Document:

EXHIBIT 10.17.1

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                           MASTER REPURCHASE AGREEMENT

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

                          Dated as of January 27, 2006

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

                          AMERICAN HOME MORTGAGE CORP.,

                    AMERICAN HOME MORTGAGE ACCEPTANCE, INC.,

                    AMERICAN HOME MORTGAGE INVESTMENT CORP.,

                      AMERICAN HOME MORTGAGE HOLDINGS, INC.

                                       and

                     AMERICAN HOME MORTGAGE SERVICING, INC.,
                                 as the Sellers

                      MORGAN STANLEY MORTGAGE CAPITAL INC.,
                                   as a Buyer

                                       and

                              MORGAN STANLEY BANK,
                            as a Buyer and the Agent

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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>            <C>                                                                         <C>
Section 1.     Definitions and Accounting Matters............................................2
        1.01.  Certain Defined Terms.........................................................2
        1.02.  Accounting Terms and Determinations..........................................20
        1.03.  Other Definitional Provisions................................................21

Section 2.     Transactions, Repurchases and Margin Maintenance.............................21
        2.01.  Transactions.................................................................21
        2.02.  Transaction Request Procedure (Transactions other than Wet-Ink Transactions).21
        2.03.  Transaction Request Procedure (Wet-Ink Transactions).........................23
        2.04.  Limitation on Types of Transactions; Illegality..............................24
        2.05.  Repurchase of Purchased Loans; Payment of Repurchase Price, Price
               Differential. ...............................................................24
        2.06.  Margin Maintenance; Mandatory Prepayments....................................25
        2.07.  Voluntary Prepayments........................................................26
        2.08.  Takeout Commitments..........................................................26
        2.09.  Extension of Termination Date................................................27

Section 3.     Payments; Computations; Etc..................................................27
        3.01.  Payments.....................................................................27
        3.02.  Computations.................................................................28
        3.03.  Requirements of Law..........................................................28
        3.04.  Extension Fee; Facility Fee; Minimum Usage Fee...............................29
        3.05.  Tax Treatment................................................................29
        3.06.  Income Payments..............................................................29

Section 4.     Purchased Items; Security Interest...........................................30
        4.01.  Purchased Items; Security Interest...........................................30
        4.02.  Further Documentation........................................................31
        4.03.  Changes in Locations, Name, etc..............................................31
        4.04.  Agent's Appointment as Attorney-in-Fact......................................32
        4.05.  Performance by Agent of Sellers' Obligations.................................33
        4.06.  Limitation on Duties Regarding Preservation of Purchased Items...............33
        4.07.  Powers Coupled with an Interest..............................................33
        4.08.  Release of Security Interest.................................................33

Section 5.     Conditions Precedent.........................................................34
        5.01.  Effectiveness................................................................34
        5.02.  Initial and Subsequent Transactions..........................................35

Section 6.     Representations and Warranties...............................................37
        6.01.  Legal Name...................................................................37
</TABLE>

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<TABLE>
<S>            <C>                                                                          <C>
        6.02.  Existence....................................................................37
        6.03.  Financial Condition..........................................................37
        6.04.  Litigation...................................................................38
        6.05.  No Breach....................................................................38
        6.06.  Action.......................................................................38
        6.07.  Approvals....................................................................38
        6.08.  Margin Regulations...........................................................39
        6.09.  Taxes........................................................................39
        6.10.  Investment Company Act.......................................................39
        6.11.  Purchased Items..............................................................39
        6.12.  Chief Executive Office/Jurisdiction of Organization..........................40
        6.13.  Location of Books and Records................................................40
        6.14.  Hedging......................................................................40
        6.15.  True and Complete Disclosure.................................................40
        6.16.  Tangible Net Worth...........................................................41
        6.17.  ERISA........................................................................41
        6.18.  [Reserved]...................................................................41
        6.19.  Subsidiaries.................................................................41
        6.20.  Solvency.....................................................................41
        6.21.  Regulatory Status............................................................41
        6.22.  Real Estate Investment Trust.................................................42
        6.23.  Compliance with Anti-Money Laundering Laws...................................42

Section 7.     Covenants of the Sellers.....................................................42
        7.01.  Financial Statements.........................................................42
        7.02.  Litigation...................................................................44
        7.03.  Existence, etc...............................................................44
        7.04.  Prohibition of Fundamental Changes...........................................45
        7.05.  Margin Deficiency............................................................45
        7.06.  Notices......................................................................45
        7.07.  Hedging......................................................................46
        7.08.  Reports......................................................................46
        7.09.  Underwriting Guidelines......................................................46
        7.10.  Transactions with Affiliates.................................................47
        7.11.  Limitation on Liens..........................................................47
        7.12.  Limitation on Guarantees.....................................................47
        7.13.  Limitation on Distributions..................................................47
        7.14.  Servicer; Servicer Report....................................................47
        7.15.  Required Filings.............................................................48
        7.16.  No Adverse Selection.........................................................48
        7.17.  Remittance of Prepayments....................................................48
        7.18.  Agency Approvals.............................................................48
        7.19.  [Reserved]...................................................................48
        7.20.  MERS Designated Mortgage Loans...............................................48
        7.21.  Title Insurance Policies.....................................................48
        7.22.  Financial Covenants..........................................................48
</TABLE>

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<TABLE>

<S>            <C>                                                                          <C>
Section 8.     Events of Default............................................................49

Section 9.     Remedies Upon Default........................................................51

Section 10.    The Agent....................................................................53
        10.01. Appointment..................................................................53
        10.02. Delegation of Duties.........................................................53
        10.03. Exculpatory Provisions.......................................................53
        10.04. Reliance by Agent............................................................54
        10.05. Notices......................................................................54
        10.06. Indemnification..............................................................54
        10.07. Agent in Its Individual Capacity.............................................55
        10.08. Non-Reliance on Agent and Other Buyers.......................................55
        10.09. Successor Agent..............................................................55

Section 11.    Miscellaneous................................................................56
        11.01. Waiver.......................................................................56
        11.02. Notices......................................................................56
        11.03. Indemnification and Expenses.................................................56
        11.04. Amendments...................................................................57
        11.05. Assignments and Participations...............................................58
        11.06. Successors and Assigns.......................................................59
        11.07. Survival.....................................................................59
        11.08. Captions.....................................................................59
        11.09. Counterparts.................................................................59
        11.10. Repurchase Agreement Constitutes Security Agreement; Governing Law...........59
        11.11. Submission To Jurisdiction; Waivers..........................................59
        11.12. WAIVER OF JURY TRIAL ........................................................60
        11.13. Acknowledgments..............................................................60
        11.14. Hypothecation or Pledge of Purchased Loans...................................60
        11.15. Servicing....................................................................60
        11.16. Periodic Due Diligence Review................................................62
        11.17. Set-Off......................................................................62
        11.18. Joint and Several Liability..................................................63
        11.19. Intent.......................................................................63
        11.20. Treatment of Certain Information.............................................63
        11.21. Substitution.................................................................64
        11.22. Disclosure Relating to Certain Federal Protections...........................64
</TABLE>

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<PAGE>

SCHEDULES

      Schedule 1        Representations and Warranties re: Mortgage Loans
      Schedule 2        [Reserved]
      Schedule 3        Filing Jurisdictions and Offices
      Schedule 4        Subsidiaries/Trade Names
      Schedule 5        Cooperative Mortgage Loan Documents
      Schedule 6        Buyer Commitments
      Schedule 7        Information for Servicer Reports
      Schedule 8        Tax ID and Organizational ID Numbers of Sellers
      Schedule 9        Leverage Calculations

EXHIBITS

      Exhibit A         Form of Custodial Agreement
      Exhibit B         Form of Transaction Request
      Exhibit C         Form of Assignment and Acceptance
      Exhibit D         Form of Seller's Release Letter
      Exhibit E         Form of Warehouse Lender's Release Letter
      Exhibit F         Underwriting Guidelines
      Exhibit G         Form of Servicer Notice
      Exhibit H         [Reserved]
      Exhibit I         Form of Notice of Prepayment
      Exhibit J         Form of Takeout Proceeds Identification Letter

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<PAGE>

                           MASTER REPURCHASE AGREEMENT

            MASTER REPURCHASE AGREEMENT, dated as of January 27, 2006 (as
amended, restated, supplemented or otherwise modified and in effect from time to
time, this "Repurchase Agreement"), is made by and among AMERICAN HOME MORTGAGE
CORP., a New York corporation ("AHM"), AMERICAN HOME MORTGAGE ACCEPTANCE, INC.,
a Maryland corporation ("AHM Acceptance"), AMERICAN HOME MORTGAGE INVESTMENT
CORP., a Maryland corporation ("AHM Investment"), AMERICAN HOME MORTGAGE
HOLDINGS, INC., a Delaware corporation ("Holdings"), and AMERICAN HOME MORTGAGE
SERVICING, INC., Maryland corporation ("AHM Servicing", together with AHM, AHM
Acceptance, AHM Investment and Holdings, collectively, the "Sellers", each a
"Seller"), MORGAN STANLEY MORTGAGE CAPITAL INC. ("MSMCI") and MORGAN STANLEY
BANK ("MS Bank", together with MSMCI, collectively, the "Buyers", each, a
"Buyer", and as agent for the Buyers, in such capacity, the "Agent").

                                    RECITALS

            WHEREAS, AHM, AHM Acceptance, AHM Investment, Holdings, AHM
Servicing, Morgan Stanley Mortgage Capital Inc. ("MSMCI") and MS Bank are
parties to that certain Amended and Restated Master Loan and Security Agreement,
dated as of November 26, 2003 (as amended, supplemented or otherwise modified
prior to the date hereof, the "Existing Loan Agreement").

            WHEREAS, the termination date under the Existing Loan Agreement is
January 27, 2006 and, in light of recent changes to the Bankruptcy Code (defined
below), the parties hereto have agreed to substitute this Repurchase Agreement
for the Existing Loan Agreement and to change the nature of their relationship
from "Borrowers" and "Lenders" to "Sellers" and "Buyers", as provided herein.

            WHEREAS, in furtherance of the foregoing, the Sellers have requested
that the Agent, on behalf of the Buyers, from time to time enter into
transactions ("Transactions"), pursuant to which, on the applicable Purchase
Date (defined below), the applicable Seller shall sell, and the Buyers shall
purchase, certain Eligible Mortgage Loans (defined below), each Buyer purchasing
undivided ownership interests in such Eligible Mortgage Loans, pursuant to such
Transactions, against payment by the Buyers of an amount equal to the Purchase
Price (defined below) for such Eligible Mortgage Loans with a simultaneous
agreement by such Seller to repurchase Purchased Loans (defined below) on the
applicable Repurchase Date by payment to the Agent for the account of the Buyers
of an amount equal to the related Repurchase Price (defined below).

            WHEREAS, the Buyers and the Agent are prepared, subject to the terms
and conditions hereof, to enter into such Transactions.

            WHEREAS, each Seller is engaged in a business that is complimentary
to the business of the other Sellers and each Seller will directly benefit from
the Transactions entered into hereunder with each other Seller and the Purchase
Price paid in connection with each Transaction will inure to the benefit of each
Seller.

<PAGE>

            NOW, THEREFORE, in consideration of the premises and the mutual
obligations set forth herein, each of the Sellers, the Buyers and the Agent
hereby agree as set forth in the heading and recitals hereto and as follows:

            Section 1. Definitions and Accounting Matters.

            1.01. Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Repurchase Agreement in the singular to have the same
meanings when used in the plural and vice versa):

            "Accepted Servicing Practices" shall mean, with respect to any
Mortgage Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage Loan
in the jurisdiction where the related Mortgaged Property is located.

            "Affiliate" shall mean with respect to any Person, any "affiliate"
of such Person, as such term is defined in the Bankruptcy Code.

            "Agency" shall mean Fannie Mae, Freddie Mac, any loan origination
program sponsored by the State of California and any other government mortgage
loan program acceptable to the Agent or any successors thereto.

            "Agency Approvals" shall have the meaning provided in Section
6.07(b) hereof.

            "Agency Eligible Mortgage Loan" shall mean a mortgage loan that is
in strict compliance with the eligibility requirements for swap or purchase by
the designated Agency, under the applicable Agency Guide and/or Agency Program.

            "Agency Guide" shall mean, with respect to Fannie Mae securities,
the Fannie Mae Selling Guide and the Fannie Mae Servicing Guide, with respect to
Freddie Mac securities, the Freddie Mac Sellers' and Servicers' Guide, and with
respect to California Program securities, the applicable program manual and the
servicer's guide, in each case including all exhibits thereto, as such Agency
Guide may be amended, supplemented or otherwise modified from time to time.

            "Agency Program" shall mean a specific mortgage backed securities
swap or purchase program under the relevant Agency Guide or as otherwise
approved by the Agency with respect to Mortgage Loans originated pursuant to the
Agency Guide.

            "Agent" shall have the meaning provided in the introductory
paragraph hereof.

            "AHM" shall have the meaning provided in the introductory paragraph
hereof.

            "AHM Acceptance" shall have the meaning provided in the introductory
paragraph hereof.

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<PAGE>

            "AHM Investment" shall have the meaning provided in the introductory
paragraph hereof.

            "AHM Servicing" shall have the meaning provided in the introductory
paragraph hereof.

            "Alternate `A' Mortgage Loan" shall mean a Mortgage Loan made by a
Seller which is underwritten in conformity with the applicable Agency Guide or
Agency Program applicable to Alternate `A' Mortgage Loans.

            "Anti-Money Laundering Laws" shall have the meaning provided in
Section 6.23 hereof.

            "Applicable Pricing Spread" shall mean for each type of Eligible
Mortgage Loan, the "Applicable Pricing Spread" set forth in the chart below
opposite the applicable type of Eligible Mortgage Loan:

            --------------------------------------------------------------
              Type of Eligible Mortgage Loan   Applicable Pricing Spread
            --------------------------------------------------------------
              Agency Eligible Mortgage Loan         0.45% per annum
            --------------------------------------------------------------
               Alternate `A' Mortgage Loan          0.50% per annum
            --------------------------------------------------------------
              Conduit Eligible Mortgage Loan        0.50% per annum
            --------------------------------------------------------------
                   Jumbo Mortgage Loans             0.45% per annum
            --------------------------------------------------------------
               Interest-Only Mortgage Loans         0.50% per annum
            --------------------------------------------------------------
              Any Eligible Mortgage Loan not        0.45% per annum
                     described above
            --------------------------------------------------------------

            "Applicable Purchase Rate" shall mean, with respect to each Eligible
Mortgage Loan, the applicable purchase rate set forth in the chart below
opposite the applicable type of Eligible Mortgage Loan:

            --------------------------------------------------------------
              Type of Eligible Mortgage Loan    Applicable Purchase Rate
            --------------------------------------------------------------
              Agency Eligible Mortgage Loan              98.0%
            --------------------------------------------------------------
               Alternate `A' Mortgage Loan               97.0%
            --------------------------------------------------------------
              Conduit Eligible Mortgage Loan             97.0%
            --------------------------------------------------------------
                   Jumbo Mortgage Loans                  97.0%
            --------------------------------------------------------------
               Interest-Only Mortgage Loans              97.0%
            --------------------------------------------------------------

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            --------------------------------------------------------------
              Any Eligible Mortgage Loan not             98.0%
                     described above
            --------------------------------------------------------------

            "Assignment and Acceptance" shall have the meaning set forth in
Section 11.05(a) hereof.

            "Assignment of Mortgage" shall mean, with respect to any mortgage,
an assignment of the mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related mortgaged property is located to reflect the assignment and pledge of
the mortgage.

            "Average Usage" shall have the meaning set forth in Section 3.04(b)
hereof.

            "Bankruptcy Code" shall mean the United States Bankruptcy Code of
1978, as amended from time to time.

            "Business Day" shall mean any day other than (i) a Saturday or
Sunday or (ii) a day on which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or Executive
Order to be closed.

            "Buyer(s)" shall have the meaning provided in the introductory
paragraph hereof.

            "Calculation Period" shall mean, with respect to any Transaction,
(a) initially, the period commencing on the Purchase Date to but excluding the
first Payment Date; and (b) thereafter, each period commencing on a Payment Date
to but excluding the next Payment Date. Notwithstanding the foregoing, no
Calculation Period may end after the Termination Date.

            "California Program Mortgage Loan" shall mean an Agency Eligible
Mortgage Loan that is in strict compliance with the eligibility requirements for
swap or purchase under a program sponsored by the State of California or such
other program as the Agent shall approve in its sole discretion as set forth in
the applicable Agency Guide and/or Agency Program.

            "Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Repurchase Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.

            "Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all similar ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.

            "Cash Equivalents" shall mean (a) securities with maturities of
ninety (90) calendar days or less from the date of acquisition issued or fully
guaranteed or insured by the United States Government or any agency thereof, (b)
certificates of deposit and eurodollar time

                                      -4-
<PAGE>

deposits with maturities of ninety (90) calendar days or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven (7) calendar days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-1 or the
equivalent thereof by S&P or P-1 or the equivalent thereof by Moody's and in
either case maturing within ninety (90) calendar days after the day of
acquisition, (e) securities with maturities of ninety (90) calendar days or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's, (f) securities with maturities of
ninety (90) calendar days or less from the date of acquisition backed by standby
letters of credit issued by any commercial bank satisfying the requirements of
clause (b) of this definition, or (g) shares of money market, mutual or similar
funds which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.

            "CLTV" shall mean with respect to any Mortgage Loan secured by a
second lien, the ratio of the sum of the outstanding principal amount of any
second priority mortgage loan plus the outstanding principal amount of the first
priority mortgage loan secured by the same Mortgaged Property to the lesser of
(a) the Appraised Value of the Mortgaged Property at origination or (b) if the
Mortgaged Property was purchased within twelve (12) months of the origination of
the Mortgage Loan, the purchase price of the Mortgaged Property, which CLTV
shall be calculated in accordance with the Underwriting Guidelines.

            "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

            "Collections" shall mean, collectively, all collections and proceeds
on or in respect of the Mortgage Loans, excluding collections required to be
paid to the Servicer or a mortgagor on the Mortgage Loans.

            "Commitment" shall mean, as to any Buyer, the obligation of such
Buyer to enter into Transactions with the Sellers pursuant to Section 2.01
hereof in an aggregate principal amount of Purchase Price at any one time
outstanding not to exceed the amount set forth opposite such Buyer's name on
Schedule 6 hereto under the caption "Commitment" or in an Assignment and
Acceptance, as such amount may be reduced from time to time in accordance with
the provisions of this Repurchase Agreement. The aggregate Commitment of all
Buyers hereunder shall equal the Maximum Amount.

            "Commitment Percentage" shall mean as to any Buyer at any time, the
percentage which such Buyer's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate outstanding amount of Purchase
Price paid by such Buyer in respect of Transactions then outstanding hereunder
constitutes of the aggregate amount Purchase Price paid by all Buyers in respect
of Transactions then outstanding hereunder); provided, that to the extent that
the

                                      -5-
<PAGE>

aggregate outstanding amount of Purchase Price paid by MS Bank, as a Buyer
hereunder, in respect of Transactions outstanding under this Repurchase
Agreement is at any time less than the Commitment of such Buyer at such time,
the Commitment Percentage of MS Bank as a Buyer hereunder shall be 100%.

            "Commitment Period" shall mean the period from and including the
date hereof to but not including the Termination Date or such earlier date on
which the Commitments shall terminate as provided herein.

            "Conduit Eligible Mortgage Loan" shall mean a Mortgage Loan made by
a Seller which is underwritten in conformity with the Sellers' underwriting
guidelines for a conduit eligible mortgage loan.

            "Cooperative Corporation" shall mean the cooperative apartment
corporation that holds legal title to a Cooperative Project and grants occupancy
rights to units therein to stockholders through Proprietary Leases or similar
arrangements.

            "Cooperative Mortgage Loan" shall mean a Mortgage Loan that is
secured by a first lien on a perfected security interest in Cooperative Shares
and the related Proprietary Lease granting exclusive rights to occupy the
related Cooperative Unit in the building owned by the related Cooperative
Corporation.

            "Cooperative Mortgage Loan Documents" shall mean the documents
listed on Schedule 5 attached hereto.

            "Cooperative Project" shall mean all real property owned by a
Cooperative Corporation including the land, separate dwelling units and all
common elements.

            "Cooperative Shares" shall mean the shares of stock issued by a
Cooperative Corporation and allocated to a Cooperative Unit and represented by a
stock certificate.

            "Cooperative Unit" shall mean a specific unit in a Cooperative
Project.

            "Costs" shall have the meaning provided in Section 11.03(a) hereof.

            "Custodial Agreement" shall mean the Custodial Agreement, dated as
of the date hereof, among the Sellers, the Custodian and the Agent,
substantially in the form of Exhibit A hereto, as the same may be amended,
restated, supplemented or otherwise modified and in effect from time to time.

            "Custodian" shall mean Deutsche Bank National Trust Company, as
custodian under the Custodial Agreement, and its successors and permitted
assigns thereunder.

            "Customer" means any natural person who has applied in writing to a
Seller for a financial product or service, has obtained any financial product or
service from a Seller or has a Mortgage Loan that is serviced or subserviced by
a Seller.

                                      -6-
<PAGE>

            "Customer Information" means any information or records in any form
(written, electronic or otherwise) containing a Customer's personal information
or identity, including a Customer's name, address, telephone number, loan
number, loan payment history, delinquency status, insurance carrier or payment
information, tax amount or payment information and the fact that the Customer
has a relationship with the relevant Seller.

            "Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.

            "Determination Period" shall have the meaning set forth in Section
3.04(b) hereof.

            "Dollars" and "$" shall mean lawful money of the United States of
America.

            "Due Diligence Review" shall mean the performance by the Agent of
any or all of the reviews permitted under Section 11.16 hereof with respect to
any or all of the Mortgage Loans, as desired by the Agent from time to time.

            "Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 5.01 shall have been satisfied.

            "Eight-Day Aged Wet-Ink Mortgage Loan" shall mean a Wet-Ink Mortgage
Loan with respect to which the complete Mortgage File has not been received by
the Custodian by the eighth (8th) Business Day following the origination date of
such Wet-Ink Mortgage Loan.

            "Electronic Agent" shall have the meaning assigned to such term in
Section 2 of the Electronic Tracking Agreement.

            "Electronic Tracking Agreement" shall mean the Electronic Tracking
Agreement, dated as of the date hereof, among the Sellers, the Agent, the
Electronic Agent and MERS, as the same shall be amended, supplemented or
otherwise modified from time to time.

            "Eligible Cooperative Mortgage Loan" shall mean a Cooperative
Mortgage Loan as to which the representations and warranties in Section 6.10 and
Part I of Schedule 1 hereof are correct.

            "Eligible Mortgage Loan" shall mean a Mortgage Loan secured by a
first or second mortgage lien on a one-to-four family residential property (a)
as to which the representations and warranties in Section 6.11 and Part I of
Schedule 1 hereof are correct and (b) which is either an Agency Eligible
Mortgage Loan, an Alternate `A' Mortgage Loan, a California Program Mortgage
Loan, an Eligible Cooperative Mortgage Loan, an Interest Only Mortgage Loan, a
Jumbo Mortgage Loan, a MERS Designated Mortgage Loan, a Second Lien Loan, HELOC
Loan or a Conduit Eligible Mortgage Loan; provided, that in no event shall any
Eligible Mortgage Loan be a security for purposes of any securities or blue sky
laws; provided, further, that the following Mortgage Loans shall not be Eligible
Mortgage Loans: (i) any Mortgage Loan for which the related obligor is subject
to a voluntary or involuntary bankruptcy proceeding or for which the related
Mortgaged Property has been acquired through foreclosure, acceptance of a
deed-in-lieu of foreclosure or otherwise in connection with the default of such

                                      -7-
<PAGE>

Mortgage Loan, (ii) any Mortgage Loan listed on an Exception Report, (iii) any
Mortgage Loan that remains subject to a Transaction outstanding hereunder later
than the date that is 180 calendar days (or solely with respect to Interest-Only
Mortgage Loans, later than 120 calendar days) after the initial Purchase Date
therefor, (iv) any Option ARM Mortgage Loan and (v) any Mortgage Loan that
contains any terms or provisions which would result in Negative Amortization.

            "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.

            "ERISA Affiliate" shall mean any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which a Seller is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which a Seller is
a member.

            "Eurocurrency Liabilities" shall have the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

            "Eurodollar Base Rate" shall mean, with respect to each day any
Transaction is outstanding, the rate per annum equal to the rate appearing at
page 5 of the Telerate Screen as one-month LIBOR on such date (and if such date
is not a Business Day, the rate quoted as one-month LIBOR on the Business Day
immediately preceding such date), and if such rate shall not be so quoted, the
rate per annum at which the Agent is offered Dollar deposits at or about 10:00
a.m., New York City time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency exchange operations
in respect of the Transactions are then being conducted for delivery on such day
for a period of thirty (30) days and in an amount comparable to the aggregate
Purchase Price of all Transactions outstanding on such day.

            "Eurodollar Rate" shall mean with respect to each day during each
Calculation Period pertaining to a Eurodollar Transaction, a rate per annum
determined for such day in accordance with the following formula (rounded upward
to the nearest 1/100th of 1%):

                              Eurodollar Base Rate
                              --------------------
                    1.00 - Eurodollar Rate Reserve Percentage

            "Eurodollar Rate Reserve Percentage" shall mean, for any Calculation
Period pertaining to a Eurodollar Transaction, the reserve percentage applicable
two (2) Business Days before the first day of such Calculation Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor thereto) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York, New York with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Transactions is determined) having a term comparable to such
Calculation Period.

                                      -8-
<PAGE>

            "Eurodollar Transaction" shall mean a Transaction with respect to
which the related Pricing Rate is determined by reference to the Eurodollar
Rate.

            "Event of Default" shall have the meaning provided in Section 8
hereof.

            "Exception" shall have the meaning assigned thereto in the Custodial
Agreement.

            "Exception Report" shall mean the portion of the Mortgage Loan
Schedule and Exception Report detailing Exceptions in respect of each Mortgage
Loan.

            "Existing Loan Agreement" shall have the meaning provided in the
Recitals above.

            "Excess Proceeds" shall have the meaning provided in Section 2.08
hereof.

            "Executive Order" shall have the meaning provided in Section 6.23
hereof.

            "Facility Exposure" shall mean, as to any Buyer at any time, the
aggregate outstanding amount of Purchase Price paid by such Buyer in respect of
the Transactions entered into by such Buyer hereunder.

            "Facility Fee" shall have the meaning set forth in Section 3.04(b)
hereof.

            "Fannie Mae" shall mean the Federal National Mortgage Association,
or any successor thereto.

            "Federal Funds Rate" shall mean, for any day, the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.

            "Freddie Mac" shall mean the Federal Home Loan Mortgage Corporation,
or any successor thereto.

            "GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States.

            "Governmental Authority" shall mean any nation or government, any
state or other political subdivision, agency or instrumentality thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over any Seller, any of its Subsidiaries or any of its properties.

            "Guarantee" shall mean, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such

                                      -9-
<PAGE>

Indebtedness against loss (whether by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, or to
take-or-pay or otherwise); provided that the term "Guarantee" shall not include
(i) endorsements for collection or deposit in the ordinary course of business,
or (ii) obligations to make servicing advances for delinquent taxes and
insurance or other obligations in respect of a Mortgaged Property, to the extent
required by the Agent. The amount of any Guarantee of a Person shall be deemed
to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith. The terms "Guarantee" and "Guaranteed"
used as verbs shall have correlative meanings.

            "HELOC Loan" shall mean a home equity revolving line of credit
secured by a first or second lien; provided, that no second lien home equity
revolving line of credit shall have a CLTV greater than 100%.

            "Holdings" shall have the meaning provided in the introductory
paragraph hereof.

            "Income" shall mean, with respect to any Purchased Loan at any time,
any principal and/or interest thereon and all dividends, sale proceeds
(including, without limitation, any proceeds from the securitization of such
Purchased Loan or other disposition thereof) and other collections and
distributions thereon (including, without limitation, any proceeds received in
respect of mortgage insurance) in respect of periods on or after the initial
Purchase Date with respect to such Purchased Loan.

            "Increased Cost Certificate" shall have the meaning set forth in
Section 3.03 hereof.

            "Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within ninety (90) calendar days after the date the
respective goods are delivered or the respective services are rendered; (c)
indebtedness of others secured by a Lien on the Property of such Person, whether
or not the respective indebtedness so secured has been assumed by such Person;
(d) obligations (contingent or otherwise) of such Person in respect of letters
of credit or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of such
Person; (f) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements; (g) indebtedness of others
Guaranteed by such Person; (h) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such Person; and
(i) indebtedness of general partnerships of which such Person is a general
partner.

            "Indemnified Party" shall have the meaning specified in Section
11.03(a) hereof.

                                      -10-
<PAGE>

            "Interest-Only Mortgage Loan" shall mean a mortgage loan that is in
strict compliance with the requirements in the Underwriting Guidelines for
"One-Month and Six-Month Interest Only ARM Products" (as defined in the
Underwriting Guidelines).

            "Interest Rate Protection Agreement" shall mean, with respect to any
or all of the Mortgage Loans, any short sale of US Treasury Securities, futures
contract, mortgage related security, Eurodollar futures contract, options
related contract, interest rate swap, cap or collar agreement or similar
arrangement providing for protection against fluctuations in interest rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies, entered into by a Seller and an Affiliate of any Buyer, and
acceptable to the Agent.

            "Jumbo Mortgage Loan" shall mean a Mortgage Loan made by a Seller
which is underwritten in conformity with the applicable Agency Guide or Agency
Program subject to an exception that the original principal amount of such
Mortgage Loan is too large; provided, that the original principal amount shall
not exceed $2,000,000 and such mortgage loan shall have a FICO score of at least
675.

            "Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.

            "Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the
original outstanding principal amount of the Mortgage Loan and the denominator
of which is the lesser of (a) the Appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 12 months of
the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property. For purposes of calculating the Loan-to-Value Ratio or LTV of a
Mortgage Loan secured by a second Mortgage, the principal balance of the related
Mortgage that is the first lien on the Mortgaged Property (at the time of
origination of the second Mortgage) as well as the second Mortgage shall be
included in the numerator.

            "Margin Base" shall mean, at any time, the aggregate Recognized
Value of all Purchased Loans subject to Transactions then outstanding hereunder.

            "Margin Deficiency" shall have the meaning provided in Section 2.06
hereof.

            "Market Value" shall mean, as of any date in respect of any
Purchased Loan (including any proposed Purchased Loan), the price at which such
Purchased Loan could readily be sold as determined by the Agent in its sole good
faith discretion, which price may be determined to be zero. The Agent's
determination of Market Value shall be conclusive upon the parties absent
manifest error on the part of the Agent.

            "Material Adverse Effect" shall mean, for any Seller, a material
adverse effect on (a) the Property, business, operations, financial condition or
prospects of such Seller (regardless of whether any Transactions relating to
such Seller are then outstanding), (b) the ability of such Seller (regardless of
whether any Transactions relating to such Seller are then outstanding) to
perform its obligations under any of the Repurchase Documents to which it is a
party, (c) the validity or enforceability of any of the Repurchase Documents,
(d) the rights and remedies of the Buyers under any of the Repurchase Documents,
(e) the timely payment of the Repurchase Price

                                      -11-
<PAGE>

or the Price Differential on the Transactions or other amounts payable in
connection herewith or (f) the Purchased Items taken as a whole.

            "Maximum Amount" shall mean, at any time, an amount equal to the
aggregate Commitment of all Buyers hereunder, which amount, as of the date
hereof, shall be $750,000,000.

            "MERS" shall mean Mortgage Electronic Registration Systems, Inc.

            "MERS Designated Mortgage Loan" shall have the meaning assigned to
such term in Section 3 of the Electronic Tracking Agreement.

            "MERS Procedures Manual" shall have the meaning assigned to such
term in the Electronic Tracking Agreement, as it may be amended from time to
time.

            "MERS Report" shall mean the schedule of MERS Designated Mortgage
Loans prepared by the Electronic Agent pursuant to the Electronic Tracking
Agreement.

            "MERS(R) System" shall mean the Electronic Agent's mortgage
electronic registry system, as more particularly described in the MERS
Procedures Manual.

            "Minimum Amount" shall mean $400,000,000.

            "Minimum Usage Fee" shall have the meaning set forth in Section
3.04(b) hereof.

            "Moody's" shall mean Moody's Investors Service, Inc.

            "Mortgage" shall mean (i) except in the case of any Cooperative
Mortgage Loan or any HELOC Loan, the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on the fee in real property
securing the Mortgage Note, (ii) in the case of each Cooperative Mortgage Loan,
a Security Agreement that creates a first priority security interest in the
Cooperative Shares and Proprietary Lease securing the Mortgage Note and (iii) in
the case of each HELOC Loan, the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien or second lien on the fee
in real property securing the Mortgage Note.

            "Mortgage File" shall have the meaning assigned to such term in the
Custodial Agreement.

            "Mortgage Loan" shall mean a mortgage loan which the Custodian has
been instructed to hold for the Agent for the benefit of the Buyers pursuant to
the Custodial Agreement, and which Mortgage Loan includes, without limitation,
(i) a Mortgage Note and related Mortgage and (ii) all right, title and interest
of the Borrower in and to the Mortgaged Property covered by such Mortgage.

            "Mortgage Loan Data File" shall mean a computer-readable file
containing information with respect to each Mortgage Loan, to be delivered by
the applicable Seller to the Agent, which electronic file fields are identified
on Annex I to the Custodial Agreement.

                                      -12-
<PAGE>

            "Mortgage Loan Documents" shall mean, with respect to any Mortgage
Loan, the documents comprising the Mortgage File for such Mortgage Loan.

            "Mortgage Loan Schedule" shall have the meaning assigned to such
term in the Custodial Agreement.

            "Mortgage Loan Schedule and Exception Report" shall have the meaning
assigned to such term in the Custodial Agreement.

            "Mortgage Note" shall mean the original executed promissory note or
other evidence of the indebtedness of a mortgagor/borrower with respect to any
Mortgage Loan.

            "Mortgaged Property" shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note or, in the case of any Cooperative Mortgage
Loan, the Cooperative Shares and the Proprietary Lease.

            "Mortgagor" shall mean the obligor on a Mortgage Note.

            "MS & Co." shall mean Morgan Stanley & Co. Incorporated, a
registered broker-dealer.

            "MS Indebtedness" shall mean any indebtedness of the Sellers
hereunder and under any other arrangement between any Seller on the one hand and
any Buyer or an Affiliate of a Buyer on the other hand.

            "Multiemployer Plan" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been or are required to be
made by any Seller or any ERISA Affiliate and that is covered by Title IV of
ERISA.

            "Negative Amortization" shall mean, with respect to any mortgage
loan a gradual increase in the mortgage debt that occurs when the monthly
payment is not sufficient for full application to both principal and interest
and the interest shortage is added to the unpaid principal balance to create
"negative" amortization.

            "Net Income" shall mean, for any period, the net income of AHM
Investment and its consolidated Subsidiaries for such period as determined in
accordance with GAAP.

            "1934 Act" shall mean the Securities and Exchange Act of 1934, as
amended.

            "OFAC Regulations" shall have the meaning provided in Section 6.23
hereof.

            "Option ARM Mortgage Loan" shall mean any adjustable rate mortgage
loan with flexible payment options.

            "Payment Date" shall have the meaning provided in Section 2.05(b)
hereof.

                                      -13-
<PAGE>

            "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.

            "Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).

            "Plan" shall mean an employee benefit or other plan established or
maintained by any Seller or any ERISA Affiliate and covered by Title IV of
ERISA, other than a Multiemployer Plan.

            "Post-Default Rate" shall mean, with respect to any amount of
Repurchase Price or any other amount payable by any Seller under this Repurchase
Agreement or any other Repurchase Document that is not paid in full when due
(whether at stated maturity, by acceleration, by optional or mandatory
prepayment or otherwise), a rate per annum during the period from and including
the due date to but excluding the date on which such amount is paid in full
equal to two percent (2%) per annum plus the Prime Rate and in no event shall
such rate exceed the maximum rate permitted by law.

            "Predatory Lending Practices" shall mean any and all underwriting
and lending policies, procedures and practices defined or enumerated in any
local or municipal ordinance or regulation or any state or federal regulation or
statute prohibiting, limiting or otherwise relating to the protection of
consumers from such policies, procedures and practices. Such policies, practices
and procedures may include, without limitation, charging excessive loan, broker,
and closing fees, charging excessive rates of loan interest, making loans
without regard to a consumer's ability to re-pay the loan, refinancing loans
with no material benefit to the consumer, charging fees for services not
actually performed, discriminating against consumers on the basis of race,
gender, or age, failing to make proper disclosures to the consumer of the
consumer's rights under federal and state law, and any other predatory lending
policy, practice or procedure as defined by ordinance, regulation or statute.

            "Prescribed Laws" shall mean, collectively, (a) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56) (The USA PATRIOT Act), (b)
Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,
and relating to Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism, (c) the International
Emergency Economic Power Act, 50 U.S.C. ss.1701 et. seq. and (d) all other
Requirements of Law relating to money laundering or terrorism.

            "Price Differential" means, with respect to any Transaction
outstanding hereunder as of any date, the aggregate amount obtained by daily
application of the Pricing Rate for such Transaction to the Purchase Price for
the Purchased Loans subject to such Transaction during the period commencing on
(and including) the Purchase Date for such Transaction and ending on (but
excluding) the applicable Repurchase Date (reduced by any amount of such Price
Differential previously paid by any Seller to the Agent, for the account of the
Buyers, with respect to such Transaction).

                                      -14-
<PAGE>

            "Pricing Rate" shall mean a rate per annum equal to the sum of (a)
the Eurodollar Rate plus (b) the Applicable Pricing Spread; provided, that
Pricing Rate shall be the applicable Post-Default Rate for any Transaction and
on any other amount payable by the applicable Seller hereunder that shall not be
paid in full when due (whether at stated maturity, by acceleration or by
mandatory repurchase or otherwise) for the period from and including the due
date thereof to but excluding the date the same is paid in full, provided
further, that in no event shall such rate exceed the maximum rate permitted by
law.

            "Prime Rate" shall mean the prime rate announced to be in effect
from time to time, as published as the average rate in The Wall Street Journal.

            "Privacy Requirements" means (a) Title V of the Gramm-Leach-Bliley
Act, 15 U.S.C. 6801 et seq., (b) federal regulations implementing such act
codified at 12 CFR Parts 40, 216, 332 and 573, (c) the Interagency Guidelines
Establishing Standards For Safeguarding Customer Information and codified at 12
CFR Parts 30, 208, 211, 225, 263, 308, 364, 568 and 570 and (d) any other
applicable federal, state and local laws, rules, regulations and orders relating
to the privacy and security of Customer Information, as such statutes,
regulations, guidelines, laws, rules and orders may be amended from time to
time.

            "Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.

            "Proprietary Lease" shall mean a lease on (or occupancy agreement
with respect to) a Cooperative Unit evidencing the possessory interest of the
owner of the Cooperative Shares or the Seller in such Cooperative Unit.

            "Purchase Advice" shall have the meaning provided in Section 2.08
hereof.

            "Purchase Advice Deficiency" shall have the meaning provided in
Section 2.08 hereof.

            "Purchase Date" shall mean the date on which a Transaction is
entered into hereunder.

            "Purchase Price" shall mean, with respect to each Purchased Loan,
(i) on each Purchase Date therefor, an amount equal to the Recognized Value of
such Purchased Loan on such Purchase Date and (ii) thereafter, such amount
decreased by the amount of any payments made by any Seller hereunder that are
applied in reduction of such amount.

            "Purchased Items" shall have the meaning provided in Section 4.01(c)
hereof.

            "Purchased Loans" shall mean the Eligible Mortgage Loans sold by the
Sellers to the Buyers in Transactions hereunder (together with any additional
Eligible Mortgage Loans transferred pursuant to Section 2.06 hereof).

            "Recognition Agreement" shall mean, with respect to a Cooperative
Mortgage Loan, an agreement executed by a Cooperative Corporation which, among
other things, acknowledges the lien of the Mortgage on the Mortgaged Property in
question.

                                      -15-
<PAGE>

            "Recognized Assets" shall mean, at any time, the total amount of
recognized assets of the Sellers, determined in accordance with the calculations
set forth in respect thereof on Schedule 9 hereto.

            "Recognized Value" shall mean, with respect to each Mortgage Loan,
the lesser of (x) the Applicable Purchase Rate times the Market Value of such
Mortgage Loan, and (y) 100% of the outstanding principal balance of such
Mortgage Loan; provided, that the following additional limitations shall apply:

            (a) The aggregate Recognized Value of all Alternate `A' Mortgage
Loans included in the Margin Base at any time shall not exceed 40% of the
Maximum Amount at such time;

            (b) The aggregate Recognized Value of all California Program
Mortgage Loans included in the Margin Base at any time shall not exceed 5.71% of
the Maximum Amount at such time;

            (c) The aggregate Recognized Value of all Interest-Only Mortgage
Loans with an LTV greater than 80%, but less than 95%, included in the Margin
Base at any time shall not exceed 15% of the Maximum Amount at such time;

            (d) The aggregate Recognized Value of all Jumbo Mortgage Loans
included in the Margin Base at any time shall not exceed 35% of the Maximum
Amount at such time;

            (e) The aggregate Recognized Value of all Second Lien Loans and
HELOC Loans included in the Margin Base at any time shall not exceed
$100,000,000;

            (f) the aggregate Recognized Value of all Wet-Ink Mortgage Loans
included in the Margin Base at any time shall not exceed $150,000,000; and

            (g) The Recognized Value shall be deemed to be zero with respect to
each Mortgage Loan:

            (i) in respect of which there is a breach of any representation and
      warranty set forth on Schedule 1 hereto (assuming each representation and
      warranty is made as of the date Recognized Value is determined),

            (ii) in respect of which there is a delinquency in the payment of
      principal and/or interest which continues for a period in excess of thirty
      (30) calendar days (without regard to applicable grace periods),

            (iii) (other than Interest Only Mortgage Loans) which remains
      subject to a Transaction outstanding hereunder later than the date that is
      180 calendar days after the initial Purchase Date therefor,

            (iv) that is Interest Only Mortgage Loan which remains subject to a
      Transaction outstanding hereunder later than the date that is 120 calendar
      days after the initial Purchase Date therefor,

                                      -16-
<PAGE>

            (v) which has been released from the possession of the Custodian
      under the Custodial Agreement to the Seller or its designee for a period
      in excess of thirty (30) days or to approved third party purchasers for a
      period in excess of forty-five (45) days,

            (vi) in respect of any Agency Eligible Mortgage Loan which is not
      subject to a Takeout Commitment and remains subject to a Transaction
      outstanding hereunder later than the date that is 120 calendar days after
      the initial Purchase Date therefor,

            (vii) in respect of which the Title Insurance Policy has not been
      delivered to AHM Investment pursuant to Section 7.21 hereof,

            (viii) which is an Eight-Day Aged Wet-Ink Mortgage Loan, or

            (ix) which exceeds the limitation on Recognized Value set forth in
      (a) through (f) above.

            "Reg AB" shall have the meaning provided in Section 7.14 hereof.

            "Regulations T, U and X" shall mean Regulations T, U and X of the
Board of Governors of the Federal Reserve System (or any successor), as the same
may be modified and supplemented and in effect from time to time.

            "REIT Distribution Requirement" shall mean distributions reasonably
necessary for each REIT Seller to maintain its REIT Status and not be subject to
corporate level tax based on income or to excise tax under Section 4981 of the
Code.

            "REIT Seller" shall mean any Seller which has REIT Status as of the
Effective Date.

            "REIT Status" shall mean with respect to any Person, such Person's
status as a real estate investment trust, as defined in Section 856(a) of the
Code, that satisfies the conditions and limitations set forth in Section 856(b)
and 856(c) of the Code.

            "Remittance Amount" shall have the meaning provided in Section 2.08
hereof.

            "Repurchase Agreement" shall have the meaning provided in the
heading hereof.

            "Repurchase Date" shall mean, with respect to any Transaction and
each Purchased Loan, the earlier of (a) the Termination Date and (b) the date on
which such Purchased Loan shall be repurchased by a Seller hereunder, which
shall not be later than the date that is one hundred eighty (180) calendar days
after the initial Purchase Date therefor.

            "Repurchase Documents" shall mean, collectively, this Repurchase
Agreement, the Custodial Agreement and the Electronic Tracking Agreement.

            "Repurchase Obligations" shall have the meaning provided in Section
4.01(b) hereof.

                                      -17-
<PAGE>

            "Repurchase Price" shall mean, with respect to each Purchased Loan,
the price at which such Purchased Loan is to be transferred from the Buyers or
their designee (including the Custodian) to a Seller upon termination of the
related Transaction, which price will be determined in each case as the sum of
the outstanding Purchase Price related to such Purchased Loan and the amount of
unpaid Price Differential that has accrued with respect to such Transaction.

            "Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law (including, without limitation, Prescribed Laws), treaty,
rule or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

            "Responsible Officer" shall mean, as to any Person, the chief
executive officer, chief financial officer, treasurer, assistant secretary or
secretary of such Person, as appropriate.

            "S&P" shall mean Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.

            "Second Lien Loan" shall mean an Eligible Mortgage Loan secured by a
second mortgage lien on a one-to-four family residential or other mixed use
property with a CLTV no greater than 100%.

            "Security Agreement" shall mean the specific security agreement
creating a security interest on and pledge of the Cooperative Shares and the
appurtenant Proprietary Lease securing a Cooperative Mortgage Loan.

            "Seller(s)" shall have the meaning provided in the introductory
paragraph hereof.

            "Seller Account" shall mean the following account: Bank: [___], ABA
No.: 021001033, Acct. No.: 00380082, for the A/C of Bankers Trust Co., Attn: R.
Silver.

            "Servicer" shall mean American Home Mortgage Servicing, Inc., a
Maryland corporation, or such other Person as the Agent may expressly approve in
its sole good faith discretion.

            "Servicer Notice" shall have the meaning provided in Section
11.15(c) hereof.

            "Servicer Report" shall mean, as to any Servicer, a list (in
computer readable form) of the Purchased Loans serviced by such Servicer,
providing as to each such Purchased Loan the applicable information specified on
Schedule 7 to this Repurchase Agreement.

            "Servicing Agreement" shall have the meaning provided in Section
11.15(c) hereof.

            "Servicing Records" shall have the meaning provided in Section
11.15(b) hereof.

                                      -18-
<PAGE>

            "Settlement Date" shall mean, with respect to any Purchased Loan
subject to a Takeout Commitment, the Business Day on which the Takeout Price for
such Purchased Loan is received by the Agent or the Sellers pursuant to the
applicable Takeout Commitment.

            "Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.

            "Takeout Commitment" shall mean either (i) with respect to each
Whole Loan Transfer pursuant to which an Agency is the Takeout Investor, a trade
confirmation from such Agency to the Seller confirming the details of a forward
trade between the Takeout Investor (as buyer) and the Seller (as seller)
constituting a valid binding and enforceable mandatory delivery commitment by
such Agency to purchase on the Settlement Date and at a given Takeout Price the
Purchased Loans described therein or (ii) with respect each Whole Loan Transfer
(other than those in which the Takeout Investor is an Agency), a trade
confirmation from a Takeout Investor to the Seller confirming the details of a
forward trade between the Takeout Investor (as buyer) and the Seller (as seller)
constituting a valid, binding and enforceable mandatory delivery commitment by
such Takeout Investor to purchase on the Settlement Date and at a given Takeout
Price the Purchased Loans described therein.

            "Takeout Investor" shall mean a securities broker-dealer, Agency or
other institution, acceptable to the Agent, which has made a Takeout Commitment.

            "Takeout Price" shall mean as to each Takeout Commitment the
purchase price (expressed as a percentage of par) set forth therein.

            "Takeout Proceeds" shall mean as to each Settlement Date, the actual
amount of proceeds delivered to the Agent by the applicable Takeout Investor for
the purchase of Mortgage Loans on such Settlement Date.

            "Tangible Net Worth" shall mean, as of a particular date, with
respect to any Person, all amounts which would be included under capital on a
consolidated balance sheet of such Person at such date, determined in accordance
with GAAP, less an amount equal to the sum of (x) amounts owing to such Person
from Affiliates plus (y) intangible assets.

            "Termination Date" shall mean January 26, 2007 or such earlier date
on which this Repurchase Agreement shall terminate in accordance with the
provisions hereof or by operation of law.

            "Title Insurance Policy" shall have the meaning provided in Section
7.21 hereof.

                                      -19-
<PAGE>

            "Total Indebtedness" shall mean, for any period, the aggregate
amount of Indebtedness (including, without limitation, the amount of all drafts
payable) of AHM Investment and its consolidated Subsidiaries during such period.

            "Total Liabilities" shall mean, at any time, the total amount of
liabilities of the Sellers, determined in accordance with GAAP on a consolidated
basis.

            "Transaction" shall have the meaning provided in the Recitals
hereof.

            "Transaction Request" shall have the meaning provided in Section
2.02(a) hereof.

            "Trust Receipt" shall have the meaning assigned to such term in the
Custodial Agreement.

            "Underwriting Guidelines" shall mean the underwriting guidelines
attached as Exhibit F hereto.

            "Uniform Commercial Code" shall mean the Uniform Commercial Code as
in effect from time to time in the State of New York; provided that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest or the renewal or enforcement thereof in
any Purchased Item is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "Uniform Commercial Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection.

            "Wet-Ink Aged Report" shall have the meaning specified in the
Custodial Agreement.

            "Wet-Ink Mortgage Loan" shall mean a Mortgage Loan originated and
funded by any Seller not more than five (5) days prior to the related Purchase
Date as to which the Custodian has not yet received the related Mortgage File
and which has not previously been pledged or otherwise conveyed or encumbered to
any warehouse lender or any other Person. A Mortgage Loan shall cease to be a
Wet-Ink Mortgage Loan on the date on which the Agent has received a Mortgage
Loan Schedule and Exception Report from the Custodian with respect to such
Mortgage Loan confirming that the Custodian has physical possession of the
related Mortgage File and that there are no Exceptions with respect to such
Mortgage Loan.

            "Wet-Ink Transaction" shall mean a Transaction in which a Wet-Ink
Mortgage Loan is the Purchased Loan. A Wet-Ink Transaction shall cease to be a
Wet-Ink Transaction on the date that the underlying Wet-Ink Mortgage Loan ceases
to be a Wet-Ink Mortgage Loan (in accordance with the definition thereof).

            "Whole Loan Transfer" shall mean the sale or transfer of some or all
of the Mortgage Loans to a Takeout Investor in a whole loan transaction.

            1.02. Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial

                                      -20-
<PAGE>

statements and certificates and reports as to financial matters required to be
delivered to the Agent hereunder shall be prepared, in accordance with GAAP.

            1.03. Other Definitional Provisions. Unless otherwise required by
the context, all references herein, or in any other Repurchase Document, to "the
Seller" shall refer to the applicable Seller of a Purchased Asset in connection
with a Transaction hereunder.

            Section 2. Transactions, Repurchases and Margin Maintenance.

            2.01. Transactions.

            (a) Subject to the fulfillment of the conditions precedent set forth
in Sections 5.01 and 5.02 hereof, and provided that no Default or Event of
Default shall have occurred and be continuing hereunder, each Buyer severally
agrees, from time to time during the period from and including the Effective
Date to and including the Termination Date, on the terms and subject to the
conditions of this Repurchase Agreement, to enter into Transactions to purchase
Eligible Mortgage Loans from the applicable Seller in an aggregate Purchase
Price (which Purchase Price shall be paid in Dollars) at any one time
outstanding up to but not exceeding the lesser of (i) such Buyer's Commitment as
then in effect and (ii) such Buyer's Commitment Percentage of the Margin Base as
in effect from time to time.

            (b) Subject to the terms and conditions of this Repurchase
Agreement, during such period the Sellers may (i) request Transactions, (ii)
repay the outstanding Repurchase Price in full or in part, without penalty, and
(iii) request additional Transactions hereunder; provided, that, notwithstanding
the foregoing, no Buyer shall have any obligation to enter into any Transaction
to the extent that the aggregate Repurchase Price then outstanding would be in
excess of the Maximum Amount and, in the event that the obligation of any Buyer
to enter into Transactions hereunder is terminated as permitted in this
Repurchase Agreement, such Buyer shall have no further obligation to enter into
any additional Transactions hereunder.

            (c) In no event shall any Transaction be entered into when any
Default or Event of Default has occurred and is continuing.

            2.02. Transaction Request Procedure (Transactions other than Wet-Ink
Transactions).

            (a) Any Seller may request a Transaction hereunder that is not a
Wet-Ink Transaction, on any Business Day during the period from and including
the Effective Date to and including the Termination Date, by delivering to the
Agent, with a copy to the Custodian, a written request substantially in the form
of Exhibit B attached hereto (a "Transaction Request"), which Transaction
Request must be received by the Agent prior to 12:00 p.m., New York City time,
at least one (l) Business Day prior to the requested Purchase Date. Such
Transaction Request shall (i) attach a schedule identifying the Eligible
Mortgage Loans that the Seller proposes to sell to the Buyers hereunder and to
have included in the Margin Base, (ii) be accompanied by a Mortgage Loan Data
File containing information with respect to such Eligible Mortgage Loans, (iii)
specify the requested Purchase Date and amount of requested Purchase Price, and
(iv) attach an officer's certificate signed by a Responsible Officer of the
Seller as required by Section 5.02(b) hereof.

                                      -21-
<PAGE>

            (b) Upon receipt from the applicable Seller of a Transaction Request
pursuant to Section 2.02(a), the Agent shall, on behalf of the Buyers, subject
to the limitations set forth in Section 2.01 above and upon satisfaction of all
conditions precedent set forth in Section 5 hereof, and provided that no Default
or Event of Default shall have occurred and be continuing, enter into the
requested Transaction with the Seller (for which all Sellers will be jointly and
severally liable) on the requested Purchase Date.

            (c) The applicable Seller shall deliver to the Custodian, in
accordance with the time frames and other applicable terms and conditions set
forth in the Custodial Agreement, the Mortgage File pertaining to each Eligible
Mortgage Loan to be sold to the Buyers and included in the Margin Base on the
requested Purchase Date.

            (d) Pursuant to the Custodial Agreement, the Custodian shall deliver
to the Agent and the applicable Seller, no later than 12:00 p.m., New York City
time, (i) on the initial Purchase Date, a Trust Receipt (as defined in the
Custodial Agreement) in respect of all Purchased Loans from time to time held by
the Custodian under the Custodial Agreement on behalf of the Agent for the
benefit of the Buyers hereunder, and (ii) on each Purchase Date, including,
without limitation, the initial Purchase Date, a Mortgage Loan Schedule and
Exception Report in respect of all Purchased Loans relating to Transactions then
outstanding under this Repurchase Agreement (including, without limitation, all
proposed Purchased Loans relating to any Transactions to be entered into on such
Purchase Date).

            (e) Upon receipt of any Transaction Request pursuant to Section
2.02(a), the Agent shall promptly notify each Buyer thereof. Each Buyer shall
thereupon, upon satisfaction of all conditions precedent set forth in Section 5
hereof and provided that no Default or Event of Default shall have occurred and
be continuing, make its Commitment Percentage of the amount of the requested
Purchase Price available to the Agent for the account of the applicable Seller
at the office of the Agent specified in Section 11.02, on the requested Purchase
Date in funds immediately available to the Agent.

            (f) Subject to Section 5 hereof, such Transaction will then be
entered into with the applicable Seller by the Agent transferring, via wire
transfer, to the Seller Account the aggregate amount of the related Purchase
Price in funds immediately available to such Seller.

            (g) Unless the Agent shall have been notified in writing by any
Buyer prior to the Purchase Date for any Transaction hereunder that such Buyer
will not make its Commitment Percentage of the Purchase Price for such
Transaction available to the Agent on such date, the Agent may, in reliance upon
such assumption make available to the applicable Seller a corresponding amount.
If such amount is not made available to the Agent on the related Purchase Date,
such Buyer shall pay to the Agent, on demand, such amount with interest thereon
at a rate per annum equal to the rate specified in Section 2.04(b) for the
period until such Buyer makes such amount immediately available to the Agent. A
certificate of the Agent submitted to any Buyer with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
If any such Buyer's pro rata share of the Purchase Price is not made available
to the Agent by such Buyer within one (1) Business Day after the related
Purchase Date, the Agent shall also be entitled to recover such amount with
interest thereon at a rate per annum equal to the rate specified in Section
2.04(b), on demand, from the applicable Seller.

                                      -22-
<PAGE>

            2.03. Transaction Request Procedure (Wet-Ink Transactions).

            (a) With respect to each Wet-Ink Transaction, a Seller may request a
Wet-Ink Transaction hereunder, on any Business Day during the Commitment Period,
provided that no Margin Deficiency then exists due to the inclusion of Eight-Day
Aged Wet-Ink Mortgage Loans in the Margin Base on such date, by delivering to
the Agent, an estimate of the amount required to fund such Wet-Ink Transaction
on the following Business Day, which estimate must be received by the Buyer
prior to 5:00 p.m., New York City time, one (1) Business Day prior to the
requested Purchase Date.

            (b) Not later than 12:00 p.m., New York City time, on the requested
Purchase Date, the Seller shall deliver to the Agent, with a copy to the
Custodian, a transmission with respect to the Wet-Ink Transaction requested to
be entered into on such date, which transmission shall (i) attach a Transaction
Request, (ii) attach a schedule identifying the Eligible Mortgage Loans that
such Seller proposes to sell to the Buyers hereunder in connection with such
Wet-Ink Transaction, (iii) specify the requested Purchase Price and (iv) attach
an officer's certificate signed by a Responsible Officer of such Seller as
required by Section 5.02(b) hereof, which shall include a certification by such
Responsible Officer that the Wet-Ink Mortgage Loan has been closed and the
proceeds thereof have been fully disbursed. Pursuant to the Custodial Agreement,
the Custodian shall deliver to the Agent and the applicable Seller, in
connection with each such transmission, a Mortgage Loan Schedule in respect of
all Purchased Loans acquired on such Purchase Date.

            (c) The applicable Seller shall deliver (or cause to be delivered)
and release to the Custodian the Mortgage File pertaining to such Wet-Ink
Mortgage Loan on the next Business Day following receipt of such Mortgage File
by such Seller, but in any event no later than seven (7) Business Days following
the applicable Purchase Date in accordance with the terms and conditions of the
Custodial Agreement. On the applicable Purchase Date and on each Business Day
following the applicable Purchase Date, no later than 5:00 p.m., New York City
time, pursuant to the Custodial Agreement, the Custodian shall deliver to the
Agent a schedule listing each Wet-Ink Mortgage Loan with respect to which the
complete Mortgage File has not been received by the Custodian as of 3:00 p.m.,
New York City time (the "Wet-Ink Aged Report"). On the applicable Purchase Date,
the Agent shall confirm that the information in the Wet-Ink Aged Report is
consistent with the information provided to the Agent pursuant to Section
2.03(b).

            (d) Upon receipt from the applicable Seller of any Transaction
Request for a Wet-Ink Transaction pursuant to this Section 2.03, the Agent shall
promptly notify each Buyer thereof. Each Buyer shall thereupon, upon
satisfaction of all conditions precedent set forth in Section 5 hereof and
provided that no Default or Event of Default shall have occurred and be
continuing, make its Commitment Percentage of the amount of the requested
Purchase Price available to the Agent for the account of the applicable Seller
at the office of the Agent specified in Section 11.02, on the requested Purchase
Date in funds immediately available to the Agent.

            (e) Subject to Section 5 hereof, such Wet-Ink Transaction will then
be entered into with the applicable Seller by the Agent transferring, via wire
transfer, to the Seller Account the aggregate amount of the related Purchase
Price in funds immediately available to such Seller.

                                      -23-
<PAGE>

            (f) Unless the Agent shall have been notified in writing by any
Buyer prior to the Purchase Date for any Transaction hereunder that such Buyer
will not make its Commitment Percentage of the Purchase Price for such
Transaction available to the Agent on such date, the Agent may, in reliance upon
such assumption make available to the applicable Seller a corresponding amount.
If such amount is not made available to the Agent on the related Purchase Date,
such Buyer shall pay to the Agent, on demand, such amount with interest thereon
at a rate per annum equal to the rate specified in Section 2.04(b) for the
period until such Buyer makes such amount immediately available to the Agent. A
certificate of the Agent submitted to any Buyer with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
If any such Buyer's pro rata share of the Purchase Price is not made available
to the Agent by such Buyer within one (1) Business Day after the related
Purchase Date, the Agent shall also be entitled to recover such amount with
interest thereon at a rate per annum equal to the rate specified in Section
2.04(b), on demand, from the applicable Seller.

            2.04. Limitation on Types of Transactions; Illegality. Anything
herein to the contrary notwithstanding, if, on or prior to the determination of
any Eurodollar Rate:

            (a) any Buyer or the Agent determines, which determination shall be
conclusive, that quotations of rates for the relevant deposits referred to in
the definition of "Eurodollar Rate" in Section 1.01 hereof are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining the Price Differential for Transactions as provided herein; or

            (b) any Buyer or the Agent determines, which determination shall be
conclusive, that the relevant rate referred to in the definition of "Eurodollar
Rate" in Section 1.01 hereof upon the basis of which the Price Differential for
Transactions is to be determined is not likely adequately to cover the cost to
the Buyers of entering into or maintaining Transactions; or

            (c) it becomes unlawful for any Buyer to honor its obligation to
enter into or maintain Transactions hereunder using a Eurodollar Rate;

then the Agent or such Buyer, as the case may be, shall give the Sellers prompt
notice thereof and, so long as such condition remains in effect, neither the
Buyers, nor the Agent on behalf of the Buyers, shall be under any obligation to
enter into any additional Transactions, and the Sellers shall, either prepay the
aggregate Repurchase Price of all Transactions then outstanding or pay Price
Differential on such Transactions at a rate per annum equal to the Federal Funds
Rate plus 0.50% plus the Applicable Pricing Spread.

            2.05. Repurchase of Purchased Loans; Payment of Repurchase Price,
Price Differential.

            (a) The Sellers hereby promise, jointly and severally, to repay in
full on the related Repurchase Date the aggregate Repurchase Price then
outstanding in respect of each Transaction.

            (b) The Sellers hereby promise, jointly and severally, to pay to the
Agent, for the account of the Buyers, Price Differential on each Transaction
entered into hereunder for the period from and including the Purchase Date of
such Transaction to but excluding the date on

                                      -24-
<PAGE>

which the related Repurchase Price shall be paid in full, at a rate per annum
equal to the Pricing Rate. Notwithstanding the foregoing, the Sellers hereby
promise, jointly and severally, to pay to the Agent, for the account of the
Buyers, interest at the applicable Post-Default Rate on the amount of any
Repurchase Price and on any other amount payable by the Sellers hereunder that
shall not be paid in full when due (whether at stated maturity, by acceleration
or by mandatory prepayment or otherwise) for the period from and including the
due date thereof to but excluding the date the same is paid in full. Accrued
Price Differential for each Transaction shall be payable monthly on the fifth
(5th) Business Day of each month and for the last month of this Repurchase
Agreement on the fifth (5th) Business Day of such last month and on the
Termination Date (each such date, a "Payment Date"); provided, that (i) the
Agent may, in its sole discretion, require any accrued and unpaid Price
Differential to be paid simultaneously with any prepayment of the Repurchase
Price by any Seller on account of any Transaction outstanding hereunder and (ii)
any accrued and unpaid Price Differential that is not required by the Buyer to
be paid simultaneously with any prepayment of Repurchase Price shall be paid in
full on the next Payment Date. Price Differential payable at the Post-Default
Rate shall accrue daily and shall be payable upon such accrual.

            (c) It is understood and agreed that, unless and until a Default or
an Event of Default shall have occurred and be continuing, the applicable Seller
shall be entitled to the proceeds of all Purchased Loans subject to Transactions
outstanding hereunder; provided, that at any time while a Default or Event of
Default has occurred and is continuing, upon notice from the Agent, the Sellers
shall promptly deliver to the Agent, for the account of the Buyers, all proceeds
of such Purchased Loans.

            2.06. Margin Maintenance; Mandatory Prepayments.

            (a) If at any time the aggregate Repurchase Price of all
Transactions outstanding hereunder exceeds the Margin Base, as determined by the
Agent (a "Margin Deficiency"), and notice thereof is given to the Sellers on any
Business Day, the Sellers shall, no later than one (1) Business Day after
receipt of such notice, either make a payment to the Agent, for the account of
the Buyers, in respect of the aggregate outstanding Repurchase Price or transfer
to the Agent, for the benefit of the Buyers, additional Eligible Mortgage Loans
that are in all respects acceptable to the Agent (which additional Eligible
Mortgage Loans shall be deemed to be Purchased Loans under the Repurchase
Documents), such that after giving effect to such payment or transfer no Margin
Deficiency shall then exist.

            (b) If at any time the aggregate Repurchase Price of all
Transactions then outstanding hereunder exceeds the Maximum Amount, the Sellers
shall at such time make a payment to the Agent, for the account of the Buyers,
in respect of the aggregate Repurchase Price such that, after giving effect to
such payment, the aggregate Repurchase Price of all Transactions then
outstanding hereunder shall not exceed the Maximum Amount.

            (c) If MS & Co.'s corporate bond rating is lowered or downgraded to
a rating below A- by S&P or A3 by Moody's, the Sellers shall repay all amounts
owing to the Buyers under this Repurchase Agreement and the other Repurchase
Documents within 120 calendar days following such downgrade; provided, that if
any such downgrade occurs prior to the initial Termination Date of this
Agreement, the Sellers shall be entitled to a prorated reimbursement of

                                      -25-
<PAGE>

the Facility Fee paid under Section 3.04(a) and the amount of any such
reimbursement shall be deducted from the amounts that would otherwise be payable
pursuant to this Section 2.06(c).

            2.07. Voluntary Prepayments. The Sellers may at any time and from
time to time make a prepayment, in whole or in part, without premium or penalty,
in respect of any outstanding Repurchase Price upon irrevocable notice delivered
to the Agent (in the form of Exhibit I) prior to 1:00 p.m., New York City time,
on the requested date thereof, in the case of the first 500 Purchased Loans
requested to be released on such date, or upon irrevocable notice delivered to
the Agent (in the form of Exhibit I), prior to 1:00 p.m., New York City time, at
least one (1) Business Day prior thereto, in the case of any Purchased Loans in
excess of 500 requested to be released, specifying the date and amount of the
prepayment and attaching a schedule of the Purchased Loans to be released in
connection with such prepayment. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with any accrued interest to such date on the amount prepaid.

            2.08. Takeout Commitments. The Sellers shall instruct each Takeout
Investor to remit all Takeout Proceeds directly to the Agent at the account
designated in Section 3.01 hereof no later than 3:00 p.m., New York City time,
on a Business Day. No later than 3:00 p.m., New York City time, on any
Settlement Date, the applicable Seller shall deliver a purchase advice
("Purchase Advice") to the Agent via facsimile or electronic mail and shall
indicate on such Purchase Advice the mortgage loan identification number which
identified each applicable Purchased Loan on the related Purchase Date
hereunder. The Takeout Proceeds shall be applied by the Agent against the
aggregate Repurchase Price for the applicable Purchased Loans and, on the
related Settlement Date, the Agent shall release and remit to the Seller the
amount of Takeout Proceeds in excess of such aggregate Repurchase Price (the
"Remittance Amount"); provided, that on the Settlement Date (i) there is no
Default or Event of Default under this Repurchase Agreement or any other
Repurchase Document, (ii) there is no Margin Deficiency and (iii) the release to
such Seller of the Remittance Amount will not cause a Margin Deficiency. If a
Margin Deficiency exists or would be created by the release of the Remittance
Amount or if a Default or Event of Default has occurred or is continuing, the
Agent shall be entitled to retain the Remittance Amount for application against
amounts owing by the Sellers hereunder and the Sellers shall thereupon have no
further right, title, or interest in, to or under the Remittance Amount. In the
event that any Purchase Advice indicates that some of the proceeds forwarded to
the Agent do not belong to the Buyers hereunder (such amount, the "Excess
Proceeds"), then (i) the Seller shall provide the Agent with a takeout proceeds
identification letter in the form of Exhibit J hereto, and (ii) upon
confirmation by the Agent that the information set forth in the Purchase Advice
matches the information that the Agent has in its possession with respect to the
related Purchased Loans, the Agent shall promptly remit such Excess Proceeds by
wire transfer the in accordance with the Seller's instructions. If funds are
received by the Agent before 3:00 p.m., New York City time on a Business Day,
but either (A) no Purchase Advice is received by the Agent or (B) such funds are
not properly identified on the related Purchase Advice (a "Purchase Advice
Deficiency"), then such funds shall be retained by the Agent in a non-interest
bearing account, and Price Differential shall continue to accrue in respect of
the related Transactions, until such Purchase Advice Deficiency is remedied, and
no Purchased Loan subject to such Purchase Advice shall be released until such
Purchase Advice Deficiency is remedied. In no event shall any Purchase Advice be
back-dated to the date of its issuance.

                                      -26-
<PAGE>

            2.09. Extension of Termination Date. At the request of the Sellers
made at least thirty (30) calendar days, but in no event earlier than ninety
(90) calendar days, prior to the then current Termination Date, the Agent may in
its sole discretion extend the Termination Date for a period to be determined by
the Agent in its sole discretion by giving written notice of such extension to
the Sellers no later than twenty (20) calendar days, but in no event earlier
than thirty (30) calendar days, prior to the then current Termination Date. Any
failure by the Agent to deliver such notice of extension shall be deemed to be
the Agent's determination not to extend the then current Termination Date.

            Section 3. Payments; Computations; Etc.

            3.01. Payments.

            (a) Except to the extent otherwise provided herein, all payments of
Repurchase Price, including Price Differential, and all other amounts to be paid
by any Seller under this Repurchase Agreement, shall be made in Dollars, in
immediately available funds, without deduction, set-off or counterclaim, to the
Agent, for the account of the Buyers, at the following account maintained by the
Agent: Account No. 30463591, Citibank, N.A., New York, NY, ABA No. 021-000-089,
Attn: MS Bank SPG, not later than 1:00 p.m., New York City time, on the date on
which such payment shall become due (and each such payment made after such time
on such due date shall be deemed to have been made on the next succeeding
Business Day and each such payment that is not identified as relating to a
Transaction subject to this Repurchase Agreement shall be retained by the Buyer
in a non-interest bearing account, and shall not be deemed made, until such
payment is properly identified; in no event shall the date of any payment which
is made after 3:00 p.m., New York City time, on a Business Day, or which is not
identified as relating to a Transaction subject to this Repurchase Agreement, be
back-dated to the date of its issuance). Each Seller acknowledges that it has no
rights of withdrawal from the foregoing account. The Agent shall promptly
provide to each Buyer (via facsimile or other transmission) the amount of such
payment to be distributed to such Buyer along with a description of the
Purchased Loans related to the Transactions then outstanding with respect to
such Buyer, after giving effect to such payment.

            (b) All amounts from time to time received by the Agent for the
account of the Buyers hereunder shall be paid by the Agent to the Buyers pro
rata based upon the Facility Exposure of each Buyer at such time; provided, that
with respect to amounts received by the Agent pursuant to Section 3.01(a) above
in respect of outstanding Purchase Price, so long as no Event of Default shall
have occurred and be continuing, to the extent that the aggregate outstanding
Purchase Price of all Transactions then outstanding hereunder is less than or
equal to MS Bank's Commitment at such time, the pro rata allocation to the
Buyers shall be calculated as if the Facility Exposure of MS Bank at such time
were $0.

            (c) Except to the extent otherwise expressly provided herein, if the
due date of any payment under this Repurchase Agreement would otherwise fall on
a day that is not a Business Day, such date shall be extended to the next
succeeding Business Day, and Price Differential on outstanding Purchase Price
and interest on other unpaid amounts shall accrue with respect to such Purchase
Price or other unpaid amounts for the period of such extension.

                                      -27-
<PAGE>

            3.02. Computations. Price Differential on the Transactions and
interest on any other unpaid amounts shall be computed on the basis of a 360-day
year for the actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable.

            3.03. Requirements of Law.

            (a) If the introduction or adoption of or any change (other than any
change by way of the imposition of an increase in reserve requirements included
in the Eurodollar Rate Reserve Percentage) in any Requirement of Law (other than
with respect to any amendment made to any Buyer's certificate of incorporation
and by-laws or other organizational or governing documents) or any change in the
interpretation or application thereof or compliance by any Buyer with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:

            (i) shall subject any Buyer to any tax of any kind whatsoever with
      respect to this Repurchase Agreement or any Transaction entered into by it
      hereunder (excluding net income or franchise taxes) or change the basis of
      taxation of payments to any Buyer in respect thereof;

            (ii) shall impose, modify or hold applicable to any Transaction any
      reserve, special deposit, compulsory loan or similar requirement against
      assets held by, deposits or other liabilities in or for the account of,
      advances, loans, Transactions or other extensions of credit by, or any
      other acquisition of funds by, any office of any Buyer which is not
      otherwise included in the determination of the Eurodollar Rate hereunder;

            (iii) shall impose on any Buyer any other condition;

and the result of any of the foregoing is to materially increase the cost to any
Buyer of entering into, participating in, continuing or maintaining any
Transaction hereunder or to reduce any amount due or owing hereunder in respect
thereof, then, in any such case, upon discovery of such increased costs, such
Buyer shall provide the Sellers with written notification thereof (an "Increased
Cost Certificate"), which Increased Cost Certificate shall set forth in
reasonable detail the bases for and calculation of the amount or amounts of
increased costs, and the Sellers, jointly and severally, shall thereupon
promptly pay such Buyer the additional amount or amounts set forth in the
related Increased Cost Certificate.

            (b) If any Buyer shall have determined that the adoption of or any
change in any Requirement of Law (other than with respect to any amendment made
to such Buyer 's certificate of incorporation and by-laws or other
organizational or governing documents) regarding capital adequacy or in the
interpretation or application thereof or compliance by such Buyer or any
corporation controlling such Buyer with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Buyer's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Buyer
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Buyer's or such corporation's
policies with respect to

                                      -28-
<PAGE>

capital adequacy) by a material amount, then from time to time, the Sellers,
jointly and severally, shall promptly pay to such Buyer such additional amount
or amounts as will compensate such Buyer for such reduction.

            (c) Any Increased Cost Certificate as to any additional amounts
payable pursuant to this Section submitted by the applicable Buyer to the
Sellers shall be conclusive in the absence of manifest error.

            3.04. Extension Fee; Facility Fee; Minimum Usage Fee.

            (a) The Sellers agree, jointly and severally, to pay to the Agent,
for the account of the Buyers, on or before the Effective Date of this
Repurchase Agreement, an extension fee ("Extension Fee") with respect to the
Existing Loan Agreement in an amount equal to $258,333.33, which Extension Fee
shall be paid in Dollars, in immediately available funds, without deduction,
set-off or counterclaim, at the account specified for the Agent in Section
3.01(a) of this Repurchase Agreement.

            (b) The Sellers agree, jointly and severally, to pay to the Agent,
for the account of the Buyers, on or before the Effective Date of this
Repurchase Agreement, a facility fee ("Facility Fee") in an amount equal to
$750,000.00, calculated as ten (10) basis points (0.10%) of the Maximum Amount,
which Facility Fee shall be paid in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, at the account specified for the
Agent in Section 3.01(a) of this Repurchase Agreement.

            (c) In the event that the average daily aggregate outstanding
Purchase Price of all Transactions outstanding hereunder (the "Average Usage")
during any three-month period, commencing with respect to the first three-month
period following the Effective Date (each, a "Determination Period"), is less
than the Minimum Amount, the Sellers agree, jointly and severally, to pay to the
Agent, for the account of the Buyers, a minimum usage fee ("Minimum Usage Fee"),
calculated as the product of (x) an amount equal to the excess of the Minimum
Amount over the Average Usage for the applicable Determination Period times (y)
a percentage rate equal to the sum of (i) the Eurodollar Rate in effect on the
last day of the applicable Determination Period plus (ii) 45 basis points
(0.45%) per annum, computed for each day in the applicable Determination Period
based upon a 360 day year, in each case payable monthly in arrears on the
Payment Date immediately following the end of such Determination Period, each
such payment to be made in Dollars in immediately available funds, without
deduction, set-off or counterclaim, at the account specified for the Agent in
Section 3.01(a) of this Repurchase Agreement.

            3.05. Tax Treatment. Each of the Buyer and the Sellers intend that
for United States federal income tax purposes, the Transactions will be
considered a secured financing.

            3.06. Income Payments. All Income, if any, that is paid in respect
of any Purchased Loan during the term of a Transaction hereunder shall be the
property of the Buyers. Notwithstanding the foregoing, (i) provided that no
Event of Default shall have occurred and be continuing, the Buyers agree that
the Sellers shall be permitted to receive all Income paid or distributed on or
in respect of the Purchased Loans to the full extent it would be so entitled if
the

                                      -29-
<PAGE>

Purchased Loans had not been sold to the Buyers and (ii) in the event that any
Event of Default shall have occurred and be continuing, the Sellers shall remit
to the Agent, for the account of the Buyers, all Income received with respect to
each Purchased Loan on the related Payment Date or on such other date or dates
as the Agent shall notify the Sellers in writing

            Section 4. Purchased Items; Security Interest.

            4.01. Purchased Items; Security Interest.

            (a) Pursuant to the Custodial Agreement, the Custodian shall hold
the Mortgage Loan Documents as exclusive bailee, agent and securities
intermediary (within the meaning of Article 8 of the Uniform Commercial Code) of
the Agent, for the ratable benefit of the Buyers, pursuant to terms of the
Custodial Agreement and shall deliver to the Agent a Trust Receipt and Mortgage
Loan Schedule and Exception Report each to the effect that it has reviewed such
Mortgage Loan Documents in the manner and to the extent required by the
Custodial Agreement and identifying any deficiencies in the Mortgage Loan
Documents so reviewed.

            (b) Each of the Buyers and the Sellers intend that, for other than
United States federal income tax purposes, the Transactions hereunder be sales
to the Buyers of the Purchased Items and not loans from the Buyers to the
applicable Seller secured by the Purchased Items. However, in order to preserve
the rights of the Buyers under this Repurchase Agreement in the event that a
court or other forum re-characterizes the Transactions hereunder as loans or in
the event that a transfer of a Purchased Item is otherwise ineffective to effect
an outright transfer of such Purchased Item to the Buyers, and in any event as
security for the performance by each Seller of all of such Seller's obligations
to the Buyers and the Transactions entered into hereunder and any other MS
Indebtedness, each Seller hereby assigns, pledges and grants a security interest
in all of its right, title and interest in, to and under the Purchased Items to
the Agent, for the ratable benefit of the Buyers, and to secure the payment of
the Repurchase Price and Price Differential on all Transactions and all other
amounts owing hereunder, including, without limitation, amounts owing to the
Agent or the Buyers pursuant to Section 11.03 and under the other Repurchase
Documents (collectively, the "Repurchase Obligations").

            (c) All of each Seller's right, title and interest in, to and under
each of the following items of property, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, is hereinafter
referred to as the "Purchased Items":

            (i) all Purchased Loans;

            (ii) all Mortgage Loan Documents, including without limitation all
      promissory notes and any other collateral pledged to secure, or otherwise
      relating to, the Purchased Loans, together with all files, documents,
      instruments, surveys, certificates, correspondence, appraisals, computer
      programs (subject to any restrictions on transfer under any related
      licensing agreement), computer storage media, accounting records and other
      books and records relating thereto, including electronic records;

            (iii) all mortgage guaranties and insurance (issued by governmental
      agencies or otherwise) and any mortgage insurance certificate or other
      document evidencing such

                                      -30-
<PAGE>

      mortgage guaranties or insurance relating to any Purchased Loan and all
      claims and payments thereunder;

            (iv) all other insurance policies and insurance proceeds relating to
      any Purchased Loan or the related Mortgaged Property;

            (v) all Interest Rate Protection Agreements, relating to or
      constituting any or all of the Purchased Items;

            (vi) all Servicing Agreements, Servicing Records and servicing
      accounts relating to the Purchased Loans;

            (vii) all Takeout Commitments now existing or hereafter arising with
      respect to any of the Purchased Loans, all rights to deliver Purchased
      Loans to the applicable Takeout Investors or to permanent investors and
      other purchasers pursuant thereto and all proceeds resulting from the
      disposition of such Purchased Loans pursuant thereto, including such
      Seller's right and entitlement to receive the entire Takeout Price
      specified in each Takeout Commitment;

            (viii) all collateral, however defined, under any other agreement
      between any Seller or any of its Affiliates on the one hand and any Buyer
      or any Affiliate of a Buyer on the other hand;

            (ix) all "general intangibles", "accounts", "instruments",
      "investment property", "deposit accounts" and "chattel paper" as defined
      in the Uniform Commercial Code relating to or constituting any and all of
      the foregoing; and

            (x) any and all replacements, substitutions, distributions on or
      proceeds of any and all of the foregoing.

            (d) Each Seller agrees to mark its computer records and files to
evidence the security interests granted to the Agent, for the ratable benefit of
the Buyers hereunder.

            4.02. Further Documentation. At any time and from time to time, upon
the reasonable written request of the Agent, and at the sole expense of the
Sellers, the Sellers will promptly and duly execute and deliver, or will
promptly cause to be executed and delivered, such further instruments and
documents and take such further action as the Agent may reasonably request for
the purpose of obtaining or preserving the full benefits of this Repurchase
Agreement and of the rights and powers herein granted. The Sellers hereby
authorize the Agent to file any financing or continuation statement to the
extent permitted by applicable law, as necessary to perfect or preserve the
security interests granted hereunder.

            4.03. Changes in Locations, Name, etc. No Seller shall (i) change
the location of its chief executive office/chief place of business from that
specified in Section 6.12 hereof, or (ii) change its name, mailing address,
identity or corporate structure (or the equivalent) or change the location where
it maintains its records with respect to the Purchased Items or (iii)
reincorporate or reorganize under the laws of another jurisdiction unless it
shall have given the Agent at least thirty (30) calendar days prior written
notice thereof and shall have taken all

                                      -31-
<PAGE>

actions deemed necessary by the Agent to continue its perfected status in the
Purchased Items with the same or better priority, including, without limitation,
the delivery of additional legal opinions with respect to the perfection and
priority of its perfected status in the Purchased Items. Each Seller's federal
tax identification number and organizational identification number is as set
forth on Schedule 8. Each Seller shall promptly notify the Agent of any change
in such organizational identification number.

            4.04. Agent's Appointment as Attorney-in-Fact.

            (a) Each Seller hereby irrevocably constitutes and appoints the
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Seller and in the name of such seller or in its own
name, from time to time in the Agent's discretion, for the purpose of carrying
out the terms of this Repurchase Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Repurchase Agreement,
and, without limiting the generality of the foregoing, each Seller hereby gives
the Agent the power and right, on behalf of such Seller, without assent by, but
with notice to, such Seller, if an Event of Default shall have occurred and be
continuing, to do the following:

            (i) in the name of each Seller or its own name, or otherwise, to
      take possession of and endorse and collect any checks, drafts, notes,
      acceptances or other instruments for the payment of moneys due under any
      mortgage insurance or payable on or with respect to any Purchased Items
      and to file any claim or to take any other action or proceeding in any
      court of law or equity or otherwise deemed appropriate by the Buyer for
      the purpose of collecting any and all such moneys due under any such
      mortgage insurance or with respect to any Purchased Items whenever
      payable;

            (ii) to pay or discharge taxes and Liens levied or placed on or
      threatened against any of the Purchased Items; and

            (iii) (A) to direct any party liable for any payment under any
      Purchased Items to make payment of any and all moneys due or to become due
      thereunder directly to the Agent or as the Agent shall direct; (B) to ask
      or demand for, collect, receive payment of and receipt for, any and all
      moneys, claims and other amounts due or to become due at any time in
      respect of or arising out of any Purchased Items; (C) to sign and endorse
      any invoices, assignments, verifications, notices and other documents in
      connection with any of the Purchased Items; (D) to commence and prosecute
      any suits, actions or proceedings at law or in equity in any court of
      competent jurisdiction to collect the Purchased Items or any portion
      thereof and to enforce any other right in respect of any Purchased Items;
      (E) to defend any suit, action or proceeding brought against any Seller
      with respect to any Purchased Items; (F) to settle, compromise or adjust
      any suit, action or proceeding described in clause (E) above and, in
      connection therewith, to give such discharges or releases as the Agent may
      deem appropriate; and (G) generally, to sell, transfer, pledge and make
      any agreement with respect to or otherwise deal with any of the Purchased
      Items as fully and completely as though the Agent were the absolute owner
      thereof for all purposes, and to do, at the Agent's option and the
      Sellers' expense, at any time, and from

                                      -32-
<PAGE>

      time to time, all acts and things which the Agent deems necessary to
      protect, preserve or realize upon the Purchased Items and the Agent's
      Liens thereon and to effect the intent of this Repurchase Agreement, all
      as fully and effectively as such Seller might do; and

            (iv) to effectuate the transfer of servicing to the designee of the
      Agent.

Each Seller hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.

            (b) Each Seller also authorizes the Agent, at any time and from time
to time, to execute, in connection with any sale provided for in Section 9
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Purchased Items and to file any initial financing
statements, amendments thereto and continuation statements with or without the
signature of any Seller as authorized by applicable law, as applicable to all or
any part of the Purchased Items.

            (c) The powers conferred on the Agent pursuant to this Section 4.04
are solely to protect the interests of the Buyers in the Purchased Items and
shall not impose any duty upon the Agent to exercise any such powers. The Agent
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither the Agent nor any of its officers,
directors, or employees shall be responsible to the Sellers for any act or
failure to act hereunder, except for its own gross negligence or willful
misconduct.

            4.05. Performance by Agent of Sellers' Obligations. If any Seller
fails to perform or comply with any of its agreements contained in the
Repurchase Documents and the Agent itself performs or complies, or otherwise
causes performance or compliance, with such agreement, the expenses of the Agent
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by the Sellers to the Agent on demand and shall constitute Repurchase
Obligations.

            4.06. Limitation on Duties Regarding Preservation of Purchased
Items. The Agent's and each Buyer's duty with respect to the custody,
safekeeping and physical preservation of the Purchased Items in its possession,
under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to
deal with it in the same manner as the Agent or such Buyer, as the case may be,
deals with similar property for its own account. Neither the Agent, any Buyer
nor any of their respective directors, officers or employees shall be liable for
failure to demand, collect or realize upon all or any part of the Purchased
Items or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Purchased Items upon the request of any Seller or
otherwise.

            4.07. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Purchased Items are irrevocable
and are powers coupled with an interest.

            4.08. Release of Security Interest. Upon termination of this
Repurchase Agreement and repayment to the Buyers of all Repurchase Obligations
and the performance of all obligations under the Transactions and the Repurchase
Documents the Buyers shall reconvey

                                      -33-
<PAGE>

all Purchased Items to the Sellers and the Agent shall release its security
interest in any remaining Purchased Items.

            Section 5. Conditions Precedent.

            5.01. Effectiveness. The effectiveness of this Repurchase Agreement
and the obligation of the Buyers and the Agent to enter into the initial
Transaction hereunder shall be subject to condition precedent that the Agent
shall have received all of the following documents, and each such document is
satisfactory to the Agent and its counsel in form and substance:

            (a) Repurchase Agreement. This Repurchase Agreement, executed and
delivered by a duly authorized officer of each of the parties hereto;

            (b) Custodial Agreement. The Custodial Agreement, executed and
delivered by a duly authorized officer of each of the parties hereto;

            (c) Electronic Tracking Agreement. The Electronic Tracking
Agreement, executed and delivered by a duly authorized officer of each of the
parties thereto;

            (d) Organizational Documents. A good standing certificate (or
equivalent documents) and certified copies of the charter and by-laws (or
equivalent documents) of each Seller and of all corporate or other authority for
each Seller with respect to the execution, delivery and performance of the
Repurchase Documents and each other document to be delivered by such Seller from
time to time in connection herewith (and the Agent and the Buyers may
conclusively rely on such certificate until it receives notice in writing from
such Seller to the contrary);

            (e) Legal Opinion. One or more legal opinions of outside counsel to
the Sellers;

            (f) Filings, Registrations, Recordings. Any documents (including,
without limitation, financing statements) required to be filed, registered or
recorded in order to create in favor of the Agent, for the ratable benefit of
the Buyers, a perfected, first-priority security interest in the Purchased
Items, subject to no Liens other than those created hereunder, shall have been
properly prepared and executed for filing, registration or recording in each
office in each jurisdiction in which such filings, registrations and
recordations are required to perfect such first-priority security interest;
provided, that assignments of the Mortgages securing or related to the Purchased
Loans shall not be required to be recorded prior to the occurrence of an Event
of Default;

            (g) Lien Searches. UCC lien searches in such jurisdictions as shall
be applicable to each Seller, the Purchased Items, the results of which shall be
satisfactory to the Agent;

            (h) Financial Statements. The financial statements referenced in
Section 6.02;

            (i) Underwriting Guidelines. A certified copy of the Underwriting
Guidelines, which shall be in form and substance satisfactory to the Agent;

                                      -34-
<PAGE>

            (j) Consents, Licenses, Approvals, etc. Copies certified by each
Seller of all consents, licenses and approvals, if any, required in connection
with the execution, delivery and performance by such Seller of, and the validity
and enforceability of, the Repurchase Documents, which consents, licenses and
approvals shall be in full force and effect; and

            (k) Other Documents. Such other documents as the Agent may
reasonably request prior to the date hereof.

            5.02. Initial and Subsequent Transactions. The entering into by the
Agent on behalf of the Buyers of each Transaction (including the initial
Transaction) on any Business Day is subject to the satisfaction of the following
further conditions precedent, both immediately prior to the entering into of
such Transaction and also after giving effect thereto and to the intended use
thereof:

            (a) No Default. The Sellers shall be in compliance with all of the
financial covenants set forth in Section 7.22 and no Default or Event of Default
shall have occurred and be continuing;

            (b) Representations and Warranties; Officer's Certificate. Both
immediately prior to and also after giving effect to such Transaction, and to
the intended use thereof, the representations and warranties made by the Sellers
(regardless of whether subject to a Transaction at such time) in Section 6 and
Schedule 1 hereof, and elsewhere in each of the Repurchase Documents, shall be
true, correct and complete in all material respects on and as of the Purchase
Date for such Transaction (in the case of the representations and warranties in
Section 6.11 and Schedule 1, solely with respect to Purchased Loans, including
all Eligible Mortgage Loans to be purchased hereunder on such Purchase Date)
with the same force and effect as if made on and as of such date (or, if any
such representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date). The Agent shall have received an
officer's certificate signed by a Responsible Officer of each Seller certifying
as to the truth, accuracy and completeness of the above, which certificate shall
specifically include a statement that such Seller is in compliance with all
governmental licenses and authorizations and is qualified to do business and in
good standing in all required jurisdictions.

            (c) Margin Base. No Margin Deficiency shall exist;

            (d) Due Diligence. Subject to the Agent's right to perform one or
more Due Diligence Reviews pursuant to Section 11.16 hereof, the Agent shall
have completed its due diligence review of the Mortgage Loan Documents for each
proposed Purchased Loan and such other documents, records, agreements,
instruments, mortgaged properties or information relating to the Purchased Loans
as the Agent in its sole discretion deems appropriate to review and such review
shall be satisfactory to the Agent in its sole good faith discretion;

            (e) Servicing Agreement(s). The Agent shall have received all
Servicing Agreements, if applicable, related to the Purchased Loans, certified
as a true, correct and complete copy of the original together, with a fully
executed Servicer Notice and Agreement and, if the Servicer is a Seller or an
Affiliate of a Seller, the letter of the applicable Servicer

                                      -35-
<PAGE>

consenting to termination of such Servicing Agreement upon the occurrence of an
Event of Default;

            (f) Trust Receipt and Mortgage Loan Schedule and Exception Report.
The Agent shall have received from the Custodian the Trust Receipt and a
Mortgage Loan Schedule and Exception Report with only such Exceptions as are
acceptable to the Agent in its sole discretion in respect of the Eligible
Mortgage Loans to be purchased hereunder on such Business Day;

            (g) Release Letter. The Agent shall have received from the Sellers a
Warehouse Lender's Release Letter substantially in the form of Exhibit E hereto
(or such other form acceptable to the Agent) or a Seller's Release Letter
substantially in the form of Exhibit D hereto (or such other form acceptable to
the Agent) covering each Eligible Mortgage Loan to be purchased hereunder on
such Business Day;

            (h) Fees and Expenses. The Agent shall have received all fees and
expenses of counsel to the Agent and the Buyers as contemplated by Section 3.04
and Section 11.03(b), which amounts, at the Agent's option, may be netted from
the Purchase Price to be paid under this Repurchase Agreement;

            (i) [Reserved]

            (j) No Market Events. None of the following shall have occurred
and/or be continuing:

            (i) an event or events shall have occurred resulting in the
      effective absence of a "repo market" or comparable "lending market" for
      financing debt obligations secured by mortgage loans or securities or an
      event or events shall have occurred resulting in the Buyers not being able
      to finance any Mortgage Loans through the "repo market" or "lending
      market" with traditional counterparties at rates which would have been
      reasonable prior to the occurrence of such event or events;

            (ii) an event or events shall have occurred resulting in the
      effective absence of a "securities market" for securities backed by
      mortgage loans or an event or events shall have occurred resulting in the
      Buyers not being able to sell securities backed by mortgage loans at
      prices which would have been reasonable prior to such event or events; or

            (iii) there shall have occurred a material adverse change in the
      financial condition of any Buyer which affects (or can reasonably be
      expected to affect) materially and adversely the ability of such Buyer to
      fund its obligations under this Repurchase Agreement;

            (k) No Morgan Stanley Downgrade. MS & Co.'s corporate bond rating as
calculated by S&P or Moody's has not been lowered or downgraded to a rating
below A- as indicated by S&P or below A3 as indicated by Moody's;

                                      -36-
<PAGE>

            (l) MERS Report. A MERS Report listing all MERS Designated Mortgage
Loans to be purchased hereunder on such Business Day shall have been made
available to the Agent on the MERS website; and

            (m) Wet-Ink Aged Report. Solely with respect to each Wet-Ink
Transaction, the Agent shall have received from the Custodian a Wet- Ink Aged
Report in the form and substance required by the Custodial Agreement.

Each Transaction Request submitted by a Seller hereunder shall constitute a
certification by such Seller that all the conditions set forth in this Section 5
(other than Section 5.02(k)) have been satisfied (both as of the date of such
notice, request or confirmation and as of the requested Purchase Date).

            Section 6. Representations and Warranties. Each Seller represents
and warrants to the Agent and the Buyers that throughout the term of this
Repurchase Agreement:

            6.01. Legal Name. On the Effective Date, the exact legal name of
each Seller is, and during the four months immediately preceding the date
hereof, such name has been, American Home Mortgage Corp., American Home Mortgage
Acceptance, Inc., American Home Mortgage Investment Corp., American Home
Mortgage Holdings, Inc. and American Home Mortgage Servicing, Inc. and no Seller
has used any previous names, assumed names or trade names except as set forth on
Schedule 4 attached hereto.

            6.02. Existence. Each Seller (a) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite corporate or other power, and has all
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a Material Adverse Effect; and
(c) is qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect.

            6.03. Financial Condition. The Seller has heretofore furnished to
the Agent a copy of (a) the consolidated balance sheet of AHM Investment and its
consolidated Subsidiaries for the fiscal year ended December 31, 2004 and the
related consolidated statements of income and retained earnings and of cash
flows for AHM Investment and its consolidated Subsidiaries for such fiscal year,
setting forth in each case in comparative form the figures for the previous
year, with the opinion thereon of Deloitte & Touche and (b) its consolidated
balance sheet and the consolidated balance sheets of its consolidated
Subsidiaries for the quarterly fiscal period ended September 30, 2005 and the
related consolidated statements of income and retained earnings and of cash
flows for AHM Investment and its consolidated Subsidiaries for such quarterly
fiscal period, setting forth in each case in comparative form the figures for
the previous year. All such financial statements are complete and correct and
fairly present, in all material respects, the consolidated financial condition
of AHM Investment and its Subsidiaries and the consolidated results of their
operations as at such dates and for such fiscal periods, all in

                                      -37-
<PAGE>

accordance with GAAP applied on a consistent basis. Since September 30, 2005,
there has been no material adverse change in the consolidated business,
operations or financial condition of AHM Investment and its consolidated
Subsidiaries taken as a whole from that set forth in said financial statements.

            6.04. Litigation. There are no actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
pending or threatened) or other legal or arbitrable proceedings affecting any
Seller or any of its Subsidiaries or affecting any of the Property of any of
them before any Governmental Authority that (i) questions or challenges the
validity or enforceability of any of the Repurchase Documents or any action to
be taken in connection with the transactions contemplated hereby, (ii) makes a
claim or claims in an aggregate amount greater than $5,000,000, (iii) which,
individually or in the aggregate, if adversely determined, could reasonably be
likely to have a Material Adverse Effect, or (iv) requires filing with the
Securities and Exchange Commission in accordance with the 1934 Act or any rules
thereunder.

            6.05. No Breach. Neither (a) the execution and delivery of the
Repurchase Documents nor (b) the consummation of the transactions therein
contemplated in compliance with the terms and provisions thereof will conflict
with or result in a breach of the charter or by-laws of any Seller, or any
applicable law (including, without limitation, the Prescribed Laws), rule or
regulation, or any order, writ, injunction or decree of any Governmental
Authority, or any Servicing Agreement or other material agreement or instrument
to which any Seller or any of their Subsidiaries is a party or by which any of
them or any of their Property is bound or to which any of them is subject, or
constitute a default under any such material agreement or instrument or result
in the creation or imposition of any Lien (except for the Liens created pursuant
to this Repurchase Agreement) upon any Property of any Seller or any of their
Subsidiaries pursuant to the terms of any such agreement or instrument.

            6.06. Action. Each Seller has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under each of the Repurchase Documents; the execution, delivery and performance
by each Seller of each of the Repurchase Documents have been duly authorized by
all necessary corporate or other action on its part; and each Repurchase
Document has been duly and validly executed and delivered by each Seller and
constitutes a legal, valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its terms, except as subject to
bankruptcy laws and other similar laws of general application affecting the
rights of creditors and subject to the application of the rules of equity,
including those relating to specific performance.

            6.07. Approvals.

            (a) No authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority or any securities exchange are
necessary for the execution, delivery or performance by each Seller of the
Repurchase Documents or for the legality, validity or enforceability thereof,
except for filings and recordings in respect of the Liens created pursuant to
this Repurchase Agreement.

                                      -38-
<PAGE>

            (b) Each of AHM and AHM Servicing is approved by Fannie Mae as an
approved lender and each of AHM, AHM Servicing and each Servicer is approved by
Freddie Mac as an approved seller/servicer, in each case in good standing (such
collective approvals and conditions, "Agency Approvals"), with no event having
occurred or any Seller having any reason whatsoever to believe or suspect will
occur (including, without limitation, a change in insurance coverage) which
would make either of AHM and AHM Servicing (or any Servicer) unable to comply
with the eligibility requirements for maintaining all such applicable Agency
Approvals or require notification to the relevant Agency. Each Seller (and any
Servicer) has adequate financial standing, servicing facilities, procedures and
experienced personnel necessary for the sound servicing of mortgage loans of the
same types as may from time to time constitute Purchased Loans and in accordance
with Accepted Servicing Practices.

            6.08. Margin Regulations. Neither the entering into of any
Transaction hereunder, nor the use of the proceeds thereof, will violate or be
inconsistent with the provisions of Regulations T, U or X.

            6.09. Taxes. Each Seller and each of their Subsidiaries has filed
all Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by any of them, except for any
such taxes as are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of each
Seller and each of their Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of each Seller, adequate.

            6.10. Investment Company Act. No Seller nor any of their
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.

            6.11. Purchased Items.

            (a) No Seller has assigned, pledged, or otherwise conveyed or
encumbered any Purchased Item to any other Person, and immediately prior to the
purchase of any Eligible Mortgage Loan by the Buyers hereunder, and the purchase
and pledge of all related Purchased Items, the applicable Seller was the sole
owner of such Eligible Mortgage Loan, and all related Purchased Items, and had
good and marketable title thereto, free and clear of all Liens, in each case
except for Liens to be released simultaneously with the sale to the Buyers and
the granting of the Liens in favor of the Agent for the benefit of the Buyers
hereunder. No Purchased Item was acquired (by purchase or otherwise) by any
Seller from an Affiliate of any Seller other than another Seller.

            (b) The provisions of this Repurchase Agreement are intended to
transfer the Purchased Items to the Buyers pursuant to a sale, but in the event
that any Transaction is deemed to constitute a loan rather than a sale, this
Repurchase Agreement and the other Repurchase Documents are effective to create
in favor of the Agent, for the benefit of the Buyers, a valid security interest
in all right, title and interest of the Sellers in, to and under the Purchased
Items.

                                      -39-
<PAGE>

            (c) Upon (i) receipt by the Custodian of each Mortgage Note,
endorsed in blank or registered in the MERS System, and each assignment of the
related Mortgage, assigned in blank, by a duly authorized officer of the
applicable Seller, and (ii) the issuance by the Custodian of the Trust Receipt
therefor, the Agent, for the ratable benefit of the Buyers, shall have a fully
perfected first priority security interest therein, in the Mortgage Loan
evidenced thereby and in such Seller's interest in the related Mortgaged
Property.

            (d) Upon the filing of financing statements on Form UCC-1 naming
each Seller as "debtor" and the Agent, for the benefit of the Buyers, as
"secured party" and describing the Purchased Items as the "collateral" in the
jurisdictions and recording offices listed on Schedule 3 attached hereto, the
security interests granted hereunder in the Purchased Items will constitute a
fully perfected first priority security interests under the Uniform Commercial
Code in all right, title and interest of the Sellers in, to and under such
Purchased Items which can be perfected by filing under the Uniform Commercial
Code.

            6.12. Chief Executive Office/Jurisdiction of Organization. On the
Effective Date, and during the four (4) months immediately preceding the
Effective Date, each Seller's chief executive office, is, and has been, located
at 538 Broadhollow Road, Melville, New York 11747. On the Effective Date, AHM
Servicing's chief place of business is located at 4600 Regent Boulevard, Suite
200, Irving, Texas 75063. On the Effective Date, AHM's jurisdiction of
organization is New York; AHM Investment's jurisdiction of organization is
Maryland; Holdings' jurisdiction of organization is Delaware; AHM Acceptance's
jurisdiction of organization is Maryland; and AHM Servicing's jurisdiction of
organization is Maryland.

            6.13. Location of Books and Records. The location where each Seller
keeps its books and records, including all computer files and records relating
to the Purchased Items is its chief executive office.

            6.14. Hedging. Each Seller has entered into Interest Rate Protection
Agreements in accordance with its respective hedging policy guidelines, having
terms with respect to protection against fluctuations in interest rates
reasonably acceptable to the Agent.

            6.15. True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Sellers to the Agent and the Buyers in connection with the
negotiation, preparation or delivery of this Repurchase Agreement and the other
Repurchase Documents or included herein or therein or delivered pursuant hereto
or thereto, when taken as a whole, do not contain any untrue statement of
material fact or omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading. All written information furnished after the date
hereof by or on behalf of the Sellers to the Agent and the Buyers in connection
with this Repurchase Agreement and the other Repurchase Documents and the
transactions contemplated hereby and thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or certified.
There is no fact known to a Responsible Officer of a Seller, after due inquiry,
that could reasonably be expected to have a Material Adverse Effect that has not
been disclosed herein, in the other Repurchase Documents or in a report,
financial

                                      -40-
<PAGE>

statement, exhibit, schedule, disclosure letter or other writing furnished to
the Agent for use in connection with the transactions contemplated hereby or
thereby.

            6.16. Tangible Net Worth. On the Effective Date, the Tangible Net
Worth of AHM Investment and its consolidated Subsidiaries is not less than
$685,000,000 plus 75% of the aggregate amount of any capital raised through its
equity issuances after June 30, 2005.

            6.17. ERISA. Each Plan to which any Seller or its Subsidiaries make
direct contributions, and, to the knowledge of such Seller, each other Plan and
each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law. No event or
condition has occurred and is continuing as to which any Seller would be under
an obligation to furnish a report to the Agent under Section 7.01(d) hereof.

            6.18. [Reserved]

            6.19. Subsidiaries. Schedule 4 sets forth the name of each
Subsidiary of the Sellers.

            6.20. Solvency. After giving effect to the entering into of each
Transaction, (i) the amount of the "present fair saleable value" of the assets
of each Seller and of such Seller and its Subsidiaries, taken as a whole, will,
as of such date, exceed the amount of all "liabilities of such Seller and of
such Seller and its Subsidiaries, taken as a whole, contingent or otherwise", as
of such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors,
(ii) the present fair saleable value of the assets of each Seller and of such
Seller and its Subsidiaries, taken as a whole, will, as of such date, be greater
than the amount that will be required to pay the liabilities of such Seller and
of such Seller and its Subsidiaries, taken as a whole, on their respective debts
as such debts become absolute and matured, (iii) no Seller, nor any Seller and
its Subsidiaries, taken as a whole, will have, as of such date, an unreasonably
small amount of capital with which to conduct their respective businesses, and
(iv) each Seller and such Seller and its Subsidiaries, taken as a whole, will be
able to pay their respective debts as they mature. For purposes of this Section
6.20, "debt" means "liability on a claim", "claim" means any (x) right to
payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, and (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

            6.21. Regulatory Status. No Seller is a "bank holding company" or a
direct or indirect subsidiary of a "bank holding company" as defined in the Bank
Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System and no Seller will become a
"bank holding company" or a direct or indirect subsidiary of a "bank holding
company" unless it shall have provided the Agent written notice thirty (30) days
prior to such change.

                                      -41-
<PAGE>

            6.22. Real Estate Investment Trust. No REIT Seller has engaged in
any material "prohibited transactions" as defined in Section 857(b)(6)(B)(iii)
and (C) of the Code. Each REIT Seller for its current "tax year" (as defined in
the Code) is and for all prior tax years subsequent to its election to be a real
estate investment trust has been entitled to a dividends paid deduction under
the requirements of Section 857 of the Code with respect to any dividends paid
by it with respect to each such year for which it claims a deduction in its Form
1120-REIT filed with the United States Internal Revenue Service for such year.

            6.23. Compliance with Anti-Money Laundering Laws. Each Seller has
complied with all applicable and anti-money laundering laws and regulations,
including without limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws"); each Seller has established an anti-money
laundering compliance program as required by the Anti-Money Laundering Laws, has
conducted the requisite due diligence in connection with the origination of each
Mortgage Loan for purposes of the Anti-Money Laundering Laws, including with
respect to the legitimacy of the applicable Mortgagor and the origin of the
assets used by the said Mortgagor to purchase the property in question, and
maintains, and will maintain, sufficient information to identify the applicable
Mortgagor for purposes of the Anti-Money Laundering Laws. No Mortgage Loan is
subject to nullification pursuant to Executive Order 13224 (the "Executive
Order") or the regulations promulgated by the Office of Foreign Assets Control
of the United States Department of the Treasury (the "OFAC Regulations") or in
violation of the Executive Order or the OFAC Regulations, and no Mortgagor is
subject to the provisions of such Executive Order or the OFAC Regulations nor
listed as a "blocked person" for purposes of the OFAC Regulations.

            Section 7. Covenants of the Sellers

            Each Seller covenants and agrees with the Agent and each Buyer that,
so long as any Transaction is outstanding and until payment in full of all
Repurchase Obligations:

            7.01. Financial Statements. The Sellers shall deliver to the Agent:

            (a) as soon as available and in any event within forty-five (45)
days after the end of each of the first three quarterly fiscal periods of each
fiscal year of AHM Investment and its consolidated Subsidiaries, the unaudited
consolidated balance sheets of AHM Investment and its consolidated Subsidiaries
as at the end of such period and the related unaudited consolidated statements
of income and retained earnings and of cash flows for the AHM Investment and its
consolidated Subsidiaries for such period and the portion of the fiscal year
through the end of such period, setting forth in each case in comparative form
the figures for the previous year, accompanied by a certificate of a Responsible
Officer of AHM Investment, which certificate shall state that said consolidated
financial statements fairly present the consolidated financial condition and
results of operations of AHM Investment and its consolidated Subsidiaries in
accordance with GAAP, consistently applied, as at the end of, and for, such
period (subject to normal year-end audit adjustments);

            (b) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of AHM Investment, the consolidated balance
sheets of AHM Investment and its consolidated Subsidiaries as at the end of such
fiscal year and the related consolidated

                                      -42-
<PAGE>

statements of income and retained earnings and of cash flows for the AHM
Investment and its consolidated Subsidiaries for such year, setting forth in
each case in comparative form the figures for the previous year, accompanied by
an opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of AHM
Investment and its consolidated Subsidiaries as at the end of, and for, such
fiscal year in accordance with GAAP, and a certificate of such accountants
stating that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any Default or Event of
Default;

            (c) from time to time such other information regarding the financial
condition, operations, or business of any Seller as the Agent may reasonably
request; and

            (d) as soon as reasonably possible, and in any event within thirty
(30) days after a Responsible Officer of any Seller knows, or with respect to
any Plan or Multiemployer Plan to which any Seller or any of its Subsidiaries
makes direct contributions, has reason to believe, that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan has
occurred or exists, a statement signed by a senior financial officer of the
Sellers setting forth details respecting such event or condition and the action,
if any, that the Sellers or its ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or given
to PBGC by the Sellers or an ERISA Affiliate with respect to such event or
condition):

            (i) any reportable event, as defined in Section 4043(c) of ERISA and
      the regulations issued thereunder, with respect to a Plan, as to which
      PBGC has not by regulation waived the requirement of Section 4043(a) of
      ERISA that it be notified within thirty (30) calendar days after the
      occurrence of such event (provided that a failure to meet the minimum
      funding standard of Section 412 of the Code or Section 302 of ERISA,
      including without limitation the failure to make on or before its due date
      a required installment under Section 412(m) of the Code or Section 302(e)
      of ERISA, shall be a reportable event regardless of the issuance of any
      waivers in accordance with Section 412(d) of the Code); and any request
      for a waiver under Section 412(d) of the Code for any Plan;

            (ii) the distribution under Section 4041(c) of ERISA of a notice of
      intent to terminate any Plan or any action taken by such Seller or an
      ERISA Affiliate to terminate any Plan;

            (iii) the institution by PBGC of proceedings under Section 4042 of
      ERISA for the termination of, or the appointment of a trustee to
      administer, any Plan, or the receipt by the Seller or any ERISA Affiliate
      of a notice from a Multiemployer Plan that such action has been taken, or
      is proposed to be taken, by PBGC with respect to such Multiemployer Plan;

            (iv) the complete or partial withdrawal from a Multiemployer Plan by
      such Seller or any ERISA Affiliate that results in liability under Section
      4201 or 4204 of

                                      -43-
<PAGE>

      ERISA (including the obligation to satisfy secondary liability as a result
      of a purchaser default) or the receipt by such Seller or any ERISA
      Affiliate of notice from a Multiemployer Plan that it is in reorganization
      or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends
      to terminate or has terminated under Section 4041A of ERISA;

            (v) the institution of a proceeding by a fiduciary of any
      Multiemployer Plan against such Seller or any ERISA Affiliate to enforce
      Section 515 of ERISA, which proceeding is not dismissed within thirty (30)
      calendar days; and

            (vi) the adoption of an amendment to any Plan that would result in
      the loss of tax-exempt status of the Plan and trust of which such Plan is
      a part if such Seller or an ERISA Affiliate fails to provide timely
      security to such Plan if and as required by the provisions of Section
      401(a)(29) of the Code or Section 307 of ERISA.

The Sellers will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraphs (a) or (b) above, a certificate of a
Responsible Officer of AHM Investment to the effect that, to the best of such
Responsible Officer's knowledge, each Seller during such fiscal period or year
has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Repurchase Agreement and the other
Repurchase Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action the Sellers have taken or proposes to take with respect
thereto).

            7.02. Litigation. Each Seller will promptly, and in any event within
ten (10) calendar days after service of process on any of the following, give to
the Agent notice of all litigation, actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are pending or
threatened) or other legal or arbitrable proceedings affecting such Seller or
any of its Subsidiaries or affecting any of the Property of any of them before
any Governmental Authority that (i) questions or challenges the validity or
enforceability of any of the Repurchase Documents or any action to be taken in
connection with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $5,000,000, (iii) which, individually
or in the aggregate, if adversely determined, could be reasonably likely to have
a Material Adverse Effect, or (iii) requires filing with the Securities and
Exchange Commission in accordance with the 1934 Act and any rules thereunder.

            7.03. Existence, etc. Each Seller will:

            (a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided that nothing in
this Section 7.03(a) shall prohibit any transaction expressly permitted under
Section 7.04 hereof);

            (b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, all Prescribed Laws, all environmental laws, all laws with respect
to unfair and deceptive lending practices and Predatory

                                      -44-
<PAGE>

Lending Practices) if failure to comply with such requirements would be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect;

            (c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;

            (d) not move its chief executive office from the address referred to
in Section 6.12 or change its jurisdiction of organization from the jurisdiction
referred to in Section 6.12 unless it shall have provided the Agent thirty (30)
calendar days' prior written notice of such change;

            (e) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained in conformance with GAAP;

            (f) at all times during the term of this Repurchase Agreement
regardless of whether subject to a Transaction at such time, permit
representatives of the Agent, during normal business hours, to examine, copy and
make extracts from its books and records (including, without limitation the
Title Insurance Policies), to inspect any of its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably requested
by the Agent; and

            (g) (i) to hold each Title Insurance Policy for the benefit of the
Agent on behalf of the Buyers; (ii) to hold each Title Insurance Policy at the
office of AHM Investment located at 538 Broadhollow Road, Melville, New York
11747 unless the Sellers shall have provided thirty (30) days' prior written
notice of any change in location, and (iii) to segregate each Title Insurance
Policy with respect to Mortgage Loans that have been pledged to the Agent, for
the ratable benefit of the Buyers hereunder from title insurance policies
unrelated to such Mortgage Loans and held at the same location.

            7.04. Prohibition of Fundamental Changes. No Seller shall enter into
any transaction of merger or consolidation or amalgamation, or liquidate, wind
up or dissolve itself (or suffer any liquidation, winding up or dissolution) or
sell all or substantially all of its assets; provided, that a Seller may merge
or consolidate with (a) any wholly owned subsidiary of such Seller, or (b) any
other Person if such Seller is the surviving corporation; and provided further,
that if after giving effect thereto, no Default would exist hereunder.

            7.05. Margin Deficiency. If at any time there exists a Margin
Deficiency the Sellers shall cure same in accordance with Section 2.06 hereof.

            7.06. Notices. The Sellers shall give notice to the Agent:

            (a) promptly upon receipt of notice or knowledge of the occurrence
of any Default;

            (b) with respect to any Purchased Loan, immediately upon receipt of
any principal prepayment (in full or partial) of such Purchased Loan;

                                      -45-
<PAGE>

            (c) with respect to any Purchased Loan, immediately upon receipt of
notice or knowledge that the underlying Mortgaged Property has been damaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty, or otherwise damaged so as to affect adversely the Recognized Value of
such Purchased Loan;

            (d) promptly upon receipt of notice or knowledge of (i) any event of
default (or any substantially similar event, however denominated) related to any
Purchased Item, (ii) any Lien or security interest (other than security
interests created hereby or by the other Repurchase Documents) on, or claim
asserted against, any Purchased Item or (iii) any event or change in
circumstances which could reasonably be expected to have a Material Adverse
Effect;

            (e) promptly upon any change in the market value of any or all of
any Seller's assets which could reasonably be expected to have a Material
Adverse Effect; and

            (f) of the execution of any Guarantee by any Seller from and after
the Effective Date, notice of which shall be given monthly (contemporaneous with
the delivery of the monthly production report required pursuant to Section
7.08(a) below) with respect to any Guarantees executed during the preceding
calendar month.

            Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of each applicable Seller setting forth
details of the occurrence referred to therein and stating what action such
Seller has taken or proposes to take with respect thereto.

            7.07. Hedging. The Sellers shall at all times maintain Interest Rate
Protection Agreements in accordance with their respective hedging policy
guidelines, which guidelines are reasonably acceptable to the Agent in its sole
discretion. The Interest Rate Protection Agreements maintained by the Sellers
shall have terms with respect to protection against fluctuations in interest
rates reasonably acceptable to the Agent. The Sellers shall deliver to the Agent
monthly a written summary of the notional amount of all outstanding Interest
Rate Protection Agreements.

            7.08. Reports. (a) The Sellers shall provide the Agent with a
monthly production report, which shall include a summary of all loans closed by
the Sellers and all loan applications approved by the Sellers during the
preceding calendar month.

            (b) The Sellers shall provide the Agent with a quarterly report,
which report shall include, among other items, a summary of each Seller's
delinquency and loss experience with respect to mortgage loans serviced by the
Sellers, any Servicer of any designee of either, plus any such additional
reports as the Agent may reasonably request with respect to any Seller's or
Servicer's servicing portfolio or pending originations of mortgage loans.

            7.09. Underwriting Guidelines. (a) Without the prior written consent
of the Agent, the Sellers shall not make any material change to the Underwriting
Guidelines or originate Mortgage Loans in a manner inconsistent with the
Underwriting Guidelines. Notwithstanding the preceding sentence, in the event
that the Sellers make any material change to the Underwriting Guidelines, the
Sellers shall promptly deliver to the Agent a complete copy of the revised
Underwriting Guidelines.

                                      -46-
<PAGE>

            (b) Each Seller shall originate Eligible Mortgage Loans in a manner
which is consistent with sound underwriting and appraisal practices, and in
compliance with applicable federal and state consumer protection laws including,
without limitation, all laws with respect to unfair or deceptive practices and
all laws relating to Predatory Lending Practices.

            7.10. Transactions with Affiliates. No Seller will enter into any
transaction, including without limitation any purchase, sale, lease or exchange
of property or the rendering of any service, with any Affiliate unless such
transaction is (a) otherwise permitted under this Repurchase Agreement, (b) in
the ordinary course of such Seller's business and (c) upon fair and reasonable
terms no less favorable to such Seller than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate, or make a
payment that is not otherwise permitted by this Section 7.10 to any Affiliate.
In no event shall any Seller sell to the Buyers or pledge to the Agent, for the
ratable benefit of the Buyers, hereunder any Purchased Loan acquired by such
Seller from any Affiliate of such Seller which is not a Seller hereunder.

            7.11. Limitation on Liens. The Sellers will defend the Purchased
Items against, and will take such other action as is necessary to remove, any
Lien, security interest or claim on or to any Purchased Item, other than the
security interests created under this Repurchase Agreement, and the Sellers will
defend the right, title and interest of the Agent and the Buyers in and to all
of the Purchased Items against the claims and demands of all persons whomsoever.

            7.12. Limitation on Guarantees. The Sellers shall not create, incur,
assume or suffer to exist any Guarantees, except for Guarantees from time to
time disclosed to the Agent and solely to the extent such Guarantees are (i)
given only in respect of Indebtedness of a Person which is a consolidated
Subsidiary of AHM Investment, (ii) not secured by any assets other than the
collateral, if any, pledged by the primary obligor which obligations are
guaranteed as security for such primary obligor's Indebtedness and (iii)
promptly, and in any event within 10 days after the incurrence thereof,
disclosed in writing to the Agent.

            7.13. Limitation on Distributions. After the occurrence and during
the continuation of any Event of Default, no Seller shall make any payment on
account of, or set apart assets for, a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of any equity
or partnership interest of such Sellers, whether now or hereafter outstanding,
or make any other distribution in respect of any of the foregoing or to any
shareholder or equity owner of such Seller, either directly or indirectly,
whether in cash or property or in obligations of such Seller or any of such
Seller's consolidated Subsidiaries except distributions in cash or other
property to the extent required to satisfy the REIT Distribution Requirement;
provided, for the avoidance of doubt, that after the occurrence and during the
continuation of any Event of Default, neither Holdings, AHM, AHM Investment nor
AHM Servicing shall make any distributions as set forth in this Section 7.13.

            7.14. Servicer; Servicer Report. The Sellers shall provide to the
Agent on the tenth (10th) Business Day of each month a Servicer Report with
respect to all Purchased Loans related to Transactions outstanding hereunder
and, in connection with the effectiveness of Regulation AB promulgated by the
Securities and Exchange Commission (as such regulation may be amended or
modified from time to time, "Reg AB"), each Seller shall provide, or shall cause
each Servicer to cooperate with the Buyer in providing, such statements and
reports as are

                                      -47-
<PAGE>

required by and in conformance with Reg AB. The Sellers shall not cause or
permit any Purchased Loan to be serviced by any Person other than the Servicer.

            7.15. Required Filings. Upon request of the Agent, each Seller shall
promptly provide the Agent with copies of all documents which such Seller or any
Affiliate of such Seller is required to file with the Securities and Exchange
Commission in accordance with the 1934 Act or any rules thereunder.

            7.16. No Adverse Selection. No Seller has selected any Purchased
Item in a manner so as to adversely affect the interests of the Buyers or the
Agent therein.

            7.17. Remittance of Prepayments. The Sellers shall remit, with
sufficient detail to enable the Agent to appropriately identify the Purchased
Loan to which any amount remitted applies, to the Agent on each Thursday (or the
next Business Day if such Thursday is not a Business Day) all principal
prepayments that the Sellers have received during the previous week.

            7.18. Agency Approvals. Should the Sellers, for any reason, cease to
possess all such applicable Agency Approvals, or should notification to the
relevant Agency be required, the Sellers shall so notify the Agent immediately
in writing. Notwithstanding the preceding sentence, each Seller shall take all
necessary action to maintain all of its (and each Servicer's) applicable Agency
Approvals at all times during the term of this Repurchase Agreement and so long
as any Transaction remains outstanding.

            7.19. [Reserved]

            7.20. MERS Designated Mortgage Loans. With respect to each MERS
Designated Mortgage Loan, the Seller shall not identify, or permit to be
identified, any party in the field "interim funder" or "warehouse lender
associate member" on the MERS(R) System without the express written consent of
the Agent.

            7.21. Title Insurance Policies. The applicable Seller shall promptly
(but in any event not later than ten (10) days following the date of origination
of each Purchased Loan) deliver the original attorney's opinion of title and
abstract of title or the original mortgagee title insurance policy, or if the
original mortgagee title insurance policy has not been issued, the irrevocable
commitment to issue the same with respect to each Purchased Loan (each, a "Title
Insurance Policy") to AHM Investment to be held for the benefit of the Agent on
behalf of the Buyers at the office of AHM Investment located at 538 Broadhollow
Road, Melville, New York 11747.

            7.22. Financial Covenants.

            (a) Maintenance of Tangible Net Worth. The Tangible Net Worth of AHM
Investment and its consolidated Subsidiaries shall at no time be less than the
sum of (i) $685,000,000 plus (ii) an amount equal to 75% of the amount of any
equity raised in a public offering by AHM Investment or any of its consolidated
Subsidiaries from and after June 30, 2005.

                                      -48-
<PAGE>

            (b) Maintenance of Profitability. The Net Income (before income
taxes and any permitted distributions) of AHM Investment and its consolidated
Subsidiaries for any two (2) consecutive fiscal quarters shall not be less than
$1.00.

            (c) Recognized Assets. The amount of Recognized Assets shall at no
time be less than the amount of Total Liabilities.

            Section 8. Events of Default. Each of the following events shall
constitute an event of default (an "Event of Default") hereunder:

            (a) any Seller shall default in the payment of any Repurchase Price
or Price Differential on any Transaction when due (whether at stated maturity,
upon acceleration or at mandatory or optional prepayment or repurchase); or

            (b) any Seller shall fail to cure any Margin Deficiency in
accordance with Section 2.06 of this Repurchase Agreement; or

            (c) any Seller shall default in the payment of any other amount
payable by it hereunder or under any other Repurchase Document after
notification by the Agent of such default, and such default shall have continued
unremedied for five (5) Business Days; or

            (d) any representation, warranty or certification made or deemed
made herein or in any other Repurchase Document by any Seller or any certificate
furnished to the Agent pursuant to the provisions hereof or thereof shall prove
to have been false or misleading in any material respect as of the time made or
furnished (other than the representations and warranties set forth in Schedule
1, which shall be considered solely for the purpose of determining the
Recognized Value of the Purchased Loans; unless (i) such Seller shall have made
any such representations and warranties with knowledge that they were materially
false or misleading at the time made or (ii) any such representations and
warranties have been determined by the Agent in its sole discretion to be
materially false or misleading on a regular basis); or

            (e) any Seller shall fail to comply with the requirements of Section
7.03(a), Section 7.04, Section 7.05, Section 7.06, or Sections 7.09 through 7.22
hereof; or any Seller shall otherwise fail to comply with the requirements of
Section 7.03 hereof and such default shall continue unremedied for a period of
five (5) Business Days; or any Seller shall fail to observe or perform any other
covenant or agreement contained in this Repurchase Agreement or any other
Repurchase Document and such failure to observe or perform shall continue
unremedied for a period of seven (7) Business Days; or

            (f) at all times during the term of the Repurchase Agreement,
regardless of whether subject to a Transaction at such time, a final judgment or
judgments for the payment of money in excess of $5,000,000 in the aggregate
shall be rendered against any Seller or any of their Affiliates by one or more
courts, administrative tribunals or other bodies having jurisdiction and the
same shall not be satisfied, discharged (or provision shall not be made for such
discharge, by an insurance company or otherwise) or bonded, or a stay of
execution thereof shall not be procured, within thirty (30) calendar days from
the date of entry thereof, and any Seller or any such Affiliate shall not,
within said period of thirty (30) calendar days, or such longer period

                                      -49-
<PAGE>

during which execution of the same shall have been stayed or bonded, appeal
therefrom and cause the execution thereof to be stayed during such appeal; or

            (g) any Seller shall admit in writing its inability to pay its debts
as such debts become due; or

            (h) any Seller or any of its Affiliates shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator or the like of itself or of all or a
substantial part of its property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (vi) take any
corporate or other action for the purpose of effecting any of the foregoing; or

            (i) a proceeding or case shall be commenced, without the application
or consent of any Seller or any of its Affiliates, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner, liquidator or the like of any Seller or any such Affiliate or
of all or any substantial part of its property, or (iii) similar relief in
respect of any Seller or any such Affiliate under any law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of thirty (30) or more days; or an order for relief against
any Seller or any such Affiliate shall be entered in an involuntary case under
the Bankruptcy Code; or

            (j) the Custodial Agreement or any Repurchase Document shall for
whatever reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by any Seller; or

            (k) any Seller shall grant, or suffer to exist, any Lien on any
Purchased Item except the Liens contemplated hereby; or the Liens contemplated
hereby shall cease to be first priority perfected Liens on the Purchased Items
in favor of the Agent, for the benefit of the Buyers, or shall be Liens in favor
of any Person other than the Agent, for the benefit of the Buyers; or

            (l) any Seller or any of its Affiliates shall be in default (i)
under any note, indenture, loan agreement, repurchase agreement, guaranty, swap
agreement or any other contract to which it is a party which default involves
the failure to pay a matured obligation, or permits the acceleration of the
maturity of obligations by any other party to or beneficiary of such note,
indenture, loan agreement, repurchase agreement, guaranty, swap agreement or
other contract in an amount greater than $10,000,000 or (ii) under any MS
Indebtedness; or

                                      -50-
<PAGE>

            (m) any materially adverse change in the Property, business,
financial condition or prospects of any Seller or any of its Affiliates shall
occur, in each case as determined by the Agent in its sole discretion, or any
other condition shall exist which, in the Agent's sole discretion, constitutes a
material impairment of the such Seller's ability to perform its obligations
under this Repurchase Agreement or any other Repurchase Document; or

            (n) MS & Co.'s corporate bond rating has been lowered or downgraded
to a rating below A- by S&P or A3 by Moody's and the Sellers shall have failed
to repay all amounts owing to the Buyers under this Repurchase Agreement and the
other Repurchase Documents within 120 calendar days following such downgrade; or

            (o) the discovery by the Agent of a condition or event which existed
at or prior to the execution hereof and which the Agent, in its sole discretion,
determines materially and adversely affects: (i) the condition (financial or
otherwise) of any Seller, any of its Subsidiaries or Affiliates; or (ii) the
ability of either any Seller or the Agent or any Buyer to fulfill its respective
obligations under this Repurchase Agreement; or

            (p) the Electronic Tracking Agreement shall for whatever reason be
terminated or cease to be in full force and effect and the Agent shall not have
received an Assignment of Mortgage with respect to each MERS Designated Mortgage
Loan identified by the Agent, in blank, in recordable form, but unrecorded; or

            (q) the failure of any REIT Seller to at any time continue to be (i)
qualified as a real estate investment trust as defined in Section 856 of the
Code and (ii) entitled to a dividend paid deduction under Section 857 of the
Code with respect to dividends paid by it with respect to each taxable year for
which it claims a deduction on its Form 1120 - REIT filed with the United States
Internal Revenue Service for such year, or the entering into by any REIT Seller
of any material "prohibited transactions" as defined in Sections 857(b) and
856(c) of the Code.

            Section 9. Remedies Upon Default.

            (a) An Event of Default shall be deemed to be continuing unless
expressly waived by the Agent in writing. Upon the occurrence of one or more
Events of Default hereunder, each Buyer's obligation to enter into any
additional Transactions under this Repurchase Agreement shall automatically
terminate without further action by any Person. Upon the occurrence of one or
more Events of Default other than those referred to in Section 8(g) or (h), the
Agent may immediately declare the Repurchase Price of the Transactions then
outstanding to be immediately due and payable, together with all Price
Differential thereon and fees and expenses accruing under this Repurchase
Agreement. Upon the occurrence and during the continuance of an Event of Default
referred to in Section 8(g) or (h), such amounts shall immediately and
automatically become due and payable without any further action by any Person.
Upon such declaration or such automatic acceleration, all amounts outstanding
hereunder shall become immediately due and payable, without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by each Seller.

            (b) Upon the occurrence of one or more Events of Default, the Agent
shall have the right to obtain physical possession of the Servicing Records and
all other files of the

                                      -51-
<PAGE>

Sellers relating to the Purchased Items, and all documents relating to the
Purchased Items which are then or may thereafter come in to the possession of
the Sellers or any third party acting for the Sellers and the Sellers shall
deliver to the Agent such assignments as the Agent shall request. The Agent
shall be entitled to specific performance of all agreements of the Sellers
contained in this Repurchase Agreement.

            (c) If any Event of Default shall occur and be continuing, (i) all
proceeds of Purchased Items received by the Sellers consisting of cash, checks
and other near-cash items shall be held by the Sellers in trust for the Buyers,
segregated from other funds of the Sellers, and shall forthwith upon receipt by
any Seller be turned over to the Agent, for the account of the Buyers, in the
exact form received by such Seller (duly endorsed by such Seller to the Agent,
if required) and (ii) any and all such proceeds received by the Buyers (whether
from a Seller or otherwise) may, in the sole discretion of the Agent, be held by
the Agent as collateral security for, and/or then or at any time thereafter may
be applied by the Agent against, the Repurchase Obligations (whether matured or
unmatured), such application to be in such order as the Agent shall elect. Any
balance of such proceeds remaining after the Repurchase Obligations shall have
been paid in full and this Repurchase Agreement shall have been terminated shall
be paid over to the applicable Seller or to whomsoever may be lawfully entitled
to receive the same. For purposes hereof, proceeds shall include, but not be
limited to, all principal and interest payments, all prepayments and payoffs,
insurance claims, condemnation awards, sale proceeds, real estate owned rents
and any other income and all other amounts received with respect to any
Purchased Items.

            (d) If a Default shall occur and be continuing, the Agent may, at
its option, enter into one or more Interest Rate Protection Agreements covering
all or a portion of the Purchased Loans and the Sellers shall be responsible for
all damages, judgments, costs and expenses of any kind which may be imposed on,
incurred by or asserted against the Agent relating to or arising out of such
Interest Rate Protection Agreements, including without limitation any losses
resulting from such Interest Rate Protection Agreements. If an Event of Default
shall occur and be continuing, the Agent may exercise, in addition to all other
rights and remedies granted to it in this Repurchase Agreement and in any other
instrument or agreement securing, evidencing or relating to the Repurchase
Obligations, all rights and remedies of a secured party under the Uniform
Commercial Code. Without limiting the generality of the foregoing, the Agent
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Seller or any other Person (each and all of which
demands, presentments, protests, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Purchased Items, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver
the Purchased Items or any part thereof (or contract to do any of the
foregoing), in one or more parcels or as an entirety at public or private sale
or sales, at any exchange, broker's board or office of the Agent or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Agent shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Purchased Items so sold, free of any
right or equity of redemption in any Seller, which right or equity is hereby
waived or released. The Sellers further agree, at the Agent's request, to

                                      -52-
<PAGE>

assemble the Purchased Items and make it available to the Agent at places which
the Agent shall reasonably select, whether at a Seller's premises or elsewhere.
The Agent shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Purchased Items or in any way relating to the
Purchased Items or the rights of the Agent or the Buyers hereunder, including
without limitation reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Repurchase Obligations, in such order as the Agent
may elect, and only after such application and after the payment by the Agent of
any other amount required or permitted by any provision of law, including
without limitation Sections 9-608(a) and 9-615(a) of the Uniform Commercial
Code, need the Agent account for the surplus, if any, to any Seller. To the
extent permitted by applicable law, each Seller waives all claims, damages and
demands it may acquire against the Agent or any Buyer arising out of the
exercise by the Agent or any Buyer of any of their rights hereunder, other than
those claims, damages and demands arising from the gross negligence or willful
misconduct of the Agent or any Buyer. If any notice of a proposed sale or other
disposition of the Purchased Items shall be required by law, such notice shall
be deemed reasonable and proper if given at least ten (10) calendar days before
such sale or other disposition. The Sellers shall remain liable for any
deficiency (plus accrued interest thereon at the Post-Default Rate and the fees
and disbursements of any attorneys employed by the Buyer to collect any such
deficiency) if the proceeds of any sale or other disposition of the Purchased
Items are insufficient to pay the Repurchase Obligations and the fees and
disbursements of any attorneys employed by the Agent or the Buyers to collect
such deficiency.

            Section 10. The Agent.

            10.01. Appointment. Each Buyer hereby irrevocably designates and
appoints Morgan Stanley Bank, and Morgan Stanley Bank hereby accepts such
designation and appointment, as the Agent of such Buyer under this Repurchase
Agreement and the other Repurchase Documents, and each such Buyer irrevocably
authorizes the Agent, in such capacity, to take such action on its behalf under
the provisions of this Repurchase Agreement and the other Repurchase Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Agent by the terms of this Repurchase Agreement and the other Repurchase
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Repurchase
Agreement, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Buyer, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Repurchase Agreement or any other Repurchase
Document or otherwise exist against the Agent.

            10.02. Delegation of Duties. The Agent may execute any of its duties
under this Repurchase Agreement and the other Repurchase Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.

            10.03. Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action

                                      -53-
<PAGE>

lawfully taken or omitted to be taken by it or such Person under or in
connection with this Repurchase Agreement or any other Repurchase Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Buyers for any recitals,
statements, representations or warranties made by any Seller or any officer
thereof contained in this Repurchase Agreement or any other Repurchase Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Repurchase Agreement or any other Repurchase Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Repurchase Agreement or any other Repurchase Document or for any failure of any
Seller to perform its obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Buyer to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Repurchase Agreement or any other Repurchase Document, or to inspect
the properties, books or records of the Sellers.

            10.04. Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Sellers),
independent accountants and other experts selected by the Agent. The Agent shall
be fully justified in failing or refusing to take any action under this
Repurchase Agreement or any other Repurchase Document unless it shall first
receive such advice or concurrence of the Buyers as it deems appropriate or it
shall first be indemnified to its satisfaction by the Buyers against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Repurchase
Agreement and the other Repurchase Documents in accordance with a request of the
Buyers, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Buyers and all future holders of the Purchased
Loans or any interests therein.

            10.05. Notices. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Agent has received notice from a Buyer or a Seller referring to this Repurchase
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Buyers. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Buyers; provided that unless and until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Buyers.

            10.06. Indemnification. The Buyers agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Sellers and without
limiting the obligation of the Sellers to do so), ratably according to their
respective Facility Exposures in effect on the date on which indemnification is
sought, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the

                                      -54-
<PAGE>

payment of any Repurchase Price) be imposed on, incurred by or asserted against
the Agent in any way relating to or arising out of, the Commitments, this
Repurchase Agreement, any of the other Repurchase Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Buyer shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this Section shall survive the payment of all amounts of
Repurchase Price and all other amounts payable hereunder.

            10.07. Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Sellers as though the Agent were not the Agent
hereunder and under the other Repurchase Documents. With respect to the
Transactions entered into by it, the Agent shall have the same rights, powers
and obligations under this Repurchase Agreement and the other Repurchase
Documents as any Buyer and may exercise the same as though it were not the
Agent, and the terms "Buyer" and "Buyers" shall include the Agent in its
individual capacity.

            10.08. Non-Reliance on Agent and Other Buyers. Each Buyer expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of any Seller, shall be deemed to constitute any
representation or warranty by the Agent to any Buyer. Each Buyer represents to
the Agent that it has, independently and without reliance upon the Agent or any
other Buyer, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of each
Seller and made its own decision to enter into Transactions and enter into this
Repurchase Agreement. Each Buyer also represents that it will, independently and
without reliance upon the Agent or any other Buyer, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Repurchase Agreement and the other Repurchase Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of each
Seller. Except for notices, reports and other documents expressly required to be
furnished by any Seller to the Agent hereunder or under the other Repurchase
Documents, which the Agent must distribute promptly to the other Buyers, the
Agent shall not have any duty or responsibility to provide any Buyer with any
credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of each Seller
which may come into the possession of the Agent or any of its officers,
directors, employees, attorneys-in-fact or Affiliates.

            10.09. Successor Agent. The Agent may resign as Agent upon thirty
(30) calendar days' notice to the Buyers and the Sellers. If the Agent shall
resign as Agent under this Repurchase Agreement and the other Repurchase
Documents, then the Buyers shall appoint from among the Buyers a successor Agent
for the Buyers, which successor Agent shall be approved by each Seller (unless
an Event of Default has occurred and is continuing), and any such successor
Agent shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall

                                      -55-
<PAGE>

mean such successor Agent effective upon such appointment and approval, and the
former Agent's rights, powers and duties as Agent shall be terminated, without
any other or further act or deed on the part of such former Agent or any of the
parties to this Repurchase Agreement or any holders of the Purchased Loans. If
no successor Agent has been appointed and shall have accepted such appointment
within thirty (30) calendar days after the retiring Agent's giving notice of its
resignation, then the retiring Agent, on behalf of the Buyers, may appoint an
Agent which shall (unless an Event of Default has occurred and is continuing) be
reasonably acceptable to each Seller. Upon the acceptance of any appointment as
the Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations, under this Repurchase Agreement and the other Repurchase
Documents. After any retiring Agent's resignation as Agent, the provisions of
this Section 10 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Repurchase Agreement and the other
Repurchase Documents.

            Section 11. Miscellaneous.

            11.01. Waiver. No failure on the part of the Agent to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Repurchase Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under any Repurchase Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.

            11.02. Notices. Except as otherwise expressly permitted by this
Repurchase Agreement, all notices, requests and other communications provided
for herein and under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Repurchase
Agreement) shall be given or made in writing (including without limitation by
telex, telecopy or facsimile) delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof or
thereof); or, as to any party, at such other address as shall be designated by
such party in a written notice to each other party provided, that a copy of all
notices given under Section 7.01 shall simultaneously be delivered to Credit
Department, Morgan Stanley, 1221 Avenue of the Americas, 35th Floor, New York,
New York 10036; Attention: Cindy Tse. Except as otherwise provided in this
Repurchase Agreement and except for notices given under Section 2 (which shall
be effective only on receipt), all such communications shall be deemed to have
been duly given when transmitted by telex, telecopy, facsimile (with written
confirmation of successful transmission received) or personally delivered or, in
the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.

            11.03. Indemnification and Expenses.

            (a) Each Seller agrees to hold the Agent and each Buyer, and their
respective Affiliates and officers, directors, employees, agents and advisors
(each an "Indemnified Party") harmless from and indemnify any Indemnified Party
against all liabilities, losses, damages, judgments, costs and expenses of any
kind which may be imposed on, incurred by or asserted against such Indemnified
Party (collectively, the "Costs") relating to or arising out of this Repurchase
Agreement, any other Repurchase Document or any transaction contemplated hereby

                                      -56-
<PAGE>

or thereby, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Repurchase Agreement, any other Repurchase
Document or any transaction contemplated hereby or thereby, that, in each case,
results from anything other than any Indemnified Party's gross negligence or
willful misconduct. Without limiting the generality of the foregoing, each
Seller agrees to hold any Indemnified Party harmless from and indemnify such
Indemnified Party against all Costs with respect to all Purchased Loans relating
to or arising out of any violation or alleged violation of any environmental
law, rule or regulation or any consumer credit laws, including without
limitation laws with respect to unfair or deceptive lending practices and
Predatory Lending Practices, the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than
such Indemnified Party's gross negligence or willful misconduct.

            (b) In any suit, proceeding or action brought by an Indemnified
Party in connection with any Purchased Loan for any sum owing thereunder, or to
enforce any provisions of any Purchased Loan, each Seller will save, indemnify
and hold such Indemnified Party harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by any Seller of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such account debtor or obligor or its successors from any Seller. Each
Seller also agrees to reimburse an Indemnified Party as and when billed by such
Indemnified Party for all such Indemnified Party's costs and expenses incurred
in connection with the enforcement or the preservation of such Indemnified
Party's rights under this Repurchase Agreement, any other Repurchase Document or
any transaction contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel. Each Seller hereby
acknowledges that the obligations of such Seller hereunder are recourse
obligations of such Seller.

            (c) The Sellers, jointly and severally, agree to pay as and when
billed by the Agent all of the reasonable out-of-pocket costs and expenses
incurred by the Agent and the Buyers in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Repurchase Agreement, any other Repurchase Document or any other documents
prepared in connection herewith or therewith. The Sellers, jointly and
severally, agree to pay as and when billed by the Agent all of such
out-of-pocket costs and expenses incurred in connection with the consummation
and administration of the transactions contemplated hereby and thereby including
without limitation (i) all the reasonable fees, disbursements and expenses of
counsel to the Agent and the Buyers and (ii) all the due diligence, inspection,
testing and review costs and expenses incurred by the Agent and the Buyers with
respect to the Purchased Items under this Repurchase Agreement, including, but
not limited to, those costs and expenses incurred by the Agent and the Buyers
pursuant to Sections 11.03(a), 11.15 and 11.16 hereof; provided, however, that
in no event shall the Sellers be required to reimburse the Agent or the Buyers
for due diligence costs and expenses pursuant to Section 11.16 in excess of
$25,000 for any calendar year.

            11.04. Amendments. Except as otherwise expressly provided in this
Repurchase Agreement, any provision of this Repurchase Agreement may be modified
or supplemented only by an instrument in writing signed by the Sellers, the
Buyers and the Agent and any provision of this Repurchase Agreement may be
waived by the Agent.

                                      -57-
<PAGE>

            11.05. Assignments and Participations. (a) No Seller may assign or
delegate any of its rights or obligations under this Repurchase Agreement
without the express written consent of the Agent and any assignment or
delegation that is attempted in contravention of this provision shall be null
and void, ab initio. The Buyer may assign and delegate to one or more Persons
all or a portion of its rights and obligations under this Repurchase Agreement;
provided, however, that the parties to each such assignment shall execute and
deliver an Assignment and Acceptance substantially in the form of Exhibit C,
with appropriate completions (an "Assignment and Acceptance).

            (b) Upon such execution and delivery, from and after the effective
date specified in such Assignment and Acceptance, (i) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned and delegated to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Buyer hereunder, and (ii) the
Buyer assignor thereunder shall, to the extent that any rights and obligations
hereunder have been assigned and delegated by it, and accepted and assumed by
the assignee pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Repurchase Agreement.

            (c) Any Buyer may sell participations to one or more Persons in or
to all or a portion of its rights and obligations under this Repurchase
Agreement; provided, however, that (i) such Buyer's obligations under this
Repurchase Agreement shall remain unchanged, (ii) such Buyer shall remain solely
responsible to the other parties hereto for the performance of such obligations,
and (iii) the Sellers shall continue to deal solely and directly with the Agent
in connection with such Buyer's rights and obligations under and in respect of
this Repurchase Agreement and the other Repurchase Documents. Notwithstanding
the terms of Section 3.03, each participant of a Buyer shall be entitled to the
additional compensation and other rights and protections afforded to Buyers
under Section 3.03 to the same extent as such Buyer would have been entitled to
receive them with respect to the participation sold to such participant.

            (d) Any Buyer may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.05, disclose to the assignee or participant or proposed assignee or
participant, as the case may be, any information relating to any Seller or any
of its Subsidiaries or to any aspect of the Transactions that has been furnished
to such Buyer by or on behalf of such Seller or any of its Subsidiaries;
provided, that any participant shall agree to abide by the confidentiality
provisions set forth in Section 11.20 hereof.

            (e) Any Buyer may at any time create a security interest in all or
any portion of its rights under this Repurchase Agreement (including, without
limitation, the Repurchase Obligations owing to it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank. No such assignment shall release the assigning Buyer from its obligations
hereunder.

            (f) Without limitation of the foregoing, upon the occurrence and
during the continuance of an Event of Default, any Buyer may assign all or any
portion of its rights and obligations hereunder to any Person, provided that
upon the effective date of such assignment such Person shall become a party
hereto and a Buyer hereunder and shall be (i) entitled to all the

                                      -58-
<PAGE>

rights, benefits and privileges accorded Buyer under the Repurchase Documents,
and (ii) subject to all the duties and obligations of a Buyer under the
Repurchase Documents.

            11.06. Successors and Assigns. This Repurchase Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

            11.07. Survival. The obligations of the Sellers under Sections 3.03
and 11.03 hereof shall survive the payment of all Repurchase Obligations and the
termination of this Repurchase Agreement. In addition, each representation and
warranty made or deemed to be made by a request for a Transaction, herein or
pursuant hereto shall survive the making of such representation and warranty,
and the Buyers shall not be deemed to have waived, by reason of entering into of
any Transaction, any Default that may arise because any such representation or
warranty shall have proved to be false or misleading, notwithstanding that the
Buyers may have had notice or knowledge or reason to believe that such
representation or warranty was false or misleading at the time such Transaction
was entered into.

            11.08. Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Repurchase Agreement.

            11.09. Counterparts. This Repurchase Agreement may be executed by
each of the parties hereto on any number of separate counterparts, each of which
shall be an original and all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Repurchase
Agreement by signing any such counterpart. Delivery of an executed counterpart
of a signature page of this Repurchase Agreement in Portable Document Format
(PDF) or by facsimile transmission shall be effective as delivery of a manually
executed original counterpart of this Repurchase Agreement.

            11.10. Repurchase Agreement Constitutes Security Agreement;
Governing Law. This Repurchase Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York and shall
constitute a security agreement within the meaning of the Uniform Commercial
Code.

            11.11. Submission To Jurisdiction; Waivers. Each Seller hereby
irrevocably and unconditionally:

            (A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS REPURCHASE AGREEMENT AND THE OTHER REPURCHASE
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

            (B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW,

                                      -59-
<PAGE>

WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

            (C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET
FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE AGENT
SHALL HAVE BEEN NOTIFIED; AND

            (D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO SUE IN ANY OTHER JURISDICTION.

            11.12. WAIVER OF JURY TRIAL . EACH OF THE SELLERS, THE AGENT AND THE
BUYERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS REPURCHASE AGREEMENT, ANY OTHER REPURCHASE DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

            11.13. Acknowledgments. Each Seller hereby acknowledges that:

            (a) it has been advised by counsel in the negotiation, execution and
delivery of this Repurchase Agreement and the other Repurchase Documents;

            (b) neither the Agent nor any Buyer has a fiduciary relationship to
any Seller, and the relationship between each Seller and each Buyer is solely
that of debtor and creditor; and

            (c) no joint venture exists between any Buyer and any Seller.

            11.14. Hypothecation or Pledge of Purchased Loans. Each Buyer shall
have free and unrestricted use of all Purchased Items and nothing in this
Repurchase Agreement shall preclude the Buyers from engaging in repurchase
transactions with the Purchased Items or otherwise pledging, repledging,
transferring, hypothecating, or rehypothecating the Purchased Items, on terms,
and subject to conditions, within the Buyer's absolute discretion. Nothing
contained in this Repurchase Agreement shall obligate the Agent or the Buyers to
segregate any Purchased Items delivered to the Agent or the Buyers by the
Sellers. Notwithstanding the foregoing, no such pledge, repledge, transfer,
hypothecation or rehypothecation shall impair the Seller's rights with respect
to the Purchased Items hereunder.

            11.15. Servicing.

            (a) Each Seller covenants to maintain or cause to be maintained the
servicing of the Purchased Loans in conformity with Accepted Servicing Practices
and in a manner at least

                                      -60-
<PAGE>

equal in quality to the servicing such Servicer provides for mortgage loans
which it owns. In the event that the preceding language is interpreted as
constituting one or more servicing contracts, the Agent may terminate each such
servicing contract at any time and at no cost or expense to the Agent (or the
Buyer). Each Seller acknowledges that neither the Buyers nor the Agent shall
have any duties and shall not assume any obligations of the related Seller or
the Servicer with respect to servicing the Purchased Loans, including without
limitation, duties owed to the Servicer, payment of any reimbursement or
indemnification, or payment of any servicing fees or any other fees due the
Servicer.

            (b) If any Purchased Loans are serviced by a Seller, such Seller
hereby (i) acknowledges that the Purchased Loans are being sold to the Buyers
hereunder on a servicing released basis, (ii) agrees that the Agent is the
collateral assignee of all servicing records, including but not limited to any
and all servicing agreements, files, documents, records, data bases, computer
files, copies of computer files, proof of insurance coverage, insurance
policies, appraisals, other closing documentation, payment history records, and
any other records relating to or evidencing the servicing of such Purchased
Loans (the "Servicing Records"), and (iii) such Seller grants the Agent, for the
ratable benefit of the Buyers, a security interest in all servicing fees and
rights relating to such Purchased Loans and all Servicing Records to secure the
obligation of each Seller or its designee to service in conformity with this
Section and any other obligation of the Sellers to the Buyers. The Sellers
covenant to safeguard such Servicing Records and to deliver them promptly to the
Agent or its designee (including the Custodian) at the Agent's request.

            (c) The applicable Seller shall provide (i) a copy of each
applicable servicing agreement to the Agent, which shall be in form and
substance reasonably acceptable to the Agent (each, a "Servicing Agreement"),
(ii) a Servicer Notice and Agreement substantially in the form of Exhibit G
hereto (a "Servicer Notice") and (iii) hereby irrevocably assigns to the Agent,
for the ratable benefit of the Buyers, and the Agent's successors and assigns,
all right, title and interest of the Sellers in, to and under, and the benefits
of, any Servicing Agreement with respect to the applicable Purchased Loans. Any
successor or assignee of a Servicer shall be approved in writing by the Agent
and shall acknowledge and agree to a Servicer Notice and Agreement prior to such
successor's assumption of servicing obligations with respect to such Purchased
Loans.

            (d) If the Servicer of any Purchased Loans is a Seller or the
Servicer is an Affiliate of a Seller, such Seller shall provide to the Agent a
letter from the Seller or the Servicer, as the case may be, to the effect that
upon the occurrence of an Event of Default, the Agent may terminate any
applicable Servicing Agreement and in any event transfer servicing to the
Agent's designee, at no cost or expense to the Agent, it being agreed that the
Sellers will pay any and all fees required to terminate such Servicing Agreement
and to effectuate the transfer of servicing to the designee of the Agent.

            (e) After the Purchase Date for any Purchased Loan, until such
Purchased Loan is repurchased by the Seller and possession of such Purchased
Loan is relinquished by the Custodian, the Sellers will have no right to modify
or alter the terms of such Purchased Loan and the Sellers will have no
obligation or right to repossess such Purchased Loan or substitute another
Purchased Loan, except as provided in the Custodial Agreement. Each Seller

                                      -61-
<PAGE>

acknowledges that if the terms of any Purchased Loan are modified or otherwise
altered, the Agent may reduce the Recognized Value of such Purchased Loan as a
result thereof.

            (f) In the event that a Seller or Affiliate of a Seller is servicing
any Purchased Loans, such Seller shall permit the Agent from time to time to
inspect such Seller's or its Affiliate's servicing facilities, as the case may
be, for the purpose of satisfying the Agent that such Seller or its Affiliate,
as the case may be, has the ability to service the Purchased Loans as provided
in this Repurchase Agreement.

            11.16. Periodic Due Diligence Review. Each Seller acknowledges that
the Agent has the right to perform continuing due diligence reviews with respect
to the Purchased Loans and the manner in which they were originated, for
purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, each Seller agrees that, unless a
Default has occurred (in which case no notice is required) upon reasonable (but
no less than one (1) Business Day's) prior notice to the Sellers, the Agent or
its authorized representatives will be permitted during normal business hours
(so long as no Default shall have occurred, at a time mutually acceptable to the
parties) to examine, inspect, and make copies and extracts of, the Mortgage
Files and any and all documents, records, agreements, instruments or information
relating to the Purchased Loans in the possession or under the control of any
Seller and/or, pursuant to the Custodial Agreement, the Custodian. The Sellers
also shall make available to the Agent a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Mortgage Files and
the Purchased Loans. Without limiting the generality of the foregoing, each
Seller acknowledges that the Agent may enter into Transactions on behalf of the
Buyers hereunder based solely upon the information provided by the Sellers to
the Agent in the Mortgage Loan Data File and the representations, warranties and
covenants contained herein, and that the Agent, at its option, has the right at
any time to conduct a partial or complete due diligence review on some or all of
the Purchased Loans relating to such Transactions, including without limitation
ordering new credit reports and new appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to originate such
Purchased Loan. The Agent may underwrite such Purchased Loans itself or engage a
mutually agreed upon third party underwriter to perform such underwriting. Each
Seller agrees to cooperate with the Agent and any third party underwriter in
connection with such underwriting, including, but not limited to, providing the
Agent and any third party underwriter with access to any and all documents,
records, agreements, instruments or information relating to such Purchased Loans
in the possession, or under the control, of any Seller (including, without
limitation, copies of any diligence reports or credit analyses conducted by, for
or on behalf of any Seller). Subject to Section 11.03(c), each Seller further
agrees that the Sellers shall reimburse the Agent for any and all reasonable
out-of-pocket costs and expenses incurred by the Agent in connection with the
Agent's activities pursuant to this Section 11.16.

            11.17. Set-Off. In addition to any rights and remedies of the Buyers
provided by this Repurchase Agreement and by law, each Buyer shall have the
right, without prior notice to any Seller, any such notice being expressly
waived by each Seller to the extent permitted by applicable law, upon any amount
becoming due and payable by any Seller hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case

                                      -62-
<PAGE>

whether direct or indirect, absolute or contingent, matured or unmatured, at any
time held or owing by any Buyer or any Affiliate thereof to or for the credit or
the account of the Sellers. Each Buyer agrees promptly to notify the Sellers
after any such set-off and application made by such Buyer; provided that the
failure to give such notice shall not affect the validity of such set-off and
application.

            11.18. Joint and Several Liability. Each Seller hereby acknowledges
and agrees that such Seller shall be jointly and severally liable to the Agent
and the Buyers to the maximum extent permitted by applicable law for all
representations, warranties, covenants, obligations and indemnities of each
Seller hereunder.

            11.19. Intent.

            (a) The parties intend and acknowledge that each Transaction is a
"repurchase agreement" and a "master netting agreement" as each such term is
defined in Section 101 of Title 11 of the United States Code, as amended (except
insofar as the type of Eligible Loans subject to such Transaction or the term of
such Transaction would render such definition inapplicable), and a "securities
contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended (except insofar as the type of assets subject to such
Transaction would render such definition inapplicable).

            (b) It is understood that any party's right to liquidate Purchased
Loans delivered to it in connection with any Transaction entered into hereunder,
or to exercise any other remedies pursuant to the terms of this Repurchase
Agreement, is a contractual right to liquidate, terminate or accelerate such
Transaction as described in Sections 555, 559 and 561 of Title 11 of the United
States Code, as amended.

            (c) The parties agree and acknowledge that, if a party hereto is an
"insured depository institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a
"qualified financial contract," as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of assets
subject to such Transaction would render such definition inapplicable).

            (d) It is understood that this agreement constitutes a "netting
contract" as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a "covered
contractual payment entitlement" or "covered contractual payment obligation",
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a "financial institution" as that term is defined in
FDICIA).

            11.20. Treatment of Certain Information. The parties hereto hereby
acknowledge and agree that all information provided by one or the other
regarding the terms set forth in any of the Repurchase Documents or the
Transactions contemplated thereby (the "Confidential Information") shall be kept
confidential and shall not be divulged to any Person without the prior written
consent of the other parties hereto, except to the extent that (i) it is
necessary to do so in working with legal counsel, auditors, taxing authorities
or other governmental agencies or

                                      -63-
<PAGE>

regulatory bodies or in order to comply with any applicable law, regulation or
court order, (ii) any of the Confidential Information is in the public domain,
other than due to a breach of this provision or (iii) the Buyers or the Agent
may determine in good faith to be necessary to disclose in connection with the
exercise of any of its rights or remedies; provided, that in no event shall any
Customer Information be disclosed or used except in compliance with the Privacy
Requirements. Notwithstanding anything to the contrary contained herein or in
any other Repurchase Document, all Persons may disclose to any and all Persons,
without limitation of any kind, the federal income tax treatment of the
Transactions and other transactions contemplated by this Repurchase Agreement or
any other Repurchase Document, any fact relevant to understanding such federal
tax treatment and all materials of any kind (including opinions or other tax
analyses) relating to such federal income tax treatment.

            11.21. Substitution. This Repurchase Agreement substitutes and
replaces in its entirety the Existing Loan Agreement. All Loans, as defined in
and outstanding under the Existing Loan Agreement shall, as of the Effective
Date hereof, be deemed, mutatis mutandis, to be Transactions outstanding under
this Repurchase Agreement and upon the Effective Date hereof, without limiting
the scope of any other conforming changes necessary to be made, (i) the
aggregate unpaid principal amount of all such Loans shall be deemed to be
Purchase Price outstanding hereunder, (ii) all amounts of accrued and unpaid
interest shall be deemed to be accrued and unpaid Price Differential hereunder,
(iii) all other amounts owing by the Sellers who are borrowers under the
Existing Loan Agreement shall be included in the aggregate Repurchase Price
outstanding hereunder and (iv) all Collateral (as defined in and pledged under
the Existing Loan Agreement) shall be deemed to be Purchased Items hereunder.

            11.22. Disclosure Relating to Certain Federal Protections. The
parties acknowledge that they have been advised that:

            (a) in the case of Transactions in which one of the parties is a
broker or dealer registered with the Securities and Exchange Commission ("SEC")
under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the
Securities Investor Protection Corporation has taken the position that the
provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not
protect the other party with respect to any Transaction hereunder;

            (b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer registered with
the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to
the other party with respect to any Transaction hereunder; and

            (c) in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured by the
Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation or the National Credit Union Share Insurance Fund, as applicable.

                   [SIGNATURES COMMENCE ON THE FOLLOWING PAGE]

                                      -64-
<PAGE>

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

                                       SELLERS
                                       -------

                                       AMERICAN HOME MORTGAGE CORP.

                                       By: /s/ Alan B. Horn
                                          ------------------
                                           Name: Alan B. Horn
                                           Title: Executive Vice President,
                                           General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York 11747
                                       Attention: Alan B. Horn, General Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

                                       AMERICAN HOME MORTGAGE
                                          ACCEPTANCE, INC.

                                       By:  /s/ Alan B. Horn
                                          ------------------
                                          Name: Alan B. Horn
                                          Title: Executive Vice President,
                                          General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York 11747
                                       Attention: Alan B. Horn, General Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

<PAGE>

                                       AMERICAN HOME MORTGAGE
                                          INVESTMENT CORP.

                                       By:  /s/ Alan B. Horn
                                          -----------------------
                                          Name: Alan B. Horn
                                          Title: Executive Vice President,
                                          General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York 11747
                                       Attention: Alan B. Horn, General Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

                                       AMERICAN HOME MORTGAGE
                                          HOLDINGS, INC.

                                       By:  /s/ Alan B. Horn
                                          ----------------------
                                          Name: Alan B. Horn
                                          Title: Executive Vice President,
                                          General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York 11747
                                       Attention: Alan B. Horn, General Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

<PAGE>

                                       AMERICAN HOME MORTGAGE
                                          SERVICING, INC.

                                       By:  /s/ Alan B. Horn
                                          ------------------
                                          Name: Alan B. Horn
                                          Title: Executive Vice President,
                                          General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York 11747
                                       Attention: Alan B. Horn, General Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

                                       With a copy to:
                                       --------------
                                       4600 Regent Blvd.
                                       Suite 200
                                       Irving, Texas 75063
                                       Attention: David Friedman

<PAGE>

                                       MORGAN STANLEY BANK,
                                         as a Buyer and as the Agent

                                       By: /s/ Andrew B. Neuberger
                                          ------------------------
                                           Name: Andrew B. Neuberger
                                           Title: Vice President

                                       Address for Notices:
                                       --------------------
                                       2500 Lake Park Boulevard
                                       West Valley City, Utah 84120
                                       Attention: Richard Felix

                                       with a copy to:
                                       --------------
                                       1221 Avenue of the Americas
                                       27th Floor
                                       New York, New York 10020
                                       Attention:  Paul Najarian
                                       Facsimile No.:  212-507-4780
                                       Telephone No.:  212-762-6397

<PAGE>

                                       MORGAN STANLEY MORTGAGE
                                         CAPITAL INC., as a Buyer

                                       By: /s/ Andrew B. Neuberger
                                          ------------------------
                                       Name: Andrew B. Neuberger
                                       Title: Vice President

                                       Address for Notices:
                                       -------------------
                                       1221 Avenue of the Americas
                                       27th Floor
                                       New York, New York 10020
                                       Attention:  Paul Najarian
                                       Facsimile No.: 212-507-4780
                                       Telephone No.: 212-762-6397

<PAGE>

                                                                      Schedule 1

                REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS

                   Part I. Eligible Residential Mortgage Loans

            As to each residential Eligible Mortgage Loan included in the Margin
Base on a Purchase Date (and the related Mortgage, Mortgage Note, Assignment of
Mortgage and Mortgaged Property), each Seller shall be deemed to make the
following representations and warranties to the Agent and each Buyer as of the
related Purchase Date and as of each date Recognized Value is determined or such
other date as is specified herein (certain defined terms used herein and not
otherwise defined in the Repurchase Agreement appearing in Part II to this
Schedule 1):

            (a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule with respect to the Mortgage Loan is complete, true and
correct in all material respects.

            (b) Payments Current. All payments required to be made up to the
Purchase Date for the Mortgage Loan under the terms of the Mortgage Note have
been made and credited. No payment required under the Mortgage Loan is
delinquent nor has any payment under the Mortgage Loan been delinquent at any
time since the origination of the Mortgage Loan. The first Monthly Payment shall
be made, or shall have been made, with respect to the Mortgage Loan on its Due
Date or within the grace period, all in accordance with the terms of the related
Mortgage Note.

            (c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage securing the Mortgage Loan, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Neither any Seller nor the Qualified
Originator from which any Seller acquired the Mortgage Loan has advanced funds,
or induced, solicited or knowingly received any advance of funds by a party
other than the Mortgagor, directly or indirectly, for the payment of any amount
required under the Mortgage Loan, except for interest accruing from the date of
the Mortgage Note or date of disbursement of the proceeds of the Mortgage Loan,
whichever is earlier, to the day which precedes by one (1) month the Due Date of
the first installment of principal and/or interest thereunder.

            (d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination; except by a written instrument which has been
recorded, if necessary to protect the interests of the Buyers, and which has
been delivered to the Custodian and the terms of which are reflected in the
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required, and
its terms are reflected on the Mortgage Loan Schedule. No Mortgagor in respect
of the Mortgage Loan has been released, in whole or in part, except in
connection with an assumption agreement approved

                                      I-1
<PAGE>

by the title insurer, to the extent required by such policy, and which
assumption agreement is part of the Mortgage File delivered to the Custodian and
the terms of which are reflected in the Mortgage Loan Schedule.

            (e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor in respect of the Mortgage Loan was a debtor
in any state or Federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was originated. No Seller has knowledge nor has it received any
notice that any Mortgagor in respect of the Mortgage Loan is a debtor in any
state or federal bankruptcy or insolvency proceeding.

            (f) Hazard Insurance. The Mortgaged Property is insured by a fire
and extended perils insurance policy, issued by a Qualified Insurer, and such
other hazards as are customary in the area where the Mortgaged Property is
located, and to the extent required by the Sellers as of the date of origination
consistent with the Underwriting Guidelines, against earthquake and other risks
insured against by Persons operating like properties in the locality of the
Mortgaged Property, in an amount not less than the greatest of (i) 100% of the
replacement cost of all improvements to the Mortgaged Property, (ii) the
outstanding principal balance of the Mortgage Loan, or (iii) the amount
necessary to avoid the operation of any co-insurance provisions with respect to
the Mortgaged Property, and consistent with the amount that would have been
required as of the date of origination in accordance with the Underwriting
Guidelines. If any portion of the Mortgaged Property is in an area identified by
any federal Governmental Authority as having special flood hazards, and flood
insurance is available, a flood insurance policy meeting the current guidelines
of the Federal Emergency Management Agency is in effect with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the least of (1) the outstanding principal balance of the Mortgage Loan, (2) the
full insurable value of the Mortgaged Property, and (3) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended
by the Flood Disaster Protection Act of 1974. All such insurance policies
(collectively, the "hazard insurance policy") contain a standard mortgagee
clause naming the relevant Seller, its successors and assigns (including without
limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not
be reduced, terminated or canceled without thirty (30) calendar days' prior
written notice to the mortgagee. No such notice has been sent or requested by
any Seller. All premiums on such insurance policy have been paid. The related
Mortgage obligates the Mortgagor to maintain all such insurance and, at such
Mortgagor's failure to do so, authorizes the mortgagee to maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement therefor
from such Mortgagor. Where required by state law or regulation, the Mortgagor
has been given an opportunity to choose the carrier of the required hazard
insurance, provided the policy is not a "master" or "blanket" hazard insurance
policy covering a condominium, or any hazard insurance policy covering the
common facilities of a planned unit development. The hazard insurance policy is
the valid and binding obligation of the insurer and is in full force and effect.
No Seller has engaged in, and has no knowledge of the Mortgagor's having engaged
in, any act or omission which would impair the coverage of any such policy, the
benefits of the endorsement provided for herein, or the validity and binding
effect of either including, without limitation, no unlawful

                                      I-2
<PAGE>

fee, commission, kickback or other unlawful compensation or value of any kind
has been or will be received, retained or realized by any attorney, firm or
other Person, and no such unlawful items have been received, retained or
realized by any Seller.

            (g) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury, laws with
respect to unfair and deceptive lending practices and Predatory Lending
Practices, truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with, the consummation of the transactions
contemplated hereby will not involve the violation of any such laws or
regulations, and each Seller shall maintain or shall cause its agent to maintain
in its possession, available for the inspection of the Agent, and shall deliver
to the Agent, upon demand, evidence of compliance with all such requirements.

            (h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated (except to the senior mortgage in the case of
a second lien loan) or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would effect any such release,
cancellation, subordination or rescission. No Seller has waived the performance
by the Mortgagor of any action, if the Mortgagor's failure to perform such
action would cause the Mortgage Loan to be in default, nor has any Seller waived
any default resulting from any action or inaction by the Mortgagor.

            (i) Location and Type of Mortgaged Property. The Mortgaged Property
is located in an Acceptable State as defined in the Mortgage Loan Schedule and
consists of a single parcel of real property with a detached single family
residence erected thereon, a Cooperative Unit in a Cooperative Project, or a
two- to four-family dwelling, or an individual condominium unit in a low-rise or
high-rise condominium project, or an individual unit in a planned unit
development or a de minimis planned unit development, provided, however, that
any condominium unit or planned unit development shall conform with the
applicable Fannie Mae and Freddie Mac requirements regarding such dwellings and
that no residence or dwelling is a mobile home or a manufactured dwelling. No
portion of the Mortgaged Property is used for commercial purposes.

            (j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected first or second lien on the real property included in
the Mortgaged Property (which lien, in the case of each Mortgage which is not
related to a HELOC Loan or a Second Lien Loan, is a first priority lien and (i)
in the case of each Mortgage which is related to a HELOC Loan, is a first
priority or second priority lien and (ii) in the case of each Second Lien Loan,
is a second priority lien), including all buildings on the Mortgaged Property
and all installations and mechanical, electrical, plumbing, heating and air
conditioning systems located in or annexed to such buildings, and all additions,
alterations and replacements made at any time with respect to the foregoing. The
lien of the Mortgage is subject only to:

            (i) the lien of current real property taxes and assessments not yet
      due and payable;

                                      I-3
<PAGE>

            (ii) covenants, conditions and restrictions, rights of way,
      easements and other matters of the public record as of the date of
      recording acceptable to prudent mortgage lending institutions generally
      and specifically referred to in the lender's title insurance policy
      delivered to the originator of the Mortgage Loan and (a) referred to or
      otherwise considered in the appraisal made for the originator of the
      Mortgage Loan or (b) which do not adversely affect the Appraised Value of
      the Mortgaged Property set forth in such appraisal; and

            (iii) in the case where the Mortgage Loan is secured by a second
      mortgage lien on the Mortgaged Property (and represented on the Mortgage
      Loan Schedule as such), the lien of the Mortgage that is the first lien on
      such Mortgaged Property;

            (iv) only in the case of a HELOC Loan secured by a second lien
      mortgage loan, a first lien mortgage loan on the related fee in real
      property; and

            (v) other matters to which like properties are commonly subject
      which do not materially interfere with the benefits of the security
      intended to be provided by the Mortgage or the use, enjoyment, value or
      marketability of the related Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable first or second lien and first or second priority
security interest on the property described therein and such Seller has full
right to sell and assign the same to the Buyer. Except with respect to Second
Lien Loans and HELOC Loans secured by a second lien mortgage, the Mortgaged
Property was not, as of the date of origination of the Mortgage Loan, subject to
a mortgage, deed of trust, deed to secure debt or other security interest
creating a lien subordinate to the lien of the Mortgage.

            (k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable
in accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any Person, including,
without limitation, the Mortgagor, any appraiser, any builder or developer, or
any other party involved in the origination of the Mortgage Loan. Each Seller
has reviewed all of the documents constituting the Servicing File and has made
such inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein.

            (l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and, except in
the case of HELOC Mortgage Loans, there is no further requirement for future
advances thereunder, and any and all requirements as to completion of any
on-site or off-site improvement and as to disbursements of

                                      I-4
<PAGE>

any escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage.

            (m) Ownership. Upon entering into the related Transaction, such
Seller, or MERS as nominee for the Seller, is the sole owner and holder of the
Mortgage Loan. The related Mortgage Note and Mortgage are not assigned or
pledged, and such Seller has good, indefeasible and marketable title thereto,
and has full right to transfer, pledge and assign the Mortgage Loan to the
Agent, for the ratable benefit of the Buyers free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to assign, transfer and
pledge each Mortgage Loan pursuant to this Repurchase Agreement and following
the pledge of each Mortgage Loan, the Agent will hold such Mortgage Loan free
and clear of any encumbrance, equity, participation interest, lien, pledge,
charge, claim or security interest except any such security interest created
pursuant to the terms of this Repurchase Agreement.

            (n) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) either (A) organized
under the laws of such state, (B) qualified to do business in such state, (C) a
federal savings and loan association, a savings bank or a national bank having a
principal office in such state, or (D) not doing business in such state.

            (o) LTV. No Mortgage Loan (other than an Alternate `A' Mortgage
Loan, Agency Eligible Mortgage Loan, California Program Mortgage Loan, Conduit
Eligible Mortgage Loan, Interest-Only Mortgage Loan or Jumbo Mortgage Loan) has
an LTV greater than 80%. No Alternate `A' Mortgage Loan has an LTV greater than
90%. No Interest-Only Mortgage Loan has an LTV greater than 95%. No Agency
Eligible Mortgage Loan (other than California Program Mortgage Loans) has an LTV
greater than 97%, no California Program Mortgage Loan has an LTV greater than
100% and no Conduit Eligible Mortgage Loan has an LTV greater than 90%;
provided, that with respect to each Agency Eligible Mortgage Loan and each
California Program Mortgage Loan with an LTV greater than 80% the excess over
80% is and will be insured as to payment defaults by a PMI Policy until the LTV
of such Mortgage Loan is reduced to 80%. With respect to each Jumbo Mortgage
Loan with an LTV greater than 80%, the excess over 80% is and will be insured as
to payment defaults by a PMI Policy until the LTV of such Mortgage Loan is
reduced to 80%. Without limitation of the foregoing, no Mortgage Loan has an LTV
or CLTV greater than 100%.

            (p) Title Insurance. Other than each Cooperative Loan and HELOC
Mortgage Loan secured by a second lien, the Mortgage Loan is covered by either
(i) an attorney's opinion of title and abstract of title, the form and substance
of which is acceptable to prudent mortgage lending institutions making mortgage
loans in the area wherein the Mortgaged Property is located or (ii) an ALTA
lender's title insurance policy or other generally acceptable form of policy or
insurance acceptable to Fannie Mae or Freddie Mac and each such title insurance
policy is issued by a title insurer acceptable to Fannie Mae or Freddie Mac and
qualified to do

                                      I-5
<PAGE>

business in the jurisdiction where the Mortgaged Property is located, insuring
the relevant Seller, its successors and assigns, as to the first priority lien
of the Mortgage in the original principal amount of the Mortgage Loan, subject
only to the exceptions contained in clauses (1), (2) and (3) of paragraph (j) of
this Part I of Schedule 1, and in the case of adjustable rate Mortgage Loans,
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage providing for adjustment to the
Mortgage Interest Rate and Monthly Payment. Where required by state law or
regulation, the Mortgagor has been given the opportunity to choose the carrier
of the required mortgage title insurance. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress and against
encroachments by or upon the Mortgaged Property or any interest therein. The
title policy does not contain any special exceptions (other than the standard
exclusions) for zoning and uses and has been marked to delete the standard
survey exception or to replace the standard survey exception with a specific
survey reading. The relevant Seller, its successors and assigns, are the sole
insureds of such lender's title insurance policy, and such lender's title
insurance policy is valid and remains in full force and effect and will be in
force and effect while the Mortgage Loan is a Purchased Item subject to this
Repurchase Agreement. No claims have been made under such lender's title
insurance policy, and no prior holder or servicer of the related Mortgage,
including any Seller, has done, by act or omission, anything which would impair
the coverage of such lender's title insurance policy, including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by any Seller.

            (q) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event has
occurred 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 neither such Seller nor its predecessors have waived any
default, breach, violation or event of acceleration. With respect to each
Mortgage Loan secured by a second lien on the Mortgaged Property, (i) the prior
mortgage is in full force and effect, (ii) there is no default, breach,
violation or event of acceleration existing under the prior mortgage or the
related mortgage note, (iii) 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 thereunder, and (iv) either
(A) the prior mortgage contains a provision that allows or (B) applicable law
requires, the mortgagee under the Second Lien Loan to receive notice of, and
affords such mortgagee an opportunity to cure, any default by payment in full or
otherwise under the prior mortgage.

            (r) No Mechanics' Liens. There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
Mortgaged Property which are or may be liens prior to, or equal or coordinate
with, the lien of the Mortgage.

            (s) Location of Improvements; No Encroachments. With respect to each
Mortgage Loan other than a Cooperative Loan, all improvements which were
considered in determining the Appraised Value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of the Mortgaged
Property, and no improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of

                                      I-6
<PAGE>

the Mortgaged Property is in violation of any applicable zoning and building
law, ordinance or regulation.

            (t) Origination; Payment Terms. The Mortgage Loan was originated by
or in conjunction with a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing Act,
a savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or similar banking institution which is supervised and
examined by a federal or state authority. Except with respect to Interest-Only
Mortgage Loans, principal payments on the Mortgage Loan commenced no more than
sixty (60) days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate is adjusted, with respect to adjustable rate Mortgage
Loans, on each Interest Rate Adjustment Date to equal the Index plus the Gross
Margin (rounded up or down to the nearest 0.125%), subject to the Mortgage
Interest Rate Cap. The Mortgage Note is payable on the first day of each month
in equal monthly installments of principal and interest, which installments of
interest, with respect to adjustable rate Mortgage Loans, are subject to change
due to the adjustments to the Mortgage Interest Rate on each Interest Rate
Adjustment Date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated maturity date, over an original
term of not more than 30 years from commencement of amortization. The due date
of the first payment under the Mortgage Note is no more than sixty (60) days
from the date of the Mortgage Note.

            (u) Customary Provisions. The Mortgage Note has a stated maturity.
Other than a Cooperative Loan, the Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits of
the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by judicial
foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on,
or trustee's sale of, the Mortgaged Property pursuant to the proper procedures,
the holder of the Mortgage Loan will be able to deliver good and merchantable
title to the Mortgaged Property. There is no homestead or other exemption (other
than under the Servicemembers Civil Relief Act) available to a Mortgagor which
would interfere with the right to sell the Mortgaged Property at a trustee's
sale or the right to foreclose the Mortgage.

            (v) Conformance with Underwriting Guidelines and Agency Standards.
The Mortgage Loan was underwritten in accordance with the Underwriting
Guidelines. The Mortgage Note and Mortgage are on Fannie Mae or Freddie Mac
uniform instruments or are on forms acceptable to Fannie Mae or Freddie Mac, and
such Seller has not made any representations to a Mortgagor that are
inconsistent with the mortgage instruments used (other than exceptions
acceptable to the Agent, in its sole discretion, in the case of Jumbo Mortgage
Loans).

            (w) Occupancy of the Mortgaged Property or Cooperative Unit. As of
the Purchase Date the Mortgaged Property or Cooperative Unit is lawfully
occupied under applicable law. All inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate authorities. No

                                      I-7
<PAGE>

Seller has received notification from any Governmental Authority that the
Mortgaged Property or Cooperative Unit is in material non-compliance with such
laws or regulations, is being used, operated or occupied unlawfully or has
failed to have or obtain such inspection, licenses or certificates, as the case
may be. No Seller has received notice of any violation or failure to conform
with any such law, ordinance, regulation, standard, license or certificate. The
Mortgagor represented at the time of origination of the Mortgage Loan that the
Mortgagor would occupy the Mortgaged Property as the Mortgagor's primary
residence.

            (x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in clause (j) above.

            (y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Custodian or
the Buyers to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor.

            (z) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage
(or a certified copy), the Assignment of Mortgage, if required, and any other
documents required to be delivered under the Custodial Agreement for each
Mortgage Loan (other than Wet-Ink Mortgage Loans) have been delivered to the
Custodian. A Seller or its agent is in possession of a complete, true and
accurate Mortgage File in compliance with the Custodial Agreement, except for
such documents the originals of which have been delivered to the Custodian. With
respect to each Mortgage Loan for which a lost note affidavit has been delivered
to the Custodian in place of the original Mortgage note, the related Mortgage
Note is no longer in existence, and, if such Mortgage Loan is subsequently in
default, the enforcement of such Mortgage Loan or of the related Mortgage by or
on behalf of the Buyer will not be affected by the absence of the original
Mortgage Note.

            (aa) Transfer of Mortgage Loans. With respect to each Mortgage Loan
other than a Cooperative Loan, the Assignment of Mortgage is in recordable form
and is acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located. With respect to each Cooperative Loan, the UCC-3
assignment is in a form suitable for filing in the jurisdiction in which the
Mortgaged Property is located.

            (bb) Due-On-Sale. The Mortgage contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property or Cooperative Unit, as
applicable, is sold or transferred without the prior written consent of the
mortgagee thereunder.

            (cc) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Sellers, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions which may constitute a "buydown"

                                      I-8
<PAGE>

provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature.

            (dd) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the Purchase Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term.
Except in the case of HELOC Mortgage Loans secured by a second lien, the lien of
the Mortgage securing the consolidated principal amount is expressly insured as
having first or second lien priority by a title insurance policy, an endorsement
to the policy insuring the mortgagee's consolidated interest or by other title
evidence acceptable to Fannie Mae and Freddie Mac. The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan.

            (ee) Mortgaged Property Undamaged. The Mortgaged Property or
Cooperative Unit is undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty so as to adversely affect the value
of the Mortgaged Property or Cooperative Unit as security for the Mortgage Loan
or the use for which the premises were intended and each Mortgaged Property is
in good repair. There have not been any condemnation proceedings with respect to
the Mortgaged Property and no Seller has knowledge of any such proceedings.

            (ff) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination and collection practices used by the originator,
each servicer of the Mortgage Loan and each Seller with respect to the Mortgage
Loan have been in all respects in compliance with Accepted Servicing Practices,
applicable laws and regulations, and have been in all respects legal and proper.
With respect to escrow deposits and Escrow Payments, all such payments are in
the possession of, or under the control of, the relevant Seller and there exist
no deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law. An escrow of funds is not prohibited
by applicable law and (for Mortgage Loans other than Cooperative Loans) has been
established in an amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
Escrow Payments or other charges or payments due the relevant Seller have been
capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law and
the terms of the related Mortgage Note. Any interest required to be paid
pursuant to state, federal and local law has been properly paid and credited.

            (gg) Conversion to Fixed Interest Rate. With respect to adjustable
rate Mortgage Loans, the Mortgage Loan is not convertible to a fixed interest
rate Mortgage Loan.

            (hh) Other Insurance Policies. No action, inaction or event has
occurred and no state of facts exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by any Seller or by any officer, director, or employee
of any Seller or any designee of

                                      I-9
<PAGE>

any Seller or any corporation in which any Seller or any officer, director, or
employee had a financial interest at the time of placement of such insurance.

            (ii) Servicemembers Civil Relief Act. The Mortgagor has not notified
any Seller, and no Seller has knowledge, of any relief requested or allowed to
the Mortgagor under the Servicemembers Civil Relief Act of 2003 (formerly known
as the Soldiers' and Sailors' Civil Relief Act of 1940) or any similar state or
local laws.

            (jj) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property or Cooperative Unit, as applicable, signed prior to
the approval of the Mortgage Loan application by a qualified appraiser, duly
appointed by the Sellers, who had no interest, direct or indirect in the
Mortgaged Property or Cooperative Unit, as applicable, or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of Fannie Mae or Freddie Mac and Title XI of the Federal
Institutions Reform, Recovery, and Enforcement Act of 1989 as amended and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.

            (kk) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by
applicable law with respect to the making of adjustable rate mortgage loans, and
the relevant Seller maintains such statement in the Mortgage File.

            (ll) Construction or Rehabilitation of Mortgaged Property. Except
for HELOC Loans, no Mortgage Loan was made in connection with the construction
or rehabilitation of a Mortgaged Property or facilitating the trade-in or
exchange of a Mortgaged Property.

            (mm) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Purchase Date (whether or not known to any Seller on
or prior to such date) which has resulted or will result in an exclusion from,
denial of, or defense to coverage under any private mortgage insurance
(including, without limitation, any exclusions, denials or defenses which would
limit or reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of actions,
representations, errors, omissions, negligence, or fraud of any Seller, the
related Mortgagor or any party involved in the application for such coverage,
including the appraisal, plans and specifications and other exhibits or
documents submitted therewith to the insurer under such insurance policy, or for
any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay. In connection with the placement of
any such insurance, no commission fee, or other compensation has been or will be
received by the Seller or any designee of the Seller or any corporation which
the Seller or any officer, director, or employee had a financial interest at the
time of placement of such insurance.

            (nn) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage Loan, the Mortgage Property, the Mortgagor or the
Mortgagor's credit

                                      I-10
<PAGE>

standing that can reasonably be expected to cause private institutional
investors to regard the Mortgage Loan as an unacceptable investment, cause the
Mortgage Loan to become delinquent, or adversely affect the value or
marketability of the Mortgage Loan.

            (oo) Capitalization of Interest; Negative Amortization. The Mortgage
Note does not by its terms provide for the capitalization or forbearance of
interest. The Mortgage Loan does not contain any terms or provisions which would
result in Negative Amortization.

            (pp) No Equity Participation. No document relating to the Mortgage
Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Mortgage Note is not convertible to an ownership interest in the
Mortgaged Property or the Mortgagor and no Seller has financed nor does it own
directly or indirectly, any equity of any form in the Mortgaged Property or the
Mortgagor.

            (qq) [Reserved]

            (rr) No Violation of Environmental Laws. The Mortgaged Property is
free from any and all toxic or hazardous substances and there exists no
violation of any local, state or federal environmental law, rule or regulation.
There is no pending action or proceeding directly involving any Mortgaged
Property of which the Seller is aware in which compliance with any environmental
law, rule or regulation is an issue; and nothing further remains to be done to
satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property.

            (ss) Withdrawn Mortgage Loans. If the Mortgage Loan has been
released to any Seller pursuant to a Request for Release as permitted under
Section 5(a) or (b) of the Custodial Agreement, then the promissory note
relating to the Mortgage Loan was returned to the Custodian within thirty (30)
calendar days (or if such thirtieth (30th) day was not a Business Day, the next
succeeding Business Day). If the Mortgage Loan has been released to any approved
third party purchaser pursuant to a Request for Release as permitted under
Section 5(c) of the Custodial Agreement, then the promissory note relating to
the Mortgage Loan was returned to the Custodian within forty-five (45) calendar
days (or if such forty-fifth (45th) day was not a Business Day, the next
succeeding Business Day).

            (tt) Origination Date. The Origination Date is no earlier than nine
(9) months prior to the date the Mortgage Loan is first included in the Margin
Base.

            (uu) No Exception. Except with respect to documents permitted to be
delivered after the Purchase Date in connection a Wet-Ink Transaction, the
Custodian has not noted any material exceptions on an Exception Report (as
defined in the Custodial Agreement) with respect to the Mortgage Loan which
would materially adversely affect the Mortgage Loan or the security interest
granted in such Mortgage Loan by the Sellers in favor of the Agent for the
ratable benefit of the Buyers.

            (vv) Qualified Originator. The Mortgage Loan has been originated by,
and, if applicable, purchased by a Seller from, a Qualified Originator.

                                      I-11
<PAGE>

            (ww) The Mortgagor. The Mortgagor is one or more natural persons
and/or an Illinois land trust or a "living trust" and such "living trust" is in
compliance with Fannie Mae or Freddie Mac guidelines. In the event the Mortgagor
is a trust, the trustee of such trust is a natural person and is an obligor
under the Mortgage Note in his or her individual capacity.

            (xx) Mortgage Submitted for Recordation. The Mortgage either has
been or will promptly be submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.

            (yy) Homeownership and Equity Protection Act; No High Cost Loans. No
Mortgage Loan is (a) a "high cost" loan under the Home Ownership and Equity
Protection Act of 1994 as amended, or (b) a "high cost," "threshold," "covered,"
"predatory," "abusive," or similarly defined loan, including refinance loans,
under any other Applicable Law (or a similarly classified loan using different
terminology under a law imposing heightened regulatory scrutiny or additional
legal liability for residential mortgage loans having high interest rates,
points and/or fees), provided that any Mortgage Loan secured by a Mortgaged
Property in Illinois characterized as a "threshold" loan shall not be a "high
cost" loan unless it is characterized as "predatory" under applicable local law
or (c) a "High Cost Loan" or "Covered Loan" as defined in the current S&P
LEVELS(R) Glossary; the Company has implemented and conducted compliance
procedures to determine if each Mortgage Loan is "high-cost" home loan under the
Applicable Laws and performed a review of the disclosure provided to the related
Mortgagor in accordance with such laws and the related Mortgage Note in order to
determine that such Mortgage Loan, if subject to any such law, does not violate
any such law. Any breach of this representation shall be deemed to materially
and adversely affect the interests of the owner of the Mortgage Loan and shall
require a repurchase of the affected Mortgage.

            (zz) Cooperative Loans. With respect to each Cooperative Loan, the
Seller represents and warrants:

            (i) The Cooperative Loan is secured by a valid, subsisting,
      enforceable and perfected first lien on the Cooperative Shares issued to
      the related Mortgagor with respect to such Cooperative Loan. The lien of
      the Security Agreement is subject only to the Cooperative Corporation's
      lien against such corporation stock, shares or membership certificate for
      unpaid assessments of the Cooperative Corporation to the extent required
      by applicable law. Any Security Agreement, chattel mortgage or equivalent
      document related to and delivered in connection with the Cooperative Loan
      establishes and creates a valid, subsisting and enforceable first lien and
      first priority security interest on the property described therein and the
      Sellers has full right to sell and assign the same to the Agent, for the
      ratable benefit of the Buyers. The Cooperative Unit was not, as of the
      date of origination of the Cooperative Loan, subject to a mortgage, deed
      of trust, deed to secure debt or other security instrument creating a lien
      subordinate to the lien of the Security Agreement.

            (ii) There is no proceeding pending or threatened for the total or
      partial condemnation of the building owned by the applicable Cooperative
      Corporation (the "Underlying Mortgaged Property"). The Underlying
      Mortgaged Property is undamaged by waste, fire, earthquake or earth
      movement, windstorm, flood, tornado or other casualty

                                      I-12
<PAGE>

      so as to affect adversely the value of the Underlying Mortgaged Property
      as security for the mortgage loan on such Underlying Mortgaged Property
      (the "Cooperative Mortgage") or the use for which the premises were
      intended.

            (iii) There is no default, breach, violation or event of
      acceleration existing under the Cooperative Mortgage or the mortgage note
      related thereto 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.

            (iv) The Cooperative Corporation has been duly organized and is
      validly existing and in good standing under the laws of the jurisdiction
      of its formation. The Cooperative Corporation has requisite power and
      authority to (A) own its properties, and (B) transact the business in
      which it is now engaged. The Cooperative Corporation possesses all rights,
      licenses, permits and authorizations, governmental or otherwise, necessary
      to entitle it to own its properties and to transact the businesses in
      which is now engaged.

            (v) The Cooperative Corporation complies in all material respects
      with all applicable legal requirements. The Cooperative Corporation is not
      in default or violation of any order, writ, injunction, decree or demand
      of any governmental authority, the violation of which might materially
      adversely affect the condition (financial or otherwise) or business of the
      Cooperative Corporation.

            (vi) The Sellers has delivered to the Agent or its designee each of
      the following documents (collectively, the "Cooperative Repurchase
      Documents"): (A) the Cooperative Loan Note, duly endorsed in accordance
      with the endorsement requirements for Mortgage Notes set forth in this
      Repurchase Agreement, (B) the Security Agreement, (C) the Cooperative
      Shares accompanied by a stock power which authorizes the Agent to transfer
      the Cooperative Shares in the event of a default under the Cooperative
      Repurchase Documents, (D) the proprietary lease or occupancy agreement,
      accompanied by an assignment in blank of such proprietary lease, (E) a
      recognition agreement executed by the Cooperative Corporation, which
      requires the Cooperative Corporation to recognize the rights of the lender
      and its successors in interest and assigns, under the Cooperative Loan,
      accompanied by an assignment of such recognition agreement in blank, (F)
      UCC-1 financing statements with recording information thereon from the
      appropriate state and county recording offices if necessary to perfect the
      security interest of the Cooperative Loan under the Uniform Commercial
      Code in the state in which the Cooperative Project is located, accompanied
      by UCC-3 financing statements executed in blank for recordation of the
      change in the secured party thereunder, and (G) any guarantees, if
      applicable. The Cooperative Repurchase Documents are assignable to the
      Agent and its successors and assigns and have been duly assigned to the
      Agent, for the ratable benefit of eth Buyers, in accordance with this
      sub-section (vi).

            (vii) The Security Agreement contains customary and enforceable
      provisions such as to render the rights and remedies of the holder thereof
      adequate for the realization against the Cooperative Shares of the
      benefits of the security provided thereby.

                                      I-13
<PAGE>

            (viii) As of the date of origination the related Cooperative Project
      is insured by a generally acceptable insurer against loss by fire, hazards
      of extended coverage and such other hazards as are customary in the area
      where the Cooperative Project is located.

            (aaa) Second Mortgages. With respect to each Mortgage Loan secured
by a second lien on the related Mortgaged Property:

            (i) if the Loan-to-Value Ratio is higher than 70%, either the
      related first lien does not provide for a balloon payment or the maturity
      date of each Mortgage Loan with respect to which a first lien on the
      related Mortgaged Property provides for a balloon payment is prior to the
      maturity date of the mortgage loan relating to such first lien;

            (ii) the related first lien on any Mortgaged Property with respect
      to which the related Mortgage Loan secured by a second lien does not
      provide for negative amortization;

            (iii) either no consent for the Mortgage Loan secured by a second
      lien on the related Mortgaged Property is required by the holder of the
      related first lien or such consent has been obtained and is contained in
      the Mortgage File; and

            (iv) where required or customary in the jurisdiction in which the
      related Mortgaged Property is located, the original lender has filed for
      record a request for notice of any action by the senior lienholder under
      the related First Lien, and the original lender has notified any senior
      lienholder in writing of the existence of the second lien Mortgage Loan
      and requested notification of any action to be taken against the Mortgagor
      by the senior lienholder.

            (bbb) Adjustments. All of the terms of the related Mortgage Note
pertaining to interest adjustments, payment adjustments and adjustments of the
outstanding principal balance, if any, are enforceable and such adjustments on
such Mortgage Loan have been made properly and in accordance with the provisions
of such Mortgage Loan.

            (ccc) Leaseholds. No Mortgage Loan is secured by a long-term
residential lease.

            (ddd) No Litigation Pending. There is no action, suit, proceeding or
investigation pending, or to the Seller's knowledge threatened, that is related
to the Mortgage Loan and likely to affect materially and adversely the servicing
of such Mortgage Loan.

            (eee) FICO Scores. Each Mortgagor has a non-zero FICO score and a
minimum FICO score of 620.

            (fff) No Arbitration Provisions. No Mortgagor agreed to submit to
arbitration to resolve any dispute arising out of or relating in any way to the
related Mortgage Loan or the origination thereof.

                                      I-14
<PAGE>

            (ggg) Down Payment. The source of the down payment, if any, with
respect to each Mortgage Loan has been fully verified by such Seller as and if
required pursuant to the Underwriting Guidelines.

            (hhh) Broker Fees. With respect to any broker fees collected and
paid on any of the Mortgage Loans, all broker fees have been properly assessed
to the borrower and no claims will arise as to broker fees that are double
charged and for which the borrower would be entitled to reimbursement.

                                      I-15
<PAGE>

                             Part II. Defined Terms

            In addition to terms defined elsewhere in the Repurchase Agreement,
the following terms shall have the following meanings when used in this Schedule
1:

            "Acceptable State" means any state notified by the Sellers to the
Agent from time to time and approved in writing by the Agent, which approval has
not been revoked by the Agent in its sole discretion, any such notice of
revocation to be given no later than ten (10) Business Days prior to its
intended effective date.

            "ALTA" means the American Land Title Association.

            "Appraised Value" means the value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.

            "Best's" means Best's Key Rating Guide, as the same shall be amended
from time to time.

            "Due Date" means the day of the month on which the Monthly Payment
is due on a Mortgage Loan, exclusive of any days of grace.

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

            "Gross Margin" means with respect to each adjustable rate Mortgage
Loan, the fixed percentage amount set forth in the related Mortgage Note.

            "Index" means with respect to each adjustable rate Mortgage Loan,
the index set forth in the related Mortgage Note for the purpose of calculating
the interest rate thereon.

            "Interest Rate Adjustment Date" means with respect to each
adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note
and the Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.

            "Monthly Payment" means the scheduled monthly payment of principal
and interest on a Mortgage Loan as adjusted in accordance with changes in the
Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an
adjustable rate Mortgage Loan.

            "Mortgage Interest Rate" means the annual rate of interest borne on
a Mortgage Note, which shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.

            "Mortgage Interest Rate Cap" means with respect to an adjustable
rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set
forth in the related Mortgage Note.

                                      I-16
<PAGE>

            "Mortgage Loan" means a mortgage loan which the Custodian has been
instructed to hold for the benefit of the Buyers pursuant to the Custodial
Agreement, which Mortgage Loan includes, without limitation, (i) a Mortgage Note
and related Mortgage and (ii) all right, title and interest of the Seller in and
to the Mortgaged Property covered by such Mortgage.

            "Origination Date" shall mean, with respect to each Mortgage Loan,
the date of the Mortgage Note relating to such Mortgage Loan, unless such
information is not provided by the Sellers with respect to such Mortgage Loan,
in which case the Origination Date shall be deemed to be the date that is forty
(40) days prior to the date of the first payment under the Mortgage Note
relating to such Mortgage Loan.

            "PMI Policy" or "Primary Insurance Policy" means a policy of primary
mortgage guaranty insurance issued by a Qualified Insurer.

            "Qualified Insurer" means an insurance company duly qualified as
such under the laws of the states in which the Mortgaged Property is located,
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by
Fannie Mae and Freddie Mac and whose claims paying ability is rated in the two
highest rating categories by any of the rating agencies with respect to primary
mortgage insurance and in the two highest rating categories by Best's with
respect to hazard and flood insurance.

            "Qualified Originator" means a Person who originates Mortgage Loans
in accordance with the Sellers' origination policies and guidelines.

            "Servicing File" means with respect to each Mortgage Loan, the file
retained by the Sellers consisting of originals of all documents in the Mortgage
File which are not delivered to a Custodian and copies of the Mortgage Loan
Documents set forth in Section 2 of the Custodial Agreement.

                                      I-17
<PAGE>

                                                                      Schedule 6
                                                                      ----------

                                   COMMITMENTS

          Buyer                                             Commitment

          Morgan Stanley Bank                              $ 500,000,000

          Morgan Stanley Mortgage Capital Inc.             $ 250,000,000
          ----------------------------------------------------------------------
                                              Total        $ 750,000,000EXHIBIT 10.17.2

                               CUSTODIAL AGREEMENT

      CUSTODIAL AGREEMENT (as amended, restated, supplemented or otherwise
modified and in effect from time to time, this "Custodial Agreement"), dated as
of January 27, 2006, made by and among:

      (i) AMERICAN HOME MORTGAGE CORP., a New York corporation, AMERICAN HOME
MORTGAGE INVESTMENT CORP., a Maryland corporation, AMERICAN HOME MORTGAGE
HOLDINGS, INC., a Delaware corporation, AMERICAN HOME MORTGAGE ACCEPTANCE, INC.,
a Maryland corporation, and AMERICAN HOME MORTGAGE SERVICING, INC., a Maryland
corporation, (each a "Seller", collectively the "Sellers");

      (ii) MORGAN STANLEY BANK (the "Buyer Agent"); and

      (iii) DEUTSCHE BANK NATIONAL TRUST COMPANY, as custodian for the Buyer
Agent pursuant to this Custodial Agreement (in such capacity, the "Custodian").

                                    RECITALS

      The Buyer Agent, the Custodian and the Sellers are parties to that certain
Amended and Restated Custodial Agreement, dated as of November 26, 2003 (as
amended, supplemented or otherwise modified prior to the date hereof, the
"Existing Custodial Agreement").

      The Sellers and the Buyer Agent are parties to that certain Master
Repurchase Agreement, dated as of the date hereof (as amended, restated,
supplemented or otherwise modified and in effect from time to time, the
"Repurchase Agreement"), pursuant to which the Buyers have agreed, subject to
the terms and conditions of the Repurchase Agreement, to purchase Eligible
Mortgage Loans (as defined therein) from the Sellers. The Repurchase Agreement
is being entered into in substitution for that certain Amended and Restated
Master Loan and Security Agreement, dated as of November 26, 2003, among the
parties thereto.

      It is a condition precedent to the effectiveness of the Repurchase
Agreement, and the Sellers, the Custodian and the Buyer Agent have agreed, that
this Custodial Agreement shall be substituted for the Existing Custodial
Agreement.

      Accordingly, the Sellers, the Custodian and the Buyer Agent hereby agree,
in consideration of the mutual premises and mutual obligations set forth herein,
that this Custodial Agreement is entered into in substitution for the Existing
Custodial Agreement, and in furtherance of the foregoing agree as follows:

Section 1.  Definitions.

      Unless otherwise defined herein, terms defined in the Repurchase Agreement
shall have their respective assigned meanings when used herein, and the
following terms shall have the following meanings:

<PAGE>

      "Affiliate" shall mean (i) with respect to the Buyer Agent, MS & Co. and
Morgan Stanley Dean Witter & Co., and (ii) with respect to any other Person, any
"affiliate" of such Person as such term is defined in the United States
Bankruptcy Code in effect from time to time.

      "Agency" shall mean Fannie Mae or Freddie Mac.

      "Agency Guide" shall mean, with respect to Fannie Mae securities, the
Fannie Mae Selling Guide and the Fannie Mae Servicing Guide, with respect to
Freddie Mac securities, the Freddie Mac Sellers' and Servicers' Guide, and with
respect to California Program securities, the applicable program manual and the
servicer's guide, in each case including all exhibits thereto, as such Agency
Guide may be amended, supplemented or otherwise modified from time to time."

      "Agency Program" shall mean a specific mortgage backed securities swap or
purchase program under the relevant Agency Guide or as otherwise approved by the
Agency with respect to Mortgage Loans originated pursuant to the Agency Guide.

      "Assignment of Mortgage" means, with respect to any mortgage, an
assignment of the mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related mortgaged property is located to reflect the assignment and pledge of
the mortgage.

      "Authorized Representative" shall have the meaning specified in Section 18
hereof.

      "Business Day" shall mean any day other than (i) a Saturday or Sunday or
(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New
York or the Custodian is authorized or obligated by law or executive order to be
closed.

      "Cooperative Corporation" shall mean the cooperative apartment corporation
that holds legal title to a Cooperative Project and grants occupancy rights to
units therein to stockholders through Proprietary Leases or similar
arrangements.

      "Cooperative Mortgage Loan" shall mean a Mortgage Loan that is secured by
a first lien on a perfected security interest in Cooperative Shares and the
related Proprietary Lease granting exclusive rights to occupy the related
Cooperative Unit in the building owned by the related Cooperative Corporation.

      "Cooperative Project" shall mean all real property owned by a Cooperative
Corporation including the land, separate dwelling units and all common elements.

      "Cooperative Shares" shall mean the shares of stock issued by a
Cooperative Corporation and allocated to a Cooperative Unit and represented by a
stock certificate.

      "Cooperative Unit" shall mean a specific unit in a Cooperative Project.

      "Custodial Agreement" shall mean this Custodial Agreement, as the same
shall be amended, restated, supplemented or otherwise modified and in effect
from time to time in accordance with the terms hereof.

                                       2
<PAGE>

      "Custodial Delivery Failure" shall have the meaning assigned to such term
in Section 13(c).

      "Custodial Identification Certificate" shall mean the certificate executed
by the Sellers in connection with the sale of Eligible Mortgage Loans to the
Buyers to be held by the Custodian pursuant to this Custodial Agreement, a form
of which is attached as Annex 3 hereto.

      "Electronic Agent" shall have the meaning assigned to such term in Section
2 of the Electronic Tracking Agreement.

      "Electronic Tracking Agreement" shall mean the Electronic Tracking
Agreement, dated as of the date hereof, among the Sellers, the Buyer Agent, the
Electronic Agent and MERS, as the same shall be amended, restated, supplemented
or otherwise modified and in effect from time to time.

      "Eligible Cooperative Mortgage Loan" shall mean a Cooperative Mortgage
Loan as to which the representations and warranties in Section 6.11 of the
Repurchase Agreement and the eligibility criteria set forth in Part I of
Schedule 1 of the Repurchase Agreement are correct.

      "Eligible Mortgage Loan" shall mean a Mortgage Loan secured by a first
mortgage lien on a one-to-four family residential property (a) as to which the
representations and warranties in Section 6.10 and Part I of Schedule 1 of the
Repurchase Agreement are correct and (b) which is either an Agency Eligible
Mortgage Loan, an Alternate `A' Mortgage Loan, a California Program Mortgage
Loan, an Eligible Cooperative Mortgage Loan, a Jumbo Mortgage Loan, a MERS
Designated Mortgage Loan or a Conduit Eligible Mortgage Loan; provided, that in
no event shall any Eligible Mortgage Loan be a security for purposes of any
securities or blue sky laws.

      "Exception" shall mean, with respect to any Mortgage Loan, any of the
following: the variances from the requirements of Section 2 hereof with respect
to the Mortgage Files (giving effect to the Sellers' right to deliver certified
copies in lieu of original documents in certain circumstances).

      "MERS Designated Mortgage Loan" shall have the meaning assigned to such
term in Section 3 of the Electronic Tracking Agreement.

      "MERS Identification Number" shall mean the eighteen digit number
permanently assigned to each MERS Designated Mortgage Loan.

      "MERS Procedures Manual" shall mean the MERS Procedures Manual attached as
Exhibit B to the Electronic Tracking Agreement, as it may be amended,
supplemented or modified from time to time.

      "MERS Report" shall mean the schedule listing MERS Designated Mortgage
Loans and other information prepared by the Electronic Agent pursuant to the
Electronic Tracking Agreement.

                                       3
<PAGE>

      "MERS(R) System" shall mean the Electronic Agent's mortgage electronic
registry system, as more particularly described in the MERS Procedures Manual."

      "Mortgage File" shall mean, as to each Mortgage Loan, those documents
listed in Section 2 of this Custodial Agreement that are delivered to the
Custodian or which at any time come into the possession of the Custodian.

      "Mortgage Loan" shall mean a mortgage loan which the Custodian has been
instructed to hold for the Buyer Agent pursuant to this Custodial Agreement.

      "Mortgage Loan Schedule" shall mean a list (in computer readable form) of
Eligible Mortgage Loans to be sold pursuant to the Repurchase Agreement,
attached to a Custodial Identification Certificate, setting forth, as to each
Eligible Mortgage Loan, the applicable information specified on Annex 1 to this
Custodial Agreement.

      "Mortgage Loan Schedule and Exception Report" shall mean a list of
Eligible Mortgage Loans delivered by the Custodian to the Buyer Agent on each
Business Day, reflecting the Mortgage Loans held by the Custodian for the
benefit of the Buyer Agent on behalf of the Buyers, which includes codes
indicating any Exceptions with respect to each Mortgage Loan listed thereon.
Each Mortgage Loan Schedule and Exception Report shall set forth (a) the
Mortgage Loans being sold to the Buyers on any applicable Purchase Date as well
as the Mortgage Loans previously sold to the Buyers and held by the Custodian
hereunder, (b) any Mortgage Loan that has been released to a Seller pursuant to
Section 5 hereof and the date such Mortgage Loan was released and (c) all
Exceptions with respect thereto, with any updates thereto from the time last
delivered.
      "Officer's Certificate" shall mean a certificate signed by a Responsible
Officer of the Person delivering such certificate and delivered as required by
this Custodial Agreement.

      "Opinion of Counsel" shall mean a written opinion letter of counsel in
form and substance reasonably acceptable to the party receiving such opinion
letter.

      "Pledgee" shall have the meaning specified in Section 25 hereof.

      "Proceeds" shall mean whatever is receivable or received when Purchased
Items or proceeds are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes, without
limitation, all rights to payment, including return premiums, with respect to
any insurance relating thereto.

      "Proprietary Lease" shall mean a lease on (or occupancy agreement with
respect to) a Cooperative Unit evidencing the possessory interest of the owner
of the Cooperative Shares or the Seller in such Cooperative Unit.

      "Recognition Agreement" shall mean, with respect to a Cooperative Mortgage
Loan, an agreement executed by a Cooperative Corporation which, among other
things, acknowledges the lien of the Mortgage on the Mortgaged Property in
question.

                                       4
<PAGE>

      "Report" shall mean a report in computer readable form prepared by the
Custodian, which shall be in a form acceptable to the Buyer Agent and the
Custodian detailing, with respect to any Mortgage Loan that has been released by
the Custodian, the following: (i) the Mortgage Loan identification number and
borrower name, (ii) the location to which such Mortgage File was delivered by
the Custodian and (iii) the date on which such Mortgage File was released by the
Custodian.

      "Review Procedures" shall have the meaning specified in Section 3(c)
hereof.

      "Security Agreement" the specific security agreement creating a security
interest on and pledge of the Cooperative Shares and the appurtenant Proprietary
Lease securing a Cooperative Mortgage Loan.

      "Trust Receipt" shall mean a Trust Receipt in the form annexed hereto as
Annex 2 delivered to the Buyer Agent by the Custodian covering all of the
Mortgage Loans subject to this Custodial Agreement from time to time, as
reflected on the Mortgage Loan Schedule and Exception Report attached thereto in
accordance with Section 3(e).

Section 2.  Delivery of Mortgage Files.

      No later than 11:00 p.m., New York City time, one (1) Business Day prior
to any Purchase Date (in the case of the first 150 Eligible Mortgage Loans
delivered in connection with any Purchase Date) plus one additional Business Day
prior to any Purchase Date (for each additional 100 Eligible Mortgage Loans in
excess thereof delivered in connection with any Purchase Date) (provided, that,
such timing requirements shall be inapplicable in the case of Mortgage Loans
already held by the Custodian for any other reason), the applicable Seller shall
release to the Custodian the following original documents pertaining to each
Eligible Mortgage Loan to be sold to the Buyers and included in the Margin Base
on such Purchase Date, each of which Mortgage Loans shall be identified in a
Mortgage Loan Schedule delivered therewith, in a computer readable format
acceptable to the Sellers and the Custodian, with a copy of such Mortgage Loan
Schedule delivered to the Buyer Agent (or, if another time is specified below
for such release or delivery, at such other time):

      (A)   With respect to each Eligible Mortgage Loan:

            (a)   The original Mortgage Note bearing all intervening
                  endorsements, endorsed "Pay to the order of _________ without
                  recourse" and signed in the name of the last endorsee (the
                  "Last Endorsee") (in the event that the Mortgage Loan was
                  acquired by the Last Endorsee in a merger, the signature must
                  be in the following form: "[Last Endorsee], successor by
                  merger to [name of predecessor]"; in the event that the
                  Mortgage Loan was acquired or originated by the Last Endorsee
                  while doing business under another name, the signature must be
                  in the following form: "[Last Endorsee], formerly known as
                  [previous name]").

            (b)   The original of the guarantee executed in connection with the
                  Mortgage Note (if any).

                                       5
<PAGE>

            (c)   The original Mortgage with evidence of recording thereon, or a
                  copy thereof together with an Officer's Certificate of the
                  applicable Seller, title company, escrow agent or closing
                  attorney certifying that such represents a true and correct
                  copy of the original and that such original has been submitted
                  for recordation in the appropriate governmental recording
                  office of the jurisdiction where the Mortgaged Property is
                  located.

            (d)   The originals of all assumption, modification, consolidation
                  or extension agreements (if any) with evidence of recording
                  thereon, or copies thereof together with an Officer's
                  Certificate of the applicable Seller, title company, escrow
                  agent or closing attorney certifying that such represent true
                  and correct copies of the originals and that such originals
                  have each been submitted for recordation in the appropriate
                  governmental recording office of the jurisdiction where the
                  Mortgaged Property is located (provided, that the Custodian
                  shall have no duty to verify whether any such documents
                  exist).

            (e)   Except in the case of a MERS Designated Mortgage Loan, the
                  original Assignment of Mortgage in blank for each Mortgage
                  Loan, in form and substance acceptable for recording and
                  signed in the name of the Last Endorsee (in the event that the
                  Mortgage Loan was acquired by the Last Endorsee in a merger,
                  the signature must be in the following form: "[Last Endorsee],
                  successor by merger to [name of predecessor]"; in the event
                  that the Mortgage Loan was acquired or originated while doing
                  business under another name, the signature must be in the
                  following form: "[Last Endorsee], formerly known as [previous
                  name]").

            (f)   Except in the case of a MERS Designated Mortgage Loan, the
                  originals of all intervening assignments of mortgage (if any)
                  with evidence of recording thereon, showing an unbroken chain
                  of title from the originator thereof to the Last Endorsee or
                  copies thereof together with an Officer's Certificate of the
                  applicable Seller, title company, escrow agent or closing
                  attorney certifying that such represent true and correct
                  copies of the originals and that such originals have each been
                  submitted for recordation in the appropriate governmental
                  recording office of the jurisdiction where the Mortgaged
                  Property is located.

            (g)   [intentionally omitted.]

            (h)   The original of any security agreement, chattel mortgage or
                  equivalent document executed in connection with the Mortgage
                  Loan; provided, that the Custodian shall have no duty to
                  verify whether any such documents exist.

            (i)   Solely with respect to each MERS Designated Mortgage Loan, a
                  MERS Report.

                                       6
<PAGE>

      (B)   With respect to each Eligible Cooperative Mortgage Loan:

            (a)   the original Security Agreement;

            (b)   the original Cooperative Shares;

            (c)   a stock power executed in blank by the Person in whose name
                  the Cooperative Shares are issued;

            (d)   the Proprietary Lease or occupancy agreement, accompanied by
                  an assignment in blank of such proprietary lease;

            (e)   a Recognition Agreement executed by the Cooperative
                  Corporation, which requires the Cooperative Corporation to
                  recognize the rights of the lender and its successors in
                  interest and assigns, under the Cooperative Mortgage Loan,
                  accompanied by an assignment of such recognition agreement in
                  blank;

            (f)   UCC-1 financing statements with recording information thereon
                  from the appropriate governmental recording offices if
                  necessary to perfect the security interest of the Cooperative
                  Mortgage Loan under the Uniform Commercial Code in the
                  jurisdiction in which the Cooperative Project is located,
                  accompanied by UCC-3 financing statements executed in blank
                  for recordation of the change in the secured party thereunder;
                  and

            (g)   any guarantees, if applicable.

      From time to time, the Sellers shall forward to the Custodian additional
original documents or additional documents evidencing any assumption,
modification, consolidation or extension of a Mortgage Loan approved by the
applicable Seller, in accordance with the terms of the Repurchase Agreement, and
upon receipt of any such other documents. Subject to the inclusion of these
documents within the Custodial Identification Certificate and Mortgage Loan
Schedule delivered by the Sellers, upon receipt, the Custodian shall hold such
additional documents.

      With respect to any documents which have been delivered or are being
delivered to recording offices for recording and have not been returned to the
applicable Seller in time to permit their delivery hereunder at the time
required, in lieu of delivering such original documents, such Seller shall
deliver to the Custodian a true copy thereof with an Officer's Certificate of
the applicable Seller, title company, escrow agent or closing attorney
certifying that such copy is a true, correct and complete copy of the original,
which has been transmitted for recordation. Each Seller shall deliver such
original documents to the Custodian promptly when they are received.

                                       7
<PAGE>

Section 3. Custodial Identification Certificate; Mortgage Loan Schedule and
Exception Report; Trust Receipt.

      (a) No later than 12:00 p.m., New York City time, two (2) Business Days
prior to each Purchase Date, the applicable Seller shall provide the Custodian
with a Custodial Identification Certificate and a related Mortgage Loan Schedule
(such information contained on the Mortgage Loan Schedule shall be delivered to
the Custodian in computer-readable form) with respect to the Eligible Mortgage
Loans to be sold to the Buyers on such Purchase Date. If the Custodian has
received such Custodial Identification Certificate by the time set forth above,
and has received a Mortgage File for a Mortgage Loan identified on the Mortgage
Loan Schedule attached thereto by the time set forth in Section 2 hereof, then
on such Purchase Date, the Custodian will deliver, via electronic transmission
acceptable to the Buyer Agent and the Custodian (or via facsimile in the event
of a delivery failure via such electronic transmission), no later than 11:00
a.m., New York City time, to the Buyer Agent a Mortgage Loan Schedule and
Exception Report for each Mortgage Loan sold on such date, with Exceptions
identified by the Custodian as current as of the date and time of delivery of
such Mortgage Loan Schedule and Exception Report.

      (b) Notwithstanding and in addition to the foregoing, on each Business
Day, as of the opening of business on such Business Day, the Custodian shall
deliver to the applicable Seller and the Buyer Agent, via electronic
transmission acceptable to the Buyer Agent and the Custodian (or via facsimile
in the event of a delivery failure via such electronic transmission), a
superceding Mortgage Loan Schedule and Exception Report, in each case no later
than 12:00 noon, New York City time, which shall supercede and replace any and
all previously delivered Mortgage Loan Schedule and Exception Reports and which
shall reflect the Exceptions identified by the Custodian as of the Business Day
prior to the date of delivery of the applicable Mortgage Loan Schedule and
Exception Report.

      (c) Each Mortgage Loan Schedule and Exception Report shall list all
Exceptions using such codes as shall be in form and substance agreed to by the
Custodian and the Buyer Agent. Each Mortgage Loan Schedule and Exception Report
shall be superseded by a subsequently issued Mortgage Loan Schedule and
Exception Report. The delivery of each Mortgage Loan Schedule and Exception
Report to the Buyer Agent shall be the Custodian's representation that, other
than the Exceptions listed as part of the Exception Report: (i) all documents
required to be delivered in respect of such Mortgage Loan pursuant to Section 2
of this Custodial Agreement have been delivered and are in the possession of the
Custodian as part of the Mortgage File for such Mortgage Loan, (ii) all such
documents have been reviewed by the Custodian in accordance with the review
procedures attached hereto as Annex 4 (the "Review Procedures") and appear on
their face to be regular and to relate to such Mortgage Loan and to satisfy
(except in the case of a MERS Designated Mortgage Loan) the requirements set
forth in Section 2 of this Custodial Agreement, (iii) each Mortgage Loan (except
in the case of a MERS Designated Mortgage Loan) identified on such Mortgage Loan
Schedule and Exception Report is being held by the Custodian as the bailee for
the Buyer Agent and/or its designees pursuant to this Custodial Agreement and
(iv) each MERS Designated Mortgage Loan is being held by MERS as the bailee for
the Buyer Agent and/or its designees pursuant to the Repurchase Agreement.

                                       8
<PAGE>

      (d) In connection with a Mortgage Loan Schedule and Exception Report
delivered hereunder by the Custodian, the Custodian shall make no
representations as to and shall not be responsible to verify (A) the validity,
legality, enforceability, due authorization, recordability, sufficiency, or
genuineness of any of the documents contained in each Mortgage File, (B) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan or (C) whether such Mortgage Loan is an "Eligible Mortgage Loan" pursuant
to the Repurchase Agreement. Subject to the following sentence, each of the
Sellers and the Buyer Agent hereby give the Custodian notice that from and after
the Purchase Date, the Buyers shall own (or in the event the Transactions are
characterized as loans, the Buyer Agent, for the ratable benefit of the Buyers,
shall have a security interest in) each Mortgage Loan identified on a Mortgage
Loan Schedule and Exception Report until such time that the Custodian receives
written notice from the Buyer Agent that the Buyers no longer own such Mortgage
Loan. In the event that the Buyers do not enter into a Transaction with the
applicable Seller prior to 5:00 p.m., New York City time, on such Purchase Date,
upon written notice thereof from the applicable Seller, acknowledged by the
Buyer Agent, the Custodian shall hold or release to such Seller, pursuant to
such Seller's written instructions, the Mortgage Loans in respect of the
Mortgage Loan Schedule and Exception Report delivered by the Custodian on such
Purchase Date. Each Mortgage Loan Schedule and Exception Report delivered to the
Buyer Agent by the Custodian, via electronic transmission acceptable to the
Buyer Agent and the Custodian (or via facsimile in the event of a delivery
failure via such electronic transmission), shall be deemed superseded and
canceled upon the delivery of a subsequent Mortgage Loan Schedule and Exception
Report.

      (e) In addition to the foregoing, on the initial Purchase Date, the
Custodian shall deliver to the Buyer Agent, no later than 11:00 a.m., New York
City time, a Trust Receipt with a Mortgage Loan Schedule and Exception Report
attached thereto via electronic transmission acceptable to the Buyer Agent and
the Custodian (or via facsimile in the event of a delivery failure via such
electronic transmission) (with the original to follow on the next Business Day).
Each Mortgage Loan Schedule and Exception Report delivered by the Custodian to
the Buyer Agent shall supersede and cancel the Mortgage Loan Schedule and
Exception Report previously delivered by the Custodian to the Buyer Agent
hereunder, and shall replace the then existing Mortgage Loan Schedule and
Exception Report to be attached to the Trust Receipt. Notwithstanding anything
to the contrary set forth herein, in the event that the Mortgage Loan Schedule
and Exception Report attached to the Trust Receipt is different from the most
recently delivered Mortgage Loan Schedule and Exception Report, then the most
recently delivered Mortgage Loan Schedule and Exception Report shall control and
be binding upon the parties hereto.

Section 4.  Obligations of the Custodian.

      (a) The Custodian shall maintain continuous custody of all items
constituting the Mortgage Files in secure facilities in accordance with
customary standards for such custody and shall reflect in its records the
interest of the Buyers therein. Each Mortgage Note (and Assignment of Mortgage)
shall be maintained in fire resistant facilities.

      (b) With respect to the documents constituting each Mortgage File relating
to a Mortgage Loan listed on the related Mortgage Loan Schedule and Exception
report, the Custodian shall (i) act exclusively as the bailee of, and custodian
for, the Buyer Agent, (ii) hold

                                       9
<PAGE>

all documents constituting such Mortgage File received by it for the exclusive
use and benefit of the Buyer Agent, and (iii) make disposition thereof only in
accordance with the terms of this Custodial Agreement or with written
instructions furnished by the Buyer Agent; provided, however, that in the event
of a conflict between the terms of this Custodial Agreement and the written
instructions of the Buyer Agent, the Buyer Agent's written instructions shall
control.

      (c) In the event that (i) the Buyer Agent, any Seller or the Custodian
shall be served by a third party with any type of levy, attachment, writ or
court order with respect to any Mortgage File or any document included within a
Mortgage File or (ii) a third party shall institute any court proceeding by
which any Mortgage File or a document included within a Mortgage File shall be
required to be delivered otherwise than in accordance with the provisions of
this Custodial Agreement, the party receiving such service shall promptly
deliver or cause to be delivered to the other parties to this Custodial
Agreement copies of all court papers, orders, documents and other materials
concerning such proceedings. The Custodian shall, to the extent permitted by
law, continue to hold and maintain all the Mortgage Files that are the subject
of such proceedings pending a final, nonappealable order of a court of competent
jurisdiction permitting or directing disposition thereof. Upon final
determination of such court, the Custodian shall dispose of such Mortgage File
or any document included within such Mortgage File as directed by the Buyer
Agent, which shall give a direction consistent with such court determination.
Expenses and fees (including, without limitation, attorney's fees) of the
Custodian incurred as a result of such proceedings shall be borne by the
Sellers, jointly and severally.

      (d) The Buyer Agent hereby acknowledges that the Custodian shall not be
responsible for the validity and perfection of the Buyer Agent's security
interest in the Purchased Items hereunder, other than the Custodian's obligation
to take possession of Purchased Items as set forth in Section 2 hereof.

      (e) The Custodian shall have no duties or responsibilities except those
that are specifically set forth herein, shall not be liable except for the
performance of such duties and obligations and no implied covenants or
obligations shall be read into this Custodial Agreement against the Custodian.

      (f) The Custodian shall have no responsibility nor duty with respect to
any Mortgage Files while not in its possession.

      (g) The Custodian shall be under no obligation to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
acknowledgement, consent, order, document in the Mortgage File, or any other
document.

      (h) The Custodian shall not be liable with respect to any action taken or
omitted to be taken in accordance with the written direction, instruction,
acknowledgment, consent or any other communication from the Buyer Agent.

      (i) The provisions of this Section 4 shall survive the resignation or
removal of the Custodian and the termination of this Custodial Agreement.

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<PAGE>

Section 5.  Release of Purchased Items.

      (a) From time to time until the Custodian is otherwise notified in writing
by the Buyer Agent, which notice shall be given by the Buyer Agent only
following the occurrence of an Event of Default, the Custodian shall, upon
receipt of written request of the applicable Seller and written authorization of
the Buyer Agent, to release documentation relating to Mortgage Loans in the
possession of the Custodian to such Seller, or its designee, for the purpose of
correcting documentary deficiencies relating thereto against a Request for
Release and Receipt executed by the applicable Seller in the form of Annex 5-A
hereto. The applicable Seller or its designee shall return to the Custodian each
document previously released from the Custodian's Mortgage File within thirty
(30) calendar days of receipt thereof. Each Seller hereby further represents and
warrants to the Buyer Agent that any such request by a Seller for release of
Purchased Items shall be solely for the purposes of correcting clerical or other
non-substantial documentation problems in preparation for returning such
Purchased Items to the Custodian for ultimate sale or exchange and that the
applicable Seller has requested such release in compliance with all terms and
conditions of such release set forth in the Repurchase Agreement.

      (b) From time to time until the Custodian is otherwise notified in writing
by the Buyer Agent, which notice shall be given by the Buyer Agent only
following the occurrence of an Event of Default, the Custodian shall, upon
written receipt from the applicable Seller or its designee of a Request for
Release of Documents and Receipt in the form of Annex 5-B hereto and written
authorization of the Buyer Agent, release to such Seller or its designee the
related Custodian's Mortgage File or the documents set forth in such request and
receipt. The applicable Seller or its designee shall hold each Mortgage File
delivered to it pursuant to this Section 5(b) as bailee for the Buyer Agent.
Such Seller or its designee shall return to the Custodian each document
previously released from the Custodian's Mortgage File within thirty (30)
calendar days of receipt thereof. Each Seller hereby further represents and
warrants to the Buyer Agent that any such request by any Seller or its designee
for release of Purchased Items shall be solely for the purposes of foreclosure
or servicing of any of the Mortgage Loans.

      (c) (i) Upon receipt of a Request for Release of Documents executed by the
applicable Seller in the form of Annex 5-C hereto, with an electronic copy to
the Buyer Agent, the Custodian shall release Mortgage Files in its possession to
approved third-party purchasers listed on Annex 12 attached hereto (each an
"Approved Purchaser") for the purpose of resale thereof. The applicable Seller
or such Approved Purchaser shall return to the Custodian each document
previously released from the Custodian's Mortgage File within forty-five (45)
calendar days of receipt thereof.

            (ii) Any transmittal of documentation for Mortgage Loans in the
      possession of the Custodian in connection with the sale thereof to an
      Approved Purchaser will be under cover of a transmittal letter
      substantially in the form attached hereto as Annex 10 duly completed by
      the Custodian and executed by the Custodian.

            (iii) Any transmittal of documentation for Mortgage Loans in the
      possession of the Custodian in connection with the shipment to a custodian
      or trustee in connection with the formation of a mortgage pool supporting
      a mortgage-backed security (an "MBS") will be under cover of a transmittal
      letter substantially in the form attached

                                       11
<PAGE>

      hereto as Annex 11. Promptly upon (x) the remittance by such Approved
      Purchaser of the full purchase price of the Mortgage Loan or (y) the
      issuance of such MBS, the Buyer Agent shall notify the Custodian thereof.
      In connection with any request to deliver Mortgage Files pursuant to this
      Section 5(c), the applicable Seller shall provide the Custodian with a
      Mortgage Loan Schedule in computer readable form and shall provide no less
      than one Business Day's notice for each 150 Mortgage Files requested for
      release; provided, that such prior notice shall not be required if the
      Custodian is to be the recipient of such files on behalf of such
      third-party purchaser or is the custodian or trustee in respect of such
      MBS.

      (d) From time to time until the Custodian is otherwise notified in writing
by the Buyer Agent, and with the prior written consent of the Buyer Agent, the
Sellers may substitute for one or more Eligible Mortgage Loans constituting the
Purchased Items one or more substitute Eligible Mortgage Loans having aggregate
Purchased Items Value equal to or greater than the Purchased Items Value of the
Mortgage Loans being substituted for, or obtain the release of one or more
Mortgage Loans constituting Purchased Items hereunder; provided that, after
giving effect to such substitution or release, the Repurchase Obligations then
outstanding shall not exceed the Margin Base, which determination shall be made
solely by the Buyer Agent. In connection with any such requested substitution or
release, the applicable Seller will provide notice to the Custodian and the
Buyer Agent in the form of Annex 5-D attached hereto no later than 3:00 p.m.,
New York City time, on the date of such request, specifying the Mortgage Loans
to be substituted for or released and the substitute Mortgage Loans to be sold
hereunder in substitution therefor, if any, and shall deliver with such notice a
Custodial Identification Certificate and a revised Mortgage Loan Schedule
indicating any substitute Mortgage Loans. The Custodian will effect the
requested substitution or release no later than 8:00 p.m., New York City time,
two Business Days following the day on which such request was timely made for
the first 150 such substitute Mortgage Loans (with one additional Business Day
for each 100 additional substitute Mortgage Loans) (provided, that, such timing
requirements shall be inapplicable in the case of Mortgage Loans already held by
the Custodian for any other reason) after the Custodian has certified to the
Buyer Agent on such Business Day that the matters set forth in Section 3(c)
hereof with respect to any substitute Mortgage Loans are true and correct. Each
such substitution or release shall be deemed to be a representation and warranty
by the Sellers that any substitute Mortgage Loans are Eligible Mortgage Loans
and that after giving effect to such substitution or release, the Repurchase
Obligations then outstanding shall not exceed the Margin Base.

      (e) So long as the Custodian has not received written notice that any
Event of Default has occurred and is continuing, the Custodian and the Buyer
Agent shall take such steps as they may reasonably be directed from time to time
by the applicable Seller in writing, which the applicable Seller deems necessary
and appropriate, to transfer promptly and deliver to the applicable Seller any
Mortgage File in the possession of the Custodian relating to any Mortgage Loan
previously included in the Margin Base as an Eligible Mortgage Loan but which
the Sellers or the applicable Seller, with the written consent of the Buyer
Agent, have notified the Custodian has ceased to be an Eligible Mortgage Loan.
In furtherance of the foregoing, upon receipt of written request from the
applicable Seller in the form of Annex 5-D hereto, which must be acknowledged by
the Buyer Agent, and provided that no Event of Default has occurred and is

                                       12
<PAGE>

continuing of which the Custodian shall have received written notice, the
Custodian shall release to the applicable Seller the requested Mortgage Files.

      (f) Following the Buyer Agent's written instructions to the Custodian not
to release any item of Purchased Items, the Custodian shall not release, or
incur any liability to any Seller or any other Person for refusing to release,
any item of Purchased Items to any Seller or any other Person without the
express prior written consent and at the direction of the Buyer Agent.

      (g) The Custodian shall at all times monitor any release of Purchased
Items under this Section 5 and shall track the period of time which has elapsed
for any such release of Purchased Items.

      (h) Notwithstanding the foregoing, any Request for Release of Documents
may be delivered to the Buyer Agent via electronic mail which attaches the
appropriate form referenced in clauses (a) and (b) above, and the Buyer Agent's
affirmative response via return electronic mail with an electronic copy to the
Custodian shall constitute written consent for the purpose of this Section 5.

Section 6.  Fees and Expenses of Custodian.

      The Custodian shall charge such fees for its services under this Custodial
Agreement as are set forth in a separate agreement between the Custodian and
American Home Mortgage Corp., the payment of which fees, together with the
Custodian's expenses (including, without, limitation, attorney's fees) in
connection herewith, shall be solely the joint and several obligation of the
Sellers. The obligations of the Sellers under this Section 6 shall survive the
termination of this Custodial Agreement and any prior resignation or removal of
the Custodian or prior termination or assignment of this Custodial Agreement.

Section 7.  Removal or Resignation of Custodian.

      (a) The Custodian may at any time resign and terminate its obligations
under this Custodial Agreement upon at least 60 days' prior written notice to
the Sellers and the Buyer Agent. Promptly after receipt of notice of the
Custodian's resignation, the Buyer Agent shall appoint, by written instrument, a
successor custodian, subject to written approval by the Sellers (which approval
shall not be unreasonably withheld). One original counterpart of such instrument
of appointment shall be delivered to each of the Sellers, the Custodian and the
successor custodian.

      (b) The Buyer Agent, with the consent of the Sellers, upon at least sixty
(60) days' prior written notice to the Custodian and the Buyer Agent, may remove
and discharge the Custodian (or any successor custodian thereafter appointed)
from the performance of its obligations under this Custodial Agreement. Promptly
after the giving of notice of removal of the Custodian, the Buyer Agent shall
appoint, by written instrument, a successor custodian, with the consent of the
Sellers. One original counterpart of such instrument of appointment shall be
delivered to each of the Sellers, the Buyer Agent, the Custodian and the
successor custodian.

      (c) In the event of any such resignation or removal, upon the surrender of
any outstanding Trust Receipts, the Custodian shall promptly transfer to the
successor custodian, as

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<PAGE>

directed in writing, all the Mortgage Files being administered under this
Custodial Agreement and, if the endorsements on the Mortgage Notes and the
Assignments of Mortgage have been completed in the name of the Custodian, assign
the Mortgages and endorse without recourse the Mortgage Notes to the successor
Custodian or as otherwise directed in writing by the Buyer Agent. The cost of
the shipment of Mortgage Files arising out of the resignation of the Custodian,
if such resignation occurs within one year from the date of this Custodial
Agreement, shall be at the expense of the Custodian; provided, however, that if
the reason for the Custodian's resignation is due to the non-payment of the fees
and expenses due it hereunder, then such shipment costs shall not be an expense
of the Custodian, but shall be at the expense of the Sellers. Any cost of
shipment arising out of the removal of the Custodian or the resignation of the
Custodian after one year from the date of this Custodial Agreement shall be at
the expense of the Sellers. The Sellers shall be responsible for the fees and
expenses of the successor custodian and the fees and expenses for endorsing the
Mortgage Notes and assigning the Mortgages to the successor custodian if
required pursuant to this paragraph.

      (d) In the event that no successor Custodian shall have been appointed
within the 60 day notice period described in Section 7(a) or 7(b) hereof, the
Custodian may either (i) deliver the Mortgage Files to the Buyer Agent or its
designee upon surrender of all outstanding Trust Receipts or (ii) in the event
that the Buyer Agent or its designee fails to accept the Mortgage Files,
petition any court of competent jurisdiction to appoint a successor custodian.

Section 8.  Examination of Mortgage Files.

      Upon reasonable prior notice to the Custodian and at the Sellers' expense,
the Buyer Agent, the Sellers and each of their respective agents, accountants,
attorneys and auditors will be permitted during normal business hours at its
offices to examine the Mortgage Files, documents, records and other papers in
the possession of or under the control of the Custodian relating to any or all
of the Mortgage Loans.

Section 9.  Insurance of Custodian.

      At its own expense, the Custodian shall maintain at all times during the
existence of this Custodial Agreement and keep in full force and effect fidelity
insurance, theft of documents insurance, forgery insurance and errors and
omissions insurance. All such insurance shall be in amounts, with standard
coverage and subject to deductibles, all as is customary for insurance typically
maintained by banks which act as custodian of collateral substantially similar
to the Purchased Items. Upon written request, the Buyer Agent shall be entitled
to receive a certificate of the respective insurer that such insurance is in
full force and effect.

Section 10. Representations and Warranties.

      (a) Each party represents and warrants to each other party that:

            (i) such party has the requisite power and authority and the legal
      right to execute and deliver, and to perform its obligations under, this
      Custodial Agreement, and has taken all necessary corporate action to
      authorize its execution, delivery and performance of this Custodial
      Agreement;

                                       14
<PAGE>

            (ii) no consent or authorization of, filing with, or other act by or
      in respect of, any arbitrator or Governmental Authority and no consent of
      any other Person (including, without limitation, any stockholder or
      creditor of such party) is required with respect to such party in
      connection with the execution, delivery, performance, validity or
      enforceability of this Custodial Agreement; and

            (iii) this Custodial Agreement has been duly executed and delivered
      on behalf of such party and constitutes a legal, valid and binding
      obligation of such party, enforceable in accordance with its terms, except
      as enforceability may be limited by bankruptcy, insolvency,
      reorganization, moratorium or similar laws affecting the enforcement of
      creditors' rights generally and by general principles of equity (whether
      enforcement is sought in a proceeding in equity or at law).

      (b) The Custodian and each of the Sellers represents to the Buyer Agent
that the Custodian is not an Affiliate of any Seller.

Section 11. Statements.

      (a) Upon the reasonable written request of the Buyer Agent or the Sellers,
the Custodian shall provide the Buyer Agent or the Sellers, as applicable, with
a list of all the Mortgage Loans for which the Custodian holds a Mortgage File
pursuant to this Custodial Agreement. Such list shall be in the form of a
Mortgage Loan Schedule and Exception Report.

      (b) No later than 12:00 noon, New York City time, on each Business Day,
and otherwise upon the reasonable request of the Buyer Agent, the Custodian
shall deliver to the Buyer Agent and the Sellers a Report with respect to all
Mortgage Loans currently held by the Custodian pursuant to this Custodial
Agreement.

Section 12. No Adverse Interest of Custodian.

      By execution of this Custodial Agreement, the Custodian represents and
warrants that it currently holds, and during the existence of this Custodial
Agreement shall hold, no adverse interest, by way of security or otherwise, in
any Mortgage Loan, and hereby waives and releases any such interest which it may
have in any Mortgage Loan as of the date hereof. The Mortgage Loans shall not be
subject to any security interest, lien or right to set-off by Custodian or any
third party claiming through Custodian, and Custodian shall not pledge,
encumber, hypothecate, transfer, dispose of, or otherwise grant any third party
interest in, the Mortgage Loans.

Section 13. Indemnification of Custodian.

      (a) Except as set forth in this Section 13, neither the Custodian nor any
of its directors, officers, agents or employees shall be liable to the Buyer
Agent or the Sellers for any action taken or not taken by it or them hereunder
other than as a result of the breach by the Custodian of its obligations
hereunder, which breach was caused by negligence, lack of good faith or willful
misconduct on the part of the Custodian or any of its directors, officers,
agents or employees, provided that in no event shall the Custodian or any of its
directors, officers, agents or employees have any liability with respect to any
special, indirect, punitive or consequential damages suffered by the Buyer Agent
or the Sellers.

                                       15
<PAGE>

      (b) Each Seller, jointly and severally, agrees to indemnify and hold the
Custodian and its directors, officers, agents and employees harmless against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including reasonable attorney's fees, that may be imposed on,
incurred by, or asserted against it or them in any way relating to or arising
out of this Custodial Agreement or any action taken or not taken by it or them
hereunder unless such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements were imposed on,
incurred by or asserted against the Custodian because of the breach by the
Custodian of its obligations hereunder, which breach was caused by negligence,
lack of good faith or willful misconduct on the part of the Custodian or any of
its directors, officers, agents or employees. The foregoing indemnification
shall survive any resignation or removal of the Custodian or the termination or
assignment of this Custodial Agreement.

      (c) In the event that the Custodian fails to produce a Mortgage Note,
Assignment of Mortgage or any other document related to a Mortgage Loan that was
in its possession pursuant to Section 2 within two (2) Business Days after
required or requested by the Sellers or Buyer Agent, and provided that (i)
Custodian previously delivered to the Buyer Agent a Mortgage Loan Schedule and
Exception Report which did not list such document as an Exception on the related
Purchase Date; (ii) such document is not outstanding pursuant to a Request for
Release and Receipt in the form annexed hereto as Annex 5-A; and (iii) such
document was held by the Custodian on behalf of a Seller or the Buyer Agent, as
applicable, (a "Custodial Delivery Failure"), then the Custodian shall (a) with
respect to any missing Mortgage Note, with respect to which a Custodial Delivery
Failure has occurred and has continued in excess of three (3) Business Days,
promptly deliver to the Buyer Agent or Sellers upon request, a Lost Note
Affidavit in the form of Annex 9 hereto unless the original Mortgage Note shall
have been delivered prior to such time and (b) with respect to any missing
document related to such Mortgage Loan, including but not limited to a missing
Mortgage Note, (1) indemnify the applicable Seller or the Buyer Agent in
accordance with the succeeding paragraph of this Section 13 and, (2) at the
Buyer Agent's option, at any time the long term obligations of the Custodian are
rated below the second highest rating category of Moody's Investors Service,
Inc. or Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., obtain and maintain an insurance bond in the name of the Buyer
Agent, and its successors in interest and assigns, insuring against any losses
associated with the loss of such document, in an amount equal to the then
outstanding principal balance of the related Mortgage Loan or such lesser amount
requested by the Buyer Agent in the Buyer Agent's sole discretion.

      (d) The Custodian agrees to indemnify and hold the Buyer Agent and each
Seller, and their respective designees harmless against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever, including reasonable
attorney's fees, that may be imposed on, incurred by, or asserted against it or
them in any way relating to or arising out of a Custodial Delivery Failure or
the Custodian's negligence, lack of good faith or willful misconduct. The
foregoing indemnification shall survive any termination or assignment of this
Custodial Agreement.

                                       16
<PAGE>

Section 14. Reliance of Custodian.

      (a) In the absence of bad faith on the part of the Custodian, the
Custodian may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any request, instruction
certificate, opinion or other document furnished to the Custodian, reasonably
believed by the Custodian to have been signed or presented by an Authorized
Representative and conforming in form only to the requirements of this Custodial
Agreement; but in the case of any certificate or opinion which by any provision
hereof is specifically required to be furnished to the Custodian, the Custodian
shall be under a duty to examine the same in accordance with the requirements of
this Custodial Agreement.

      (b) In the absence of bad faith on the part of the Custodian, the
Custodian may conclusively rely upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, coupon or other paper or document reasonably believed by the
Custodian to be genuine and to have been signed or presented by an Authorized
Representative.

      (c) In the absence of bad faith on the part of the Custodian, the
Custodian shall be entitled to conclusively rely in good faith upon the written
direction, order, instruction or other communication from the Buyer Agent or a
Seller reasonably believed by the Custodian to be genuine and to have been
signed or presented by an Authorized Representative.

      (d) This Section shall not be construed to limit the effect of any
provision of this Custodial Agreement respecting the rights or remedies of the
Custodian or any other right of the Custodian.

      (e) If the Custodian requests instructions from the Buyer Agent with
respect to any act, action or failure to act in connection with this Custodial
Agreement, Custodian shall be entitled (without incurring any liability therefor
to Buyer Agent, the Sellers or any other person) to refrain from taking such
action and continue to refrain from acting unless and until the Custodian shall
have received written instructions from the Buyer Agent with respect to a
Mortgage File.

      (f) The Custodian may consult with counsel and the advice or any opinion
of counsel shall be full and complete authorization and protection in respect of
any action taken or omitted by it hereunder in good faith and in accordance with
such advice or opinion of counsel.

      (g) None of the provisions of this Custodial Agreement shall require the
Custodian to expend or risk its own funds or otherwise to incur any liability,
financial or otherwise, in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or indemnity satisfactory to it
against such risk or liability is not assured to it.

      (h) Any corporation into which the Custodian 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 Custodian shall be a party, or any
corporation succeeding to the business of the Custodian shall be the successor
of the Custodian hereunder without the execution or filing of any paper with any
party hereto or any further act on the part of any of the

                                       17
<PAGE>

parties hereto except where an instrument of transfer or assignment is required
by law to effect such succession, anything herein to the contrary
notwithstanding.

Section 15. Term of Custodial Agreement.

      Promptly after written notice from the Buyer Agent of the termination of
the Repurchase Agreement and payment in full of all amounts owing to the Buyer
Agent thereunder and under the Note, the Custodian shall deliver all documents
remaining in the Mortgage Files to the applicable Seller, and this Custodial
Agreement shall thereupon terminate.

Section 16. Notices.

      All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given when received by the recipient party at
the address shown on its signature page hereto, or at such other addresses as
may hereafter be furnished to each of the other parties by like notice. Any such
demand, notice or communication hereunder shall be deemed to have been received
on the date delivered to or received at the premises of the addressee. The
Custodian's office is located at the address set forth on its signature page
hereto, and the Custodian shall notify the Buyer Agent and the Sellers if such
address should change.

Section 17. Governing Law.

      This Custodial Agreement shall be construed in accordance with the laws of
the State of New York, and the obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws without regard to the
conflict of laws doctrine applied in such state (other than Section 5-1401 of
the New York General Obligations Law). Section 18. Authorized Representatives.

      Each individual designated as an authorized representative of the Buyer
Agent or its successors or assigns, the Sellers and the Custodian, respectively
(an "Authorized Representative"), is authorized to give and receive notices,
requests and instructions and to deliver certificates and documents in
connection with this Custodial Agreement on behalf of the Buyer Agent, the
Sellers and the Custodian, as the case may be, and the specimen signature for
each such Authorized Representative, initially authorized hereunder, is set
forth on Annexes 6, 7 and 8 hereof, respectively. From time to time, the Buyer
Agent, the Sellers and the Custodian or their respective successors or permitted
assigns may, by delivering to the others a revised annex, change the information
previously given pursuant to this Section 18, but each of the parties hereto
shall be entitled to rely conclusively on the then current annex until receipt
of a superseding annex.

Section 19. Amendment.

      This Custodial Agreement may be amended from time to time by written
agreement signed by the Sellers, the Buyer Agent and the Custodian.

                                       18
<PAGE>

Section 20. Cumulative Rights.

      The rights, powers and remedies of the Custodian and the Buyer Agent under
this Custodial Agreement shall be in addition to all rights, powers and remedies
given to the Custodian and the Buyer Agent by virtue of any statute or rule of
law, the Repurchase Agreement or any other agreement, all of which rights,
powers and remedies shall be cumulative and may be exercised successively or
concurrently without impairing the Buyer Agent's security interest in the
Purchased Items.

Section 21. Binding Upon Successors.

      All rights of the Custodian and the Buyer Agent under this Custodial
Agreement shall inure to the benefit of the Custodian and the Buyer Agent and
their successors and permitted assigns, and all obligations of each Seller shall
bind its successors and assigns.

Section 22. Entire Agreement; Severability.

      This Custodial Agreement contains the entire agreement with respect to the
Purchased Items among the Custodian, the Buyer Agent and the Sellers; provided,
however, that this Custodial Agreement, together with the other Repurchase
Documents, contains the entire agreement with respect to the Purchased Items
among the Buyer Agent and the Sellers. If any of the provisions of this
Custodial Agreement shall be held invalid or unenforceable, this Custodial
Agreement shall be construed as if not containing such provisions, and the
rights and obligations of the parties hereto shall be construed and enforced
accordingly between the Buyer Agent and the Sellers, and this Custodial
Agreement contains the entire Agreement with respect to the rights and
obligations of the Custodian.

Section 23. Execution In Counterparts.

      This Custodial Agreement may be executed in counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.

Section 24. Tax Reports.

      The Custodian shall not be responsible for the preparation or filing of
any reports or returns relating to federal, state or local income taxes with
respect to this Custodial Agreement, other than in respect of the Custodian's
compensation or for reimbursement of expenses.

Section 25. Pledging of the Mortgage Loans by the Buyer Agent.

      In connection with a pledge of the Mortgage Loans as collateral for an
obligation of the Buyer Agent, the Buyer Agent may pledge its interest in the
Mortgage Files held by the Custodian for the benefit of the Buyer Agent from
time to time by delivering written notice to the Custodian stating that the
buyer Agent has pledged its interest in the identified Mortgage Loans and
Mortgage Files, and the identity of the party to whom the Mortgage Loans have
been pledged (such party, the "Pledgee"). Upon receipt of such notice from the
Buyer Agent, the Custodian shall mark its records to reflect the pledge of the
Mortgage Loans by the Buyer Agent

                                       19
<PAGE>

to the Pledgee. The Custodian's records shall reflect the pledge of the Mortgage
Loans by the Buyer Agent to the Pledgee until such time as the Custodian
receives written instructions from the Buyer Agent and acknowledged by the
Pledgee that the Mortgage Loans are no longer pledged by the Buyer Agent to the
Pledgee, at which time the Custodian shall change its records to reflect the
release of the pledge of the Mortgage Loans and that the Custodian is holding
the Mortgage Loans as custodian for, and for the benefit of, the Buyer Agent;
provided, however that such pledge shall not affect the right of the Custodian
to rely on instructions from the Buyer Agent hereunder.

Section 26. Transmission of Mortgage Files.

      Prior to any shipment of any Mortgage Files hereunder, the applicable
Seller shall deliver to the Custodian written instructions as to the method of
shipment and the shipper that the Custodian is to utilize in connection with the
transmission of such Mortgage Files or other loan documents in the performance
of the Custodian's duties hereunder. Such Seller shall arrange for the provision
of such services at its sole cost and expense (or, at the Custodian's option,
reimburse the Custodian for all costs and expenses incurred by the Custodian
consistent with such instructions) and will maintain such insurance against loss
or damage to the Mortgage Files or other loan documents as such Seller may deem
appropriate. It is expressly agreed that in no event shall the Custodian have
any liability for any losses or damages to any person, including without
limitation, any Seller, arising out of actions of the Custodian consistent with
the instructions of a Seller. In the event that the Custodian does not receive
such written instructions, the Custodian shall be authorized and shall be
indemnified as provided herein to utilize a nationally recognized courier
service.

Section 27. Submission To Jurisdiction; Waivers.

      Each Seller, the Buyer Agent and the Custodian hereby irrevocably and
unconditionally:

      (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS CUSTODIAL AGREEMENT, THE REPURCHASE AGREEMENT AND THE OTHER
REPURCHASE DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

      (b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;

      (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED

                                       20
<PAGE>

OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID,
TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF
WHICH THE BUYER AGENT SHALL HAVE BEEN NOTIFIED; AND

      (d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN
ANY OTHER JURISDICTION.

Section 28. Waiver of Jury Trial.

      Each Seller, the Buyer Agent and the Custodian hereby waive trial by jury
in any judicial proceeding involving, directly or indirectly, any matter
(whether sounding in tort, contract or otherwise) in any way arising out of,
related to, or connected with this Custodial Agreement or the relationships
established hereunder.

Section 29. Substitution.

      This Custodial Agreement substitutes and replaces in its entirety the
Existing Custodial Agreement. All Mortgage Files that are held by the Custodian
pursuant to the Existing Custodial Agreement immediately prior to the execution
and delivery of this Custodial Agreement shall, as of the execution and delivery
hereof, be deemed, mutatis mutandis, to be held under this Custodial Agreement.

                               [SIGNATURES FOLLOW]

                                       21
<PAGE>

      IN WITNESS WHEREOF, this Custodial Agreement was duly executed by the
parties hereto as of the day and year first above written.

                                       SELLERS

                                       AMERICAN HOME MORTGAGE CORP.

                                       By: /s/ Alan B. Horn
                                           -----------------
                                           Name:  Alan B. Horn
                                           Title: Executive Vice President,
                                                  General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York  11747
                                       Attention: Alan B. Horn, General
                                       Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

                                       AMERICAN HOME MORTGAGE
                                       INVESTMENT CORP.

                                       By: /s/ Alan B. Horn
                                           ----------------
                                           Name:  Alan B. Horn
                                           Title: Executive Vice President,
                                                  General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York  11747
                                       Attention: Alan B. Horn, General Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

<PAGE>

                                       AMERICAN HOME MORTGAGE
                                       HOLDINGS, INC.

                                       By: /s/ Alan B. Horn
                                           ------------------
                                           Name:  Alan B. Horn
                                           Title: Executive Vice President,
                                                  General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York  11747
                                       Attention: Alan B. Horn, General Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

                                       AMERICAN HOME MORTGAGE
                                       ACCEPTANCE, INC.

                                       By: /s/ Alan B. Horn
                                           ------------------
                                           Name:   Alan B. Horn
                                           Title:  Executive Vice President,
                                                   General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York  11747
                                       Attention: Alan B. Horn, General Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

<PAGE>

                                       AMERICAN HOME MORTGAGE
                                       SERVICING, INC.

                                       By: /s/ Alan B. Horn
                                           ------------------
                                           Name:   Alan B. Horn
                                           Title:  Executive Vice President,
                                                   General Counsel and Secretary

                                       Address for Notices:
                                       -------------------
                                       538 Broadhollow Road
                                       Melville, New York  11747
                                       Attention: Alan B. Horn, General Counsel
                                       Facsimile: (800) 209-7276
                                       Telephone: (516) 396-7703

                                       With a copy to:
                                       --------------
                                       4600 Regent Blvd.
                                       Suite 200
                                       Irving, Texas 75063
                                       Attention: David Friedman

<PAGE>

                                       BUYER AGENT
                                       -----------

                                       MORGAN STANLEY BANK

                                       By: /s/ Andrew B. Neuberger
                                          ------------------------

                                           Name:  Andrew B. Neuberger
                                           Title: Vice President

                                       Address for Notices:
                                       -------------------
                                       2500 Lake Park Boulevard
                                       West Valley City, Utah  84120
                                       Attention:  Richard Felix

                                       with a copy to:
                                       1221 Avenue of the Americas, 27th Floor
                                       New York, New York 10020
                                       Attention:  Paul Najarian
                                       Telecopier No.:  (212) 507-4780
                                       Telephone No.:  (212) 762-6397

<PAGE>

                                       CUSTODIAN
                                       ---------

                                       DEUTSCHE BANK NATIONAL TRUST
                                       COMPANY

                                       By: /s/ Norma L. Catone
                                           -------------------
                                           Name:  Norma L. Catone
                                           Title: Vice President

                                       By: /s/ Andrew Hays
                                           ---------------
                                           Name:  Andrew Hays
                                           Title: Associate

                                       Address for Notices:
                                       -------------------
                                       1761 East St. Andrew Place
                                       Santa Ana, California 92705
                                       Attention: Mortgage Custody - AH05BC
                                       Telecopier No.:  (714) 247-6035
                                       Telephone No.:  (714) 247-6000

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