Document:

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                                                                  EXECUTION COPY

                      AMENDED AND RESTATED TRUST AGREEMENT

                            dated as of May 30, 2003

                                  by and among

                         ACCREDITED HOME LENDERS, INC.,
                                   as Sponsor,

                         ACCREDITED HOME CAPITAL, INC.,
                                   as Seller,

                                       and

                      U.S. BANK TRUST NATIONAL ASSOCIATION,
                                as Owner Trustee

                      ACCREDITED MORTGAGE LOAN TRUST 2003-1
                        Asset-Backed Notes, Series 2003-1

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                                       TABLE OF CONTENTS

                                          ARTICLE I
                                         DEFINITIONS

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Section 1.01. Capitalized Terms..........................................................1
Section 1.02. Other Definitional Provisions..............................................5

                                          ARTICLE II
                                         ORGANIZATION

Section 2.01. Name.......................................................................6
Section 2.02. Office.....................................................................6
Section 2.03. Purposes and Powers........................................................6
Section 2.04. Appointment of Owner Trustee...............................................7
Section 2.05. Initial Capital Contribution of Owner Trust Estate.........................7
Section 2.06. Declaration of Trust.......................................................8
Section 2.07. Liability of the Certificateholders........................................8
Section 2.08. Title to Trust Property....................................................8
Section 2.09. Situs of Trust.............................................................8
Section 2.10. Representations and Warranties of the Sponsor..............................8
Section 2.11. Federal Income Tax Treatment of the Trust.................................10
Section 2.12. Covenants of the Sponsor..................................................10
Section 2.13. Covenants of the Certificateholders.......................................11
Section 2.14. Representations and Warranties of the Seller..............................12
Section 2.15. Covenants of the Seller...................................................13

                                        ARTICLE III
                                        SUB-TRUSTS

Section 3.01. Series Trust..............................................................13
Section 3.02. Establishment of Sub-Trust................................................13
Section 3.03. Assets of Sub-Trust.......................................................13
Section 3.04. Liabilities of Sub-Trust..................................................14

                                      ARTICLE IV
                        CERTIFICATES AND TRANSFER OF INTERESTS

Section 4.01. Initial Ownership.........................................................15
Section 4.02. The Certificates..........................................................15
Section 4.03. Execution, Authentication and Delivery of Certificates....................15
Section 4.04. Registration of Transfer and Exchange of Certificates.....................16
Section 4.05. Mutilated, Destroyed, Lost or Stolen Certificates.........................16
Section 4.06. Persons Deemed Owners.....................................................17
Section 4.07. Access to List of Certificateholders' Names and Addresses.................17
Section 4.08. Maintenance of Office or Agency...........................................17
Section 4.09. Restrictions on Transfers of Certificates.................................17

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                                              ARTICLE V
                                       ACTIONS BY OWNER TRUSTEE

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Section 5.01. Prior Notice to the Certificateholders with Respect to Certain Matters..............20
Section 5.02. Action by Certificateholders with Respect to Bankruptcy.............................22
Section 5.03. Restrictions on Certificateholders' Power...........................................22
Section 5.04. Majority Control....................................................................22

                                               ARTICLE VI
                                     TAX PROVISIONS; CERTAIN DUTIES

Section 6.01. Federal Income Tax Provisions.......................................................22
Section 6.02. Withholding Taxes...................................................................26
Section 6.03. Accounting and Reports to the Certificateholders, the Internal Revenue
              Service and Others..................................................................27

                                              ARTICLE VII
                                  AUTHORITY AND DUTIES OF OWNER TRUSTEE

Section 7.01. General Authority...................................................................27
Section 7.02. General Duties......................................................................28
Section 7.03. Action upon Instruction.............................................................28
Section 7.04. No Duties Except as Specified in this Agreement, the Basic Documents or any
              Instructions........................................................................29
Section 7.05. No Action Except under Specified Documents or Instructions..........................30
Section 7.06. Restrictions........................................................................30

                                             ARTICLE VIII
                                      CONCERNING THE OWNER TRUSTEE

Section 8.01. Acceptance of Trusts and Duties.....................................................30
Section 8.02. Furnishing of Documents.............................................................31
Section 8.03. Representations and Warranties of the Owner Trustee.................................32
Section 8.04. Reliance; Advice of Counsel.........................................................32
Section 8.05. Not Acting in Individual Capacity...................................................33
Section 8.06. Owner Trustee Not Liable for the Certificates or Mortgage Loans.....................33
Section 8.07. Owner Trustee May Own Certificates and Notes........................................33
Section 8.08. Licenses............................................................................34

                                               ARTICLE IX
                                      COMPENSATION OF OWNER TRUSTEE

Section 9.01. Owner Trustee's Fees and Expenses...................................................34
Section 9.02. Indemnification.....................................................................34
Section 9.03. Payments to the Owner Trustee.......................................................35

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                                        ARTICLE X
                              TERMINATION OF TRUST AGREEMENT

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Section 10.01. Termination of Trust Agreement...........................................35

                                        ARTICLE XI
                  SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

Section 11.01. Eligibility Requirements for Owner Trustee...............................36
Section 11.02. Resignation or Removal of Owner Trustee..................................36
Section 11.03. Successor Owner Trustee..................................................37
Section 11.04. Merger or Consolidation of Owner Trustee.................................38
Section 11.05. Appointment of Co-Trustee or Separate Trustee............................38

                                         ARTICLE XII
                                        MISCELLANEOUS

Section 12.01. Supplements and Amendments...............................................39
Section 12.02. No Legal Title to Owner Trust Estate in Certificateholders...............40
Section 12.03. Limitations on Rights of Others..........................................40
Section 12.04. Notices..................................................................41
Section 12.05. Severability.............................................................41
Section 12.06. Separate Counterparts....................................................41
Section 12.07. Successors and Assigns...................................................41
Section 12.08. No Petition..............................................................41
Section 12.09. No Recourse..............................................................42
Section 12.10. Headings.................................................................42
Section 12.11. GOVERNING LAW............................................................42
Section 12.12. Grant of Certificateholder Rights to Note Insurer........................42
Section 12.13. Third-Party Beneficiary..................................................43
Section 12.14. Suspension and Termination of Note Insurer's Rights......................43
Section 12.15. Master Servicer..........................................................43

EXHIBITS

EXHIBIT A         Form of Trust Certificate
EXHIBIT B         Form of Certificate of Trust
EXHIBIT C         Form of Investment Letter
EXHIBIT D         Form of Transferor Certificate

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     This AMENDED AND RESTATED TRUST AGREEMENT, dated as of May 30, 2003, is
among ACCREDITED HOME LENDERS, INC., as sponsor (the "SPONSOR"), ACCREDITED HOME
CAPITAL, INC., as seller (the "SELLER") and U.S. BANK TRUST, NATIONAL
ASSOCIATION, a national banking association, as owner trustee (the "OWNER
TRUSTEE").

     NOW, THEREFORE, in consideration of the mutual agreements herein contained,
and of other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

     Section 1.01     CAPITALIZED TERMS. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:

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

     "ANNUAL TAX REPORTS" shall have the meaning assigned thereto in Section
6.01(c)(xi).

     "AUTHORIZED OFFICER" shall have the meaning assigned thereto in Appendix I
to the Indenture.

     "BACKUP SERVICER" shall mean Countrywide Home Loans Servicing LP, or any
successor backup servicer appointed pursuant to the Sale and Servicing
Agreement.

     "BASIC DOCUMENTS" shall mean this Agreement, the Sale and Servicing
Agreement, the Indenture, the Insurance Agreement and the Indemnification
Agreement.

     "BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday or
(ii) a day that is either a legal holiday or a day on which the Note Insurer or
banking institutions in the State of New York, the State of Delaware, the State
of California, or the state in which the Indenture Trustee's office from which
payments will be made to the Certificateholder, are authorized or obligated by
law, regulation or executive order to be closed.

     "CAPITAL ACCOUNT" shall have the meaning assigned thereto in Section
6.01(c)(i).

     "CERTIFICATE" shall mean each Trust Certificate.

     "CERTIFICATEHOLDER" shall mean each Person in whose name a Trust
Certificate is registered.

     "CERTIFICATE OF TRUST" shall mean the Certificate of Trust, in the form of
EXHIBIT B, to be filed for the Trust pursuant to Section 3810(a) of the
Statutory Trust Statute.

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     "CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" shall mean the register
mentioned and the registrar appointed pursuant to Section 4.04.

     "CLASS" shall mean either the Class A-1 Notes, the Class A-2 Notes or the
Class A-3 Notes.

     "CLASS A-1 NOTES" shall mean the Accredited Mortgage Loan Trust 2003-1,
Asset-Backed Notes, Series 2003-1, Class A-1.

     "CLASS A-2 NOTES" shall mean the Accredited Mortgage Loan Trust 2003-1,
Asset-Backed Notes, Series 2003-1, Class A-2.

     "CLASS A-3 NOTES" shall mean the Accredited Mortgage Loan Trust 2003-1,
Asset-Backed Notes, Series 2003-1, Class A-3.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended, and, where
appropriate in context, Treasury Regulations promulgated thereunder.

     "CORPORATE TRUST OFFICE" shall mean, with respect to the Owner Trustee, an
office of the Owner Trustee which for purposes of the Agreement is located at
400 North Michigan Avenue, Second Floor, Chicago, Illinois 60611, Attention:
Corporate Trust Administration; or at such other address as the Owner Trustee
may designate by notice to the Certificateholders and the Sponsor, or an office
of any successor Owner Trustee (the address of which the successor Owner Trustee
will notify the Certificateholders and the Sponsor).

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

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

     "EXPENSES" shall have the meaning assigned to such term in Section 9.02.

     "GROUP I MORTGAGE LOANS" shall mean a pool of fixed rate mortgage loans, as
identified in the related Mortgage Loan Schedule.

     "GROUP II MORTGAGE LOANS" shall mean a pool of adjustable-rate mortgage
loans, as identified in the related Mortgage Loan Schedule.

     "GROUP III MORTGAGE LOANS" shall mean a pool of adjustable-rate mortgage
loans, as identified in the related Mortgage Loan Schedule.

     "HOLDER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning set forth for
"partner nonrecourse debt minimum gain" in Treasury Regulations Section
1.704-2(i)(2). A Certificateholder's share of Holder Nonrecourse Debt Minimum
Gain shall be determined in accordance with Treasury Regulations Section
1.704-2(i)(5).

     "INDEMNIFICATION AGREEMENT" shall mean the Indemnification Agreement, dated
as of May 28, 2003, between the Note Insurer and the Underwriters.

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     "INDENTURE" shall mean the Indenture, dated as of May 1, 2003, by and
between the Trust and the Indenture Trustee.

     "INDENTURE TRUSTEE" means Deutsche Bank National Trust Company, as
Indenture Trustee under the Indenture.

     "INSURANCE AGREEMENT" shall mean the Insurance and Indemnity Agreement
dated as of May 30, 2003 among the Note Insurer, the Trust, the Master Servicer,
the Seller, the Sponsor and the Indenture Trustee, including any amendments and
supplements thereto.

     "INVESTMENT LETTER" shall have the meaning assigned to such term in Section
4.04.

     "LOAN GROUP" shall mean either Loan Group I, Loan Group II or Loan Group
III.

     "LOAN GROUP I" shall mean the pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group I.

     "LOAN GROUP II" shall mean the pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group II.

     "LOAN GROUP III" shall mean the pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group III.

     "MASTER SERVICER" shall mean Accredited Home Lenders, Inc., a California
corporation, or any successor master servicer appointed pursuant to the Sale and
Servicing Agreement.

     "MORTGAGE LOANS" shall mean the Group I Mortgage Loans, the Group II
Mortgage Loans and the Group III Mortgage Loans.

     "NON-U.S. PERSON" shall mean an individual, corporation, partnership or
other person other than a United States Person.

     "NOTEHOLDER" shall have the meaning assigned to such terms in the
Indenture.

     "NOTE INSURANCE POLICY" shall mean the financial guaranty insurance policy
issued by the Note Insurer for the benefit of the Noteholders.

     "NOTE INSURER" shall mean Ambac Assurance Corporation, a New York financial
guaranty insurance company.

     "NOTE INSURER DEFAULT" shall have the meaning assigned to such term in the
Indenture.

     "NOTE PRINCIPAL BALANCE" shall have the meaning assigned to such term in
the Indenture.

     "NOTES" shall mean the Class A-1 Notes, the Class A-2 Notes and the Class
A-3 Notes.

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     "OUTSTANDING" shall have the meaning assigned to such term in the
Indenture.

     "OWNERSHIP INTEREST" means, with respect to any Certificate, any ownership
or security interest in such Certificate, including any interest in such
Certificate as the Certificateholder thereof and any other interest therein,
whether direct or indirect, legal or beneficial, as owner or as pledgee.

     "OWNER TRUST ESTATE" shall mean the Trust Estate, including the
contribution of $1,000 referred to in Section 2.05 hereof.

     "OWNER TRUSTEE" shall mean U.S. Bank Trust National Association, a national
banking association, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor owner trustee hereunder.

     "PAYMENT DATE" shall mean the 25th day of each month or, if such 25th day
is not a Business Day, the next succeeding Business Day, commencing June 25,
2003.

     "PERCENTAGE INTEREST" shall mean with respect to any Certificate, the
percentage portion of the Certificates evidenced thereby as stated on the face
of such Certificate.

     "PROSPECTIVE HOLDER" shall have the meaning set forth in Section 4.09(a).

     "RATING AGENCY CONDITION" means, with respect to any action to which a
Rating Agency Condition applies, that each Rating Agency shall have been given
ten (10) days (or such shorter period as is acceptable to each Rating Agency)
prior notice thereof and that each of the Rating Agencies shall have notified
the Indenture Trustee, the Sponsor, the Master Servicer, the Note Insurer, the
Owner Trustee and the Trust in writing that such action will not result in a
reduction or withdrawal of the then current rating of the Notes that it
maintains without taking into account the Note Insurance Policy.

     "RECORD DATE" shall mean, with respect to the Certificates and any Payment
Date, the last Business Day of the month immediately preceding the month in
which such Payment Date occurs.

     "SALE AND SERVICING AGREEMENT" shall mean the Sale and Servicing Agreement,
dated as of May 1, 2003, among the Sponsor, the Trust, the Indenture Trustee,
the Backup Servicer and the Master Servicer.

     "SECRETARY OF STATE" shall mean the Secretary of State of the State of
Delaware.

     "SELLER" shall mean Accredited Home Capital, Inc., a Delaware corporation.

     "SPONSOR" shall mean Accredited Home Lenders, Inc., a California
corporation.

     "STATUTORY TRUST STATUTE" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from time to
time.

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     "SUB-TRUST" shall have the meaning specified in Section 3.01 and includes
either Sub-Trust I Sub-Trust II or Sub-Trust III, each of which constitute a
separate series of interests in the Trust Estate pursuant to Section 3806(b)(2)
of the Statutory Trust Statute.

     "SUB-TRUST I" shall mean the portion of the Trust Estate assigned to
Sub-Trust I.

     "SUB-TRUST II" shall mean the portion of the Trust Estate assigned to
Sub-Trust II.

     "SUB-TRUST III" shall mean the portion of the Trust Estate assigned to
Sub-Trust III.

     "TAXABLE YEAR" shall have the meaning assigned thereto in Section
6.01(c)(x).

     "TAX MATTERS PARTNER" shall have the meaning assigned thereto in Section
6.01(c)(xii).

     "TRANSFER" means any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.

     "TREASURY REGULATIONS" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations. "Trust" shall mean the Accredited Home Equity Loan Trust 2003-1,
the Delaware statutory trust created pursuant to this Agreement.

     "TRUST CERTIFICATE" shall mean a certificate evidencing the beneficial
interest of a Certificateholder in the Trust consisting of Sub-Trust I,
Sub-Trust II and Sub-Trust III, substantially in the form attached hereto as
EXHIBIT A.

     "TRUST MINIMUM GAIN" shall have the meaning set forth for "partnership
minimum gain" in Treasury Regulations 1.704-2(b)(2) and 1.704-2(d). In
accordance with Treasury Regulations Section 1.704-2(d), the amount of Trust
Minimum Gain is determined by first computing, for each nonrecourse liability of
the Trust, any gain the Trust would realize if it disposed of the property
subject to that liability for no consideration other than full satisfaction of
the liability, and then aggregating the separately computed gains. A
Certificateholder's share of Trust Minimum Gain shall be determined in
accordance with Treasury Regulations Section 1.704-2(g)(1).

     "UNDERWRITERS" shall mean Lehman Brothers Inc. and Credit Suisse First
Boston LLC.

     Section 1.02.    OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
Appendix I to the Indenture.

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

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

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

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

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

                                   ARTICLE II

                                  ORGANIZATION

     Section 2.01.    NAME. The Trust governed hereby shall be known as
"Accredited Mortgage Loan Trust 2003-1," in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued on behalf of the Trust.

     Section 2.02.    OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in the
State of Delaware as the Owner Trustee may designate by written notice to the
Certificateholders, Indenture Trustee, the Note Insurer and the Sponsor.

     Section 2.03.    PURPOSES AND POWERS. The purpose of the Trust is to engage
in the following activities:

          (a)  to issue the Notes pursuant to the Indenture and to sell such
     Notes;

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          (b)  with the proceeds of the sale of the Notes and Certificates, to
     pay the organizational, startup and transactional expenses of the Trust and
     to purchase the Mortgage Loans to be included in the Owner Trust Estate
     from the Seller with the balance of such funds pursuant to the Sale and
     Servicing Agreement;

          (c)  to assign, grant, transfer, pledge, mortgage and convey the Owner
     Trust Estate pursuant to the Indenture and to hold, manage and distribute
     to the Certificateholders any portion of the Owner Trust Estate released
     from the lien of, and remitted to the Trust pursuant to, the Indenture;

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

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

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

          (g)  to issue the Certificates pursuant to this Agreement.

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

     Section 2.04.    APPOINTMENT OF OWNER TRUSTEE. The Sponsor hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein and in the Statutory
Trust Statute, and the Owner Trustee hereby accepts such appointment.

     The Owner Trustee may engage, in the name of the Trust or in its own name
     on behalf of the Trust, in the activities of the Trust, make and execute
     contracts on behalf of the Trust and sue on behalf of the Trust.

     Section 2.05.    INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. The
Sponsor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1,000. The Owner Trustee hereby
acknowledges receipt in trust from the Sponsor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Payment Account. The Sponsor shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee. Concurrently with the execution of this
Agreement, the Trust will enter into the Sale and Servicing Agreement pursuant
to which it will purchase the Mortgage Loans, to be designated to the related
Sub-Trust, which comprise the remainder of the Owner Trust Estate.

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     Section 2.06.    DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Noteholders, the Note
Insurer and the Certificateholders, subject to the obligations of the Trust
Under the Basic Documents.

          It is the intention of the parties hereto that, solely for income and
franchise tax purposes, the Trust constitutes a statutory trust under the
Statutory Trust Statute and that this Agreement constitutes the governing
instrument of such statutory trust. It is the intention of the parties hereto
that, solely for income and franchise tax purposes, the Trust shall be treated
as a security arrangement, with the assets of the Trust being the Sub-Trusts
consisting of each Loan Group. The parties agree that, unless otherwise required
by appropriate tax authorities, the Trust will file or cause to be filed annual
or other necessary returns, reports and other forms, if any, consistent with the
characterization of the Trust, the Sub-Trusts and each Loan Group as provided in
the preceding sentence for such tax purposes. Effective as of the date hereof,
the Owner Trustee shall have all rights, powers and duties set forth herein and
in the Statutory Trust Statute with respect to accomplishing the purposes of the
Trust. The Owner Trustee shall file the Certificate of Trust with the Secretary
of State.

     Section 2.07.    LIABILITY OF THE CERTIFICATEHOLDERS. Subject to Section
2.05, no Certificateholder shall have any personal liability for any liability
or obligation of the Trust. The Certificates shall be fully paid and
nonassessable.

     Section 2.08.    TITLE TO TRUST PROPERTY.

          (a)  Subject to the Indenture, legal title to all of the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee and/or a separate
trustee, as the case may be.

          (b)  The Certificateholders shall not have legal title to any part of
the Owner Trust Estate. No transfer by operation of law or otherwise of any
interest of the Certificateholders shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of any part of the Owner Trust Estate.

     Section 2.09.    SITUS OF TRUST. The Trust will be located in the State of
Delaware and administered by the Owner Trustee in the States of Delaware and
Illinois. The Trust shall not have any employees; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware.

     Section 2.10.    REPRESENTATIONS AND WARRANTIES OF THE SPONSOR. The Sponsor
hereby represents and warrants to the Owner Trustee and the Note Insurer that:

     (a)  The Sponsor is duly organized and validly existing as a corporation in
good standing under the laws of the State of California, with power and
authority to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted.

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<PAGE>

     (b)  The Sponsor has the power and authority to execute and deliver this
Agreement and to carry out its terms; and the execution, delivery and
performance of this Agreement has been duly authorized by the Sponsor by all
necessary corporate action.

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

     (d)  There are no proceedings or investigations pending or notice of which
has been received in writing before any court, regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Sponsor or its properties: (x) asserting the invalidity of this Agreement, (y)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement or (z) seeking any determination or ruling that should reasonably
be expected to materially and adversely affect the performance by the Sponsor of
its obligations under, or the validity or enforceability of, this Agreement.

     (e)  The representations and warranties of the Sponsor in Article III of
the Sale and Servicing Agreement are true and correct.

     (f)  The Sponsor has duly executed and delivered this Agreement, and this
Agreement constitutes the legal, valid and binding obligation of the Sponsor,
enforceable against the Sponsor, in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or similar laws affecting the enforcement of creditors' rights generally and by
the application of equitable principles.

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

     (h)  The Sponsor will hold itself out to the public under its own name as a
separate and distinct entity from the Seller and the Trust and conduct its
business so as not to mislead others as to the identity of the Trust. Without
limiting the generality of the foregoing, all oral and written communications,
including without limitation, all letters, invoices, contracts, statements and
applications will be made solely in the name of the Trust if they are made on
behalf of the Trust and solely in the name of the Sponsor if they are made on
behalf of the Sponsor.

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     Section 2.11.    FEDERAL INCOME TAX TREATMENT OF THE TRUST.

     (a)  For so long as the Trust has one Certificateholder for federal income
tax purposes, it will, pursuant to Treasury Regulations promulgated under
Section 7701 of the Code, be disregarded as an entity distinct from the
Certificateholder for all federal income tax purposes. Accordingly, for federal
income tax purposes, the Certificateholder will be treated as (i) owning all
assets owned by the Trust, (ii) having incurred all liabilities incurred by the
Trust, and (iii) all transactions between the Trust and the Certificateholder
will be disregarded.

     (b)  In the event that the Trust has two or more Certificateholders for
federal income tax purposes, the Trust will be treated as a partnership. At any
such time that the Trust has two or more Certificateholders, this Agreement may
need to be amended, in accordance with Section 12.01 herein, and appropriate
provisions may need to be added so as to provide for treatment of the Trust as a
partnership.

     (c)  The Owner Trustee shall have no obligation or liability for its
failure to treat the Trust as a partnership prior to the earlier of its receipt
of notice or its having actual knowledge that the Trust has more than a single
equity owner.

     (d)  Neither the Owner Trustee nor any Certificateholder will, under any
circumstances, file a Form 8832, or any successor form, on behalf of the Trust.

     Section 2.12.    COVENANTS OF THE SPONSOR. The Sponsor agrees and covenants
for the benefit of each Certificateholder, the Note Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:

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

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

     (c)  it shall not, for any reason, withdraw or attempt to withdraw from
this Agreement or any other Basic Document to which it is a party.

                                       10
<PAGE>

     Section 2.13.    COVENANTS OF THE CERTIFICATEHOLDERS. Each
Certificateholder by becoming a beneficial owner of the Certificate or by its
acceptance of a Certificate agrees:

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

     (b)  to the appointment of the Owner Trustee as such Certificateholder's
agent and attorney-in-fact to sign any federal income tax information return
filed on behalf of the Trust and, if requested by the Trust, to sign such
federal income tax information return in its capacity as holder of an interest
in the Trust;

     (c)  not to take any position in such Certificateholder's tax returns
inconsistent with those taken in any tax returns filed by the Trust; and

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

     Section 2.14.    REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
hereby represents and warrants to the Owner Trustee and the Note Insurer that:

     (a)  The Seller is duly organized and validly existing as a corporation in
good standing under the laws of the State of Delaware, with power and authority
to own its properties and to conduct its business as such properties are
currently owned and such business is presently conducted.

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

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

                                       11
<PAGE>

     (d)  There are no proceedings or investigations pending or notice of which
has been received in writing before any court, regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the Seller
or its properties: (x) asserting the invalidity of this Agreement, (y) seeking
to prevent the consummation of any of the transactions contemplated by this
Agreement or (z) seeking any determination or ruling that should reasonably be
expected to materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement.

     (e)  The representations and warranties of the Seller in Article III of the
Sale and Servicing Agreement are true and correct.

     (f)  The Seller has duly executed and delivered this Agreement, and this
Agreement constitutes the legal, valid and binding obligation of the Seller,
enforceable against the Seller, in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or similar laws affecting the enforcement of creditors' rights generally and by
the application of equitable principles.

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

     (h)  The Seller will hold itself out to the public under its own name as a
separate and distinct entity from the Sponsor and the Trust and conduct its
business so as not to mislead others as to the identity of the Trust. Without
limiting the generality of the foregoing, all oral and written communications,
including without limitations, all letters, invoices, contracts, statements and
applications will be made solely in the name of the Trust if they are made on
behalf of the Trust and solely in the name of the Seller if they are made on
behalf of the Seller.

     Section 2.15.    COVENANTS OF THE SELLER. The Seller agrees and covenants
for the benefit of each Certificateholder, the Note Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:

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

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

                                       12
<PAGE>

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

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

                                  ARTICLE III

                                   SUB-TRUSTS

     Section 3.01.    SERIES TRUST. The beneficial interest in the assets of the
Trust shall be divided into designated series as provided in Section 3806(b)(2)
of the Statutory Trust Statute (the segregated pool of assets belonging to each
series, a "Sub-Trust"). Accordingly, it is the intent of the parties hereto that
Articles II, IV and X of this Agreement shall apply also with respect to each
such Sub-Trust as if each such Sub-Trust were a separate series of a statutory
trust under the Statutory Trust Statute, and each reference to the term "Trust"
in such Articles shall be deemed to be a reference to each such Sub-Trust to the
extent necessary to give effect to the foregoing intent. The use of the terms
"Trust" or "Sub-Trust" in this Agreement shall in no event alter the intent of
the parties hereto that the Trust receive the full benefit of the limitation on
interseries liability as set forth in Section 3804 of the Statutory Trust
Statute.

     Section 3.02.    ESTABLISHMENT OF SUB-TRUST.

          The Owner Trustee hereby establishes and designates three initial
Sub-Trusts, as follows:

                   Sub-Trust I, Sub-Trust II and Sub-Trust III

          The provisions of this Article III shall be applicable to the above
designated Sub-Trusts.

     Section 3.03.    ASSETS OF SUB-TRUST. All consideration received by the
Owner Trust Estate for the issuance or sale of the Notes relating to a
particular Loan Group and Sub-Trust, together with the entire Owner Trust Estate
in which such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong solely to that Sub-

                                       13
<PAGE>

Trust for all purposes, subject only to the rights of creditors of such
Sub-Trust and except as may otherwise be provided in the Sale and Servicing
Agreement or required by applicable tax laws, and shall be so recorded upon the
books of account of the Trust. Separate and distinct records shall be maintained
for each Sub-Trust and the assets associated with a Sub-Trust shall be held and
accounted for separately from the other assets of the Owner Trust Estate, and
any other Sub-Trust. In the event that there is any Owner Trust Estate, or any
income, earnings, profits, and proceeds thereof, or funds or payments which are
not readily identifiable as belonging to any particular Sub-Trust, the Owner
Trustee shall allocate them to the Certificates generally. Each such allocation
by the Owner Trustee shall be conclusive and binding upon all Noteholders and
Certificateholders for all purposes.

     Section 3.04.    LIABILITIES OF SUB-TRUST.

          The Owner Trust Estate belonging to each particular Sub-Trust shall be
charged with the liabilities of the Trust in respect of that Sub-Trust and only
that Sub-Trust and all expenses, costs, charges and reserves attributable to
that Sub-Trust, and any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as belonging to any
particular Sub-Trust shall be allocated and charged by the Owner Trustee to the
Certificateholders generally, based on their Ownership Interest. Each allocation
of liabilities, expenses, costs, charges and reserves by the Owner Trustee shall
be conclusive and binding upon all Noteholders and Certificateholders for all
purposes. The Owner Trustee shall have full discretion, to the extent not
inconsistent with applicable law, to determine which items shall be treated as
income and which items as capital, and each such determination and allocation
shall be conclusive and binding upon the Noteholders and the Certificateholders.
Every written agreement, instrument or other undertaking made or issued by or on
behalf of a particular Sub-Trust shall include a recitation limiting the
obligation or claim represented thereby to that Sub-Trust and its assets.

          Without limitation of the foregoing provisions of this Article, but
subject to the right of the Owner Trustee in its discretion to allocate general
liabilities, expenses, costs, charges or reserves as herein provided, the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to a particular Sub-Trust shall be enforceable against the
assets of such Sub-Trust only, and not against the assets (i) of the Trust
generally or (ii) of any other Sub-Trust. Notice of this limitation on
interseries liabilities shall be set forth in the Certificate of Trust of the
Trust (whether originally or by amendment) as filed or to be filed in the Office
of the Secretary of State pursuant to the Statutory Trust Statute, and upon the
giving of such notice in the Certificate of Trust, the statutory provisions of
Section 3804 of the Statutory Trust Statute relating to limitations on
interseries liabilities (and the statutory effect under Section 3804 of setting
forth such notice in the Certificate of Trust) shall become applicable to the
Trust and each Sub-Trust. Every note, bond, contract, instrument, certificate or
other undertaking made or issued by or on behalf of a particular Sub-Trust shall
include a recitation limiting the obligation represented thereby to that
Sub-Trust and its assets in accordance with Section 3804(a) of the Statutory
Trust Statute.

                                       14
<PAGE>

                                   ARTICLE IV

                     CERTIFICATES AND TRANSFER OF INTERESTS

     Section 4.01.    INITIAL OWNERSHIP. Upon the formation of the Trust by the
contribution by the Sponsor pursuant to Section 2.05 and the filing of the
Certificate of Trust with the Secretary of State and until the issuance of the
Certificates, the Sponsor shall be the sole owner of the Trust.

     Section 4.02.    THE CERTIFICATES. The Certificates shall be issued as a
single certificate which shall represent each separate series of beneficial
interests in each Sub-Trust, substantially in the form of Exhibit A hereto, upon
the order of the Owner Trustee, at the direction of the Sponsor, to the Seller
concurrently with the sale and assignment to the Trust of the Mortgage Loans by
the Seller, at the direction of the Sponsor, to the Owner Trustee. The
Certificates shall represent the entire beneficial interest in the assets of
each Sub-Trust subject to the debt represented by the Notes relating to each
Sub-Trust. The Certificates shall be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Owner Trustee,
as evidenced by its execution thereof. The Certificates shall be executed on
behalf of the Trust by manual or facsimile signature of an Authorized Officer of
the Owner Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be valid, notwithstanding that
such individuals or any of them shall have ceased to be so authorized prior to
the authentication and delivery of such Certificates or did not hold such
offices at the date of authentication and delivery of such Certificates.

          A transferee of a Certificate shall become a Certificateholder, and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Certificate
duly registered in such transferee's name pursuant to Section 4.04.

          The beneficial interest in each Sub-Trust shall be treated as a single
class of securities represented by the Certificates for purposes of Article 8 of
the Uniform Commercial Code of the State of Delaware.

     Section 4.03.    EXECUTION, AUTHENTICATION AND DELIVERY OF CERTIFICATES.
Concurrently with the initial transfer of the Mortgage Loans to the Trust
pursuant to the Sale and Servicing Agreement, the Owner Trustee shall cause the
Certificates, representing 100% of the Percentage Interests of the Trust, to be
executed on behalf of the Trust, authenticated and delivered, at the written
direction of the Sponsor, to the Seller as initial Certificateholder. No
Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in EXHIBIT A,
executed by the Owner Trustee or the Owner Trustee's authenticating agent, by
manual or facsimile signature; such authentication shall constitute conclusive
evidence that such Certificate shall have been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.

                                       15
<PAGE>

     Section 4.04.    REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 4.08, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
"Certificate Registrar."

          Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 4.08, the Owner Trustee, upon
the satisfaction of the conditions set forth in Section 4.09(c), shall execute,
authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates of a like Percentage Interest dated
the date of authentication by the Owner Trustee or any authenticating agent. At
the option of a Certificateholder, Certificates may be exchanged for other
Certificates of a like Percentage Interest upon surrender of the Certificates to
be exchanged at the office or agency maintained pursuant to Section 4.08.

          Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form, attached to the form of Certificate attached hereto as EXHIBIT A, or such
other form satisfactory to the Note Insurer, or, upon the occurrence and
continuation of a Note Insurer Default, satisfaction of the Rating Agency
Condition, duly executed by the Certificateholder or his attorney duly
authorized in writing.

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

          The preceding provisions of this Section 4.04 notwithstanding, the
Certificate Registrar shall not register transfers or exchanges of Certificates
for a period of fifteen (15) days preceding the Payment Date with respect to the
Certificates.

          Notwithstanding anything contained herein to the contrary, neither the
Certificate Registrar nor the Owner Trustee shall be responsible for
ascertaining whether any transfer complies with the registration provisions or
exemptions from the Securities Act of 1933, as amended, the Securities Act of
1934, as amended, applicable state securities law or the Investment Company Act
of 1940, as amended; PROVIDED, HOWEVER, that if an Investment Letter is
specifically required to be delivered to the Owner Trustee by a purchaser or
transferee of a Certificate, the Owner Trustee shall be under a duty to examine
the same to determine whether it conforms to the form of Investment Letter set
forth as EXHIBIT C hereto and shall promptly notify the party delivering the
same if such Investment Letter does not so conform.

     Section 4.05.    MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or

                                       16
<PAGE>

indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Certificate shall have been acquired by a protected
purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner
Trustee, or the Owner Trustee's authenticating agent, shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like Percentage Interest. In connection
with the issuance of any new Certificate under this Section 4.05, the Owner
Trustee or the Certificate Registrar may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.

     Section 4.06.    PERSONS DEEMED OWNERS. Each person by virtue of becoming a
Certificateholder in accordance with this Agreement shall be deemed to be bound
by the terns of this Agreement. Prior to due presentation of a Certificate for
registration of transfer, the Owner Trustee or the Certificate Registrar may
treat the Person in whose name any Certificate shall be registered in the
Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 6.02 and for all other purposes
whatsoever, and neither the Owner Trustee nor the Certificate Registrar shall be
bound by any notice to the contrary.

     Section 4.07.    ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
The Certificate Registrar shall furnish or cause to be furnished to the Owner
Trustee, the Master Servicer, the Sponsor and the Indenture Trustee immediately
prior to each Payment Date, a list of the names and addresses of the
Certificateholders as of the most recent Record Date. If one or more
Certificateholder, together evidencing Percentage Interests totaling not less
than 25%, apply in writing to the Certificate Registrar, and such application
states that the applicants desire to communicate with other Certificateholders
with respect to their rights under this Agreement or under the Certificates and
such application is accompanied by a copy of the communication that such
applicants propose to transmit, then the Certificate Registrar shall, within
five (5) Business Days after the receipt of such application, afford such
applicants access during normal business hours to the current list of
Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Sponsor, the
Certificate Registrar or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.

     Section 4.08.    MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee shall
maintain an office or offices or agency or agencies where notices and demands to
or upon the Owner Trustee in respect of the Basic Documents may be served, and
so long as the Owner Trustee is the Certificate Registrar, where Certificates
may be surrendered for registration of transfer or exchange and notices and
demands to or upon the Certificate Registrar in respect of the Certificates, may
be served. The Owner Trustee initially designates the Corporate Trust Office as
its principal corporate trust office for such purposes. The Owner Trustee shall
give prompt written notice to the Note Insurer, the Indenture Trustee, the
Sponsor and the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.

     Section 4.09.    RESTRICTIONS ON TRANSFERS OF CERTIFICATES. (a) Each
prospective purchaser and any subsequent transferee of a Certificate (each, a
"PROSPECTIVE HOLDER"), other than the Sponsor, shall execute and deliver to the
Owner Trustee and the Certificate Registrar and any

                                       17
<PAGE>

of their respective successors an Investment Letter in the form of Exhibit C
hereto to the effect that:

          (i)   Such Person is (A) a "qualified institutional buyer" as defined
     in Rule 144A under the Securities Act of 1933, as amended (the "Securities
     Act"), and is aware that the seller of the Certificate may be relying on
     the exemption from the registration requirements of the Securities Act
     provided by Rule 144A and is acquiring such Certificate for its own account
     or for the account of one or more qualified institutional buyers for whom
     it is authorized to act, or (B) a Person involved in the organization or
     operation of the Trust or an affiliate of such Person within the meaning of
     Rule 3a-7 of the Investment Company Act of 1940, as amended (including, but
     not limited to, the Sponsor).

          (ii)  Such Person understands that the Certificates have not been and
     will not be registered under the Securities Act and may be offered, sold,
     pledged or otherwise transferred only to a person whom the seller
     reasonably believes is (A) a qualified institutional buyer or (B) a Person
     involved in the organization or operation of the Trust or an affiliate of
     such Person, in a transaction pursuant to an effective registration
     statement under the Securities Act and any applicable state securities laws
     or exempt from the registration requirements of the Securities Act and any
     such state securities laws.

          (iii) Such Person understands that the Certificates bear a legend to
     the following effect:

                "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
                UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
                ANY STATE SECURITIES LAWS. THIS CERTIFICATE MAY BE DIRECTLY
                OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF
                (INCLUDING PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A
                "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
                UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER THE
                ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT
                FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE
                LAWS OR (II) A PERSON INVOLVED IN THE ORGANIZATION OR
                OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A PERSON
                WITHIN THE MEANING OF RULE 3a-7 OF THE INVESTMENT COMPANY
                ACT OF 1940, AS AMENDED (INCLUDING, BUT NOT LIMITED TO,
                ACCREDITED HOME LENDERS, INC.) IN A TRANSACTION THAT IS
                REGISTERED UNDER

                                       18
<PAGE>

                THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS
                EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND
                SUCH LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS
                CERTIFICATE UNDER THE ACT OR ANY STATE SECURITIES LAWS."

     (b)  By its acceptance of a Certificate, each Prospective Holder agrees and
acknowledges that no legal or beneficial interest in all or any portion of any
Certificate may be transferred directly or indirectly to an entity that holds
residual securities as nominee to facilitate the clearance and settlement of
such securities through electronic book-entry changes in accounts of
participating organizations (a "BOOK-ENTRY NOMINEE") and any such purported
transfer shall be void and have no effect.

          The Certificates shall bear an additional legend referring to the
restrictions contained in preceding paragraph to the following effect:

                THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
                DISPOSED OF UNLESS, PRIOR TO SUCH DISPOSITION, THE PROPOSED
                TRANSFEREE DELIVERS TO THE OWNER TRUSTEE AND THE CERTIFICATE
                REGISTRAR A CERTIFICATE STATING THAT SUCH TRANSFEREE IS NOT
                AN ENTITY THAT WILL HOLD THIS CERTIFICATE AS NOMINEE TO
                FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH SECURITY
                THROUGH ELECTRONIC BOOK-ENTRY CHANGES IN ACCOUNTS OF
                PARTICIPATING ORGANIZATIONS.

     (c)  No transfer of a Certificate or any beneficial interest therein shall
be made to any person unless the Owner Trustee has received a representation
letter from the Prospective Holder to the effect that such Prospective Holder
(i) is not a person which is an employee benefit plan, trust or account subject
to Title I of ERISA or Section 4975 of the Code or a governmental plan, as
defined in Section 3(32) of ERISA, subject to any federal, state or local law
which is, to a material extent, similar to the foregoing provisions of ERISA or
the Code (any such person being a "PLAN"), (ii) is not an entity, including an
insurance company separate account or general account, whose underlying assets
include "plan assets" by reason of a Plan's investment in the entity and (iii)
is not directly or indirectly purchasing such Certificate or interest therein on
behalf of, as investment manager of, as named fiduciary of, as trustee of, or
with the assets of a Plan.

     (d)  The Owner Trustee shall not execute, and shall not countersign and
deliver, a Certificate in connection with any transfer thereof unless the
transferor shall have provided to the Owner Trustee an Investment Letter, signed
by the transferee, which certificate shall contain the consent of the transferee
to any amendments of this Agreement as may be required to effectuate

                                       19
<PAGE>

further the foregoing restrictions on transfer of the Certificates to Book-Entry
Nominees, and an agreement by the transferee that it will not transfer a
Certificate without providing to the Owner Trustee an Investment Letter.

     (e)  [Reserved].

     (f)  Unless the Prospective Holder delivers a certificate to the Owner
Trustee to the effect that it is a United States Person, the Prospective Holder,
other than Accredited Home Lenders, Inc. or an affiliate of the Accredited Home
Lenders, Inc., shall obtain and deliver to the Note Insurer and the Owner
Trustee an Opinion of Counsel satisfactory to the Note Insurer to the effect
that, as a matter of federal income tax law, the transfer of the Certificate to
such Prospective Holder will not result in the imposition of any U.S.
withholding tax on payments in respect of the Mortgage Loans or the Certificate.

     (g)  No pledge or transfer of the Certificates shall be effective unless
such pledge or transfer is (i) to a single beneficial owner and (ii) accompanied
by an Opinion of Counsel satisfactory to the Owner Trustee and the Note Insurer,
which Opinion of Counsel shall not, unless otherwise agreed, be an expense of
the Trust, the Certificate Registrar, the Master Servicer, the Backup Servicer,
the Note Insurer or the Sponsor, to the effect such pledge or transfer will not
cause the Trust to be treated for federal income tax purposes as a taxable
mortgage pool, association or a publicly traded partnership taxable as a
corporation.

                                   ARTICLE V

                            ACTIONS BY OWNER TRUSTEE

     Section 5.01.    PRIOR NOTICE TO THE CERTIFICATEHOLDERS WITH RESPECT TO
CERTAIN MATTERS. With respect to the following matters, the Owner Trustee shall
not take action (and the Certificateholders shall not direct the Owner Trustee
to take any action) unless at least thirty (30) days before the taking of such
action, the Owner Trustee shall have notified the Certificateholders (unless the
Certificateholders have directed the Owner Trustee to take action) and the Note
Insurer in writing of the proposed action and neither the Certificateholders nor
the Note Insurer shall have notified the Owner Trustee in writing prior to the
30th day after such notice is given that such Certificateholders and/or the Note
Insurer have withheld consent or the Certificateholders have provided
alternative written direction (any direction by the Certificateholders shall
require the prior written consent of the Note Insurer):

          (a)  the initiation of any claim or lawsuit by the Trust (except
     claims or lawsuits brought in connection with the collection of the
     Mortgage Loans) and the compromise of any action, claim or lawsuit brought
     by or against the Trust (except with respect to the aforementioned claims
     or lawsuits for collection of the Mortgage Loans);

          (b)  the election by the Trust to file an amendment to the Certificate
     of Trust (unless such amendment is required to be filed under the Statutory
     Trust Statute);

          (c)  the amendment or other change to this Agreement or any Basic
     Document in circumstances where the consent of any Certificateholder is
     required; PROVIDED, that

                                       20
<PAGE>

     notwithstanding this Section 5.01, the prior written consent of the Note
     Insurer must be obtained for any amendment or change to this Agreement or
     any other Basic Document;

          (d)  the amendment or other change to this Agreement or any other
     Basic Document in circumstances where the consent of any Certificateholder
     is not required and such amendment materially adversely affects the
     interest of the Certificateholders;

          (e)  the appointment pursuant to the Indenture of a successor Note
     Registrar, or Indenture Trustee or pursuant to this Agreement of a
     successor Certificate Registrar or the consent to the assignment by the
     Note Registrar or Indenture Trustee or Certificate Registrar of their
     respective obligations under the Indenture or this Agreement, as
     applicable;

          (f)  the consent to the waiver of any default of any Basic Document;

          (g)  the consent to the assignment by the Indenture Trustee or Master
     Servicer of their respective obligations under any Basic Document;

          (h)  except as provided in Article X hereof, dissolve, terminate or
     liquidate the Trust in whole or in part;

          (i)  merge or consolidate the Trust with or into any other entity, or
     convey or transfer all or substantially all of the Trust's assets to any
     other entity;

          (j)  cause the Trust to incur, assume or guaranty any indebtedness
     other than as set forth in this Agreement or the other Basic Documents;

          (k)  do any act which would make it impossible to carry on the
     ordinary business of the Trust as described in Section 2.03 hereof;

          (l)  confess a judgment against the Trust;

          (m)  possess Trust assets, or assign the Trust's right to property,
     for other than a Trust purpose;

          (n)  cause the Trust to lend any funds to any entity; or

          (o)  change the Trust's purpose and powers from those set forth in
     this Agreement.

          In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses and liabilities
from its own funds, and the Trust shall not pay the indebtedness, operating
expenses and liabilities of any other entity. The Master Servicer, on behalf of
the Trust, shall maintain appropriate minutes or other records of all
appropriate action. The Trust shall maintain its office separate from the
offices of the Sponsor, the Seller and the Master Servicer.

                                       21
<PAGE>

          Notwithstanding the other provisions of this Section 5.01, the Owner
Trustee shall not have the power, except upon the written direction of the
Certificateholders with the prior written consent of the Note Insurer, and to
the extent otherwise consistent with the Basic Documents, to remove or replace
the Master Servicer or the Indenture Trustee.

     Section 5.02.    ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO BANKRUPTCY.
The Owner Trustee shall not have the power to (i) institute proceedings to have
the Trust declared or adjudicated bankrupt or insolvent, (ii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iii)
file a petition or consent to a petition seeking reorganization or relief on
behalf of the Trust under any applicable federal or state law relating to
bankruptcy, (iv) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or any similar official) of the Trust or a substantial
portion of the property of the Trust, (v) make any assignment for the benefit of
the Trust's creditors, (vi) cause the Trust to admit in writing its inability to
pay its debts generally as they become due, or (vii) take any action, or cause
the Trust to take any action, in furtherance of any of the foregoing (any of the
above, a "Bankruptcy Action") without the unanimous prior written consent and
approval of all Certificateholders and the prior written consent and approval of
the Note Insurer and the delivery to the Owner Trustee by each such
Certificateholder of a certification that such Certificateholder reasonably
believes that the Trust is insolvent. So long as the Indenture and the Insurance
Agreement remain in effect and no Note Insurer Default exists, no
Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or direct the Owner Trustee to take
any Bankruptcy Action with respect to the Trust. The terms of this Section 5.02
shall survive for one year and one day following the termination of this
Agreement.

     Section 5.03.    RESTRICTIONS ON CERTIFICATEHOLDERS' POWER. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the other Basic
Documents or would be contrary to Section 2.03, nor shall the Owner Trustee be
obligated to follow any such direction, if given.

     Section 5.04.    MAJORITY CONTROL. Except as expressly provided herein, any
action that may be taken by the Certificateholders under this Agreement may be
taken by the holders of Certificates evidencing more than 50% of the Percentage
Interest in the Trust and such action shall be binding upon all
Certificateholders. Except as expressly provided herein, any written notice of
the Certificateholders delivered pursuant to this Agreement shall be effective
if signed by holders of Certificates evidencing more than 50% of the Percentage
Interest in the Trust at the time of the delivery of such notice and such action
shall be binding upon all Certificateholders.

                                   ARTICLE VI

                         TAX PROVISIONS; CERTAIN DUTIES

     Section 6.01.    FEDERAL INCOME TAX PROVISIONS. (a) For so long as the
Trust has a single owner for federal income tax purposes, it will, pursuant to
Treasury Regulations promulgated under section 7701 of the Code, be disregarded
as an entity distinct from the Certificateholder for all federal income tax
purposes. Accordingly, for federal income tax purposes, the Certificateholder
will be treated as (i) owning all assets owned by the Trust, (ii)

                                       22
<PAGE>

having incurred all liabilities incurred by the Trust, and (iii) all
transactions between the Trust and the Certificateholder will be disregarded.

     (b)  Neither the Owner Trustee nor any Certificateholder will, under any
circumstances, and at any time, make an election of IRS Form 8832 or otherwise,
to classify the Trust as an association taxable as a corporation for federal,
state or any other applicable tax purpose.

     (c)  If the Trust is treated as a partnership (rather than disregarded as a
separate entity) for federal income tax purposes pursuant to Section 2.06, the
following provisions shall apply:

          (i)   A separate capital account (a "Capital Account") shall be
     established and maintained for each Certificateholder by the Sponsor, in
     accordance with Treasury Regulations Section 1.704-1 (b)(2)(iv). No
     Certificateholder shall be entitled to interest on its Capital Account or
     any capital contribution made by such Certificateholder to the Trust.

          (ii)  Upon termination of the Trust pursuant to Article X, any amounts
     available for distribution to Certificateholders shall be distributed to
     the Certificateholders with positive Capital Account balances in accordance
     with such balances. For purposes of this Section 6.01(c)(ii), the Capital
     Account of each Certificateholder shall be determined after all adjustments
     made in accordance with this Section 6.01 resulting from the Trust's
     operations and from all sales and dispositions of all or any part of the
     assets of the Trust. Any distributions pursuant to this Section 6.01(c)(ii)
     shall be made by the end of the Taxable Year in which the termination
     occurs (or, if later, within 90 days after the date of the termination).

          (iii) No Certificateholder shall be required to restore any deficit
     balance in its Capital Account. Furthermore, no Certificateholder shall be
     liable for the return of the Capital Account of, or of any capital
     contribution made to the Trust by, another Certificateholder.

          (iv)  Profit and loss of the Trust for each Taxable Year shall be
     allocated to the Certificateholders in accordance with their respective
     Percentage Interests.

          (v)   Notwithstanding any provision to the contrary, (i) any expense
     of the Trust that is a "nonrecourse deduction" within the meaning of
     Treasury Regulations Section 1.704-2(b)(1) shall be allocated in accordance
     with the Certificateholders' respective Percentage Interests, (ii) any
     expense of the Trust that is a "partner nonrecourse deduction" within the
     meaning of Treasury Regulations Section 1.704-2(i)(2) shall be allocated in
     accordance with Treasury Regulations Section 1.704-2(i)(1), (iii) if there
     is a net decrease in Trust Minimum Gain within the meaning of Treasury
     Regulations Section 1.704-2(f)(1) for any Taxable Year, items of gain and
     income shall be allocated among the Certificateholders in accordance with
     Treasury Regulations Section 1.704-2(f) and the ordering rules contained in
     Treasury Regulations Section 1.704-2(i), and (iv) if there is a net
     decrease in Certificateholder Nonrecourse Debt Minimum Gain within the
     meaning of Treasury Regulations Section 1.704-2(i)(4) for any Taxable Year,
     items of

                                       23
<PAGE>

     gain and income shall be allocated among the Certificateholders in
     accordance with Treasury Regulations Section 1.704-2(i)(4) and the ordering
     rules contained in Treasury Regulations Section 1.704-2(j). A
     Certificateholder's "interest in partnership profits" for purposes of
     determining its share of the nonrecourse liabilities of the Trust within
     the meaning of Treasury Regulations Section 1.752-3(a)(3) shall be such
     Certificateholder's Percentage Interest.

          (vi)  If a Certificateholder receives in any Taxable Year an
     adjustment, allocation, or distribution described in subparagraphs (4),
     (5), or (6) of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) that
     causes or increases a negative balance in such Certificateholder's Capital
     Account that exceeds the sum of such Certificateholder's shares of Trust
     Minimum Gain and Certificateholder Nonrecourse Debt Minimum Gain, as
     determined in accordance with Treasury Regulations Sections 1.704-2(g) and
     1.704-2(i), such Certificateholder shall be allocated specially for such
     Taxable Year (and, if necessary, later Taxable Years) items of income and
     gain in an amount and manner sufficient to eliminate such negative Capital
     Account balance as quickly as possible as provided in Treasury Regulations
     Section 1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of
     income or gain to a Certificateholder in accordance with this Section
     6.01(c)(vi), to the extent permitted by Regulations Section 1.704-1(b),
     items of expense or loss shall be allocated to such Certificateholder in an
     amount necessary to offset the income or gain previously allocated to such
     Certificateholder under this Section 6.01(c)(vi).

          (vii) Loss shall not be allocated to a Certificateholder to the extent
     that such allocation would cause a deficit in such Certificateholder's
     Capital Account (after reduction to reflect the items described in Treasury
     Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum
     of such Certificateholder's shares of Trust Minimum Gain and
     Certificateholder Nonrecourse Debt Minimum Gain. Any loss in excess of that
     limitation shall be allocated to all the Certificateholders in accordance
     with their respective Percentage Interests. After the occurrence of an
     allocation of loss to a Certificateholder in accordance with this Section
     6.01(c)(vii), to the extent permitted by Treasury Regulations Section
     1.704-1(b), profit shall be allocated to such Certificateholder in an
     amount necessary to offset the loss previously allocated to such
     Certificateholder under this Section 6.01(c)(vii).

          (viii) If a Certificateholder transfers any part or all of its
     Percentage Interest and the transferee is admitted as a Certificateholder
     as provided herein (a "TRANSFEREE CERTIFICATEHOLDER"), the distributive
     shares of the various items of profit and loss allocable among the
     Certificateholders during such Taxable Year shall be allocated between the
     transferor and the Transferee Certificateholder (at the election of the
     Certificateholders (including the transferor, but excluding the Transferee
     Certificateholder)) either (i) as if the Taxable Year had ended on the date
     of the transfer or (ii) based on the number of days of such Taxable Year
     that each was a Certificateholder without regard to the results of Trust
     activities in the respective portions of such Taxable Year in which the
     transferor and Transferee Certificateholder were Certificateholders.

                                       24
<PAGE>

          (ix) "Profit" and "loss" and any items of income, gain, expense or
     loss referred to in this Section 6.01 shall be determined in accordance
     with federal income tax accounting principles as modified by Treasury
     Regulations Section 1.704-1(b)(2)(iv), except that profits and losses shall
     not include items of income, gain, and expense that are specially allocated
     pursuant to Sections 6.01(c)(v), 6.01(c)(vi) or 6.01(c)(vii) hereof. All
     allocations of income, profits, gains, expenses, and losses (and all items
     contained therein) for federal income tax purposes shall be identical to
     all allocations of such items set forth in this Section 6.01, except as
     otherwise required by Section 704(c) of the Code and Section 1.704-1(b)(4)
     of the Treasury Regulations.

          (x)  The taxable year of the Trust (the "TAXABLE YEAR") shall be the
     calendar year or such other taxable year as may be required by Section
     706(b) of the Code.

          (xi) At the Trust's expense, the Sponsor shall (i) prepare, or cause
     to be prepared, and file or cause to be filed such tax returns relating to
     the Trust (including a partnership information return, IRS Form 1065) as
     are required by applicable federal, state, and local law, (ii) cause such
     returns to be signed in the manner required by law, (iii) make such
     elections as may from time to time be required or appropriate under any
     applicable law so as to maintain the Trust's classification as a
     partnership for tax purposes, (iv) prepare and deliver, or cause to be
     prepared and delivered, to the Certificateholders, no later than 120 days
     after the close of each Taxable Year (or no later than April l5th), a
     Schedule K-1, a copy of the Trust's informational tax return (IRS Form
     1065), and such other reports (collectively, the "ANNUAL TAX REPORTS")
     setting forth in sufficient detail all such information and data with
     respect to the transactions effected by or involving the Trust during such
     Taxable Year as shall enable each Certificateholder to prepare its federal,
     state, and local income tax returns in accordance with the laws then
     prevailing, and (v) collect, or cause to be collected, any withholding tax
     as described in Section 5.02(c) with respect to income or distributions to
     Certificateholders.

          (xii) The Sponsor shall, if required, be designated as the tax matters
     partner for the Trust within the meaning of Section 6231(a)(7) of the Code
     (the "TAX MATTERS PARTNER"). The Tax Matters Partner shall have the right
     and obligation to take all actions authorized and required, respectively,
     by the Code for the Tax Matters Partner. The Tax Matters Partner shall have
     the right to retain professional assistance in respect of any audit or
     controversy proceeding initiated with respect to the Trust by the Internal
     Revenue Service or any state or local taxing authority, and all expenses
     and fees incurred by the Tax Matters Partner on behalf of the Trust shall
     constitute expenses of the Trust. In the event the Tax Matters Partner
     receives notice of a final partnership adjustment under Section 6223(a)(2)
     of the Code, the Tax Matters Partner shall either (i) file a court petition
     for judicial review of such adjustment within the period provided under
     Section 6226(a) of the Code, a copy of which petition shall be mailed to
     all other Holders on the date such petition is filed, or (ii) mail a
     written notice to all other Holders, within such period, that describes the
     Tax Matters Partner's reasons for determining not to file such a petition.

          (xiii) Except as otherwise provided in this Section 6.01 and Section
     7.06, the Certificateholders shall instruct the Sponsor in writing as to
     whether to make any

                                       25
<PAGE>

     available election under the Code or any applicable state or local tax law
     on behalf of the Trust.

     Section 6.02.    WITHHOLDING TAXES. In the event that any withholding tax
is imposed under federal, state, or local law on the Trust's payment (or
allocations of income) to a Certificateholder, such tax shall reduce the amount
otherwise distributable to such Certificateholder in accordance with this
Section 6.02. The Indenture Trustee, on behalf of the Owner Trustee, is hereby
authorized and directed to retain in the Payment Account from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not prevent
the Indenture Trustee from contesting any such tax in appropriate proceedings,
and withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The Sponsor will provide the Indenture Trustee with a
statement indicating the amount of any such withholding tax. The amount of any
withholding tax imposed with respect to a Certificateholder shall be treated as
cash distributed to such Certificateholder at the time it is withheld by the
Indenture Trustee and remitted to the appropriate taxing authority from the
Payment Account at the direction of the Indenture Trustee, on behalf of the
Owner Trustee. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a Certificateholder who is
a Non-U.S. Person), the Indenture Trustee may in its sole discretion withhold
such amounts in accordance with this paragraph. In the event that a
Certificateholder wishes to apply for a refund of any such withholding tax, the
Owner Trustee and the Indenture Trustee shall reasonably cooperate with such
Certificateholder in making such claim so long as such Certificateholder agrees
in writing to reimburse the Owner Trustee for any out-of-pocket expenses
incurred.

          Any Certificateholder which is organized under the laws of a
jurisdiction outside the United States shall, on or prior to the date such
Certificateholder becomes a Certificateholder, (a) so notify the Owner Trustee
and the Indenture Trustee, on behalf of the Trust, (b) (i) provide the Owner
Trustee and the Indenture Trustee, on behalf of the Trust, with Internal Revenue
Service form W-8, or (ii) notify the Owner Trustee and the Indenture Trustee, on
behalf of the Trust, that it is not entitled to an exemption from United States
withholding tax or a reduction in the rate thereof on payments of interest. Any
such Certificateholder agrees by its acceptance of a Certificate, on an ongoing
basis, to provide like certification for each taxable year and to notify the
Owner Trustee and the Indenture Trustee, on behalf of the Trust, should
subsequent circumstances arise affecting the information provided. The Trust,
the Owner Trustee and the Indenture Trustee shall be fully protected in relying
upon, and each Certificateholder by its acceptance of a Certificate hereunder
agrees to indemnify and hold the Trust, the Owner Trustee and the Indenture
Trustee harmless against all claims or liability of any kind arising in
connection with or related to their reliance upon any documents, forms or
information provided by any Certificateholder. In addition, if the Indenture
Trustee has not withheld taxes on any payment made to any Certificateholder, and
the Indenture Trustee is subsequently required to remit to any taxing authority
any such amount not withheld, such Certificateholder shall return such amount to
the Indenture Trustee upon written demand by the Indenture Trustee. Neither the
Owner Trustee nor the Indenture Trustee shall be liable for damages to any
Certificateholder due to a violation of the Code unless and only to the extent
such liability is caused by the Owner Trustee's or the Indenture Trustee's
failure to act in accordance with its standard of care under this Agreement.

                                       26
<PAGE>

     Section 6.03.    ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDERS, THE
INTERNAL REVENUE SERVICE AND OTHERS. The Sponsor shall (a) maintain (or cause to
be maintained) the books of the Trust on a calendar year basis on the accrual
method of accounting, including, without limitation, the allocations of net
income under Section 6.01, and (b) deliver (or cause to be delivered) to each
Certificateholder such information, reports or statements as may be required by
the Code and applicable Treasury Regulations and as may be required to enable
each Certificateholder to prepare its respective federal and state income tax
returns. Consistent with the Trust's (and each Loan Groups' and Sub-Trusts')
characterization for tax purposes as a security arrangement for the issuance of
non-recourse debt, no federal income tax return shall be filed on behalf of the
Trust unless either (y) the Trust, the Sub-Trusts, the Owner Trustee or the
Certificateholders receive an Opinion of Counsel based on a change in applicable
law occurring after the date hereof that the Code requires such a filing or (z)
the Internal Revenue Service shall determine that the Trust (or a related Loan
Group or Sub-Trust) is required to file such a return. In the event that the
Trust (or a related Loan Group or Sub-Trust) is required to file tax returns,
the Owner Trustee shall elect under Section 1278 of the Code to include in
income currently any market discount that accrues with respect to the Mortgage
Loans. The Owner Trustee shall prepare or shall cause to be prepared any tax
returns required to be filed by the Trust or the Sub-Trusts and shall remit such
returns to the Sponsor at least five days before such returns are due to be
filed. The Sponsor, or any other such party required by law, shall promptly sign
such returns and deliver such returns after signature to the Owner Trustee and
such returns shall be filed by, or at the direction of, the Owner Trustee with
the appropriate tax authorities. In no event shall the Sponsor be liable for any
liabilities, costs or expenses of the Trust or the Sub-Trusts arising out of the
application of any tax law, including federal, state, foreign or local income or
excise taxes or any other tax imposed on or measured by income (or any interest,
penalty or addition with respect thereto or arising from a failure to comply
therewith), except for any such liability, cost or expense attributable to the
Sponsor's breach of its obligations under this Agreement.

                                  ARTICLE VII

                      AUTHORITY AND DUTIES OF OWNER TRUSTEE

     Section 7.01.    GENERAL AUTHORITY. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the Notes,
the Certificates and the Basic Documents to which the Trust is to be a party and
each certificate or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Trust is to be a party and any amendment or
other agreement or instrument described in Article IV, in each case, as the
Sponsor shall approve, as evidenced conclusively by the Owner Trustee's
execution thereof. In addition, the Owner Trustee is authorized and directed, on
behalf of the Trust, to execute and deliver to the Authenticating Agent the
Trust Request and the Trust Orders referred to in Section 2.11 of the Indenture,
directly to the Authenticating Agent to authenticate and deliver Class A-1 Notes
in the Original Note Principal Balance of $104,201,000, the Class A-2 Notes in
the Original Note Principal Balance of $110,037,000 and Class A-3 Notes in the
Original Note Principal Balance of $88,809,000 In addition to the foregoing, the
Owner Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust, pursuant to the Basic Documents.

                                       27
<PAGE>

     Section 7.02.    GENERAL DUTIES. (a) It shall be the duty of the Owner
Trustee:

          (i)  to discharge (or cause to be discharged) all of its
     responsibilities pursuant to the terms of this Agreement and the Basic
     Documents to which the Trust is a party and to administer the Trust in the
     interest of the Certificateholders, subject to the Basic Documents and in
     accordance with the provisions of this Agreement; and

          (ii) to maintain the Trust's existence as a statutory trust under the
     laws of the State of Delaware.

     (b)  The Owner Trustee shall not be responsible for taking any action on
behalf of the Trust under any Basic Document unless specifically directed in
writing to do so in accordance with Section 7.03 of this Agreement.

     (c)  The Owner Trustee shall not be responsible for any matter regarding
the Securities Act, the Exchange Act or the Investment Company Act of 1940, as
amended, or the rules or regulations thereunder.

     Section 7.03.    ACTION UPON INSTRUCTION. (a) Subject to Article V hereof,
and in accordance with the terms of the Basic Documents, the Certificateholders
may by written instruction direct the Owner Trustee in the management of the
Trust but only to the extent consistent with the limited purpose of the Trust.
Such direction may be exercised at anytime by written instruction of the
Certificateholders pursuant to Article V hereof. Without limiting the generality
of the foregoing, the Owner Trustee shall act as directed in writing by the
Certificateholders in connection with Note redemptions requested by the
Certificateholders, and shall take all actions and deliver all documents that
the Trust is required to take and deliver in accordance with Section 4.01 and
Article X of the Indenture in order to effect any redemption requested by the
Certificateholders.

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

     (c)  Subject to Article V hereof, whenever the Owner Trustee is unable to
decide between alternative courses of action permitted or required by the terms
of this Agreement or under any other Basic Document, the Owner Trustee shall
promptly give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders and the Note Insurer requesting
instruction from the Certificateholders as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Certificateholders received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten (10)
days of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents,

                                       28
<PAGE>

as it shall deem to be in the best interests of the Certificateholders, and
shall have no liability to any Person for such action or inaction.

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

     Section 7.04.    NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT, THE BASIC
DOCUMENTS OR ANY INSTRUCTIONS.

     (a)  The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, this Agreement or any document
contemplated hereby to which the Trust is a party, except as expressly provided
by the terms of this Agreement, any other Basic Document or in any document or
written instruction received by the Owner Trustee pursuant to Section 7.03; and
no implied duties or obligations shall be read into this Agreement or any other
Basic Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any
Securities and Exchange Commission filing for the Trust or to record this
Agreement or any other Basic Document. The Owner Trustee nevertheless agrees
that it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any liens on any part of the Owner Trust Estate that
result from actions by, or claims against, the Owner Trustee in its individual
capacity that are not related to the ownership or the administration of the
Owner Trust Estate.

     (b)  Notwithstanding anything to the contrary herein or in any other
document, the Owner Trustee shall not be required to execute, deliver or certify
on behalf of the Trust or any other Person any filings, certificates, affidavits
or other instruments required under the Sarbanes-Oxley Act of 2002.
Notwithstanding any Person's right to instruct the Owner Trustee, neither the
Owner Trustee nor any agent, employee, director or officer of the Owner Trustee
shall have any obligation to execute any certificates or other documents
required pursuant to the Sarbanes-Oxley Act of 2002 or the rules and regulations
promulgated thereunder, and the refusal to

                                       29
<PAGE>

comply with any such instructions shall not constitute a default or breach under
any Basic Document.

     Section 7.05.    NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the other Basic
Documents and (iii) in accordance with any document or written instruction
delivered to the Owner Trustee pursuant to Section 7.03.

     Section 7.06.    RESTRICTIONS. Neither the Owner Trustee nor the Sponsor
shall take any action (a) that violates or results in a breach of or is
inconsistent with the purposes of the Trust set forth in Section 2.03 or (b)
that, to the actual knowledge of the Sponsor and the Owner Trustee, would result
in the Trust's becoming taxable as a corporation for Federal income tax
purposes. The Certificateholders shall not direct the Owner Trustee to take
action that would violate the provisions of this Section 7.06.

                                  ARTICLE VIII

                          CONCERNING THE OWNER TRUSTEE

     Section 8.01.    ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts, but only upon the terms of this Agreement subject to the
other Basic Documents. The Owner Trustee also agrees to disburse all moneys
actually received by it constituting part of the Owner Trust Estate upon the
terms of the other Basic Documents and this Agreement. The Owner Trustee shall
not be answerable or accountable hereunder or under any other Basic Document
under any circumstances, except (i) for its own willful breach or misconduct or
gross negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 8.03 expressly made by the Owner Trustee in its
individual capacity. In particular, but not by way of limitation (and subject to
the exceptions set forth in the preceding sentence):

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

     (b)  The Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in accordance with the instructions of the
Certificateholders or the Note Insurer given in accordance with this Agreement;

     (c)  No provision of this Agreement or any other Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any other Basic Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;

     (d)  Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;

                                       30
<PAGE>

     (e)  The Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Sponsor or for the form, character, genuineness, sufficiency, value or validity
of any of the Owner Trust Estate or for or in respect of the validity or
sufficiency of the Basic Documents, other than the certificate of authentication
on the Certificates, and the Owner Trustee shall in no event assume or incur any
liability, duty, or obligation to any Noteholder or to any Certificateholders,
other than as expressly provided for herein and in the other Basic Documents;

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

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

     (h)  Notwithstanding anything contained herein to the contrary, neither
U.S. Bank Trust National Association in its individual capacity nor as Owner
Trustee shall be required to take any action in any jurisdiction other than in
the State of Delaware if the taking of such action will (i) require the consent
or approval or authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the State
of Delaware; (ii) result in any fee, tax or other governmental charge under the
laws of any jurisdiction or any political subdivisions thereof in existence on
the date hereof other than the State of Delaware becoming payable by U.S. Bank
Trust National Association; or (iii) subject U.S. Bank Trust National
Association to personal jurisdiction in any jurisdiction other than the State of
Delaware for causes of action arising from acts unrelated to the consummation of
the transactions by U.S. Bank Trust, National Association in its individual
capacity or as Owner Trustee, as the case may be, contemplated hereby. The Owner
Trustee shall be entitled to obtain advice of counsel (which advice shall be an
expense of the Sponsor to determine whether any action required to be taken
pursuant to this Agreement or the other Basic Documents results in the
consequences described in clauses (i), (ii) and (iii) of the preceding sentence.
In the event that said counsel advises the Owner Trustee that such action will
result in such consequences, the Owner Trustee will appoint an additional
trustee pursuant to Section 11.05 hereof to proceed with such action.

     Section 8.02.    FURNISHING OF DOCUMENTS. Subject to Section 4.07, the
Owner Trustee shall furnish to the Certificateholders promptly upon receipt of a
written request therefor, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements

                                       31
<PAGE>

and any other instruments furnished to the Owner Trustee under the Basic
Documents. On behalf of the Owner Trustee, the Sponsor shall furnish to
Noteholders promptly upon written request therefor, copies of the Sale and
Servicing Agreement and the Indenture.

     Section 8.03.    REPRESENTATIONS AND WARRANTIES OF THE OWNER TRUSTEE. The
Owner Trustee hereby represents and warrants to the Sponsor, the Note Insurer
and the Certificateholders, that:

     (a)  It is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America. It has
all requisite power and authority to execute, deliver and perform its
obligations under this Agreement.

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

     (c)  Neither the execution nor the delivery by it of this Agreement nor the
consummation by it of the transactions contemplated hereby nor compliance by it
with any of the terns or provisions hereof will contravene any Delaware or
Federal law, governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws.

     (d)  This Agreement has been duly authorized, executed and delivered by the
Owner Trustee and constitutes a valid, legal and binding obligation of the Owner
Trustee, enforceable against it in accordance with the terms hereof, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights generally and to general
principles of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.

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

     (f)  No litigation is pending or, to the best of the Owner Trustee's
knowledge, threatened against the Owner Trustee which would prohibit its
entering into this Agreement or performing its obligations under this Agreement.

     Section 8.04.    RELIANCE; ADVICE OF COUNSEL. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, Note, or
other document or paper believed by it in good faith to be genuine and believed
by it in good faith to be signed by the proper party or parties. The Owner
Trustee may accept a certified copy of a resolution of the board of directors or
other governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which is
not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the

                                       32
<PAGE>

treasurer or other authorized officers of the relevant party, as to such fact or
matter and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.

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

     Section 8.05.    NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided in
Section 8.03, in accepting the trusts hereby created, U.S. Bank Trust National
Association acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any other Basic Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.

     Section 8.06.    OWNER TRUSTEE NOT LIABLE FOR THE CERTIFICATES OR MORTGAGE
LOANS. The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) shall
be taken as the statements of the Sponsor, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
other Basic Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates and as specified in
Section 8.03 hereof) or the Notes, or of any Mortgage Loans or related
documents. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Mortgage Loan, or the perfection and priority of any security interest
created by any Mortgage Loan or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Owner Trust Estate or
its ability to generate the payments to be distributed to the Certificateholders
under this Agreement or the Noteholders under the Indenture, including, without
limitation, the existence, condition and ownership of any Mortgaged Property,
the existence and enforceability of any insurance thereon, the existence and
contents of any Mortgage Loan on any computer or other record thereof, the
validity of the assignment of any Mortgage Loan to the Trust or of any
intervening assignment, the completeness of any Mortgage Loan, the performance
or enforcement of any Mortgage Loan, the compliance by the Sponsor or the Master
Servicer with any warranty or representation made under any Basic Document or in
any related document or the accuracy of any such warranty or representation or
any action of the Indenture Trustee or the Master Servicer or any subservicer
taken in the name of the Owner Trustee.

     Section 8.07.    OWNER TRUSTEE MAY OWN CERTIFICATES AND NOTES. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of the

                                       33
<PAGE>

Certificates or the Notes and may deal with the Sponsor, the Indenture Trustee,
the Master Servicer and the Backup Servicer in banking transactions with the
same rights as it would have if it were not Owner Trustee.

     Section 8.08.    LICENSES. The Sponsor shall cause the Trust to use its
best efforts to obtain and maintain the effectiveness of any licenses required
in connection with this Agreement and the other Basic Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof.

                                   ARTICLE IX

                          COMPENSATION OF OWNER TRUSTEE

     Section 9.01.    OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Master Servicer and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Master Servicer for its other reasonable expenses hereunder as separately
agreed (the "OWNER TRUSTEE FEE").

     Section 9.02.    INDEMNIFICATION. The Sponsor shall be liable as obligor
for, and shall indemnify the Owner Trustee (in its individual and trust
capacities) and its successors, assigns, agents and servants (collectively, the
"INDEMNIFIED PARTIES") from and against, any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and expenses)
of any kind and nature whatsoever (collectively, "EXPENSES") which may at any
time be imposed on, incurred by, or asserted against any Indemnified Party in
any way relating to or arising out of this Agreement, the other Basic Documents,
the Owner Trust Estate, the administration of the Owner Trust Estate or the
action or inaction of the Owner Trustee hereunder, except only that the Sponsor
shall not be liable for or required to indemnify an Indemnified Party from and
against Expenses arising or resulting from any of the matters described in the
third sentence of Section 8.01. The indemnities contained in this Section 9.02
shall survive the resignation or termination of the Owner Trustee or the
termination of this Agreement. In any event of any claim, action or proceeding
for which indemnity will be sought pursuant to this Section, the Sponsor will be
entitled to participate therein, with counsel selected by the Sponsor and
reasonably satisfactory to the Indemnified Parties, but after notice from an
Indemnified Party to the Sponsor of its election to assume the defense thereof,
the Sponsor shall not be liable to the Indemnified Party under this Section 9.02
for any legal or other expenses subsequently incurred by such Indemnified Party
in connection with the defense of such action; PROVIDED, HOWEVER, that this
sentence shall not be in effect if (1) the Sponsor shall not have employed
counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party within a reasonable time after notice of commencement of the
action, (2) the Sponsor shall have authorized the employment of counsel for the
Indemnified Party at the expense of the Sponsor or (3) in the event any such
claim involves a possible imposition of criminal liability or penalty or a
material civil penalty on such Indemnified Party, a conflict of interest between
such Indemnified Party and the Sponsor or another indemnitee or the granting of
material injunctive relief against such Indemnified Party, and such Indemnified
Party informs the Sponsor that such Indemnified Party desires to be represented
by separate counsel, in which case, the reasonable fees and expenses of such
separate counsel shall be borne by the Sponsor. If the

                                       34
<PAGE>

Sponsor assumes the defense of any such proceeding, the Sponsor shall be
entitled to settle such proceeding without any liability being assessed against
any Indemnified Party or, if such settlement provides for release of any such
Indemnified Party without any liability being assessed against any Indemnified
Party in connection with all matters relating to the proceeding which have been
asserted against such Indemnified Party in such proceeding by the other parties
to such settlement, without the prior written consent of such Indemnified Party,
but otherwise only with the prior written consent of such Indemnified Party.

     Section 9.03.    PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee pursuant to this Article IX shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.

                                   ARTICLE X

                         TERMINATION OF TRUST AGREEMENT

     Section 10.01.   TERMINATION OF TRUST AGREEMENT. (a) This Agreement (other
than Article IX) shall terminate and the Trust shall dissolve and be of no
further force or effect on the earlier of: (i) the final payment or other
liquidation of the Mortgage Loans and the disposition of all REO Properties and
the remittance of all funds due hereunder with respect to such Mortgage Loans
and REP Properties after the satisfaction and discharge of the Indenture
pursuant to Section 4.01 of the Indenture; and (ii) the expiration of 21 years
from the death of the last survivor of descendants of Joseph P. Kennedy (the
late ambassador of the United States to the Court of St. James). The bankruptcy,
liquidation, dissolution, death or incapacity of the any Certificateholder or
the Sponsor shall not (x) operate to terminate this Agreement or the Trust, nor
(y) entitle Certificateholders' or the Sponsor's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust Estate
nor (z) otherwise affect the rights, obligations and liabilities of the parties
hereto.

     (b)  Except as provided in Section 10.01(a) above, none of the Sponsor, the
Master Servicer, the Backup Servicer, the Note Insurer nor the
Certificateholders shall be entitled to revoke or terminate the Trust.

     (c)  Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Indenture Trustee for payment of the final distributions and cancellation, shall
be given by the Owner Trustee to the Certificateholders, the Note Insurer, the
Rating Agencies and the Indenture Trustee mailed within five (5) Business Days
of receipt by the Owner Trustee from the Master Servicer of notice of such
termination, which notice given by the Owner Trustee shall state (i) the Payment
Date upon or with respect to which final payment of the Certificates shall be
made upon presentation and surrender of the Certificates at the office of the
Indenture Trustee therein designated, (ii) the amount of any such final payment
and (iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Indenture Trustee therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Indenture Trustee at the time such notice is given to
Certificateholders. Upon presentation and surrender of

                                       35
<PAGE>

Certificates, subject to Section 3808 of the Statutory Trust Statute, amounts
distributable on such Payment Date pursuant to the terms of the Indenture.

     (d)  In the event that Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Owner Trustee shall give a second written
notice to Certificateholders to surrender the Certificates for cancellation and
receive the final distribution with respect thereto. If within one year after
the second notice the Ownership Interest shall not have been surrendered for
cancellation, the Owner Trustee may take appropriate steps, or may appoint an
agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of the Certificates, and the cost thereof shall be paid out
of the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Indenture Trustee to the Certificateholders.

     (e)  Upon the winding up of the Trust in accordance with Section 3808 of
the Statutory Trust Statute and its termination, the Owner Trustee shall cause
the Certificate of Trust to be canceled by filing a certificate of cancellation
with the Secretary of State in accordance with the provisions of Section 3810 of
the Statutory Trust Statute.

                                   ARTICLE XI

             SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

     Section 11.01.   ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation or banking association satisfying
the provisions of Section 3807(a) of the Statutory Trust Statute; authorized to
exercise trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or state
authorities; and having (or having a parent that has) a rating of at least
"Baa3" by Moody's and "A-1" by S&P (or otherwise acceptable to the Rating
Agencies) and being acceptable to the Note Insurer. If such entity shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 11.01, the combined capital and surplus of such entity shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section 11.01,
the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 11.02.

     Section 11.02.   RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Trust, the Sponsor, the Master Servicer,
the Backup Servicer, the Indenture Trustee and the Note Insurer. Upon receiving
such notice of resignation, the Note Insurer may (and, if the Note Insurer fails
to do so, the Sponsor shall promptly) appoint a successor Owner Trustee
(acceptable to the Note Insurer) by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Owner Trustee and one
copy to the successor Owner Trustee. If no successor Owner Trustee shall have
been so appointed and have accepted appointment within thirty (30) days after
the giving of such notice of resignation, the resigning Owner Trustee

                                       36
<PAGE>

or the Note Insurer may petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee.

          If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 11.01 and shall fail to resign after
written request therefor by the Certificateholders or the Sponsor, or if at any
time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Note Insurer, or the Certificateholders or
the Sponsor with the written consent of the Note Insurer, may remove the Owner
Trustee. If the Certificateholders or the Sponsor or the Note Insurer shall
remove the Owner Trustee under the authority of the immediately preceding
sentence, the Note Insurer, or the Sponsor with the written consent of the Note
Insurer, shall promptly appoint a successor Owner Trustee by written instrument
in duplicate, one copy of which instrument shall be delivered to the outgoing
Owner Trustee so removed and one copy to the successor Owner Trustee and payment
of all fees owed to the outgoing Owner Trustee.

          Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 11.02
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 11.03, written approval by the Note Insurer
and payment of all fees and expenses owed to the outgoing Owner Trustee. The
Master Servicer shall provide notice of such resignation or removal of the Owner
Trustee to each of the Rating Agencies, the Indenture Trustee and the Note
Insurer.

     Section 11.03.   SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 11.02 shall execute, acknowledge and deliver to
the Trust, the Sponsor, the Indenture Trustee, the Note Insurer and to its
predecessor Owner Trustee an instrument accepting such appointment under this
Agreement, and thereupon, subject to the payment of all fees and expenses owed
to the outgoing Owner Trustee, the resignation or removal of the predecessor
Owner Trustee shall become effective and such successor Owner Trustee (if
acceptable to the Note Insurer), without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties, and obligations
of its predecessor under this Agreement, with like effect as if originally named
as Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees
and expenses deliver to the successor Owner Trustee all documents and statements
and moneys held by it under this Agreement; and the Sponsor and the predecessor
Owner Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties, and
obligations.

          No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 11.01.

          Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section 11.03, the Sponsor shall mail notice of the successor of such
Owner Trustee to the Certificateholders, the Indenture Trustee, the Noteholders,
the Note Insurer and the Rating Agencies. If the Sponsor fails to mail such
notice within ten (10) days after acceptance of

                                       37
<PAGE>

appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Sponsor.

          Any successor Owner Trustee appointed pursuant to this Section 11.03
shall file an amendment to the Certificate of Trust with the Secretary of State
identifying the name and principal place of business of such successor Owner
Trustee in the State of Delaware.

     Section 11.04.   MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any corporation
or banking association into which the Owner Trustee may be merged or converted
or with which it may be consolidated or any corporation or banking association
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation or banking association succeeding
to all or substantially all of the corporate trust business of the Owner
Trustee, shall be the successor of the Owner Trustee hereunder, provided such
corporation or banking association shall be eligible pursuant to Section 11.01,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, except the filing of an amendment to the
Certificate of Trust, if appropriate, anything herein to the contrary
notwithstanding; provided, further, that the Owner Trustee shall mail notice of
such merger, conversion or consolidation to the Rating Agencies and; provided,
further, that the Owner Trustee shall file an amendment to the Certificate of
Trust as required under Section 11.03 above.

     Section 11.05.   APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

     (a)  Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, and for the purpose of performing certain duties and obligations of the
Owner Trustee with respect to the Trust and the Certificates, the Owner Trustee
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and acceptable to the Note
Insurer to act as co-trustee, jointly with the Owner Trustee, or separate
trustee or separate trustees, of all or any part of the Owner Trust Estate, and
to vest in such Person, in such capacity, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section 11.05, such
powers, duties, obligations, rights and trusts as the Note Insurer and the Owner
Trustee may consider necessary or desirable. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 11.01 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 11.03.

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

          (i)  all rights, powers, duties and obligations conferred or imposed
     upon the Owner Trustee shall be conferred upon and exercised or performed
     by the Owner Trustee and such separate trustee or co-trustee jointly (it
     being understood that such separate trustee or co-trustee is not authorized
     to act separately without the Owner Trustee joining in such act), except to
     the extent that under any law of any jurisdiction in which any particular
     act or acts are to be performed, the Owner Trustee shall be incompetent or
     unqualified to perform such act or acts, in which event such rights,
     powers, duties, and

                                       38
<PAGE>

     obligations (including the holding of title to the Trust or any portion
     thereof in any such jurisdiction) shall be exercised and performed singly
     by such separate trustee or co-trustee, but solely at the direction of the
     Owner Trustee;

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

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

     (c)  Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to the separate trustees and co-trustees, as if
given to each of them. Every instrument appointing any separate trustee or
co-trustee, other than this Agreement, shall refer to this Agreement and to the
conditions of this Article XI. Each separate trustee and co-trustee, upon its
acceptance of appointment, shall be vested with the estates specified in its
instrument of appointment, either jointly with the Owner Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Owner Trustee.
Each such instrument shall be filed with the Owner Trustee.

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

                                  ARTICLE XII

                                  MISCELLANEOUS

     Section 12.01.   SUPPLEMENTS AND AMENDMENTS. This Agreement may be amended
by the Sponsor, the Seller and the Owner Trustee, with the prior written consent
of the Note Insurer, and with prior written notice to the Rating Agencies, but
without the consent of any of the Noteholders, the Certificateholders or the
Indenture Trustee, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, such action shall not adversely affect in
any material respect the interests of any Noteholder or Certificateholder. An
amendment described above shall be deemed not to adversely affect in any
material respect the interests of any Noteholder if the party requesting the
amendment satisfies the Rating Agency Condition with respect to such amendment.

          This Agreement may also be amended from time to time by the Sponsor,
the Seller and the Owner Trustee, with the prior written consent of the Rating
Agencies and with the prior written consent of the Indenture Trustee, the Note
Insurer, the Noteholders evidencing more than 50% of the Note Principal Balance
of the Outstanding Notes of all of the Classes and

                                       39
<PAGE>

the Certificateholders evidencing more than 50% of the Percentage Interests of
the Trust, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; PROVIDED,
HOWEVER, no such amendment shall (a) increase or reduce in any manner the amount
of, or accelerate or delay the timing of, collections of payments on the
Mortgage Loans or distributions that shall be required to be made for the
benefit of the Noteholders, the Certificateholders or the Note Insurer, (b)
reduce the aforesaid percentage of the Outstanding Principal Balance of the
Notes or the Percentage Interests required to consent to any such amendment, in
either case of clause (a) or (b) without the consent of the holders of all the
outstanding Notes, the Note Insurer and the Certificateholders of all the
outstanding Certificates.

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

          It shall not be necessary for the consent of the Certificateholders,
the Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.

          Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.

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

     Section 12.02.   NO LEGAL TITLE TO OWNER TRUST ESTATE IN
CERTIFICATEHOLDERS. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided beneficial ownership
interest therein only in accordance with Articles VI and X. No transfer, by
operation of law or otherwise, of any right, title, or interest of the
Certificateholders to and in their ownership interest in the Owner Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.

     Section 12.03.   LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Sponsor, the
Seller, the Certificateholders, the Note Insurer and, to the extent expressly
provided herein, the Indenture Trustee and the Noteholders, and nothing in this
Agreement, whether express or implied, shall be construed

                                       40
<PAGE>

to give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.

     Section 12.04.   NOTICES. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all communications provided for or permitted
hereunder shall be in writing and shall be deemed to have been given if (1)
personally delivered, (2) upon receipt by the intended recipient or three
Business Days after mailing if mailed by certified mail, postage prepaid (except
that notice to the Owner Trustee shall be deemed given only upon actual receipt
by the Owner Trustee), (3) sent by express courier delivery service and received
by the intended recipient or (4) except with respect to notices sent to the
Owner Trustee, transmitted by telex or facsimile transmission (or any other type
of electronic transmission agreed upon by the parties and confirmed by a writing
delivered by any of the means described in (1), (2) or (3), at the following
addresses: (i) if to the Owner Trustee, at its Corporate Trust Office; (ii) if
to the Sponsor, Accredited Home Lenders, Inc., 15030 Avenue of Science, Suite
100, San Diego, California 92128, Attention: General Counsel, telecopy: (858)
676-2170; and (iii) if to the Note Insurer, Ambac Assurance Corporation, One
State Street Plaza, New York, New York, 10004, Attention: Accredited Mortgage
Loan Trust 2003-1, telecopy: (858) 676-2170; or, as to each such party, at such
other address as shall be designated by such party in a written notice to each
other party.

     (b)  Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.

     Section 12.05.   SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     Section 12.06.   SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

     Section 12.07.   SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Sponsor, the Note Insurer, the Owner Trustee and its successors and each
Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by a Certificateholder shall bind the successors and assigns of such
Certificateholder.

     Section 12.08.   NO PETITION. The Owner Trustee, by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the Seller
or the Trust, or join in any institution against the Seller or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy law in
connection with any

                                       41
<PAGE>

obligations relating to the Certificates, the Notes, this Agreement or any of
the other Basic Documents.

          This Section 12.08 will survive for one year and one day following the
termination of this Agreement.

     Section 12.09.   NO RECOURSE. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificate represents a
beneficial interest in the Trust only and does not represent an interest in or
an obligation of the Master Servicer, the Backup Servicer, the Sponsor, the
Owner Trustee or any Affiliate thereof and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated in
this Agreement, the Certificates or the other Basic Documents.

     Section 12.10.   HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.

     Section 12.11.   GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

     Section 12.12.   GRANT OF CERTIFICATEHOLDER RIGHTS TO NOTE INSURER. (a) In
consideration for the issuance of the Certificates and for the guarantee of the
Notes by the Note Insurer pursuant to the Note Insurance Policy, the
Certificateholders hereby grant to the Note Insurer the right to act as the
holder of 100% of the outstanding Certificates for the purpose of exercising the
rights hereunder of the Certificateholders under this Agreement without the
consent of the Certificateholders, including the voting rights of such
Certificateholders hereunder, but excluding those rights requiring the consent
of all such Certificateholders, and any rights of such Certificateholders to
distributions under the Indenture and the other Basic Documents; provided, that
the preceding grant of rights to the Note Insurer by the Certificateholders
shall be subject to Section 12.14.

     (b)  [Reserved].

     (c)  The duties and responsibilities of the Owner Trustee shall be limited
to those expressly provided for in this Agreement. The parties hereto agree that
except for purposes of the foregoing sentence, the Owner Trustee shall have no
management responsibilities or owe any fiduciary duties to the Note Insurer (or
the Noteholders in the event they succeed to the Note Insurer's rights).

     (d)  Whenever in connection with its performance under this Agreement the
Owner Trustee receives inconsistent notices or advice from the Note Insurer and
the Certificateholders, the Owner Trustee shall, in the absence of a Note
Insurer Default, take the action required by the notices or advice received from
the Note Insurer.

                                       42
<PAGE>

     Section 12.13.   THIRD-PARTY BENEFICIARIES. The Indenture Trustee and the
Note Insurer are intended third-party beneficiaries of this Agreement, and this
Agreement shall be binding upon and inure to the benefit of the Indenture
Trustee and the Note Insurer; provided, that, notwithstanding the foregoing, for
so long as a Note Insurer Default is continuing with respect to its obligations
under the Note Insurance Policy, the Certificateholders shall succeed to the
Note Insurer's rights hereunder. Without limiting the generality of the
foregoing, all covenants and agreements in this Agreement that expressly confer
rights upon the Note Insurer shall be for the benefit of and run directly to the
Note Insurer, and the Note Insurer shall be entitled to rely on and enforce such
covenants to the same extent as if it were a party to this Agreement.

     Section 12.14.   SUSPENSION AND TERMINATION OF NOTE INSURER'S RIGHTS.
During the continuation of a Note Insurer Default, rights granted or reserved to
the Note Insurer hereunder shall vest instead in the Certificateholders;
provided, that the Note Insurer shall be entitled to any distributions of
reimbursements to the Note insurer as set forth in the Indenture and the
Insurance Agreement and the Note Insurer shall retain those rights under Section
12.01 to consent to any amendment of this Agreement.

          At such time as either (i) the outstanding Note Principal Balance of
the Notes has been reduced to zero or (ii) the Note Insurance Policy has been
terminated and in either case of (i) or (ii) the Note Insurer has been
reimbursed for all amounts owed under the Note Insurance Policy and the
Insurance Agreement (and the Note Insurer no longer has any obligation under the
Note Insurance Policy), then the rights and benefits granted or reserved to the
Note Insurer hereunder (including the rights to direct certain actions and
receive certain notices) shall terminate and the Certificateholders shall be
entitled to the exercise of such rights and to receive such benefits of the Note
Insurer following such termination to the extent that such rights and benefits
are applicable to the Certificateholders.

     Section 12.15.   MASTER SERVICER. The Master Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of the Trust all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Trust, the Sponsor or Owner Trustee to prepare, file or
deliver pursuant to the Basic Documents. Upon written request, the Owner Trustee
shall execute and deliver to the Master Servicer a limited power of attorney
appointing the Master Servicer the Trust's agent and attorney-in-fact to
prepare, or cause to be prepared, execute and deliver all such documents,
reports, filings, instruments, certificates and opinions.

                  [Remainder of Page Intentionally Left Blank]

                                       43
<PAGE>

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

                                      ACCREDITED HOME LENDERS, INC.,
                                         as Sponsor

                                      By: /s/ Ray W. McKewon
                                         --------------------------------------
                                         Name: Ray W. McKewon
                                         Title: Executive Vice President
                                      ACCREDITED HOME CAPITAL, INC.,
                                               as Seller

                                      By: /s/ David E. Hertzel
                                         --------------------------------------
                                         Name: David E. Hertzel
                                         Title: GC, AVP & Assistant Secretary
                                      U.S. BANK TRUST, NATIONAL
                                      ASSOCIATION, not in its individual
                                      capacity but solely as Owner Trustee
                                      under the Trust Agreement

                                      By: /s/ Melissa A. Rosal
                                         --------------------------------------
                                         Name: Melissa A. Rosal
                                         Title: Vice President

                                       44
<PAGE>

                                TRUST CERTIFICATE

THE EQUITY INTEREST IN THE TRUST REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS. THIS EQUITY INTEREST MAY BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE
HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND OF SUCH STATE LAWS OR (II) A PERSON INVOLVED IN THE
ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A PERSON WITHIN
THE MEANING OF RULE 3A-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(INCLUDING, BUT NOT LIMITED TO, ACCREDITED HOME LENDERS, INC.) IN A TRANSACTION
THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. NO PERSON IS
OBLIGATED TO REGISTER THIS EQUITY INTEREST UNDER THE ACT OR ANY STATE SECURITIES
LAWS.

NO TRANSFER OF THIS CERTIFICATE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE MADE
TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A REPRESENTATION LETTER FROM
THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A PERSON WHICH IS
AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE OR A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT
TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO
THE FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH PERSON BEING A "PLAN"),
(II) IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY AND (III) IS NOT DIRECTLY OR INDIRECTLY
PURCHASING THIS CERTIFICATE OR A BENEFICIAL INTEREST HEREIN ON BEHALF OR, AS
INVESTMENT MANAGER OF, AS TRUSTEE OF, OR WITH THE ASSETS OF A PLAN.

THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS,
PRIOR TO SUCH DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE OWNER TRUSTEE
AND THE CERTIFICATE REGISTRAR A CERTIFICATE STATING THAT SUCH TRANSFEREE (A)
AGREES TO BE BOUND BY AND TO ABIDE BY THE TRANSFER RESTRICTIONS APPLICABLE TO
THIS CERTIFICATE; (B) IS NOT AN ENTITY THAT WILL HOLD THIS CERTIFICATE AS
NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH SECURITY THROUGH
ELECTRONIC BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS; AND
(C) UNDERSTANDS THAT IT MUST TAKE INTO ACCOUNT ITS PERCENTAGE INTEREST OF THE
TAXABLE INCOME RELATING TO THIS CERTIFICATE.

<PAGE>

Certificate No. 1                                      Percentage Interest: 100%

          THIS CERTIFIES THAT Accredited Home Capital, Inc. (the
"CERTIFICATEHOLDER") is the registered owner of a 100% Percentage Interest in
Accredited Mortgage Loan Trust 2003-1 (the "TRUST") existing under the laws of
the State of Delaware and created pursuant to that certain Trust Agreement,
dated as of May 9, 2003, as amended and restated on May 30, 2003 (as amended and
restated, the "TRUST AGREEMENT"), by and among Accredited Home Lenders, Inc., as
sponsor, Accredited Home Capital, Inc., as seller, and U.S. Bank Trust National
Association, not its individual capacity but solely as owner trustee under the
Trust Agreement (the "OWNER TRUSTEE"). Capitalized terms used but not otherwise
defined herein have the meanings assigned to such terms in the Trust Agreement.
The Owner Trustee, on behalf of the Trust and not in its individual capacity,
has executed this Certificate by one of its duly authorized signatories as set
forth below. This Certificate is one of the Certificates referred to in the
Trust Agreement and is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement to which the Certificateholder by virtue of
the acceptance hereof agrees and by which the Certificateholder hereof is bound.
Reference is hereby made to the Trust Agreement for the rights of the
Certificateholder, as well as for the terms and conditions of the Trust created
by the Trust Agreement.

          The recitals contained herein (other than the signature and
countersignature of the Owner Trustee) shall be taken as the statements of the
Sponsor, and the Owner Trustee assumes no responsibility for the correctness
thereof.

          The Certificateholder, by its acceptance hereof, agrees not to
transfer this Certificate except in accordance with terms and provisions of the
Trust Agreement.

          The Certificateholder, by its acceptance hereof, acknowledges that
such Certificateholder's Certificate represents a beneficial interest in the
Trust only and does not represent an interest in or an obligation of the Master
Servicer, the Backup Servicer, the Seller, the Sponsor, the Owner Trustee or any
Affiliate thereof and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated herein, in the
Trust Agreement or the other Basic Documents.

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

                                      A-2
<PAGE>

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

                                          ACCREDITED MORTGAGE LOAN
                                            TRUST 2003-1

                                          U.S. BANK TRUST NATIONAL
                                          ASSOCIATION, not in its individual
                                          capacity but solely as Owner Trustee
                                          under the Trust Agreement

                                          By:
                                             -----------------------------------
                                                       Authorized Signatory

Dated:  May 30, 2003

                          CERTIFICATE OF AUTHENTICATION

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

                                          U.S. BANK TRUST NATIONAL
                                          ASSOCIATION, not in its individual
                                          capacity but solely as Owner Trustee
                                          under the Trust Agreement

                                          By:
                                             -----------------------------------
                                                       Authorized Signatory

Dated:  May 30, 2003

                                      A-3
<PAGE>

                                   ASSIGNMENT

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

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

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

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

Dated:

                                          By:                                 */
                                             -----------------------------------
                                                   Signature Guaranteed:

                                          By:                                 */
                                             -----------------------------------

_______________________
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Instrument in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.

                                      A-4
<PAGE>

                                                                       EXHIBIT B

                          FORM OF CERTIFICATE OF TRUST

                             CERTIFICATE OF TRUST OF
                      ACCREDITED MORTGAGE LOAN TRUST 2003-1

          THIS CERTIFICATE OF TRUST OF ACCREDITED MORTGAGE LOAN TRUST 2003-1
(the "Trust"), dated as of May 9, 2003, as amended and restated on May 30, 2003
(as amended and restated, the "TRUST AGREEMENT"), is being duly executed and
filed by U.S. Bank Trust National Association, a national banking association,
as owner trustee (the "Owner Trustee"), to form a statutory trust under the
Delaware Statutory Trust Act (12 Del. Code, ss. 3801 et seq.).

          1.   NAME. The name of the business trust formed hereby is Accredited
     Mortgage Loan Trust 2003-1.

          2.   DELAWARE TRUSTEE. The name and business address of the Owner
     Trustee of the Trust in the State of Delaware are U.S. Bank Trust National
     Association, 300 Delaware Avenue, Eighth Floor, Wilmington, Delaware 19801,
     Attention: Corporate Trust Administration.

          3.   SERIES. Pursuant to Section 3806(b)(2) of the Act, the Trust
     shall issue one or more series of beneficial interests having the rights
     and preferences set forth in the Governing instrument of the Trust, as the
     same may be amended from time to time (each, a "Series" or "Sub-Trust").

          4.   NOTICE OF LIMITATION OF LIABILITIES OF EACH SERIES. Pursuant to
     Section 3804(a) of the Act, there shall be a limitation on liabilities of
     each Series such that (a) the debts, liabilities, obligations and expenses
     incurred, contracted for or otherwise existing with respect to a particular
     Series shall be enforceable against the assets of such Series only, and not
     against the assets of the Trust generally or the assets of any other Series
     thereof and (b) none of the debts, liabilities, obligations and expenses
     incurred, contracted for or otherwise existing with respect to the Trust
     generally or any other Series thereof shall be enforceable against the
     assets of such Series.

          5.   EFFECTIVE DATE. This Certificate of Trust shall be effective at
     12:01 a.m. on May 9, 2003.

                                      B-1
<PAGE>

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

                                           U.S. BANK TRUST NATIONAL
                                           ASSOCIATION, not in its individual
                                           capacity but solely as Owner Trustee
                                           under the Trust Agreement, dated as
                                           of May 9, 2003.

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

                                      B-2
<PAGE>

                                                                       EXHIBIT C

                            FORM OF INVESTMENT LETTER
                            __________________, ____

Accredited Home Lenders, Inc.
15030 Avenue of Science, Suite 100
San Diego, California  92128

U.S. Bank Trust National Association
300 Delaware Avenue, Eighth Floor,
Wilmington, Delaware  19809
Attention: Corporate Trust Administration

          Re:  Accredited Mortgage Loan Trust 2003-1 (the "Trust")
               Asset-Backed Notes, Series 2003-1
               --------------------------------------------------

Ladies and Gentlemen:

          ____________________________________________ (the "Certificateholder")
has purchased or acquired, or intends to purchase or acquire from
_______________________, the current Certificateholder (the "Current
Certificateholder"), a Trust Certificate representing a 100% Percentage Interest
(the "Certificate") in the Trust, which represents an interest in the Trust
created pursuant to that certain Trust Agreement, dated as of May 9, 2003, as
amended and restated on May 30, 2003 (as amended and restated, the "TRUST
AGREEMENT"), by and among Accredited Home Lenders, Inc., as Sponsor, Accredited
Home Capital, Inc., as Seller and U.S. Bank Trust National Association, as Owner
Trustee. Capitalized terms used and not otherwise defined herein have the
meanings assigned to such terms in the Trust Agreement.

                                  CERTIFICATION

          The undersigned, as an authorized officer or agent of the
Certificateholder, hereby certifies, represents, warrants and agrees on behalf
of the Certificateholder as follows:

          1.   The Certificateholder is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it was formed and is
authorized to invest in the Certificate. The person executing this letter on
behalf of the Certificateholder is duly authorized to do so on behalf of the
Certificateholder.

          2.   The Certificateholder hereby acknowledges that no transfer of the
Certificate may be made unless such transfer is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act");
and applicable state securities laws, or is made in accordance with the
Securities Act and such laws.

          3.   The Certificateholder understands that the Certificate has not
been and will not be registered under the Securities Act and may be offered,
sold, pledged or otherwise transferred to a person whom the transferor
reasonably believes is (A) a qualified institutional

                                      C-1
<PAGE>

buyer (as defined in Rule 144A under the Securities Act) or (B) a Person
involved in the organization or operation of the Trust or an affiliate of such
Person, in a transaction pursuant to an effective registration statement under
the Securities Act and any applicable state securities laws or exempt from the
registration requirements of the Securities Act and any such state securities
laws. The Certifcateholder understands that the Certificate bears a legend to
the foregoing effect.

          4.   The Certificateholder is acquiring the Certificate for its own
account or for accounts for which it exercises sole investment discretion, and
not with a view to or for sale or other transfer in connection with any
distribution of the Certificate in any manner that would violate Section 5 of
the Securities Act or any applicable state securities laws, subject nevertheless
to any requirement of law that the disposition of the Certificateholder's
property shall at all times be and remain within its control.

          5.   The Certificateholder is (A) a "qualified institutional buyer" (a
"QIB") as defined in Rule 144A under the Securities Act, and is aware that the
transferor of the Certificate may be relying on an exemption from the
registration requirements of the Securities Act and is acquiring such
Certificate for its own account or for the account of one or more qualified
institutional buyers for whom it is authorized to act, or (B) a Person involved
in the organization or operation of the Trust or an affiliate of such Person
within the meaning of Rule 3a-7 of the Investment Company Act of 1940, as
amended (including, but not limited to, the Sponsor). The Certificateholder is
able to bear the economic risks of such an investment. The Certificateholder is
a QIB because [STATE FACTUAL BASIS FOR QIB STATUS].

          6.   If the Certificateholder sells or otherwise transfers the
registered ownership of such Certificate, the Certificateholder will comply with
the restrictions and requirements with respect to the transfer of the ownership
of the Certificate under the Trust Agreement, and the Certificateholder will
obtain from any subsequent purchaser or transferee substantially the same
certifications, representations, warranties and covenants as required under the
Trust Agreement in connection with such subsequent sale or transfer thereof.

          7.   The Certificateholder is not an entity that will hold a
Certificate as nominee (a "Book Entry Nominee") to facilitate the clearance and
settlement of such security through electronic book-entry changes in Accounts or
participating organizations.

          8.   The Certificateholder (i) is not a person which is an employee
benefit plan, trust or account subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
or a governmental plan, as defined in Section 3(32) of ERISA, subject to any
federal, state or local law which is, to a material extent, similar to the
foregoing provisions of ERISA or the Code (any such person being a "Plan"), (ii)
is not an entity, including an insurance company separate account or general
account, whose underlying assets include "plan assets" by reason of a Plan's
investment in the entity and (iii) is not directly or indirectly purchasing such
Certificate on behalf of, as investment manager of, as named fiduciary of, as
trustee of, or with assets of a Plan.

          9.   The Certificateholder hereby agrees to indemnify each of the
Trust, the Indenture Trustee, the Note Insurer, and the Owner Trustee against
any liability that may result if the Certificateholder's transfer of a
Certificate (or any portion thereof) is not exempt from the

                                      C-2
<PAGE>

registration requirements of the Securities Act and any applicable state
securities laws or is not made in accordance with such federal and state laws.
Such indemnification of the Trust, the Indenture Trustee, and the Owner Trustee
shall survive the termination of the related Trust Agreement.

          IN WITNESS WHEREOF, the Certificateholder has caused this instrument
to be executed on its behalf pursuant to the authority of its Board of
Directors, by its duly authorized signatory this _______ day of _____________,
2003.

                                         [NAME OF CERTIFICATEHOLDER]
                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                      C-3
<PAGE>

                                                                       EXHIBIT D

                         FORM OF TRANSFEROR CERTIFICATE

                             _______________, ______

Accredited Home Lenders, Inc.
15030 Avenue of Science, Suite 100
San Diego, California  92128

U.S. Bank Trust National Association
300 Delaware Avenue, Eighth Floor,
Wilmington, Delaware  19809
Attention: Corporate Trust Administration

          Re:  Accredited Mortgage Loan Trust 2003-1 (the "Trust")
               Asset-Backed Notes, Series 2003-1
               --------------------------------------------------

Ladies and Gentlemen:

          In connection with our disposition of the above-referenced Asset-
Backed Certificates (the "Certificates") we certify that (i) we understand that
the Certificates have not been registered under the Securities Act of 1933, as
amended (the "Act"), and are being transferred by us in a transaction that is
exempt from the registration requirements of the Act and (ii) we have not
offered or sold any Certificates to, or solicited offers to buy any Certificates
from, any person, or otherwise approached or negotiated with any person with
respect thereto, in a manner that would be deemed, or taken any other action
which would result in, a violation of Section 5 of the Act.

Dated:

                                        [NAME OF TRANSFEROR]
                                        By:
                                           -----------------------------------
                                               sAuthorized Officer

                                      D-1<PAGE>

                                                                  EXECUTION COPY

                          SALE AND SERVICING AGREEMENT

                             dated as of May 1, 2003

                                  by and among

                         ACCREDITED HOME CAPITAL, INC.,
                                   as Seller,

                         ACCREDITED HOME LENDERS, INC.,
                         as Sponsor and Master Servicer,

                     ACCREDITED MORTGAGE LOAN TRUST 2003-1,
                                   as Issuer,

                      COUNTRYWIDE HOME LOANS SERVICING LP,
                               as Backup Servicer,

                                       and

                      DEUTSCHE BANK NATIONAL TRUST COMPANY,
                              as Indenture Trustee

<PAGE>

<TABLE>
<CAPTION>

                                           TABLE OF CONTENTS

                                                                                                  Page
                                                                                                  ----

                                                 ARTICLE I
                                                DEFINITIONS

<S>                                                                                                 <C>
Section 1.01.   Certain Defined Terms................................................................1
Section 1.02.   Provisions of General Application....................................................2

                                                ARTICLE II
                                 SALE AND CONVEYANCE OF THE MORTGAGE LOANS

Section 2.01.   Purchase and Sale of Mortgage Loans; Deposit of Derivatives..........................2
Section 2.02.   Reserved.............................................................................3
Section 2.03.   Purchase Price.......................................................................3
Section 2.04.   Possession of Mortgage Files; Access to Mortgage Files...............................3
Section 2.05.   Delivery of Mortgage Loan Documents..................................................3
Section 2.06.   Acceptance of the Trust Estate; Certain Substitutions; Certification by the
                 Indenture Trustee...................................................................6
Section 2.07.   Grant of Security Interest...........................................................8
Section 2.08.   Further Action Evidencing Assignments................................................9
Section 2.09.   Assignment of Agreement..............................................................9

                                                ARTICLE III
                                      REPRESENTATIONS AND WARRANTIES

Section 3.01.   Representations of the Master Servicer...............................................9
Section 3.02.   Representations, Warranties and Covenants of the Sponsor............................11
Section 3.03.   Representations, Warranties and Covenants of the Backup Servicer....................12
Section 3.04.   Representations, Warranties and Covenants of the Indenture Trustee..................13
Section 3.05.   Covenants and Representations of the Sponsor and Master Servicer Regarding
                 Prepayment Charges.................................................................14
Section 3.06.   Representations, Warranties and Covenants of the Seller.............................15

                                                ARTICLE IV
                                            THE MORTGAGE LOANS

Section 4.01.   Representations and Warranties Concerning the Mortgage Loans........................16
Section 4.02.   Purchase and Substitution...........................................................24

                                                 ARTICLE V
                            ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

Section 5.01.   The Master Servicer.................................................................25
Section 5.02.   Collection of Certain Mortgage Loan Payments; Collection Account....................27
Section 5.03.   Permitted Withdrawals from the Collection Account...................................28
Section 5.04.   Hazard Insurance Policies; Property Protection Expenses.............................30

                                                    i

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                                 <C>
Section 5.05.   Assumption and Modification Agreements..............................................31
Section 5.06.   Realization Upon Defaulted Mortgage Loans...........................................32
Section 5.07.   Indenture Trustee to Cooperate......................................................33
Section 5.08.   Servicing Compensation; Payment of Certain Expenses by Master Servicer..............34
Section 5.09.   Annual Statement as to Compliance...................................................34
Section 5.10.   Annual Independent Public Accountants' Servicing Report.............................35
Section 5.11.   Access to Certain Documentation.....................................................35
Section 5.12.   Maintenance of Fidelity Bond........................................................35
Section 5.13.   Subservicing Agreements Between the Master Servicer and Subservicer and
                 Subservicers.......................................................................35
Section 5.14.   Reports to the Indenture Trustee; Collection Account Statements.....................37
Section 5.15.   Optional Purchase of Defaulted Mortgage Loans.......................................37
Section 5.16.   Reports to be Provided by the Master Servicer and the Backup Servicer...............38
Section 5.17.   [Reserved]..........................................................................39
Section 5.18.   Periodic Advances...................................................................39
Section 5.19.   Indemnification; Third Party Claims.................................................40
Section 5.20.   Maintenance of Corporate Existence and Licenses; Merger or Consolidation of the
                 Master Servicer and Backup Servicer................................................40
Section 5.21.   Assignment of Agreement by Master Servicer and Backup Servicer; Master Servicer
                 and Backup Servicer Not to Resign..................................................41
Section 5.22.   Periodic Filings with the Securities and Exchange Commission Additional
                 Information........................................................................41
Section 5.23.   Administrative Duties...............................................................42

                                               ARTICLE VI
                                          APPLICATION OF FUNDS

Section 6.01.   eposits to the Payment Account.....................................................43
Section 6.02.   ollection of Money.................................................................43
Section 6.03.   pplication of Principal and Interest...............................................43
Section 6.04.   Reserved]..........................................................................43
Section 6.05.   ompensating Interest...............................................................43
Section 6.06.   ffect of Payments by the Note Insurer; Subrogation.................................44

                                               ARTICLE VII
                                            SERVICER DEFAULT

Section 7.01.   ervicer Events of Default..........................................................44
Section 7.02.   ackup Servicer to Act: Appointment of Successor....................................47
Section 7.03.   aiver of Defaults..................................................................51
Section 7.04.   ights of the Note Insurer to Exercise Rights of the Noteholders....................51
Section 7.05.   ndenture Trustee To Act Solely with Consent of the Note Insurer....................52
Section 7.06.   ortgage Loans, Trust Estate and Accounts Held for Benefit of the Note Insurer......52
Section 7.07.   ote Insurer Default................................................................52

                                                   ii
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                              ARTICLE VIII
                                               TERMINATION

<S>                                                                                                <C>
Section 8.01.   ermination.........................................................................53
Section 8.02.   dditional Termination Requirements.................................................54
Section 8.03.   ccounting Upon Termination of Master Servicer......................................54
Section 8.04.   ermination of Backup Servicer as Successor Master Servicer.........................54

                                               ARTICLE IX
                                               [RESERVED]

                                                ARTICLE X
                                        MISCELLANEOUS PROVISIONS

Section 10.01.  imitation on Liability.............................................................54
Section 10.02.  cts of Noteholders.................................................................55
Section 10.03.  mendment...........................................................................56
Section 10.04.  ecordation of Agreement............................................................56
Section 10.05.  uration of Agreement...............................................................57
Section 10.06.  otices.............................................................................57
Section 10.07.  everability of Provisions..........................................................57
Section 10.08.  o Partnership......................................................................57
Section 10.09.  ounterparts........................................................................58
Section 10.10.  uccessors and Assigns..............................................................58
Section 10.11.  eadings............................................................................58
Section 10.12.  o Petition.........................................................................58
Section 10.13.  hird Party Beneficiary.............................................................58
Section 10.14.  ntent of the Parties...............................................................58
Section 10.15.  OVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL........................58

Schedule I      Mortgage Loan Schedule
Appendix I      Defined Terms

                                                EXHIBITS

Exhibit A       Contents of the Mortgage File
Exhibit B       Indenture Trustee's Acknowledgement of Receipt
Exhibit C       Indenture Trustee's Acknowledgement of Receipt
Exhibit D       Initial Certification of Indenture Trustee
Exhibit E       Final Certification of Indenture Trustee
Exhibit F       Request for Release of Documents

                                                      iii
</TABLE>

<PAGE>

     SALE AND SERVICING AGREEMENT, dated as of May 1, 2003 (this "AGREEMENT"),
by and among ACCREDITED HOME CAPITAL, INC., a Delaware corporation, as seller
(the "SELLER"), ACCREDITED HOME LENDERS, INC., a California corporation, as
sponsor (the "SPONSOR"), ACCREDITED MORTGAGE LOAN TRUST 2003-1, a Delaware
statutory trust, as issuer (the "TRUST"), ACCREDITED HOME LENDERS, INC., a
California corporation, as master servicer (the "MASTER SERVICER"), COUNTRYWIDE
HOME LOANS SERVICING LP, a Texas limited partnership, as backup servicer (the
"BACKUP SERVICER"), and DEUTSCHE BANK NATIONAL TRUST COMPANY, a national banking
association, as indenture trustee (the "INDENTURE TRUSTEE").

                               W I T N E S S E T H

     WHEREAS, the Sponsor has sold the mortgage loans (the "MORTGAGE LOANS")
listed on Schedule I to this Agreement and together with the Mortgage Loans, the
"MORTGAGE LOANS") to the Seller, pursuant to the Master Sale and Purchase
Agreement, dated as of December 29, 2001, between the Sponsor and the Seller;

     WHEREAS, the Seller desires to sell to the Trust, and the Trust desires to
purchase from the Seller, the Mortgage Loans;

     WHEREAS, immediately after such purchase, the Trust will pledge such
Mortgage Loans to the Indenture Trustee pursuant to the terms of an Indenture,
dated as of May 1, 2003 (the "INDENTURE"), between the Trust and the Indenture
Trustee, and issue the Accredited Mortgage Loan Trust 2003-1, Asset-Backed Notes
(the "NOTES");

     WHEREAS, the Master Servicer has agreed to service the Mortgage Loans,
which constitute the principal assets of the Trust;

     WHEREAS, the Backup Servicer has agreed to act as backup servicer of the
Mortgage Loans, which constitute the principal assets of the Trust; and

     WHEREAS, the Indenture Trustee will hold the Mortgage Loans and certain
other assets pledged to the Indenture Trustee pursuant to the Indenture;

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Seller, the Sponsor, the Trust, the Master Servicer, the
Backup Servicer and the Indenture Trustee hereby agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

     Section 1.01.    CERTAIN DEFINED TERMS. Capitalized terms used herein but
not defined herein shall have the meanings ascribed to such terms in Appendix I
attached hereto.

                                       1
<PAGE>

     Section 1.02.    PROVISIONS OF GENERAL APPLICATION.

     (a)  The terms defined herein and in Appendix I to the Indenture include
the plural as well as the singular.

     (b)  The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. Unless otherwise noted, all
references to Articles and Sections shall be deemed to refer to Articles and
Sections of this Agreement.

     (c)  Any reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.

     (d)  All calculations of interest with respect to the Class A-1 Notes
provided for herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All calculations of interest with respect to the Class A-2
Notes and Class A-3 Notes provided for herein shall be on the basis of a 360-day
year and the actual number of days elapsed in the related Accrual Period. All
calculations of interest with respect to any Mortgage Loan provided for herein
shall be made in accordance with the terms of the related Mortgage Note and
Mortgage or, if such documents do not specify the basis upon which interest
accrues thereon, on the basis of a 360 day year consisting of twelve 30-day
months, to the extent permitted by applicable law.

     (e)  Any Mortgage Loan payment is deemed to be received on the date such
payment is actually received by the Master Servicer; provided, however, that,
for purposes of calculating payments on the Notes, prepayments with respect to
any Mortgage Loan are deemed to be received on the date they are applied in
accordance with Accepted Servicing Practices consistent with the terms of the
related Mortgage Note and Mortgage to reduce the outstanding Principal Balance
of such Mortgage Loan on which interest accrues.

                                   ARTICLE II

                    SALE AND CONVEYANCE OF THE MORTGAGE LOANS

     Section 2.01.    PURCHASE AND SALE OF MORTGAGE LOANS; DEPOSIT OF
DERIVATIVES. (a) The Sponsor hereby directs the Seller to sell, transfer,
assign, set over and convey, and the Seller does hereby sell, transfer, assign,
set over and convey to the Trust, to be included as part of Sub-Trust 1,
Sub-Trust 2 or Sub-Trust 3, as specified in the Mortgage Loan Schedule, in each
case without recourse, but subject to the terms and provisions of this
Agreement, all of the right, title and interest of the Seller in and to the
Mortgage Loans, including the Cut-Off Date Principal Balance of, and interest
due on, such Mortgage Loans listed on Schedule I attached hereto, and all other
assets included or to be included in the Trust Estate. In addition, on or prior
to the Closing Date, the Sponsor shall cause the Note Insurer to deliver the
Note Insurance Policy.

     (a)  The Seller may cause the deposit of derivatives at any time into the
Accredited Mortgage Loan Trust 2003-1 and any such deposited derivatives shall
become part of the Trust Estate.

                                       2
<PAGE>

     Section 2.02.    RESERVED.

     Section 2.03.    PURCHASE PRICE. On the Closing Date, as full consideration
for the Seller's sale of the Mortgage Loans to the Trust, the Underwriter, on
behalf of the Trust, will deliver to, or at the direction of, the Seller an
amount in cash equal to the sum of (A) 99.966051%, 100.0000% and 100.0000% of
the Original Note Principal Balance as of the Closing Date of the Class A-1
Notes, Class A-2 Notes and the Class A-3 Notes, respectively, plus (B) accrued
interest on the Original Note Principal Balance of the Class A-1 Notes at the
rate of ____% per annum from (and including) May 1, 2003 to (but not including)
the Closing Date. Additionally, the Seller will receive the Certificates issued
by the Trust pursuant to the Trust Agreement.

     Section 2.04.    POSSESSION OF MORTGAGE FILES; ACCESS TO MORTGAGE FILES.

          (a)  Upon the receipt by the Seller, or its designee, of the purchase
price for the Mortgage Loans set forth in Section 2.03 hereof, the ownership of
each Mortgage Note, each Mortgage and the contents of the Mortgage File related
to each Mortgage Loan will be vested in the Trust, and will be pledged to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.

          (b)  Pursuant to Section 2.05 hereof, the Seller has delivered, or
caused to be delivered the Indenture Trustee's Mortgage File related to each
Mortgage Loan to the Indenture Trustee.

          (c)  The Indenture Trustee will hold the Indenture Trustee's Mortgage
Files in trust pursuant to the terms of the Indenture for the benefit of all
present and future Noteholders and the Note Insurer.

          (d)  Consistent with the terms of the Indenture, the Indenture Trustee
shall afford the Seller, the Sponsor, the Trust, the Note Insurer, the Master
Servicer and the Backup Servicer reasonable access to all records and
documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable prior written
request and during normal business hours at the offices of the Indenture
Trustee.

     Section 2.05.    DELIVERY OF MORTGAGE LOAN DOCUMENTS. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Seller shall, on or
before the Closing Date, deliver, or cause to be delivered, to the Indenture
Trustee (as pledgee of the Trust pursuant to the Indenture), the following
documents or instruments constituting the Indenture Trustee's Mortgage File with
respect to each Mortgage Loan so transferred or assigned:

               (i)  the original Mortgage Note, endorsed without recourse in
     blank by the Sponsor, including all intervening endorsements showing a
     complete chain of endorsement;

               (ii) the related original Mortgage with evidence of recording
     indicated thereon or a copy thereof certified by the applicable recording
     office;

               (iii) each intervening mortgage assignment, with evidence of
     recording indicated thereon or if the original is not available, a copy
     thereof certified by the

                                       3
<PAGE>

     applicable recording office, if any, showing a complete chain of assignment
     from the originator of the related Mortgage Loan to the Sponsor (which
     assignment may, at the Sponsor's option, be combined with the assignment
     referred to in subpart (iv) hereof, in which case it must be in recordable
     form, but need not have been previously recorded);

               (iv) a mortgage assignment in recordable form (which, if
     acceptable for recording in the relevant jurisdiction as evidenced by an
     opinion of counsel addressed to the Indenture Trustee, may be included in a
     blanket assignment or assignments) of each Mortgage from the Sponsor to the
     Indenture Trustee;

               (v)  originals of all assumption, modification and substitution
     agreements in those instances where the terms or provisions of a Mortgage
     or Mortgage Note have been modified or such Mortgage or Mortgage Note has
     been assumed (if any); and

               (vi) an original title insurance policy or title opinion (or (A)
     a copy of the title insurance policy or title opinion, or (B) the related
     binder, commitment or preliminary report, or copy thereof in which case the
     Sponsor hereby certifies that the original Mortgage has been delivered to
     the title insurance company that issued such binder, commitment or
     preliminary report).

     In instances where the original recorded Mortgage or any intervening
mortgage assignment or a completed assignment of the Mortgage in recordable form
cannot be delivered by the Sponsor to the Indenture Trustee prior to or
concurrently with the execution and delivery of this Agreement due to a delay in
connection with recording, the Sponsor may:

          (x)  in lieu of delivering such original recorded Mortgage or
     intervening mortgage assignment, deliver to the Indenture Trustee, a copy
     thereof and the Sponsor hereby certifies that the original Mortgage has
     been delivered to a title insurance company for recordation after receipt
     of its policy of title insurance or the related binder, commitment or
     preliminary report therefor; and

          (y)  with respect to clause (iii) above, in lieu of delivering the
     completed assignment in recordable form, deliver to the Indenture Trustee,
     the assignment in recordable form, otherwise complete except for recording
     information.

The Indenture Trustee is hereby authorized and directed, promptly upon receipt
thereof, with respect to each Mortgage Note described in Section 2.05(a)(i)
hereof and each assignment described in Section 2.05(a)(iv) hereof, to endorse
such Mortgage Note and assignment as follows: "Deutsche Bank National Trust
Company, as Indenture Trustee under the Indenture dated as of May 1, 2003,
Accredited Mortgage Loan Trust 2003-1."

          (b)  As promptly as practicable, but in any event within thirty (30)
days from the Closing Date, the Sponsor shall promptly submit, or cause to be
submitted for recording in the appropriate public office for real property
records, each assignment referred to in Section 2.05(a)(iv); provided however,
the Sponsor need not cause to be recorded any assignment which relates to a
Mortgage Loan in any jurisdiction under the laws of which, as evidenced by an
Opinion of Counsel delivered by the Sponsor (at the Sponsor's expense) to the
Indenture

                                       4
<PAGE>

Trustee, acceptable to the Rating Agencies and the Note Insurer, the recordation
of such assignment is not necessary to protect the Indenture Trustee's, the Note
Insurer's, the Noteholders' and the Certificates' interest in the related
Mortgage Loan. The Indenture Trustee, shall retain a copy of each assignment
submitted for recording. In the event that any such assignment is lost or
returned unrecorded because of a defect therein, the Sponsor shall promptly
prepare a substitute assignment or cure such defect, as the case may be, and
thereafter the Sponsor shall submit each such assignment for recording. The
costs relating to the delivery and recordation of the documents in connection
with the Mortgage Loans as specified in this Article II shall be borne by the
Sponsor.

          (c)  The Sponsor shall, within five (5) Business Days after the
receipt thereof, deliver, or cause to be delivered, to the Indenture Trustee:
(i) the original recorded Mortgage and related power of attorney, if any, in
those instances where a copy thereof certified by the Sponsor was delivered to
the Indenture Trustee; (ii) the original recorded assignment of Mortgage from
the last endorsee to the Indenture Trustee, which, together with any intervening
assignments of Mortgage, evidences a complete chain of assignment from the
originator of the Mortgage Loan to the Indenture Trustee, in those instances
where copies of such assignments certified by the Sponsor were delivered to the
Indenture Trustee; and (iii) the title insurance policy or title opinion
required in Section 2.05(a)(vi).

     Notwithstanding anything to the contrary contained in this Section 2.05, in
those instances where the public recording office retains the original Mortgage,
power of attorney, if any, assignment or assignment of Mortgage after it has
been recorded or such original has been lost, the Sponsor shall be deemed to
have satisfied its obligations hereunder upon delivery to the Indenture Trustee,
of a copy of such Mortgage, power of attorney, if any, assignment or assignment
of Mortgage certified by the public recording office to be a true copy of the
recorded original thereof.

     From time to time the Sponsor may forward, or cause to be forwarded, to the
Indenture Trustee, additional original documents evidencing any assumption or
modification of a Mortgage Loan.

          (d)  All original documents relating to the Mortgage Loans that are
not required to be delivered to the Indenture Trustee, pursuant to Section
2.05(a) hereof are, and shall be, held by the Master Servicer, the Sponsor or
the Seller, as the case may be, in trust for the benefit of the Indenture
Trustee, on behalf of the Noteholders and the Note Insurer. In the event that
any such original document is required pursuant to the terms of this Section
2.05 to be a part of an Indenture Trustee's Mortgage File, such document shall
be delivered promptly to the Indenture Trustee. From and after the sale of the
Mortgage Loans to the Trust pursuant hereto, to the extent that the last
assignee thereof retains title of record to any Mortgage Loans prior to the
vesting of legal title in the Trust, such title shall be retained in trust for
the Trust as the owner of the Mortgage Loans, and the Indenture Trustee, as the
pledgee of the Trust under the Indenture. In acting as custodian of any original
document which is part of the Indenture Trustee's Mortgage Files, the Master
Servicer agrees further that it does not and will not have or assert any
beneficial ownership interest in the related Mortgage Loans or the Mortgage
Files. Promptly upon the Master Servicer's receipt of any such original
document, the Master Servicer, on behalf of the Trust, shall mark conspicuously
each such original document, and its master

                                       5
<PAGE>

data processing records with a legend evidencing that the Trust has purchased
the related Mortgage Loan and all right and title thereto and interest therein,
and pledged such Mortgage Loan and all right and title thereto and interest
therein to the Indenture Trustee, on behalf of the Noteholders and the Note
Insurer.

     Section 2.06.    ACCEPTANCE OF THE TRUST ESTATE; CERTAIN SUBSTITUTIONS;
CERTIFICATION BY THE INDENTURE TRUSTEE. (a) The Indenture Trustee agrees to
execute and deliver to the Seller, the Sponsor, the Note Insurer, the Master
Servicer and the Backup Servicer on or prior to the Closing Date an
acknowledgement of receipt of the Note Insurance Policy in the form attached as
EXHIBIT B hereto.

          (b)  The Indenture Trustee is authorized and directed to, and agrees
to, do the following:

               (i)  execute and deliver to the Seller, the Sponsor, the Note
     Insurer, the Master Servicer and the Backup Servicer, on or prior to the
     Closing Date with respect to each Mortgage Loan transferred on such date,
     an acknowledgement of receipt, in the form attached as EXHIBIT C hereto, of
     the original Mortgage Note as required to be included in the Indenture
     Trustee's Mortgage File (with any exceptions noted) and declares that it
     will hold such documents and any amendments, replacements or supplements
     thereto, as well as any other assets included in the definition of Trust
     Estate and delivered to the Indenture Trustee, subject to the conditions
     set forth in the Indenture, for the benefit of the Noteholders and the Note
     Insurer.

               (ii) to review (or cause to be reviewed) each Indenture Trustee's
     Mortgage File within sixty (60) days after the Closing Date (or, with
     respect to any Qualified Substitute Mortgage Loans, within sixty (60) days
     after receipt thereof), and to deliver to the Master Servicer, the Backup
     Servicer, the Seller, the Sponsor, and the Note Insurer a certification, in
     the form attached hereto as EXHIBIT D, to the effect that, except as
     otherwise noted, as to each Mortgage Loan listed in the related Mortgage
     Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage
     Loan specifically identified in such certification as not covered by such
     certification), (i) all documents specified in Section 2.05(a)(i)-(iv) and
     (vi) are in its possession, (ii) each such document has been reviewed by it
     and appears, on its face, not to have been mutilated, damaged, torn or
     otherwise physically altered (handwritten additions, changes or corrections
     shall not constitute physical alteration if they reasonably appear to have
     been initialed), appears regular on its face and relates to such Mortgage
     Loan, and (iii) based on its examination and only as to the foregoing
     documents, the information set forth on the Mortgage Loan Schedule as to
     the information set forth in (i), (ii) (with respect to property address
     only, excluding zip code), (iii) and (vi) of the definition of "Mortgage
     Loan Schedule" accurately reflects the information set forth in the
     Indenture Trustee's Mortgage File delivered on such date; PROVIDED HOWEVER,
     no certification of the Indenture Trustee shall constitute a determination
     by the Indenture Trustee of the proper form, adequacy or enforceability of
     any document included in the Indenture Trustee's Mortgage File.

                                       6
<PAGE>

               (iii) to review (or cause to be reviewed) each Indenture
     Trustee's Mortgage File within one hundred eighty (180) days after the
     Closing Date (or, with respect to any Qualified Substitute Mortgage Loans,
     within one hundred eighty (180) days after receipt thereof), and to deliver
     to the Master Servicer, the Backup Servicer, the Sponsor and the Note
     Insurer a certification in the form attached hereto as EXHIBIT E to the
     effect that, except as otherwise noted, as to each Mortgage Loan listed in
     the related Mortgage Loan Schedule (other than any Mortgage Loan paid in
     full or any Mortgage Loan specifically identified in such certification as
     not covered by such certification), (i) all documents specified in Section
     2.05(a)(i)-(iv) and (vi) are in its possession, (ii) each such document has
     been reviewed by it and has not been mutilated, damaged, torn or otherwise
     physically altered (handwritten additions, changes or corrections shall not
     constitute physical alteration if they reasonably appear to be initialed by
     the Mortgagor), appears regular on its face and relates to such Mortgage
     Loan, and (iii) based on its examination and only as to the foregoing
     documents, the information set forth in items (i), (ii) (with respect to
     property address only, excluding zip code), (iii) and (vi) of the
     definition of "Mortgage Loan Schedule" accurately reflects the information
     set forth in the Indenture Trustee's Mortgage File delivered on such date.

     In performing any such review, the Indenture Trustee may conclusively rely
on the Sponsor as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Indenture Trustee's
review of the Indenture Trustee's Mortgage Files is limited solely to confirming
that the documents listed in Section 2.05 have been executed and received and
relate to the Indenture Trustee's Mortgage Files identified in the related
Mortgage Loan Schedule. The Indenture Trustee shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face.

          (c)  If the Indenture Trustee during the process of reviewing the
Indenture Trustee's Mortgage Files finds any document constituting a part of a
Indenture Trustee's Mortgage File which is not executed, has not been received,
is unrelated to the Mortgage Loan identified in the related Mortgage Loan
Schedule, or does not conform to the requirements of Section 2.05 or the
description thereof as set forth in the related Mortgage Loan Schedule, the
Indenture Trustee shall promptly so notify the Master Servicer, the Backup
Servicer, the Sponsor, the Note Insurer and the Indenture Trustee. Upon receipt
of such notice respecting such defect, the Sponsor shall have a sixty (60) day
period after such notice within which to correct or cure any such defect. If,
however, within such sixty (60) day period, the Sponsor has not caused to be
remedied the defect and the Master Servicer or the Note Insurer determines that
the defect materially and adversely affects the value of the related Mortgage
Loan or the interest of the Noteholders and the Note Insurer in the related
Mortgage Loan, the Sponsor will be obligated to either (i) substitute in lieu of
such Mortgage Loan a Qualified Substitute Mortgage Loan in the manner and
subject to the conditions set forth in this Section 2.06 or (ii) purchase such
Mortgage Loan at a purchase price equal to the Loan Repurchase Price. Upon
receipt by the Indenture Trustee of two copies of a certification, in the form
attached hereto as EXHIBIT F, of a Servicing Officer of such substitution or
purchase and, in the case of a substitution, upon receipt by the Indenture
Trustee, of the related Indenture Trustee's Mortgage File, and the deposit of
the Loan Repurchase Price, in the case of a purchase, or the Substitution
Adjustment,

                                       7
<PAGE>

if any, in connection with a substitution, in the Collection Account, the
Indenture Trustee shall release to the Master Servicer for release to the
Sponsor the related Indenture Trustee's Mortgage File and the Indenture Trustee
shall execute, without recourse, and deliver such instruments of transfer
furnished by the Sponsor as may be necessary to transfer such Mortgage Loan to
the Sponsor. The Indenture Trustee shall provide notice to the Note Insurer if
the Sponsor fails to repurchase or substitute for a Mortgage Loan in accordance
with the foregoing.

     Section 2.07.    GRANT OF SECURITY INTEREST. (a) It is intended that the
conveyance of the Mortgage Loans and other property by the Seller to the Trust
as provided in this Article II be, and be construed for all purposes other than
tax and accounting purposes as, a sale of the Mortgage Loans and such other
property by the Seller to the Trust. It is, for all purposes other than tax and
accounting purposes further, not intended that such conveyance be deemed a
pledge of the Mortgage Loans or such other property by the Seller to the Trust
to secure a debt or other obligation of the Seller. However, in the event that
the Mortgage Loans or any of such other property are held to be property of the
Seller, or if for any reason this Agreement is held or deemed to create a
security interest in the Mortgage Loans or any of such other property, then it
is intended that: (i) this Agreement shall also be deemed to be a security
agreement within the meaning of the Uniform Commercial Code; (ii) the conveyance
provided for in this Article II shall be deemed to be a grant by the Seller to
the Trust of a security interest in all of the Seller's right, title and
interest in and to the Mortgage Loans and such other property and all amounts
payable to the holders of the Mortgage Loans in accordance with the terms
thereof and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including,
without limitation, all amounts from time to time held or invested in the
Accounts whether in the form of cash, instruments, securities or other property;
(iii) the possession by the Indenture Trustee, of the Mortgage Notes and such
other items of property as constitute instruments, money, negotiable documents
or chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to the Uniform Commercial
Code; and (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from financial intermediaries, bailees or agents, as applicable, of the
Indenture Trustee for the purpose of perfecting such security interest under
applicable law. The Seller, the Sponsor, the Master Servicer, on behalf of the
Trust and the Indenture Trustee, shall, to the extent consistent with this
Agreement, take such actions as may be reasonably necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans
or any of such other property, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.

          (b)  The Seller, the Sponsor, the Master Servicer and the Backup
Servicer shall take no action inconsistent with the Trust's ownership of the
Trust Estate and each shall indicate or shall cause to be indicated in its
records and records held on its behalf that ownership of each Mortgage Loan and
the other assets in the Trust Estate is vested in the Trust, as owner, and is
pledged to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer pursuant to the terms of the Indenture. The Indenture Trustee is
authorized to act, pursuant to the terms of this Agreement for the benefit of
the Noteholders and Note Insurer and shall be authorized to act at the direction
of such parties. In addition, the Seller, the Sponsor, the Master Servicer and
the Backup Servicer shall respond to any inquiries from third parties with
respect to ownership of a

                                       8
<PAGE>

Mortgage Loan or any other asset in the Trust Estate by stating that it is not
the owner of such asset and that the Trust is the owner of such Mortgage Loan or
other asset in the Trust Estate, which is pledged to the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer.

     Section 2.08.    FURTHER ACTION EVIDENCING ASSIGNMENTS. (a) The Master
Servicer agrees that, from time to time, at its expense, it shall cause the
Sponsor or Seller, as the case may be, to, and each of the Sponsor and Seller
agree that it shall, promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Master Servicer or the Indenture Trustee may reasonably request, in
order to perfect, protect or more fully evidence the transfer of ownership of
the Mortgage Loans and other assets in the Trust Estate or to enable the
Indenture Trustee, to exercise or enforce any of its rights hereunder. Without
limiting the generality of the foregoing, the Master Servicer, the Sponsor and
the Seller shall, upon the request of the Master Servicer or the Indenture
Trustee execute and file (or cause to be executed and filed) such real estate
filings, financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be necessary
or appropriate.

          (b)  Each of the Sponsor and the Seller hereby grants to the Master
Servicer, the Backup Servicer and the Indenture Trustee powers of attorney to
execute all documents on its behalf under this Agreement as may be necessary or
desirable to effectuate the foregoing.

     Section 2.09.    ASSIGNMENT OF AGREEMENT. The Sponsor, the Seller and the
Master Servicer hereby acknowledge and agree that the Trust may assign its
interest under this Agreement to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer, as may be required to effect the purposes of
the Indenture, without further notice to, or consent of, the Sponsor or the
Master Servicer, and the Indenture Trustee shall succeed to such of the rights
of the Trust hereunder as shall be so assigned. The Trust shall, pursuant to the
Indenture, assign all of its right, title and interest in and to the Mortgage
Loans and its right to exercise the remedies created by Section 4.02 of this
Agreement for breaches of the representations, warranties, agreements and
covenants of the Sponsor contained in Sections 3.02 and 4.01 of this Agreement,
assign such right, title and interest to the Indenture Trustee, for the benefit
of the Noteholders and the Note Insurer. The Sponsor agrees that, upon such
assignment to the Indenture Trustee, such representations, warranties,
agreements and covenants will run to and be for the benefit of the Indenture
Trustee and the Indenture Trustee may enforce, without joinder of the Sponsor or
the Trust, the repurchase obligations of the Sponsor set forth herein with
respect to breaches of such representations, warranties, agreements and
covenants.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     Section 3.01.    REPRESENTATIONS OF THE MASTER SERVICER. The Master
Servicer hereby represents and warrants to the Indenture Trustee, the Seller,
the Sponsor, the Trust, the Note Insurer, the Backup Servicer and the
Noteholders as of the Closing Date and during the term of this Agreement that:

                                       9
<PAGE>

          (a)  The Master Servicer is duly organized, validly existing and in
good standing under the laws of its state of incorporation and has the power to
own its assets and to transact the business in which it is currently engaged.
The Master Servicer is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it or the performance
of its obligations hereunder requires such qualification and in which the
failure so to qualify could reasonably be expected to have a material adverse
effect on the business, properties, assets, or condition (financial or other) of
the Master Servicer or the performance of its obligations hereunder.

          (b)  The Master Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under this Agreement, and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement, and assuming the due
authorization, execution and delivery hereof by the other parties hereto
constitutes, or will constitute, the legal, valid and binding obligation of the
Master Servicer, enforceable in accordance with its terms, except as enforcement
of such terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and by general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law).

          (c)  The Master Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
which consent already has not been obtained in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, except such
as have been obtained prior to the Closing Date.

          (d)  The execution, delivery and performance of this Agreement by the
Master Servicer will not violate any provision of any existing law or regulation
or any order or decree of any court or the charter or bylaws of the Master
Servicer, or constitute a breach of any mortgage, indenture, contract or other
Agreement to which the Master Servicer is a party or by which it may be bound.

          (e)  There is no action, suit, proceeding or investigation pending or
threatened against the Master Servicer which, either in any one instance or in
the aggregate, is, in the Master Servicer's judgment, likely to result in any
material adverse change in the business, operations, financial condition,
properties, or assets of the Master Servicer, or in any material impairment of
the right or ability of the Master Servicer to carry on its business
substantially as now conducted, or in any material liability on the part of the
Master Servicer, or which would draw into question the validity of this
Agreement, the Notes, or the Mortgage Loans or of any action taken or to be
taken in connection with the obligations of the Master Servicer contemplated
herein or therein, or which would be likely to impair materially the ability of
the Master Servicer to perform its obligations hereunder.

          (f)  Neither this Agreement nor any statement, report, or other
document furnished by the Master Servicer pursuant to this Agreement or in
connection with the transactions contemplated hereby, including, without
limitation, the sale or placement of the Notes, contains any untrue statement of
fact provided by or on behalf of the Master Servicer or

                                       10
<PAGE>

omits to state a fact necessary to make the statements provided by or on behalf
of the Master Servicer contained herein or therein not misleading.

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

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

          (i)  The Master Servicer shall take all necessary steps to maintain
the Indenture Trustee's perfection and priority in the Mortgage Loans.

     It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.01 shall survive the delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee and inure
to the benefit of the Indenture Trustee.

     Section 3.02.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR.
The Sponsor hereby represents, warrants and covenants to the Indenture Trustee,
the Seller, the Trust, the Backup Servicer, the Note Insurer and the Master
Servicer that as of the date of this Agreement or as of such date specifically
provided herein:

          (a)  The Sponsor is a corporation duly organized, validly existing and
in good standing under the laws of the State of California.

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

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

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

          (e)  None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration

                                       11
<PAGE>

under (A) the articles of incorporation or bylaws of the Sponsor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Sponsor or any of its subsidiaries
is a party or by which it or any of its subsidiaries is bound; (ii) results or
will result in a violation of any law, rule, regulation, order, judgment or
decree applicable to the Sponsor of any court or governmental authority having
jurisdiction over the Sponsor or its subsidiaries; or (iii) results in the
creation or imposition of any lien, charge or encumbrance which would have a
material adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans.

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

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

     It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee and shall
inure to the benefit of the Indenture Trustee.

     Section 3.03.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BACKUP
SERVICER. The Backup Servicer hereby represents, warrants and covenants to the
Indenture Trustee, the Trust, the Master Servicer, the Note Insurer, the Seller
and the Sponsor that as of the date of this Agreement:

          (a)  The Backup Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of California.

          (b)  The Backup Servicer has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement.

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

          (d)  No consent, approval, authorization or order of or registration
or filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Backup
Servicer with this Agreement or the consummation

                                       12
<PAGE>

by the Backup Servicer of any of the transactions contemplated hereby, except as
have been made on or prior to the Closing Date.

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

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

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

     It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.03 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee and shall
inure to the benefit of the Indenture Trustee.

     Section 3.04.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INDENTURE
TRUSTEE. The Indenture Trustee hereby represents, warrants and covenants to the
Backup Servicer, the Trust, the Master Servicer, the Seller, the Note Insurer
and the Sponsor that as of the date of this Agreement or as of such date
specifically provided herein:

          (a)  The Indenture Trustee is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America.

          (b)  The Indenture Trustee has the requisite power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement.

          (c)  This Agreement has been duly and validly authorized, executed and
delivered by the Indenture Trustee, all requisite action having been taken, and,
assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes or will constitute the legal, valid and binding
agreement of the Indenture Trustee, enforceable against

                                       13
<PAGE>

the Indenture Trustee in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law).

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

          (e)  None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the articles of association or bylaws of the Indenture
Trustee, or (B) to the best of its knowledge, of any term, condition or
provision of any material indenture, deed of trust, contract or other agreement
or instrument to which the Indenture Trustee is a party or by which it is bound;
or (ii) results or will result in a violation of any statute, rule, regulation,
order, judgment or decree applicable to the Indenture Trustee of any court or
governmental authority having jurisdiction over the Indenture Trustee or its
subsidiaries which violation would materially and adversely affect the Indenture
Trustee's performance of its duties hereunder; and

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

     It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee.

     Section 3.05.    COVENANTS AND REPRESENTATIONS OF THE SPONSOR AND MASTER
SERVICER REGARDING PREPAYMENT CHARGES. The Master Servicer covenants that it
will not waive any Prepayment Charge or part of a Prepayment Charge unless in
connection with a Mortgage Loan that is in default or for which a default is
reasonably foreseeable.

          (a)  The Sponsor hereby represents and warrants that the information
set forth in the Prepayment Charge Schedule is complete, true and correct in all
material respects at the date or dates respecting which such information is
furnished and each Prepayment Charge is permissible and enforceable in
accordance with its terms (except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally) under applicable law.

                                       14
<PAGE>

          (b)  Upon discovery by the Sponsor or the Indenture Trustee of a
breach of the foregoing, the party discovering such breach shall give prompt
written notice to the other parties. Within 60 days of the earlier of discovery
by the Master Servicer or receipt of notice by the Master Servicer of breach,
the Master Servicer shall cure such breach in all material respects. If the
covenant made by the Master Servicer in clause (a) above is breached the Master
Servicer must pay into the Collection Account the amount of the waived
Prepayment Charge. If the representation made by the Sponsor in clause (b) above
is breached, the Sponsor must pay into the Collection Account the amount of the
scheduled Prepayment Charge, less any amount previously collected and paid by
the Master Servicer into the Collection Account. The foregoing obligations of
the Master Servicer and the Sponsor shall be the sole and exclusive remedies for
a breach of this Section 3.05(a) or (b).

     Section 3.06.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER.
The Seller, hereby represents, warrants and covenants to the Indenture Trustee,
the Trust, the Sponsor, the Backup Servicer, the Note Insurer and the Master
Servicer that as of the date of this Agreement or as of such date specifically
provided herein:

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

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

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

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

          (e)  None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the articles of incorporation or bylaws of the Seller, or
(B) of any term, condition or provision of any material indenture, deed of
trust, contract or other agreement or instrument to which the Seller or any of
its subsidiaries is a party or by which it or any of its subsidiaries is bound;
(ii) results or will result in a violation of any law, rule, regulation, order,
judgment or

                                       15
<PAGE>

decree applicable to the Seller of any court or governmental authority having
jurisdiction over the Seller or its subsidiaries; or (iii) results in the
creation or imposition of any lien, charge or encumbrance which would have a
material adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans.

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

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

     It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.05 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee and shall
inure to the benefit of the Indenture Trustee.

                                   ARTICLE IV

                               THE MORTGAGE LOANS

     Section 4.01.    REPRESENTATIONS AND WARRANTIES CONCERNING THE MORTGAGE
LOANS. The Sponsor makes the following representations and warranties to the
Seller, the Master Servicer, the Backup Servicer, the Indenture Trustee, the
Note Insurer and the Trust as to the Mortgage Loans on which the Trust relies in
accepting the Mortgage Loans in trust and executing the Notes. With respect to
the representations and warranties stated in Sections 4.01(i), (r), (ddd), (eee)
and (fff), the Sponsor makes such representations and warranties on behalf of
itself and the Seller. Such representations, warranties and covenants are made
or deemed to be made as of the Closing Date.

          (a)  The information with respect to each Mortgage Loan set forth in
the Mortgage Loan Schedule is true and correct as of the Cut-Off Date, based on
Cut-Off Date Principal Balances.

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

          (c)  Each Mortgage Loan was underwritten or reunderwritten pursuant to
the Underwriting Guidelines which conform in all material respects to the
description thereof set forth in the Prospectus Supplement.

          (d)  All of the original or certified documentation required to be
delivered to the Indenture Trustee pursuant to this Agreement (including all
material documents related thereto) with respect to each Mortgage Loan has been
or will be delivered to the Indenture Trustee in accordance with the terms of
this Agreement. Each of the documents and instruments

                                       16
<PAGE>

specified to be included therein has been duly executed and in due and proper
form, and each such document or instrument is in a form generally acceptable to
prudent mortgage lenders that regularly originate or purchase mortgage loans
comparable to the Mortgage Loans for sale to prudent investors in the secondary
market that invest in mortgage loans such as the Mortgage Loans.

          (e)  [Reserved].

          (f)  Each Mortgaged Property is improved by a single (one to four)
family residential dwelling, which may include condominiums, individual units in
a planned unit development and townhouses but shall not include cooperatives.

          (g)  No Mortgage Loan had an LTV in excess of 90%.

          (h)  Each Mortgage Loan is a valid and subsisting first lien as
identified on the Mortgage Loan Schedule on the Mortgaged Property and subject
in all cases to the exceptions to title set forth in the title insurance policy,
with respect to the related Mortgage Loan, which exceptions are generally
acceptable to banking institutions in connection with their regular mortgage
lending activities, and such other exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate, materially
and adversely affect the benefits of the security intended to be provided by
such Mortgage. At the time each Mortgage Loan was originated, the originator was
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act or a savings and loan
association, a savings bank, a commercial bank or similar banking institution
which was supervised and examined by a federal or state authority or a mortgage
banker or broker licensed or authorized to do business in the jurisdiction in
which the related Mortgaged Property is located, applying the same standards and
procedures used by the Sponsor in originating Mortgage Loans directly.

          (i)  Immediately prior to the transfer and assignment of the Mortgage
Loans to the Seller pursuant to the Master Sale and Purchase Agreement, the
Sponsor held good and marketable title to, and was the sole owner of each
Mortgage Loan, subject to no liens, charges, mortgages or encumbrances or rights
of others; and immediately prior to the transfer and assignment herein
contemplated, the Seller held good and marketable title to, and was the sole
owner of, each Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except liens which will be released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Indenture Trustee will hold
good and marketable title to, and be the sole owner of, each Mortgage Loan
subject to no liens, charges, mortgages, encumbrances or rights of others except
liens which will be released simultaneously with such transfer and assignment.

          (j)  There is no delinquent tax or assessment lien on any Mortgaged
Property, and each Mortgaged Property is free of substantial damage and is in
good repair.

          (k)  There is no valid and enforceable right of rescission, offset,
defense or counterclaim to any Mortgage Note or Mortgage, including the
obligation of the related Mortgagor to pay the unpaid principal of or interest
on such Mortgage Note or the defense of

                                       17
<PAGE>

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, or subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto.

          (l)  There is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or equal
with, the lien of the related Mortgage except those which are insured against by
any title insurance policy referred to in paragraph (n) below.

          (m)  Each Mortgage Loan at the time it was made complied with, and
each Mortgage Loan at all times was serviced in compliance with, in each case,
in all material respects, applicable state and federal laws and regulations,
including, without limitation, the federal Truth-in-Lending Act and other
consumer protection laws, the Home Ownership and Equity Protection Act of 1994,
real estate settlement procedure, usury, equal credit opportunity, disclosure
and recording laws and all applicable predatory and abusive lending laws.

          (n)  With respect to each Mortgage Loan, a lender's title insurance
policy, issued in standard California Land Title Association form or American
Land Title Association form, or other form acceptable in a particular
jurisdiction by a title insurance company authorized to transact business in the
state in which the related Mortgaged Property is situated, in an amount at least
equal to the original Principal Balance of such Mortgage Loan insuring the
mortgagee's interest under the related Mortgage Loan as the holder of a valid
first mortgage lien of record on the real property described in the related
Mortgage, as the case may be, subject only to exceptions of the character
referred to in paragraph (h) above, was effective on the date of the origination
of such Mortgage Loan, and, as of the Closing Date such policy will be valid and
inure to the benefit of the Indenture Trustee on behalf of the Noteholders.

          (o)  The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy (which may be a blanket policy of the
type described in this Agreement) with a generally acceptable carrier that
provides for fire and extended coverage representing coverage not less than the
least of (i) the outstanding Principal Balance of the related Mortgage Loan,
(ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis or (iii) the full insurable value of the Mortgaged
Property.

          (p)  If any Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy (which may be a blanket policy of the type
described in this Agreement) in a form meeting the requirements of the current
guidelines of the Federal Insurance Administration is in effect with respect to
such Mortgaged Property with a generally acceptable carrier in an amount
representing coverage not less than the least of (i) the outstanding Principal
Balance of the related Mortgage Loan (together, in the case of a second mortgage
loan, with the outstanding principal balance of the first mortgage loan), (ii)
the minimum amount required to compensate for damage or loss on a replacement
cost basis or (iii) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973.

                                       18
<PAGE>

          (q)  Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), and all parties to
each Mortgage Loan had full legal capacity to execute all documents relating to
such Mortgage Loan and convey the estate therein purported to be conveyed.

          (r)  The Sponsor has directed and the Seller has caused to be
performed any and all acts required to be performed to preserve the rights and
remedies of the Indenture Trustee in any Insurance Policies applicable to any
Mortgage Loan delivered by the Sponsor or the Seller including, to the extent
such Mortgage Loan is not covered by a blanket policy described in this
Agreement, any necessary notifications of insurers, assignments of policies or
interests therein, and establishments of coinsured, joint loss payee and
mortgagee rights in favor of the Indenture Trustee.

          (s)  The Sponsor has caused or will have caused, within ten days, the
filing of all appropriate financing statements in the proper filing office in
the appropriate jurisdictions under applicable law in order to perfect the
security interest in the original Mortgage Note and all subsequent assignments
of the original Mortgage, granted to the Indenture Trustee hereunder, subject to
the provisions of Section 2.05(b) of this Agreement.

          (t)  The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the
Noteholders and which has been delivered to the Indenture Trustee

          (u)  The proceeds of each Mortgage Loan have been fully disbursed, and
there is no obligation on the part of the mortgagee to make future advances
thereunder. All costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans were paid.

          (v)  Except as otherwise required by law or pursuant to the statute
under which the related Mortgage Loan was made, the related Mortgage Note is not
and has not been secured by any collateral, pledged account or other security
except the lien of the corresponding Mortgage.

          (w)  No Mortgage Loan was originated under a buydown plan.

          (x)  No Mortgage Loan provides for negative amortization, has a shared
appreciation feature, or other contingent interest feature.

          (y)  Each Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of one or more parcels of real property with
a residential dwelling erected thereon.

          (z)  Each Mortgage securing a Mortgage Note contains a provision for
the acceleration of the payment of the unpaid Principal Balance of the related
Mortgage Loan in the

                                       19
<PAGE>

event the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder.

          (aa) Any advances made after the date of origination of a Mortgage
Loan but prior to the Cut-Off Date, have been consolidated with the outstanding
principal amount secured by the related Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term
reflected on the Mortgage Loan Schedule. The consolidated principal amount does
not exceed the original principal amount of the related Mortgage Loan. No
Mortgage Note permits or obligates the Seller, the Master Servicer, the Backup
Servicer, the Sponsor or any other Person to make future advances to the related
Mortgagor at the option of the Mortgagor.

          (bb) There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and each Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, flood, tornado or other casualty, so as to affect
adversely the value of the Mortgaged Property as security for the Mortgage Loan
or the use for which the premises were intended.

          (cc) All of the improvements which were included for the purposes of
determining the Appraised Value of any Mortgaged Property lie wholly within the
boundaries and building restriction lines of such Mortgaged Property, and no
improvements on adjoining properties encroach upon such Mortgaged Property,
except as stated in the related title insurance policy and affirmatively
insured.

          (dd) No improvement located on or being part of any Mortgaged Property
is in violation of any applicable zoning law or regulation. As of the related
date of origination, all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of each 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 and such Mortgaged
Property is lawfully occupied under the applicable law.

          (ee) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Sponsor, the Seller, or the Trust to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the related Mortgagor.

          (ff) [Reserved].

          (gg) [Reserved].

          (hh) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including (i) in the case of a Mortgage designated as a deed of trust,
by trustee's sale and (ii) otherwise by judicial foreclosure. There is no
homestead or other exemption available which materially interferes with the
right to sell the related Mortgaged Property at a trustee's sale or the right to
foreclose the related Mortgage.

                                       20
<PAGE>

          (ii) Except for delinquencies identified in the Mortgage Loan
Schedule, there is no default, breach, violation or event of acceleration
existing under any Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration;
and the Seller has not waived any default, breach, violation or event of
acceleration.

          (jj) No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released, in whole
or in part.

          (kk) [Reserved]

          (ll) The Sponsor has no actual knowledge that there exists on any
Mortgaged Property any hazardous substances, hazardous wastes or solid wastes,
as such terms are defined in the CERCLA, the Resource Conservation and Recovery
Act of 1976, or other federal, state or local environmental legislation.

          (mm) No action, error, omission, misrepresentation, negligence, fraud
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 or in the application of any insurance in relation to such
Mortgage Loan.

          (nn) The Sponsor has not solicited the Mortgagor in connection with
any refinancing.

          (oo) If the Mortgage Loan is an adjustable rate Mortgage Loan, all of
the adjustments to the Mortgage Interest Rate, to the amount of the monthly
payment, and to the principal balance have been made in accordance with the
terms of the related Mortgage Note.

          (pp) The origination and collection practices used with respect to the
Mortgage Loan have been in all respects legal, proper, prudent and customary in
the mortgage origination and servicing business.

          (qq) An appraisal of the related Mortgaged Property was made and
signed, prior to the approval of the Mortgage Loan application, by a qualified
appraiser who met the requirements of the Sponsor's appraisal policy and
procedures and who had no interest, direct or indirect in the Mortgaged Property
or in any loan made on the security thereof, whose compensation was not affected
by the approval or disapproval of the Mortgage Loan.

          (rr) The Mortgagor has received all disclosure materials required by
applicable law with respect to the making of adjustable rate mortgage loans; and
if the Mortgage Loan is a refinanced Mortgage Loan, the Mortgagor has received
all disclosure and rescission materials required by applicable law with respect
to the making of a refinanced Mortgage Loan, and evidence of such receipt is and
will remain in the Master Servicer's file.

          (ss) If the residential dwelling on the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development),

                                       21
<PAGE>

such condominium or planned unit development project meets the Sponsor's
eligibility requirements.

          (tt) [As of the Cut-Off Date, no more than 0.15% of the Mortgage Loans
were more than 29 days contractually delinquent or had been dishonored. No more
than 0.04% of the Mortgage Loans have been thirty or more days delinquent more
than one time in the twelve months preceding the Cut-Off Date.]

          (uu) The Sponsor has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a person other than the Mortgagor,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan, except for interest prepaid upon the closing of the Mortgage
Loan. No Mortgage Loan contains any provision pursuant to which Monthly Payments
are: (i) paid or partially paid with funds deposited in any separate account
established by the Sponsor, the Mortgagor, or anyone on behalf of the Mortgagor
or (ii) paid by any source other than the Mortgagor. The Mortgage Loan is not
deemed a graduated payment mortgage loan and the Mortgage Loan does not have a
shared appreciation or other contingent interest feature.

          (vv) No foreclosure proceedings are pending against the Mortgaged
Property and the Mortgage Loan is not subject to any pending bankruptcy or
insolvency proceeding, and to the Sponsor's best knowledge, no material
litigation or material lawsuit relating to the Mortgage Loan is pending.

          (ww) Principal payments on the Mortgage Loan commenced or will
commence within sixty days after the proceeds of the Mortgage Loan were
disbursed.

          (xx) With respect to escrow deposits, if any, all such payments are in
the possession of, or under the control of, the Master Servicer and there exists
no deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made or could be made. No escrow deposits or
escrow advances or other charges or payments due the Master Servicer have been
capitalized under any Mortgage or the related Mortgage Note.

          (yy) With respect to the conveyance of the Mortgage Loans by the
Sponsor to the Seller, the Sponsor used no selection procedures that identified
the Mortgage Loans as being less desirable or valuable than other comparable
mortgage loans originated or acquired by the Sponsor. The Mortgage Loans are
representative of the Sponsor's portfolio of fixed-rate or adjustable-rate
mortgage loans, as applicable. With respect to the conveyance of the Mortgage
Loans pursuant to this Agreement, the Seller used no selection procedures that
identified the Mortgage Loans as being less desirable or valuable than other
comparable mortgage loans originated or acquired by the Seller. The Mortgage
Loans are representative of the Seller's portfolio of fixed-rate or
adjustable-rate mortgage loans, as applicable.

          (zz) Each Mortgage Loan conforms, and all such Mortgage Loans in the
aggregate conform in all material respects to the description thereof set forth
in the Prospectus Supplement.

          (aaa) All requirements for the valid transfer of each Insurance
Policy, including any assignments or notices required in each Insurance Policy,
have been satisfied.

                                       22
<PAGE>

          (bbb) This Agreement creates a valid and continuing security interest
(as defined in the applicable UCC) in the Mortgage Loans in favor of the
Indenture Trustee, which security interest is prior to all other liens, and is
enforceable as such as against creditors of and purchasers from the Seller.

          (ccc) The Mortgage Loans constitute "instruments" within the meaning
of the applicable UCC.

          (ddd) The Sponsor received all consents and approvals required by the
terms of the Mortgage Loans to the sale of the Mortgage Loans pursuant to the
Master Sale and Purchase Agreement to the Seller and the Seller has received all
consents and approvals required by the terms of the Mortgage Loans to the sale
of the Mortgage Loans hereunder to the Owner Trustee and the subsequent pledge
to the Indenture Trustee.

          (eee) Other than the security interest granted to the Indenture
Trustee pursuant to the Indenture, neither the Sponsor nor the Seller has
pledged, assigned, sold, granted a security interest in, or otherwise conveyed
any of the Mortgage Loans. Neither the Sponsor nor the Seller has authorized the
filing of nor is aware of any financing statements against the Sponsor or the
Seller that include a description of collateral covering the Mortgage Loans
other than any financing statement relating to the security interest granted to
the Indenture Trustee hereunder or that has been terminated. Neither the Sponsor
nor the Seller is aware of any judgment or tax lien filings affecting the
Mortgage Loans against either the Seller or the Sponsor.

          (fff) All financing statements filed or to be filed against the
Sponsor or the Seller in favor of the Indenture Trustee in connection herewith
describing the Mortgage Loans contain a statement to the following effect: "A
purchase of or security interest in any collateral described in this financing
statement will violate the rights of the Indenture Trustee."

          (ggg) None of the Mortgage Loans is a "High Cost Home Loan" within the
meaning of the Georgia Fair Lending Act (the "Georgia Act"). The Mortgage Loans
in the Trust Estate that are "Covered Loans" within the meaning of the Georgia
Act comply with all material provisions of the Georgia Act, and the Sponsor has
ensured, among other things, that if a borrower under a "Covered Loan" has
refinanced an existing "Home Loan" that was consummated within the previous five
years, the "Covered Loan" has provided a reasonable, tangible net benefit to
such borrower considering all of the circumstances.

          (hhh) None of the Mortgage Loans is a Section 32 Mortgage Loan under
the Home Ownership Equity Protection Act of 1994.

          (iii) None of the Mortgage Loans encumbering property located in
Georgia was originated after October 1, 2002.

     It is understood and agreed that the representations, warranties and
covenants set forth in this Section 4.01 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee and shall
inure to the benefit of the Indenture Trustee on behalf of the Noteholders and
the Note Insurer.

                                       23
<PAGE>

     Section 4.02.    PURCHASE AND SUBSTITUTION. (a) It is understood and agreed
that the representations and warranties set forth in Section 4.01 shall survive
the transfer of the Mortgage Loans by the Seller to the Trust, the subsequent
pledge thereof by the Trust to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer, and the delivery of the Notes to the
Noteholders, and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement.

          (b)  Upon discovery by the Seller, the Sponsor, the Master Servicer,
the Indenture Trustee, the Note Insurer or a Noteholder of a breach of any of
the representations and warranties in Section 4.01 which materially and
adversely affects the value of any Mortgage Loan, or which materially and
adversely affects the interests of the Note Insurer or the Noteholders in the
related Mortgage Loan, the party discovering such breach or failure shall
promptly (and in any event within five (5) days of the discovery) give written
notice thereof to the others. Within sixty (60) days of the earlier of its
discovery or its receipt of notice of any breach of a representation or
warranty, the Sponsor shall (a) promptly cure such breach in all material
respects, (b) purchase such Mortgage Loan on the next succeeding Servicer
Payment Date, in the manner and at the price specified in Section 2.06(c) and
this Section 4.02, or (c) remove such Mortgage Loan from the Trust Estate (in
which case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner specified in Section 2.06 and
this Section 4.02. The Indenture Trustee shall deliver prompt written notice to
the Note Insurer and the Rating Agencies of any repurchase or substitution made
pursuant to this Section 4.02 or Section 2.06(c).

          (c)  As to any Deleted Mortgage Loan for which the Sponsor substitutes
a Qualified Substitute Mortgage Loan or Loans, the Master Servicer shall cause
the Sponsor to effect such substitution by delivering to the Indenture Trustee a
certification, in the form attached hereto as EXHIBIT F, executed by a Servicing
Officer, and the documents described in Sections 2.05(a)(i)-(vi) for such
Qualified Substitute Mortgage Loan or Loans.

          (d)  The Master Servicer shall deposit in the Collection Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in or before the Due Period in which the
substitution occurs shall not be part of the Trust Estate and will be retained
by the Sponsor on the next succeeding Payment Date. For the Due Period in which
the substitution occurs, distributions to Noteholders will include the Monthly
Payment due on any Deleted Mortgage Loan for such Due Period and thereafter the
Sponsor shall be entitled to retain all amounts received in respect of such
Deleted Mortgage Loan. The Master Servicer shall give written notice to the
Backup Servicer, the Indenture Trustee and the Note Insurer that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans. Upon such substitution, such Qualified Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects.

          (e)  With respect to any Mortgage Loan that has been converted to an
REO Mortgage Loan, all references in this Section 4.02 or Section 2.06 to
"Mortgage Loan" shall be

                                       24
<PAGE>

deemed to also refer to the REO Mortgage Loan. With respect to any Mortgage Loan
that the Sponsor is required to repurchase that is or becomes a Liquidated
Mortgage Loan, in lieu of repurchasing such Mortgage Loan, the Master Servicer
shall deposit into the related Payment Account, pursuant to Section 8.01 of the
Indenture, an amount equal to the amount of the Liquidated Loan Loss, if any,
incurred in connection with the liquidation of such Mortgage Loan within the
same time period in which the Master Servicer or Sponsor would have otherwise
been required to repurchase such Mortgage Loan.

          (f)  It is understood and agreed that the obligations of the Sponsor
set forth in Sections 2.06 and 4.02 to cure, purchase or substitute for a
defective Mortgage Loan, or to indemnify as described in Section 4.02(g)
constitute the sole remedies of the Indenture Trustee, the Note Insurer and the
Noteholders respecting a breach of the representations and warranties of the
Sponsor set forth in Section 4.01 of this Agreement.

          (g)  The Sponsor shall be obligated to indemnify the Seller, the
Indenture Trustee, the Trust, the Owner Trustee, the Noteholders and the Note
Insurer for any third party claims arising out of a breach by the Sponsor of
representations or warranties regarding the Mortgage Loans.

                                   ARTICLE V

               ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

     Section 5.01.    THE MASTER SERVICER. (a) The Master Servicer shall service
and administer the Mortgage Loans in accordance with this Agreement and in
accordance with Accepted Servicing Practices, and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable.

          (b)  The Master Servicer shall exercise its discretion consistent with
Accepted Servicing Practices and the terms of this Agreement, with respect to
the enforcement of defaulted Mortgage Loans in such manner as will maximize the
receipt of principal and interest with respect thereto, including but not
limited to the sale of such Mortgage Loan to a third party, the modification of
such Mortgage Loan, or foreclosure upon the related property with a Mortgage and
disposition thereof.

          (c)  The duties of the Master Servicer shall include collecting and
posting of all payments, responding to inquiries of Mortgagors or by federal,
state or local government authorities with respect to the Mortgage Loans,
investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for collections and
furnishing monthly and annual statements to the Indenture Trustee with respect
to distributions, paying Compensating Interest and making Periodic Advances and
Servicing Advances pursuant hereto. The Master Servicer shall follow its
customary standards, policies and procedures in performing its duties as Master
Servicer. The Master Servicer shall cooperate with the Indenture Trustee and
furnish to the Indenture Trustee with reasonable promptness information in its
possession as may be necessary or appropriate to enable the Indenture Trustee to
perform its tax reporting duties hereunder. The Indenture Trustee shall furnish
the Master

                                       25
<PAGE>

Servicer, or the Backup Servicer with any powers of attorney and other documents
as the Indenture Trustee shall deem necessary or appropriate to enable the
Master Servicer, and the Backup Servicer to carry out its servicing and
administrative duties hereunder; provided, however, the Master Servicer, or the
Backup Servicer shall prepare for and deliver to the Indenture Trustee for its
execution any such powers of attorney; provided, further, that the Indenture
Trustee shall not be responsible for any misuse of any such power of attorney.

          (d)  [Reserved].

          (e)  The Master Servicer shall, in accordance with Accepted Servicing
Practices, have the right to approve requests of Mortgagors for consent to (i)
partial releases of Mortgage Loans and (ii) alterations, removal, demolition or
division of Mortgaged Properties subject to Mortgage Loans. No such request
shall be approved by the Master Servicer unless: (x) the provisions of the
related Mortgage Note have been complied with; (y) the LTV (which may, for this
purpose, be determined at the time of any such action in a manner reasonably
acceptable to the Note Insurer) after any release does not exceed the LTV set
forth for such Mortgage Loan in the Mortgage Loan Schedule; and (z) the lien
priority, monthly payment, Mortgage Interest Rate or maturity date of the
related Mortgage is not affected except in accordance with Section 5.01(f);
PROVIDED, HOWEVER, that the foregoing requirements (x), (y) and (z) shall not
apply to any such situation described in this paragraph if such situation
results from any condemnation or easement activity by a governmental entity.

          (f)  Notwithstanding anything else contained herein, the Master
Servicer may not, without the consent of the Note Insurer, agree to a
modification or extension of any Mortgage Loan unless both (i) such Mortgage
Loan is in default or a default thereon is reasonably foreseeable and (ii) such
modification or extension would not result in the Master Servicer agreeing to
modifications or extensions on Mortgage Loans with aggregate Cut-Off Date
Principal Balances of more than 5.0% of the Maximum Collateral Amount. In
addition, the Master Servicer may not agree to more than (i) one modification or
extension with respect to any individual Mortgage Loan in a calendar year or
(ii) three modifications or extensions of an individual Mortgage Loan during the
life of such Mortgage Loan.

          (g)  [Reserved].

          (h)  Without limiting the generality of the foregoing, but subject to
Sections 5.05 and 5.06, the Master Servicer in its own name may be authorized
and empowered pursuant to a power of attorney executed and delivered by the
Indenture Trustee to execute and deliver, and may be authorized and empowered by
the Indenture Trustee, to execute and deliver, on behalf of itself, the
Noteholders and the Indenture Trustee or any of them, (i) any and all
instruments of satisfaction or cancellation or of partial or full release or
discharge and all other comparable instruments with respect to the Mortgage
Loans and with respect to the Mortgaged Properties, (ii) and to institute
foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect
ownership of any Mortgaged Property on behalf of the Indenture Trustee, and
(iii) to hold title to any Mortgaged Property upon such foreclosure or deed in
lieu of foreclosure on behalf of the Indenture Trustee; PROVIDED, HOWEVER, that
Section 5.07(a) shall constitute a power of attorney from the Indenture Trustee
to the Master Servicer to execute an instrument of satisfaction (or assignment
of mortgage without recourse) with respect to any Mortgage Loan

                                       26
<PAGE>

paid in full (or with respect to which payment in full has been escrowed).
Subject to Sections 5.05 and 5.06, the Indenture Trustee shall furnish the
Master Servicer with any powers of attorney and other documents as the Master
Servicer shall reasonably request to enable the Master Servicer to carry out
their respective servicing and administrative duties hereunder; provided,
however, the Master Servicer shall prepare for and deliver to the Indenture
Trustee for its execution any such powers of attorney; provided, further, that
the Indenture Trustee shall not be responsible for any misuse of any such power
of attorney.

          (i)  The Master Servicer shall give prompt notice to the Backup
Servicer, the Indenture Trustee and the Note Insurer of any action, of which the
Master Servicer has actual knowledge, to (i) assert a claim against the Trust or
(ii) assert jurisdiction over the Trust.

          (j)  Servicing Advances incurred by the Master Servicer in connection
with the servicing of the Mortgage Loans (including any penalties in connection
with the payment of any taxes and assessments or other charges) on any Mortgaged
Property shall be recoverable by the Master Servicer to the extent described
herein.

          (k)  The Master Servicer shall be entitled to rely, and shall be fully
protected in relying, upon any promissory note, writing, resolution, notice,
consent, certificate, affidavit, letter, e-mail, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document reasonably
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 Mortgagor(s)), independent
accountants and other experts selected by the Master Servicer.

          (l)  The Master Servicer shall have no liability to the Seller, the
Sponsor, the Indenture Trustee, the Owner Trustee, the Note Insurer, any
Noteholder or any other Person for any action taken, or for refraining from the
taking of any action, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that the foregoing shall not apply to any breach of
representations or warranties made by the Master Servicer herein, or to any
specific liability imposed upon the Master Servicer pursuant to this Agreement
or any liability that would otherwise be imposed upon the Master Servicer by
reason of its willful misconduct, bad faith or negligence in the performance of
its duties hereunder or by reason of its failure to perform its obligations or
duties hereunder.

     Section 5.02.    COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS; COLLECTION
ACCOUNT. (a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow Accepted Servicing Practices. Consistent with the foregoing, the Master
Servicer may in its discretion waive any assumption fees or other fees which may
be collected in the ordinary course of servicing such Mortgage Loans.

          (b)  The Master Servicer shall establish and maintain, in the name of
the Indenture Trustee, the Collection Account, in trust for the benefit of the
Noteholders and the Note Insurer. The Collection Account shall be established
and maintained as an Eligible Account.

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<PAGE>

          (c)  The Master Servicer shall deposit in the Collection Account any
amounts representing Monthly Payments on the Mortgage Loans due or to be applied
as of a date after the Cut-Off Date on each Business Day, not more than two
Business Days after the date of collection, the following payments and
collections received or made by it (other than in respect of monthly payments of
principal on and interest of the Mortgage Loans that were due on or before the
related Cut-Off Date and Monthly Payments due on May 1, 2003):

               (i)  payments of interest on the Mortgage Loans including
     Prepayment Charges;

               (ii) payments of principal of the Mortgage Loans, including
     Principal Prepayments;

               (iii) the Loan Repurchase Price of Mortgage Loans repurchased
     pursuant to Sections 2.06(c) or 4.02;

               (iv) the Substitution Adjustment received in connection with
     Mortgage Loans for which Qualified Substitute Mortgage Loans are received
     pursuant to Sections 2.06 and 4.02;

               (v)  all Net REO Proceeds;

               (vi) all Net Liquidation Proceeds; and

               (vii) all Insurance Proceeds (including, for this purpose, any
     amounts required to be deposited by the Master Servicer pursuant to Section
     5.04 hereof).

     It is understood that the Master Servicer need not deposit amounts
representing fees, late payment charges or extension or other administrative
charges (other than Prepayment Charges) payable by Mortgagors, or amounts
received by the Master Servicer for the account of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments and similar items
or foreclosure proceeds to the extent payable to the related Mortgagor.

          (d)  The Master Servicer shall invest any funds in the Collection
Account in Permitted Investments, which shall mature not later than the Business
Day next preceding the Servicer Payment Date next following the date of such
investment (except that any investment held by the Indenture Trustee may mature
on such Servicer Payment Date) and shall not be sold or disposed of prior to its
maturity. All net income and gain realized from any such investment shall be for
the benefit of the Master Servicer and shall be subject to its withdrawal or
order on a Servicer Payment Date. The Master Servicer shall deposit from its own
funds the amount of any loss, to the extent not offset by investment income or
earnings, in the Collection Account upon the realization of such loss.

     Section 5.03.    PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT. The
Master Servicer may make withdrawals from the Collection Account, on or prior to
any Servicer Payment Date, for the following purposes:

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<PAGE>

          (a)  to pay to the Sponsor amounts received in respect of any
Defective Mortgage Loan purchased or substituted for by the Sponsor to the
extent that the payment of any such amounts on the Servicer Payment Date upon
which the proceeds of such purchase are paid would make the total amount
distributed in respect of any such Mortgage Loan on such Servicer Payment Date
greater than the Loan Repurchase Price or the Substitution Adjustment therefor;

          (b)  to reimburse the Master Servicer for unreimbursed Periodic
Advances and unreimbursed Servicing Advances with respect to the Mortgage Loans
for which it has made a Periodic Advance or Servicing Advance, from late or
deferred payments collected, collections other than timely Monthly Payments,
Liquidation Proceeds, Insurance Proceeds and/or the Loan Repurchase Price or
Substitution Adjustment of or relating to such Mortgage Loans;

          (c)  to reimburse the Master Servicer for any Periodic Advances and
Servicing Advances determined in good faith to have become Nonrecoverable
Advances, such reimbursement to be made from any funds in the Collection
Account;

          (d)  to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;

          (e)  to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein;

          (f)  to pay the Master Servicer the Servicing Compensation pursuant to
Section 5.08 hereof to the extent not retained or paid;

          (g)  to pay the Backup Servicer the Backup Servicing Fee pursuant to
Section 5.08 hereof to the extent payments in respect of these amounts have not
been previously retained or paid;

          (h)  without duplication, and solely out of amounts which are payable
to a former master servicer pursuant to Section 7.02(g), to pay to the Backup
Servicer, the Indenture Trustee or any successor master servicer amounts paid by
them in connection with the transfer of the Master Servicer's servicing
obligations pursuant to Article VII hereof and required under such Article VII
to be borne by the Master Servicer;

          (i)  to withdraw income on the Collection Account as provided in
Section 5.02(d); and

          (j)  amounts deposited into the Collection Account in respect of late
fees, assumption fees and similar fees (other than Prepayment Charges).

     The Master Servicer shall keep and maintain a separate accounting for each
Mortgage Loan for the purpose of accounting for withdrawals from the Collection
Account pursuant to this Section 5.03. Furthermore, in the event that servicing
has been transferred to the Backup Servicer, all reimbursements in respect of
Servicer Advances and Periodic Advances shall be

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<PAGE>

made on a first in, first out priority basis (i.e. the longest outstanding
reimbursable Servicer Advance or Periodic Advance will be reimbursed first).

     Section 5.04.    HAZARD INSURANCE POLICIES; PROPERTY PROTECTION EXPENSES.
(a) The Master Servicer shall cause to be maintained with respect to each
Mortgage Loan a hazard insurance policy with a carrier licensed in the state in
which the Mortgaged Property is located that provides for fire and extended
coverage, and which provides for a recovery by the named insured of insurance
proceeds relating to such Mortgage Loan in an amount not less than the least of
(i) the outstanding Principal Balance of the Mortgage Loan plus the outstanding
principal balance of any mortgage loan senior to such Mortgage Loan, but in no
event shall such amount be less than is necessary to prevent the Mortgagor from
becoming a coinsurer thereunder, (ii) the minimum amount required to compensate
for loss or damage on a replacement cost basis and (iii) the full insurable
value of the related Mortgage Property. The Master Servicer shall also maintain
on property acquired upon foreclosure, or by deed in lieu of foreclosure, hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value from time to time of the improvements
which are a part of such property or (ii) the sum of the Principal Balance of
such Mortgage Loan and the principal balance of any mortgage loan senior to such
Mortgage Loan at the time of such foreclosure plus accrued interest and the
good-faith estimate of the Master Servicer of related Liquidation Expenses to be
incurred in connection therewith. Amounts collected by the Master Servicer under
any such policies shall be deposited in the Collection Account to the extent
that they constitute Liquidation Proceeds or Insurance Proceeds. Each hazard
insurance policy shall contain a standard mortgage clause naming the Master
Servicer, its successors and assigns, as mortgagee. The Master Servicer shall be
under no obligation to require that any Mortgagor maintain earthquake (except as
provided herein) or other additional insurance and shall be under no obligation
itself to maintain any such additional insurance on property acquired in respect
of a Mortgage Loan, other than pursuant to such applicable laws and regulations
as shall at any time be in force and as shall require such additional insurance.

          (b)  In the event that the Master Servicer shall obtain and maintain a
blanket policy with an insurer either (i) which satisfies the corresponding
requirements of Fannie Mae or Freddie Mac or (ii) approved in writing by the
Note Insurer, such approval not to be unreasonably withheld, insuring against
fire, flood and hazards of extended coverage on all of the Mortgage Loans, then,
to the extent such policy names the Master Servicer as loss payee and provides
coverage in an amount equal to the aggregate unpaid Principal Balance on the
Mortgage Loans without co-insurance, and otherwise complies with the
requirements of this Section 5.04, the Master Servicer shall be deemed
conclusively to have satisfied its obligations with respect to fire and hazard
insurance coverage under this Section 5.04, it being understood and agreed that
such blanket policy may contain a deductible clause (payable by the Master
Servicer), in which case the Master Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the preceding paragraph of this Section 5.04, and there shall
have been a loss which would have been covered by such policy, deposit in the
Collection Account from the Master Servicer's own funds the difference, if any,
between the amount that would have been payable under a policy complying with
the preceding paragraph of this Section 5.04 and the amount paid under such
blanket policy. Upon the request of the Indenture Trustee or the Note Insurer,
the Master Servicer shall cause to be delivered to the Indenture Trustee or the
Note Insurer, a certified true copy of such policy.

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<PAGE>

          (c)  If the Mortgage Loan at the time of origination relates to a
Mortgaged Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards as designated to the
Master Servicer by the Sponsor, the Master Servicer will cause to be maintained
with respect thereto a flood insurance policy in a form meeting the requirements
of the current guidelines of the Federal Insurance Administration with a
generally acceptable carrier in an amount representing coverage, and which
provides for a recovery by the Master Servicer on behalf of the Trust of
insurance proceeds relating to such Mortgage Loan of not less than the least of
(i) the outstanding Principal Balance of the related Mortgage Loan, plus the
principal balance of the related first lien, if any, (ii) the minimum amount
required to compensate for damage or loss on a replacement cost basis and (iii)
the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973. The Master Servicer shall indemnify the Trust and the
Note Insurer out of the Master Servicer's own funds for any loss to the Trust
and the Note Insurer resulting from the Master Servicer's failure to maintain
the insurance required by this Section.

     Section 5.05.    ASSUMPTION AND MODIFICATION AGREEMENTS. When a Mortgaged
Property has been or is about to be conveyed by the Mortgagor, the Master
Servicer shall, to the extent it has knowledge of such conveyance or prospective
conveyance, exercise its rights to accelerate the maturity of the related
Mortgage Loan under any "due-on-sale" clause contained in the related Mortgage
or Mortgage Note; PROVIDED, HOWEVER, that the Master Servicer shall not exercise
any such right if (i) the "due-on-sale" clause, in the reasonable belief of the
Master Servicer, is not enforceable under applicable law or (ii) the Master
Servicer reasonably believes that to permit an assumption of the Mortgage Loan
would not materially and adversely affect the interest of the Noteholders or of
the Note Insurer. In such event, the Master Servicer shall enter into an
assumption and modification agreement with the Person to whom such property has
been or is about to be conveyed, pursuant to which such Person becomes liable
under the Mortgage Note and, unless prohibited by applicable law or the mortgage
documents, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Master Servicer is authorized to enter into
a substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note; PROVIDED, HOWEVER, that to
the extent any such substitution of liability agreement would be delivered by
the Master Servicer outside of its usual procedures for mortgage loans held in
its own portfolio the Master Servicer shall, prior to executing and delivering
such agreement, obtain the prior written consent of the Note Insurer. The
Mortgage Loan, if assumed, shall conform in all respects to the requirements and
representations and warranties of this Agreement. The Master Servicer shall
notify the Indenture Trustee that any applicable assumption or substitution
agreement has been completed by forwarding to the Indenture Trustee the original
copy of such assumption or substitution agreement, which copy shall be added by
the Indenture Trustee to the related Indenture Trustee's Mortgage File and which
shall, for all purposes, be considered a part of such Indenture Trustee's
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. The Master Servicer shall be responsible for
promptly recording any such assumption or substitution agreements. In connection
with any such assumption or substitution agreement, the required monthly payment
on the related Mortgage Loan shall not be changed but shall remain as in effect
immediately prior to the assumption or substitution, the stated maturity or
outstanding Principal Balance of such Mortgage Loan shall not be changed, the
Mortgage Interest Rate shall not be changed nor shall any required monthly
payments of principal or interest be deferred or

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<PAGE>

forgiven. Any fee collected by the Master Servicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Master Servicer as additional servicing compensation.

     Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption which the Master Servicer
may be restricted by law from preventing, for any reason whatsoever.

     Section 5.06.    REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The Master
Servicer shall foreclose upon or otherwise comparably effect the ownership on
behalf of the Trust of Mortgaged Properties relating to defaulted Mortgage Loans
as to which no satisfactory arrangements can be made for collection of
Delinquent payments and which the Sponsor has not purchased pursuant to Section
5.15, unless the Master Servicer reasonably believes that Net Liquidation
Proceeds with respect to such Mortgage Loan would not be increased as a result
of such foreclosure or other action, in which case, such Mortgage Loan will be
charged-off and will become a Liquidated Mortgage Loan. The Master Servicer
shall have no obligation to purchase any Mortgaged Property at any foreclosure
sale. In connection with such foreclosure or other conversion, the Master
Servicer shall exercise foreclosure procedures with the same degree of care and
skill in their exercise or use, as it would ordinarily exercise or use under the
circumstances in the conduct of their own affairs. Any amounts including
Liquidation Expenses, advanced by the Master Servicer in connection with such
foreclosure or other action shall constitute Servicing Advances.

     Pursuant to its efforts to sell any REO Property, the Master Servicer
either itself or through an agent selected by the Master Servicer shall manage,
conserve, protect and operate such REO Property in the same manner and to such
extent as is customary in the locality where such REO Property is located and
may, incident to its conservation and protection of the interests of the Master
Servicer, rent the same, or any part thereof, as the Master Servicer deems to be
in the best interest of the Trust and Note Insurer for the period prior to the
sale of such REO Property. The net income generated from the REO Property and
the proceeds from a sale of any REO Property shall be deposited in the
Collection Account.

          (b)  If the Master Servicer has reason to believe that a Mortgaged
Property which the Master Servicer is contemplating acquiring in foreclosure or
by deed in lieu of foreclosure contains environmental or hazardous waste risks
known to the Master Servicer, the Master Servicer shall notify the Backup
Servicer, the Indenture Trustee and the Note Insurer and obtain the consent of
the Note Insurer prior to acquiring the Mortgaged Property. The Master Servicer
shall not institute foreclosure actions with respect to such a property if it
reasonably believes that such action would not be consistent with the Accepted
Servicing Practices, and in no event shall the Master Servicer be required to
manage, operate or take any other action with respect thereto which the Master
Servicer in good faith believes will result in "clean-up" or other liability
under applicable law, unless the Master Servicer receives an indemnity
acceptable to it in its sole discretion.

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<PAGE>

          (c)  The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts if any it expects to recover from or
on account of such defaulted Mortgage Loan, whereupon such Mortgage Loan shall
become a Liquidated Mortgage Loan.

          (d)  Net Foreclosure Profits, if any, shall be paid directly to the
Sponsor.

          (e)  With respect to its obligations under this Section 5.06, the
Master Servicer shall take all such actions as it reasonably believes are
consistent with Accepted Servicing Practices.

     Section 5.07.    INDENTURE TRUSTEE TO COOPERATE. (a) Upon the payment in
full of any Mortgage Loan or the receipt by the Master Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Master Servicer shall deliver to the Indenture Trustee one
copy of a Request for Release. Upon receipt of such copy of the Request for
Release, the Indenture Trustee shall promptly release the related Indenture
Trustee's Mortgage File, in trust to (i) the Master Servicer (ii) an escrow
agent or (iii) any employee, agent or attorney of the Indenture Trustee, in each
case pending its release by the Master Servicer, such escrow agent or such
employee, agent or attorney of the Indenture Trustee, as the case may be. Upon
any such payment in full, or the receipt of such notification that such funds
have been placed in escrow, the Master Servicer is authorized to give, as
attorney-in-fact for the Indenture Trustee and the mortgagee under the Mortgage
which secured the Mortgage Note, an instrument of satisfaction (or assignment of
Mortgage without recourse) regarding the Mortgaged Property relating to such
Mortgage, which instrument of satisfaction or assignment, as the case may be,
shall be delivered to the Person or Persons entitled thereto against receipt
therefor of payment in full, it being understood and agreed that no expense
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Collection Account.

          (b)  (i) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any applicable Insurance
Policy, the Indenture Trustee shall (except in the case of the payment or
liquidation pursuant to which the related Indenture Trustee's Mortgage File is
released to an escrow agent or an employee, agent or attorney of the Indenture
Trustee), upon request of the Master Servicer and delivery to the Indenture
Trustee of one copy of a Request for Release, release the related Indenture
Trustee's Mortgage File to the Master Servicer and shall execute such documents
as shall be necessary to the prosecution of any such proceedings, including,
without limitation, an assignment without recourse of the related Mortgage to
the Master Servicer. The Indenture Trustee shall complete in the name of the
Indenture Trustee any endorsement in blank on any Mortgage Note prior to
releasing such Mortgage Note to the Master Servicer. Such receipt shall obligate
the Master Servicer to return the Indenture Trustee's Mortgage File to the
Indenture Trustee when the need therefor by the Master Servicer no longer exists
unless the Mortgage Loan shall be liquidated, in which case, the Master Servicer
shall deliver one copy of a Request for Release indicating such loan has been
paid in full.

               (ii) Each Request for Release may be delivered to the Indenture
     Trustee (x) via mail or courier, (y) via facsimile or (z) by such other
     means, including,

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<PAGE>

     without limitation, electronic or computer readable medium, as the Master
     Servicer and the Indenture Trustee shall mutually agree. The Indenture
     Trustee shall promptly release the related Indenture Trustee's Mortgage
     File(s) within three (3) Business Days of receipt of one copy of a properly
     completed Request for Release pursuant to clauses (x), (y) or (z) above or
     such shorter period as may be agreed upon by the Master Servicer and the
     Indenture Trustee. Receipt of a Request for Release pursuant to clauses
     (x), (y) or (z) above shall be authorization to the Indenture Trustee to
     release such Indenture Trustee's Mortgage Files, provided the Indenture
     Trustee has determined that such Request for Release has been executed,
     with respect to clauses (x) or (y) above, or approved, with respect to
     clause (z) above, by a Servicing Officer of the Master Servicer. If the
     Indenture Trustee is unable to release the Indenture Trustee's Mortgage
     Files within the time frames previously specified, the Indenture Trustee
     shall immediately notify the Master Servicer, indicating the reason for
     such delay, but in no event shall such notification be later than five
     Business Days after receipt of a Request for Release. If the Master
     Servicer, is required to pay penalties or damages due solely to the
     Indenture Trustee's negligent failure to release the related Indenture
     Trustee's Mortgage File or the Indenture Trustee's negligent failure to
     execute and release documents in a timely manner, the Indenture Trustee
     shall be liable for such penalties or damages.

          (c)  No costs associated with the procedures described in this Section
5.07 shall be an expense of the Trust.

     Section 5.08.    SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY
MASTER SERVICER. The Master Servicer shall be entitled to receive and retain,
out of collections on the Mortgage Loans for each Due Period, as servicing
compensation for such Due Period, an amount (the "SERVICING FEE") equal to the
product of one-twelfth of the Servicing Fee Rate and the aggregate Stated
Principal Balance of the Mortgage Loans in each Loan Group as of the beginning
of such Due Period. Additional servicing compensation in the form of assumption
fees, late payment charges or extension and other administrative charges (other
than Prepayment Charges) shall be retained by the Master Servicer. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its activities hereunder (including payment of the Indenture Trustee Fee to the
extent that monies in the Collection Account are insufficient therefor, as
provided in Section 6.16 of the Indenture, and all other fees and expenses not
expressly stated hereunder to be payable by or from another source) and shall
not be entitled to reimbursement therefor except as specifically provided
herein.

     The Backup Servicer shall be entitled to receive, and the Master Servicer
shall pay, out of collections on the Mortgage Loans for each Due Period, as
servicing compensation for such Due Period, an amount (the "BACKUP SERVICING
FEE") equal to the product of one-twelfth of the Backup Servicing Fee Rate and
the aggregate Stated Principal Balance of the Mortgage Loans in each Loan Group
as of the beginning of such Due Period. The Backup Servicer will also be
entitled to an upfront fee of $7,500.00.

     Section 5.09.    ANNUAL STATEMENT AS TO COMPLIANCE. The Master Servicer
will deliver to the Backup Servicer, the Trust, the Indenture Trustee, the
Rating Agencies, the Note Insurer and, the Sponsor on or before March 15 of each
year, beginning March 15, 2004, an Officer's Certificate of the Master Servicer
stating that (a) a review of the activities of the Master Servicer

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<PAGE>

during the preceding calendar year and of its performance under this Agreement
has been made under such officer's supervision and (b) to the best of such
officer's knowledge, based on such review, the Master Servicer has fulfilled all
its material obligations under this Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof.

     Section 5.10.    ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before March 15 of each year, beginning March 15, 2004, the Master
Servicer at its expense shall cause a firm of independent public accountants
that is a member of the American Institute of Certified Public Accountants (who
may also render other services to the Master Servicer) to furnish a report to
the Backup Servicer, the Trust, the Indenture Trustee, the Rating Agencies, the
Note Insurer and the Sponsor to the effect that such firm has examined certain
documents and records relating to the servicing of mortgage loans under
servicing agreements (including this Agreement) substantially similar to this
Agreement, and that such examination, which has been conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers or
the Audit Guide for Audits of HUD Approved Nonsupervised Mortgagees (to the
extent that the procedures in such audit guide are applicable to the servicing
obligations set forth in such agreements), has disclosed no items of
noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be set
forth in such report.

     Section 5.11.    ACCESS TO CERTAIN DOCUMENTATION. The Master Servicer shall
provide to the Backup Servicer, the Indenture Trustee, the Note Insurer, the
FDIC and the supervisory agents and examiners (as required in the latter case by
applicable State and federal regulations) of each of the foregoing access to the
documentation regarding the Mortgage Loans, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Master Servicer designated by it.

     Upon any change in the format of the computer tape maintained by the Master
Servicer in respect of the Mortgage Loans, the Master Servicer shall deliver a
copy of such computer tape to the Indenture Trustee and the Backup Servicer and
in addition shall provide a copy of such computer tape to the Indenture Trustee,
the Backup Servicer and the Note Insurer at such other times as the Indenture
Trustee or the Note Insurer may reasonably request.

     The Master Servicer shall keep confidential (including from affiliates
thereof) information concerning the Mortgage Loans, except as required by law.

     Section 5.12.    MAINTENANCE OF FIDELITY BOND. The Master Servicer and the
Backup Servicer shall each, during the term of its service as Master Servicer
and Backup Servicer, respectively, maintain in force a fidelity bond and errors
and omissions insurance in respect of their respective officers, employees or
agents. Such bond and insurance shall comply with the requirements from time to
time of Fannie Mae for Persons performing servicing for mortgage loans purchased
by such association.

     Section 5.13.    SUBSERVICING AGREEMENTS BETWEEN THE MASTER SERVICER AND
SUBSERVICER AND SUBSERVICERS. (a) The Master Servicer may enter into
subservicing agreements for any servicing and administration of Mortgage Loans
with any institution which is in compliance with

                                       35
<PAGE>

the laws of each state necessary to enable it to perform its obligations under
such subservicing agreement. The Master Servicer shall give notice to the Backup
Servicer, the Note Insurer and the Indenture Trustee of the appointment of any
subservicer and shall furnish to the Backup Servicer, the Note Insurer and the
Indenture Trustee a copy of the subservicing agreement. The Master Servicer
shall give notice to each Rating Agency of the appointment of any subservicer.
No such appointment of a subservicer shall be effective without the consent of
the Note Insurer. For purposes of this Agreement, the Master Servicer shall be
deemed to have received payments on Mortgage Loans when any subservicer has
received such payments. Any such subservicing agreement shall be consistent with
and not violate the provisions of this Agreement.

          (b)  The Master Servicer may, with the consent of the Note Insurer,
terminate any subservicing agreement in accordance with the terms and conditions
of such subservicing agreement and thereafter directly service the related
Mortgage Loans itself or enter into a subservicing agreement with a successor
subservicer that qualifies under Subsection (a) of this Section 5.13. The Master
Servicer shall give notice to each Rating Agency of the termination of any
subservicer and the appointment of any successor subservicer.

          (c)  The Master Servicer shall not be relieved of its obligations
under this Agreement notwithstanding any subservicing agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a subservicer or otherwise, and the Master Servicer shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Master Servicer
shall be entitled to enter into any agreement with a subservicer for
indemnification of the Master Servicer by such subservicer and nothing contained
in such subservicing agreement shall be deemed to limit or modify this
Agreement. The Trust shall not indemnify the Master Servicer for any losses due
to the Master Servicer's negligence.

          (d)  Any subservicing agreement and any other transactions or services
relating to the Mortgage Loans involving a subservicer shall be deemed to be
between the subservicer and the Master Servicer alone and the Backup Servicer,
the Note Insurer, the Indenture Trustee and the Noteholders shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Subservicer except as set forth in Subsection
(e) of this Section 5.13 and the related Subservicing Agreement.

          (e)  Notwithstanding any contrary provision contained herein, in
connection with the assumption of the responsibilities, duties and liabilities
and of the authority, power and rights of the Master Servicer hereunder by the
Backup Servicer, the Indenture Trustee or any other successor master servicer
pursuant to Section 7.02, it is understood and agreed that the Master Servicer's
rights and obligations under any subservicing agreement then in force between
the Master Servicer and a subservicer may be assumed or terminated (without
cost) by the Backup Servicer, the Indenture Trustee or any other successor
master servicer at its option as successor to the Master Servicer.

     The Master Servicer shall, upon request of the Backup Servicer, the
Indenture Trustee or the Note Insurer, but at the expense of the Master
Servicer, deliver to the assuming party documents and records relating to each
subservicing agreement and an accounting of amounts collected and held by it and
otherwise use its best reasonable efforts to effect the orderly and

                                       36
<PAGE>

efficient transfer of the subservicing agreements to the assuming party, without
the payment of any fee by the Backup Servicer, the Indenture Trustee, any
Noteholders or the Note Insurer, notwithstanding any contrary provision in any
subservicing agreement.

     Section 5.14.    REPORTS TO THE INDENTURE TRUSTEE; COLLECTION ACCOUNT
STATEMENTS. Not later than twenty-five (25) days after each Payment Date, the
Master Servicer shall provide to the Indenture Trustee, the Backup Servicer and
the Note Insurer a statement, certified by a Servicing Officer, setting forth
the status of the Collection Account as of the close of business on the last day
of the Due Period preceding such Payment Date, stating that all payments
required by this Agreement to be made by the Master Servicer on behalf of the
Indenture Trustee have been made (or if any required payment has not been made
by the Master Servicer, specifying the nature and status thereof) and showing,
for the period covered by such statement, the aggregate of deposits into and
withdrawals from the Collection Account and the aggregate of deposits into each
Payment Account as specified in Section 6.01. Such statement shall also state
the aggregate Stated Principal Balance and the aggregate unpaid principal
balance of all the Mortgage Loans as of the close of business on the last day of
the month preceding the month in which such Payment Date occurs.

     Section 5.15.    OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. (a) The
Sponsor, in its sole discretion, shall have the right to elect (by written
notice sent to the Master Servicer, the Indenture Trustee and the Note Insurer),
but shall not be obligated, to purchase for its own account from the Trust any
Mortgage Loan which is ninety (90) days or more Delinquent in the manner at the
Loan Repurchase Price (except that the amount described in the definition of
Loan Repurchase Price shall in no case be net of the Servicing Fee and the
Backup Servicing Fee). The purchase price for any Mortgage Loan purchased
hereunder shall be deposited in the Collection Account and the Indenture
Trustee, upon the Indenture Trustee's receipt of written notice by the Master
Servicer of such deposit, shall release or cause to be released to the purchaser
of such Mortgage Loan the related Indenture Trustee's Mortgage File and shall
execute and deliver such instruments of transfer or assignment prepared by the
purchaser of such Mortgage Loan, in each case without recourse, as shall be
necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
to all the Indenture Trustee's right, title and interest in and to such Mortgage
Loan and all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free of
any further obligation to the Indenture Trustee, the Note Insurer or the
Noteholders with respect thereto. The purchaser of such Mortgage Loan shall give
written notice to the Note Insurer of the means by which any Mortgage Loan
purchased pursuant to this Section 5.15 is ultimately disposed of and any other
information regarding any such Mortgage Loan reasonably requested by the Note
Insurer.

          (b)  After the Sponsor or an Affiliate of the Sponsor has repurchased
any Mortgage Loans which are 90 days or more Delinquent in an aggregate amount
equal to 1% of the Maximum Collateral Amount, then notwithstanding the
foregoing, unless the Note Insurer consents, the Sponsor or an Affiliate of the
Sponsor may only exercise its option pursuant to this Section 5.15 with respect
to the Mortgage Loan or Mortgage Loans (including REO Mortgage Loans) that have
been Delinquent for the longest period at the time of such repurchase. Any
request by the Sponsor or an Affiliate of the Sponsor to the Note Insurer for
consent to

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<PAGE>

repurchase Mortgage Loans that are not the most Delinquent shall be accompanied
by a description of the Mortgage Loans that have been Delinquent longer than the
Mortgage Loan or Mortgage Loans the Sponsor or such Affiliate proposes to
repurchase. If the Note Insurer fails to respond to such request within ten (10)
Business Days after receipt thereof, the Sponsor or such Affiliate may
repurchase the Mortgage Loan or Mortgage Loans proposed to be repurchased
without the consent of, or any further action by, the Note Insurer. Notice to
the Note Insurer shall be delivered in accordance with the terms of the
Insurance Agreement.

     Section 5.16.    REPORTS TO BE PROVIDED BY THE MASTER SERVICER AND THE
BACKUP SERVICER. (a) By 3:00 p.m. eastern time on the second Business Day
following the fifteenth (15th) day of each month (the "SERVICER REPORTING
DATE"), the Master Servicer shall deliver to the Indenture Trustee, the Backup
Servicer, the Underwriter, Intex, Bloomberg and the Note Insurer a Servicer
Remittance Report for the related Servicer Payment Date setting forth the
following information with respect to all Mortgage Loans as well as a break out
as to each Loan Group as of the close of business on the last Business Day of
the prior calendar month (except as otherwise provided in clause (v) below):

               (i)  the total number of Mortgage Loans and the Aggregate
     Principal Balances thereof, together with the number, Aggregate Principal
     Balances of such Mortgage Loans and the percentage (based on the Aggregate
     Principal Balances of the Mortgage Loans) of the Aggregate Principal
     Balances of such Mortgage Loans to the Aggregate Principal Balance of all
     Mortgage Loans (A) 30-59 days Delinquent, (B) 60-89 days Delinquent and (C)
     90 or more days Delinquent;

               (ii) the number, Aggregate Principal Balances of all Mortgage
     Loans and percentage (based on the Aggregate Principal Balances of the
     Mortgage Loans) of the Aggregate Principal Balances of such Mortgage Loans
     to the Aggregate Principal Balance of all Mortgage Loans in foreclosure
     proceedings and the number, Aggregate Principal Balances of all Mortgage
     Loans and percentage (based on the Aggregate Principal Balances of the
     Mortgage Loans) of any such Mortgage Loans also included in any of the
     statistics described in the foregoing clause (i);

               (iii) the number, Aggregate Principal Balances of all Mortgage
     Loans and percentage (based on the Aggregate Principal Balances of the
     Mortgage Loans) of the Aggregate Principal Balances of such Mortgage Loans
     to the Aggregate Principal Balance of all Mortgage Loans relating to
     Mortgagors in bankruptcy proceedings and the number, Aggregate Principal
     Balances of all Mortgage Loans and percentage (based on the Aggregate
     Principal Balances of the Mortgage Loans) of any such Mortgage Loans also
     included in any of the statistics described in the foregoing clause (i);

               (iv) the number, Aggregate Principal Balances of all Mortgage
     Loans and percentage (based on the Aggregate Principal Balances of the
     Mortgage Loans) of the Aggregate Principal Balances of such Mortgage Loans
     to the Aggregate Principal Balance of all Mortgage Loans relating to REO
     Properties and the number, Aggregate Principal Balances of all Mortgage
     Loans and percentage (based on the Aggregate Principal Balances of the
     Mortgage Loans) of any such Mortgage Loans also included in any of the
     statistics described in the foregoing clause (i);

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<PAGE>

               (v)  the weighted average Mortgage Interest Rate for the Mortgage
     Loans in Loan Group 1, Loan Group 2 and Loan Group 3, in each case, as of
     the Due Date occurring in the Due Period related to such Payment Date;

               (vi) the weighted average remaining term to stated maturity of
     all Mortgage Loans;

               (vii) the book value of any REO Property;

               (viii) the Cumulative Loan Losses during the related Collection
     Period;

               (ix) the number and the Aggregate Principal Balance of Mortgage
     Loans repurchased pursuant to Section 5.15; and

               (x)  such other loan level information as either (a) the
     Indenture Trustee may reasonably request to enable it to prepare the
     Indenture Trustee's Remittance Report or (b) the Note Insurer may
     reasonably request.

          (b)  [Reserved].

          (c)  In addition to the contingent obligations of the Backup Servicer
under this Agreement, the Backup Servicer shall establish and maintain a system
of transaction accounting in regard to the Mortgage Loans substantially similar
to that maintained by the Master Servicer and post to such system all
information relating to the Mortgage Loans obtained by the Backup Servicer
pursuant to Section 5.16 and 5.18, to enable the Backup Servicer to perform the
obligations of a successor master servicer immediately upon any termination or
resignation of the Master Servicer. The Backup Servicer's obligations described
in this Section 5.16(c) and its obligations pursuant to Section 7.02 shall be
the only obligations of the Backup Servicer under this Agreement. All such
obligations of the Backup Servicer are effective as of the date of this
Agreement.

     Section 5.17.    [Reserved].

     Section 5.18.    PERIODIC ADVANCES. If, on any Servicer Payment Date, the
Master Servicer determines that any Monthly Payments due during the related Due
Period have not been received as of the end of the related Due Period, the
Master Servicer shall determine the amount of any Periodic Advance required to
be made with respect to the related Payment Date. The Master Servicer shall
deliver, one (1) Business Day after such Servicer Payment Date, a magnetic tape,
diskette (or such other electronic medium used by the Master Servicer for such
purpose) to the Backup Servicer indicating the payment status of each Mortgage
Loan as of the date which is two Business Days prior to such Servicer Payment
Date. The Master Servicer shall include in the amount to be deposited in the
related Payment Account on such Servicer Payment Date an amount equal to the
Periodic Advance, if any, which deposit may be made in whole or in part from
funds in the Collection Account being held for future payment or withdrawal on
or in connection with Payment Dates in subsequent months, other than any such
amounts which are voluntary Principal Prepayments in full. Any funds being held
for future payment to Noteholders and so used shall be replaced by the Master
Servicer from its own funds by deposit in the Collection Account on or before
the Business Day preceding any future Servicer Payment

                                       39
<PAGE>

Date to the extent that funds in the Collection Account on such Servicer Payment
Date shall be less than the Servicer Remittance Amount for such Payment Date.

     The Master Servicer shall designate on its records the specific Mortgage
Loans and related installments (or portions thereof) as to which such Periodic
Advance shall be deemed to have been made, such determination being conclusive
for purposes of withdrawals from the Collection Account pursuant to Section 5.03
hereof.

     Section 5.19.    INDEMNIFICATION; THIRD PARTY CLAIMS. The Master Servicer
agrees to indemnify and to hold each of the Trust, the Owner Trustee, the
Seller, the Sponsor, the Backup Servicer, the Indenture Trustee, the Note
Insurer and each Noteholder harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses (including attorneys' fees and expenses) that the
Trust, the Owner Trustee, the Seller, the Sponsor, the Backup Servicer, the
Indenture Trustee, the Note Insurer and any Noteholder (or any director,
officer, employee or agent of the foregoing) may sustain in any way related to
the failure of the Master Servicer to perform its duties and service the
Mortgage Loans in compliance with the terms of this Agreement and the other
Basic Documents and in connection with the Indenture as provided in Section 6.16
thereof. Each indemnified party and the Master Servicer shall immediately notify
the other indemnified parties if a claim is made by a third party with respect
to this Agreement and the other Basic Documents and the Master Servicer shall
assume the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Trust, the Owner
Trustee, the Seller, the Sponsor, the Backup Servicer, the Master Servicer, the
Indenture Trustee, the Note Insurer and/or a Noteholder (or any director,
officer, employee or agent of the foregoing) in respect of such claim. The
obligations of the Master Servicer under this Section 5.19 arising prior to any
resignation or termination of the Master Servicer hereunder shall survive the
resignation or termination of the Master Servicer or the termination of this
Agreement or the Indenture.

     Section 5.20.    MAINTENANCE OF CORPORATE EXISTENCE AND LICENSES; MERGER OR
CONSOLIDATION OF THE MASTER SERVICER AND BACKUP SERVICER. (a) Each of the Master
Servicer and the Backup Servicer will keep in full effect its existence, rights
and franchises as a corporation, will obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction necessary to protect
the validity and enforceability of this Agreement or any of the Mortgage Loans
and to perform its duties under this Agreement and will otherwise operate its
business so as to cause the representations and warranties under Section 3.01
hereof to be true and correct at all times under this Agreement.

          (b)  Any corporation into which the Master Servicer or the Backup
Servicer 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
Master Servicer or the Backup Servicer shall be a party, or any corporation
succeeding to all or substantially all of the business of the Master Servicer or
the Backup Servicer, shall be the successor of the Master Servicer or the Backup
Servicer, as applicable, hereunder, only with the consent of the Note Insurer
but without the execution or filing of any paper or any further act on the part
of any of the parties hereto provided that, in the case of the Master Servicer,
such corporation meets the qualifications set forth in Section 7.02(b). The
Master Servicer or the Backup Servicer, as applicable, shall

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<PAGE>

send notice of any such merger or consolidation to the Owner Trustee, the
Indenture Trustee, the Note Insurer and the Master Servicer or the Backup
Servicer, as applicable.

     Section 5.21.    ASSIGNMENT OF AGREEMENT BY MASTER SERVICER AND BACKUP
SERVICER; MASTER SERVICER AND BACKUP SERVICER NOT TO RESIGN. Neither the Master
Servicer nor the Backup Servicer shall assign this Agreement nor resign from the
obligations and duties hereby imposed on it except with the prior consent of the
Note Insurer (a copy of which will be provided to the Indenture Trustee), or
upon the determination that the Master Servicer's or Backup Servicer's duties
hereunder are no longer permissible under applicable law and that such
incapacity cannot be cured by the Master Servicer or the Backup Servicer, as
applicable, without incurring, in the reasonable judgment of the Note Insurer,
unreasonable expense. Any such determination that the Master Servicer's or the
Backup Servicer's duties hereunder are no longer permissible under applicable
law permitting the resignation of the Master Servicer or the Backup Servicer, as
applicable, shall be evidenced by a written Opinion of Counsel (who may be
counsel for the Master Servicer or the Backup Servicer) to such effect delivered
to the Indenture Trustee, the Trust, the Seller, the Sponsor, the Note Insurer
and the Backup Servicer or the Master Servicer, as applicable. No such
resignation of the Master Servicer shall become effective until the Backup
Servicer or a successor master servicer appointed in accordance with the terms
of this Agreement has assumed the Master Servicer's responsibilities and
obligations hereunder in accordance with Section 7.02. The Master Servicer or
the Backup Servicer, as applicable, shall provide the Indenture Trustee, the
Rating Agencies and the Note Insurer with 30 days' prior written notice of its
intention to resign pursuant to this Section 5.21.

     Section 5.22.    PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION ADDITIONAL INFORMATION.

          (a)  The Indenture Trustee shall reasonably cooperate with the Master
Servicer in connection with the satisfaction of the reporting requirements under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Indenture Trustee shall prepare on behalf of the Trust Fund any Forms 8-K and
10-K customary for similar securities as required by the Exchange Act and the
Rules and Regulations of the Securities and Exchange Commission (the
"Commission") thereunder, and shall file (via the Commission's Electronic Data
Gathering and Retrieval System) such Forms on behalf of the Master Servicer. The
Master Servicer hereby grants to the Indenture Trustee a limited power of
attorney to execute and file each such Form 8-K but only to the extent no
accompanying certification is required to be filed on behalf of the Master
Servicer. Such power of attorney shall continue until the earlier of (i) receipt
by the Indenture Trustee from the Master Servicer of written termination of such
power of attorney and (ii) termination of the Trust Fund. The Master Servicer
shall execute the Form 10-Ks. The Indenture Trustee shall have no liability with
respect to any failure to properly prepare or file such periodic reports
resulting from or relating to the Indenture Trustee's inability or failure to
obtain any information not resulting from its own negligence or willful
misconduct.

          (b)  Each Form 8-K shall be filed by the Indenture Trustee within 15
days after each Payment Date, with a copy of the statement to Certificateholders
for such Payment Date as an exhibit thereto. Prior to March 30th of each year
(or such earlier date as may be required by the Exchange Act and the Rules and
Regulations of the Commission), the Indenture Trustee shall file a Form 10-K, in
substance as required by applicable law or the Commission's staff

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<PAGE>

interpretations. Such Form 10-K shall include as exhibits the Master Servicer's
annual statement of compliance described under Section 5.09 and the accountant's
report described under Section 5.10, in each case to the extent they have been
timely delivered to the Indenture Trustee. If they are not so timely delivered,
the Indenture Trustee shall file an amended Form 10-K including such documents
as exhibits reasonably promptly after they are delivered to the Indenture
Trustee. The Indenture Trustee shall have no liability with respect to any
failure to properly prepare or file such periodic reports resulting from or
relating to the Indenture Trustee's inability or failure to obtain any
information not resulting from its own negligence or willful misconduct. The
Form 10-K shall also include a certification in the form attached hereto as
Exhibit N (the "CERTIFICATION"), which shall be signed by the senior officer of
the Master Servicer in charge of securitization. The Indenture Trustee shall
prepare and deliver each Form 10-K to the Sponsor for execution no later than
March 20th of each year. The Master Servicer shall return the executed Form 10-K
to the Indenture Trustee for filing no later than March 25th of each year.

          (c)  The Master Servicer shall indemnify and hold harmless the
Indenture Trustee and its officers, directors and affiliates from and against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses arising out
of or based upon a breach of the Master Servicer's obligations under this
Section or the Sponsor's negligence, bad faith or willful misconduct in
connection therewith.

          (d)  Upon any filing with the Commission, the Indenture Trustee shall
promptly deliver to the Master Servicer a copy of any executed report, statement
or information.

     Section 5.23.    ADMINISTRATIVE DUTIES. (a) DUTIES WITH RESPECT TO THE
BASIC DOCUMENTS. The Master Servicer shall perform all its duties and the duties
of the Trust under the Basic Documents. In addition, the Master Servicer shall
consult with the Owner Trustee as the Master Servicer deems appropriate
regarding the duties of the Trust under the Basic Documents. The Master Servicer
shall monitor the performance of the Trust and shall advise the Owner Trustee
when action is necessary to comply with the Trust's duties under the Basic
Documents. The Master Servicer shall prepare for execution by the Trust or shall
cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Trust to prepare, file or deliver pursuant to the Basic Documents. In
furtherance of the foregoing, the Master Servicer shall take all necessary
action that is the duty of the Trust to take pursuant to the Basic Documents.

          (b)  DUTIES WITH RESPECT TO THE TRUST. In addition to the duties of
the Master Servicer set forth in this Agreement or any of the Basic Documents,
the Master Servicer shall perform such calculations and shall prepare for
execution by the Trust or the Owner Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Trust or the Owner
Trustee to prepare, file or deliver pursuant to this Agreement or any of the
Basic Documents or under state and federal tax and securities laws and shall
take all appropriate action that it is the duty of the Trust to take pursuant to
this Agreement or any of the Basic Documents. In accordance with the directions
of the Trust or the Owner Trustee, the Master Servicer shall administer,
perform, or supervise the performance of such other activities in connection
with the Basic Documents as are

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<PAGE>

not covered by any of the foregoing provisions and as are expressly requested by
the Trust or the Owner Trustee and are reasonably within the capability of the
Master Servicer.

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

          (c)  Additional Information to be Furnished to the Issuer. The Master
Servicer shall furnish to the Owner Trustee from time to time such additional
information regarding the Trust or the Basic Documents as the Owner Trustee
shall reasonably request. The Master Servicer shall prepare, execute and deliver
all certificates or other documents required to be delivered by the Issuer
pursuant to the Sarbanes-Oxley Act of 2002 or the rules and regulations
promulgated thereunder.

                                   ARTICLE VI

                              APPLICATION OF FUNDS

     Section 6.01.    DEPOSITS TO THE PAYMENT ACCOUNT. By 12:00 noon (Eastern
Time) on each Servicer Payment Date, the Master Servicer shall cause to be
deposited in the related Payment Account, from funds on deposit in the
Collection Account, an amount equal to the Servicer Remittance Amount with
respect to the related Payment Date, minus any portion thereof payable to the
Master Servicer or the Backup Servicer pursuant to Section 5.03.

     Section 6.02.    COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Indenture Trustee
pursuant to this Agreement, including (a) all payments due on the Mortgage Loans
in accordance with the respective terms and conditions of such Mortgage Loans
and required to be paid over to the Indenture Trustee by the Master Servicer and
(b) Insured Amounts. The Indenture Trustee shall hold all such money and
property received by it, as part of the Trust Estate and shall apply it as
provided in the Indenture.

     Section 6.03.    APPLICATION OF PRINCIPAL AND INTEREST. In the event that
Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than the
Principal Balance of the related Mortgage Loan plus accrued interest thereon, or
any Mortgagor makes a partial payment of any Monthly Payment due on a Mortgage
Loan, such Net Liquidation Proceeds or partial payment shall be applied to
payment of the related Mortgage Note as provided therein, and if not so
provided, first to interest accrued at the Mortgage Interest Rate and then to
principal.

     Section 6.04.    [Reserved].

     Section 6.05.    COMPENSATING INTEREST. Not later than the Servicer Payment
Date, the Master Servicer shall remit to the Indenture Trustee (without right to
reimbursement therefor) for deposit into the related Payment Account, an amount
equal to, for all of the Mortgage Loans, the lesser of (a) the Prepayment
Interest Shortfalls for all of the Mortgage Loans for the related Payment Date
resulting from Principal Prepayments in full during the related Prepayment
Period

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<PAGE>

and (b) its aggregate Servicing Fee with respect to all of the Mortgage Loans
for the related Due Period (the "Compensating Interest").

     Section 6.06.    EFFECT OF PAYMENTS BY THE NOTE INSURER; SUBROGATION.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Notes which is made with moneys received
pursuant to the terms of the Note Insurance Policy shall not be considered
payment of the Notes from the Trust Estate. The Seller, the Sponsor, the Master
Servicer, the Trust and the Indenture Trustee acknowledge and agree, that
without the need for any further action on the part of the Note Insurer, the
Seller, the Sponsor, the Master Servicer, the Trust, the Indenture Trustee or
the Note Registrar (a) to the extent the Note Insurer makes payments, directly
or indirectly, on account of principal of or interest on the Notes to the
Holders of such Notes, the Note Insurer will be fully subrogated to, and each
Noteholder, the Master Servicer, the Seller, the Sponsor, the Trust and the
Indenture Trustee hereby delegate and assign to the Note Insurer, to the fullest
extent permitted by law, the rights of such Holders to receive such principal
and interest from the Trust Estate, including, without limitation, any amounts
due to the Noteholders in respect of securities law violations arising from the
offer and sale of the Notes, and (b) the Note Insurer shall be paid such amounts
from the sources and in the manner provided herein for the payment of such
amounts and as provided in the Insurance Agreement. The Indenture Trustee and
the Master Servicer shall cooperate in all respects with any reasonable request
by the Note Insurer for action to preserve or enforce the Note Insurer's rights
or interests under this Agreement without limiting the rights or affecting the
interests of the Holders as otherwise set forth herein.

                                  ARTICLE VII

                                SERVICER DEFAULT

     Section 7.01.    SERVICER EVENTS OF DEFAULT. (a) I. The following events
shall each constitute a "Servicer Event of Default" hereunder:

               (i)  any failure by the Master Servicer to remit to the Indenture
     Trustee any payment required to be made by the Master Servicer under the
     terms of this Agreement (other than Servicing Advances covered by clause
     (ii) below and Periodic Advances, which shall have no cure period), which
     continues unremedied for one (1) Business Day after the date upon which
     notice of such failure, requiring the same to be remedied, shall have been
     given to the Master Servicer by the Indenture Trustee or to the Master
     Servicer and Indenture Trustee by the Note Insurer or Noteholders affected
     thereby evidencing Percentage Interests of at least 25%;

               (ii) the failure by the Master Servicer to make any required
     Servicing Advance, which failure continues unremedied for a period of
     thirty (30) days after the date on which written notice of such failure,
     requiring the same to be remedied, shall have been given to the Master
     Servicer by the Indenture Trustee or to the Master Servicer and the
     Indenture Trustee by the Note Insurer or Noteholders affected thereby
     evidencing Percentage Interests of at least 25%;

                                       44
<PAGE>

               (iii) any failure on the part of the Master Servicer duly to
     observe or perform in any material respect any other of the covenants or
     agreements on the part of the Master Servicer contained in this Agreement,
     or the failure of any representation and warranty made pursuant to Section
     3.01(a) hereof to be true and correct which continues unremedied for a
     period of thirty (30) days after the date on which written notice of such
     failure, requiring the same to be remedied, shall have been given to the
     Master Servicer by the Indenture Trustee or to the Master Servicer and the
     Indenture Trustee by the Note Insurer or Noteholders affected thereby
     evidencing Percentage Interests of at least 25%;

               (iv) a decree or order of a court or agency or supervisory
     authority having jurisdiction in an involuntary case under any present or
     future federal or state bankruptcy, insolvency or similar law or for the
     appointment of a conservator or receiver or liquidation in any insolvency,
     readjustment of debt, marshalling of assets and liabilities or similar
     proceedings, or for the winding-up or liquidation of its affairs, shall
     have been entered against the Master Servicer and such decree or order
     shall have remained in force, undischarged or unstayed for a period of
     ninety (90) days;

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

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

               (vii) the Note Insurer shall notify the Indenture Trustee of any
     "event of default" under the Insurance Agreement;

               (viii) if on any Payment Date the Rolling Six Month Delinquency
     Rate exceeds 14.0%;

               (ix) if on any Payment Date, the Twelve Month Loss Amount exceeds
     2.50% of the Aggregate Principal Balance of the Mortgage Loans, as of the
     close of business on the first day of the twelfth preceding calendar month;

               (x)  if the total stockholders' equity of the Master Servicer, as
     determined by the Master Servicer's independent accountants in accordance
     with generally accepted accounting principles, shall be less than $40
     million;

               (xi) if the total on- or off-balance sheet financing available to
     the Master Servicer shall be less than $400 million; or

               (xii) the occurrence of an Event of Default under the Indenture;

          II   The following events shall each constitute a "Backup Servicer
Event of Default" hereunder:

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<PAGE>

               (i)  any failure on the part of the Backup Servicer duly to
     observe or perform in any material respect any other of the covenants or
     agreements on the part of the Backup Servicer contained in this Agreement,
     or the failure of any representation and warranty made pursuant to Section
     3.03(a) hereof to be true and correct which continues unremedied for a
     period of thirty (30) days after the date on which written notice of such
     failure, requiring the same to be remedied, shall have been given to the
     Backup Servicer by the Indenture Trustee or to the Backup Servicer and the
     Indenture Trustee by the Note Insurer or Noteholders affected thereby
     evidencing Percentage Interests of at least 25%;

               (ii) a decree or order of a court or agency or supervisory
     authority having jurisdiction in an involuntary case under any present or
     future federal or state bankruptcy, insolvency or similar law or for the
     appointment of a conservator or receiver or liquidation in any insolvency,
     readjustment of debt, marshalling of assets and liabilities or similar
     proceedings, or for the winding-up or liquidation of its affairs, shall
     have been entered against the Backup Servicer and such decree or order
     shall have remained in force, undischarged or unstayed for a period of
     ninety (90) days;

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

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

     So long as a Servicer Event of Default shall have occurred and not have
been remedied: (x) with respect solely to Section 7.01(a)(I)(i), if such payment
is in respect of Periodic Advances or Compensating Interest owing by the Master
Servicer and such payment is not made by 12:00 noon New York time on the second
Business Day prior to the applicable Payment Date, the Indenture Trustee, upon
receipt of written notice or discovery by a Responsible Officer of the Indenture
Trustee of such failure, shall give immediate telephonic and facsimile notice of
such failure to a Servicing Officer of the Master Servicer and the Backup
Servicer and to the Note Insurer, and the Indenture Trustee may, with the
consent of the Note Insurer, and shall, at the direction of the Note Insurer,
terminate all of the rights and obligations of the Master Servicer under this
Agreement, except for the Master Servicer's indemnification obligation under
Section 5.19, and the Backup Servicer, the Indenture Trustee (if it is the
successor master servicer) or a successor master servicer appointed in
accordance with Section 7.02, shall immediately make such Periodic Advance or
payment of Compensating Interest as provided in Section 7.02 and assume,
pursuant to Section 7.02 hereof, the duties of a successor master servicer; (y)
with respect to that portion of Section 7.01(a)(I)(i) not referred to in the
preceding clause (x) and with respect to clauses (ii), (iii), (iv), (v), (vi),
(vii) and (xii) of Section 7.01(a)(I) or clauses (i) through (iv) of Section
7.01(a)(II), upon receipt of written notice or actual knowledge by a Responsible
Officer of the Indenture Trustee, the Indenture Trustee shall, but only at the
direction of the Note Insurer or the Majority Noteholders, by notice in writing
to the Master Servicer, the Backup Servicer and a Responsible Officer of the
Indenture Trustee and subject to

                                       46
<PAGE>

the prior written consent of the Note Insurer in the case of any removal at the
direction of the Majority Noteholders, and in addition to whatever rights such
Noteholders may have at law or equity to damages, including injunctive relief
and specific performance, terminate all the rights and obligations of the Master
Servicer or Backup Servicer, as applicable, under this Agreement, except for the
Master Servicer's indemnification obligations under Section 5.19, and in and to
the Mortgage Loans and the proceeds thereof, as Master Servicer; and (z) with
respect to clauses (viii)-(xi) of Section 7.01(a)(I), upon receipt of written
notice or actual knowledge by a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall, but only at the direction of the Note Insurer,
after notice in writing to the Master Servicer, the Backup Servicer and a
Responsible Officer of the Indenture Trustee, terminate all the rights and
obligations of the Master Servicer under this Agreement, except for the Master
Servicer's indemnification obligations under Section 5.19, and in and to the
Mortgage Loans and the proceeds thereof, as Master Servicer. Upon receipt by the
Master Servicer of such written notice, all authority and power of the Master
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall, subject to Section 7.02, pass to and be vested in the Backup
Servicer, or another successor master servicer selected by the Note Insurer, and
the Backup Servicer or another successor master servicer is hereby authorized
and empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, at the expense of the Master Servicer, any and
all documents and other instruments and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Mortgage Loans and related documents. The Master Servicer
agrees to cooperate (and to pay any related costs and expenses) with the
Indenture Trustee and the Backup Servicer or another successor master servicer
in effecting the termination of the Master Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the Backup
Servicer or another successor master servicer, for administration by it of all
amounts which shall at the time be credited by the Master Servicer to the
Collection Account or thereafter received with respect to the Mortgage Loans.
The Indenture Trustee shall promptly notify the Note Insurer and the Rating
Agencies of the occurrence of a Servicer Event of Default upon discovery or
receipt of notice by a Responsible Officer of the Indenture Trustee; provided,
however, the Indenture Trustee shall not be obligated to monitor the Master
Servicer's compliance with the terms hereof or to determine the occurrence of
any Servicer Event of Default.

     Section 7.02.    BACKUP SERVICER TO ACT: APPOINTMENT OF SUCCESSOR. (a) (i)
On and after the time the Master Servicer receives a notice of termination
pursuant to Section 7.01, or the Indenture Trustee receives the resignation of
the Master Servicer evidenced by an Opinion of Counsel pursuant to Section 5.21,
or the Master Servicer is removed as Master Servicer pursuant to this Article
VII, in which event the Indenture Trustee shall promptly notify the Rating
Agencies, and except as otherwise provided in this Section 7.02, the Backup
Servicer (provided the Backup Servicer receives 20 days' prior written notice)
or another successor master servicer selected by the Note Insurer shall be the
successor in all respects to the Master Servicer in its capacity as master
servicer under this Agreement and the transactions set forth or provided for in
this Agreement, and shall be subject to all the responsibilities, restrictions,
duties, liabilities and termination provisions relating thereto placed on the
Master Servicer by the terms and provisions of this Agreement. The Backup
Servicer or another successor master servicer and the Indenture Trustee shall
take such action, consistent with this Agreement, as shall be necessary to
effect any such succession. If the Backup Servicer or any other successor master
servicer is acting as

                                       47
<PAGE>

Master Servicer hereunder, it shall be subject to termination under Section 7.01
upon the occurrence or continuation of a Servicer Event of Default applicable to
it as Master Servicer. The Backup Servicer hereby agrees to act as successor
master servicer pursuant to the terms of this Agreement upon the termination or
resignation of the Master Servicer as provided in this Section 7.02, provided
that the Backup Servicer receives all of the necessary documents relating to the
Mortgage Loans and computer records reflecting the status of the Mortgage Loans
as of the date of such transfer of servicing. The Backup Servicer will not be
obligated to incur any expenses or costs (including, without limitation, legal
fees and the preparation and recording of all intervening assignments of
mortgage) in connection with the transfer of servicing of the Mortgage Loans to
the Backup Servicer, or to compel the performance of any obligations by any
party to this Agreement. Any successor master servicer and the Backup Servicer
prior to its becoming the successor master servicer shall not be liable for any
actions, omissions or defaults of any master servicer prior to it or breaches of
representations and warranties of the master servicer prior to it. The Backup
Servicer or any other successor master servicer, as successor master servicer,
shall be obligated to pay Compensating Interest pursuant to Section 6.05 in any
event and to make Periodic Advances pursuant to Section 5.18 unless, and only to
the extent the Backup Servicer determines reasonably and in good faith that such
advances would not be recoverable from the proceeds of the related Mortgage Loan
pursuant to Section 5.03, such determination to be evidenced by a certification
of a Responsible Officer of the Backup Servicer delivered to the Note Insurer.
Furthermore, the Backup Servicer shall not be obligated to fund any resulting
discrepancy or shortfall in the Collection Account. Upon the transfer of the
servicing of the Mortgage Loans, the Indenture Trustee shall provide the Backup
Servicer with an officer's certificate that contains: (i) a complete description
of all material breaches by the Master Servicer under the Agreement known by the
Indenture Trustee which have not been fully cured and (ii) confirmation that all
reports required to be filed with the Indenture Trustee have been timely filed
by the Master Servicer.

               (ii) In the event that the Backup Servicer is terminated or
     resigns pursuant to this Agreement or otherwise becomes unable to perform
     its obligations under this Agreement, the Note Insurer may (or if the Note
     Insurer fails to do so promptly the Indenture Trustee will) appoint a
     successor backup servicer in accordance with the provisions of this Section
     7.02; provided, that any successor backup servicer, shall satisfy the
     requirements set forth in Section 7.02(b) and shall be approved by the
     Rating Agencies and the Note Insurer.

          (b)  Any successor master servicer or successor backup servicer
hereunder (other than the Indenture Trustee) shall be a housing and home finance
institution, bank or mortgage servicing institution which has been designated as
an approved seller-servicer by Fannie Mae or Freddie Mac, having equity of not
less than $5,000,000 as determined in accordance with GAAP, as the successor to
the Master Servicer or the Backup Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Master Servicer
or the Backup Servicer, as applicable, hereunder.

          (c)  In the event the Backup Servicer is the successor master
servicer, it shall be entitled to the same Servicing Compensation (including the
Servicing Fee as adjusted pursuant to the definition thereof) and other funds
pursuant to Section 5.08 hereof as the Master

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<PAGE>

Servicer if the Master Servicer had continued to act as master servicer
hereunder, and shall continue to be entitled to the Backup Servicing Fee.

          (d)  The Indenture Trustee, the Backup Servicer and any successors
master servicer or backup servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. The Master
Servicer agrees to cooperate with the Indenture Trustee, the Backup Servicer and
any successor master servicer in effecting the termination of the Master
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Indenture Trustee, the Backup Servicer or such successor master
servicer, as applicable, at the Master Servicer's cost and expense, all
documents and records reasonably requested by it to enable it to assume the
Master Servicer's functions hereunder and shall promptly also transfer to the
Indenture Trustee, the Backup Servicer or such successor master servicer, as
applicable, all amounts that then have been or should have been deposited in the
Collection Account by the Master Servicer or that are thereafter received with
respect to the Mortgage Loans, including without limitation all Liquidation
Proceeds and Insurance Proceeds, and payments of insurance deductible amounts by
the Master Servicer pursuant to Section 5.04(b) with respect to all insurance
claims arising during the Master Servicer's tenure. Any collections received by
the Master Servicer after such removal or resignation shall be endorsed by it to
the Backup Servicer or (if the Backup Servicer is not the successor master
servicer) to the Indenture Trustee and remitted directly to the Backup Servicer
or the Indenture Trustee, as applicable (or, at the direction of the Indenture
Trustee, to any other successor master servicer). Neither the Backup Servicer,
the Indenture Trustee nor any other successor master servicer shall be held
liable by reason of any failure to make, or any delay in making, any payment
hereunder or any portion thereof caused by (i) the failure of the Master
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Master Servicer hereunder. Notwithstanding anything to the contrary
herein, no appointment of a successor master servicer under this Agreement shall
be effective until the Note Insurer shall have consented thereto, and written
notice of such proposed appointment shall have been provided by the Indenture
Trustee to the Note Insurer and the Backup Servicer. The Indenture Trustee shall
not resign as Master Servicer until a successor master servicer reasonably
acceptable to the Note Insurer has been appointed. The Note Insurer shall have
the right to remove the Indenture Trustee as successor Master Servicer under
this Section 7.02 without cause, and the Indenture Trustee shall appoint such
other successor master servicer as directed by the Note Insurer.

          (e)  In the event that the Master Servicer is terminated hereunder and
no Backup Servicer is obligated to act as successor master servicer and no other
successor master servicer has been appointed hereunder, the Indenture Trustee
may appoint a successor master servicer (which may be an affiliate of the
Indenture Trustee) or petition a court of competent jurisdiction to appoint a
successor master servicer. Pending appointment of such a successor master
servicer hereunder, the Indenture Trustee shall be the successor master servicer
and act in such capacity; provided, however, that the Indenture Trustee, in its
capacity as successor master servicer pending appointment of another successor
master servicer, (i) shall be obligated to make Periodic Advances or Servicing
Advances only to the extent that the Indenture Trustee deems such advances to be
recoverable, (ii) shall be obligated to make Compensating Interest payments in
respect of any Payment Date only to the extent of any Servicing Fee received by
the Indenture Trustee in respect of such Payment Date, (iii) shall not be
obligated to perform any other duties

                                       49
<PAGE>

or obligations of the Master Servicer hereunder until the Indenture Trustee has
received all master servicing records and files from the predecessor master
servicer or backup servicer and in no event later than 90 days following the
termination of the Master Servicer; provided, however, the Indenture Trustee
shall use its reasonable efforts to perform the duties and obligations of the
Master Servicer prior to the end of such 90 day period, (iv) shall not be
obligated to perform any of the administrative duties specified in Section 5.23
hereof, and (v) shall be entitled to payment of all Servicing Compensation and
the Backup Servicing Fee. In connection with any appointment and assumption of
duties of a successor master servicer, the Indenture Trustee may make such
arrangements for the compensation of such successor master servicer out of
payments on Mortgage Loans as the Note Insurer and such successor shall agree;
provided, however, that such compensation may not be in excess of that permitted
the Master Servicer pursuant to Section 5.08, together with other Servicing
Compensation and the Backup Servicing Fee. The Master Servicer, the Indenture
Trustee and such successor Master Servicer shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.

          (f)  In the event the Backup Servicer, the Indenture Trustee, or any
successor master servicer incurs out-of-pocket expenses other than Servicing
Advances or Periodic Advances in connection with the transfer of master
servicing hereunder, which expenses are required to be borne by the Master
Servicer hereunder, and such expenses are not promptly reimbursed by the Master
Servicer or recoverable out of amounts reimbursable to the Master Servicer out
of the Collection Account, the Indenture Trustee shall make such reimbursement
to the applicable party out of funds in each Payment Account on any Payment Date
after all Payments to Noteholders on such Payment Date have been made and the
Reserve Payment Amount has been made to the Reserve Account but before any
distribution to the Certificateholders. The right of the Indenture Trustee to
reimbursement from any Payment Account for any of the Indenture Trustee's costs
and expenses in connection with the transfer of any master servicing hereunder
shall be in addition to any rights of the Indenture Trustee to indemnification
and reimbursement under the Indenture.

          (g)  In the event that the Master Servicer is terminated or resigns
hereunder, and at such time the Master Servicer has made unreimbursed Periodic
Advances or Servicing Advances out of its own funds,

               (i)  any such Periodic Advances or Servicing Advances shall be
     allocated by the successor master servicer in whole or in part to specific
     Mortgage Loans which are delinquent at the time of the transfer of master
     servicing, which allocation shall be based on loan-level accounts of the
     portion of each Periodic Advance or Servicing Advance which has been funded
     by the Master Servicer from its own funds consistently maintained by the
     former Master Servicer, or, if no such accounts exist, then in the
     successor master servicer's discretion;

               (ii) following the transfer of master servicing, the successor
     master servicer shall reimburse the former Master Servicer for such
     Periodic Advances and Servicing Advances in accordance with the allocations
     determined in accordance with clause (i) above only out of the proceeds of
     the Mortgage Loans to which they relate and otherwise subject to Section
     5.03, or, to the extent the successor master servicer

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<PAGE>

     determines any such Periodic Advance or Servicing Advance to be a
     Nonrecoverable Advance, out of any funds in the Collection Account.

     Section 7.03.    WAIVER OF DEFAULTS. The Note Insurer or the Majority
Noteholders may, on behalf of all Noteholders, and subject to the consent of the
Note Insurer, waive any events permitting removal of the Master Servicer as
master servicer pursuant to this Article VII; PROVIDED, HOWEVER, that the
Majority Noteholders may not waive a default in making a required payment on a
Note without the consent of the Holder of such Note. Upon any waiver of a past
default, such default shall cease to exist, and any Servicer Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Indenture Trustee to the Rating
Agencies and the Note Insurer.

     Section 7.04.    RIGHTS OF THE NOTE INSURER TO EXERCISE RIGHTS OF THE
NOTEHOLDERS. By accepting its Note, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall be deemed to be the Noteholders
for all purposes (other than with respect to the receipt of payment on the
Notes) and shall have the right to exercise all rights of the Noteholders under
this Agreement and under the Notes without any further consent of the
Noteholders, including, without limitation:

          (a)  the right to require the Sponsor to repurchase or substitute
Mortgage Loans pursuant to Sections 2.06 and 4.02 hereof to the extent set forth
therein;

          (b)  the right to give notices of breach or to terminate the rights
and obligations of the Master Servicer as master servicer pursuant to Section
7.01 hereof and to consent to or direct waivers of Master Servicer defaults
pursuant to Section 7.03 hereof;

          (c)  the right to direct the actions of the Indenture Trustee during
the continuance of a Servicer Event of Default pursuant to Sections 7.01 and
7.02 hereof;

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

          (e)  the right to remove the Indenture Trustee pursuant to Section
6.09 of the Indenture;

          (f)  the right to direct foreclosures upon the failure of the Master
Servicer to do so in accordance with the provisions of Section 5.06 of this
Agreement; and

          (g)  any rights or remedies expressly given the Majority Noteholders.

     In addition, each Noteholder agrees that, subject to Section 10.02, unless
a Note Insurer Default exists, the rights specifically enumerated above may only
be exercised by the Noteholders with the prior written consent of the Note
Insurer.

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<PAGE>

     Section 7.05.    INDENTURE TRUSTEE TO ACT SOLELY WITH CONSENT OF THE NOTE
INSURER. Unless a Note Insurer Default exists, the Indenture Trustee shall not,
without the Note Insurer's consent or unless directed by the Note Insurer:

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

          (b)  agree to any amendment pursuant to Section 10.03 hereof; or

          (c)  undertake any litigation.

     The Note Insurer may, in writing and in its sole discretion renounce all or
any of its rights under Sections 7.04, 7.05 or 7.06 or any requirement for the
Note Insurer's consent for any period of time.

     Section 7.06.    MORTGAGE LOANS, TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT
OF THE NOTE INSURER. (a) The Indenture Trustee shall hold the Trust Estate and
the Indenture Trustee's Mortgage Files, for the benefit of the Noteholders and
the Note Insurer, and all references in this Agreement, the Notes and in any of
the other Basic Documents to the benefit of Noteholders shall be deemed to
include the Note Insurer. The Indenture Trustee shall cooperate in all
reasonable respects with any reasonable request by the Note Insurer for action
to preserve or enforce the Note Insurer's rights or interests under this
Agreement, the Notes and in any of the Basic Documents unless, as stated in an
Opinion of Counsel addressed to the Indenture Trustee and the Note Insurer, such
action is adverse to the interests of the Noteholders or diminishes the rights
of the Noteholders or imposes additional burdens or restrictions on the
Noteholders.

          (b)  The Master Servicer hereby acknowledges and agrees that it shall
service the Mortgage Loans for the benefit of the Noteholders and for the
benefit of the Note Insurer, and all references in this Agreement and in any of
the other Basic Documents to the benefit of or actions on behalf of the
Noteholders shall be deemed to include the Note Insurer.

     Section 7.07.    NOTE INSURER DEFAULT. During the continuation of a Note
Insurer Default, rights granted or reserved to the Note Insurer hereunder shall
vest instead in the Noteholders; provided, that the Note Insurer shall be
entitled to any distributions of reimbursements as set forth in the Indenture
and the Insurance Agreement and the Note Insurer shall retain those rights under
Section 10.03 to consent to any amendment of this Agreement.

     At such time as either (i) the outstanding Note Principal Balance of the
Notes has been reduced to zero or (ii) the Note Insurance Policy has been
terminated and in either case of (i) or (ii) the Note Insurer has been
reimbursed for all amounts owed under the Note Insurance Policy and the
Insurance Agreement (and the Note Insurer no longer has any obligation under the
Note Insurance Policy, except for breach thereof by the Note Insurer), then the
rights and benefits granted or reserved to the Note Insurer hereunder (including
the rights to direct certain actions and receive certain notices) shall
terminate and the Certificateholders shall be entitled to the exercise of such
rights and to receive such benefits of the Note Insurer following such
termination to the extent that such rights and benefits are applicable to the
Certificateholders.

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<PAGE>

                                  ARTICLE VIII

                                   TERMINATION

     Section 8.01.    TERMINATION. (a) Subject to Section 8.02, this Agreement
shall terminate upon notice to the Indenture Trustee of either: (i) the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable to the Note Insurer and the Indenture Trustee or (ii) mutual consent of
the Owner Trustee, on behalf of the Trust, at the direction of all the
Certificateholders, the Indenture Trustee, the Master Servicer, the Note Insurer
and all Noteholders in writing.

          (b)  In addition, subject to Section 8.02, the Sponsor may, at its
sole option, cost and expense, terminate the Trust in accordance with the terms
of Section 10.01 of the Indenture.

          (c)  If on any date, the Master Servicer determines that there are no
outstanding Mortgage Loans and no other funds or assets in the Trust Estate
other than funds in the Payment Accounts, the Master Servicer shall send a final
payment notice promptly to the Indenture Trustee, who shall forward notice to
each Noteholder in accordance with Section 8.01(d).

          (d)  Notice of any termination, specifying the Payment Date upon which
the Trust will terminate and the Noteholders shall surrender their Notes to the
Indenture Trustee for final payment and cancellation, shall be given promptly by
the Master Servicer to the Indenture Trustee, who shall forward the notice by
letter to Noteholders mailed during the month of such final payment before the
Servicer Payment Date in such month, specifying (i) the Payment Date upon which
final payment of the Notes will be made upon presentation and surrender of Notes
at the office of the Indenture Trustee therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Payment Date is not applicable, payments being made only upon presentation
and surrender of the Notes at the office of the Indenture Trustee therein
specified. The obligations of the Note Insurer hereunder shall terminate upon
the deposit by the Sponsor with the Indenture Trustee of a sum sufficient to
purchase all of the Mortgage Loans and REO Properties as set forth in Section
10.01 of the Indenture or when the Note Principal Balance of the Notes has been
reduced to zero.

          (e)  In the event that all of the Noteholders do not surrender their
Notes for cancellation within six (6) months after the time specified in the
above-mentioned written notice, the Indenture Trustee shall give a second
written notice to the remaining Noteholders to surrender their Notes for
cancellation and receive the final payment with respect thereto. If within six
(6) months after the second notice, all of the Notes shall not have been
surrendered for cancellation, the Indenture Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Noteholders concerning surrender of their Notes and the cost thereof shall be
paid out of the funds and other assets which remain subject hereto. If within
nine (9) months after the second notice all the Notes shall not have been
surrendered for cancellation, the Certificateholders shall be entitled to all
unclaimed funds and other assets which remain subject hereto and the Indenture
Trustee upon transfer of such funds shall be discharged

                                       53
<PAGE>

of any responsibility for such funds and the Noteholders shall look only to the
Certificateholders for payment and not to the Note Insurer. Such funds shall
remain uninvested.

     Section 8.02.    ADDITIONAL TERMINATION REQUIREMENTS. By their acceptance
of the Notes, the Holders thereof hereby agree to appoint the Master Servicer as
their attorney in fact to: (i) adopt a plan of complete liquidation (and the
Noteholders hereby appoint the Indenture Trustee as their attorney in fact to
sign such plan) as appropriate or upon the written request of the Note Insurer
and (ii) to take such other action in connection therewith as may be reasonably
required to carry out such plan of complete liquidation all in accordance with
the terms hereof.

     Section 8.03.    ACCOUNTING UPON TERMINATION OF MASTER SERVICER. Upon
termination of the Master Servicer, the Master Servicer shall, at its expense:

          (a)  deliver to the successor master servicer or, if none shall yet
have been appointed, to the Indenture Trustee, the funds in any Account
administered by the Master Servicer;

          (b)  deliver to the successor master servicer or, if none shall yet
have been appointed, to the Indenture Trustee all Mortgage Files and related
documents and statements held by it hereunder and a Mortgage Loan portfolio
computer tape (such delivery to take place within 24 hours if the successor
master servicer is the Backup Servicer);

          (c)  deliver to the successor master servicer, or, if none shall yet
have been appointed, to the Indenture Trustee a full accounting of all funds,
including a statement showing the Monthly Payments collected by it and a
statement of monies held in trust by it for the payments or charges with respect
to the Mortgage Loans; and

          (d)  execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to the successor master servicer and to more
fully and definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Master Servicer under this
Agreement.

     Section 8.04.    TERMINATION OF BACKUP SERVICER AS SUCCESSOR MASTER
SERVICER. In the event the Backup Servicer becomes the successor master servicer
and is terminated for reasons other than the occurrence of a Servicer Event of
Default, then the Backup Servicer will be entitled to a release fee of $10.00
per Mortgage Loan (subject to a minimum of $5,000.00).

                                   ARTICLE IX

                                   [RESERVED]

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

     Section 10.01.   LIMITATION ON LIABILITY. (a) None of the Trust, the Owner
Trustee, the Seller, the Sponsor, the Master Servicer, the Backup Servicer, the
Indenture Trustee or any of the

                                       54
<PAGE>

directors, officers, employees or agents of such Persons shall be under any
liability to the Trust, the Noteholders or the Note Insurer for any action
taken, or for refraining from the taking of any action, in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Trust, the Owner Trustee, the Seller, the
Sponsor, the Master Servicer, the Backup Servicer, the Indenture Trustee or any
such Person against liability for any breach of warranties or representations
made herein by such party, or against any specific liability imposed on each
such party pursuant to this Agreement or against any liability which would
otherwise be imposed upon such party by reason of willful misfeasance, bad faith
or negligence in the performance of duties or by reason of failure to perform
its obligations or duties hereunder. The Trust, the Owner Trustee, the Seller,
the Sponsor, the Master Servicer, the Backup Servicer, the Indenture Trustee and
any director, officer, employee or agent of such Person may rely in good faith
on any document of any kind which, prima facie, is properly executed and
submitted by any appropriate Person respecting any matters arising hereunder.

          (b)  It is expressly understood and agreed by the parties hereto that
(i) this Agreement is executed and delivered by U.S. Bank Trust National
Association, not individually or personally but solely as Owner Trustee under
the Trust Agreement, in the exercise of the powers and authority conferred and
vested in it under the Trust Agreement, (ii) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by U.S.
Bank Trust National Association but is made and intended for the purpose for
binding only the Trust, (iii) nothing herein contained shall be construed as
creating any liability on U.S. Bank Trust National Association, individually or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties hereto
and by any Person claiming by, through or under the parties hereto and (iv)
under no circumstances shall U.S. Bank Trust National Association be personally
liable for the payment of any indebtedness or expenses of the Trust or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Trust under this Agreement or any other
related documents.

     Section 10.02.   ACTS OF NOTEHOLDERS. (a) Subject to Section 7.04 and
except as otherwise specifically provided herein, whenever Noteholder action,
consent or approval is required under this Agreement, such action, consent or
approval shall be deemed to have been taken or given on behalf of, and shall be
binding upon, all Noteholders if the Majority Noteholders or the Note Insurer
agrees to take such action or give such consent or approval.

          (b)  The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Noteholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.

          (c)  No Noteholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Notes, be construed
so as to constitute the Noteholders from time to time as partners or

                                       55
<PAGE>

members of an association; nor shall any Noteholder be under any liability to
any third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.

     Section 10.03.   AMENDMENT. (a) This Agreement may be amended from time to
time by the Owner Trustee, on behalf of the Trust, the Master Servicer, the
Seller, Sponsor, the Backup Servicer and the Indenture Trustee by written
agreement, upon the prior written consent of the Note Insurer, without notice to
or consent of the Noteholders to cure any ambiguity, to correct or supplement
any provisions herein, to comply with any changes in the Code, or to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not adversely affect in any material
respect the interests of any Noteholder, as evidenced by (i) an Opinion of
Counsel, at the expense of the party requesting the change, delivered to the
Indenture Trustee to such effect or (ii) a letter from each Rating Agency
confirming that such action will not result in the reduction, qualification or
withdrawal of the then-current ratings on the Notes (without taking into account
the Note Insurance Policy). The Indenture Trustee shall give prompt written
notice to the Rating Agencies of any amendment made pursuant to this Section
10.03.

          (b)  This Agreement may be amended from time to time by the Owner
Trustee, on behalf of the Trust, the Master Servicer, the Seller, the Sponsor,
the Backup Servicer and the Indenture Trustee, with the consent of the Note
Insurer, the Noteholders representing at least 51% of the outstanding Principal
Balance of the Notes of each affected Class and all of the Certificateholders;
PROVIDED, HOWEVER, that no such amendment shall reduce in any manner the amount
of, or delay the timing of, payments received on Mortgage Loans which are
required to be paid on any Class of Notes without the consent of the Holders of
such Class of Notes or reduce the percentage for the Holders of which are
required to consent to any such amendment without the consent of the Holders of
100% of such Class of Notes affected thereby.

          (c)  It shall not be necessary for the consent of Holders under this
Section 10.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.

          (d)  In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by Article IX of the Indenture or the
modifications thereby of the trusts created by the Indenture, the Indenture
Trustee shall be entitled to receive, and (subject to Section 6.01 of the
Indenture) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by the Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties or immunities under the Indenture or
otherwise. The Master Servicer, on behalf of the Trust, shall cause executed
copies of any supplemental indentures to be delivered to the Note Insurer and
the Rating Agencies.

     Section 10.04.   RECORDATION OF AGREEMENT. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are

                                       56
<PAGE>

situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at the Noteholders'
expense on direction and at the expense of Majority Noteholders requesting such
recordation, but only when accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Noteholders or is necessary for the administration or servicing of the Mortgage
Loans.

     Section 10.05.   DURATION OF AGREEMENT. This Agreement shall continue in
existence and effect until terminated as herein provided.

     Section 10.06.   NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
to (i) in the case of the Master Servicer, Accredited Home Lenders, Inc., 15030
Avenue of Science, Suite 100, San Diego, California 92128, Attention: Director
of Operations with a copy to General Counsel; (ii) in the case of the Backup
Servicer, Countrywide Home Loans Servicing LP, 7105 Corporate Drive, Plano,
Texas 75024, Attention: Accredited Mortgage Loan Trust 2003-1; (iii) in the case
of the Trust, Accredited Mortgage Loan Trust 2003-1, c/o the Owner Trustee at
its Corporate Trust Office, Attention: Corporate Trust Administration; (iv) in
the case of the Indenture Trustee, Deutsche Bank National Trust Company, 1761
East St. Andrew Place, Santa Ana, California 92705-4934, Attention: Trust
Administration - AC0301; (v) in the case of the Sponsor, Accredited Home
Lenders, Inc., 15030 Avenue of Science, Suite 100, San Diego, California 92128,
Attention: Investor Reporting; (vi) in the case of the Underwriter, Lehman
Brothers Inc., 745 Seventh Avenue, 7th Floor, New York, New York 10019,
Attention: Samir Tabet; (vii) in the case of the Note Insurer, Ambac Assurance
Corporation, One State Street Plaza, New York, New York 10004, Attention: Jeff
Nabi (in each case in which notice or other communication to the Note Insurer
refers to an Event of Default, a Servicer Event of Default or a claim on the
Note Insurance Policy or with respect to which failure on the part of the Note
Insurer to respond shall be deemed to constitute consent or acceptance, then a
copy of such notice or other communication should also be sent to the attention
of each of the General Counsel and the Head- Financial Guaranty Group, and shall
be marked to indicate "URGENT MATERIAL ENCLOSED"); (viii) in the case of
Standard & Poor's Rating Services, 55 Water Street, New York, New York 10004,
Attention: Residential Mortgage Surveillance Group; (ix) in the case of Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention:
Keith Wofford; (x) in the case of the Seller, Accredited Home Capital, Inc.,
15030 Avenue of Science, Suite 100A, San Diego, California 92128, Attention:
General Counsel and (xi) in the case of the Noteholders, as set forth in the
Note Register. Any such notices shall be deemed to be effective with respect to
any party hereto upon the receipt of such notice by such party, except that
notices to the Noteholders shall be effective upon mailing or personal delivery.

     Section 10.07.   SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.

     Section 10.08.   NO PARTNERSHIP. Nothing herein contained shall be deemed
or construed to create a co-partnership or joint venture between the parties
hereto and the services of the

                                       57
<PAGE>

Master Servicer shall be rendered as an independent contractor and not as agent
for the Noteholders.

     Section 10.09.   COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.

     Section 10.10.   SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the Trust, the Master Servicer, the Backup
Servicer, the Seller, the Sponsor, the Indenture Trustee and the Noteholders and
their respective successors and permitted assigns.

     Section 10.11.   HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.

     Section 10.12.   NO PETITION. The Master Servicer and the Backup Servicer,
by entering into this Agreement, hereby covenant and agree that they will not at
any time institute against the Sponsor, the Seller or the Trust, or join in any
institution against the Sponsor, the Seller or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy law in
connection with any obligations relating to the Certificates, the Notes, this
Agreement or any of the other Basic Documents.

     This Section 10.12 will survive for one year and one day following the
termination of this Agreement.

     Section 10.13.   THIRD PARTY BENEFICIARY. The parties agree that each of
the Owner Trustee and the Note Insurer is intended and shall have all rights of
a third-party beneficiary of this Agreement. Without limiting the generality of
the foregoing, all covenants and agreements in this Agreement that expressly
confer rights upon the Note Insurer shall be for the benefit of and run directly
to the Note Insurer, and the Note Insurer shall be entitled to rely on and
enforce such covenants to the same extent as if it were a party to this
Agreement.

     Section 10.14.   INTENT OF THE PARTIES. It is the intent of the parties
hereto and Noteholders that, for federal income taxes, state and local income or
franchise taxes and other taxes imposed on or measured by income, the Notes be
treated as debt. The parties to this Agreement and the Holder of each Note, by
acceptance of its Note, and each Beneficial Owner thereof, agree to treat, and
to take no action inconsistent with the treatment of, the related Notes in
accordance with the preceding sentence for purposes of federal income taxes,
state and local income and franchise taxes and other taxes imposed on or
measured by income.

     Section 10.15.   GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.

                                       58
<PAGE>

          (b)  THE TRUST, THE MASTER SERVICER, THE SELLER, THE SPONSOR, THE
BACKUP SERVICER AND THE INDENTURE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH IN SECTION 10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S.
MAILS, POSTAGE PREPAID. THE TRUST, THE SELLER, THE SPONSOR, THE MASTER SERVICER,
THE BACKUP SERVICER AND THE INDENTURE TRUSTEE EACH HEREBY WAIVE ANY OBJECTION
BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 10.15
SHALL AFFECT THE RIGHT OF THE TRUST, THE SELLER, THE SPONSOR, THE MASTER
SERVICER, THE BACKUP SERVICER OR THE INDENTURE TRUSTEE TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS TO BRING ANY
ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.

          (c)  THE TRUST, THE SELLER, THE SPONSOR, THE MASTER SERVICER, THE
     BACKUP SERVICER AND THE INDENTURE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO
     HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
     CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
     IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED IN
     A BENCH TRIAL WITHOUT A JURY.

                  [Remainder of Page Intentionally Left Blank]

                                       59
<PAGE>

     IN WITNESS WHEREOF, the Master Servicer, the Backup Servicer, the Trust,
the Indenture Trustee, the Seller and the Sponsor have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.

                                       ACCREDITED HOME LENDERS, INC.,
                                         as Sponsor and Master Servicer

                                       By:  /s/ Ray W. McKewon
                                            -----------------------------------
                                            Name: Ray W. McKewon
                                            Title: Executive Vice President

                                        ACCREDITED MORTGAGE LOAN TRUST 2003-1

                                        By: U.S. BANK TRUST NATIONAL
                                            ASSOCIATION, not in its individual
                                            capacity, but solely as Owner
                                            Trustee under the Trust Agreement

                                            By: /s/ Melissa A. Rosal
                                               --------------------------------
                                               Name: Melissa A. Rosal
                                               Title: Vice President

                                       ACCREDITED HOME CAPITAL, INC.,
                                         as Seller

                                       By:  /s/ David E. Hertzel
                                            -----------------------------------
                                            Name: David E. Hertzel
                                            Title: GC, AVP & Assistant Secretary

                                       DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                        as Indenture Trustee

                                       By:  /s/ Barbara Campbell
                                            -----------------------------------
                                            Name: Barbara Campbell
                                            Title: Assistant Vice President

                                       By:  /s/ Ronald Reyes
                                            -----------------------------------
                                            Name: Ronald Reyes
                                            Title: Assistant Vice President

                                       60
<PAGE>

                                        COUNTRYWIDE HOME LOANS SERVICING LP,
                                           as Backup Servicer

                                        By:  /s/ Michael Schloessmann
                                             -----------------------------------
                                             Name: Michael Schloessmann
                                             Title: Senior Vice President

                [Signature Page to Sale and Servicing Agreement]

                                       61
<PAGE>

                                                                      SCHEDULE I

                             MORTGAGE LOAN SCHEDULE

                      [On File with Dewey Ballantine LLP]

                                      A-1
<PAGE>

                                                                      APPENDIX I

                                  DEFINED TERMS

                          [See Appendix I to Indenture]

<PAGE>

                                    EXHIBIT A

                          CONTENTS OF THE MORTGAGE FILE

     With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items (copies to the extent the originals have been delivered to
the Indenture Trustee for the benefit of the Noteholders and the Note Insurer,
pursuant to Section 2.05 of the Sale and Servicing Agreement), all of which
shall be available for inspection by the Noteholders, to the extent required by
applicable laws:

     1.   the original Mortgage Note, endorsed without recourse in blank from
the last endorsee thereof, including all intervening endorsements showing a
complete chain of endorsement;

     2.   the related original Mortgage with evidence of recording indicated
thereon or a copy thereof certified by the applicable recording office;

     3.   each intervening mortgage assignment, with evidence of recording
indicated thereon or if the original is not available, a copy thereof certified
by the applicable recording office, if any, showing a complete chain of
assignment from the last assignee thereof of the related Mortgage Loan to the
Seller (which assignment may, at the Sponsor's option, be combined with the
assignment referred to in subpart (4) hereof, in which case it must be in
recordable form, but need not have been previously recorded);

     4.   a mortgage assignment in recordable form (which, if acceptable for
recording in the relevant jurisdiction as evidenced by an opinion of counsel
addressed to the Indenture Trustee, may be included in a blanket assignment or
assignments) of each Mortgage from the Sponsor to the Indenture Trustee;

     5.   originals of all assumption, modification and substitution agreements
in those instances where the terms or provisions of a Mortgage or Mortgage Note
have been modified or such Mortgage or Mortgage Note has been assumed (if any);
and

     6.   an original title insurance policy or title opinion (or (A) a copy of
the title insurance policy or title opinion, or (B) the related binder,
commitment or preliminary report, or copy thereof in which case the Sponsor
hereby certifies that the original Mortgage has been delivered to the title
insurance company that issued such binder, commitment or preliminary report).

     In instances where the original recorded Mortgage or any intervening
mortgage assignment or a completed assignment of the Mortgage in recordable form
cannot be delivered by the Sponsor to the Indenture Trustee prior to or
concurrently with the execution and delivery of this Agreement, due to a delay
in connection with recording, the Sponsor may:

     (a)  with respect to item (3) above, in lieu of delivering such original
recorded Mortgage or intervening mortgage assignment, deliver to the Indenture
Trustee, a copy thereof; provided, that the Sponsor certifies that the original
Mortgage has been delivered to a title

                                       A-1
<PAGE>

insurance company for recordation after receipt of its policy of title insurance
or the related binder, commitment or preliminary report; and

     (b)  in lieu of delivering the completed assignment in recordable form,
deliver to the Indenture Trustee, the assignment in recordable form, otherwise
complete except for recording information.

                                       A-2

<PAGE>

                                                                       EXHIBIT B

                  INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT

                                                     May __, 2003

Lehman Brothers Inc.                         Accredited Home Lenders, Inc.
745 Seventh Avenue                           15030 Avenue of Science, Suite 100
New York, New York  10019                    San Diego, California  92128

Countrywide Home Loans Servicing LP          Ambac Assurance Corporation
4500 Park Granada, Mail Stop CH-143,         One State Street Plaza
Calabasas, California  91302                 New York, New York  10022

Accredited Home Capital, Inc.
15030 Avenue of Science, Suite 100
San Diego, California  92128

     Re:  Sale and Servicing Agreement, dated as of May 1, 2003 among Accredited
          Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Home
          Capital, Inc., as seller, Accredited Mortgage Loan Trust 2003-1,
          Countrywide Home Loans Servicing LP, as Backup Servicer, and Deutsche
          Bank National Trust COMPANY, AS INDENTURE TRUSTEE

Ladies and Gentlemen:

     In accordance with Section 2.06(a) of the above-captioned Sale and
Servicing Agreement, the undersigned, as Indenture Trustee, hereby acknowledges
receipt by it in good faith without notice of adverse claims, of the Note
Insurance Policy and declares that it holds and will hold such Note Insurance
Policy in trust for the exclusive use and benefit of all present and future
Noteholders pursuant to the terms of the Indenture dated as of May 1, 2003, by
and between Accredited Mortgage Loan Trust 2003-1 and the Indenture Trustee.

     Capitalized words and phrases used herein shall have the respective
meanings assigned to them in Appendix I to the Indenture.

                                        DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                        as Indenture Trustee

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

                                      B-1

<PAGE>

                                                                       EXHIBIT C

                 INDENTURE TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT

                                                        May __, 2003

Lehman Brothers Inc.                          Accredited Home Lenders, Inc.
745 Seventh Avenue                            15030 Avenue of Science, Suite 100
New York, New York 10019                      San Diego, California  92128

Countrywide Home Loans Servicing LP           Ambac Assurance Corporation
4500 Park Granada, Mail Stop CH-143,          One State Street Plaza
Calabasas, California 91302                   New York, New York 10022

Accredited Home Capital, Inc.
15030 Avenue of Science, Suite 100
San Diego, California  92128

     Re:  Sale and Servicing Agreement, dated as of May 1, 2003 among Accredited
          Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Home
          Capital, Inc., as seller, Accredited Mortgage Loan Trust 2003-1,
          Countrywide Home Loans Servicing LP, as Backup Servicer, and Deutsche
          Bank National Trust COMPANY, AS INDENTURE TRUSTEE

     Ladies and Gentlemen:

     In accordance with Section 2.06(b)(i) of the above-captioned Sale and
Servicing Agreement, the undersigned, as Indenture Trustee, hereby acknowledges
receipt by it in good faith without notice of adverse claims, subject to the
provisions of Sections 2.04 and 2.05 of the Sale and Servicing Agreement (as
such provisions relate to the Mortgage Loan), of, with respect to each Mortgage
Loan, a Mortgage File containing the original Mortgage Note, except with respect
to the list of exceptions attached hereto, and based on its examination and only
as to the foregoing, the information set forth in items (i), (ii) (with respect
to property address only, excluding zip code), (iii) and (vi) of the definition
of the "Mortgage Loan Schedule" accurately reflects information set forth in the
Mortgage Note, and declares that it holds and will hold such documents and the
other documents delivered to it constituting the Indenture Trustee's Mortgage
Files, and that it holds or will hold all such assets and such other assets
included in the definition of "Trust Estate" that are delivered to it for the
exclusive use and benefit of all present and future Noteholders and the Note
Insurer.

     The Indenture Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced Sale
and Servicing Agreement. The Indenture Trustee makes no representations as to:
(i) the validity, legality, sufficiency, perfection, priority, enforceability or
genuineness of any such documents or any of the Mortgage

                                      C-1
<PAGE>

Loans identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.

     The Mortgage Loan Schedule is attached to this Receipt.

     Capitalized words and phrases used herein shall have the respective
meanings assigned to them in Appendix I to the Indenture, dated as of May 1,
2003, by and between Accredited Mortgage Loan Trust 2003-1 and the Indenture
Trustee.

                                        DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                        as Indenture Trustee

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

                                      C-2

<PAGE>

                                                                       EXHIBIT D

                   INITIAL CERTIFICATION OF INDENTURE TRUSTEE

                                                           _________, 2003

Lehman Brothers Inc.                         Accredited Home Lenders, Inc.
745 Seventh Avenue                           15030 Avenue of Science, Suite 100
New York, New York 10019                     San Diego, California  92128

Countrywide Home Loans Servicing LP,         Ambac Assurance Corporation
as Backup Servicer                           One State Street Plaza
4500 Park Granada, Mail Stop CH-143,         New York, New York 10022
Calabasas, California 91302

Accredited Home Capital, Inc.
15030 Avenue of Science, Suite 100
San Diego, California  92128

     Re:  Sale and Servicing Agreement, dated as of May 1, 2003 among Accredited
          Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Home
          Capital, Inc., as seller, Accredited Mortgage Loan Trust 2003-1,
          Countrywide Home Loans Servicing LP, as Backup Servicer, and Deutsche
          Bank National Trust COMPANY, AS INDENTURE TRUSTEE

Ladies and Gentlemen:

     In accordance with the provisions of Section 2.06(b)(ii) of the
above-referenced Sale and Servicing Agreement, the undersigned, as Indenture
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
listed on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.05(a) of the Sale and Servicing Agreement and has
determined that, except as noted on the attachment hereto, (i) all documents
required to be delivered to it pursuant to Section 2.05(a)(i)-(iv) and (vi) of
the above-referenced Sale and Servicing Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
have not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections do not constitute physical
alteration if they reasonably appear to have been initialed by the Mortgagor)
and relates to such Mortgage Loan and (iii) based on its examination and only as
to the foregoing documents, the information set forth in the Mortgage Loan
Schedule as to the information in clauses (i), (ii) (with respect to property
address only, excluding zip code), (iii) and (vi) of the definition of "Mortgage
Loan Schedule" respecting such Mortgage Loan accurately reflects the information
set forth in Indenture Trustee's Mortgage

                                      D-1

<PAGE>

File. The Indenture Trustee has made no independent examination of such
documents beyond the review specifically required in the above-referenced Sale
and Servicing Agreement. The Indenture Trustee makes no representations as to:
(x) the validity, legality, recordability, sufficiency, perfection, priority,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (y) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.

     Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.

                                       DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                       as Indenture Trustee

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

                                      D-2

<PAGE>

                                                                       EXHIBIT E

                    FINAL CERTIFICATION OF INDENTURE TRUSTEE

                                              ___________, 2003

Lehman Brothers Inc.                         Accredited Home Lenders, Inc.
745 Seventh Avenue                           15030 Avenue of Science, Suite 100
New York, New York 10019                     San Diego, California  92128

Countrywide Home Loans Servicing LP,         Ambac Assurance Corporation
as Backup Servicer                           One State Street Plaza
4500 Park Granada, Mail Stop CH-143,         New York, New York 10022
Calabasas, California 91302

Accredited Home Capital, Inc.
15030 Avenue of Science, Suite 100
San Diego, California  92128

     Re:  Sale and Servicing Agreement, dated as of May 1, 2003 among Accredited
          Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Home
          Capital, Inc., as seller, Accredited Mortgage Loan Trust 2003-1,
          Countrywide Home Loans Servicing LP, as Backup Servicer, and Deutsche
          Bank National Trust COMPANY, AS INDENTURE TRUSTEE

Ladies and Gentlemen:

     In accordance with the provisions of Section 2.06(b)(iii) of the
above-referenced Sale and Servicing Agreement, the undersigned, as Indenture
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
listed on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.05(a) of the Sale and Servicing Agreement and has
determined that (i) all documents required to be delivered to it pursuant to
Section 2.05(a)(i)-(iv) and (vi) of the above referenced Sale and Servicing
Agreement are in its possession, (ii) such documents have been reviewed by it
and appear regular on their face and have not been mutilated, damaged, torn or
otherwise physically altered (handwritten additions, changes or corrections do
not constitute physical alteration if they reasonably appear to have been
initialed by the Mortgagor) and relates to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing documents, the information set
forth in items (i), (ii) (with respect to property address only, excluding zip
code), (iii) and (vi) of the definition of the Mortgage Loan Schedule respecting

                                      E-1
<PAGE>

such Mortgage Loan that can be determined from the face of such documents
accurately reflects the information set forth in the Indenture Trustee's
Mortgage File. The Indenture Trustee has made no independent examination of such
documents beyond the review specifically required in the above-referenced Sale
and Servicing Agreement. The Indenture Trustee makes no representations as to:
(x) the validity, legality, recordability, sufficiency, perfection, priority,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (y) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.

     Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.

                                       DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                       as Indenture Trustee

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

                                      E-2

<PAGE>

                                                                       EXHIBIT F

                        REQUEST FOR RELEASE OF DOCUMENTS

To:  Deutsche Bank National Trust Company
     1761 East St. Andrew Place
     Santa Ana, California 92705
     Attention: Trust Administration - AC0202

     Re:  Sale and Servicing Agreement, dated as of May 1, 2003 among Accredited
          Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Home
          Capital, Inc., as seller, Accredited Mortgage Loan Trust 2003-1,
          Countrywide Home Loans Servicing LP, as Backup Servicer, and Deutsche
          Bank National Trust COMPANY, AS INDENTURE TRUSTEE
          ("CUSTODIAN/INDENTURE TRUSTEE")

     In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee for the Issuer pursuant to the above-captioned Sale and
Servicing Agreement, we request the release, and hereby acknowledge receipt, of
the Indenture Trustee's Mortgage File for the Mortgage Loan described below, for
the reason indicated.

MORTGAGE LOAN NUMBER:

MORTGAGOR NAME, ADDRESS & Zip Code:

Reason for Requesting Documents (check one):

____    1.    Mortgage Paid in Full

____    2.    Foreclosure

____    3.    Substitution

____    4.    Other Liquidation (Repurchases, etc.)

____    5.    Nonliquidation Reason:                  Reason: _________________

        Address to which Indenture Trustee should

Deliver the Mortgage File:             ______________________
                                       ______________________
                                       ______________________

<PAGE>

                                      By: __________________________________
                                                  (authorized signer)
                                      Issuer: ______________________________
                                      Address:______________________________
                                              ______________________________

                                      Date:_________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}]]