Document:

<PAGE>
                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

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                      GREENPOINT MORTGAGE SECURITIES INC.,
                                    Sponsor,

                       GREENPOINT MORTGAGE FUNDING, INC.,
                                    Servicer,

                    GREENPOINT HOME EQUITY LOAN TRUST 1999-2,
                                     Issuer,

                                       and

                         BANK ONE, NATIONAL ASSOCIATION
                                Indenture Trustee

                             -----------------------

                          SALE AND SERVICING AGREEMENT

                          Dated as of December 1, 1999

                             ----------------------

                       Home Equity Loan Asset-Backed Notes

                                  Series 1999-2
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                                TABLE OF CONTENTS
<TABLE>
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                                                                                                               Page
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<S>                                                                                                             <C>
ARTICLE I DEFINITIONS.............................................................................................1
       Section 1.01. Definitions..................................................................................1
       Section 1.02. Other Definitional Provisions................................................................1
       Section 1.03. Interest Calculations........................................................................2

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF NOTES; TAX TREATMENT................................2
       Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances
                          Under Credit Line Agreements............................................................2
       Section 2.02. Further Encumbrance of Trust Property........................................................6
       Section 2.03. Acceptance by Indenture Trustee;  Certain Substitution of Mortgage Loans.....................7
       Section 2.04. Representations and Warranties Regarding the Servicer and the Sponsor........................8
       Section 2.05. Representations and Warranties of the Sponsor Regarding the Mortgage
                          Loans; Retransfer of Certain Mortgage Loans............................................10
       Section 2.06. Covenants of the Sponsor....................................................................18
       Section 2.07. Retransfers of Mortgage Loans at Election of Sponsor........................................19
       Section 2.08. Execution and Authentication of Notes.......................................................20
       Section 2.09. Tax Treatment...............................................................................20
       Section 2.10. Conveyance of the Subsequent Mortgage Loans.................................................20

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.......................................................23
       Section 3.01. The Servicer................................................................................23
       Section 3.02. Collection of Certain Mortgage Loan Payments................................................24
       Section 3.03. Withdrawals from the Collection Account.....................................................26
       Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses...............................26
       Section 3.05. Assumption and Modification Agreements......................................................27
       Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage
                          Loans..................................................................................27
       Section 3.07. Indenture Trustee to Cooperate..............................................................28
       Section 3.08. Servicing Compensation; Payment of Certain Expenses by Servicer.............................29
       Section 3.09. Annual Statement as to Compliance...........................................................29
       Section 3.10. Annual Servicing Report.....................................................................30
       Section 3.11. Annual Opinion of Counsel...................................................................30
       Section 3.12. Access to Certain Documentation and Information Regarding the Mortgage
                          Loans..................................................................................30
       Section 3.13. Maintenance of Certain Servicing Insurance Policies.........................................31
       Section 3.14. Reports to the Securities and Exchange Commission...........................................31
       Section 3.15. Tax Returns.................................................................................31
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<TABLE>
<S>                                                                                                             <C>
       Section 3.16. Information Required by the Internal Revenue Service Generally and Reports
                          of Foreclosures and Abandonments of Mortgaged Property.................................31

ARTICLE IV SERVICING CERTIFICATE.................................................................................32
       Section 4.01. Servicing Certificate.......................................................................32
       Section 4.02. Reserve Fund................................................................................34

ARTICLE V THE SERVICER AND THE SPONSOR...........................................................................34
       Section 5.01. Liability of the Servicer and the Sponsor...................................................34
       Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of, the
                          Servicer or the Sponsor................................................................34
       Section 5.03. Limitation on Liability of the Servicer and Others..........................................34
       Section 5.04. Servicer Not to Resign......................................................................35
       Section 5.05. Delegation of Duties........................................................................35
       Section 5.06. Indemnification of the Trust by the Servicer................................................36
       Section 5.07. Indemnification of the Trust by the Sponsor.................................................36
       Section 5.08. Limitation on Liability of the Sponsor......................................................36

ARTICLE VI SERVICING TERMINATION.................................................................................37
       Section 6.01. Events of Servicing Termination.............................................................37
       Section 6.02. Indenture Trustee to Act; Appointment of Successor..........................................39
       Section 6.03. Notification to Securityholders.............................................................40

ARTICLE VII TERMINATION..........................................................................................40
       Section 7.01. Termination.................................................................................40

ARTICLE VIII ADMINISTRATIVE DUTIES OF THE SERVICER...............................................................41
       Section 8.01. Administrative Duties.......................................................................41
       Section 8.02. Records.....................................................................................43
       Section 8.03. Additional Information to be Furnished to the Issuer........................................43

ARTICLE IX MISCELLANEOUS PROVISIONS..............................................................................43
       Section 9.01. Amendment...................................................................................43
       Section 9.02. Recordation of Agreement....................................................................45
       Section 9.03. Limitation on Rights of Noteholders.........................................................45
       Section 9.04. Governing Law...............................................................................46
       Section 9.05. Notices.....................................................................................46
       Section 9.06. Severability of Provisions..................................................................46
       Section 9.07. Assignment..................................................................................47
       Section 9.08. Third-Party Beneficiaries...................................................................47
       Section 9.09. Counterparts................................................................................47
       Section 9.10. Effect of Headings and Table of Contents....................................................47
       Section 9.11. Insurance Agreement.........................................................................47
       Section 9.12. Nonpetition Covenant........................................................................47
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                                    EXHIBITS

EXHIBIT A:  MORTGAGE LOAN SCHEDULE...........................................A-1

EXHIBIT B:  FORM OF OPINION OF COUNSEL.......................................B-1

EXHIBIT C:  OFFICER'S CERTIFICATES...........................................C-1

EXHIBIT D:  FORM OF CREDIT LINE AGREEMENT....................................D-1

EXHIBIT E:  FORM OF MORTGAGE NOTE (SECOND LIEN)..............................E-1

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                  SALE AND SERVICING AGREEMENT, dated as of December 1, 1999,
(the "Agreement") among GREENPOINT HOME EQUITY LOAN TRUST 1999-2, a Delaware
business trust (the "Issuer"), GREENPOINT MORTGAGE SECURITIES INC., a Delaware
corporation (the "Sponsor"), GREENPOINT MORTGAGE FUNDING, INC., a New York
corporation (the "Servicer"), and BANK ONE, NATIONAL ASSOCIATION, a national
banking association (the "Indenture Trustee")

                  WHEREAS, the Issuer desires to purchase a portfolio of
Mortgage Loans arising in connection with Loan Agreements acquired by GreenPoint
Mortgage Funding, Inc.;

                  WHEREAS, the Sponsor has purchased such Mortgage Loans from
GreenPoint Mortgage Funding, Inc. and is willing to sell such Mortgage Loans to
the Issuer;

                  WHEREAS, the Issuer desires to purchase Subsequent Mortgage
Loans arising in connection with Loan Agreements to be acquired by GreenPoint
Mortgage Funding, Inc.;

                  WHEREAS, the Sponsor has an agreement to purchase such
Subsequent Mortgage Loans from GreenPoint Mortgage Funding, Inc. and is willing
to sell such Subsequent Mortgage Loans to the Issuer;

                  WHEREAS, such Mortgage Loans consist of certain home equity
revolving lines of credit (the "HELOC Mortgage Loans") and certain second lien,
closed-end mortgage loans (the "Closed End Mortgage Loans");

                  WHEREAS, the Servicer is willing to service all such Mortgage
Loans;

                  NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

         Section 1.01. Definitions. All capitalized terms used in this Agreement
and not otherwise defined herein, shall have the meanings assigned thereto in
Annex A to the Indenture dated as of December 1, 1999, between the Issuer and
the Indenture Trustee, as the same may be amended and supplemented from time to
time.

         Section 1.02. Other Definitional Provisions.

         (a) All terms defined in this Agreement shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.

         (b) As used in this Agreement, in any instrument governed hereby and in
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement or in any such instrument,
certificate or other document, and accounting terms partly defined in this
Agreement or in any such instrument, certificate or other

<PAGE>

document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in effect on the date of
this Agreement or any such instrument, certificate or other document, as
applicable. To the extent that the definitions of accounting terms in this
Agreement or in any such instrument, certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Agreement or in any such
instrument, certificate or other document shall control.

         (c) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

         Section 1.03. Interest Calculations. All calculations of interest
hereunder that are made in respect of the Principal Balance of a Mortgage Loan
shall be made on a daily basis using a 365-day year. All calculations of
interest on the Notes shall be made on the basis of the actual number of days in
an Interest Period and a year assumed to consist of 360 days. The calculation of
the Servicing Fee shall be made on the basis of the actual number of days
elapsed in a 360-day year. All dollar amounts calculated hereunder shall be
rounded to the nearest penny with one-half of one penny being rounded down.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                           ORIGINAL ISSUANCE OF NOTES;
                                  TAX TREATMENT

         Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements. (a) In consideration of the Issuer's
delivery to or upon the order of the Sponsor on the Closing Date of the net
proceeds from the sale of the Notes and Certificates and the other amounts to be
distributed from time to time to the Sponsor in accordance with the terms of
this Agreement, the Sponsor, concurrently with the execution and delivery of
this Agreement, hereby sells, transfers, assigns, sets over and otherwise
conveys to the Issuer, without recourse (subject to Sections 2.03 and 2.05), all
of its right, title and interest in and to (i) each Initial Mortgage Loan,
including its Principal Balance (including any Additional Balances related
thereto) and all collections in respect thereof received after the Initial
Cut-Off Date (excluding Interest Collection due on or prior to the Initial
Cut-Off Date); (ii) each Subsequent Mortgage Loan (including any Additional
Balances related thereto) and all collections in respect thereof received after
the related Subsequent Cut-Off Date (excluding Interest Collections due on or
prior to such related Subsequent Cut-Off Date); (iii) property that secured a
Mortgage Loan that is acquired by foreclosure or deed in lieu of foreclosure;
(iv) all of the Sponsor's rights under the Purchase Agreement (including all
representations and warranties of the Company contained therein); (v) the
Sponsor's rights under the hazard insurance policies; (vi) the Reserve Fund;
(vii) the Policy; (viii) the Pre-Funding Account; and (ix) any proceeds of the
foregoing and all other assets included or to be included in the Trust for the
benefit of Securityholders and the Insurer; provided, however, neither the
Indenture Trustee nor the Trust

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assumes the obligation under any Credit Line Agreement that provides for the
funding of future advances to the Mortgagor thereunder, and neither the Trust
nor the Indenture Trustee shall be obligated or permitted to fund any such
future advances. With respect to the HELOC Mortgage Loans, Additional Balances
shall be part of the related Principal Balance and are hereby transferred to the
Trust on the Closing Date pursuant to this Section 2.01, and therefore part of
the Trust Property. On or prior to the Closing Date, the Sponsor shall cause the
Insurer to deliver the Policy to the Indenture Trustee for the benefit of the
Noteholders. It is the intention of the Sponsor that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Mortgage Loans and
other Trust Property from the Sponsor to the Issuer and that such sale should
constitute a valid transfer and assignment of the Mortgage Loans and other Trust
Property to the Issuer and the beneficial interest in and title to the Mortgage
Loans and the other Trust Property shall not be part of the Sponsor's estate in
the event of the filing of a bankruptcy petition by or against the Sponsor under
any bankruptcy law. In the event that, notwithstanding the intent of the
Sponsor, the transfer and assignment contemplated hereby is held not to be a
sale, this Agreement shall constitute a grant of a security interest in the
property referred to in this Section 2.01 for the benefit of the Securityholders
and the Insurer. To the extent that the fair market value of any Additional
Balance or Subsequent Mortgage Loan sold by the Sponsor to the Issuer is greater
than the cash consideration paid by the Issuer for such Additional Balance or
Subsequent Mortgage Loan, the difference between such fair market value and the
amount of such cash consideration shall be deemed to be a capital contribution
made to the Issuer by the Sponsor.

         (b) Each of the Company and the Sponsor agrees to take or cause to be
taken such actions and execute such documents (including, without limitation,
the filing of all necessary continuation statements for the UCC-1 financing
statements filed in the States of California and Delaware, respectively, (which
shall have been filed on or as of the Closing Date) describing the Cut-Off Date
Principal Balances and Additional Balances and naming (i) the Company as debtor
and the Sponsor as secured party, and (ii) the Sponsor as debtor and the Issuer
as secured party and any amendments to UCC-1 financing statements required to
reflect a change in the name or corporate structure of the Company or the
Sponsor or the filing of any additional UCC-1 financing statements due to the
change in the principal office of the Company or the Sponsor (within 10 days of
any event necessitating such filing) as are necessary to perfect and protect the
Noteholders' and Insurer's interests in each Cut-Off Date Principal Balance and
Additional Balance and the proceeds thereof (other than maintaining possession
by the Indenture Trustee of the Mortgage Loans and the Mortgage Files).

         (c) In connection with such transfer and assignment, the Servicer shall
deliver to the Indenture Trustee the following documents or instruments (each a
"Related Document" and together for each Mortgage Loan, the "Mortgage File")
with respect to each Initial Mortgage Loan on the Closing Date and will deliver
with respect to each Subsequent Mortgage Loan on the related Subsequent Transfer
Date:

                  (i) the original Mortgage Note endorsed in blank;

                  (ii) an original Assignment of Mortgage in blank in recordable
         form;

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                  (iii) the original recorded Mortgage or, if, in connection
         with any Mortgage Loan, the original recorded Mortgage with evidence of
         recording thereon cannot be delivered on or prior to the Closing Date
         because of a delay caused by the public recording office where such
         original Mortgage has been delivered for recordation or because such
         original Mortgage has been lost, the Sponsor shall deliver or cause to
         be delivered to the Indenture Trustee, a true and correct copy of such
         Mortgage, together with (i) in the case of a delay caused by the public
         recording office, an Officer's Certificate of the Sponsor stating that
         such original Mortgage has been dispatched to the appropriate public
         recording official or (ii) in the case of an original Mortgage that has
         been lost, a certificate by the appropriate county recording office
         where such Mortgage is recorded;

                  (iv) if applicable, the original intervening assignments, if
         any ("Intervening Assignments"), with evidence of recording thereon,
         showing a complete chain of title to the Mortgage from the originator
         to the Indenture Trustee or, if any such original Intervening
         Assignment has not been returned from the applicable recording office
         or has been lost, a true and correct copy thereof, together with (i) in
         the case of a delay caused by the public recording office, an Officer's
         Certificate of the Sponsor stating that such original Intervening
         Assignment has been dispatched to the appropriate public recording
         official for recordation or (ii) in the case of an original Intervening
         Assignment that has been lost, a certificate by the appropriate county
         recording office where such Mortgage is recorded;

                  (v) either a title policy, a title search or guaranty title
         with respect to the related Mortgaged Property;

                  (vi) the original of any guaranty executed in connection with
         the Mortgage Note;

                  (vii) the original of each assumption, modification,
         consolidation or substitution agreement, if any, relating to the
         Mortgage Loans; and

                  (viii) any security agreement, chattel mortgage or equivalent
         instrument executed in connection with the Mortgage;

provided, however, that as to any Mortgage Loan, if (a) as evidenced by an
Opinion of Counsel delivered to and in form and substance satisfactory to the
Indenture Trustee and the Insurer, (x) an optical image or other representation
of the Related Documents specified in clauses (i) through (viii) above are
enforceable in the relevant jurisdictions to the same extent as the original of
such document and (y) such optical image or other representation does not impair
the ability of an owner of such Mortgage Loan to transfer its interest in such
Mortgage Loan, and (b) the retention of such documents in such format will not
result in a reduction in the then current rating of the Notes, without regard to
the Policy, such optical image or other representation may be delivered by the
Servicer, to the Indenture Trustee in lieu of the physical documents specified
above.

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<PAGE>

         The Sponsor hereby confirms to the Indenture Trustee that it has caused
the portions of the Electronic Ledgers relating to the Initial Mortgage Loans as
of the Closing Date, and that it will cause such Electronic Ledgers with respect
to each Subsequent Mortgage Loans as of the related Subsequent Transfer Date, to
be clearly and unambiguously marked, and has made, or will make, the appropriate
entries in its general accounting records to indicate that such Mortgage Loans
have been transferred to the Trust. The Servicer hereby confirms to the
Indenture Trustee that it has clearly and unambiguously made appropriate entries
in its general accounting records indicating that such Mortgage Loans constitute
part of the Trust and are serviced by it on behalf of the Trust in accordance
with the terms hereof. The Servicer hereby confirms to the Indenture Trustee
that it will clearly and unambiguously make appropriate entries in its general
accounting records indicating that each Subsequent Mortgage Loan constitutes
part of the Trust and is serviced by it on behalf of the Trust in accordance
with the terms hereof as of the related Subsequent Transfer Date.

         (d) Notwithstanding the characterization of the Notes as debt for
Federal, state and local income and franchise tax purposes, the parties hereto
intend to treat the transfer of the Mortgage Loans to the Trust as provided
herein as a sale, for certain non-tax purposes, of all the Sponsor's right,
title and interest in and to the Mortgage Loans, whether now existing or
hereafter created, and the other property described above and all proceeds
thereof. In the event such transfer is deemed not to be a sale for such
purposes, the Sponsor grants to the Trust, a security interest in all of such
party's right, title and interest in, to and under the Mortgage Loans, whether
now existing or hereafter created, and the other property described above and
all proceeds thereof; and this Agreement shall constitute a security agreement
under applicable law.

         (e) Within 90 days following delivery of the Mortgage Files to the
Indenture Trustee pursuant to this Section, the Indenture Trustee shall review
each such Mortgage File to ascertain that all required documents set forth in
this Section 2.01 have been executed and received, and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule and in so
doing the Indenture Trustee may rely on the purported due execution and
genuineness of any signature thereon. If within such 90-day period the Indenture
Trustee finds any document constituting a part of a Mortgage File not to have
been executed or received or to be unrelated to the Mortgage Loans identified in
said Mortgage Loan Schedule or, if in the course of its review, the Indenture
Trustee determines that such Mortgage File is otherwise defective in any
material respect, the Indenture Trustee shall promptly upon the conclusion of
its review notify the Sponsor and the Insurer, and the Sponsor shall have a
period of 90 days after such notice within which to correct or cure any such
defect.

         The Indenture Trustee shall have no responsibility for reviewing any
Mortgage File except as expressly provided in this Section 2.01. In reviewing
any Mortgage File pursuant to this Section, the Indenture Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form (except, if applicable, to determine if the Indenture Trustee is the
assignee or endorsee), whether any document has been recorded in accordance with
the requirements of any applicable jurisdiction, or whether a blanket assignment
is permitted in any applicable jurisdiction, whether any Person executing any
document is authorized to do so or whether any signature thereon is genuine, but
shall only be required to determine whether a document has

                                       5
<PAGE>

been executed, that it appears to be what it purports to be, and, where
applicable, that it purports to be recorded.

         (f) The Sponsor shall take all necessary steps to prepare and submit
for recordation an Assignment or Mortgage in the name of the Indenture Trustee
for each Initial Mortgage Loan within 30 days after the Closing Date and for
each Subsequent Mortgage Loan within 30 days after the related Subsequent
Transfer Date.

         (g) The Sponsor shall sell, assign, transfer, set over and otherwise
convey without recourse to the Indenture Trustee all right, title and interest
of the Sponsor in and to any Eligible Substitute Mortgage Loan delivered to the
Indenture Trustee on behalf of the Trust by the Sponsor pursuant to Section 2.03
or Section 2.05 hereof and all its right, title and interest to principal
collected and interest accruing on such Eligible Substitute Mortgage Loan on and
after the applicable Substitute Cut-Off Date; provided, however, that the
Sponsor shall reserve and retain all right, title and interest in and to
payments of interest due on such Eligible Substitute Mortgage Loan prior to the
applicable Substitute Cut-Off Date; provided, further, that neither the Trust
nor the Indenture Trustee shall be obligated to fund any future advances to the
related Mortgagor under such Eligible Substitute Mortgage Loan.

         In connection with any transfer and assignment of an Eligible
Substitute Mortgage Loan to the Indenture Trustee on behalf of the Trust, the
Sponsor agrees to cause to be delivered to the Indenture Trustee the items
described in Section 2.01(c) on the date of such transfer and assignment or, if
a later delivery time is permitted by Section 2.01(c), then no later than such
later delivery time.

         (h) Each Defective Mortgage Loan that is required to be repurchased or
substituted pursuant to the provisions this Agreement or the Purchase Agreement
shall, upon such repurchase or substitution in accordance with the provisions
hereof, be released from the Trust and from the lien created by the Indenture.
As to each Mortgage Loan released from the Trust in connection with the
repurchase thereof or the conveyance of an Eligible Substitute Mortgage Loan
therefor, the Indenture Trustee will transfer, assign, set over and otherwise
convey without recourse, to or upon the order of the Sponsor, all of its right,
title and interest in and to such released Mortgage Loan and all the Trust's
right title and interest to principal collected and interest accruing on such
released Mortgage Loan on and after the first day of the calendar month in which
such Mortgage Loan is released; the applicable; provided, however, that the
Trust shall reserve and retain all right, title and interest in and to payments
of principal and interest collected on such released Mortgage Loan prior to such
date.

         Section 2.02. Further Encumbrance of Trust Property.

         (a) Immediately upon the conveyance to the Trust by the Sponsor of any
item of the Trust Property pursuant to Section 2.01, all right, title and
interest of the Sponsor in and to such item of Trust Property shall terminate,
and all such right, title and interest shall vest in the Trust, in accordance
with the Trust Agreement and Sections 3802 and 3805 of the Delaware Business
Trust Act (12 Del. Code, Section 3801 et seq.).

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<PAGE>

         (b) Immediately upon the vesting of the Trust Property in the Trust,
the Trust shall have the sole right to pledge or otherwise encumber, such Trust
Property. Pursuant to the Indenture and contemporaneously with such property
vesting in the Trust pursuant to (a) above, the Trust shall grant a security
interest in the Trust Property to secure the repayment of the Notes. The
Certificates shall represent the beneficial ownership interest in the Trust
Property, and the Certificateholders shall be entitled to receive distributions
with respect thereto as set forth herein.

         (c) Prior to the payment in full on the Notes, the payment of all
amounts due to the Insurer under the Insurance Agreement, the termination of the
Policy (as defined therein) and the surrender of the Policy by the Indenture
Trustee to the Insurer, the Indenture Trustee shall hold the Trust Property on
behalf of the Noteholders and the Insurer. Following the payment in full of the
Notes and the release and discharge of the Indenture, all covenants of the
Issuer under Article III of the Indenture shall, until payment in full of the
Certificates, remain as covenants of the Issuer for the benefit of the
Certificateholders, enforceable by the Certificateholders to the same extent as
such covenants were enforceable by the Noteholders prior to the discharge of the
Indenture. Any rights of the Indenture Trustee under Article III of the
Indenture, following the discharge of the Indenture, shall vest in the
Certificateholders.

         Section 2.03. Acceptance by Indenture Trustee; Certain Substitution of
Mortgage Loans

         (a) The Indenture Trustee shall, at such time as there are no
Securities outstanding and all sums due to (i) the Indenture Trustee or any
agent or counsel thereof pursuant to the Indenture, (ii) the Indenture Trustee
pursuant to this Agreement and (iii) the Insurer pursuant to the Insurance
Agreement, have been paid, release any remaining portion of the Trust Property
to the Sponsor; provided, that the release of the Reserve fund is subject to
Section 2.05 of the Insurance Agreement.

         (b) The Trust hereby acknowledges its receipt of the Policy and the
Mortgage Loans, and declares that the Indenture Trustee holds and will hold such
instrument, and to the extent that any documents are delivered to it pursuant to
Section 2.01, will hold such documents, and all amounts received by it
thereunder and hereunder, in trust, upon the terms herein set forth, for the use
and benefit of all present and future Securityholders and the Insurer. If the
time to cure any defect in respect of any Mortgage Loan of which the Indenture
Trustee has notified the Sponsor following the review pursuant to Section 2.01
has expired or if at any time any loss is suffered by the Indenture Trustee on
behalf of the Noteholders or the Insurer, in respect of any Mortgage Loan as a
result of (i) a defect in any document constituting a part of its Mortgage File
or (ii) an Assignment of Mortgage to the Indenture Trustee not having been
recorded as required by Section 2.01, then on the next succeeding Business Day
(i) substitute in lieu of such Mortgage Loan all Eligible Substitute Mortgage
Loans and, deliver the Substitution Amount applicable thereto to the Servicer
for deposit in the Collection Account or (ii) purchase such Mortgage Loan at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Collection Account. Upon
receipt of any Mortgage Loan or of written notification signed by a Servicing
Officer to the effect that the Loan Purchase Price in respect of a Defective
Mortgage Loan has been deposited into the Collection Account, then as promptly
as practicable, the Indenture Trustee shall execute such documents and

                                       7
<PAGE>

instruments of transfer presented by the Sponsor, in each case without recourse,
representation or warranty, and take such other actions as shall reasonably be
requested by the Sponsor to effect such transfer by the Trust of such Defective
Mortgage Loan pursuant to this Section. It is understood and agreed that the
obligation of the Sponsor to accept a transfer of a Defective Mortgage Loan and
to either convey an Eligible Substitute Mortgage Loan or to make a deposit of
any related Loan Purchase Price into the Collection Account shall constitute the
sole remedy respecting such defect available to Noteholders and the Indenture
Trustee against the Sponsor.

         (c) As to any Eligible Substitute Mortgage Loan, the Sponsor shall, if
required to deliver any such Eligible Substitute Mortgage Loan, deliver to the
Indenture Trustee with respect to such Eligible Substitute Mortgage Loan such
documents and agreements as are required to be held by the Indenture Trustee in
accordance with Section 2.01. For any Collection Period during which the Sponsor
substitutes one or more Eligible Substitute Mortgage Loan, the Servicer shall
determine the Substitution Amount which amount shall be deposited by the Sponsor
in the Collection Account at the time of substitution. All amounts received in
respect of the Eligible Substitute Mortgage Loan during the Collection Period in
which the circumstances giving rise to such substitution occur shall not be a
part of the Trust and shall not be deposited by the Servicer in the Collection
Account. All amounts received by the Servicer during the Collection Period in
which the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust shall be deposited by the
Servicer in the Collection Account. Upon such substitution, the Eligible
Substitute Mortgage Loan shall be subject to the terms of this Agreement in all
respects, and the Sponsor shall be deemed (i) to have made with respect to such
Eligible Substitute Mortgage Loan as of the date of substitution, the covenants,
representations and warranties set forth in Section 2.05 and (ii) to have
certified that such Mortgage Loan is an Eligible Substitute Mortgage Loan. The
procedures applied by the Sponsor in selecting each Eligible Substitute Mortgage
Loan shall not be materially adverse to the interests of the Indenture Trustee,
the Noteholders or the Insurer.

         The Servicer, promptly following the transfer of a Defective Mortgage
Loan from or to the Trust pursuant to this Section, shall amend the Mortgage
Loan Schedule and make appropriate entries in its general account records to
reflect such transfer. The Servicer shall, following such retransfer,
appropriately mark its records to indicate that it is no longer servicing such
Mortgage Loan on behalf of the Trust. The Sponsor, promptly following such
transfer, shall appropriately mark its Electronic Ledger and make appropriate
entries in its general account records to reflect such transfer.

         Section 2.04. Representations and Warranties Regarding the Servicer and
the Sponsor. (a) The Servicer represents and warrants to the Indenture Trustee
and the Insurer that as of the Closing Date and as of each Subsequent Transfer
Date:

                  (i) The Servicer is a New York corporation, validly existing
         and in good standing under the laws of the State of New York, and has
         the corporate power to own its assets and to transact the business in
         which it is currently engaged. The Servicer is duly qualified to do
         business as a foreign corporation and is in good standing in each
         jurisdiction in which the character of the business transacted by it or
         any properties owned or leased by it requires such qualification and in
         which the failure so to qualify

                                       8
<PAGE>

         would have a material adverse effect on the business, properties,
         assets, or condition (financial or other) of the Servicer;

                  (ii) The Servicer has the power and authority to make,
         execute, deliver and perform this Agreement and all of the transactions
         contemplated under this Agreement, and has taken all necessary
         corporate action to authorize the execution, delivery and performance
         of this Agreement. When executed and delivered, this Agreement will
         constitute the legal, valid and binding obligation of the Servicer
         enforceable in accordance with its terms, except as enforcement of such
         terms may be limited by bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting the enforcement of
         creditors' rights generally and by the availability of equitable
         remedies;

                  (iii) The Servicer is not required to obtain the consent of
         any other party or any consent, license, approval or authorization
         from, or registration or declaration with, any governmental authority,
         bureau or agency in connection with the execution, delivery,
         performance, validity or enforceability of this Agreement, except for
         such consent, license, approval or authorization, or registration or
         declaration, as shall have been obtained or filed, as the case may be,
         prior to the Closing Date;

                  (iv) The execution, delivery and performance of this Agreement
         by the Servicer will not violate any provision of any existing law or
         regulation or any order or decree of any court applicable to the
         Servicer or any provision of the Certificate of Incorporation or Bylaws
         of the Servicer, or constitute a material breach of any mortgage,
         indenture, contract or other agreement to which the Servicer is a party
         or by which the Servicer may be bound; and

                  (v) No litigation or administrative proceeding of or before
         any court, tribunal or governmental body is currently pending, or to
         the knowledge of the Servicer threatened, against the Servicer or any
         of its properties or with respect to this Agreement or the Notes.

The representations and warranties set forth in this Section 2.04(a) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Noteholders or the Insurer, the person
discovering such breach shall give prompt written notice to the other parties
and to the Insurer. Within 90 days of its discovery or its receipt of notice of
breach, or, with the prior written consent of a Responsible Officer of the
Indenture Trustee and the Insurer such longer period specified in such consent,
the Servicer shall cure such breach in all material respects.

         (b) The Sponsor represents and warrants to the Indenture Trustee and
the Insurer that as of the Closing Date and as of each Subsequent Transfer Date:

                  (i) The Sponsor is a Delaware corporation, validly existing
         and in good standing under the laws of the State of Delaware, and has
         the statutory power to own its assets and to transact the business in
         which it is currently engaged. The Sponsor is duly qualified to do
         business as a foreign limited liability company and is in good standing
         in

                                       9
<PAGE>

         each jurisdiction in which the character of the business transacted by
         it or any properties owned or leased by it requires such qualification
         and in which the failure so to qualify would have a material adverse
         effect on the business, properties, assets, or condition (financial or
         other) of the Sponsor;

                  (ii) The Sponsor has the power and authority to make, execute,
         deliver and perform this Agreement and all of the transactions
         contemplated under this Agreement, and has taken all necessary
         corporate action to authorize the execution, delivery and performance
         of this Agreement. When executed and delivered, this Agreement will
         constitute the legal, valid and binding obligation of the Sponsor
         enforceable in accordance with its terms, except as enforcement of such
         terms may be limited by bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting the enforcement of
         creditors' rights generally and by the availability of equitable
         remedies;

                  (iii) The Sponsor is not required to obtain the consent of any
         other party or any consent, license, approval or authorization from, or
         registration or declaration with, any governmental authority, bureau or
         agency in connection with the execution, delivery, performance,
         validity or enforceability of this Agreement;

                  (iv) The execution, delivery and performance of this Agreement
         by the Sponsor will not violate any provision of any existing law or
         regulation or any order or decree of any court applicable to the
         Sponsor or any provision of the Certificate of Incorporation or bylaws
         of the Sponsor, or constitute a material breach of any mortgage,
         indenture, contract or other agreement to which the Sponsor is a party
         or by which the Sponsor may be bound; and

                  (v) No litigation or administrative proceeding of or before
         any court, tribunal or governmental body is currently pending, or to
         the knowledge of the Sponsor threatened, against the Sponsor or any of
         its properties or with respect to this Agreement or the Notes.

The representations and warranties set forth in this Section 2.04(b) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Noteholders or the Insurer, the person
discovering such breach shall give prompt written notice to the other parties
and to the Insurer. Within 90 days of its discovery or its receipt of notice of
breach, or, with the prior written consent of a Responsible Officer of the
Indenture Trustee and the Insurer, such longer period specified in such consent,
the Sponsor shall cure such breach in all material respects.

         Section 2.05. Representations and Warranties of the Sponsor Regarding
the Mortgage Loans; Retransfer of Certain Mortgage Loans.

         (a) The Sponsor hereby makes the following representations and
warranties on which the Issuer is deemed to have relied in acquiring the
Mortgage Loans and upon which the Insurer is deemed to rely in issuing the
Policy. Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date with respect to the
Initial

                                       10
<PAGE>

Mortgage Loans and as of the related Transfer Date with respect to the
Subsequent Mortgage Loans, but shall survive the sale, transfer, and assignment
of the Mortgage Loans to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture,

                  (i) As of the Closing Date with respect to the Initial
         Mortgage Loans and as of the related Transfer Date with respect to the
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans
         and with respect to any HELOC Mortgage Loan, as of the date any
         Additional Balance is created, the information set forth in the
         Mortgage Loan Schedule for such Mortgage Loans is true and correct in
         all material respects;

                  (ii) Each Mortgage Loan is being serviced by the Servicer or a
         Person controlling, controlled by or under common control with the
         Servicer and qualified to service mortgage loans;

                  (iii) The applicable Cut-Off Date Principal Balance has not
         been assigned or pledged, and the Sponsor is the sole owner and holder
         of such Cut-Off Date Principal Balance free and clear of any and all
         liens, claims, encumbrances, participation interests, equities,
         pledges, charges or security interests of any nature, and has full
         right and authority, under all governmental and regulatory bodies
         having jurisdiction over the ownership of the applicable Mortgage
         Loans, to sell, assign or transfer the same pursuant to this Agreement;

                  (iv) As of the Closing Date, with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans,
         the Mortgage Loans have not been assigned or pledged, and the Sponsor
         is the sole owner and holder of such Mortgage Loans free and clear of
         any and all liens, claims, encumbrances, participation interests,
         equities, pledges, charges or security interests of any nature, and has
         full right and authority, under all governmental and regulatory bodies
         having jurisdiction over the ownership of the applicable Mortgage
         Loans, to sell and assign the same pursuant to this Agreement;

                  (v) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans,
         the related Mortgage is a valid and subsisting first or second lien, as
         set forth on the Mortgage Loan Schedule with respect to each related
         Mortgaged Property, and as of the applicable Cut-Off Date the related
         Mortgaged Property is free and clear of all encumbrances and liens
         having priority over the first or second lien, as applicable, of such
         Mortgage except for liens for (i) real estate taxes and special
         assessments not yet delinquent; (ii) any first mortgage loan secured by
         such Mortgaged Property and specified on the Mortgage Loan Schedule;
         (iii) covenants, conditions and restrictions, rights of way, easements
         and other matters of public record as of the date of recording that are
         acceptable to mortgage lending institutions generally; and (iv) other
         matters to which like properties are commonly subject which do not
         materially interfere with the benefits of the security intended to be
         provided by such Mortgage;

                                       11
<PAGE>

                  (vi) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans,
         there is no valid offset, defense or counterclaim of any obligor under
         any Loan Agreement or Mortgage;

                  (vii) To the best knowledge of the Sponsor, as of the Closing
         Date with respect to the Initial Mortgage Loans and the applicable
         Transfer Date with respect to any Subsequent Mortgage Loans and any
         Eligible Substitute Mortgage Loans, there is no delinquent recording or
         other tax or fee or assessment lien against any related Mortgaged
         Property;

                  (viii) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans,
         there is no proceeding pending or, to the best knowledge of the
         Sponsor, threatened for the total or partial condemnation of the
         related Mortgaged Property, and such property is free of material
         damage;

                  (ix) To the best knowledge of the Sponsor, as of the Closing
         Date with respect to the Initial Mortgage Loans and the applicable
         Transfer Date with respect to any Subsequent Mortgage Loans and any
         Eligible Substitute Mortgage Loans, there are no mechanics' or similar
         liens or claims which have been filed for work, labor or material
         affecting the related Mortgaged Property which are, or may be, liens
         prior or equal to the lien of the related Mortgage, except liens which
         are fully insured against by the title insurance policy referred to in
         clause (xiv);

                  (x) No Minimum Monthly Payment is more than 89 days delinquent
         (measured on a contractual basis);

                  (xi) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans,
         for each Mortgage Loan, the related Mortgage File contains each of the
         documents and instruments specified to be included therein;

                  (xii) The related Loan Agreement and the related Mortgage at
         origination complied in all material respects with applicable state and
         federal laws, including, without limitation, usury, truth-in-lending,
         real estate settlement procedures, consumer credit protection, equal
         credit opportunity or disclosure laws applicable to the Mortgage Loans;

                  (xiii) On the Closing Date with respect to the Initial
         Mortgage Loans and to the extent not already included in such filing,
         on the applicable Transfer Date with respect to any Subsequent Mortgage
         Loans and any Eligible Substitute Mortgage Loans, the Sponsor has filed
         UCC-1 financing statements with respect to such Mortgage Loans.

                  (xiv) Either a lender's title insurance policy or binder was
         issued on the date of origination of the Mortgage Loans and each such
         policy is valid and remains in full force and effect, or a title search
         or guaranty of title customary in the relevant jurisdiction

                                       12
<PAGE>

         was obtained with respect to a Mortgage Loans as to which no title
         insurance policy or binder was issued;

                  (xv) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans,
         none of the Mortgaged Properties is a mobile home or a manufactured
         housing unit;

                  (xvi) As of the Initial Cut-Off Date for the Initial Mortgage
         Loans no more than (a) 0.67% of the Initial Pool I Mortgage Loans (by
         Initial Pool I Balance), or (b) 3.14% of the Initial Pool II Mortgage
         Loans (by Initial Pool II Balance) are secured by Mortgaged Properties
         located in one United States postal zip code;

                  (xvii) The Combined Loan-to-Value Ratio for each Initial Pool
         I Mortgage Loan was not in excess of 100% and the Combined
         Loan-to-Value Ratio for each Initial Pool II Mortgage Loan was not in
         excess of 100%;

                  (xviii) Each Pool I Mortgage Loan substantially conforms to
         certain loan origination standards with respect to loan balances as of
         the date of origination set forth by the Federal National Mortgage
         Association.

                  (xix) No selection procedure reasonably believed by the
         Sponsor to be adverse to the interests of the Noteholders or the
         Insurer was utilized in selecting the Mortgage Loans;

                  (xx) The Sponsor has not transferred the Mortgage Loans to the
         Trust with any intent to hinder, delay or defraud any of its creditors;

                  (xxi) The Minimum Monthly Payment with respect to any Mortgage
         Loan is not less than the interest accrued at the applicable Loan Rate
         on the average daily Principal Balance during the interest period
         relating to the date on which such Minimum Monthly Payment is due;

                  (xxii) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans,
         each Loan Agreement and each Mortgage Loan is an enforceable obligation
         of the related Mortgagor, except as the enforceability thereof may be
         limited by the bankruptcy, insolvency or similar laws affecting
         creditors' rights generally;

                  (xxiii) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans,
         there has been no default of any senior mortgage loan related to a
         Mortgaged Property that has not been cured by a party other than the
         Servicer;

                  (xxiv) The terms of each Mortgage Note and each Mortgage have
         not been impaired, altered or modified in any respect, except by a
         written instrument which (if

                                       13
<PAGE>

         such instrument is secured by real property) has been recorded, if
         necessary, to protect the interest of the Noteholders and which has
         been delivered to the Indenture Trustee. The substance of any such
         alteration or modification is reflected on the related Mortgage Loan
         Schedule and has been approved by the primary mortgage guaranty
         insurer, if any;

                  (xxv) The definition of "prime rate" in each Credit Line
         Agreement relating to a HELOC Mortgage Loan does not differ materially
         from the definition in the form of Credit Line Agreement in Exhibit D;

                  (xxvi) The weighted average remaining term to maturity of the
         Initial Pool I Mortgage Loans on a contractual basis as of the related
         Initial Cut-Off Date is approximately 207 months and for the Initial
         Pool II Mortgage Loans is approximately 209 months. On each date that
         the Loan Rates relating to Initial HELOC Mortgage Loans have been
         adjusted, interest rate adjustments on the Initial HELOC Mortgage Loans
         were made in compliance with the related Mortgages and Credit Line
         Agreement and applicable law. Over the term of each Initial HELOC
         Mortgage Loan, the Loan Rate may not exceed the related Loan Rate Cap,
         if any. With respect to the Initial Pool I HELOC Mortgage Loans, the
         weighted average Loan Rate Cap is approximately 18.001%. With respect
         to the Initial Pool II HELOC Mortgage Loans, the weighted average Loan
         Rate Cap is approximately 18.000%. With respect to the Initial Pool I
         HELOC Mortgage Loans, the margins range between 0.00% and 6.25% and the
         weighted average margin is approximately 3.23% as of the related
         Initial Cut-Off Date. With respect to the Initial Pool II HELOC
         Mortgage Loans, the margins range between 0.00% and 6.00% and the
         weighted average margin is approximately 3.00% as of the related
         Initial Cut-Off Date. The Loan Rates on the Initial Pool I Mortgage
         Loans range between 5.625% and 15.500%, the Loan Rates on the Initial
         Pool II Mortgage Loans range between 5.875% and 14.500% and the
         weighted average Loan Rate is approximately 7.084% for Pool I and
         6.451% for Pool II;

                  (xxvii) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans,
         each Mortgaged Property consists of a single parcel of real property
         with a one-to-four unit single family residence erected thereon, or an
         individual condominium unit, planned unit development unit or
         townhouse;

                  (xxviii) No more than 30.73% (by Initial Pool I Balance) of
         the Initial Pool I Mortgage Loans are secured by real property improved
         by individual condominium units, planned development units or
         two-to-four family residences erected thereon, and approximately 69.27%
         (by Initial Pool I Balance) of the Initial Pool I Mortgage Loans are
         secured by real property with a one-family residence erected thereon;

                  No more than 21.17% (by Initial Pool II Balance) of the
         Initial Pool II Mortgage Loans are secured by real property improved by
         individual condominium units, planned development units or two-to-four
         family residences erected thereon, and approximately 78.83% (by Initial
         Pool II Balance) of the Initial Pool II Mortgage Loans are secured by
         real property with a one-family residence erected thereon;

                                       14
<PAGE>

                  (xxix) Each Mortgage Note evidencing a Closed End Mortgage
         Loan is comprised of one original promissory note and each such
         promissory note constitutes an "instrument" for purposes of Section
         9-105(1)(i) of the UCC;

                  (xxx) The Credit Limits on the Initial Pool I HELOC Mortgage
         Loans range between $10,000 and $500,000 with an average of
         approximately $52,380. The Credit Limits on the Initial Pool II HELOC
         Mortgage Loans range between $15,000 and $500,000 with an average of
         approximately $127,774. The Principal Balances on the Initial Pool I
         HELOC Mortgage Loans range between $0 and $351,688 with an average of
         approximately $37,582. The Principal Balances on the Initial Pool II
         HELOC Mortgage Loans range between $0 and $500,000 with an average of
         approximately $110,214. The Principal Balances on the Initial Pool I
         Closed End Mortgage Loans range between $10,000 and $112,500 with an
         average of approximately $37,791. The average Credit Limit Utilization
         Rate (weighted by credit line) of the Initial Pool I HELOC Mortgage
         Loans is approximately 88.93% and of the Initial Pool II HELOC Mortgage
         Loans is approximately 93.64%;

                  (xxxi) 100% of the Initial Mortgage Loans are second liens,
         and either (A) no consent for each Mortgage Loan was required by the
         holder of the related senior lien prior to the making of such Mortgage
         Loan or (B) such consent has been obtained and is contained in the
         related Mortgage File;

                  (xxxii) This Agreement constitutes a valid transfer and
         assignment to the Trust of all right, title and interest of the Sponsor
         in and to the Cut-Off Date Principal Balances with respect to the
         applicable Mortgage Loans, all monies due or to become due with respect
         thereto and all proceeds of such Cut-Off Date Principal Balances with
         respect to the Mortgage Loans and such funds as are from time to time
         deposited in the Collection Account (excluding any investment earnings
         thereon) and all other property specified in the definition of "Trust"
         as being part of the corpus of the Trust conveyed to the Trust, and
         upon payment for the Additional Balances, will constitute a valid
         transfer and assignment to the Indenture Trustee of all right, title
         and interest of the Sponsor in and to the Additional Balances, all
         monies due or to become due with respect thereto, and all proceeds of
         such Additional Balances and all other property specified in the
         definition of "Trust" relating to the Additional Balances;

                  (xxxiii) No Mortgagor is insolvent or bankrupt as of the
         Closing Date with respect to the Initial Mortgage Loans and the
         applicable Transfer Date with respect to any Subsequent Mortgage Loans
         and any Eligible Substitute Mortgage Loans;

                  (xxxiv) The proceeds of each Closed End Mortgage Loan have
         been fully disbursed, and there is no obligation on the part of the
         mortgagee to make future advances thereunder. Any and all requirements
         as to completion of any on-site or off-site improvements and as to
         disbursements of any escrow funds therefor have been complied with. All
         costs, fees and expenses incurred in making or closing or recording
         such Closed End Mortgage Loans were paid;

                                       15
<PAGE>

                  (xxxv) Each Mortgage contains customary and enforceable
         provisions which render the rights and remedies of the holder thereof
         adequate for the realization against the related Mortgaged Property of
         the benefits of the security, including (A) in the case of a Mortgage
         designated as a deed of trust, by trustee's sale and (B) otherwise by
         judicial foreclosure;

                  (xxxvi) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loan,
         there is no default, breach, violation or event of acceleration
         existing under any Mortgage or the related Mortgage Note and no event
         which, with the passage of time or with notice and the expiration of
         any grace or cure period, would constitute a default, breach, violation
         or event of acceleration; and the Sponsor has not waived any default,
         breach, violation or event of acceleration;

                  (xxxvii) To the best knowledge of the Sponsor, all parties to
         the Mortgage Note and the Mortgage had legal capacity to execute the
         Mortgage Note and the Mortgage and each Mortgage Note and Mortgage have
         been duly and properly executed by such parties;

                  (xxxviii) As of the Initial Cut-Off Date no more than 0.32% of
         the Principal Balance of the Initial Pool I Mortgage Loans nor more
         than 0.00% of the Principal Balance of the Initial Pool II Mortgage
         Loans represents Mortgage Loans with respect to which the related
         Mortgagor had a Credit Score of 600 or less at the time of origination
         or whose Credit Score was unavailable.

                  (xxxix) As of the Closing Date with respect to the Initial
         Mortgage Loans and the applicable Transfer Date with respect to any
         Subsequent Mortgage Loan and any Eligible Substitute Mortgage Loan, no
         Mortgagor has been released, in whole or in part, except in connection
         with an assumption agreement which has been approved by the applicable
         title insurer (to the extent required by such title insurer) and which
         is part of the Mortgage File delivered to the Indenture Trustee;

                  (xl) At the time of origination of each Mortgage Loan, the
         related prior lien was not more than 30 days delinquent;

                  (xli) All required inspections, licenses and certificates with
         respect to the use and occupancy of all occupied portions of all
         property securing the Mortgages have been made, obtained or issued, as
         applicable;

                  (xlii) With respect to each Mortgage Loan, the related prior
         lien does not provide for negative amortization;

                  (xliii) With respect to each Mortgage Loan, the maturity date
         of the Mortgage Loan is prior to the maturity date of the related prior
         lien if such prior lien provides for a balloon payment;

                  (xliv) Each Initial Pool I Mortgage Loan is secured by a
         property having an appraised value as of origination of $3,600,000 or
         less and each Initial Pool II Mortgage

                                       16
<PAGE>

         Loan is secured by a property having an appraised value as of
         origination of $6,000,000 or less;

                  (xlv) With respect to each Mortgage Loan, the improvements
         upon each Mortgaged Property are covered by a valid and existing hazard
         insurance policy with a carrier generally acceptable to the Servicer
         that provides for fire and extended coverage representing coverage not
         less than (a) the Credit Limit of such HELOC Mortgage Loan or (b) the
         Cut-Off Date Principal Balance of such Closed End Mortgage Loan or (c)
         the maximum insurable value of the Mortgaged Property;

                  (xlvi) Each Subsequent Mortgage Loan was or will be originated
         in accordance with the same underwriting standards that were used to
         originate the Initial Mortgage Loans.

With respect to the representations and warranties set forth in this Section
2.05 that are made to the best of the Sponsor's knowledge or as to which the
Sponsor has no knowledge, if it is discovered by the Sponsor, the Servicer, the
Insurer or a Responsible Officer of the Indenture Trustee that the substance of
such representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan then,
notwithstanding the Sponsor's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.

         (b) It is understood and agreed that the representations and warranties
set forth in this Section 2.05 shall survive delivery of the respective Mortgage
Files to the Indenture Trustee pursuant to Section 2.01 and the termination of
the rights and obligations of the Servicer pursuant to Section 5.04 or 6.02.
Upon discovery by the Sponsor, the Servicer, the Insurer or a Responsible
Officer of the Indenture Trustee of a breach of any of the foregoing
representations and warranties, without regard to any limitation set forth
therein concerning the knowledge of the Sponsor as to the facts stated therein,
which materially and adversely affects the interests of the Trust or the
Noteholders or the Insurer in the related Mortgage Loans, the party discovering
such breach shall give prompt written notice to the other parties and the
Insurer. Within 90 days of its discovery or its receipt of notice of such
breach, the Sponsor shall use all reasonable efforts to cure such breach in all
material respects or shall, not later than the Business Day next preceding the
Payment Date in the month following the Collection Period in which any such cure
period expired (or such later date that is acceptable to the Indenture Trustee
and the Insurer as evidenced by their written consents), either (a) accept a
transfer of such Mortgage Loan from the Trust or (b) substitute an Eligible
Substitute Mortgage Loan, each in the same manner and subject to the same
conditions as set forth in Section 2.03; provided, however, that the cure for
any breach of a representation and warranty relating to the characteristics of
the Mortgage Loans in the aggregate shall be a repurchase of or substitution for
only the Mortgage Loans necessary to cause such characteristics to be in
compliance with the related representation and warranty. Upon accepting such
transfer and making any required deposit into the Collection Account or
substitution of an Eligible Substitute Mortgage Loans, as the case may be, the
Sponsor shall be entitled to receive an instrument of assignment or transfer
from the Indenture Trustee to the same extent as set forth in Section 2.03 with
respect to the transfer of Mortgage Loans under that Section.

                                       17
<PAGE>

         It is understood and agreed that the obligation of the Sponsor to
accept a retransfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required deposit in the Collection Account or to
substitute an Eligible Substitute Mortgage Loan, as the case may be, shall
constitute the sole remedy against the Sponsor respecting such breach available
to Noteholders, the Indenture Trustee on behalf of Noteholders and the Insurer;
provided, however, that the Sponsor shall defend and indemnify the Indenture
Trustee, the Insurer and the Noteholders against all reasonable costs and
expenses, and all losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and the amount of any settlement entered into with
the consent of the Sponsor (such consent not to be unreasonably withheld), which
may be asserted against or incurred by any of them as a result of any
third-party action arising out of any breach of any such representation and
warranty. Notwithstanding the foregoing, with regard to any breach of the
representation and warranty set forth in Section 2.05(a)(xxix), the Sponsor
shall pay to the Trust the sum of (i) the amount of the related Principal
Balances, plus unpaid accrued interest on each such Principal Balance at the
applicable Loan Rate to the date of payment, (ii) the amount of any loss
suffered by the Noteholders or the Insurer with respect to the affected Mortgage
Loans and (iii) all amounts owing to the Insurer pursuant to the Insurance
Agreement.

         Section 2.06. Covenants of the Sponsor. The Sponsor hereby covenants
that:

         (a) Security Interests. The Sponsor will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loans, whether now existing or hereafter created, or
any interest therein; the Sponsor will notify the Indenture Trustee and the
Insurer of the existence of any Lien on any Mortgage Loans immediately upon
discovery thereof; and the Sponsor will defend the Trust's right, title and
interest (including the Trust's security interest) in, to and under the Mortgage
Loans, whether now existing or hereafter created, against all claims of third
parties claiming through or under the Sponsor; provided, however, that nothing
in this Section 2.06(a) shall prevent or be deemed to prohibit the Sponsor from
suffering to exist upon any of the Mortgage Loans any Liens for municipal or
other local taxes and other governmental charges if such taxes or governmental
charges shall not at the time be due and payable or if the Sponsor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.

         (b) UCC-1 Financing Statements. On the Closing Date with respect to the
Initial Mortgage Loans and, to the extent not already included in such filing,
on the applicable Transfer Date with respect to any Subsequent Mortgage Loans
and any Eligible Substitute Mortgage Loans, the Sponsor will file UCC-1
financing statements with respect to such Mortgage Loans.

         (c) Negative Pledge. The Sponsor hereby agrees not to transfer, assign,
exchange, pledge, finance, hypothecate, grant a security interest in or
otherwise convey the Certificates except in accordance with Sections 5.05 and
6.02 hereof and in accordance with the Insurance Agreement and the Trust
Agreement.

         (d) Downgrading. The Sponsor will not engage in any activity which
would result in a downgrading or withdrawal of the ratings on the Notes without
regard to the effect of the Policy.

                                       18
<PAGE>

         (e) Amendment to Certificate of Incorporation. The Sponsor will not
amend its Certificate of Incorporation without prior written notice to the
Indenture Trustee and the Rating Agencies and the prior written consent of the
Insurer which consent shall not be unreasonably withheld.

         (f) Principal Place of Business. The Sponsor's principal place of
business is in California, and the Sponsor will not change its principal place
of business without prior written notice to the Indenture Trustee, the Rating
Agencies and to the Insurer.

         Section 2.07. Retransfers of Mortgage Loans at Election of Sponsor.
Subject to the conditions set forth below and Section 8.2 of the Indenture, the
Sponsor may, but shall not be obligated to, require the retransfer of Mortgage
Loans from the Trust to the Sponsor as of the close of business on a Payment
Date (each, a "Retransfer Date"). On the fifth Business Day (the "Retransfer
Notice Date") prior to the Retransfer Date designated in such notice, the
Sponsor shall give the Indenture Trustee, the Insurer and the Servicer a notice
of the proposed retransfer that contains a list of the Mortgage Loans to be
retransferred. Such retransfers of Mortgage Loans in Pool I or Pool II shall be
permitted upon satisfaction of the following conditions:

                  (i) The applicable Rapid Amortization Period shall not have
         commenced;

                  (ii) On the Retransfer Date, the related Overcollateralization
         Amount (after giving effect to the removal from the Trust of the
         Mortgage Loans proposed to be retransferred) is at least equal to the
         related Specified Overcollateralization Amount;

                  (iii) The transfer of such Mortgage Loans on any Retransfer
         Date during the related Managed Amortization Period shall not, in the
         reasonable belief of the Sponsor, cause a Rapid Amortization Event with
         respect to the related Class of Notes to occur or an event which with
         notice or lapse of time or both would constitute such a Rapid
         Amortization Event;

                  (iv) On or before the Retransfer Date, the Sponsor shall have
         delivered to the Indenture Trustee a revised Mortgage Loan Schedule,
         reflecting the proposed transfer and the Retransfer Date, and the
         Servicer shall have marked the Electronic Ledger to show that the
         Mortgage Loans retransferred to the Sponsor are no longer owned by the
         Trust;

                  (v) The Sponsor shall represent and warrant that no selection
         procedures reasonably believed by the Sponsor to be adverse to the
         interests of the Noteholders or the Insurer were utilized in selecting
         the Mortgage Loans to be removed from the Trust;

                  (vi) In connection with each such retransfer of Mortgage Loans
         pursuant to this Section, each Rating Agency shall have received on or
         prior to the related Retransfer Notice Date notice of such proposed
         retransfer of Mortgage Loans and, prior to the Retransfer Date, shall
         have notified the Indenture Trustee and the Insurer in writing that
         such retransfer of Mortgage Loans would not result in a reduction or
         withdrawal of its then current ratings of the Class A-1 Notes or of the
         Class A-2 Notes, in either case without regard to the Policy; and

                                       19
<PAGE>

                  (vii) The Sponsor shall have delivered to the Indenture
         Trustee and the Insurer an Officer's Certificate certifying that the
         items set forth in subparagraphs (i) through (vi), inclusive, have been
         performed or are true and correct, as the case may be. The Indenture
         Trustee may conclusively rely on such Officer's Certificate, shall have
         no duty to make inquiries with regard to the matters set forth therein
         and shall incur no liability in so relying.

         Upon receiving the requisite information from the Sponsor, the Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Retransfer Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Sponsor the Mortgage
File for each Mortgage Loan being so transferred, and the Indenture Trustee
shall execute and deliver to the Sponsor such other documents prepared by the
Sponsor as shall be reasonably necessary to transfer such Mortgage Loans to the
Sponsor. Any such retransfer of the Trust's right, title and interest in and to
Mortgage Loans shall be without recourse, representation or warranty by or of
the Indenture Trustee or the Trust to the Sponsor.

         Section 2.08. Execution and Authentication of Notes. The Indenture
Trustee, on behalf of the Trust, has caused to be executed, authenticated and
delivered to or upon the order of the Sponsor, in exchange for the Trust,
concurrently with the sale, assignment and conveyance to the Indenture Trustee
of the Trust, Notes representing indebtedness of the Trust in authorized
denominations and the Certificates, evidencing the ownership of the Trust.

         Section 2.09. Tax Treatment. It is the intention of the Sponsor and the
Certificateholders that the Notes will be indebtedness of the Sponsor for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income. The Sponsor, the Indenture
Trustee and each Noteholder (or Note Owner) by acceptance of its Note (or, in
the case of a Note Owner, by virtue of such Note Owner's acquisition of a
beneficial interest therein) agrees to treat the Notes (or beneficial interest
therein), for purposes of federal, state and local income or franchise taxes and
any other tax imposed on or measured by income, as indebtedness of the Sponsor
secured by the assets of the Trust and to report the transactions contemplated
by this Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Noteholder agrees that it will cause any Note Owner acquiring an
interest in a Note through it to comply with this Agreement as to treatment of
the Notes as indebtedness for federal, state and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by income. The
Indenture Trustee will prepare and file all tax reports required hereunder
consistent with this Agreement except as may be required by or provided in
Section 3.15.

         Section 2.10. Conveyance of the Subsequent Mortgage Loans.

         (a) Subject to the satisfaction of the conditions set forth in Section
2.01 and paragraph (b) below, in consideration of the Indenture Trustee's
delivery on a Subsequent Transfer Date to or upon the order of the Sponsor of
amounts in the Pre-Funding Account equal to the aggregate principal balance of
the Subsequent Mortgage Loans the Sponsor shall, to the extent of the
availability thereof, on the related Subsequent Transfer Date transfer, assign,
set over and otherwise convey to the Trust without recourse (subject to Sections
2.03 and 2.05) all of its right, title and interest in and to such Subsequent
Mortgage Loans and all Collections in

                                       20
<PAGE>

respect thereof received after the Cut-Off Date for the Subsequent Mortgage
Loans (excluding payments in respect of accrued interest due prior to the
related Subsequent Transfer Date) or, with respect to any Additional Balances
with respect thereto, on or after the date of transfer to the Trust. Future
advances made to a Mortgagor under a Loan Agreement relating to a Subsequent
Mortgage Loans shall be part of the related Principal Balance and transferred to
the Trust pursuant to this Section 2.10, and, therefore, part of the Trust
Property upon the sale thereof to the Sponsor under the Purchase Agreement.

         On each Subsequent Transfer Date, the Sponsor shall deliver to the
Indenture Trustee a letter which: (i) states the amount to be withdrawn from the
Pre-Funding Account on such date to purchase Subsequent Mortgage Loans for
addition to Pool I; (ii) states the amount to be withdrawn from the Pre-Funding
Account on such date to purchase Subsequent Mortgage Loans for addition to Pool
II; (iii) lists each Subsequent Mortgage Loan being conveyed to the Trust on
such Subsequent Transfer Date (including a description of the Pool into which
each such Subsequent Mortgage Loan is being conveyed); (iv) acknowledges that
each of the requirements listed in Section 2.10(b) of this Agreement have been
satisfied; (v) attaches as exhibits thereto each of the documents described in
Sections 2.10(b)(i), (v), (vii) and (viii) and; (vi) acknowledges that the
Sponsor has conveyed its right, title and interest in and to each Subsequent
Mortgage Loans and to the corresponding Related Documents and certain other
rights to the Indenture Trustee pursuant to this Agreement, and the Indenture
Trustee shall hold such documents hereunder for the benefit of the Noteholders.
The Indenture Trustee shall acknowledge its receipt of such letter by signing it
and returning a signed copy to the Sponsor, the Servicer, the Issuer, the
Insurer and each of the Rating Agencies.

         (b) The obligation of the Indenture Trustee to accept the transfer of
the Subsequent Mortgage Loans and the other property and rights related thereto
described in paragraph (a) above is subject to the satisfaction of each of the
following conditions on or prior to the Subsequent Transfer Date:

                  (i) the Indenture Trustee shall have been provided with a
         letter from the Insurer consenting to such transfer of the Subsequent
         Mortgage Loans (which consent shall not be unreasonably withheld or
         delayed);

                  (ii) the Indenture Trustee shall have been provided with a
         Mortgage Loan Schedule, listing the Subsequent Mortgage Loans delivered
         or to be delivered on such Subsequent Transfer Date;

                  (iii) the Sponsor shall have deposited in the Collection
         Account all Collections in respect of such Subsequent Mortgage Loans
         received after the Cut-Off Date (excluding payments in respect of
         accrued interest due prior to the related Transfer Date) for the
         Subsequent Mortgage Loans;

                  (iv) the representations and warranties of the Sponsor in
         Section 2.05 hereof, to the extent such representations and warranties
         do not pertain exclusively to the Initial Mortgage Loans, are true and
         correct with respect to the Subsequent Mortgage Loans as of the related
         Subsequent Transfer Date;

                                       21
<PAGE>

                  (v) the Servicer shall acknowledge in writing that it has
         delivered the related Mortgage Files to the Indenture Trustee and
         complied with all other requirements with respect to the assignment of
         the related Mortgages specified therein;

                  (vi) the Servicer shall represent and warrant that no
         selection procedures reasonably believed by the Servicer to be adverse
         to the interests of the Noteholders or the Insurer were utilized in
         selecting the Subsequent Mortgage Loans;

                  (vii) the Sponsor shall have delivered to the Indenture
         Trustee an Officer's Certificate confirming the satisfaction of each
         condition precedent specified in this paragraph (b) and paragraphs (c)
         and (d) below; and

                  (viii) the Sponsor shall have acknowledged in writing that,
         with respect to either Pool, neither (x) the aggregate amount withdrawn
         from the Pre-Funding Account to purchase Subsequent Mortgage Loans for
         addition to such Pool on that all prior Subsequent Transfer Dates nor
         (y) the aggregate Principal Balances of the Subsequent Mortgage Loans
         transferred to the Trust for assignment to such Pool on that and all
         prior Subsequent Transfer Dates exceeds the Original Class A-1
         Pre-Funded Amount or the Original Class A-2 Pre-Funded Amount, as
         applicable.

         (c) The obligations of the Issuer to accept the assignment of a
Subsequent Mortgage Loan on any Subsequent Transfer Date are subject to the
following additional requirements, any of which may be waived or modified in any
respect by the Insurer (with consent of the Rating Agencies) by a written
instrument executed by the Insurer. The obligation of the Trust to purchase all
of the Subsequent Mortgage Loans for addition to either Pool (the "Subsequent
Mortgage Loans") in the Trust is subject to the following additional aggregate
requirements: (i) the aggregate weighted average Margin for the Subsequent
Mortgage Loans is at least 3.10%; (ii) the aggregate weighted average Combined
Loan-to-Value Ratio of all of the Subsequent Mortgage Loans is not more than
84.00%; (iii) the Subsequent Mortgage Loans shall maintain a weighted average
Credit Score of at least 691; (iv) no Subsequent Mortgage Loans may be 60 or
more days delinquent; and (v) no more than 1.00% of the Subsequent Mortgage
Loans shall be 30-59 days delinquent.

         (d) On the last Payment Date of the Pre-Funding Period, the Sponsor
shall have provided the Indenture Trustee, the Rating Agencies and the Insurer
with an Opinion of Counsel to the effect that the transfers of the Subsequent
Mortgage Loans during the Pre-Funding Period constitute a sale of the Principal
Balances of the Subsequent Mortgage Loans to the Sponsor and a sale of or grant
of a security interest in the Subsequent Mortgage Loans to the Indenture
Trustee; provided, however, that in the event of a change of law during the
Pre-Funding Period that materially affects the method of perfecting the security
interest in the Subsequent Mortgage Loans, the Sponsor shall (i) provide the
Indenture Trustee, the Rating Agencies and the Insurer with an Opinion of
Counsel to the effect that such transfer constitutes a sale of the Principal
Balances of the Subsequent Mortgage Loans to the Sponsor and a sale of or grant
of a security interest in the Subsequent Mortgage Loans to the Indenture
Trustee, and (ii) take such action as is necessary to perfect the interests of
the Trust in the Subsequent Mortgage Loans.

                                       22
<PAGE>

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         Section 3.01. The Servicer.

         (a) The Servicer is hereby authorized to act as agent for the Trust and
in such capacity shall manage, service, administer and make collections on the
Mortgage Loans and perform the other actions under this Agreement. The Servicer
shall service and administer the Mortgage Loans in a manner consistent with the
terms of this Agreement and with general industry practice and shall have full
power and authority, acting alone or through a subservicer, to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable, it being understood, however, that the Servicer shall at
all times remain responsible to the Indenture Trustee, the Securityholders and
the Insurer for the performance of its duties and obligations hereunder in
accordance with the terms hereof. Any amounts received by any subservicer in
respect of a Mortgage Loan shall be deemed to have been received by the Servicer
whether or not actually received by it. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered
by the Trust, to execute and deliver, on behalf of the Trust, 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 with respect to the Mortgaged Properties and to make deposits to and
withdrawals from the Collection Account. The Indenture Trustee and the Owner
Trustee shall, upon the written request of a Servicing Officer, furnish the
Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder. The Servicer in such capacity may also consent to the placing
of a lien senior to that of any Mortgage on the related Mortgaged Property,
provided that

                  (i) such Mortgage succeeded to a first lien position after the
         related Mortgage Loan was conveyed to the Trust and, immediately
         following the placement of such senior lien, such Mortgage is in a
         second lien position and the outstanding principal amount of the
         mortgage loan secured by such subsequent senior lien is no greater than
         the outstanding principal amount of the senior mortgage loan secured by
         the Mortgaged Property as of the date the related Mortgage Loan was
         originated; or

                  (ii) the Mortgage relating to such Mortgage Loan was in a
         second lien position as of the Cut-Off Date and the new senior lien
         secures a mortgage loan that refinances an existing first mortgage loan
         and the outstanding principal amount of the replacement first mortgage
         loan immediately following such refinancing is not greater than the
         outstanding principal amount of such existing first mortgage loan at
         the date of origination of such Mortgage Loan;

provided, further, that such senior lien does not secure a note that provides
for negative amortization.

         The Servicer may also, without prior approval from the Rating Agencies
or the Insurer, increase the Credit Limits on HELOC Mortgage Loans provided that
(i) new appraisals are

                                       23
<PAGE>

obtained and the Combined Loan-to-Value Ratios of the HELOC Mortgage Loans after
giving effect to such increase are less than or equal to the Combined
Loan-to-Value Ratios of the Mortgage Loans as of the Cut-Off Date and (ii) such
increases are consistent with the Servicer's credit and collection policies. No
material change or departure from the Servicer's credit and collection policies
with respect to any Mortgage Loans as in effect as of the Closing Date shall be
permitted without the prior written consent of the Insurer.

         In addition, the Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the Mortgagor; provided that (i) such changes do
not materially and adversely affect the interests of Securityholders or the
Insurer, (ii) such changes are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Indenture Trustee and the Insurer and (iii) the Rating Agencies are
promptly notified of the changes.

         In addition to the foregoing, the Servicer may solicit Mortgagors to
change any other terms of the related Mortgage Loans; provided that such changes
(i) do not materially and adversely affect the interest of Securityholders or
the Insurer and (ii) are consistent with prudent and customary business practice
as evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee and the Insurer. Nothing herein shall limit the right of the
Servicer to solicit Mortgagors with respect to new loans (including mortgage
loans) that are not Mortgage Loans.

         The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Indenture Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.

         (b) In the event that the rights, duties and obligations of the
Servicer are terminated hereunder, any successor to the Servicer in its sole
discretion may, to the extent permitted by applicable law, terminate the
existing subservicer arrangements with any subservicer or assume the terminated
Servicer's rights under such subservicing arrangements which termination or
assumption will not violate the terms of such arrangements.

         Section 3.02. Collection of Certain Mortgage Loan Payments

         (a) Collection of Certain Mortgage Loan Payments. 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, follow such collection procedures as it
follows with respect to home equity loans in its servicing portfolio comparable
to the Mortgage Loans. Consistent with the foregoing, and without limiting the
generality of the foregoing, the Servicer may in its discretion (i) waive any
late payment charge or any assumption fees or other fees which may be collected
in the ordinary course of servicing such Mortgage Loans and (ii) arrange with a
Mortgagor a schedule for the payment of interest due and unpaid; provided that
such arrangement is consistent with the Servicer's policies with respect to the
Mortgage Loans it owns or services; provided, further, that notwithstanding such
arrangement such Mortgage Loans will be included in the information regarding
delinquent Mortgage Loans set forth in the Servicing Certificate and monthly
statement to Noteholders pursuant to Section 4.01.

                                       24
<PAGE>

         (b) The Servicer shall on the Closing Date deposit into the Collection
Account any amounts representing payments on, and any collections in respect of,
the Initial Mortgage Loans received after the related Initial Cut-Off Date and
prior to the Closing Date (exclusive of payments in respect of accrued interest
due on or prior to such Cut-Off Date) and thereafter the Servicer, or the
Sponsor, as the case may be, shall deposit into the Collection Account within
two Business Days following receipt thereof the following payments and
collections received or made by it (without duplication):

                  (i) all collections on and in respect of the Mortgage Loans;

                  (ii) the amounts, if any, deposited to the Collection Account
         pursuant to Section 3.04;

                  (iii) Net Liquidation Proceeds;

                  (iv) Insurance Proceeds (including, for this purpose, any
         amount required to be credited by the Servicer pursuant to the last
         sentence of Section 3.04 and excluding the portion thereof, if any,
         that has been applied to the restoration or repair of the related
         Mortgaged Property or released to the related Mortgagor in accordance
         with the normal servicing procedures of the Servicer);

                  (v) any amounts required to be deposited therein pursuant to
         Section 7.01;

                  (vi) amounts transferred from the Pre-Funding Account pursuant
         to Section 8.9(e) of the Indenture;

                  (vii) any amounts drawn under the Policy pursuant to Section
         4.02;

provided, however, that with respect to each Collection Period, the Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such Collection Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Servicer need not deposit in the Collection Account amounts representing
Foreclosure Profits, fees (including annual fees) or late charge penalties
payable by Mortgagors, or amounts received by the Servicer for the accounts of
Mortgagors for application towards the payment of taxes, insurance premiums,
assessments, excess pay off amounts and similar items. The Servicer shall remit
all Foreclosure Profits to the Sponsor.

         The Indenture Trustee shall hold amounts deposited in the Collection
Account as trustee for the Noteholders and for the Insurer. The Servicer shall
notify the Indenture Trustee and the Insurer in writing on each Determination
Date of the amount of payments and collections in the Collection Account
allocable to Interest Collections and Principal Collections for the related
Payment Date. Following such notification, the Servicer shall be entitled to
withdraw from the Collection Account and retain any amounts that constitute
income and gain realized from the investment of such payments and collections.

         At the direction of the Servicer, the Indenture Trustee shall invest
funds in the Collection Account in Eligible Investments. All income and gain
realized from any investment in Eligible

                                       25
<PAGE>

Investments of funds in the Collection Account shall be for the benefit of the
Servicer and shall be subject to its withdrawal from time to time. The amount of
any losses incurred in respect of the principal amount of any such investments
shall be deposited in the Collection Account by the Servicer out of its own
funds immediately as realized.

         Section 3.03. Withdrawals from the Collection Account. From time to
time, withdrawals may be made from the Collection Account by the Servicer for
the following purposes:

                  (i) If not received by the Servicer pursuant to Section
         3.02(b), to the Servicer as payment for its Servicing Fee pursuant to
         Section 3.08;

                  (ii) To pay to the Servicer amounts on deposit in the
         Collection Account that are not to be included in the distributions and
         payments pursuant to Section 8.6 of the Indenture to the extent
         provided by the second to the last and the last paragraph of Section
         3.02(b);

                  (iii) To make or to permit the Paying Agent to make
         distributions and payments pursuant to Section 8.6 of the Indenture;

                  (iv) Prior to the Collection Period preceding the Rapid
         Amortization Commencement Date, to pay to the Sponsor the amount of any
         Additional Balances as and when created during the related Collection
         Period; provided, that the aggregate amount so paid to the Sponsor in
         respect of Additional Balances at any time during any Collection Period
         shall not exceed the amount of Principal Collections theretofore
         received for such Collection Period;

                  (v) To pay to the Servicer any Liquidation Expenses not
         reimbursed prior to the deposit of Net Liquidation Proceeds to the
         Collection Account;

                  (vi) Upon termination of the Trust, to make any payments
         required by Section 7.01.

         If the Servicer deposits in the Collection Account any amount not
required to be deposited therein or any amount in respect of payments by
Mortgagors made by checks subsequently returned for insufficient funds or other
reason for non-payment it may at any time withdraw such amount from the
Collection Account, and any such amounts shall not be included in the amounts to
be deposited in the Collection Account pursuant to Section 3.02(b), any
provision herein to the contrary notwithstanding.

         Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Servicer or the related subservicer as loss payee
thereunder providing extended coverage in an amount which is at

                                       26
<PAGE>

least equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan from time to time or (ii) the combined principal
balance owing on such Mortgage Loan and any mortgage loan senior to such
Mortgage Loan from time to time. The Servicer shall also maintain on property
acquired upon foreclosure, or by deed in lieu of foreclosure, hazard insurance
with extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value from time to time of the improvements which are a
part of such property or (ii) the combined principal balance owing on such
Mortgage Loan and any mortgage loan senior to such Mortgage Loan at the time of
such foreclosure or deed in lieu of foreclosure plus accrued interest and the
good-faith estimate of the Servicer of related Liquidation Expenses to be
incurred in connection therewith. Amounts collected by the Servicer under any
such policies shall be deposited in the Collection Account to the extent called
for by Section 3.02. In cases in which any Mortgaged Property is located in a
federally designated flood area, the hazard insurance to be maintained for the
related Mortgage Loan shall include flood insurance. All such flood insurance
shall be in such amounts as are required under applicable guidelines of the
Federal Flood Emergency Act. The Servicer shall be under no obligation to
require that any Mortgagor maintain earthquake or other additional insurance and
shall be under no obligation itself to maintain any such additional insurance on
property acquired in respect of a Mortgage Loan, 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 Servicer shall obtain and maintain a
blanket policy consistent with prudent industry standards insuring against
hazard losses on all of the Mortgage Loans in an aggregate amount prudent under
industry standards, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section 3.04 and if there
shall have been a loss which would have been covered by such policy, deposit in
the Collection Account, as the case may be, the amount not otherwise payable
under the blanket policy because of any deductible clause.

         Section 3.05. Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall exercise its right to accelerate the maturity of such
Mortgage Loan consistent with the then current practice of the Servicer and
without regard to the inclusion of such Mortgage Loan in the Trust. If it elects
not to enforce its right to accelerate or if it is prevented from doing so by
applicable law, the Servicer (so long as such action conforms with the
underwriting standards generally acceptable in the industry at the time for new
origination) is authorized to take or enter into an assumption and modification
agreement from or with the Person to whom such Mortgaged Property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Loan Agreement and, to the extent permitted by applicable law, the Mortgagor
remains liable thereon. The Servicer shall notify the Indenture Trustee that any
assumption and modification agreement has been completed by delivering to the
Indenture Trustee an Officer's Certificate signed by a Servicing Officer
certifying that such agreement is in compliance with this Section 3.05 and by
forwarding to the Indenture Trustee the original copy of such assumption and
modification agreement. Any such assumption and modification agreement shall,
for all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. No
change in the terms of the related Loan Agreement may be made by the Servicer in
connection with any such assumption to the extent that such change would not be
permitted to be made in respect of the original Loan Agreement pursuant to the
fourth paragraph of Section 3.01(a). Any fee collected by the Servicer for
entering into any such agreement will be retained by the Servicer as additional
servicing compensation.

         Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans. The Servicer shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue

                                       27
<PAGE>

in default when, in the opinion of the Servicer based upon the practices and
procedures referred to in the following sentence, no satisfactory arrangements
can be made for collection of delinquent payments pursuant to Section 3.02;
provided, that if the Servicer has actual knowledge or reasonably believes that
any Mortgaged Property is affected by hazardous or toxic wastes or substances
and that the acquisition of such Mortgaged Property would not be commercially
reasonable, then the Servicer will not cause the Trust to acquire title to such
Mortgaged Property in a foreclosure or similar proceeding. In connection with
such foreclosure or other conversion, the Servicer shall follow such practices
(including, in the case of any default on a related senior mortgage loan, the
advancing of funds to correct such default) and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general mortgage
servicing activities. The foregoing is subject to the proviso that the Servicer
shall not be required to incur any Liquidation Expenses or to otherwise expend
its own funds in connection with any foreclosure or towards the correction of
any default on a related senior mortgage loan or restoration of any property
unless it shall determine that such expenditure will increase Net Liquidation
Proceeds.

         In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, or to its nominee on behalf of the
Trust.

         The Servicer, in its sole discretion, shall have the right but not the
obligation to purchase for its own account from the Trust any Mortgage Loan
which is 91 days or more delinquent. The price for any Mortgage Loan purchased
hereunder (which shall be at a purchase price equal to the Loan Purchase Price
thereof), shall be deposited in the Collection Account and the Indenture
Trustee, upon receipt of a certificate from the Servicer in the form of Exhibit
C-1 hereto, shall release or cause to be released to the Servicer the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment prepared by the Servicer, in each case without recourse,
representation or warranty, as shall be necessary to vest in the purchaser of
such Mortgage Loans any Mortgage Loans released pursuant hereto and the Servicer
shall succeed to all the Indenture Trustee's right, title and interest in and to
such Mortgage Loans and all security and documents related thereto. Such
assignment shall be an assignment outright and not for security. The Servicer
shall thereupon own such Mortgage Loans, and all security and documents, free of
any further obligation to the Indenture Trustee, the Insurer or the
Securityholders with respect thereto.

         Section 3.07. Indenture Trustee to Cooperate. On or before each Payment
Date, the Servicer will notify the Indenture Trustee of the payment in full of
the Principal Balance of any Mortgage Loan during the preceding Collection
Period, which notification shall be by a certification (which certification
shall include a statement to the effect that all amounts received in connection
with such payment which are required to be deposited in the Collection Account
pursuant to Section 3.02 have been so deposited or credited) of a Servicing
Officer. Upon any such payment in full, the Servicer is authorized to execute,
pursuant to the authorization contained in Section 3.01, if the assignments of
Mortgage have been recorded as required hereunder, an instrument of satisfaction
regarding the related Mortgage, which instrument of satisfaction shall be
recorded by the Servicer if required by applicable law and be delivered to the
Person entitled thereto. It is understood and agreed that no expenses incurred
in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in

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<PAGE>

the Collection Account. If the Indenture Trustee is holding the Mortgage Files,
from time to time and as appropriate for the servicing or foreclosure of any
Mortgage Loan, or in connection with the payment in full of the Principal
Balance of any Mortgage Loan shall, upon request of the Servicer and delivery to
the Indenture Trustee of a Request for Release substantially in the form
attached hereto as Exhibit C signed by a Servicing Officer, release the related
Mortgage File to the Servicer and the Indenture Trustee shall execute such
documents, in the forms provided by the Servicer, as shall be necessary to the
prosecution of any such proceedings or the taking of other servicing actions.
Such trust receipt shall obligate the Servicer to return the Mortgage File to
the Indenture Trustee when the need therefor by the Servicer no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to that hereinabove specified, the
trust receipt shall be released by the Indenture Trustee.

         In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the Assignments of
Mortgage in accordance with the provisions hereof, the Indenture Trustee shall,
if so requested in writing by the Servicer, execute an appropriate assignment in
the form provided to the Indenture Trustee by the Servicer to assign such
Mortgage Loan for the purpose of collection to the Servicer or to the related
subservicer (any such assignment shall unambiguously indicate that the
assignment is for the purpose of collection only), and, upon such assignment,
the Servicer will thereupon bring all required actions in its own name and
otherwise enforce the terms of the Mortgage Loan and deposit the Net Liquidation
Proceeds, exclusive of Foreclosure Profits, received with respect thereto in the
Collection Account. In the event that all delinquent payments due under any such
Mortgage Loan are paid by the Mortgagor and any other defaults are cured, then
the Servicer shall promptly reassign such Mortgage Loan to the Indenture Trustee
and return the related Mortgage File to the place where it was being maintained.

         Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to receive the Servicing Fee pursuant
to Section 3.03 as compensation for its services in connection with servicing
the Mortgage Loans. Moreover, additional servicing compensation in the form of
late payment charges or other receipts not required to be deposited in the
Collection Account (other than Foreclosure Profits) shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all other fees
and expenses not expressly stated hereunder to be for the account of the
Securityholders) and shall not be entitled to reimbursement therefor except as
specifically provided herein. Liquidation Expenses are reimbursable to the
Servicer solely from related Liquidation Proceeds.

         Section 3.09. Annual Statement as to Compliance.

         (a) The Servicer will deliver to the Indenture Trustee, the Insurer and
the Rating Agencies, on or before March 31 of each year, beginning March 31,
2001, an Officer's Certificate stating that (i) a review of the activities of
the Servicer during the preceding fiscal year (or such shorter period as is
applicable in the case of the first report) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
of its material obligations under this Agreement throughout such fiscal year,
or, if there has been a default in

                                       29
<PAGE>

the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.

         (b) The Servicer shall deliver to the Indenture Trustee, the Insurer
and each of the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice by means of an Officer's Certificate of any event which with the giving
of notice or the lapse of time or both, would become an Event of Servicing
Termination.

         Section 3.10. Annual Servicing Report. On or before March 31 of each
year, beginning March 31, 2001, the Servicer, at its expense, shall cause a firm
of nationally recognized independent public accountants (who may also render
other services to the Servicer) to furnish a report to the Indenture Trustee,
the Insurer and each Rating Agency to the effect that such firm has examined
certain documents and records relating to the servicing of mortgage loans during
the most recent fiscal year then ended under pooling and servicing agreements
(substantially similar to this Agreement, including this Agreement), that such
examination was conducted substantially in compliance with the audit guide for
audits of non-supervised mortgagees approved by the Department of Housing and
Urban Development for use by independent public accountants (to the extent that
the procedures in such audit guide are applicable to the servicing obligations
set forth in such agreements) and that such examination has disclosed no items
of noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be set
forth in such report.

         Section 3.11. Annual Opinion of Counsel. On or before March 31 of each
year, beginning March 31, 2001, the Sponsor, at its expense, shall deliver to
the Indenture Trustee and the Insurer the applicable Opinion of Counsel
specified in Exhibit B hereto.

         Section 3.12. Access to Certain Documentation and Information Regarding
the Mortgage Loans.

         (a) Servicer shall provide to the Indenture Trustee, the Insurer, any
Noteholders that are federally insured savings and loan associations, the Office
of Thrift Supervision, successor to the Federal Home Loan Bank Board, the FDIC
and the supervisory agents and examiners of the Office of Thrift Supervision
access to the documentation regarding the Mortgage Loans required by applicable
regulations of the Office of Thrift Supervision and the FDIC (acting as operator
of the SAIF or the BIF), such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer. Nothing in this Section 3.12 shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section 3.12 as a result of such obligation shall not
constitute a breach of this Section 3.12.

         (b) The Servicer shall supply information in such form as the Indenture
Trustee shall reasonably request to the Indenture Trustee and the Paying Agent,
on or before the start of the Determination Date preceding the related Payment
Date, as is required in the Indenture Trustee's reasonable judgment to enable
the Paying Agent or the Indenture Trustee, as the case may be, to

                                       30
<PAGE>

make required distributions and to furnish the required reports to Noteholders
and to make any claim under the Policy.

         Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as master servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and bond together shall comply with the requirements from time to time
of the Federal National Mortgage Association for persons performing servicing
for mortgage loans purchased by such Association.

         Section 3.14. Reports to the Securities and Exchange Commission. The
Indenture Trustee shall, on behalf of the Trust, cause to be filed with the
Securities and Exchange Commission any periodic reports required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder. Upon
the request of the Indenture Trustee, each of the Servicer and the Sponsor shall
cooperate with the Indenture Trustee in the preparation of any such report and
shall provide to the Indenture Trustee in a timely manner all such information
or documentation as the Indenture Trustee may reasonably request in connection
with the performance of its duties and obligations under this Section.

         Section 3.15. Tax Returns. In accordance with Section 2.09 hereof, the
Servicer shall prepare and file any Federal, State or local income and franchise
tax return for the Trust as well as any other applicable return and apply for a
taxpayer identification number on behalf of the Trust as provided in Article V
of the Trust Agreement, including, without limitation, forms 1099 and 1065. The
Sponsor shall treat the Mortgage Loans as its property for all Federal, State or
local tax purposes and shall report all income earned thereon (including amounts
payable as fees to the Servicer) as its income for income tax purposes. In the
event the Trust shall be required pursuant to an audit or administrative
proceeding or change in applicable regulations to file Federal, State or local
tax returns, the Servicer shall prepare and file or shall cause to be prepared
and filed any tax returns required to be filed by the Trust; the Indenture
Trustee shall promptly sign such returns and deliver such returns after
signature to the Servicer and such returns shall be filed by the Servicer. The
Indenture Trustee shall also prepare or shall cause to be prepared all tax
information required by law to be distributed to Noteholders. In no event shall
the Indenture Trustee or the Servicer be liable for any liabilities, costs or
expenses of the Trust, the Noteholders, the Certificateholders or the Note
Owners arising under any tax law, including, without limitation, Federal, state
or local income and franchise or excise taxes or any other tax imposed on or
measured by income (or any interest or penalty with respect thereto or arising
from a failure to comply therewith).

         Section 3.16. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Servicer shall prepare and deliver all federal and state information reports
when and as required by all applicable state and federal income tax laws. In
particular, with respect to the requirement under Section 6050J of the Code to
the effect that the Servicer shall make reports of foreclosures and abandonments
of any mortgaged property for each year beginning in 2000, the Servicer shall
file reports relating to each instance occurring during the previous calendar
year in which the Servicer (i) on

                                       31
<PAGE>

behalf of the Indenture Trustee acquires an interest in any Mortgaged Property
through foreclosure or other comparable conversion in full or partial
satisfaction of a Mortgage Loan, or (ii) knows or has reason to know that any
Mortgaged Property has been abandoned. The reports from the Servicer shall be in
form and substance sufficient to meet the reporting requirements imposed by
Section 6050J.

                                   ARTICLE IV

                              SERVICING CERTIFICATE

         Section 4.01. Servicing Certificate. Not later than each Determination
Date, the Servicer shall deliver (a) to the Indenture Trustee, the Statement to
each Class of Noteholders required to be prepared pursuant to Section 8.7 of the
Indenture and (b) to the Indenture Trustee, the Sponsor, the Paying Agent, the
Insurer and each Rating Agency a Servicing Certificate (in written form or the
form of computer readable media or such other form as may be agreed to by the
Indenture Trustee and the Servicer), together with an Officer's Certificate to
the effect that such Servicing Certificate is true and correct in all material
respects, stating the related Collection Period, Payment Date, the series number
of the Notes, the date of this Agreement, and:

                  (i) the aggregate amount of collections received on the
         Mortgage Loans on or prior to the Determination Date in respect of such
         Collection Period;

                  (ii) the aggregate amount of (a) Interest Collections and (b)
         Principal Collections for such Collection Period;

                  (iii) the Class A-1 Note Rate and the Class A-2 Note Rate;

                  (iv) the amount, if any, of such Class A-1 Interest Payment
         Amount or Class A-2 Interest Payment Amount that is not payable on
         account of insufficient Noteholders' Interest Collections;

                  (v) the Accelerated Principal Payments to be distributed
         pursuant to Section 8.6(d)(viii) of the Indenture;

                  (vi) the Principal Collections for such Payment Date,
         separately stating the components thereof;

                  (vii) any accrued and unpaid Servicing Fees for previous
         Collection Periods and the Servicing Fee for such Collection Period;

                  (viii) the related Pool Balance for each Pool as of the end of
         the preceding Collection Period and as of the end of the second
         preceding Collection Period;

                  (ix) the Class A-1 Note Principal Balance and the Class A-2
         Note Principal Balance and related Pool Factor after giving effect to
         the distribution on such Payment Date;

                                       32
<PAGE>

                  (x) the aggregate amount of Additional Balances created during
         the previous Collection Period;

                  (xi) the number and aggregate Principal Balances of Mortgage
         Loans (x) as to which the Minimum Monthly Payment is delinquent for
         30-59 days, 60-89 days and 90 or more days, respectively and (y) that
         have become REO, in each case as of the end of the preceding Collection
         Period;

                  (xii) whether a Rapid Amortization Event has occurred since
         the prior Determination Date, specifying each such Rapid Amortization
         Event if one has occurred;

                  (xiii) whether an Event of Servicing Termination has occurred
         since the prior Determination Date, specifying each such Event of
         Servicing Termination if one has occurred;

                  (xiv) the amount to be distributed to the Insurer pursuant to
         Section 8.6(d)(ii) and Section 8.6(d)(vi) of the Indenture, stated
         separately;

                  (xv) the amount to be distributed to the Reserve Fund pursuant
         to Section 8.6(d)(ix) of the Indenture;

                  (xvi) Insured Payments, if any, for such Payment Date
         including any related Deficiency Amount and any related Preference
         Amount;

                  (xvii) the amount to be distributed to the related
         Certificateholders pursuant to Section 8.6(d)(xiii) of the Indenture;

                  (xviii) the amount to be paid to the Servicer pursuant to
         Section 8.6(d)(x) of the Indenture;

                  (xix) the total amount of funds on deposit in the Reserve
         Fund;

                  (xx) the related Overcollateralization Amount after giving
         effect to the distribution to be made on such Payment Date; and

                  (xxi) the number and Principal Balances of any Mortgage Loans
         retransferred to the Sponsor pursuant to Section 2.07;

In addition, on the Servicing Certificate delivered in January 2000, the
Servicer shall also indicate (i) the amount on deposit in the Pre-Funding
Account as of such Payment Date and (ii) the aggregate of the Principal Balances
of Subsequent Mortgage Loans purchased on the related Subsequent Transfer Date.

         The Indenture Trustee shall conclusively rely upon the information
contained in a Servicing Certificate for purposes of making distributions
pursuant to Section 8.6 of the Indenture, shall have no duty to inquire into
such information and shall have no liability in so relying. The format and
content of the Servicing Certificate may be modified by the mutual

                                       33
<PAGE>

agreement of the Servicer, the Indenture Trustee and the Insurer. The Servicer
shall give notice of any such change to the Rating Agencies.

         Section 4.02. Reserve Fund.

         (a) Amounts on deposit in the Reserve Fund will, at the direction of
the Servicer, be invested in Eligible Investments maturing no later than the day
before the next Payment Date.

         All income and gain realized from any investment of funds in the
Reserve Fund shall be considered part of the Reserve Fund until released
pursuant to the Indenture. Following that point all earnings shall go to the
Sponsor. The Sponsor will report for Federal, state and local income tax
purposes the income, if any, represented by the Reserve Fund.

         (b) Following the termination of the Trust pursuant to Section 7.01
hereof, the Indenture Trustee shall withdraw all amounts then on deposit in the
Reserve Fund pursuant to the Indenture.

                                   ARTICLE V

                          THE SERVICER AND THE SPONSOR

         Section 5.01. Liability of the Servicer and the Sponsor. The Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Servicer herein. The Sponsor
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Sponsor.

         Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or the Sponsor. Any corporation into which the
Servicer or the Sponsor may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer or
the Sponsor shall be a party, or any corporation succeeding to the business of
the Servicer or the Sponsor, shall be the successor of the Servicer or the
Sponsor, 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.

         Section 5.03. Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Trust or the Securityholders
for any action taken or for refraining from the taking of any action by the
Servicer in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
such Person against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
of the Servicer or by reason of reckless disregard of obligations and duties of
the Servicer hereunder. The Servicer and any director or officer or 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 and any director or officer or employee or agent
of the Servicer shall be indemnified by the Trust and held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to this Agreement or the Notes, other than any loss,

                                       34
<PAGE>

liability or expense related to any specific Mortgage Loan (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of its reckless disregard of obligations and duties
hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to duties to
service the Mortgage Loans in accordance with this Agreement, and which in its
opinion may involve it in any expense or liability; provided, however, that the
Servicer may in its sole discretion undertake any such action which it may deem
necessary or desirable in respect of this Agreement, and the rights and duties
of the parties hereto and the interests of the Securityholders hereunder. In
such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust and the Servicer shall only be entitled to be reimbursed therefor pursuant
to Section 8.6(d)(x) of the Indenture. The Servicer's right to indemnity or
reimbursement pursuant to this Section 5.03 shall survive any resignation or
termination of the Servicer pursuant to Section 5.04 or 6.01 with respect to any
losses, expenses, costs or liabilities arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation or
termination).

         Section 5.04. Servicer Not to Resign. Subject to the provisions of
Section 5.02, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer to the Indenture Trustee and the
Insurer in writing and such proposed successor servicer is reasonably acceptable
to the Indenture Trustee; (b) each Rating Agency shall have delivered a letter
to the Indenture Trustee and the Insurer prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Servicer hereunder will not result in the qualification, reduction
or withdrawal of the then current rating of the Notes without regard to the
Policy; and (c) such proposed successor servicer is reasonably acceptable to the
Insurer, as evidenced by a letter to the Indenture Trustee; provided, however,
that no such resignation by the Servicer shall become effective until the
Indenture Trustee or successor servicer designated by the Servicer as provided
above shall have assumed the Servicer's responsibilities and obligations
hereunder or the Indenture Trustee shall have designated a successor servicer in
accordance with Section 6.02. Any such resignation shall not relieve the
Servicer of responsibility for any of the obligations specified in Sections 6.01
and 6.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Indenture Trustee and the Insurer. The Servicer shall
have no claim (whether by subrogation or otherwise) or other action against any
Securityholder for any amounts paid by the Servicer pursuant to any provision of
this Agreement.

         Section 5.05. Delegation of Duties. In the ordinary course of business,
the Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, or any subservicer referred to in Section 3.01,
who agrees to conduct such duties in

                                       35
<PAGE>

accordance with standards comparable to those with which the Servicer complies
pursuant to Section 3.01. Such delegation shall not relieve the Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 5.04.

         Section 5.06. Indemnification of the Trust by the Servicer. The
Servicer shall indemnify and hold harmless the Trust, the Owner Trustee and the
Indenture Trustee from and against any loss, liability, expense, damage or
injury suffered or sustained by reason of the Servicer's activities or omissions
in servicing or administering the Mortgage Loans that are not in accordance with
this Agreement, including, but not limited to, any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim. Any
such indemnification shall not be payable from the assets of the Trust. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof. The provisions of this Section
5.06 shall survive termination of this Agreement.

         Section 5.07. Indemnification of the Trust by the Sponsor.
Notwithstanding anything to the contrary contained herein, the Sponsor (i)
agrees to be liable directly to the injured party for the entire amount of any
losses, claims, damages, liabilities and expenses of the Trust (other than those
attributable to a Noteholder as a result of defaults on the Mortgage Loans) to
the extent that the Sponsor would be liable if the Trust were a partnership
under the Delaware Revised Uniform Limited Partnership Act in which the Sponsor
was a general partner and (ii) shall indemnify and hold harmless the Trust, the
Owner Trustee and the Indenture Trustee from and against any loss, liability,
expense, damage, claim or injury (other than those attributable to a Noteholder
as a result of defaults on the Mortgage Loans) arising out of or based on this
Agreement by reason of any acts, omissions, or alleged acts or omissions arising
out of activities of the Trust, the Owner Trustee or the Indenture Trustee, or
the actions of the Servicer, including, but not limited to, amounts payable to
the Servicer pursuant to Section 5.03, any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim;
provided that the Sponsor shall not indemnify the Owner Trustee or the Indenture
Trustee (but shall indemnify any other injured party) if such loss, liability,
expense, damage or injury is due to the Owner Trustee's or the Indenture
Trustee's willful malfeasance, bad faith or gross negligence or by reason of the
Owner Trustee's or the Indenture Trustee's reckless disregard of its obligations
hereunder. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof.

         Section 5.08. Limitation on Liability of the Sponsor. None of the
directors or officers or employees or agents of the Sponsor shall be under any
liability to the Trust, the Owner Trustee or the Indenture Trustee or the
Securityholders, it being expressly understood that all such liability is
expressly waived and released as a condition of, and as consideration for, the
execution of this Agreement and the issuance of the Notes; provided, however,
that this provision shall not protect any such Person against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of the duties hereunder. Except as provided
in Section 5.07, the Sponsor shall not be under any liability to the Trust, the
Owner Trustee or the Indenture Trustee or the Securityholders for any action
taken or for refraining from the taking of any action in its capacity as Sponsor
pursuant to

                                       36
<PAGE>

this Agreement whether arising from express or implied duties under this
Agreement; provided, however, that this provision shall not protect the Sponsor
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties hereunder. The
Sponsor and any director or officer or employee or agent of the Sponsor 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.

                                   ARTICLE VI

                              SERVICING TERMINATION

         Section 6.01. Events of Servicing Termination. If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:

                  (i) Any failure by the Servicer to deposit in the Collection
         Account any deposit required to be made under the terms of this
         Agreement which continues unremedied for a period of five Business Days
         after the date upon which written notice of such failure shall have
         been given to the Servicer by the Indenture Trustee or to the Servicer
         and the Indenture Trustee by the Insurer or Holders of Notes evidencing
         more than 25% of the Principal Balance of the Notes instruct otherwise;
         or

                  (ii) Failure on the part of the Servicer duly to observe or
         perform in any material respect any other covenants or agreements of
         the Servicer set forth in the Notes or in this Agreement, which failure
         continues unremedied for a period of 60 days after the date on which
         written notice of such failure, requiring the same to be remedied, and
         stating that such notice is a "Notice of Default" hereunder, shall have
         been given to the Servicer by the Indenture Trustee or to the Servicer
         and the Indenture Trustee by the Insurer or the Holders of Notes
         evidencing Percentage Interests aggregating not less than 25%; or

                  (iii) The entry against the Servicer of a decree or order by a
         court or agency or supervisory authority having jurisdiction in the
         premises for the appointment of a trustee, conservator, receiver or
         liquidator in any insolvency, conservatorship, receivership,
         readjustment of debt, marshalling of assets and liabilities or similar
         proceedings, or for the winding up or liquidation of its affairs, and
         the continuance of any such decree or order unstayed and in effect for
         a period of 60 consecutive days; or

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

                                       37
<PAGE>

                  (v) the occurrence of an Event of Servicer Termination under
         the Insurance Agreement.

then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Servicer, either the Indenture
Trustee, the Insurer or the Holders of Notes evidencing more than 50% of the
Outstanding Amount of the Notes instruct otherwise, in each case with the
consent of the Insurer, or the Insurer, by notice then given in writing to the
Servicer (and to the Indenture Trustee if given by the Insurer or the Holders of
Notes) may terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Upon the occurrence of a Servicer Termination
Delinquency Rate Trigger or Servicer Termination Loss Trigger as those terms are
defined in the Insurance Agreement, the Insurer may, in its reasonable
discretion, terminate all of the rights and obligations of the Servicer pursuant
to the terms hereof. Any such notice to the Servicer shall also be given to each
Rating Agency and the Insurer. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Notes or the Mortgage Loans or otherwise, shall pass
to and be vested in the Indenture Trustee pursuant to and under this Section
6.01; and, without limitation, the Indenture Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise. The
Servicer agrees to cooperate with the Indenture Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to the Indenture Trustee for the
administration by it of all cash amounts that shall at the time be held by the
Servicer and to be deposited by it in the Collection Account, or that have been
deposited by the Servicer in the Collection Account or thereafter received by
the Servicer with respect to the Mortgage Loans. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with amending this
Agreement to reflect such succession as Servicer pursuant to this Section 6.01
shall be paid by the predecessor Servicer (or if the predecessor Servicer is the
Indenture Trustee, the initial Servicer) upon presentation of reasonable
documentation of such costs and expenses.

         Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(i) for a period of two Business Days or under Section
6.01(ii) for a period of 60 days, shall not constitute an Event of Servicing
Termination if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Indenture Trustee, the Sponsor, the Insurer
and the Noteholders and Certificateholders with an Officer's Certificate giving
prompt notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations. The Servicer shall immediately notify the
Indenture Trustee and the Insurer in writing of any Events of Servicing
Termination.

                                       38
<PAGE>

         Section 6.02. Indenture Trustee to Act; Appointment of Successor.

         (a) On and after the time the Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in all respects 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.
Notwithstanding the above, if the Indenture Trustee becomes the Servicer
hereunder, it shall have no responsibility or obligation (i) of repurchase or
substitution with respect to any Mortgage Loan, (ii) with respect to any
representation or warranty of the Servicer, and (iii) for any act or omission of
either a predecessor or successor Servicer other than the Indenture Trustee. As
compensation therefor, the Indenture Trustee shall be entitled to such
compensation as the Servicer would have been entitled to hereunder if no such
notice of termination had been given. In addition, the Indenture Trustee will be
entitled to compensation with respect to its expenses in connection with
conversion of certain information, documents and record keeping, as provided in
Section 6.7 and 6.8 of the Indenture. Notwithstanding the above, (i) if the
Indenture Trustee is unwilling to act as successor Servicer, or (ii) if the
Indenture Trustee is legally unable so to act, the Indenture Trustee may with
the consent of the Insurer (in the situation described in clause (i)) or shall
(in the situation described in clause (ii)) appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, bank or other mortgage loan or home equity loan servicer with all
licenses and permits required to perform its obligations under this Agreement
and having a net worth of not less than $15,000,000 as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder; provided that any such
successor Servicer shall be acceptable to the Insurer, as evidenced by the
Insurer's prior written consent, which consent shall not be unreasonably
withheld; and provided, further, that the appointment of any such successor
Servicer will not result in the qualification, reduction or withdrawal of the
ratings assigned to the Notes by the Rating Agencies without regard to the
Policy. Pending appointment of a successor to the Servicer hereunder, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.08 (or such lesser compensation as the Indenture Trustee and such
successor shall agree). The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.

         (b) Any successor, including the Indenture Trustee, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of Securityholders and
the Insurer and (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Servicer
hereunder and a fidelity bond in respect of its officers, employees and agents
to the same extent as the Servicer is so required pursuant to Section 3.13. The
appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
Insurance Policy pursuant to Section 3.04), nor shall any successor

                                       39
<PAGE>

Servicer be liable for any acts or omissions of the predecessor Servicer or for
any breach by such Servicer of any of its representations or warranties
contained herein.

         Section 6.03. Notification to Securityholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VI or
Section 5.04, the Indenture Trustee shall give prompt written notice thereof to
the Securityholders at their respective addresses appearing in the Note
Register, the Certificate Register, the Insurer and each Rating Agency.

                                  ARTICLE VII

                                   TERMINATION

         Section 7.01. Termination.

         (a) The respective obligations and responsibilities of the Servicer,
the Sponsor and the Indenture Trustee created hereby (other than the obligation
of the Indenture Trustee to make certain payments to Noteholders after the final
Payment Date and the obligation of the Servicer to send certain notices as
hereinafter set forth) shall terminate upon the last action required to be taken
by the Indenture Trustee on the final Payment Date pursuant to this Article VII
following the later of (A) the Payment Date following payment in full of all
amounts owing to the Insurer and (B) the earliest of (i) the transfer, under the
conditions specified in Section 7.01(b), to the Sponsor of the Noteholders'
interest on each Mortgage Loan and all property acquired in respect of any
Mortgage Loans remaining in the Trust for an amount equal to the sum of (w) the
sum of the Class A-1 Note Principal Balance and the Class A-2 Note Principal
Balance, (x) the sum of accrued and unpaid Class A-1 Interest Payment Amount and
Class A-2 Interest Payment Amount through the day preceding the final Payment
Date, and (y) interest accrued on any Class A-1 Deferred Interest or Class A-2
Deferred Interest to the extent legally permissible, and (z) all amounts due and
owing the Insurer pursuant to the Insurance Agreement and Section 8.6 of the
Indenture, (ii) the day following the Payment Date on which the distribution
made to Noteholders has reduced the Class A-1 Note Principal Balance and the
Class A-2 Note Principal Balance to zero and no other amounts are owed to the
Noteholders hereunder pursuant to the Insurance Agreement and Section 8.6 of the
Indenture, (iii) the final payment or other liquidation of the last Mortgage
Loan remaining in the Trust (including, without limitation, the disposition of
the Mortgage Loans pursuant to Section 5.4 of the Indenture) or the disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (iv) the Payment Date in December 2025; provided, however,
that in no event shall the trust created hereby continue beyond the expiration
of 21 years from the date of death of the last surviving descendants of Joseph
P. Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. Upon termination in accordance with clause (a)(B)(i)
of this Section 7.01, the Indenture Trustee shall execute such documents and
instruments of transfer presented by the Sponsor, in each case without recourse,
representation or warranty, and take such other actions as the Sponsor may
reasonably request to effect the transfer of the Mortgage Loans to the Sponsor.

         (b) (i) The Sponsor shall have the right to exercise the option to
         effect the transfer to the Sponsor of each Pool I Mortgage Loan
         pursuant to Section 7.01(a)(B) above on any Payment Date on or after
         the Payment Date immediately prior to which the

                                       40
<PAGE>

         Class A-1 Note Principal Balance is less than ten percent (10%) of the
         Original Class A-1 Note Principal Balance and all amounts due and owing
         to the Insurer for unpaid premiums and unreimbursed draws on the Policy
         (in each case, related to the Class A-1 Notes) and all other amounts
         due and owing to the Insurer pursuant to the Insurance Agreement,
         together with interest thereon as provided under the Insurance
         Agreement, have been paid.

                  (ii) The Sponsor shall have the right to exercise the option
         to effect the transfer to the Sponsor of each Pool II Mortgage Loan
         pursuant to Section 7.01(a)(B) above on any Payment Date on or after
         the Payment Date immediately prior to which the Class A-2 Note
         Principal Balance is less than ten percent (10%) of the Original Class
         A-2 Note Principal Balance and all amounts due and owing to the Insurer
         for unpaid premiums and unreimbursed draws on the Policy (in each case,
         related to the Class A-2 Notes) and all other amounts due and owing to
         the Insurer for unpaid premiums and unreimbursed draws on the Policy
         and all other amounts due and owing to the Insurer pursuant to the
         Insurance Agreement, together with interest thereon as provided under
         the Insurance Agreement, have been paid.

         (c) The Sponsor, at its expense, shall prepare and deliver to the
Indenture Trustee for execution, at the time the related Mortgage Loans are to
be released to the Sponsor, appropriate documents assigning each such Mortgage
Loan from the Indenture Trustee to the Sponsor and shall promptly record such
assignments.

         (d) The Sponsor shall not exercise its right to repurchase the Mortgage
Loans pursuant to Section 7.01(b) hereof if such repurchase would result in a
draw on the Policy, without the consent of the Insurer, which consent shall not
be unreasonably withheld.

                                  ARTICLE VIII

                      ADMINISTRATIVE DUTIES OF THE SERVICER

         Section 8.01. Administrative Duties.

         (a) Duties with Respect to the Indenture. The Servicer shall perform
all its duties and the duties of the Issuer under the Indenture. In addition,
the Servicer shall consult with the Owner Trustee as the Servicer deems
appropriate regarding the duties of the Issuer under the Indenture. The Servicer
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties under the Indenture.
The Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture. In furtherance of
the foregoing, the Servicer shall take all necessary action that is the duty of
the Issuer to take pursuant to the Indenture.

                                       41
<PAGE>

         (b) Duties with Respect to the Issuer.

                  (i) In addition to the duties of the Servicer set forth in
         this Agreement or any of the Basic Documents, the Servicer shall
         perform such calculations and shall prepare for execution by the Issuer
         or the Owner Trustee or shall cause the preparation by other
         appropriate Persons of all such documents, reports, filings,
         instruments, certificates and opinions as it shall be the duty of the
         Issuer or the Owner Trustee to prepare, file or deliver pursuant to
         this Agreement or any of the Basic Documents or under state and federal
         tax and securities laws, and at the request of the Owner Trustee shall
         take all appropriate action that it is the duty of the Issuer to take
         pursuant to this Agreement or any of the Basic Documents, including,
         without limitation, pursuant to Sections 2.6 and 2.11 of the Trust
         Agreement. In accordance with the directions of the Issuer or the Owner
         Trustee, the Servicer shall administer, perform or supervise the
         performance of such other activities in connection with the Mortgage
         Loans (including the Basic Documents) as are not covered by any of the
         foregoing provisions and as are expressly requested by the Issuer or
         the Owner Trustee and are reasonably within the capability of the
         Servicer.

                  (ii) Notwithstanding anything in this Agreement or any of the
         Basic Documents to the contrary, the Servicer shall be responsible for
         promptly notifying the Owner Trustee and the Indenture Trustee and the
         Insurer in the event that any withholding tax is imposed on the
         Issuer's payments (or allocations of income) to a Certificateholder (as
         defined in the Trust Agreement) as contemplated by this Agreement. Any
         such notice shall be in writing and specify the amount of any
         withholding tax required to be withheld by the Owner Trustee or the
         Indenture Trustee pursuant to such provision.

                  (iii) Notwithstanding anything in this Agreement or the Basic
         Documents to the contrary, the Servicer shall be responsible for
         performance of the duties of the Issuer or the Sponsor set forth in
         Section 5.1(a), (b), (c) and (d) of the Trust Agreement with respect
         to, among other things, accounting and reports to Certificateholders
         (as defined in the Trust Agreement).

                  (iv) The Servicer shall perform the duties of the Sponsor
         specified in Section 10.2 of the Trust Agreement required to be
         performed in connection with the resignation or removal of the Owner
         Trustee, and any other duties expressly required to be performed by the
         Servicer under this Agreement or any of the Basic Documents.

                  (v) In carrying out the foregoing duties or any of its other
         obligations under this Agreement, the Servicer may enter into
         transactions with or otherwise deal with any of its Affiliates;
         provided, however, that the terms of any such transactions or dealings
         shall be in accordance with any directions received from the Issuer and
         shall be, in the Servicer's opinion, no less favorable to the Issuer in
         any material respect.

         (c) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article VIII unless within a reasonable time
before the taking of such action, the Servicer shall have

                                       42
<PAGE>

notified the Owner Trustee and the Insurer of the proposed action and the Owner
Trustee and the Insurer shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:

                  (A) the amendment of or any supplement to the Indenture;

                  (B) the initiation of any claim or lawsuit by the Issuer and
         the compromise of any action, claim or lawsuit brought by or against
         the Issuer (other than in connection with the collection of the
         Mortgage Loans);

                  (C) the amendment, change or modification of this Agreement or
         any of the Basic Documents;

                  (D) the appointment of successor Note Registrars, successor
         Paying Agents and successor Indenture Trustees pursuant to the
         Indenture or the appointment of Successor Servicers or the consent to
         the assignment by the Note Registrar, Paying Agent or Indenture Trustee
         of its obligations under the Indenture; and

                  (E) the removal of the Indenture Trustee.

         (d) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders or Certificateholders under the
Basic Documents, (2) sell the Trust Property pursuant to Section 5.4 of the
Indenture, (3) take any other action that the Issuer directs the Servicer not to
take on its behalf or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.

         (e) The Indenture Trustee or any successor Servicer shall not be
responsible for any obligations or duties of the Servicer under Section 8.01.

         Section 8.02. Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer
and the Indenture Trustee at any time during normal business hours.

         Section 8.03. Additional Information to be Furnished to the Issuer. The
Servicer shall furnish to the Issuer and the Indenture Trustee from time to time
such additional information regarding the Mortgage Loans as the Issuer and the
Indenture Trustee shall reasonably request.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

         Section 9.01. Amendment. This Agreement may be amended from time to
time by agreement among the Sponsor, the Servicer, and the Indenture Trustee, in
each case without

                                       43
<PAGE>

notice to or the consent of any of the Noteholders or Certificateholders, but
only with the consent of the Insurer (which consent shall not be unreasonably
withheld), (i) to cure any ambiguity, (ii) to correct any defective provisions
or to correct or supplement any provisions herein that may be inconsistent with
any other provisions herein, (iii) to add to the duties of the Sponsor or the
Servicer, (iv) to add any other provisions with respect to matters or questions
arising under this Agreement or the Policy, as the case may be, which shall not
be inconsistent with the provisions of this Agreement, (v) to add or amend any
provisions of this Agreement as required by any Rating Agency or any other
nationally recognized statistical rating organization in order to maintain or
improve any rating of the Notes (it being understood that, after obtaining the
ratings in effect on the Closing Date, neither the Indenture Trustee, the
Sponsor nor the Servicer is obligated to obtain, maintain or improve any such
rating) or (vi) to comply with any requirement imposed by the Code; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
materially and adversely affect the interests of any Noteholder or any
Certificateholder or the Insurer; and provided, further, that the amendment
shall be deemed not to adversely affect in any material respect the interests of
the Noteholders and the Certificateholders and no opinion referred to in the
preceding proviso shall be required to be delivered 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 Notes without regard to the Policy.

         This Agreement also may be amended from time to time by agreement among
the Servicer, the Sponsor and the Indenture Trustee, with the consent of the
Insurer and the Holders of the Notes evidencing more than 50% of the Outstanding
Amount of the Notes instruct otherwise and the Holders of the Certificates
evidencing more than 50% of the percentage interest in the Certificates (which
consent of such Holders of Notes and Certificates given pursuant to this Section
9.01 or pursuant to any other provision of this Agreement shall be conclusive
and binding on such Holder and all future Holders of such securities and of any
security issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon the security) for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Noteholders or the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments on the Notes or distributions or payments under the Policy which are
required to be made on any Note without the consent of the Holder of such Note
or (ii) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of the Holders of all then outstanding Notes and
Certificates or (iii) adversely effect in any material respect the interests of
the Insurer.

         Following the execution and delivery of any such amendment hereto or to
the Policy, either the Sponsor, if the Sponsor requested the amendment, or the
Servicer, if the Servicer requested the amendment, shall reimburse the Insurer
for the reasonable out-of-pocket costs and expenses incurred by the Insurer in
connection with such amendment.

         Prior to the execution of any such amendment, the party hereto
requesting any such amendment shall furnish written notification of the
substance of such amendment to each Rating Agency. In addition, promptly after
the execution of any such amendment made with the consent of the Noteholders,
the Indenture Trustee shall furnish written notification of the

                                       44
<PAGE>

substance of such amendment to each Noteholder and fully executed original
counterparts of the instruments effecting such amendment to the Insurer.

         It shall not be necessary for the consent of Noteholders under this
Section 9.01 to approve the particular form of any proposed amendment or
consent, 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 Securityholders shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe.

         In executing any amendment permitted by this Section 9.01, the
Indenture Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that such amendment is authorized or
permitted hereby and that all conditions precedent to the execution and delivery
of such amendment have been satisfied. The Indenture Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Indenture
Trustee's own rights, duties or immunities under this Agreement or otherwise.

         Section 9.02. Recordation of Agreement. 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
Indenture Trustee, but only upon direction of Noteholders accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Noteholders. The Noteholders requesting
such recordation shall bear all costs and expenses of such recordation. The
Indenture Trustee shall have no obligation to ascertain whether such recordation
so affects the interests of the Noteholders.

         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 9.03. Limitation on Rights of Noteholders. No Noteholder shall
have any right to vote (except as provided in Sections 6.01, 7.01, and 9.01
herein and Section 5.4 of the Indenture) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the Notes, be
construed so as to constitute the Noteholders from time to time as partners or
members of an association; nor shall any Noteholder be under any liability to
any third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.

         No Noteholder 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 Indenture Trustee a written notice of
default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Notes evidencing more than 50% of the Outstanding Amount of
the Notes shall have made written request upon the Indenture Trustee to
institute such action, suit or proceeding in its own name as Indenture Trustee
hereunder and shall have offered to the Indenture Trustee such reasonable
indemnity as it may require against the costs, expenses and

                                       45
<PAGE>

liabilities to be incurred therein or thereby, and the Indenture 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 Noteholder
with every other Noteholder and the Indenture Trustee, that no one or more
Holders of Notes 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 Notes, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all Noteholders. For
the protection and enforcement of the provisions of this Section 9.03, each and
every Noteholder and the Indenture Trustee shall be entitled to such relief as
can be given either at law or in equity.

         By accepting its Note, each Noteholder agrees that unless a Insurer
Default exists, the Insurer shall have the right to exercise all rights of the
Noteholder under this Agreement without any further consent of the Noteholder.

         Section 9.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.

         Section 9.05. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) in the case of the Sponsor, GreenPoint Mortgage Securities Inc., 700
Larkspur Landing Circle, Suite 250, Larkspur, California 94939, Attention: Peter
T. Paul, (b) in the case of the Servicer, GreenPoint Mortgage Funding, Inc.,
1100 Larkspur Landing Circle, Suite 101, Larkspur, California 94939, Attention:
Gilbert MacQuarrie, (c) in the case of the Indenture Trustee, at the Corporate
Trust Office, (d) in the case of the Insurer, Ambac Assurance Structured
Finance, One State Street Plaza, New York, NY 10022-4834, Attention: Managing
Director (telecopy number (212) 891-1456 or (212) 755-5477), (e) in the case of
Moody's, Residential Loan Monitoring Group, 4th Floor, 99 Church Street, New
York, New York 10007, and (f) in the case of Standard & Poor's, 55 Water Street,
New York, New York 10041, or, as to each party, at such other address as shall
be designated by such party in a written notice to each other party. Any notice
required or permitted to be mailed to a Noteholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Note
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Securityholder receives such notice. Any notice or other document required to be
delivered or mailed by the Indenture Trustee to any Rating Agency shall be given
on a best efforts basis and only as a matter of courtesy and accommodation and
the Indenture Trustee shall have no liability for failure to deliver such notice
or document to any Rating Agency.

         Section 9.06. 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

                                       46
<PAGE>

affect the validity or enforceability of the other provisions of this Agreement
or of the Notes or the rights of the Holders thereof.

         Section 9.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.02 and 5.04, this Agreement
may not be assigned by the Sponsor or the Servicer without the prior written
consent of the Insurer and Holders of the Notes evidencing Percentage Interests
aggregating not less than 66%.

         Section 9.08. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Note Owners, the Insurer and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement, no other Person will
have any right or obligation hereunder.

         Section 9.09. Counterparts. This instrument 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 9.10. 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 9.11. Insurance Agreement. The Indenture Trustee is authorized
and directed to execute and deliver the Insurance Agreement and to perform the
obligations of the Indenture Trustee thereunder.

         Section 9.12. Nonpetition Covenant. Until one year plus one day shall
have elapsed since the termination of the Trust in accordance with Section 7.01,
none of the Sponsor, the Company, the Servicer, nor the Indenture Trustee shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Sponsor or the
Trust under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Sponsor or the Trust or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Sponsor or the Trust.

                                       47
<PAGE>

         IN WITNESS WHEREOF, the Sponsor, the Servicer and the Indenture Trustee
have caused this Agreement to be duly executed by their respective officers all
as of the day and year first above written.

                                   GREENPOINT MORTGAGE SECURITIES INC.,
                                       as Sponsor

                                   By: /s/ Kristen Decker
                                       -----------------------------------------
                                       Name:  Kristen Decker
                                       Title: Vice President

                                   GREENPOINT MORTGAGE FUNDING, INC.,
                                       as Company and Servicer

                                   By: /s/  Gilbert J. MacQuarrie
                                       -----------------------------------------
                                       Name:  Gilbert J. MacQuarrie
                                       Title: Executive Vice President and Chief
                                              Financial Officer

                                   BANK ONE, NATIONAL ASSOCIATION,
                                       as Indenture Trustee

                                   By: /s/ R. Tarnas
                                       -----------------------------------------
                                       Name:  R. Tarnas
                                       Title: Vice President

                                   GREENPOINT HOME EQUITY LOAN TRUST
                                       1999-2, as Issuer
                                       By: Wilmington Trust Company, not in its
                                       individual capacity but solely as Owner
                                       Trustee

                                       By: /s/ James P. Lawler
                                       -----------------------------------------
                                       Name:  James P. Lawler
                                       Title: Vice President

                         [Sale and Servicing Agreement]
<PAGE>

                                                                       EXHIBIT A

                             MORTGAGE LOAN SCHEDULE

                        [On file with Indenture Trustee]

                                      A-1
<PAGE>

                                                                       EXHIBIT B

                           FORM OF OPINION OF COUNSEL
                       WITH RESPECT TO SECTION 3.11 OF THE
                          SALE AND SERVICING AGREEMENT

The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the opinions of counsel
to the Company delivered on the Closing Date. Unless otherwise indicated, all
capitalized terms used herein shall have the meanings ascribed to them in the
Sale and Servicing Agreement dated as of December 1, 1999 among GreenPoint
Mortgage Funding, Inc. (the "Company" and the "Servicer"), GreenPoint Mortgage
Securities Inc. (the "Sponsor") and Bank One, National Association, as Indenture
Trustee. Terms used but not defined herein shall have the meaning given to such
terms in the above-referenced Sale and Servicing Agreement.

The Indenture Trustee has a valid perfected first priority security interest
with respect to the Sponsor's right, title and interest in and to the Mortgage
Loans (including all Subsequent Mortgage Loans and all Eligible Substitute
Mortgage Loans).

                                      B-1
<PAGE>

                                                                     EXHIBIT C-1

                              OFFICER'S CERTIFICATE

                      REQUEST BY THE SERVICER FOR PERMANENT
                   RELEASE OF MORTGAGE LOANS AND MORTGAGE FILE

TO:      Bank One, National Association,
           as Indenture Trustee
         One North State Street, 9th Floor
         Chicago, Illinois 60602
         Attention: Corporate Trust Office

Gentlemen:

In connection with the payment in full of the Mortgage Loans held by you as
Indenture Trustee, under the Sale and Servicing Agreement dated as of December
1, 1999 among GreenPoint Mortgage Funding, Inc., as Servicer, GreenPoint
Mortgage Securities Inc., as Sponsor, and you, as Indenture Trustee, the
undersigned requests the release of the Mortgage Loans and the Mortgage Files
for the Mortgage Loans identified in the schedule attached to this Request.

The undersigned hereby certifies that any and all payments received on the
Mortgage Loans identified in the schedule attached to this Request which are
required to be deposited in the Collection Account pursuant to Section 3.02 of
such Sale and Servicing Agreement have been so deposited.

                                            GREENPOINT MORTGAGE FUNDING, INC.,
                                                as Servicer

                                            By:
                                               ---------------------------------
                                               Name:
                                               ---------------------------------
                                               Title:
                                               ---------------------------------
                                               Date:
                                               ---------------------------------
ACKNOWLEDGED BY:

BANK ONE, NATIONAL ASSOCIATION,
    as Indenture Trustee

By:
   --------------------------------
   Name:
   --------------------------------
   Title:
   --------------------------------
   Date:
   --------------------------------

                                     C-1-1
<PAGE>

                                                                     EXHIBIT C-2

                              OFFICER'S CERTIFICATE
                      REQUEST BY THE SERVICER FOR TEMPORARY
                  RELEASE OF MORTGAGE LOANS AND MORTGAGE FILES

TO:      Bank One, National Association,
           as Indenture Trustee
         One North State Street, 9th Floor
         Chicago, Illinois 60602
         Attention: Corporate Trust Office

Gentlemen:

In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee, under the Sale and Servicing Agreement dated as of December
1, 1999 among GreenPoint Mortgage Funding, Inc., as Servicer, GreenPoint
Mortgage Securities Inc., as Sponsor, and you, as Indenture Trustee, the
undersigned requests the temporary release of the Mortgage Loans and the related
Mortgage Files for the Mortgage Loans identified in the schedule attached to
this Request.

                                            GREENPOINT MORTGAGE FUNDING, INC.,
                                                 as Servicer

                                            By:
                                               ---------------------------------
                                               Name:
                                               ---------------------------------
                                               Title:
                                               ---------------------------------
                                               Date:
                                               ---------------------------------
ACKNOWLEDGED BY:

BANK ONE, NATIONAL ASSOCIATION,
as Indenture Trustee

By:
   ---------------------------------
   Name:
   ---------------------------------
   Title:
   ---------------------------------
   Date:
   ---------------------------------

                                     C-2-1
<PAGE>

                                                                       EXHIBIT D

                          FORM OF CREDIT LINE AGREEMENT

                                      D-1
<PAGE>

                                                                       EXHIBIT E

                            FORM OF MORTGAGE NOTE FOR
                           SECOND LIEN MORTGAGE LOANS

                                      E-1<PAGE>
                                                                     EXHIBIT 4.2

                                                                  EXECUTION COPY

================================================================================

                                 TRUST AGREEMENT

                                     between

                       GREENPOINT MORTGAGE SECURITIES INC.
                                     Sponsor

                                       and

                            WILMINGTON TRUST COMPANY
                                  Owner Trustee

                          Dated as of December 1, 1999

================================================================================

<PAGE>

                                                 TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                               Page

<S>                                                                                                              <C>
ARTICLE I Definitions.............................................................................................1

     SECTION 1.1.   Defined Terms.................................................................................1
     SECTION 1.2.   Other Definitional Provisions.................................................................2
     SECTION 1.3.   Action by or Consent of Noteholders and Certificateholders....................................2

ARTICLE II Organization...........................................................................................3

     SECTION 2.1.   Name  3
     SECTION 2.2.   Office........................................................................................3
     SECTION 2.3.   Purposes and Powers...........................................................................3
     SECTION 2.4.   Appointment of Owner Trustee..................................................................4
     SECTION 2.5.   Initial Capital Contribution of Trust Estate..................................................4
     SECTION 2.6.   Declaration of Trust..........................................................................4
     SECTION 2.7.   Liability.....................................................................................4
     SECTION 2.8.   Title to Trust Property.......................................................................4
     SECTION 2.9.   Situs of Trust................................................................................5
     SECTION 2.10.  Representations and Warranties of the Sponsor.................................................5
     SECTION 2.11.  Federal Income Tax Allocations................................................................6
     SECTION 2.12.  Covenants of the Sponsor......................................................................7
     SECTION 2.13.  Covenants of the Certificateholders...........................................................7

ARTICLE III Certificates and Transfer of Interests................................................................8

     SECTION 3.1.   Initial Ownership.............................................................................8
     SECTION 3.2.   The Certificates..............................................................................8
     SECTION 3.3.   Authentication of Certificates................................................................9
     SECTION 3.4.   Registration of Transfer and Exchange of Certificates.........................................9
     SECTION 3.5.   Mutilated, Destroyed, Lost or Stolen Certificates.............................................9
     SECTION 3.6.   Persons Deemed Certificateholders............................................................10
     SECTION 3.7.   Access to List of Certificateholders' Names and Addresses....................................10
     SECTION 3.8.   Maintenance of Office or Agency..............................................................10
     SECTION 3.9.   ERISA Restrictions...........................................................................11
     SECTION 3.10.  Restrictions on Transfer of Certificates.....................................................11
     SECTION 3.11.  Acceptance of Obligations....................................................................12
     SECTION 3.12.  Distributions on Certificates................................................................12

ARTICLE IV Voting Rights and Other Actions.......................................................................12

     SECTION 4.1.   Prior Notice to Holders with Respect to Certain Matters......................................12
     SECTION 4.2.   Action by Certificateholders with Respect to Certain Matters.................................13
     SECTION 4.3.   Action by Certificateholders with Respect to Bankruptcy......................................13
     SECTION 4.4.   Restrictions on Certificateholders' Power....................................................14
     SECTION 4.5.   Majority Control.............................................................................14

</TABLE>

                                        i
<PAGE>
<TABLE>

<S>                                                                                                              <C>
     SECTION 4.6.   Rights of Insurer............................................................................14

ARTICLE V Certain Duties.........................................................................................15

     SECTION 5.1.   Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue
                    Service and Others...........................................................................15
     SECTION 5.2.   Signature on Returns; Tax Matters Partner....................................................15
     SECTION 5.3.   Underwriting Agreement.......................................................................15

ARTICLE VI Authority and Duties of Owner Trustee.................................................................16

     SECTION 6.1.   General Authority............................................................................16
     SECTION 6.2.   General Duties...............................................................................16
     SECTION 6.3.   Action upon Instruction......................................................................16
     SECTION 6.4.   No Duties Except as Specified in this Agreement or in Instructions...........................17
     SECTION 6.5.   No Action Except under Specified Documents or Instructions...................................18
     SECTION 6.6.   Restrictions.................................................................................18

ARTICLE VII Concerning the Owner Trustee.........................................................................18

     SECTION 7.1.   Acceptance of Trust and Duties...............................................................18
     SECTION 7.2.   Furnishing of Documents......................................................................19
     SECTION 7.3.   Representations and Warranties...............................................................19
     SECTION 7.4.   Reliance; Advice of Counsel..................................................................20
     SECTION 7.5.   Not Acting in Individual Capacity............................................................20
     SECTION 7.6.   Owner Trustee Not Liable for Certificates or Mortgage Loans..................................20
     SECTION 7.7.   Owner Trustee May Own Certificates and Notes.................................................21
     SECTION 7.8.   Payments from Owner Trust Estate.............................................................21
     SECTION 7.9.   Doing Business in Other Jurisdictions........................................................21

ARTICLE VIII Compensation of Owner Trustee.......................................................................21

     SECTION 8.1.   Owner Trustee's Fees and Expenses............................................................21
     SECTION 8.2.   Indemnification..............................................................................21
     SECTION 8.3.   Payments to the Owner Trustee................................................................22
     SECTION 8.4.   Non-recourse Obligations.....................................................................22

ARTICLE IX Termination of Trust Agreement........................................................................22

     SECTION 9.1.   Termination of Trust Agreement...............................................................22

ARTICLE X Successor Owner Trustees and Additional Owner Trustees.................................................23

     SECTION 10.1.  Eligibility Requirements for Owner Trustee...................................................23
     SECTION 10.2.  Resignation or Removal of Owner Trustee......................................................24
     SECTION 10.3.  Successor Owner Trustee......................................................................25
     SECTION 10.4.  Merger or Consolidation of Owner Trustee.....................................................25
     SECTION 10.5.  Appointment of Co-Owner Trustee or Separate Owner Trustee....................................25
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                              <C>
ARTICLE XI Miscellaneous.........................................................................................27

     SECTION 11.1.  Supplements and Amendments...................................................................27
     SECTION 11.2.  No Legal Title to Owner Trust Estate in Certificateholders...................................28
     SECTION 11.3.  Limitations on Rights of Others..............................................................28
     SECTION 11.4.  Notices......................................................................................28
     SECTION 11.5.  Severability.................................................................................29
     SECTION 11.6.  Separate Counterparts........................................................................29
     SECTION 11.7.  Assignments; Insurer.........................................................................29
     SECTION 11.8.  No Petition..................................................................................29
     SECTION 11.9.  No Recourse..................................................................................29
     SECTION 11.10. Headings.....................................................................................30
     SECTION 11.11. GOVERNING LAW................................................................................30
     SECTION 11.12. Servicer.....................................................................................30

EXHIBITS

Exhibit A           Form of Certificate
Exhibit B           Form of Certificate of Trust

</TABLE>

                                      iii
<PAGE>

                  TRUST AGREEMENT dated as of December 1, 1999 (the "Agreement")
between GREENPOINT MORTGAGE SECURITIES INC., a Delaware corporation (the
"Sponsor"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation as
Owner Trustee.

                                   ARTICLE I

                                   Definitions

                  SECTION 1.1. Defined Terms. For the purposes of this
Agreement, the following terms shall have the meanings set forth below. All
other capitalized terms used herein but not defined shall have the meanings set
forth in Annex A to the Indenture dated as of December 1, 1999, between the
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.

                  "Affiliate" shall mean with respect to any specified Person, a
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, or owns, directly or
indirectly, 50% or more of, the Person specified.

                  "Agreement" shall mean this Trust Agreement, as the same may
be amended and supplemented from time to time.

                  "Benefit Plan" shall have the meaning assigned to such term in
Section 3.9.

                  "Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq. as the same may be amended
from time to time.

                  "Certificate" shall mean a trust certificate evidencing the
beneficial ownership interest of a Certificateholder in the Trust, substantially
in the form of Exhibit A attached hereto.

                  "Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of
the Business Trust Statute.

                  "Certificate Register" and "Certificate Registrar" shall mean
the register maintained and the registrar respectively appointed pursuant to
Section 3.4.

                  "Definitive Certificates" shall mean Certificates issued in
certificated, fully registered form.

                  "Expenses" shall have the meaning assigned to such term in
Section 8.2.

                  "Holder" or "Certificateholder" shall mean the Person in whose
name a Certificate is registered on the Certificate Register.

                  "Indemnified Parties" shall have the meaning assigned to such
term in Section 8.2.

                  "Instructing Party" shall have the meaning assigned to such
term in Section 6.3.

<PAGE>

                  "Owner Trust Estate" shall mean all right, title and interest
of the Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Collection Account and all other property of the Trust from time
to time, including any rights of the Issuer pursuant to the Sale and Servicing
Agreement.

                  "Proposer" shall have the meaning ascribed to it in Section
4.2(b) herein.

                  "Secretary of State" shall mean the Secretary of State of the
State of Delaware.

                  "Security Majority" means a majority by principal amount of
the Noteholders so long as the Notes are outstanding and a majority by principal
amount of the Certificateholders thereafter.

                  "Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.

                  SECTION 1.2.  Other Definitional Provisions.

                  (a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.

                  (b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles as in effect on the
date of this Agreement or any such certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall
control.

                  (c) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."

                  (d) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.

                  SECTION 1.3.  Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by

                                       2
<PAGE>

Noteholders or Certificateholders, such provision shall be deemed to refer to
the Certificateholder or Noteholder, as the case may be, of record as of the
Record Date immediately preceding the date on which such action is to be taken,
or consent given, by Noteholders or Certificateholders. Solely for the purposes
of any action to be taken, or consented to, by Noteholders or
Certificateholders, any Note or Certificate registered in the name of the
Sponsor or any Affiliate thereof shall be deemed not to be outstanding;
provided, however, that, solely for the purpose of determining whether the
Indenture Trustee is entitled to rely upon any such action or consent, only
Notes or Certificates which the Owner Trustee, or the Indenture Trustee,
respectively, knows to be so owned shall be so disregarded.

                                   ARTICLE II

                                  Organization

                  SECTION 2.1.  Name. There is hereby formed a trust to be known
as "GreenPoint Home Equity Loan Trust 1999-2", in which name the Owner Trustee
may conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.

                  SECTION 2.2.  Office. The office of the Trust shall be in
the care of the Owner Trustee at the Corporate ------ Trust Office or at such
other address as the Owner Trustee may designate by written notice to the
Certificateholders and the Sponsor.

                  SECTION 2.3.  Purposes and Powers.

                  (a) The purpose of the Trust is, and the Trust shall have the
power and authority, to engage in the following activities:

                  (i) to issue the Notes pursuant to the Indenture and the
         Certificates pursuant to this Agreement, and to sell the Notes;

                  (ii) to assign, grant, transfer, pledge, mortgage and convey
         the Owner Trust Estate to the Indenture Trustee on behalf of the
         Noteholders and for the benefit of the Insurer and to hold, manage and
         distribute to the Certificateholders pursuant to the terms of the Sale
         and Servicing Agreement any portion of the Owner Trust Estate released
         from the Lien of, and remitted to the Trust pursuant to, the Indenture;

                  (iii) with the proceeds of the sale of the Notes, to fund the
         Pre-Funding Account and to pay the organizational, start-up and
         transactional expenses of the Trust and to pay the balance to the
         Sponsor pursuant to the Sale and Servicing Agreement;

                  (iv) to enter into and perform its obligations under the Basic
         Documents to which it is a party;

                  (v) to engage in those activities, including entering into
         agreements, that are necessary, suitable or convenient to accomplish
         the foregoing or are incidental thereto or connected therewith; and

                                       3
<PAGE>

                  (vi) subject to compliance with the Basic Documents, to engage
         in such other activities as may be required in connection with
         conservation of the Owner Trust Estate and the making of distributions
         to the Certificateholders and the Noteholders.

The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.

                  SECTION 2.4   Appointment of Owner Trustee. The Sponsor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.

                  SECTION 2.5.  Initial Capital Contribution of Trust Estate.
The Sponsor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Sponsor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Collection Account. On or prior to the Closing
Date, the Owner Trustee will also, upon receipt thereof, acknowledge on behalf
of the Trust receipt of the Mortgage Loans pursuant to the Sale and Servicing
Agreement. The Sponsor shall pay organizational expenses of the Trust as they
may arise or shall, upon the request of the Owner Trustee, promptly reimburse
the Owner Trustee for any such expenses paid by the Owner Trustee.

                  SECTION 2.6.  Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the Basic
Documents. It is the intention of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that, solely for income tax purposes, the Trust shall be
treated as a branch; provided, however, that in the event Certificates are owned
by more than one Certificateholder, it is the intention of the parties hereto
that, solely for income and franchise tax purposes, the Trust shall then be
treated as a partnership and that, unless otherwise required by appropriate tax
authorities, only after such time the Trust will file or cause to be filed
annual or other necessary returns, reports and other forms consistent with the
characterization of the Trust as a partnership for such tax purposes. Effective
as of the date hereof, the Owner Trustee shall have all rights, powers and
duties set forth herein and to the extent not inconsistent herewith, in the
Business Trust Statute with respect to accomplishing the purposes of the Trust.
The Owner Trustee shall file the Certificate of Trust with the Secretary of
State.

                  SECTION 2.7.  Liability. No Holder shall have any personal
liability for any liability or obligation of the Trust.

                  SECTION 2.8.  Title to Trust Property.

                  (a) Legal title to all the Owner Trust Estate shall be vested
at all times in the Trust as a separate legal entity except where applicable law
in any jurisdiction requires title to

                                       4
<PAGE>

any part of the Owner Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.

                  (b) The Holders shall not have legal title to any part of the
Trust Property. The Holders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Article IX. No transfer, by operation of law or otherwise, of any right, title
or interest by any Certificateholder of its ownership interest in the Owner
Trust Estate shall operate to terminate this Agreement or the trusts hereunder
or entitle any transferee to an accounting or to the transfer to it of legal
title to any part of the Trust Property.

                  SECTION 2.9.  Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of New York. Payments will be received by the Trust only in Delaware or
New York and payments will be made by the Trust only from Delaware or New York.
The Trust shall not have any employees in any state other than Delaware;
provided, however, that nothing herein shall restrict or prohibit the Owner
Trustee, the Servicer or any agent of the Trust from having employees within or
without the State of Delaware. The only office of the Trust will be at the
Corporate Trust Office in Delaware.

                  SECTION 2.10.  Representations and Warranties of the Sponsor.
The Sponsor makes the following representations and warranties on which the
Owner Trustee relies in accepting the Owner Trust Estate in trust and issuing
the Certificates and upon which the Insurer relies in issuing the Policy.

                  (a) The Sponsor is duly organized and validly existing as a
Delaware corporation with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted and is proposed to be conducted pursuant to this Agreement
and the Basic Documents;

                  (b) It is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of its property,
the conduct of its business and the performance of its obligations under this
Agreement and the Basic Documents requires such qualification;

                  (c) The Sponsor has the corporate power and authority to
execute and deliver this Agreement and to carry out its terms; the Sponsor has
full power and authority to sell and assign the property to be sold and assigned
to and deposited with the Trust and the Sponsor has duly authorized such sale
and assignment and deposit to the Trust by all necessary corporate action; and
the execution, delivery and performance of this Agreement has been duly
authorized by the Sponsor by all necessary corporate action;

                  (d) No consent, license, approval or authorization or
registration or declaration with, any Person or with any governmental authority,
bureau or agency is required in

                                       5
<PAGE>

connection with the execution, delivery or performance of this Agreement and the
Basic Documents, except for such as have been obtained, effected or made;

                  (e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Sponsor, or any material indenture, agreement or
other instrument to which the Sponsor is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of the Sponsor's knowledge, any order, rule or regulation applicable to the
Sponsor of any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Sponsor or its properties; and

                  (f) There are no proceedings or investigations pending or, to
its knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the issuance of
the Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (C) seeking any
determination or ruling that might materially and adversely affect its
performance of its obligations under, or the validity or enforceability of, this
Agreement or any of the Basic Documents, or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax attributes of the Notes
or the Certificates.

                  SECTION 2.11. Federal Income Tax Allocations. In the event
that the Trust is treated as a partnership for Federal income tax purposes, net
income of the Trust for any month as determined for Federal income tax purposes
(and each item of income, gain, loss, credit and deduction entering into the
computation thereof) shall be allocated:

                  (a) to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of such month,
in proportion to their ownership of principal amount of Certificates on such
date; and

                  (b) to the Sponsor, to the extent of any remaining net income.

If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in clause (b). Net
losses of the Trust, if any, for any month as determined for Federal income tax
purposes (and each item of income, gain, loss, credit and deduction entering
into the computation thereof) shall be allocated among the Certificateholders as
of the Record Date in proportion to their ownership percentage of principal
amount of Certificates on such Record Date until the principal balance of the
Certificates is reduced to zero. The Sponsor is authorized to modify the
allocations in this paragraph if necessary or appropriate, in its sole
discretion, for the allocations to fairly reflect the economic income, gain or
loss to the Certificateholders, or as otherwise required by the Code.

                                       6
<PAGE>

                  SECTION 2.12. Covenants of the Sponsor. The Sponsor agrees and
covenants for the benefit of each Certificateholder, the Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:

                  (a) it shall not create, incur or suffer to exist any
indebtedness or engage in any business, except, in each case, as permitted by
its certificate of incorporation and the Basic Documents;

                  (b) it shall not, for any reason, institute proceedings for
the Trust to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust, or file a
petition seeking or consenting to reorganization or relief under any applicable
federal or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;

                  (c) it shall obtain from each counterparty to each Basic
Document to which it or the Trust is a party and each other agreement entered
into on or after the date hereof to which it or the Trust is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.1(e) such counterparty shall not institute against, or
join any other Person in instituting against, it or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States; and

                  (d) it shall not, for any reason, withdraw or attempt to
withdraw from this Agreement, dissolve, institute proceedings for it to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against it, or file a petition seeking or consenting
to reorganization or relief under any applicable federal or state law relating
to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of it or a
substantial part of its property, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or declare or effect a moratorium on its debt or take any action in
furtherance of any such action.

                  SECTION 2.13. Covenants of the Certificateholders. Each
Certificateholder agrees:

                  (a) to be bound by the terms and conditions of the
Certificates and of this Agreement, including any supplements or amendments
hereto and to perform the obligations of a Certificateholder as set forth
therein or herein, in all respects as if it were a signatory hereto. This
undertaking is made for the benefit of the Trust, the Owner Trustee, the Insurer
and all other Certificateholders present and future;

                  (b) to hereby appoint the Sponsor as such Certificateholder's
agent and attorney-in-fact to sign any federal income tax information return
filed on behalf of the Trust, if

                                       7
<PAGE>

any, and agree that, if requested by the Trust, it will sign such federal income
tax information return in its capacity as holder of an interest in the Trust.
Each Certificateholder also hereby agrees that in its tax returns it will not
take any position inconsistent with those taken in any tax returns that may be
filed by the Trust;

                  (c) if such Certificateholder is other than an individual or
other entity holding its Certificate through a broker who reports securities
sales on Form 1099-B, to notify the Owner Trustee of any transfer by it of a
Certificate in a taxable sale or exchange, within 30 days of the date of the
transfer; and

                  (d) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for the Trust or the
Sponsor to be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Sponsor or the Trust or a substantial part of its property, or
cause or permit the Sponsor or the Trust to make any assignment for the benefit
of its creditors, or admit in writing its inability to pay its debts generally
as they become due, or declare or effect a moratorium on its debt or take any
action in furtherance of any such action.

                  Except as provided in Section 2.13, and notwithstanding any
other provision to the contrary in this Agreement, no Certificateholder other
than the Sponsor in its capacity as the "Sponsor" shall be deemed to have
adopted, be bound by, or succeed in any way to any representation by, or duty of
indemnification by or any other duty of, the Sponsor, including those contained
in Sections 2.10, 2.12, 3.6, 8.2 or elsewhere herein.

                                  ARTICLE III

                     Certificates and Transfer of Interests

                  SECTION 3.1.  Initial Ownership. Upon the formation of the
Trust by the contribution by the Sponsor pursuant to Section 2.5, the Owner
Trustee, contemporaneously therewith, having full power, authority, and
authorization to do so, has executed, authenticated, dated, issued, and
delivered, in the name and on behalf of the Trust, to the Sponsor, one (1) or
more Certificates representing in the aggregate a 100% interest in the Trust,
and has registered such Certificate(s) on the Certificate Register in the name
of the Sponsor. The Sponsor shall be the sole beneficiary of the Trust. Such
Certificate(s) are duly authorized, validly issued, and entitled to the benefits
of this Agreement. For so long as the Sponsor shall own such 100% interest in
the Trust, the Sponsor shall be the sole beneficial owner of the Trust. The
Sponsor shall at all times keep and own a Certificate or Certificates
representing no less than 1% interest, and at no time will the Sponsor sell or
alienate its interest represented by Certificate(s) in such a way as to reduce
its aggregate beneficial ownership in the Trust to less than 1%.

                  SECTION 3.2.  The Certificates. The Certificates shall be
issued in denominations of $1,000 and integral multiples of $1000 in excess
thereof. The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of an authorized officer of the Owner Trustee. Certificates
bearing the manual or facsimile signatures of individuals who

                                       8
<PAGE>

were, at the time when such signatures shall have been affixed, authorized to
sign on behalf of the Trust, shall be validly issued and entitled to the benefit
of this Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates. A transferee of a Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder, upon due registration of such
Certificate in such transferee's name pursuant to Section 3.4.

                  SECTION 3.3.  Authentication of Certificates. Concurrently
with the initial sale of the Mortgage Loans to the Trust pursuant to the Sale
and Servicing Agreement, the Owner Trustee shall cause the Certificates to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Sponsor, signed by its chairman of the board, its president
or any vice president, its treasurer or any assistant treasurer without further
corporate action by the Sponsor, in authorized denominations. No Certificate
shall entitle its holder to any benefit under this Agreement, or shall be valid
for any purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.

                  SECTION 3.4.  Registration of Transfer and Exchange of
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Owner Trustee shall be the
initial Certificate Registrar.

                  In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that it has no right to or interest in any monies at any time held in the
Reserve Fund or the Pre-Funding Account prior to the release of such monies
pursuant to Section 8.6(d)(ix) of the Indenture, such monies being held in trust
for the benefit of the Noteholders and the Insurer. Notwithstanding the
foregoing, in the event that it is ever determined that the monies held in the
Reserve Fund or the Pre-Funding Account constitute a pledge of collateral, then
the provisions of the Sale and Servicing Agreement shall be considered to
constitute a security agreement and the Sponsor and the Certificateholders
hereby grant to the Indenture Trustee and the Insurer a first priority perfected
security interest in such amounts. In addition, each Certificateholder, by
acceptance of its Certificate, hereby appoints the Sponsor as its agent to
pledge a first priority perfected security interest in the Reserve Fund and the
Pre-Funding Account, and any amounts held therein from time to time to the
Indenture Trustee and the Insurer and agrees to execute and deliver such
instruments of conveyance, assignment, grant, confirmation, etc., as well as any
financing statements, in each case as the Insurer shall consider reasonably
necessary in order to perfect the Indenture Trustee's security interest in the
Mortgage Loans.

                  SECTION 3.5.  Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate shall be surrendered to the
Certificate

                                       9
<PAGE>

Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b) there
shall be delivered to the Certificate Registrar, the Owner Trustee and the
Insurer such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust
shall execute and the Owner Trustee shall authenticate 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 denomination. In connection with the
issuance of any new Certificate under this Section, the Owner Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.

                  SECTION 3.6.  Persons Deemed Certificateholders. Every Person
by virtue of becoming a Certificateholder in accordance with this Agreement and
the rules and regulations of the Certificate Registrar shall be deemed to be
bound by the terms of this Agreement. Prior to due presentation of a Certificate
for registration of transfer, the Owner Trustee, the Certificate Registrar and
the Insurer and any agent of the Owner Trustee, the Certificate Registrar and
the Insurer, may treat the Person in whose name any Certificate shall be
registered in the Certificate Register as the owner of such Certificate for the
purpose of receiving distributions pursuant to the Sale and Servicing Agreement
and the Indenture and for all other purposes whatsoever, and none of the Owner
Trustee, the Certificate Registrar or the Insurer nor any agent of the Owner
Trustee, the Certificate Registrar or the Insurer shall be bound by any notice
to the contrary.

                  SECTION 3.7.  Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Sponsor or the Insurer, within 15 days after receipt by the Owner
Trustee of a request therefor from such Person in writing, a list, of the names
and addresses of the Certificateholders as of the most recent Record Date. If
three or more Holders of Certificates or one or more Holders of Certificates
evidencing not less than 25% by Percentage Interest apply in writing to the
Owner Trustee, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and such application is accompanied by
a copy of the communication that such applicants propose to transmit, then the
Owner Trustee shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Sponsor, the
Servicer, the Owner Trustee or the Insurer or any agent thereof accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.

                  SECTION 3.8.  Maintenance of Office or Agency. The Owner
Trustee shall maintain in Wilmington, Delaware an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Basic Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the Insurer of any change in the location of the Certificate Register or any
such office or agency.

                                       10
<PAGE>

                  SECTION 3.9.  ERISA Restrictions. The Certificates may not be
acquired by or for the account of (i) an employee benefit plan (as defined in
Section 3(3) of ERISA that is subject to the provisions of Title I of ERISA,
(ii) a plan described in Section 4975(e)(1) of the Internal Revenue Code of
1986, as amended, or (iii) any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity (each, a "Benefit Plan").
By accepting and holding its beneficial ownership interest in its Certificate,
the Holder thereof shall be deemed to have represented and warranted that it is
not a Benefit Plan.

                  SECTION 3.10. Restrictions on Transfer of Certificates.

                  (a) The Certificates shall be assigned, transferred,
exchanged, pledged, financed, hypothecated or otherwise conveyed (collectively,
for purposes of this Section 3.10 and any other Section referring to the
Certificates, "transferred" or a "transfer") only in accordance with this
Section 3.10.

                  (b) No transfer of a Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. Except for the initial issuance of the
Certificate to the Sponsor, the Indenture Trustee shall require (i) the
transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Indenture Trustee and the Insurer certifying to
the Indenture Trustee and the Insurer the facts surrounding such transfer, which
investment letter shall not be an expense of the Indenture Trustee or the
Insurer or (ii) if the investment letter is not delivered, a written Opinion of
Counsel acceptable to and in form and substance satisfactory to the Indenture
Trustee, the Insurer and the Sponsor that such transfer may be made pursuant to
an exemption, describing the applicable exemption and the basis therefor from
said Act or is being made pursuant to said Act, which Opinion of Counsel shall
not be an expense of the Indenture Trustee, the Insurer or the Sponsor. The
Holder of a Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Sponsor and the Insurer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

                  (c) The Certificate and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent: (i)
the Person that acquires a Certificate shall (A) be organized and existing under
the laws of the United States of America or any state thereof or the District of
Columbia; (B) expressly assume, by an agreement supplemental hereto, executed
and delivered to the Indenture Trustee and the Insurer, the performance of every
covenant and obligation of the Sponsor hereunder and (C) as part of its
acquisition of a Certificate, acquire all rights of the Sponsor or any
transferee under this Section 3.10(c) to amounts payable to such Sponsor or such
transferee under Section 8.6(d)(xiii) of the Indenture; (ii) the Holder of the
Certificates shall deliver to the Indenture Trustee and the Insurer an Officer's
Certificate stating that such transfer and such supplemental agreement comply
with this Section 3.10(c) and that all conditions precedent provided by this
Section 3.10(c) have been complied with and an Opinion of Counsel stating that
all conditions precedent provided by this Section 3.10(c) have been complied
with, and the Indenture Trustee may conclusively rely on such Officer's
Certificate, shall have no duty to make inquiries with regard to the matters set
forth therein and shall incur no liability in so relying; (iii) the Holder of
the Certificates shall deliver to the Indenture Trustee and the Insurer a letter
from each Rating Agency confirming that

                                       11
<PAGE>

its rating of the Notes, after giving effect to such transfer, will not be
reduced or withdrawn without regard to the Policy; (iv) the transferee of the
Certificates shall deliver to the Indenture Trustee and the Insurer an Opinion
of Counsel to the effect that (a) such transfer will not adversely affect the
treatment of the Notes after such transfer as debt for federal and applicable
state income tax purposes, (b) such transfer will not result in the Trust being
subject to tax at the entity level for federal or applicable state tax purposes,
(c) such transfer will not have any material adverse impact on the federal or
applicable state income taxation of a Noteholder or any Certificateholder and
(d) such transfer will not result in the arrangement created by this Agreement
or any "portion" of the Trust, being treated as a taxable mortgage pool as
defined in Section 7701(i) of the Code; (v) all filings and other actions
necessary to continue the perfection of the interest of the Trust in the
Mortgage Loans and the other property conveyed hereunder shall have been taken
or made and (vi) the Insurer shall have consented to such transfer.
Notwithstanding the foregoing, the requirement set forth in subclause (i)(A) of
this Section 3.10(c) shall not apply in the event the Indenture Trustee shall
have received a letter from each Rating Agency confirming that its rating of the
Notes, after giving effect to a proposed transfer to a Person that does not meet
the requirement set forth in subclause (i)(A), shall not be reduced or withdrawn
without regard to the Policy. Notwithstanding the foregoing, the requirements
set forth in this paragraph (c) shall not apply to the initial issuance of the
Certificates to the Sponsor.

                  Except for the initial issuance of the Certificate to the
Sponsor, no transfer of a Certificate shall be made unless the Indenture Trustee
and the Insurer shall have received a representation letter from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to the
Indenture Trustee and the Insurer, to the effect that such transferee is not a
Benefit Plan, nor a Person acting on behalf of or using the assets of a Benefit
Plan, which representation letter shall not be an expense of the Indenture
Trustee or the Insurer.

                  (d) No transfer or pledge of the Certificates shall result in
more than 98 other holders of Certificates.

                  SECTION 3.11. Acceptance of Obligations. The Sponsor, by its
acceptance of the Certificates, agrees to be bound by and to perform all the
duties of the Sponsor set forth in this Agreement.

                  SECTION 3.12. Distributions on Certificates. The Holders of
the Certificates will be entitled to distributions on each Payment Date, as
provided in the Sale and Servicing Agreement and the Indenture.

                                   ARTICLE IV

                         Voting Rights and Other Actions

                  SECTION 4.1.  Prior Notice to Holders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:

                                       12
<PAGE>

                  (a) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute or unless such amendment would not materially and
adversely affect the interests of the Holders);

                  (b) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;

                  (c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
or

                  (d) except pursuant to Section 9.01 of the Sale and Servicing
Agreement, the amendment, change or modification of the Sale and Servicing
Agreement, except to cure any ambiguity or defect or to amend or supplement any
provision in a manner that would not materially adversely affect the interests
of the Certificateholders.

The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Note Registrar, or Certificate Registrar within five
Business Days thereof.

                  SECTION 4.2.  Action by Certificateholders with Respect to
Certain Matters.

                  (a) The Owner Trustee shall not have the power, except upon
the direction of the Insurer, to (i) remove the Servicer under the Sale and
Servicing Agreement or (ii) except as expressly provided in the Basic Documents,
sell the Mortgage Loans after the termination of the Indenture. The Owner
Trustee shall take the actions referred to in the preceding sentence only upon
written instructions signed by the Insurer or the Securityholders, and the
furnishing of indemnification satisfactory to the Owner Trustee by the
Certificateholders.

                  (b) Upon the written request of any Certificateholder (a
"Proposer"), the Owner Trustee shall distribute promptly to all
Certificateholders any request for action or consent of Certificateholders
submitted by such Proposer, with a copy to the Manager. The Owner Trustee shall
provide a reasonable method for collecting responses to such request and shall
tabulate and report the results thereof to the Certificateholders and the
Manager. The Owner Trustee shall have no responsibility or duty to determine if
any such proposed action or consent is permitted under the terms of this
Agreement or applicable law.

                  SECTION 4.3.  Action by Certificateholders with Respect to
Bankruptcy. Until one year and one day following the day on which the Notes have
been paid in full, the Owner Trustee shall not have the power to, and shall not,
commence any proceeding or other actions contemplated by Section 2.12(b)
relating to the Trust without the prior written consent of the Insurer. Until
one year and one day following the day on which the Notes have been paid in
full, all amounts due to the Insurer under the Insurance Agreement have been
paid in full, the Policy has terminated and the Indenture Trustee has
surrendered the Policy to the Insurer, the Owner Trustee shall not have the
power to, and shall not, commence any proceeding or other actions contemplated
by Section 2.12(b) relating to the Trust without the prior written consent of
all of the Certificateholders and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.

                                       13
<PAGE>

                  SECTION 4.4.  Restrictions on Certificateholders' Power.

                  (a) The Certificateholders shall not direct the Owner Trustee
to take or refrain from taking any action if such action or inaction would be
contrary to any obligation of the Trust or the Owner Trustee under this
Agreement or any of the Basic Documents or would be contrary to Section 2.3 or
otherwise contrary to law nor shall the Owner Trustee be obligated to follow any
such direction, if given.

                  (b) No Certificateholder (other than the Sponsor as sole
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 or any Basic
Document, unless the Certificateholders are the Instructing Party pursuant to
Section 6.3 and unless a Certificateholder previously shall have given to the
Owner Trustee a written notice of default and of the continuance thereof, as
provided in this Agreement, and also unless Certificateholders evidencing not
less than 25% by Percentage Interest shall have made written request upon the
Owner Trustee to institute such action, suit or proceeding in its own name as
Owner Trustee under this Agreement and shall have offered to the Owner Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Owner Trustee, for 30
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, and
during such 30-day period no request or waiver inconsistent with such written
request has been given to the Owner Trustee pursuant to and in compliance with
this Section or Section 6.3; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner 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 provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.

                  SECTION 4.5.  Majority Control. No Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust except as expressly provided in this Agreement. Except
as expressly provided herein, any action that may be taken by the
Certificateholders under this Agreement may be taken by the Holders of
Certificates evidencing not less than a majority interest in the Trust. Except
as expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by
Certificateholders evidencing not less than a majority interest in the Trust at
the time of the delivery of such notice.

                  SECTION 4.6.  Rights of Insurer. Notwithstanding anything to
the contrary in the Basic Documents, without the prior written consent of the
Insurer the Owner Trustee shall not (i) remove the Servicer, (ii) initiate any
claim, suit or proceeding by the Trust or compromise any claim, suit or
proceeding brought by or against the Trust, other than with respect to the
enforcement of any Mortgage Loan or any rights of the Trust thereunder, (iii)
authorize the

                                       14
<PAGE>

merger or consolidation of the Trust with or into any other business trust or
other entity, (iv) amend the Certificate of Trust or (v) amend this Agreement in
accordance with Section 11.1 of this Agreement.

                                   ARTICLE V

                                 Certain Duties

                  SECTION 5.1.  Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
8.01(b)(iii) and 8.01(c) of the Sale and Servicing Agreement, the Sponsor shall
(a) maintain (or cause to be maintained) the books of the Trust on a calendar
year basis on the accrual method of accounting, including, without limitation,
the allocations of net income under Section 2.11 hereof, (b) deliver (or cause
to be delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1, if applicable) to enable each Certificateholder to prepare its
Federal and state income tax returns, (c) file or cause to be filed, if
necessary, such tax returns relating to the Trust (including a partnership
information return, Form 1065), and direct the Owner Trustee or the Servicer, as
the case may be, to make such elections as may from time to time be required or
appropriate under any applicable state or Federal statute or rule or regulation
thereunder so as to maintain the Trust's characterization as a branch, or if
applicable, as a partnership, for Federal income tax purposes and (d) collect or
cause to be collected any withholding tax as described in and in accordance with
Section 8.01(b)(ii) of the Sale and Servicing Agreement with respect to income
or distributions to Certificateholders and the appropriate forms relating
thereto. The Owner Trustee or the Servicer, as the case may be, shall make all
elections pursuant to this Section as directed in writing by the Sponsor. The
Owner Trustee shall sign all tax information returns, if any, filed pursuant to
this Section 5.1 and any other returns as may be required by law, and in doing
so shall rely entirely upon, and shall have no liability for information
provided by, or calculations provided by, the Sponsor or the Servicer. The
Sponsor will direct the Owner Trustee and the Owner Trustee shall elect under
Section 1278 of the Code to include in income currently any market discount that
accrues with respect to the Mortgage Loans. The Sponsor shall not direct the
Owner Trustee and the Owner Trustee shall not make the election provided under
Section 754 of the Code.

                  SECTION 5.2.  Signature on Returns; Tax Matters Partner.

                  (a) Notwithstanding the provisions of Section 5.1 and in the
event that the Trust is characterized as a partnership, the Owner Trustee shall
sign on behalf of the Trust the tax returns of the Trust, unless applicable law
requires a Certificateholder to sign such documents, in which case such
documents shall be signed by the Sponsor.

                  (b) In the event that the Trust is characterized as a
partnership, the Sponsor shall be the "tax matters partner" of the Trust
pursuant to the Code.

                  SECTION 5.3.  Underwriting Agreement. The Servicer is hereby
authorized to execute and deliver the Underwriting Agreement with respect to the
Notes.

                                       15
<PAGE>

                                   ARTICLE VI

                      Authority and Duties of Owner Trustee

                  SECTION 6.1.  General Authority. The Owner Trustee is
authorized and directed to execute and deliver the Basic Documents to which the
Trust is named as a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is named as
a party and any amendment thereto, in each case, in such form as the Sponsor
shall approve as evidenced conclusively by the Owner Trustee's execution
thereof, and on behalf of the Trust, to direct the Indenture Trustee to
authenticate and deliver Class A-1 Notes in the aggregate principal amount of
$193,275,000 and Class A-2 Notes in the aggregate principal amount of
$52,370,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust pursuant to
the Basic Documents. The Owner Trustee is further authorized from time to time
to take such action as the Instructing Party recommends with respect to the
Basic Documents so long as such activities are consistent with the terms of the
Basic Documents. The Owner Trustee may rely on the Manager to carry out any
action that the Owner Trustee is authorized or directed to perform hereunder, to
the extent permitted by the Management Agreement.

                  SECTION 6.2.  General Duties. It shall be the duty of the
Owner Trustee to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and to administer the
Trust in the interest of the Holders, subject to the Basic Documents and in
accordance with the provisions of this Agreement. Notwithstanding the foregoing,
the Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the Basic Documents to the extent the
Servicer has agreed in the Sale and Servicing Agreement to perform any act or to
discharge any duty of the Trust or the Owner Trustee hereunder or under any
Basic Document, and the Owner Trustee shall not be liable for the default or
failure of the Servicer to carry out its obligations under the Sale and
Servicing Agreement or the failure of the Manager to carry out its obligations
under the Management Agreement.

                  SECTION 6.3.  Action upon Instruction.

                  (a) Subject to Article IV, the Insurer (the "Instructing
Party") shall have the exclusive right to direct the actions of the Owner
Trustee in the management of the Trust, so long as such instructions are not
inconsistent with the express terms set forth herein or in any Basic Document.
The Instructing Party shall not instruct the Owner Trustee in a manner
inconsistent with this Agreement or the Basic Documents. In acting in accordance
with the direction of the Insurer pursuant to this Section or pursuant to
Article IV, the Owner Trustee shall not be deemed to (i) owe any fiduciary
obligation to the Insurer or (ii) have violated any fiduciary responsibility to
the Certificateholders.

                  (b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.

                                       16
<PAGE>

                  (c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Basic Document, the Owner Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, notwithstanding any other provision of this
Agreement, take or refrain from taking such action, not inconsistent with this
Agreement or the Basic Documents, as it shall deem to be in the best interests
of the Certificateholders, and shall have no liability to any Person for such
action or inaction.

                  (d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, notwithstanding any other provision of this
Agreement, to the extent that the Owner Trustee acts or refrains from acting in
good faith in accordance with any such instruction received, the Owner Trustee
shall not be liable, on account of such action or inaction, to any Person. If
the Owner Trustee shall not have received appropriate instruction within 10 days
of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Certificateholders, and shall have no liability to
any Person for such action or inaction.

                  SECTION 6.4.  No Duties Except as Specified in this Agreement
or in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing 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 or to prepare or file any Commission filing for the Trust or to
record this Agreement or any Basic Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any Liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee (solely in its
individual capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.

                                       17
<PAGE>

                  SECTION 6.5.  No Action Except under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents
and (iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.

                  SECTION 6.6.  Restrictions. The Owner Trustee shall not take
any action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation or a publicly traded
partnership for Federal income tax purposes. The Certificateholders shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section.

                                   ARTICLE VII

                          Concerning the Owner Trustee

                  SECTION 7.1.  Acceptance of Trust and Duties. The Owner
Trustee accepts the trust hereby created and agrees to perform its duties
hereunder with respect to such trust but only upon the terms of this Agreement.
The Owner Trustee also agrees to disburse all monies actually received by it
constituting part of the Owner Trust Estate upon the terms of the Basic
Documents and this Agreement. The Owner Trustee shall not be answerable or
accountable hereunder or under any Basic Document under any circumstances,
except (i) for its own willful misconduct, bad faith or gross negligence, (ii)
in the case of the inaccuracy of any representation or warranty contained in
Section 7.3 expressly made by the Owner Trustee in its individual capacity,
(iii) for liabilities arising from the failure of the Owner Trustee to perform
obligations expressly undertaken by it in the last sentence of Section 6.4
hereof, or (iv) for taxes, fees or other charges on, based on or measured by,
any fees, commissions or compensation received by the Owner Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):

                  (a) the Owner Trustee shall not be liable for any error of
judgment, not constituting gross negligence, made by a Responsible Officer of
the Owner Trustee;

                  (b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it if such action or omission is in
accordance with the instructions of the Instructing Party, the Sponsor, the
Servicer or any Certificateholder pursuant to the terms hereof;

                  (c) or risk funds or otherwise incur any financial liability
in the performance of any of its rights or powers hereunder or under any Basic
Document if the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured or provided to it;

                  (d) by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;

                  (e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Sponsor or for the form,

                                       18
<PAGE>

character, genuineness, sufficiency, value or validity of any of the Owner Trust
Estate or for or in respect of the validity or sufficiency of the Basic
Documents, other than the certificate of authentication on the Certificates, and
the Owner Trustee shall in no event assume or incur any liability, duty or
obligation to the Sponsor, the Insurer, Indenture Trustee, any
Certificateholder, other than as expressly provided for herein and in the Basic
Documents;

                  (f) the Owner Trustee shall not be liable for the default or
misconduct of the Sponsor, the Insurer, the Indenture Trustee, or the Servicer
under any of the Basic Documents or otherwise and the Owner Trustee shall have
no obligation or liability to perform the obligations under this Agreement or
the Basic Documents that are required to be performed by the Sponsor under this
Agreement, by the Indenture Trustee under the Indenture or the Servicer under
the Sale and Servicing Agreement; and

                  (g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of the Instructing Party or any of the Certificateholders, unless such
Instructing Party or Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty, and the
Owner Trustee shall not be answerable for other than its gross negligence, bad
faith or willful misconduct in the performance of any such act.

                  SECTION 7.2.  Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents.

                  SECTION 7.3.  Representations and Warranties. The Owner
Trustee hereby represents and warrants, in its individual capacity, to the
Sponsor and the Holders that:

                  (a) It is a Delaware banking corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.

                  (b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.

                  (c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.

                                       19
<PAGE>

                  SECTION 7.4.  Reliance; Advice of Counsel.

                  (a) The Owner Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer, secretary or other authorized officers of the
relevant party, as to such fact or matter, and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.

                  (b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and (ii) may
consult with counsel, accountants and other skilled persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
opinion or advice of any such counsel, accountants or other such persons and
according to such opinion not contrary to this Agreement or any Basic Document.

                  SECTION 7.5.  Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created Wilmington
Trust Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.

                  SECTION 7.6.  Owner Trustee Not Liable for Certificates or
Mortgage Loans. The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Owner Trustee on the
Certificates) shall be taken as the statements of the Sponsor and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Basic Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Notes, or of
any Mortgage Loan or related documents. The Owner Trustee shall at no time have
any responsibility or liability for or with respect to the legality, validity
and enforceability of any Mortgage Loan, or the perfection and priority of any
security interest created by any Mortgage Loan or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Owner
Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation: the existence, condition and ownership of any
Mortgage Loan; the existence and enforceability of any insurance thereon; the
existence and contents of any Mortgage Loan on any computer or other record
thereof; the validity of the assignment of any Mortgage Loan to the Trust or of
any intervening assignment; the completeness of any Mortgage Loan; the
performance or enforcement of any Mortgage Loan; the compliance by the Sponsor,
the Servicer or any other Person with any warranty or

                                       20
<PAGE>

representation made under any Basic Document or in any related document or the
accuracy of any such warranty or representation or any action of the Indenture
Trustee or the Servicer or any subservicer taken in the name of the Owner
Trustee.

                  SECTION 7.7.  Owner Trustee May Own Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates or Notes and may deal with the Sponsor, the Indenture
Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee.

                  SECTION 7.8.  Payments from Owner Trust Estate. All payments
to be made by the Owner Trustee under this Agreement or any of the Basic
Documents to which the Trust or the Owner Trustee is a party shall be made only
from the income and proceeds of the Owner Trust Estate and only to the extent
that the Owner Trust shall have received income or proceeds from the Owner Trust
Estate to make such payments in accordance with the terms hereof. Wilmington
Trust Company, or any successor thereto, in its individual capacity, shall not
be liable for any amounts payable under this Agreement or any of the Basic
Documents to which the Trust or the Owner Trustee is a party.

                  SECTION 7.9.  Doing Business in Other Jurisdictions.
Notwithstanding anything contained to the contrary, neither Wilmington Trust
Company or any successor thereto, nor the Owner Trustee shall be required to
take any action in any jurisdiction other than in the State of Delaware if the
taking of such action will, even after the appointment of a co-trustee or
separate trustee in accordance with Section 10.5 hereof, (i) require the consent
or approval or authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the State
of Delaware ; (ii) result in any fee, tax or other governmental charge under the
laws of the State of Delaware becoming payable by Wilmington Trust Company (or
any successor thereto); or (iii) subject Wilmington Trust Company (or any
successor thereto) to personal jurisdiction in any jurisdiction other than the
State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust Company (or any successor
thereto) or the Owner Trustee, as the case may be, contemplated hereby.

                                  ARTICLE VIII

                          Compensation of Owner Trustee

                  SECTION 8.1.  Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon between the Company and the Owner Trustee, and
the Owner Trustee shall be entitled to be reimbursed by the Sponsor for its
other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel
as the Owner Trustee may employ in connection with the exercise and performance
of its rights and its duties hereunder and under the Basic Documents.

                  SECTION 8.2.  Indemnification. The Sponsor shall be liable as
primary obligor for, and shall indemnify the Owner Trustee (in its individual
and trust capacities) and its

                                       21
<PAGE>

officers, directors, successors, assigns, agents and servants (collectively, the
"Indemnified Parties") from and against, any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and expenses)
of any kind and nature whatsoever (collectively, "Expenses") which may (in its
trust or individual capacities) at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Sponsor shall not be liable
for or required to indemnify the Owner Trustee from and against Expenses arising
or resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section and the rights under Section 8.1
shall survive the resignation or termination of the Owner Trustee or the
termination of this Agreement. In any event of any claim, action or proceeding
for which indemnity will be sought pursuant to this Section, the Owner Trustee's
choice of legal counsel shall be subject to the approval of the Sponsor which
approval shall not be unreasonably withheld.

                  SECTION 8.3.  Payments to the Owner Trustee. Any amounts paid
to the Owner Trustee pursuant to this Article VIII shall be deemed not to be a
part of the Owner Trust Estate immediately after such payment.

                  SECTION 8.4.  Non-recourse Obligations. Notwithstanding
anything in this Agreement or any Basic Document, the Owner Trustee agrees in
its individual capacity and in its capacity as Owner Trustee for the Trust that
all obligations of the Trust to the Owner Trustee individually or as Owner
Trustee for the Trust shall be recourse to the Owner Trust Estate only and
specifically shall not be recourse to the assets of any Certificateholder.

                                   ARTICLE IX

                         Termination of Trust Agreement

                  SECTION 9.1.  Termination of Trust Agreement.

                  (a) This Agreement and the Trust shall terminate and be of no
further force or effect upon the later of (i) the maturity or other liquidation
of the last Mortgage Loan (including the redemption by the Sponsor at its option
of the Notes as described in Section 7.01(b) of the Sale and Servicing
Agreement) and the subsequent distribution of amounts in respect of such
Mortgage Loans as provided in the Basic Documents or (ii) the payment to
Certificateholders of all amounts required to be paid to them pursuant to this
Agreement and the payment to the Insurer of all amounts payable or reimbursable
to it pursuant to the Sale and Servicing Agreement and the Insurance Agreement;
provided, however, that the rights to indemnification under Section 8.2 and the
rights under Section 8.1 shall survive the termination of the Trust. The
Servicer shall promptly notify the Owner Trustee and the Insurer of any
prospective termination pursuant to this Section 9.1. The bankruptcy,
liquidation, dissolution, death or incapacity of any Certificateholder shall not
(x) operate to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.

                                       22
<PAGE>

                  (b) Except as provided in clause (a), neither the Sponsor nor
any other Certificateholder shall be entitled to revoke or terminate the Trust.

                  (c) Notice of any termination of the Trust, specifying the
Payment Date upon which the Certificateholders shall surrender their
Certificates to the Indenture Trustee for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Servicer given pursuant to Section 7.01(c) of the Sale and
Servicing Agreement, stating (i) the Payment Date upon or with respect to which
final payment of the Certificates shall be made upon presentation and surrender
of the Certificates at the office of the Indenture Trustee therein designated,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Payment Date is not applicable, payments being made
only upon presentation and surrender of the Certificates at the office of the
Indenture Trustee therein specified. The Owner Trustee shall give such notice to
the Certificate Registrar (if other than the Owner Trustee) and the Indenture
Trustee at the time such notice is given to Certificateholders. Upon
presentation and surrender of the Certificates, the Indenture Trustee shall
cause to be distributed to Certificateholders amounts distributable on such
Payment Date pursuant to Section 8.6(d)(xiii) of the Indenture.

                  In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Owner 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 one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner 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 that shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Sponsor and Holders shall look solely to the
Sponsor for payment.

                  (d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Sponsor.

                  (e) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.

                                    ARTICLE X

             Successor Owner Trustees and Additional Owner Trustees

                  SECTION 10.1. Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times be a corporation (i) satisfying the provisions
of Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined

                                       23
<PAGE>

capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal or State authorities; (iv) having (or having a parent
which has) a rating of at least Baa3 by Moody's or A-1 by Standard & Poor's; and
(v) acceptable to the Insurer in its sole discretion. If such corporation shall
publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section, the combined capital and surplus of such corporation
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 Owner Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.

                  SECTION 10.2. Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Sponsor (or in the event that
the Sponsor is not the sole Certificateholder, the Holders of Certificates
evidencing not less than a majority in interest in the Trust), the Insurer and
the Servicer. Upon receiving such notice of resignation, the Sponsor shall
promptly appoint a successor Owner Trustee, meeting the qualifications set forth
in Section 10.1 herein, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Sponsor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the Insurer by either of the Rating
Agencies. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or the Insurer may petition any court
of competent jurisdiction for the appointment of a successor Owner Trustee.

                  If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Certificateholder with the consent of the Insurer may
remove the Owner Trustee. If the Certificateholder shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the Sponsor
shall promptly appoint a successor Owner Trustee, meeting the qualifications set
forth in Section 10.1 herein, by written instrument, in duplicate, one copy of
which instrument shall be delivered to the outgoing Owner Trustee so removed,
one copy to the Insurer and one copy to the successor Owner Trustee and the
Sponsor shall pay all fees owed to the outgoing Owner Trustee, if not previously
paid by the Trust.

                  Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section shall not become effective until acceptance of appointment by the
successor Owner Trustee pursuant to Section 10.3 and payment of all fees and
expenses owed to the outgoing Owner Trustee. The Sponsor shall provide notice of
such resignation or removal of the Owner Trustee to each of the Rating Agencies.

                                       24
<PAGE>

                  Notwithstanding any other provision of this Agreement, and in
addition to any other method of removal of the Owner Trustee contained herein,
upon a proposal made pursuant to Section 4.2(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in the Trust,
the Owner Trustee may be removed as Owner Trustee , subject to the consent of
the Insurer, which consent is not to be unreasonably withheld. In the event the
Owner Trustee is removed pursuant to this paragraph, the provisions of this
Agreement, including Article X herein, shall apply as if the Owner Trustee had
resigned hereunder.

                  SECTION 10.3. Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Sponsor, the Servicer, the Insurer and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Sponsor and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.

                  No successor Owner Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Owner Trustee shall be eligible pursuant to Section 10.1.

                  Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Servicer shall mail notice of the successor of
such Owner Trustee to all Certificateholders, the Indenture Trustee, the
Noteholders and the Rating Agencies. If the Servicer shall fail to mail such
notice within 10 days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at the
expense of the Servicer.

                  SECTION 10.4. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner 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 Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.

                  SECTION 10.5. Appointment of Co-Owner Trustee or Separate
Owner 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 Owner Trust Estate or any Mortgaged Property may at the
time be located, the Servicer and the Owner Trustee acting

                                       25
<PAGE>

jointly shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Owner Trustee and the Insurer to act
as co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Owner Trust Estate, and to vest in such
Person, in such capacity, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Servicer and the Owner Trustee may
consider necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, the
Owner Trustee subject to the approval of the Insurer (which approval shall not
be unreasonably withheld) shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to Section 10.1 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.3.

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

                  (i) all rights, powers, duties and obligations conferred or
         imposed upon the Owner Trustee shall be conferred upon and exercised or
         performed by the Owner 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 Owner 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,
         the Owner 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 Trust 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
         Owner Trustee;

                  (ii) no trustee under this Agreement shall be personally
         liable by reason of any act or omission of any other trustee under this
         Agreement; and

                  (iii) the Servicer and the Owner Trustee acting jointly may at
         any time accept the resignation of or remove any separate trustee or
         co-trustee.

                  Any notice, request or other writing given to the Owner
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. 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 Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer and the Insurer.

                  Any separate trustee or co-trustee may at any time appoint the
Owner 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

                                       26
<PAGE>

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 Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.

                                   ARTICLE XI

                                  Miscellaneous

                  SECTION 11.1. Supplements and Amendments.

                  (a) This Agreement may be amended by the Sponsor and the Owner
Trustee, with the prior written consent of the Insurer and with prior written
notice to the Rating Agencies, without the consent of any of the Noteholders or,
in the event that the Sponsor is not the sole Certificateholder, the
Certificateholders, (i) to cure any ambiguity or defect or (ii) to correct,
supplement or modify any provisions in this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel which may be based
upon a certificate of the Servicer, adversely affect in any material respect the
interests of any Noteholder or Certificateholder.

                  (b) This Agreement may also be amended from time to time, with
the prior written consent of the Insurer by the Sponsor and the Owner Trustee,
with prior written notice to the Rating Agencies, and, to the extent such
amendment materially and adversely affects the interests of the Noteholders,
with the consent of the Noteholders evidencing not less than a majority of the
Outstanding Amount of the Notes and, the consent of the Certificateholders
evidencing not less than a majority interest in the Trust (which consent of any
Holder of a Certificate or Note given pursuant to this Section or pursuant to
any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Certificate or Note and of any
Certificate or Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the
Certificate or Note) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that, subject to the express rights of the Insurer under the
Basic Documents, no such amendment shall (a) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of payments on
Mortgage Loans or distributions that shall be required to be made for the
benefit of the Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Certificates, the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and Holders of all
outstanding Certificates.

                  Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.

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

                                       27
<PAGE>

thereof. The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe. Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the filing of such amendment
with the Secretary of State.

                  Prior to the execution of any amendment to this Agreement or
the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.

                  SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided ownership interest therein
only in accordance with Article IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholders to and in
their ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.

                  SECTION 11.3. Limitations on Rights of Others. Except for
Section 2.7, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Sponsor, the Certificateholders, the Servicer and, to the
extent expressly provided herein, the Insurer, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.

                  SECTION 11.4. Notices.

                  (a) Unless otherwise expressly specified or permitted by the
terms hereof, all notices shall be in writing and shall be deemed given upon
receipt personally delivered, delivered by overnight courier or mailed first
class mail or certified mail, in each case return receipt requested, and shall
be deemed to have been duly given upon receipt, if to the Owner Trustee,
addressed to the Corporate Trust Office; if to the Sponsor, addressed to
GreenPoint Mortgage Securities Inc., 700 Larkspur Landing Circle, Suite 240,
Larkspur, California 94939; if to the Insurer, addressed to Insurer, Ambac
Assurance Corporation, One State Street Plaza, New York, New York 10004,
Attention: Surveillance Department, Telecopy No.: (212) 668-0340; or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.

                  (b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be

                                       28
<PAGE>

conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.

                  SECTION 11.5. Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

                  SECTION 11.6. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.

                  SECTION 11.7. Assignments; Insurer.

                  (a) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. This Agreement shall also inure to the benefit of the Insurer. Without
limiting the generality of the foregoing, all covenants and agreements in this
Agreement which confer rights upon the Insurer shall be for the benefit of and
run directly to the Insurer, and the Insurer shall be entitled to rely on and
enforce such covenants, subject, however, to the limitations on such rights
provided in this Agreement and the Basic Documents. The Insurer may disclaim any
of its rights and powers under this Agreement (but not its duties and
obligations under the Policy) upon delivery of a written notice to the Owner
Trustee.

                  (b) In accepting instructions from the Insurer pursuant to
Article IV or Section 6.3 of this Agreement, and with respect to any other
obligations of the Owner Trustee to the Insurer under this Agreement, the Owner
Trustee undertakes to perform or observe only its express obligations under this
Agreement, and no implied obligations with respect to the Insurer shall be read
into this Agreement against the Owner Trustee. The Owner Trustee shall not be
deemed to owe any fiduciary duty to the Insurer and it is expressly understood
and agreed by the Insurer that the Owner Trustee shall not be personally liable
or responsible for the payment of any amount owing on or with respect to the
Basic Documents or for the failure of the Trust to perform its obligations under
the Basic Documents or any other agreement with respect thereto.

                  SECTION 11.8. No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenants and agrees that they will not at any time institute against the
Sponsor, or join in any institution against the Sponsor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes, this
Agreement or any of the Basic Documents.

                  SECTION 11.9. No Recourse. Each Certificateholder by accepting
a Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust

                                       29
<PAGE>

only and do not represent interests in or obligations of the Servicer, the
Sponsor, the Owner Trustee, the Indenture Trustee, the Insurer or any Affiliate
thereof and no recourse may be had against such parties or their assets, except
as may be expressly set forth or contemplated in this Agreement, the
Certificates or the Basic Documents.

                  SECTION 11.10. Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.

                  SECTION 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.

                  SECTION 11.12. Servicer. The Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of the Trust all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Trust or Owner Trustee to prepare, file or deliver
pursuant to the Basic Documents. Upon written request, the Owner Trustee shall
execute and deliver to the Servicer a limited power of attorney appointing the
Servicer the Trust's agent and attorney-in-fact to prepare, or cause to be
prepared, execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.

                                       30
<PAGE>

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

                                            WILMINGTON TRUST COMPANY,
                                              Owner Trustee

                                            By:  /s/  James P. Lawler
                                                 -------------------------------
                                                 Name:  James P. Lawler
                                                 Title: Vice President

                                            GREENPOINT MORTGAGE SECURITIES INC.,
                                               Sponsor

                                            By:  /s/  Kristen Decker
                                                 -------------------------------
                                                 Name:  Kristen Decker
                                                 Title: Vice President

Acknowledged and Agreed:

GREENPOINT MORTGAGE FUNDING, INC.,
Servicer

By:  /s/  Gilbert J. MacQuarrie
     -------------------------------------
     Name:  Gilbert J. MacQuarrie
     Title: Executive Vice President and
              Chief Financial Officer

AMBAC ASSURANCE CORPORATION,
Insurer

By:  /s/  Jeff D. Nabi
     -------------------------------------
     Name:  Jeff D. Nabi
     Title: Vice President

                                       31
<PAGE>

                                                                       EXHIBIT A

                                   CERTIFICATE

THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE EXTENT
DESCRIBED HEREIN AND IN THE TRUST AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON.

THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER
OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH
REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION
3.10 OF THE TRUST AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE TRANSFEREE PROVIDES A
REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH CERTIFICATE, ACCEPTABLE TO AND
IN FORM AND SUBSTANCE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE INSURER, TO
THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN
SECTION 3(3) OF ERISA) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, A
PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE, NOR A PERSON
ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN, WHICH REPRESENTATION
LETTER SHALL NOT BE AN EXPENSE OF THE INDENTURE TRUSTEE OR THE INSURER.

NO TRANSFER OF A CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS OR IS MADE IN ACCORDANCE WITH SAID ACT AND
LAWS. EXCEPT FOR THE INITIAL ISSUANCE OF THE CERTIFICATE TO THE SPONSOR, THE
INDENTURE TRUSTEE SHALL REQUIRE (i) THE TRANSFEREE TO EXECUTE AN INVESTMENT
LETTER ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE INDENTURE
TRUSTEE AND THE INSURER CERTIFYING TO THE INDENTURE TRUSTEE AND THE INSURER THE
FACTS SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN EXPENSE
OF THE INDENTURE TRUSTEE OR THE INSURER OR (ii) IF THE INVESTMENT LETTER IS NOT
DELIVERED, A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE
SATISFACTORY TO THE INDENTURE TRUSTEE, THE INSURER AND THE SPONSOR

                                      A-1
<PAGE>

THAT SUCH TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION, DESCRIBING THE
APPLICABLE EXEMPTION AND THE BASIS THEREFOR, FROM SAID ACT OR IS BEING MADE
PURSUANT TO SAID ACT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE
INDENTURE TRUSTEE, THE INSURER OR THE SPONSOR. THE HOLDER OF A CERTIFICATE
DESIRING TO EFFECT SUCH TRANSFER SHALL, AND DOES HEREBY AGREE TO, INDEMNIFY THE
SPONSOR AND THE INSURER 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.

THE CERTIFICATES AND ANY INTEREST THEREIN SHALL NOT BE TRANSFERRED EXCEPT UPON
SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (i) THE PERSON THAT ACQUIRES
A CERTIFICATE SHALL (A) BE ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED
STATES OF AMERICA OR ANY STATE OR THE DISTRICT OF COLUMBIA THEREOF, (B)
EXPRESSLY ASSUME, BY AN AGREEMENT SUPPLEMENTAL HERETO, EXECUTED AND DELIVERED TO
THE INDENTURE TRUSTEE AND THE INSURER, THE PERFORMANCE OF EVERY COVENANT AND
OBLIGATION OF THE SPONSOR UNDER THE TRUST AGREEMENT AND (C) AS PART OF ITS
ACQUISITION OF A CERTIFICATE, ACQUIRE ALL RIGHTS OF THE SPONSOR OR ANY
TRANSFEREE UNDER SECTION 3.10 OF THE TRUST AGREEMENT TO AMOUNTS PAYABLE TO THE
CERTIFICATE OR SUCH TRANSFEREE UNDER SECTIONS 8.6(D)(XIII) AND 8.5(C) OF THE
INDENTURE; (ii) THE HOLDER OF THE CERTIFICATES SHALL DELIVER TO THE INDENTURE
TRUSTEE AND THE INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH TRANSFER AND
SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10(C) OF THE TRUST AGREEMENT
AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10(C) OF THE TRUST
AGREEMENT HAVE BEEN COMPLIED WITH AND AN OPINION OF COUNSEL STATING THAT ALL
CONDITIONS PRECEDENT PROVIDED BY SECTION 3.10(C) OF THE TRUST AGREEMENT HAVE
BEEN COMPLIED WITH, AND THE INDENTURE TRUSTEE MAY CONCLUSIVELY RELY ON SUCH
OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH REGARD TO THE
MATTERS SET FORTH THEREIN AND SHALL INCUR NO LIABILITY IN SO RELYING; (iii) THE
HOLDER OF THE CERTIFICATES SHALL DELIVER TO THE INDENTURE TRUSTEE AND THE
INSURER A LETTER FROM EACH RATING AGENCY CONFIRMING THAT ITS RATING OF THE
NOTES, AFTER GIVING EFFECT TO SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN
WITHOUT REGARD TO THE POLICY; (iv) THE TRANSFEREE OF THE CERTIFICATES SHALL
DELIVER TO THE INDENTURE TRUSTEE AND THE INSURER AN OPINION OF COUNSEL TO THE
EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE
NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE INCOME TAX
PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN THE TRUST BEING SUBJECT TO TAX AT
THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C) SUCH TRANSFER
WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR APPLICABLE STATE
INCOME TAXATION OF A NOTEHOLDER OR ANY NOTE OWNER AND (D) SUCH TRANSFER WILL NOT
RESULT IN THE ARRANGEMENT CREATED BY THE TRUST AGREEMENT OR ANY "PORTION" OF THE
TRUST, BEING

                                      A-2
<PAGE>

TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(I) OF
THE CODE; (v) ALL FILINGS AND OTHER ACTIONS NECESSARY TO CONTINUE THE PERFECTION
OF THE INTEREST OF THE TRUST IN THE MORTGAGE LOANS AND THE OTHER PROPERTY
CONVEYED UNDER THE TRUST AGREEMENT SHALL HAVE BEEN TAKEN OR MADE AND (vi) THE
INSURER SHALL HAVE CONSENTED TO SUCH TRANSFER.

THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

                                      A-3
<PAGE>

              GREENPOINT HOME EQUITY LOAN TRUST 1999-2 CERTIFICATE

Percentage Interest:  100%                  Cut-Off Date:  November 30, 1999
 First Payment Date:  January 15, 2000        Issue Date:  December 22, 1999

No. 1

                       GREENPOINT MORTGAGE SECURITIES INC.
                                Certificateholder

                  OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION

                  This is one of the Certificates referred to in the
within-mentioned Trust Agreement.

                           WILMINGTON TRUST COMPANY,  not in its
                           individual capacity but solely as Owner Trustee

                           By:
                               ---------------------------------------
                                         Authenticating Agent

                  The Trust was created pursuant to a Trust Agreement dated as
of December 1, 1999 (the "Trust Agreement"), between the Sponsor and Wilmington
Trust Company, as owner trustee (the "Owner Trustee"), a summary of certain of
the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Trust Agreement.

                  This Certificate is one of the duly authorized Certificates
designated as GreenPoint Home Equity Loan "Asset Backed Certificates" (herein
called the "Certificates"). Also issued under the Indenture dated as of December
1, 1999, among the Trust and Bank One, National Association, as indenture
trustee (the "Indenture Trustee") are two classes of Notes designated as Class
A-1 Notes and Class A-2 Notes (collectively referred to herein as the "Notes").
These Certificates are issued under and are subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the holder of this
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of the Trust includes (A) a pool of certain adjustable
rate home equity revolving credit line loans (the "HELOC Mortgage Loans")
(including any Additional Balances related thereto) and certain second lien
closed-end loans (the "Closed End Mortgage Loans") in each case which
substantially conform to the loan origination standards with respect to loan
balances as of the date of origination set form by the Federal National Mortgage
Association and (B) a pool of certain HELOC Mortgage Loans (including any
Additional Balances related thereto) and certain Closed End Mortgage Loans which
do not so conform.

                                      A-4
<PAGE>

                  Under the Trust Agreement, there will be distributed on the
15th day of each month or, if such 15th day is not a Business Day, the next
Business Day (the "Payment Date"), commencing on January 15, 2000, to the Person
in whose name this Certificate is registered at the close of business on the
Business Day preceding such Payment Date (the "Record Date") such
Certificateholder's Percentage Interest in the amount to be distributed to
Certificateholders on such Payment Date.

                  The holder of this Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.

                  The holder of this Certificate, by acceptance of this
Certificate, specifically acknowledges that it has no right to or interest in
any monies at any time held pursuant to the Reserve Fund, the Pre-Funding
Account or prior to the release of such monies pursuant to Sections 8.6(d)(xiii)
and 8.5(c) of the Indenture, such monies being held in trust for the benefit of
the Noteholders and the Insurer. Notwithstanding the foregoing, in the event
that it is ever determined that the monies held in the Reserve Fund or the
Pre-Funding Account constitute a pledge of collateral, then the provisions of
the Sale and Servicing Agreement shall be considered to constitute a security
agreement and the holder of this Certificate hereby grants to the Indenture
Trustee and the Insurer a first priority perfected security interest in such
amounts. In addition, each Certificateholder, by acceptance of its Certificate,
hereby appoints the Sponsor as its agent to pledge a first priority perfected
security interest in the Reserve Fund and the Pre-Funding Account and agrees to
execute and deliver such instruments of conveyance, assignment, grant,
confirmation, etc., as well as any financing statements, in each case as the
Insurer shall consider reasonably necessary in order to perfect the Indenture
Trustee's security interest in the Trust Property.

                  It is the intent of the Sponsor, the Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a branch. In the event that the Certificates are held by more than
one Holder, it is the intent of the Sponsor, the Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Sponsor and any other Certificateholders, by acceptance
of a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
the Trust. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Trust or the Sponsor, or join in any institution against the Trust or the
Sponsor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Basic Documents.

                  Distributions on this Certificate will be made as provided in
the Sale and Servicing Agreement and the Indenture by the Indenture Trustee by
wire transfer or check mailed to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate

                                      A-5
<PAGE>

will be made after due notice by the Owner Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for the purpose by the Owner Trustee in the
Corporate Trust Office.

                  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.

                  Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.

                  The Certificates do not represent an obligation of, or an
interest in, the Company, the Sponsor, the Servicer, the Insurer, the Owner
Trustee or any Affiliates of any of them and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated
herein or in the Trust Agreement, the Indenture or the Basic Documents. In
addition, this Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections with
respect to the Mortgage Loans, as more specifically set forth herein, in the
Sale and Servicing Agreement and in the Indenture. A copy of each of the Sale
and Servicing Agreement and the Trust Agreement may be examined during normal
business hours at the principal office of the Sponsor, and at such other places,
if any, designated by the Sponsor, by any Certificateholder upon written
request.

                  The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Sponsor and the rights of the Certificateholders under the
Trust Agreement at any time by the Sponsor and the Owner Trustee with the prior
written consent of the Insurer and with the consent of the holders of the Notes
and the Certificates evidencing not less than a majority of the outstanding
Notes and the Certificates. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and on all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Certificates (other than the Sponsor or the Insurer).

                  As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner 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
in authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust Company.

                                      A-6
<PAGE>

                  Except for Certificates issued to the Sponsor, the
Certificates are issuable only as registered Certificates without coupons in
denominations of $1,000 or integral multiples of $1,000 in excess thereof. As
provided in the Trust Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates in authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.

                  The Owner Trustee, the Certificate Registrar, the Insurer and
any agent of the Owner Trustee, the Certificate Registrar, the Insurer or the
Insurer may treat the person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Owner Trustee, the Certificate
Registrar, the Insurer nor any such agent shall be affected by any notice to the
contrary.

                  The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement, the Indenture and the Sale and Servicing Agreement and the
disposition of all property held as part of the Trust. The Sponsor may at its
option redeem the Notes at a price and upon the satisfaction of certain
conditions specified in Section 7.01(b) of the Sale and Servicing Agreement, and
if all of the Notes are redeemed, such redemption may result in termination of
the Trust which may effect a transfer of the Certificates; however, such right
of purchase is exercisable, subject to certain restrictions, only on any Payment
Date on or after the Payment Date immediately prior to which the related Note
Principal Balance for a Class of Notes is less than 10% of the related Original
Note Principal Balance for such Class of Notes and all amounts due and owing to
the Insurer for unpaid premiums and unreimbursed draws related to such Class of
Notes on the Policy and all other amounts due and owing to the Insurer pursuant
to the Insurance Agreement, together with interest thereon as provided under the
Insurance Agreement, have been paid.

                  The recitals contained herein shall be taken as the statements
of the Sponsor or the Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.

                  Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual or
facsimile signature, this Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.

                                      A-7

<PAGE>

                  IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust
and not in its individual capacity, has caused this Certificate to be duly
executed.

                                GREENPOINT HOME EQUITY LOAN TRUST 1999

                                By: WILMINGTON TRUST COMPANY, not in its
                                individual capacity but solely as Owner Trustee

                                By:
                                    -------------------------------------------
                                    Name:
                                    Title:

Dated:  December 22, 1999

                                      A-8
<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

--------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)

--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing_________________ Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.

Dated:

                                                     ______________________ *
                                                     Signature Guaranteed:

                                                     ______________________ *

------------

*  NOTICE: The signature to this assignment must correspond with the name
   of the registered owner as it appears on the face of the within
   Certificate in every particular, without alteration, enlargement or any
   change whatever. Such signature must be guaranteed by an "eligible
   guarantor institution" meeting the requirements of the Certificate
   Registrar, which requirements include membership or participation in
   STAMP or such other "signature guarantee program" as may be determined
   by the Certificate Registrar in addition to, or in substitution for,
   STAMP, all in accordance with the Securities Exchange Act of 1934, as
   amended.

<PAGE>

                                                                       EXHIBIT B

                             CERTIFICATE OF TRUST OF
                    GREENPOINT HOME EQUITY LOAN TRUST 1999-2

                  This Certificate of Trust of GreenPoint Home Equity Loan Trust
1999-2 (the "Trust"), dated as of December __, 1999, is being duly executed and
filed by Wilmington Trust Company, a Delaware banking corporation, as trustee,
to form a business trust under the Delaware Business Trust Act (12 Del. Code,
Section 3801 et seq.).

                  1. Name. The name of the business trust formed hereby is
GreenPoint Home Equity Loan Trust 1999-2.

                  2. Delaware Trust. The name and business address of the Owner
Trustee of the Trust in the State of Delaware is Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001.
Attn: Corporate Trust Administration.

                  3. This Certificate of Trust will be effective December 22,
1999.

                  IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.

                            WILMINGTON TRUST COMPANY,
                            not in its individual capacity but solely as Owner
                            Trustee of the Trust.

                            By:
                               -------------------------------------------
                               Name:
                               Title:

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