the Unaffiliated  Seller to the Depositor as
contemplated  by this  Agreement  and  each of the  Assignment  and  Recognition
Agreements be, and be treated for accounting purposes as, a sale of the Mortgage
Loans. It is, further,  not the intention of the parties that such conveyance be
deemed  a  pledge  of the  Mortgage  Loans  by the  Unaffiliated  Seller  to the
Depositor  to  secure a debt or other  obligation  of the  Unaffiliated  Seller.
However,  in the event  that,  notwithstanding  the intent of the  parties,  the
Mortgage  Loans are held to continue to be  property of the  Originators  or the
Unaffiliated  Seller  then (a)  this  Agreement  shall  also be  deemed  to be a
security  agreement  within  the  meaning  of  Articles  8 and 9 of the  Uniform
Commercial  Code; (b) the transfer of the Mortgage Loans provided for herein and
each of the Assignment and Recognition  Agreements shall be deemed to be a grant
by the Originators to the Unaffiliated  Seller and by the Unaffiliated Seller to
the Depositor of a security  interest in all of such parties'  right,  title and
interest in and to the  Mortgage  Loans and all amounts  payable on the Mortgage
Loans in accordance  with the terms thereof and all proceeds of the  conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other  property;  (c) the possession by the Depositor of Mortgage Notes and such
other items of property as constitute  instruments,  money, negotiable documents
or chattel  paper shall be deemed to be  "possession  by the secured  party" for
purposes of perfecting  the security  interest  pursuant to Section 9-305 of the
Uniform Commercial Code; and (d) notifications to persons holding such property,
and  acknowledgments,  receipts  or  confirmations  from  persons  holding  such
property,  shall be deemed  notifications  to, or  acknowledgments,  receipts or
confirmations from, financial intermediaries,  bailees or agents (as applicable)
of the  Depositor for the purpose of perfecting  such  security  interest  under
applicable law. Any assignment of the interest of the Depositor  pursuant to any
provision  hereof  shall  also be deemed  to be an  assignment  of any  security
interest created hereby. The Unaffiliated Seller and the Depositor shall, to the
extent consistent with this Agreement,  take such actions as may be necessary to
ensure  that,  if  this  Agreement  or  any of the  Assignment  and  Recognition
Agreements were deemed to create a security interest in the Mortgage Loans, such
security  interest would be deemed to be a perfected  security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement.

                  Section 6.08.  MISCELLANEOUS.  This  Agreement and each of the
Assignment  and  Recognition  Agreements  supersedes  all prior  agreements  and
understandings relating to the subject matter hereof.

                  Section 6.09. AMENDMENTS.

                                       12
<PAGE>

                  (a) This  Agreement  may be  amended  from time to time by the
Unaffiliated Seller and the Depositor by written agreement, without notice to or
consent  of the  Certificateholders,  to  cure  any  ambiguity,  to  correct  or
supplement any provisions  herein, to comply with any changes in the Code, or to
make any other  provisions  with respect to matters or questions  arising  under
this  Agreement  which shall not be  inconsistent  with the  provisions  of this
Agreement; provided, however, that such action shall not, as evidenced by (i) an
Opinion of Counsel, at the expense of the party requesting the change, delivered
to the  Trustee or (ii) a letter from each Rating  Agency  confirming  that such
amendment will not result in the reduction,  qualification  or withdrawal of the
current rating of the Certificates, adversely affect in any material respect the
interests  of  any  Certificateholder;  and  provided,  further,  that  no  such
amendment  shall (x) reduce in any manner the amount of, or delay the timing of,
payments  received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, or (y) change
the rights or  obligations of any other party hereto without the consent of such
party,  or (z) cause  the  Unaffiliated  Seller  to  conduct  any  activity  not
permitted for qualified  special purpose  entities under the current  accounting
literature.

                  (b) It shall not be necessary for the consent of Holders under
this Section to approve the particular  form of any proposed  amendment,  but it
shall be sufficient if such consent shall approve the substance thereof.

                  SECTION  6.10.  THIRD-PARTY  BENEFICIARIES.  The parties agree
that each of the Class A Certificate Insurer,  the Servicer,  and the Trustee is
an intended third-party beneficiary of this Agreement to the extent necessary to
enforce  the rights and to obtain the benefit of the  remedies of the  Depositor
under this  Agreement  which are  assigned to the Trustee for the benefit of the
Certificateholders and the Class A Certificate Insurer,  pursuant to the Pooling
and Servicing  Agreement,  and to the extent  necessary to obtain the benefit of
the  enforcement of the  obligations  and covenants of the  Unaffiliated  Seller
under Section 4.01 of this Agreement.

                  SECTION 6.11.  GOVERNING LAW; CONSENT TO JURISDICTION;  WAIVER
OF JURY TRIAL.

                  (a) THIS  AGREEMENT  SHALL BE GOVERNED  BY, AND  CONSTRUED  IN
ACCORDANCE  WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS  PROVISIONS)
OF THE STATE OF NEW YORK.

                  (b) THE  DEPOSITOR  AND THE  UNAFFILIATED  SELLER  EACH HEREBY
SUBMIT TO THE NON-EXCLUSIVE  JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND THE UNITED STATES  DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW
YORK CITY, AND EACH WAIVES  PERSONAL  SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO
THE  ADDRESS  SET FORTH IN SECTION  6.01 OF THIS  AGREEMENT  AND SERVICE SO MADE
SHALL BE  DEEMED  TO BE  COMPLETED  FIVE DAYS  AFTER  THE SAME  SHALL  HAVE BEEN
DEPOSITED IN THE U.S. MAIL, POSTAGE PREPAID. THE ORIGINATORS,  THE DEPOSITOR AND
THE  UNAFFILIATED  SELLER EACH HEREBY  WAIVES ANY  OBJECTION  BASED ON FORUM NON
CONVENIENS,  AND ANY OBJECTION TO VENUE OF ANY ACTION  INSTITUTED  HEREUNDER AND
CONSENTS  TO THE  GRANTING  OF SUCH  LEGAL  OR  EQUITABLE  RELIEF  AS IS  DEEMED
APPROPRIATE BY THE COURT.  NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY SUCH PARTIES' RIGHT TO BRING ANY
ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.

                                       13
<PAGE>

                  (c) THE  DEPOSITOR  AND THE  UNAFFILIATED  SELLER  EACH HEREBY
WAIVE ANY RIGHT TO HAVE A JURY  PARTICIPATE  IN RESOLVING  ANY DISPUTE,  WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

                  Section 6.12. EXECUTION IN COUNTERPARTS. This Agreement may be
executed  in any  number of  counterparts,  each of which so  executed  shall be
deemed to be an original,  but all such counterparts  shall together  constitute
but one and the same instrument.

                  Section 6.13.  SUBSEQUENT MORTGAGE LOANS.. Sales of Subsequent
Mortgage Loans shall be effectuated by means of Subsequent  Transfer  Agreements
on substantially the form of Exhibit K to the Pooling and Servicing Agreement.

                  [Remainder of Page Intentionally Left Blank]

                                       14
<PAGE>

                  IN WITNESS WHEREOF, the parties to this Unaffiliated  Seller's
Agreement  have  caused  their names to be signed by their  respective  officers
thereunto duly authorized as of the date first above written.

                                      MORGAN STANLEY ABS CAPITAL I INC.

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:

                                      CDC MORTGAGE CAPITAL INC.

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:

             [Signature Page to the Unaffiliated Seller's Agreement]

                                      B-1
<PAGE>

                                                                       EXHIBIT A

                             MORTGAGE LOAN SCHEDULE

                                      B-2
<PAGE>

                                                                       EXHIBIT B

    REPRESENTATIONS AND WARRANTIES OF THE UNAFFILIATED SELLER AS TO THE SUPERIOR
    MORTGAGE LOANS

                  With respect to each Superior  Mortgage Loan, the Unaffiliated
Seller hereby makes the representations and warranties set forth in this Exhibit
B only to the  Depositor and the Trustee,  as of the Closing  Date.  Capitalized
terms used but not  otherwise  defined in this Exhibit B shall have the meanings
ascribed thereto in the Pooling and Servicing Agreement.

                  (1)  MORTGAGE  LOAN  SCHEDULE.  As of the  Cut-off  Date,  the
            following  information as set forth in the Data Tape  Information is
            true and correct with respect to each Superior  Mortgage  Loan:  (i)
            the  paid-through  date as of the Cut-off  Date;  (ii) the principal
            balance of the Mortgage Loan as of the Cut-off Date, after deduction
            of payments of principal  due and collected on or before the Cut-off
            Date;

                  (2) PAYMENTS CURRENT. As of the Cut-off Date, unless otherwise
            indicated on the Mortgage  Loan Schedule no payment  required  under
            the Mortgage Loan is 30 days or more delinquent;

                  (3) ORIGINAL TERMS UNMODIFIED. Since the date the Unaffiliated
            Seller  purchased the Mortgage  Loan, the terms of the Mortgage Note
            and Mortgage have not been impaired,  waived, altered or modified in
            any respect;

                  (4)  NO   SATISFACTION   OF  MORTGAGE.   Since  the  date  the
            Unaffiliated  Seller  purchased the Mortgage  Loan, the Mortgage has
            not been satisfied,  cancelled,  subordinated or rescinded, in whole
            or in part,  and the  Mortgaged  Property has not been released from
            the  lien  of the  Mortgage,  in  whole  or in  part,  nor  has  any
            instrument  been  executed  that  would  effect  any  such  release,
            cancellation,  subordination or rescission.  From and after the date
            the   Unaffiliated   Seller   purchased  the  Mortgage   Loan,   the
            Unaffiliated  Seller has not waived the performance by the Mortgagor
            of any action,  if the  Mortgagor's  failure to perform  such action
            would  cause  the  Mortgage  Loan  to be in  default,  nor  has  the
            Unaffiliated  Seller waived any default resulting from any action or
            inaction by the Mortgagor;

                  (5) NO DEFAULTS.  Other than payments due, to the Unaffiliated
            Seller's knowledge,  there is no default, breach, violation or event
            which would permit  acceleration  existing under the Mortgage or the
            Mortgage  Note and no event which,  with the passage of time or with
            notice  and  the  expiration  of any  grace  or cure  period,  would
            constitute a default,  breach, violation or event which would permit
            acceleration;

                  (6) MORTGAGED PROPERTY UNDAMAGED; NO CONDEMNATION PROCEEDINGS.
            To the  Unaffiliated  Seller's  knowledge,  there  is no  proceeding
            pending or threatened for the total or partial  condemnation  of the
            Mortgaged  Property.  To the Unaffiliated  Seller's  knowledge,  the
            Mortgaged Property is undamaged by waste, fire,  earthquake or earth
            movement,  windstorm,  flood,  tornado  or other  casualty  so as to
            affect adversely the value of the Mortgaged Property as security for
            the Mortgage  Loan or the use for which the premises  were  intended
            and each Mortgaged Property is in good repair;

                                      B-3
<PAGE>

                  (7)  OTHER  INSURANCE  POLICIES.  From and  after the date the
            Unaffiliated Seller purchased the Mortgage Loan, no action, inaction
            or event has  occurred  and no state of facts  exists or has existed
            that has resulted or will result in the exclusion  from,  denial of,
            or defense to coverage  under any  insurance  policy  related to the
            Mortgage  Loans,  irrespective  of the  cause  of  such  failure  of
            coverage;

                                      B-4
<PAGE>

                                                                       EXHIBIT C

             REPRESENTATIONS AND WARRANTIES OF THE UNAFFILIATED SELLER AS TO THE
             NC MORTGAGE LOANS

                  With respect to each NC Mortgage Loan, the Unaffiliated Seller
hereby makes the representations and warranties set forth in this Exhibit C only
to the Depositor and the Trustee, as of the Closing Date. Capitalized terms used
but not  otherwise  defined in this Exhibit C shall have the  meanings  ascribed
thereto in the Pooling and Servicing Agreement.

                  (1)  MORTGAGE  LOAN  SCHEDULE.  As of the  Cut-off  Date,  the
            following  information as set forth in the Data Tape  Information is
            true and correct with respect to each New Century Mortgage Loan: (i)
            paid through date as of the Cut-off Date; (ii) the principal balance
            of the  Mortgage  Loan as of the Cut-off  Date,  after  deduction of
            payments of  principal  due and  collected  on or before the Cut-off
            Date; and

                  (2) PAYMENTS CURRENT. As of the Cut-off Date, unless otherwise
            indicated on the Mortgage  Loan Schedule no payment  required  under
            the Mortgage Loan is 30 days or more delinquent.

                                      C-1

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