Document:

Prepared by MerrillDirect

 

Exhibit 10.38

 

MARKETING AGREEMENT

            This
MARKETING AGREEMENT  (the “Agreement”)
is entered into on this 27th day of September 2001, by and between
Speech Design International Inc. (“SDI” or the "Company") and
2.T-Telematik Venture Beteiligungsgesellschaft mbh individually and together
with any affiliate, ”T-Venture”) 

            WHEREAS, the Company and its
subsidiary, Speech Design GmbH, is in the business, of providing unified
messaging services and products, and

            WHEREAS, T-Venture is desirous of
using its relationships and experience to further the Company’s marketing
efforts for the sale of unified messaging service, and in particular, the sale
of such services to customers that would provide substantial market impact for
the Company’s reputation and industry visibility: and 

            WHEREAS, the Company has agreed that
to recognize a successful marketing effort by T-Venture, the Company would
issue as compensation to T-Venture an aggregate of 100,000 shares of its
authorized but unissued common stock, $.001 par value per share (the
"Common Stock);

            NOW THEREFORE, it is agreed, that;

            1.         Retention.  SDI hereby retains T-Venture, and T-Venture
hereby accepts such retention by SDI in accordance with the terms and
conditions set forth in this Agreement.

            2.         Services.  (a) T-Venture shall use its reasonable
efforts, determined in its sole discretion, to market and arrange for the sale
of Unified Messaging Services to any mobile carrier entity affiliated with
Deutsche Telekom AG, in particular T-Mobile International and any of its
controlled affiliates (the “Prospects”), on such terms and conditions as the
Company shall advise it are available for such transaction. 

 

                        (b)        T-Venture will perform such services
when and as determined solely by it as an independent contractor to, and not as
an agent or employee of SDI, and T-Venture will not have authority to bind SDI
or any of its subsidiaries in respect of any potential sale of Unified
Messaging Services to the Prospects or otherwise.

                        (c)        SDI shall cooperate in the marketing of
the Unified Messaging Services to the Prospects, including the preparation of
marketing, due diligence and pricing-related information about the Unified
Messaging Services and letters of intent and definitive sale agreements
concerning the Unified Messaging Services. 
T-Venture and SDI will share information with each other about potential
purchases by the Prospects and T-Venture will inform SDI of the requests and
proposals of the Prospects for purchase of the Unified Messaging Services.

                        (d)        SDI shall have sole and
absolute discretion with respect to the terms of any letter of intent and
definitive agreement with respect to the sale of Unified Messaging Services,
and may elect to approve or disapprove of any terms of any proposed sale in its
sole discretion.

                        (e)        Prior to
disclosing any confidential information concerning SDI or its subsidiaries or
the SDI Unified Messaging Services, T-Venture shall ensure that the recipient
of such information has signed any confidentiality agreement required by SDI.      

            3.         Term.  The term of this Agreement shall expire on December 31, 2001 (the
"Term"). Notwithstanding the provisions of Section 3, this Agreement
may be terminated at any time by either party immediately upon written notice
to the other party; provided, however that any such termination by SDI shall
not relieve it of the obligation to pay the Marketing Fee set forth below in
the case of a Sales Event.  

            4.         Compensation.  In consideration of the performance by
T-Venture of all its services in connection with this Agreement and the sale of
the SDI Unified Messaging Services, SDI shall pay T-Venture a fee (the
"Marketing Fee") in the event, and only in the event, of a “Sales
Event” (as defined below) in the form of the issuance to T-Venture of an aggregate
of One Hundred Thousand (100,000) fully paid and non-assessable shares of
common stock, $.001 par value per share, of SDI, payable within thirty days of
a Sales Event. . For purposes hereof, a “Sales Event” shall mean the
acceptance, on or before December 31, 2001, by the Company of non-revocable,
non-cancelable orders from the Prospects for unified messaging services which
in the aggregate provide for the purchase of services for which such customers
will pay the Company not less than 2,500,000 Euros. In the event that a
contract or order calls for the Company to provide multiple services or
products, such contract, as nearly as possible will be apportioned by the
Company reasonably and in good faith to calculate for the purpose of this
Agreement, the portion of revenue which is attributable to the purchase of
unified messaging services.

            5.         Non-Exclusive
Arrangement.  T-Venture will
provide the services described herein on a non-exclusive basis and nothing
herein contained shall be construed as prohibiting SDI from engaging other
individuals or entities to market and arrange for the sale of the SDI Unified
Messaging Services, nor shall it be construed as preventing SDI from selling
the SDI Unified Messaging Services independently.  

            6.         Confidentiality.  SDI and T-Venture understand and agree that
in the performance of this Agreement each party may have access to
confidential, nonpublic and/or proprietary information of the other party
(“Confidential Information”).  Confidential
Information does not include information that the recipient can demonstrate (a)
was in recipient’s possession prior to its being furnished under the terms of
this Agreement or is rightfully obtained by recipient from a third party,
provided that the source of that information is not bound by a confidentiality
agreement with or other legal or fiduciary obligation of confidentiality to the
disclosing party, (b) is now, or hereafter becomes, through no act or failure
to act on the part of the recipient, generally known to the public, or (c) is
independently developed by recipient without use of or reference to the
Confidential Information.  Each party
agrees that it will not disclose the Confidential Information to any third
party and will take all necessary steps to maintain the confidentiality and
secrecy of the Confidential Information except as otherwise permitted in this
Agreement.

            7.         Arbitration.  The parties agree that any and all disputes
related to or stemming from this Agreement shall be finally settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association.  The decision
of the arbitrators shall be final and binding and any court with proper
jurisdiction shall be entitled to issue a decree enforcing the arbital award.

 

            8.         Miscellaneous.  This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of both T-Venture and SDI.  If any term or provision of this Agreement
shall be invalid or unenforceable to any extent or in any application, then the
remainder of this Agreement, and any such term or provision except to such
extent or in such application, shall not be affected thereby, and each and
every term and provision of this Agreement shall be valid and enforceable to
the fullest extent and in the broadest application permitted by law.  No waiver of any terms hereof shall be
binding unless and until agreed to in writing by the party to be charged.  This Agreement supersedes all prior
agreements, oral or written, between T-Venture and SDI relating to the subject
matter hereof.  This Agreement shall be
construed and enforced in accordance with the laws of the state of New Jersey.

 

                        The undersigned have
executed this Agreement as of the day and year first written above.

 

	 	SPEECH DESIGN
  INTERNATIONAL INC.
	 	 
	 	By: Kasimir Arciszewski
	 	 
	 	Chief Executive Officer
	 	 
	 	 
	 	2.T-Telematik
  Venture Beteiligungsgesellschaft mbh:
	 	 
	 	/s/<PAGE>

                                                                    EXHIBIT 4.1

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

                          LONG BEACH SECURITIES CORP.,
                                    Depositor

                          LONG BEACH MORTGAGE COMPANY,
                                 Master Servicer

                     FEDERAL NATIONAL MORTGAGE ASSOCIATION,
              Guarantor (with respect to the Class A-1 Certificates
                         and the Class S-1 Certificates)
                                       and

                   BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                                     Trustee

                         POOLING AND SERVICING AGREEMENT
                          Dated as of September 1, 2001

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

                      Long Beach Mortgage Loan Trust 2001-3

                    Asset-Backed Certificates, Series 2001-3

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

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
ARTICLE I DEFINITIONS.............................................................................................6
   Section 1.01   Defined Terms...................................................................................6
   Section 1.02   Accounting.....................................................................................58
   Section 1.03   Allocation of Certain Interest Shortfalls......................................................58
   Section 1.04   Rights of the Guarantor........................................................................60
   Section 1.05   Guarantor Purchase Option......................................................................60

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES.......................................60
   Section 2.01   Conveyance of Mortgage Loans...................................................................60
   Section 2.02   Acceptance of REMIC 1A and REMIC 1B by the Trustee.............................................63
   Section 2.03   Cure, Repurchase or Substitution of Mortgage Loans by the Seller; Remedies for
                     Breaches by Depositor or Master Servicer; Remedies for Breaches Relating to
                     Prepayment Charges..........................................................................64
   Section 2.04   Representations, Warranties and Covenants of the Master Servicer...............................67
   Section 2.05   Representations and Warranties of the Depositor................................................69
   Section 2.06   Issuance of Certificates.......................................................................71
   Section 2.07   Conveyance of REMIC Regular Interests and Acceptance of REMIC 1A and REMIC 1B
                     by the Trustee; Issuance of Certificates....................................................72

ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS...................................................73
   Section 3.01   Master Servicer to Act as Master Servicer......................................................73
   Section 3.02   Sub-Servicing Agreements Between the Master Servicer and Sub-Servicers.........................75
   Section 3.03   Successor Sub-Servicers........................................................................76
   Section 3.04   Liability of the Master Servicer...............................................................76
   Section 3.05   No Contractual Relationship Between Sub-Servicers and the Trustee or
                     Certificateholders..........................................................................77
   Section 3.06   Assumption or Termination of Sub-Servicing Agreements by Trustee...............................77
   Section 3.07   Collection of Certain Mortgage Loan Payments...................................................78
   Section 3.08   Sub-Servicing Accounts.........................................................................79
   Section 3.09   Collection of Taxes, Assessments and Similar Items; Servicing Accounts.........................79
   Section 3.10   Collection Account and Distribution Account....................................................80
   Section 3.11   Withdrawals from the Collection Account and Distribution Account...............................83
   Section 3.12   Investment of Funds in the Collection Account and the Distribution Account.....................84
   Section 3.13   Agreement to Appoint a Special Servicer........................................................86

</TABLE>

                                       i

<PAGE>

<TABLE>

<S>                                                                                                            <C>
   Section 3.14   Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage.................88
   Section 3.15   Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................89
   Section 3.16   Realization Upon Defaulted Mortgage Loans......................................................91
   Section 3.17   Trustee to Cooperate; Release of Mortgage Files................................................93
   Section 3.18   Servicing Compensation.........................................................................94
   Section 3.19   Reports to the Trustee; Collection Account Statements..........................................95
   Section 3.20   Statement as to Compliance.....................................................................95
   Section 3.21   Independent Public Accountants' Servicing Report...............................................96
   Section 3.22   Access to Certain Documentation................................................................96
   Section 3.23   Title, Management and Disposition of REO Property..............................................97
   Section 3.24   Obligations of the Master Servicer in Respect of Prepayment Interest
                     Shortfalls.................................................................................100
   Section 3.25   Obligations of the Master Servicer in Respect of Mortgage Rates and Monthly
                     Payments...................................................................................100
   Section 3.26   Reserve Fund..................................................................................100
   Section 3.27   Advance Facility..............................................................................102

ARTICLE IV FLOW OF FUNDS........................................................................................103
   Section 4.01   Distributions.................................................................................103
   Section 4.02   [Reserved]....................................................................................110
   Section 4.03   Statements....................................................................................110
   Section 4.04   Remittance Reports; Advances..................................................................114
   Section 4.05   Distributions on the REMIC Regular Interests..................................................116
   Section 4.06   Allocation of Realized Losses.................................................................119
   Section 4.07   Compliance with Withholding Requirements......................................................121
   Section 4.08   Commission Reporting..........................................................................122
   Section 4.09   The Guaranty..................................................................................122

ARTICLE V THE CERTIFICATES 122
   Section 5.01   The Certificates..............................................................................122
   Section 5.02   Registration of Transfer and Exchange of Certificates.........................................124
   Section 5.03   Mutilated, Destroyed, Lost or Stolen Certificates.............................................129
   Section 5.04   Persons Deemed Owners.........................................................................129

ARTICLE VI THE MASTER SERVICER AND THE DEPOSITOR................................................................129
   Section 6.01   Liability of the Master Servicer and the Depositor............................................129
   Section 6.02   Merger or Consolidation of the Depositor or the Master Servicer...............................130
   Section 6.03   Limitation on Liability of the Depositor, the Master Servicer and Others......................130
   Section 6.04   Limitation on Resignation of Master Servicer..................................................131
   Section 6.05   Rights of the Depositor in Respect of the Master Servicer.....................................132

</TABLE>

                                       ii

<PAGE>

<TABLE>

<S>                                                                                                            <C>
ARTICLE VII DEFAULT.............................................................................................133
   Section 7.01   Master Servicer Events of Default.............................................................133
   Section 7.02   Trustee to Act; Appointment of Successor......................................................135
   Section 7.03   Notification to Certificateholders............................................................137
   Section 7.04   Waiver of Master Servicer Events of Default...................................................137

ARTICLE VIII THE TRUSTEE........................................................................................138
   Section 8.01   Duties of Trustee.............................................................................138
   Section 8.02   Certain Matters Affecting the Trustee.........................................................139
   Section 8.03   Trustee not Liable for Certificates or Mortgage Loans.........................................141
   Section 8.04   Trustee May own Certificates..................................................................141
   Section 8.05   Trustee's Fees and Expenses...................................................................141
   Section 8.06   Eligibility Requirements for Trustee..........................................................142
   Section 8.07   Resignation or Removal of Trustee.............................................................142
   Section 8.08   Successor Trustee.............................................................................143
   Section 8.09   Merger or Consolidation of Trustee............................................................144
   Section 8.10   Appointment of Co-Trustee or Separate Trustee.................................................144
   Section 8.11   Appointment of Custodians.....................................................................145
   Section 8.12   Appointment of Office or Agency...............................................................146
   Section 8.13   Representations and Warranties of the Trustee.................................................146

ARTICLE IX TERMINATION..........................................................................................147
   Section 9.01   Termination Upon Purchase or Liquidation of All Mortgage Loans................................147
   Section 9.02   Additional Termination Requirements...........................................................149

ARTICLE X REMIC PROVISIONS......................................................................................150
   Section 10.01     REMIC Administration.......................................................................150
   Section 10.02     Prohibited Transactions and Activities.....................................................153
   Section 10.03     Trustee, Master Servicer and Depositor Indemnification.....................................153

ARTICLE XI MISCELLANEOUS PROVISIONS.............................................................................154
   Section 11.01     Amendment..................................................................................154
   Section 11.02     Recordation of Agreement; Counterparts.....................................................155
   Section 11.03     Limitation on Rights of Certificateholders.................................................156
   Section 11.04     Governing Law; Jurisdiction................................................................157
   Section 11.05     Notices....................................................................................157
   Section 11.06     Severability of Provisions.................................................................157
   Section 11.07     Notice to the Rating Agencies and Guarantor................................................157
   Section 11.08     Article and Section References.............................................................158
   Section 11.09     [Reserved].................................................................................158
   Section 11.10     Grant of Security Interest.................................................................159

</TABLE>

                                      iii

<PAGE>

                                    Exhibits

Exhibit A-1     Form of Class A-1 Certificates
Exhibit A-2     Form of Class A-2 Certificates
Exhibit A-3     Form of Class S-1 Certificates
Exhibit A-4     Form of Class S-2 Certificates
Exhibit A-5     Form of Class M-1 Certificates
Exhibit A-6     Form of Class M-2 Certificates
Exhibit A-7     Form of Class M-3 Certificates
Exhibit A-8     Form of Class C Certificates
Exhibit A-9     Form of Class P Certificates
Exhibit A-10    Form of Class R Certificates
Exhibit B       [Reserved]
Exhibit C       Form of Mortgage Loan Purchase Agreement
Exhibit D       Mortgage Loan Schedule
Exhibit E-1     Request for Release (for Trustee/Custodian)
Exhibit E-2     Request for Release (Certificate - Mortgage Loan Paid in Full)
Exhibit F-1     Form of Trustee's Initial Certification
Exhibit F-2     Form of Trustee's Final Certification
Exhibit G       [Reserved]
Exhibit H       Form of Lost Note Affidavit
Exhibit I       Form of ERISA Representation
Exhibit J       Form of Investment Letter
Exhibit K       Form of Class R Certificate Transfer Affidavit
Exhibit L       Form of Transferor Certificate

                                    Schedules

Schedule I            Prepayment Charge Schedule

                                       iv

<PAGE>

         This POOLING AND SERVICING AGREEMENT is dated as of September 1, 2001
(the "Agreement"), among LONG BEACH SECURITIES CORP., as depositor (the
"Depositor"), LONG BEACH MORTGAGE COMPANY, as master servicer (the "Master
Servicer"), FEDERAL NATIONAL MORTGAGE ASSOCIATION, as Guarantor of the Class A-1
Certificates and the Class S-1 Certificates (the "Guarantor"), and BANKERS TRUST
COMPANY OF CALIFORNIA, N.A., as trustee (the "Trustee").

                             PRELIMINARY STATEMENT:

         The Depositor intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of ten classes of
certificates, designated as (i) the Class A-1 Certificates, (ii) the Class A-2
Certificates, (iii) the Class S-1 Certificates, (iv) the Class S-2 Certificates,
(v) the Class M-1 Certificates, (vi) the Class M-2 Certificates, (vii) the Class
M-3 Certificates, (viii) the Class P Certificates, (ix) the Class C Certificates
and (x) the Class R Certificates.

                                    REMIC 1A
         As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Group I Mortgage Loans and certain
other related assets subject to this Agreement (exclusive of the Reserve Fund
and Master Servicer Prepayment Charge Payment Amounts) as a real estate mortgage
investment conduit (a "REMIC") for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC 1A." The Class R-1A
Interest will represent the sole class of "residual interests" in REMIC 1A for
purposes of the REMIC Provisions (as defined herein) under federal income tax
law. The following table irrevocably sets forth the designation, the
Uncertificated REMIC 1A Pass-Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC
1A Regular Interests. None of the REMIC 1A Regular Interests will be
certificated.

<TABLE>
<CAPTION>

                      Uncertificated REMIC 1A    Initial Uncertificated            Assumed Final
   Designation           Pass-Through Rate       Principal Balance                Maturity Date(1)
   -----------        -----------------------    ----------------------           ----------------
   <S>                <C>                        <C>                              <C>
      LT1A-1               Variable(2)                 $615,010,107.00            September 2031
      LT1A-2               Variable(2)                  $68,334,000.00            September 2031
      LT1A-P               Variable(2)                         $100.00            September 2031

</TABLE>

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

         (1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date for
the Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each REMIC 1A Regular Interest.

         (2) Calculated in accordance with the definition of "Uncertificated
REMIC 1A Pass-Through Rate" herein.

<PAGE>

                                    REMIC 1B

         As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Group II Mortgage Loans and certain
other related assets subject to this Agreement (exclusive of the Reserve Fund
and Master Servicer Prepayment Charge Payment Amounts) as a real estate mortgage
investment conduit (a "REMIC") for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC 1B." The Class R-1B
Interest will represent the sole class of "residual interests" in REMIC 1B for
purposes of the REMIC Provisions (as defined herein) under federal income tax
law. The following table irrevocably sets forth the designation, the
Uncertificated REMIC 1B Pass-Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC
1B Regular Interests. None of the REMIC 1B Regular Interests will be
certificated.

<TABLE>
<CAPTION>

                        Uncertificated REMIC 1B       Initial Uncertificated         Assumed Final
    Designation         Pass-Through Rate               Principal Balance           Maturity Date(1)
    -----------         -----------------------       -------------------           ----------------
    <S>                 <C>                           <C>                           <C>
       LT1B-1                Variable(2)                 $285,895,839.00            September 2031
       LT1B-2                Variable(2)                  $31,766,000.00            September 2031
       LT1B-P                Variable(2)                         $100.00            September 2031

</TABLE>

----------------------------------
         (1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date for
the Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each REMIC 1B Regular Interest.

         (2) Calculated in accordance with the definition of "Uncertificated
REMIC 1B Pass-Through Rate" herein.

                                       2

<PAGE>

                                     REMIC 2

         As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 1A Regular Interests and the
REMIC 1B Regular Interests as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC 2". The Class R-2
Interest represents the sole class of "residual interests" in REMIC 2 for
purposes of the REMIC Provisions. The following table irrevocably sets forth the
designation, the Uncertificated REMIC 2 Pass-Through Rate, the initial
Uncertificated Principal Balance, and solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC 2 Regular Interests. None of the REMIC 2 Regular Interests
will be certificated.

<TABLE>
<CAPTION>

                                Uncertificated REMIC 2       Initial Uncertificated               Assumed Final
       Designation                Pass-Through Rate            Principal Balance                 Maturity Date(1)
       -----------              ----------------------         -----------------                 --------------
       <S>                      <C>                          <C>                                 <C>
         LT2A-1                      Variable(2)                 $669,677,224.86                  September 2031
         LT2B-1                      Variable(2)                 $5,637,580.00                    September 2031
         LT2C-1                      Variable(2)                 $444,171.01                      September 2031
         LT2D-1                      Variable(2)                 $392,923.92                      September 2031
         LT2E-1                      Variable(2)                 $256,255.92                      September 2031
         LT2F-1                      Variable(2)                 $6,935,951.30                    September 2031
         LT2A-2                      Variable(2)                 $311,308,602.22                  September 2031
         LT2B-2                      Variable(2)                 $2,620,710.00                    September 2031
         LT2C-2                      Variable(2)                 $206,478.99                      September 2031
         LT2D-2                      Variable(2)                 $182,656.08                      September 2031
         LT2E-2                      Variable(2)                 $119,124.08                      September 2031
         LT2F-2                      Variable(2)                 $3,224,267.62                    September 2031
         LT2S-1A                     Variable(3)                 N/A(6)                           September 2031
         LT2S-1B                     Variable(4)                 N/A(6)                           September 2031
         LT2S-1C                     Variable(5)                 N/A(6)                           September 2031
         LT2S-2A                     Variable(3)                 N/A(7)                           September 2031
         LT2S-2B                     Variable(4)                 N/A(7)                           September 2031
         LT2S-2C                     Variable(5)                 N/A(7)                           September 2031
         LT2P-1                      Variable(2)                 $100.00                          September 2031
         LT2P-2                      Variable(2)                 $100.00                          September 2031

</TABLE>

-------------------
         (1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date for
the Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each REMIC 2 Regular Interest.

         (2) Calculated in accordance with the definition of "Uncertificated
REMIC 2 Pass-Through Rate" herein.

         (3) 2.50% per annum for the first 30 Distribution Dates and 0.00% per
annum thereafter.

         (4) 1.00% per annum for the first 20 Distribution Dates and 0.00% per
annum thereafter.

         (5) 1.00% per annum for the first 10 Distribution Dates and 0.00% per
annum thereafter.

                                       3
<PAGE>

         (6) REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular Interest LT2S-1B
and REMIC 2 Regular Interest LT2S-1C will not have Uncertificated Principal
Balances, but will accrue interest on their respective Uncertificated Notional
Amounts outstanding from time to time which, in each case, shall equal the
Uncertificated Principal Balance of REMIC 1A Regular Interest LT1A-2.

         (7) REMIC 2 Regular Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B
and REMIC 2 Regular Interest LT2S-2C will not have Uncertificated Principal
Balances, but will accrue interest on their respective Uncertificated Notional
Amounts outstanding from time to time which in each case shall equal the
Uncertificated Principal Balance of REMIC 1B Regular Interest LT1B-2.

                                       4
<PAGE>

                                     REMIC 3

         As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 2 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 3." The Class R-3 Interest represents the sole class of
"residual interests" in REMIC 3 for purposes of the REMIC Provisions.

         The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for each
Class of Certificates that represents one or more of the "regular interests" in
REMIC 3 created hereunder:

<TABLE>
<CAPTION>

                                      Original Class Certificate    Pass-Through               Assumed Final
      Class Designation                   Principal Balance            Rate                  Maturity Date(1)
      -----------------               --------------------------    ------------              --------------
<S>                                   <C>                           <C>                      <C>
 Class A-1                                    $563,758,000.00        Variable(2)              September 2031
 Class A-2                                    $262,071,000.00        Variable(2)              September 2031
 Class M-1                                     $65,065,000.00        Variable(2)              September 2031
 Class M-2                                     $57,558,000.00        Variable(2)              September 2031
 Class M-3                                     $37,538,000.00        Variable(2)              September 2031
 Class S-1                                               N/A(3)           N/A(3)              September 2031
 Class S-2                                               N/A(4)           N/A(4)              September 2031
 Class C                                      $15,015,946.00(5)      Variable(2)              September 2031
 Class P                                              $200.00            N/A(6)               September 2031

</TABLE>

-------------------
         (1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date for
the Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each Class of Certificates that represents
one or more of the "regular interests" in REMIC 3.

         (2) Calculated in accordance with the definition of "Pass-Through Rate"
herein.

         (3) The Class S-1 Certificates will receive all amounts distributed to
REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular Interest LT2S-1B and REMIC 2
Regular Interest LT2S-1C.

         (4) The Class S-2 Certificates will receive all amounts distributed to
REMIC 2 Regular Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B and REMIC 2
Regular Interest LT2S-2C.

         (5) The Class C Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class C Certificates outstanding
from time to time which shall equal the aggregate of the Uncertificated
Principal Balances of the REMIC 2 Regular Interests. The Class C Certificates
will not accrue interest on their Class Certificate Principal Balance.

         (6) The Class P Certificates will not accrue interest.

                                       5
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

Section 1.01  Defined Terms.

         Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations in respect of interest on the Class A-1 Certificates, Class A-2
Certificates and Mezzanine Certificates shall be made on the basis of the actual
number of days elapsed on the basis of a 360-day year and all other calculations
of interest described herein shall be made on the basis of a 360-day year
consisting of twelve 30-day months. The Class P Certificates and the Class R
Certificates are not entitled to distributions in respect of interest and,
accordingly, will not accrue interest.

         "1933 Act":  The Securities Act of 1933, as amended.

         "Account":  Either of the Collection Account and Distribution Account.

         "Accrual Period": With respect to the Class S Certificates, Class C
Certificates, the REMIC 1A Regular Interests, the REMIC 1B Regular Interests and
the REMIC 2 Regular Interests and each Distribution Date, the calendar month
prior to the month of such Distribution Date. With respect to the Class A
Certificates, the Mezzanine Certificates and each Distribution Date, the period
commencing on the immediately preceding Distribution Date (or in the case of the
first such Accrual Period, commencing on the Closing Date) and ending on the day
immediately preceding such Distribution Date.

         "Adjustable Rate Mortgage Loan": A Mortgage Loan which provides for an
adjustable Mortgage Rate payable with respect thereto.

         "Adjusted Net Maximum Mortgage Rate": With respect to any Mortgage Loan
(or the related REO Property), as of any date of determination, a per annum rate
of interest equal to the Maximum Mortgage Rate for such Mortgage Loan (if such
Mortgage Loan is an Adjustable Rate Mortgage Loan) or the Mortgage Rate for such
Mortgage Loan (if such Mortgage Loan is a Fixed Rate Mortgage Loan), in either
such case as of the first day of the month preceding the month in which the
Distribution Date occurs, minus the Servicing Fee Rate.

         "Adjusted Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property), as of any date of determination, a per annum rate of
interest equal to the Mortgage Rate for such Mortgage Loan as of the first day
of the month preceding the month in which the Distribution Date occurs, minus
the Servicing Fee Rate.

         "Adjustment Date": With respect to each Adjustable Rate Mortgage Loan,
each adjustment date, on which the Mortgage Rate of such Mortgage Loan changes
pursuant to the related Mortgage Note. The first Adjustment Date following the
Cut-off Date as to each Adjustable Rate Mortgage Loan is set forth in the
Mortgage Loan Schedule.

                                       6
<PAGE>

         "Advance": As to any Mortgage Loan or REO Property, any advance made by
the Master Servicer in respect of any Distribution Date pursuant to Section
4.04.

         "Advancing Person": As defined in Section 3.27 hereof.

         "Adverse REMIC Event": As defined in Section 10.01(f) hereof.

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

         "Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.

         "Allocated Realized Loss Amount": With respect to any Distribution Date
and any Class of Mezzanine Certificates, the sum of (i) any Realized Losses
allocated to such Class of Certificates on any Distribution Date and (ii) the
amount of any Allocated Realized Loss Amount for such Class of Certificates
remaining unpaid from the previous Distribution Date.

         "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder's office), which is
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect or record the sale of the Mortgage.

         "Available Funds": With respect to any Distribution Date, an amount
equal to the excess of (i) the sum of (a) the aggregate of the Monthly Payments
on the Mortgage Loans due on the related Due Date and received on or prior to
the related Determination Date, (b) Liquidation Proceeds, Insurance Proceeds,
Principal Prepayments and other unscheduled recoveries of principal and interest
in respect of the Mortgage Loans during the related Prepayment Period (other
than any Prepayment Charges collected by the Master Servicer in connection with
the full or partial prepayment of any of the Mortgage Loans and any Master
Servicer Prepayment Charge Payment Amount), (c) the aggregate of any amounts
received in respect of an REO Property acquired in respect of a Mortgage Loan
withdrawn from any REO Account and deposited in the Collection Account for such
Distribution Date, (d) the aggregate of any amounts deposited in the Collection
Account by the Master Servicer in respect of related Prepayment Interest
Shortfalls on the Mortgage Loans for such Distribution Date, (e) the aggregate
of any Advances made by the Master Servicer or the Trustee for such Distribution
Date with respect to the Mortgage Loans, (f) the aggregate of any related
advances made by or on behalf of the Trustee for such Distribution Date with
respect to the Mortgage Loans pursuant to Section 7.02(b), and (g) the aggregate
of any amounts constituting proceeds of repurchases or substitutions of the
Mortgage Loans occurring during the related Prepayment Period over (ii) the sum
of (a) amounts reimbursable or payable to the Depositor, the Master Servicer,
the Trustee, the Seller, the Guarantor, or any Sub-

                                       7
<PAGE>

Servicer pursuant to Section 3.11 or Section 3.12 in respect of the Mortgage
Loans or otherwise payable in respect of Extraordinary Trust Fund Expenses, (b)
amounts deposited in the Collection Account or the Distribution Account pursuant
to clauses (i)(a) through (g) above, as the case may be, in error, (c) Stayed
Funds, (d) any indemnification payments or expense reimbursements made by the
Trust Fund pursuant to Section 8.05 and (e) amounts reimbursable to the Trustee
for an advance made pursuant to Section 7.02(b) which advance the Trustee has
determined to be nonrecoverable from the Stayed Funds in respect of which it was
made.

         "Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.

         "Bankruptcy Loss": With respect to any Mortgage Loan, a Realized Loss
resulting from a Deficient Valuation or Debt Service Reduction.

         "Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class A Certificates, the Class S Certificates and the Mezzanine
Certificates shall be Book-Entry Certificates.

         "Book-Entry Custodian": The custodian appointed pursuant to Section
5.01.

         "Business Day": Any day other than a Saturday, a Sunday or a day on
which the Guarantor or banking or savings institutions in the State of Delaware,
the State of New York, the State of Maryland, the State of California, the State
of Minnesota, the State of Washington, or in the city in which the Corporate
Trust Office of the Trustee is located, are authorized or obligated by law or
executive order to be closed.

         "Certificate": Any Regular Certificate or Class R Certificate.

         "Certificateholder" or "Holder": The Person in whose name a Certificate
is registered in the Certificate Register, except that a Disqualified
Organization or a Non-United States Person shall not be a Holder of a Residual
Certificate for any purposes hereof and, solely for the purposes of giving any
consent pursuant to this Agreement, any Certificate registered in the name of
the Depositor or the Master Servicer or any Affiliate thereof shall be deemed
not to be outstanding and the Voting Rights to which it is entitled shall not be
taken into account in determining whether the requisite percentage of Voting
Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee and the Guarantor may
conclusively rely upon a certificate of the Depositor or the Master Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Guarantor shall be

                                       8
<PAGE>

required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.

         "Certificate Margin": With respect to the Class A-1 Certificates on
each Distribution Date (A) on or prior to the Optional Termination Date, 0.11%
per annum and (B) after the Optional Termination Date, 0.22% per annum. With
respect to the Class A-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 0.25% per annum and (B) after the Optional
Termination Date, 0.50% per annum. With respect to the Class M-1 Certificates on
each Distribution Date (A) on or prior to the Optional Termination Date, 0.55%
per annum and (B) after the Optional Termination Date, 0.825% per annum. With
respect to the Class M-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 0.95% per annum and (B) after the Optional
Termination Date, 1.425% per annum. With respect to the Class M-3 Certificates
on each Distribution Date (A) on or prior to the Optional Termination Date,
1.875% per annum and (B) after the Optional Termination Date, 2.8125% per annum.

         "Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.

         "Certificate Principal Balance": With respect to any Class A
Certificates, Mezzanine Certificates or Class P Certificates immediately prior
to any Distribution Date, will be an amount equal to the Initial Certificate
Principal Balance thereof reduced by the sum of all amounts actually distributed
in respect of principal of such Class and, in the case of a Mezzanine
Certificate, Realized Losses allocated thereto on all prior Distribution Dates.
With respect to the Class C Certificates as of any date of determination, an
amount equal to the excess, if any, of (A) the then aggregate Uncertificated
Principal Balances of the REMIC 2 Regular Interests over (B) the then aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificates. The Class S Certificates will not
have a Certificate Principal Balance.

         "Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02 hereof.

         "Class": Collectively, Certificates which have the same priority of
payment and bear the same class designation and the form of which is identical
except for variation in the Percentage Interest evidenced thereby.

         "Class A Certificate": Any Class A-l Certificate or Class A-2
Certificate.

         "Class A Principal Distribution Amount": With respect to any
Distribution Date, the sum of the Class A-1 Principal Distribution Amount and
the Class A-2 Principal Distribution Amount.

         "Class A-1 Certificate": Any one of the Class A-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-1 executed, authenticated and

                                       9
<PAGE>

delivered by the Trustee, representing the rights to distributions as set forth
herein and therein and evidencing a Regular Interest in REMIC 3.

         "Class A-1 Principal Allocation Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is (x) the Group
I Principal Remittance Amount for such Distribution Date, and the denominator of
which is (y) the Principal Remittance Amount for such Distribution Date.

         "Class A-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the aggregate Certificate Principal Balance of
the Class A-1 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 65.00% and (ii) the aggregate Stated
Principal Balance of the Group I Mortgage Loans as of the last day of the
related Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Group I Mortgage
Loans as of the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) minus $3,416,721.

         "Class A-2 Certificate": Any one of the Class A-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-2, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class A-2 Principal Allocation Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is (x) the Group
II Principal Remittance Amount for such Distribution Date and the denominator of
which is (y) the Principal Remittance Amount for such Distribution Date.

         "Class A-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the aggregate Certificate Principal Balance of
the Class A-2 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 65.00% and (ii) the aggregate Stated
Principal Balance of the Group II Mortgage Loans as of the last day of the
related Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Group II Mortgage
Loans as of the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) minus $1,588,310.

                                       10
<PAGE>

         "Class C Certificate": Any one of the Class C Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-8, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class Factors": The Trustee will determine a Class Factor (carried to
eight decimal places) for each Class of Certificates (other than the Class R
Certificates) in connection with each Distribution Date. When the Class Factor
is multiplied by the Original Class Certificate Principal Balance (or original
Notional Amount) of a Certificate of that Class, the product will equal the
Certificate Principal Balance (or Notional Amount) of such Certificate (after
giving effect to the distribution to Certificateholders on such Distribution
Date of, to the extent part of Available Funds for such Distribution Date,
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period).

         "Class M-1 Certificate": Any one of the Class M-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-5, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date)
and (ii) the aggregate Certificate Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 78.00% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor.

         "Class M-2 Certificate": Any one of the Class M-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-6, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into

                                       11
<PAGE>

account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the aggregate Certificate Principal Balance of the
Class M-1 Certificates (after taking into account the payment of the Class M-1
Principal Distribution Amount on such Distribution Date) and (iii) the aggregate
Certificate Principal Balance of the Class M-2 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 89.50% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus the Overcollateralization Floor.

         "Class M-3 Certificate": Any one of the Class M-3 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-7, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the aggregate Certificate Principal Balance of the Class M-1 Certificates
(after taking into account the payment of the Class M-1 Principal Distribution
Amount on such Distribution Date), (iii) the aggregate Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date) and (iv)
the aggregate Certificate Principal Balance of the Class M-3 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 97.00% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus the
Overcollateralization Floor.

         "Class P Certificate": Any one of the Class P Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-9, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class R Certificate": Any one of the Class R Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-10, executed, authenticated and delivered by the Trustee, evidencing
the ownership of the Class R-1A Interest, the Class R-1B Interest, the Class R-2
Interest and the Class R-3 Interest.

                                       12
<PAGE>

         "Class R-1A Interest":  The Residual Interest in REMIC 1A.

         "Class R-1B Interest":  The Residual Interest in REMIC 1B

         "Class R-2 Interest":  The Residual Interest in REMIC 2.

         "Class R-3 Interest":  The Residual Interest in REMIC 3.

         "Class S Certificate":  Any Class S-1 Certificate or Class S-2
Certificate.

         "Class S-1 Certificate": Any one of the Class S-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-3, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class S-2 Certificate": Any one of the Class S-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-4, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Close of Business": As used herein, with respect to any Business Day,
5:00 p.m. (New York time).

         "Closing Date":  September 24, 2001.

         "Code":  The Internal Revenue Code of 1986, as amended.

         "Collection Account": The account or accounts created and maintained by
the Master Servicer pursuant to Section 3.10(a), which shall be entitled
"Bankers Trust Company of California, N.A., as Trustee, in trust for registered
Holders of Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3," which must be an Eligible Account.

         "Commission":  The Securities and Exchange Commission.

         "Compensating Interest":  As defined in Section 3.24.

         "Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 1761 East St. Andrew Place,
Santa Ana, California 92705, or at such other address as the Trustee may
designate from time to time by notice to the Certificateholders, the Depositor
and the Master Servicer.

         "Corresponding Certificates": With respect to (i) REMIC 2 Regular
Interest LT2B-1, (ii) REMIC 2 Regular Interest LT2B-2, (iii) REMIC 2 Regular
Interest LT2C-1 and REMIC 2 Regular Interest LT2C-2, (iv) REMIC 2 Regular
Interest LT2D-1 and REMIC 2 Regular Interest

                                       13
<PAGE>

LT2D-2, (v) REMIC 2 Regular Interest LT2E-1 and REMIC 2 Regular Interest LT2E-2,
and (vi) REMIC 2 Regular Interest LT2P-1 and REMIC 2 Regular Interest LT2P-2,
(i) the Class A-1 Certificates (ii) the Class A-2 Certificates (iii) the Class
M-1 Certificates, (iv) the Class M-2 Certificates, (v) the Class M-3
Certificates, and (vi) the Class P Certificates, respectively.

         "Credit Enhancement Percentage": For any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is (x) the sum of
the aggregate Certificate Principal Balances of the Mezzanine Certificates and
the Class C Certificates, and the denominator of which is (y) the aggregate
Stated Principal Balance of the Mortgage Loans, calculated prior to taking into
account payments of principal on the Mortgage Loans due on the related Due Date
or received during the related Prepayment Period and distribution of the
Principal Distribution Amount to the Holders of the Certificates then entitled
to distributions of principal on such Distribution Date.

         "Cumulative Loss Percentage": With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred from the Cut-off Date to the last day of the
preceding calendar month and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.

         "Custodial Agreement": An agreement that may be entered into or an
agreement assigned to the Trustee with respect to the Mortgage Loans.

         "Custodian": A custodian, which shall not be the Depositor, the Master
Servicer, the Seller or any affiliate of any of them, appointed pursuant to a
Custodial Agreement.

         "Cut-off Date": With respect to each Mortgage Loan, September 1, 2001.

         "Cut-off Date Aggregate Principal Balance": The aggregate of the
Cut-off Date Principal Balances of the Mortgage Loans.

         "Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-off Date of such Mortgage
Loan (or as of the applicable date of substitution with respect to a Qualified
Substitute Mortgage Loan), after giving effect to scheduled payments due on or
before the Cut-off Date, whether or not received.

         "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.

         "Deficiency Amount": With respect to any Distribution Date, the sum of
(i) the Guaranteed Interest Distribution Amount and (ii) the Guaranteed
Principal Distribution Amount.

                                       14
<PAGE>

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

         "Definitive Certificates":  As defined in Section 5.01(b) hereof.

         "Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Qualified Substitute Mortgage Loans.

         "Delinquency Percentage": For any Distribution Date, the percentage
obtained by dividing (x) the aggregate Principal Balance of Mortgage Loans
Delinquent 60 days or more by (y) the aggregate Principal Balance of the
Mortgage Loans, in each case, as of the last day of the previous calendar month.

         "Delinquent": With respect to any Mortgage Loan and related Monthly
Payment, the Monthly Payment due on a Due Date which is not made by the Close of
Business on the next scheduled Due Date for such Mortgage Loan. For example, a
Mortgage Loan is 60 or more days Delinquent if the Monthly Payment due on a Due
Date is not made by the Close of Business on the second scheduled Due Date after
such Due Date.

         "Depositor": Long Beach Securities Corp., a Delaware corporation, or
any successor in interest.

         "Depository": The initial Depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.

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

         "Determination Date": With respect to any Distribution Date, the 15th
day of the calendar month in which such Distribution Date occurs or, if such
15th day is not a Business Day, the Business Day immediately preceding such 15th
day.
         "Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the REMIC other than through an
Independent Contractor; provided, however, that the Trustee (or the Master
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property

                                       15
<PAGE>

solely because the Trustee (or the Master Servicer on behalf of the Trustee)
establishes rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.

         "Disqualified Organization": Any: (A) "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of (i) the United
States, any state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (ii) any organization (other than a cooperative described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
unless such organization is subject to the tax imposed by Section 511 of the
Code, or (iii) any organization described in Section 1381(a)(2)(C) of the Code;
(B) "electing large partnership" within the meaning of Section 775 of the Code;
or (C) other Person so designated by the Trustee based upon an Opinion of
Counsel provided by nationally recognized counsel to the Trustee that the
holding of an ownership interest in a Class R Certificate by such Person may
cause the Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in the Class R Certificate to such Person. A
corporation will not be treated as an instrumentality of the United States or of
any state or political subdivision thereof if all of its activities are subject
to income tax and a majority of its board of directors is not selected by a
governmental unit. The term "United States," "state" and "international
organization" shall have the meanings set forth in Section 7701 of the Code.

         "Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, Bankers Trust Company of California, N.A., in trust for
the registered Certificateholders of Long Beach Mortgage Loan Trust 2001-3,
Asset-Backed Certificates, Series 2001-3" and which must be an Eligible Account.

         "Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in October 2001.

         "Due Date": With respect to each Distribution Date, the first day of
the calendar month in which such Distribution Date occurs, which is the day of
the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of
any days of grace.

         "Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.

         "Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated P-1 by Moody's, F-1 by Fitch or A-1+ by S&P (or comparable ratings if
Moody's, Fitch

                                       16
<PAGE>

and S&P are not the Rating Agencies) at the time any amounts are held on deposit
therein, (ii) an account or accounts the deposits in which are fully insured by
the FDIC (to the limits established by such corporation), the uninsured deposits
in which account are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders will have a claim with respect to the funds in such account
or a perfected first priority security interest against such collateral (which
shall be limited to Permitted Investments) securing such funds that is superior
to claims of any other depositors or creditors of the depository institution
with which such account is maintained, (iii) a trust account or accounts
maintained with the trust department of a federal or state chartered depository
institution, national banking association or trust company acting in its
fiduciary capacity or (iv) an account otherwise acceptable to each Rating Agency
without reduction or withdrawal of their then current ratings of the
Certificates as evidenced by a letter from each Rating Agency to the Trustee.
Eligible Accounts may bear interest.

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

         "Excess Overcollateralized Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date,
assuming that 100% of the Principal Remittance Amount is applied as a principal
payment on such Distribution Date over (ii) the Overcollateralization Target
Amount for such Distribution Date.

         "Extraordinary Trust Fund Expense": Any amounts reimbursable to the
Trustee, or any director, officer, employee or agent of the Trustee, from the
Trust Fund pursuant to Section 8.05, any amounts payable from the Distribution
Account in respect of taxes pursuant to Section 10.01(g)(iii), any amounts
payable from the Distribution Account in respect of any REMIC pursuant to
Section 10.01(c), any amounts payable from the Trust Fund as a trustee fee for
any successor trustee and any amounts payable by the Trustee for the recording
of the assignments of mortgage pursuant to Section 2.01.

         "Extra Principal Distribution Amount": With respect to any Distribution
Date, the lesser of (x) the Net Monthly Excess Cashflow for such Distribution
Date and (y) the Overcollateralization Deficiency Amount for such Distribution
Date.

         "Fannie Mae": Federal National Mortgage Association, or any successor
thereto.

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

         "Final Recovery Determination": With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller or the Master Servicer pursuant to or as contemplated by Section
2.03 or 9.01), a determination made by the Master Servicer that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries which the Master
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Master Servicer shall
maintain

                                       17
<PAGE>

records, prepared by a Servicing Representative, of each Final Recovery
Determination made thereby.

         "Fitch":  Fitch, Inc., or its successor in interest.

         "Fixed Rate Mortgage Loan": A Mortgage Loan which provides for a fixed
Mortgage Rate payable with respect thereto.

         "Formula Rate": For any Distribution Date and the Class A-1
Certificates, the Class A-2 Certificates and the Mezzanine Certificates, the
lesser of (i) LIBOR plus the related Certificate Margin and (ii) the related
Maximum Cap Rate.

         "Freddie Mac": The Federal Home Loan Mortgage Corporation, or any
successor thereto.

         "Group I Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the Group I
Mortgage Loans or to Compensating Interest paid by the Master Servicer with
respect to the Group I Mortgage Loans.

         "Group I Mortgage Loans": Those Mortgage Loans identified as Group I
Mortgage Loans on the Mortgage Loan Schedule.

         "Group I Principal Distribution Amount": The sum of (i) (x) the Group I
Principal Remittance Amount minus (y) the amount of any Overcollateralization
Release Amount for such Distribution Date multiplied by the Class A-1 Principal
Allocation Percentage and (ii) the Extra Principal Distribution Amount
multiplied by the Class A-1 Principal Allocation Percentage.

         "Group I Principal Remittance Amount": With respect to any Distribution
Date, the sum of (i) all scheduled payments of principal collected or advanced
on the Group I Mortgage Loans by the Master Servicer that were due during the
related Due Period, (ii) all partial and full principal prepayments of the Group
I Mortgage Loans applied by the Master Servicer during the related Prepayment
Period, (iii) the principal portion of all Net Liquidation Proceeds and
Insurance Proceeds received during the related Prepayment Period with respect to
the Group I Mortgage Loans, (iv) that portion of the Purchase Price,
representing principal of any repurchased Group I Mortgage Loan, deposited to
the Collection Account during the related Prepayment Period, (v) the principal
portion of any Substitution Adjustments deposited in the Collection Account
during the related Prepayment Period with respect to the Group I Mortgage Loans
and (vi) on the Distribution Date on which the Trust is to be terminated in
accordance with this Agreement, that portion of the Termination Price
representing principal with respect to the Group I Mortgage Loans.

         "Group II Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Funds for such Distribution Date
attributable to interest received or

                                       18
<PAGE>

advanced with respect to the Group II Mortgage Loans or to Compensating Interest
paid by the Master Servicer with respect to the Group II Mortgage Loans.

         "Group II Mortgage Loans": Those Mortgage Loans identified as Group II
Mortgage Loans on the Mortgage Loan Schedule.

         "Group II Principal Distribution Amount": The sum of (i) (x) the Group
II Principal Remittance Amount minus (y) the amount of any Overcollateralization
Release Amount for such Distribution Date multiplied by the Class A-2 Principal
Allocation Percentage and (ii) the Extra Principal Distribution Amount
multiplied by the Class A-2 Principal Allocation Percentage.

         "Group II Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) all scheduled payments of principal collected
or advanced on the Group II Mortgage Loans by the Master Servicer that were due
during the related Due Period, (ii) all partial and full principal prepayments
of the Group II Mortgage Loans applied by the Master Servicer during the related
Prepayment Period, (iii) the principal portion of all Net Liquidation Proceeds
and Insurance Proceeds received during the related Prepayment Period with
respect to the Group II Mortgage Loans, (iv) that portion of the Purchase Price,
representing principal of any repurchased Group II Mortgage Loan, deposited to
the Collection Account during the related Prepayment Period, (v) the principal
portion of any Substitution Adjustments deposited in the Collection Account
during the related Prepayment Period with respect to the Group II Mortgage Loans
and (vi) on the Distribution Date on which the Trust is to be terminated in
accordance with this Agreement, that portion of the Termination Price
representing principal with respect to the Group II Mortgage Loans.

         "Gross Margin": With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.

         "Guaranteed Certificates": The Class A-1 Certificates and the Class S-1
Certificates.

         "Guaranteed Interest Distribution Amount": For any Distribution Date
and the Guaranteed Certificates, the amount, if any, after giving effect to the
distributions of the Guaranty Fee and the Guarantor Reimbursement Amount to the
Guarantor and the Monthly Interest Distributable Amount and any Unpaid Interest
Shortfall Amount to the Class A-1 Certificates and the Class S-1 Certificates,
by which the (i) sum of (x) the Monthly Interest Distributable Amount and the
Unpaid Interest Shortfall Amount payable on the Guaranteed Certificates for such
Distribution Date and (y) the Net Prepayment Interest Shortfalls and the Relief
Act Interest Shortfalls allocated to the Guaranteed Certificates for such
Distribution Date exceeds (ii) the amount of interest actually paid (without
giving effect to any Guarantor Payment) to the Holders of the related Classes of
Guaranteed Certificates on such Distribution Date.

                                       19
<PAGE>

         "Guaranteed Principal Distribution Amount": With respect to any
Distribution Date, the amount, if any, by which (i) the aggregate Certificate
Principal Balance of the Class A-1 Certificates (after giving effect to all
amounts distributable and allocable to principal on such Class A-1 Certificates
but prior to giving effect to any Guarantor Payment on such Distribution Date)
exceeds (ii) the aggregate Stated Principal Balance of the Group I Mortgage
Loans (after giving effect to the principal portion of Monthly Payments due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period).

         "Guaranty":  The obligations of the Guarantor pursuant to Section 4.09.

         "Guaranty Fee": For any Distribution Date and with respect to the
Guaranteed Certificates, the fee payable to the Guarantor in respect of its
services as Guarantor that accrues at the applicable Guaranty Fee Rate for such
Guaranteed Certificates on a balance equal to the aggregate Certificate
Principal Balance of the Class A-1 Certificates immediately prior to such
Distribution Date, computed on the basis of a 360-day year and the actual number
of days elapsed in the related Accrual Period.

         "Guaranty Fee Rate": The per annum rate set forth in a side letter of
the Guarantor, addressed to the Trustee, the Seller and the Master Servicer.

         "Guarantor":  Fannie Mae, or its successor in interest.

         "Guarantor Interest Reimbursement Amount": With respect to any
Distribution Date, (i) the sum of any accrued but unpaid Guaranty Fees, not
including the Guaranty Fee due on such Distribution Date, and (ii) the sum of
all amounts paid by the Guarantor in respect of Guaranteed Interest Distribution
Amounts on all prior Distribution Dates to the extent not previously reimbursed.

         "Guarantor Payment": Any payment made by the Guarantor in respect of a
Guaranteed Interest Distribution Amount or Guaranteed Principal Distribution
Amount.

         "Guarantor Principal Reimbursement Amount": With respect to any
Distribution Date, the sum of all amounts paid by the Guarantor in respect of
Guaranteed Principal Distribution Amounts on all prior Distribution Dates to the
extent not previously reimbursed.

         "Guarantor Reimbursement Amount": With respect to any Distribution
Date, the sum of Guarantor Interest Reimbursement Amount and the Guarantor
Principal Reimbursement Amount.

         "Indenture": The indenture, if any, entered into following the Closing
Date, among Long Beach NIM Trust 2001-3 as issuer, and Bankers Trust Company of
California, N.A., as indenture trustee, relating to the NIM Notes to be issued
thereunder.

                                       20
<PAGE>

         "Independent": When used with respect to any specified Person, any such
Person who (a) is in fact independent of the Depositor, the Master Servicer and
their respective Affiliates, (b) does not have any direct financial interest in
or any material indirect financial interest in the Depositor or the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor
or the Master Servicer or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee, trust administrator, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail to
be Independent of the Depositor or the Master Servicer or any Affiliate thereof
merely because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Depositor or the Master Servicer or any Affiliate
thereof, as the case may be.

         "Independent Contractor": Either (i) any Person (other than the Master
Servicer) that would be an "independent contractor" with respect to any of the
REMICs created hereunder within the meaning of Section 856(d)(3) of the Code if
such REMIC were a real estate investment trust (except that the ownership tests
set forth in that Section shall be considered to be met by any Person that owns,
directly or indirectly, 35% or more of any Class of Certificates), so long as
each such REMIC does not receive or derive any income from such Person and
provided that the relationship between such Person and such REMIC is at arm's
length, all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or
(ii) any other Person (including the Master Servicer) if the Trustee has
received an Opinion of Counsel to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code (determined
without regard to the exception applicable for purposes of Section 860D(a) of
the Code), or cause any income realized in respect of such REO Property to fail
to qualify as Rents from Real Property.

         "Index": With respect to each Adjustable Rate Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.

         "Information Supplement": The Information Supplement of the Depositor
dated September 19, 2001, relating to the Guaranteed Certificates.

         "Initial Certificate Principal Balance": With respect to any Regular
Certificate (other than any Class S Certificate), the amount designated "Initial
Certificate Principal Balance" on the face thereof.

         "Initial Notional Amount": With respect to any Class S Certificate or
Class C Certificate, the amount designated "Initial Notional Amount" on the face
thereof.

         "Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan or the related Mortgaged
Property, to the extent such proceeds are not to be applied to the restoration
of the related Mortgaged Property or released to the Mortgagor in accordance
with the procedures that the Master Servicer would follow in servicing

                                       21
<PAGE>

mortgage loans held for its own account, subject to the terms and conditions of
the related Mortgage Note and Mortgage.

         "Interest Determination Date": With respect to the Class A-1
Certificates, the Class A-2 Certificates and the Mezzanine Certificates and each
Accrual Period, the second LIBOR Business Day preceding the commencement of such
Accrual Period.

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

         "LIBOR": With respect to each Accrual Period, the rate determined by
the Trustee on the related Interest Determination Date on the basis of the
"Interest Settlement Rate" for United States dollar deposits of one-month
maturity set forth by the British Bankers' Association (the "BBA"), as such rate
appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date. With respect to any Interest Determination Date, if
the BBA's Interest Settlement Rate does not appear on Telerate Page 3750 as of
11:00 a.m. (London time) on such date, or if Telerate Page 3750 is not available
on such date the Trustee will obtain such from Reuters Monitor Money Rates
Service page "LIBOR01" or Bloomberg L.P. page "BBAM." Alternatively, the Trustee
may request the principal London office of each of the Reference Banks to
provide a quotation of its rate. On such Interest Determination Date, LIBOR for
the related Accrual Period will be established by the Trustee as follows:

                  (i) If on such Interest Determination Date two or more
         Reference Banks provide such offered quotations, LIBOR for the related
         Accrual Period shall be the arithmetic mean of such offered quotations
         (rounded upwards if necessary to the nearest whole multiples of
         0.03125%); and

                  (ii) If on such Interest Determination Date fewer than two
         Reference Banks provide such offered quotations, LIBOR for the related
         Accrual Period shall be the higher of (i) LIBOR as determined on the
         previous Interest Determination Date and (ii) the Reserve Interest
         Rate.

         The Trustee will select a particular index as the alternative index
only if it receives an Opinion of Counsel that the selection of such index will
not cause any REMIC to lose its classification as a REMIC for federal income tax
purposes.

         "LIBOR Business Day": Any day on which banks in London, England and The
City of New York are open for conducting transactions in foreign currency and
exchange.

         "Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures

                                       22
<PAGE>

specified herein, as of the end of the related Prepayment Period, that all
Liquidation Proceeds which it expects to recover with respect to the liquidation
of the Mortgage Loan or disposition of the related REO Property have been
recovered.

         "Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 9.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property or (ii) such REO Property is
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.23 or Section 9.01.

         "Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received by
the Master Servicer in connection with (i) the taking of all or a part of a
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise or (iii) the repurchase, substitution or sale of a
Mortgage Loan or an REO Property pursuant to or as contemplated by Section 2.03,
Section 3.23 or Section 9.01.

         "Loan-to-Value Ratio": As of any date and as to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the (x) Principal
Balance of the Mortgage Loan (if such Mortgage Loan is secured by a first lien
on the related Mortgaged Property) or the sum of the Principal Balance of the
Mortgage Loan and any other mortgage loan secured by a senior lien on the
related Mortgaged Property (if such Mortgage Loan is secured by a junior lien on
the related Mortgaged Property) and the denominator of which is (y) the Value of
the related Mortgaged Property.

         "Lost Note Affidavit": With respect to any Mortgage Loan as to which
the original Mortgage Note has been permanently lost or destroyed and has not
been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost or destroyed (together with a copy of the related
Mortgage Note and indemnifying the Trust against any loss, cost or liability
resulting from the failure to deliver the original Mortgage Note) in the form of
Exhibit H hereto.

         "Marker Rate 1": With respect to the Class C Certificates and any
Distribution Date, a per annum rate equal to 2 times the weighted average of the
Uncertificated REMIC 2 Pass-Through Rates for REMIC 2 Regular Interest LT2B-1,
REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC 2
Regular Interest LT2E-1, and REMIC 2 Regular Interest LT2F-1, with the rate on
REMIC 2 Regular Interest LT2B-1 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class A-1 Certificates and (ii) the
lower of the Net WAC Rate and the Maximum Cap Rate applicable to the Class A-1
Certificates, with the rate on REMIC 2 Regular Interest LT2C-1 subject to a cap
equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class M-1
Certificates and (ii) the lower of the Net WAC Rate and

                                       23
<PAGE>

the Maximum Cap Rate applicable to the Mezzanine Certificates, with the rate on
REMIC 2 Regular Interest LT2D-1 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class M-2 Certificates and (ii) the
lower of the Net WAC Rate and the Maximum Cap Rate applicable to the Mezzanine
Certificates, with the rate on REMIC 2 Regular Interest LT2E-1 subject to a cap
equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class M-3
Certificates and (ii) the lower of the Net WAC Rate and the Maximum Cap Rate
applicable to the Mezzanine Certificates, with the rate on REMIC 2 Regular
Interest LT2F-1 subject to a cap of zero for the purpose of this calculation,
provided that in each case the rate used herein shall be multiplied by a
fraction the numerator of which is the actual number of days elapsed in the
Accrual Period and the denominator of which is 30.

         "Marker Rate 2": With respect to the Class C Certificates and any
Distribution Date, a per annum rate equal to 2 times the weighted average of the
Uncertificated REMIC 2 Pass-Through Rates for REMIC 2 Regular Interest LT2B-2,
REMIC 2 Regular Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC 2
Regular Interest LT2E-2, and REMIC 2 Regular Interest LT2F-2, with the rate on
REMIC 2 Regular Interest LT2B-2 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class A-2 Certificates and (ii) the
lower of the Net WAC Rate and the Maximum Cap Rate applicable to the Class A-2
Certificates, with the rate on REMIC 2 Regular Interest LT2C-2 subject to a cap
equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class M-1
Certificates and (ii) the lower of the Net WAC Rate and the Maximum Cap Rate
applicable to the Mezzanine Certificates, with the rate on REMIC 2 Regular
Interest LT2D-2 subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class M-2 Certificates and (ii) the lower of the Net
WAC Rate and the Maximum Cap Rate applicable to the Mezzanine Certificates, with
the rate on REMIC 2 Regular Interest LT2E-2 subject to a cap equal to the lesser
of (i) LIBOR plus the Certificate Margin of the Class M-3 Certificates and (ii)
the lower of the Net WAC Rate and the Maximum Cap Rate applicable to the
Mezzanine Certificates, with the rate on REMIC 2 Regular Interest LT2F-2 subject
to a cap of zero for the purpose of this calculation, provided that in each case
the rate used herein shall be multiplied by a fraction the numerator of which is
the actual number of days in the Accrual Period and the denominator of which is
30.

         "Master Servicer": Long Beach Mortgage Company, a Delaware corporation,
or any successor servicer appointed as herein provided, in its capacity as
Master Servicer hereunder.

         "Master Servicer Event of Default": One or more of the events described
in Section 7.01.

         "Master Servicer Prepayment Charge Payment Amount": The amounts (i)
payable by the Master Servicer in respect of any Prepayment Charges waived other
than in accordance with the standard set forth Section 2.04(a)(viii) or (ii)
collected from the Master Servicer in its capacity as Seller in respect of a
remedy for the breach of the representation and warranty made by the Master
Servicer in its capacity as Seller set forth in Section 2.04(a)(vii).

         "Master Servicer Remittance Date": With respect to any Distribution
Date, 3:00 p.m. New York time on the Business Day prior to the Distribution
Date.

                                       24
<PAGE>

         "Master Servicer Termination Test": With respect to any Distribution
Date, the Master Servicer Termination Test will be failed with respect to the
Master Servicer if the Cumulative Loss Percentage exceeds 6.125%.

         "Maximum Cap Rate":

         For any Distribution Date and the Class A-1 Certificates, (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Maximum Mortgage Rates of the Group I Mortgage Loans, weighted on
the basis of the Stated Principal Balances thereof as of the Due Date in the
month preceding the month of such Distribution Date, over (ii) the sum of (A)
the product of (I) the Guaranty Fee Rate and (II) the percentage equivalent of a
fraction, the numerator of which is (w) the Certificate Principal Balance of the
Class A-1 Certificates, and the denominator of which is (x) the aggregate Stated
Principal Balance of the Group I Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date and (B) the percentage equivalent
of a fraction, the numerator of which is (y) the Pass-Through Rate for the Class
S-1 Certificates for such Distribution Date multiplied by the S-1 Notional
Amount and the denominator of which is (z) the aggregate Stated Principal
Balance of the Group I Mortgage Loans as of the Due Date in the month preceding
the month of such Distribution Date multiplied by (b) a fraction the numerator
of which is 30 and the denominator of which is the actual number of days elapsed
in the related Accrual Period.

         For any Distribution Date and the Class A-2 Certificates, (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Maximum Mortgage Rates of the Group II Mortgage Loans, weighted on
the basis of the Stated Principal Balances thereof as of the Due Date in the
month preceding the month of such Distribution Date, over (ii) the percentage
equivalent of a fraction, the numerator of which is (x) the Pass-Through Rate
for the Class S-2 Certificates for such Distribution Date multiplied by the S-2
Notional Amount and the denominator of which is (y) the aggregate Stated
Principal Balance of the Group II Mortgage Loans as of the Due Date in the month
preceding the month of such Distribution Date multiplied by (b) a fraction the
numerator of which is 30 and the denominator of which is the actual number of
days elapsed in the related Accrual Period.

         For any Distribution Date and the Mezzanine Certificates, a per annum
rate equal to the lesser of the Maximum Cap Rate with respect to the Class A-1
Certificates and the Maximum Cap Rate with respect to the Class A-2
Certificates, in either case for such Distribution Date.

         "Maximum LT2F-1 Uncertificated Accrued Interest Deferral Amount": With
respect to any Distribution Date, the sum of:

         (A)    the excess of (a) accrued interest at the Uncertificated REMIC 2
                Pass-Through Rate applicable to REMIC 2 Regular Interest LT2F-1
                for such Distribution Date on a balance equal to the
                Uncertificated Principal Balance of REMIC 2 Regular Interest
                LT2F-1 minus the REMIC 2 Overcollateralized Amount 1, in each
                case for such Distribution Date, over (b) Uncertificated Accrued
                Interest on REMIC 2 Regular Interest LT2B-1 with the rate on
                REMIC 2 Regular Interest LT2B-1

                                       25
<PAGE>

                subject to a cap equal to the lesser of (i) LIBOR plus the
                Certificate Margin of the Class A-1 Certificates and (ii) the
                lower of the Net WAC Rate and the Maximum Cap Rate applicable to
                the Class A-1 Certificates, Uncertificated Accrued Interest on
                REMIC 2 Regular Interest LT2C-1 with the rate on REMIC 2 Regular
                Interest LT2C-1 subject to a cap equal to the lesser of (i)
                LIBOR plus the Certificate Margin of the Class M-1 Certificates
                and (ii) the lower of the Net WAC Rate and the Maximum Cap Rate
                applicable to the Mezzanine Certificates, Uncertificated Accrued
                Interest on REMIC 2 Regular Interest LT2D-1 with the rate on
                REMIC 2 Regular Interest LT2D-1 subject to a cap equal to the
                lesser of (i) LIBOR plus the Certificate Margin of the Class M-2
                Certificates and (ii) the lower of the Net WAC Rate and the
                Maximum Cap Rate applicable to the Mezzanine Certificates and
                Uncertificated Accrued Interest on REMIC 2 Regular Interest
                LT2E-1 with the rate on REMIC 2 Regular Interest LT2E-1 subject
                to a cap equal to the lesser of (i) LIBOR plus the Certificate
                Margin of the Class M-3 Certificates and (ii) the lower of the
                Net WAC Rate or the Maximum Cap Rate applicable to the Mezzanine
                Certificates, provided, that in each case the rates set forth in
                clauses (i) above shall be -------- multiplied by a fraction the
                numerator of which is the actual number of days elapsed in the
                Accrual Period and the denominator of which is 30, and

         (B)    the REMIC 2 Group I Diverted Excess Spread.

         "Maximum LT2F-2 Uncertificated Accrued Interest Deferral Amount": With
respect to any Distribution Date, the sum of:

         (A)    the excess of (a) accrued interest at the Uncertificated REMIC 2
                Pass-Through Rate applicable to REMIC 2 Regular Interest LT2F-2
                for such Distribution Date on a balance equal to the
                Uncertificated Principal Balance of REMIC 2 Regular Interest
                LT2F-2 minus the REMIC 2 Overcollateralized Amount 2, in each
                case for such Distribution Date, over (b) Uncertificated Accrued
                Interest on REMIC 2 Regular Interest LT2B-2 with the rate on
                REMIC 2 Regular Interest LT2B-2 subject to a cap equal to the
                lesser of (i) LIBOR plus the Certificate Margin of the Class A-2
                Certificates and (ii) the lower of the Net WAC Rate and the
                Maximum Cap Rate applicable to the Class A-2 Certificates,
                Uncertificated Accrued Interest on REMIC 2 Regular Interest
                LT2C-2 with the rate on REMIC 2 Regular Interest LT2C-2 subject
                to a cap equal to the lesser of (i) LIBOR plus the Certificate
                Margin of the Class M-1 Certificates and (ii) the lower of the
                Net WAC Rate and the Maximum Cap Rate applicable to the
                Mezzanine Certificates, Uncertificated Accrued Interest on REMIC
                2 Regular Interest LT2D-2 with the rate on REMIC 2 Regular
                Interest LT2D-2 subject to a cap equal to the lesser of (i)
                LIBOR plus the Certificate Margin of the Class M-2 Certificates
                and (ii) the lower of the Net WAC Rate and the Maximum Cap Rate
                applicable to the Mezzanine Certificates and Uncertificated
                Accrued Interest on REMIC 2 Regular Interest LT2E-2 with the
                rate on REMIC 2 Regular Interest LT2E-2 subject to a cap equal
                to the lesser of (i) LIBOR plus the Certificate Margin of the
                Class M-3 Certificates and (ii) the

                                       26
<PAGE>

                lower of the Net WAC Rate or the Maximum Cap Rate applicable to
                the Mezzanine Certificates, provided, that in each case the
                rates set forth in clauses (i) above shall be multiplied by a
                fraction the numerator of which is the actual number of days
                elapsed in the Accrual Period and the denominator of which is
                30, and

         (B)    the REMIC 2 Group II Diverted Excess Spread.

         "Maximum Mortgage Rate": With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the maximum Mortgage Rate
thereunder.

         "Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate or Class M-3 Certificate.

         "Minimum Mortgage Rate": With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the minimum Mortgage Rate
thereunder.

         "Monthly Interest Distributable Amount": With respect to the Class A
Certificates, Mezzanine Certificates, the Class S Certificates and the Class C
Certificates and any Distribution Date, the amount of interest accrued during
the related Accrual Period at the related Pass-Through Rate on the Certificate
Principal Balance (or Notional Amount in the case of the Class S Certificates
and the Class C Certificates) of such Class immediately prior to such
Distribution Date, in each case, reduced by any Net Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls and in each case as such shortfall
allocations are set forth in Section 1.03. Notwithstanding the foregoing, for
federal income tax purposes and under the REMIC Provisions, the Monthly Interest
Distributable Amount for the Class S-1 Certificates and any Distribution Date
will be deemed to be the Uncertificated Accrued Interest for REMIC 2 Regular
Interest LT2S-1A, Uncertificated Accrued Interest for REMIC 2 Regular Interest
LT2S-1B and Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1C
for such Distribution Date and the Monthly Interest Distributable Amount for the
Class S-2 Certificates and any Distribution Date will be deemed to be the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-2A,
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-2B, and
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-2C for such
Distribution Date.

         "Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Sections 3.01 and 3.07; and (c) on the
assumption that all other amounts, if any, due under such Mortgage Loan are paid
when due.

         "Moody's": Moody's Investors Service, Inc. or its successor in
interest.

                                       27
<PAGE>

         "Mortgage": The mortgage, deed of trust or other instrument creating a
first lien or second lien on, or first priority security interest or second
priority security interest in, a Mortgaged Property securing a Mortgage Note.

         "Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.

         "Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee and delivered to the Trustee pursuant to Section 2.01 or Section 2.03(d)
as from time to time held as a part of the Trust Fund, the Mortgage Loans so
held being identified in the Mortgage Loan Schedule.

         "Mortgage Loan Purchase Agreement": The agreement between the Master
Servicer, in its capacity as Seller, and the Depositor, regarding the transfer
of the Mortgage Loans by the Seller to or at the direction of the Depositor,
substantially in the form attached hereto as Exhibit C.

         "Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in REMIC 1A and REMIC 1B on such date, attached hereto as Exhibit D.
The Mortgage Loan Schedule shall be prepared by the Seller and shall set forth
the following information as of the Cut-off Date with respect to each Mortgage
Loan, as applicable:

                (i)         the Mortgagor's name and the Master Servicer's
                            Mortgage Loan identifying number;

                (ii)        the street address of the Mortgaged Property
                            including the state and zip code;

                (iii)       a code indicating whether the Mortgaged Property is
                            owner-occupied;

                (iv)        the type of Residential Dwelling constituting the
                            Mortgaged Property;

                (v)         the original months to maturity;

                (vi)        the Loan-to-Value Ratio and the combined
                            Loan-to-Value Ratio at origination;

                (vii)       the Mortgage Rate in effect immediately following
                            the Cut-off Date;

                (viii)      the date on which the first Monthly Payment was due
                            on the Mortgage Loan;

                (ix)        the stated maturity date;

                                       28

<PAGE>

                (x)         the amount of the Monthly Payment due on the first
                            Due Date after the Cut-off Date;

                (xi)        the last Due Date on which a Monthly Payment was
                            actually applied to the unpaid Stated Principal
                            Balance;

                (xii)       the original principal amount of the Mortgage Loan;

                (xiii)      the Stated Principal Balance of the Mortgage Loan as
                            of the Close of Business on the Cut-off Date;

                (xiv)       whether such Mortgage Loan is a Fixed Rate Mortgage
                            Loan or an Adjustable Rate Mortgage Loan, and with
                            respect to each Adjustable Rate Mortgage Loan: (a)
                            the Gross Margin, (b) the Maximum Mortgage Rate, (c)
                            the Minimum Mortgage Rate, (d) the Periodic Rate Cap
                            for the first Adjustment Date and each subsequent
                            Adjustment Date and (e) the next Adjustment Date
                            immediately following the Cut-off Date;

                (xv)        a code indicating the purpose of the Mortgage Loan
                            (i.e., purchase financing, rate/term refinancing,
                            cash-out refinancing);

                (xvi)       the Mortgage Rate at origination;

                (xvii)      a code indicating the documentation program;

                (xviii)     the Seller's risk grade and the FICO score;

                (xix)       the Value of the Mortgaged Property;

                (xx)        the sale price of the Mortgaged Property, if
                            applicable;

                (xxi)       whether such Mortgage Loan is secured by a first
                            lien or a second lien on the related Mortgaged
                            Property;

                (xxii)      the date of origination;

                (xxiii)     the stated remaining months to maturity as of the
                            Cut-off Date;

                (xxiv)      the current principal and interest payment of the
                            Mortgage Loan as of the Cut-off Date;

                (xxv)       the interest "paid to date" of the Mortgage Loan as
                            of the Cut-off Date;

                (xxvi)      a code indicating whether the Mortgage Loan is a
                            Group I Mortgage Loan or a Group II Mortgage Loan;

                                       29

<PAGE>

                (xxvii)     a code indicating the Index that is associated with
                            such Mortgage Loan (if such Mortgage Loan is an
                            Adjustable Rate Mortgage Loan);

                (xxviii)    the rate adjustment frequency (if such Mortgage Loan
                            is an Adjustable Rate Mortgage Loan); and

                (xxix)      the number of years the prepayment penalty is in
                            effect.

         The Mortgage Loan Schedule shall set forth the following information,
with respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the Cut-off Date Principal Balance of the
Mortgage Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans and
(4) the weighted average maturity of the Mortgage Loans. The Mortgage Loan
Schedule shall be amended from time to time by the Master Servicer in accordance
with the provisions of this Agreement. With respect to any Qualified Substitute
Mortgage Loan, Cut-off Date shall refer to the related Cut-off Date for such
Mortgage Loan, determined in accordance with the definition of Cut-off Date
herein. The Mortgage Loan Schedule shall clearly identify the Mortgage Loans
that are included in Group I Mortgage Loans, and therefore in REMIC 1A, and
those that are included in Group II Mortgage Loans and therefore in REMIC 1B.

         "Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.

         "Mortgage Pool": The pool of Mortgage Loans, identified on Exhibit D
from time to time, and any REO Properties acquired in respect thereof.

         "Mortgage Rate": With respect to each Fixed Rate Mortgage Loan, the
annual rate set forth in the related Mortgage Note, as amended, modified or
supplemented from time to time. With respect to each Adjustable Rate Mortgage
Loan, the annual rate at which interest accrues on such Mortgage Loan from time
to time in accordance with the provisions of the related Mortgage Note, which
rate (A) as of any date of determination until the first Adjustment Date
following the Cut-off Date shall be the rate set forth in the Mortgage Loan
Schedule as the Mortgage Rate in effect immediately following the Cut-off Date
and (B) as of any date of determination thereafter shall be the rate as adjusted
on the most recent Adjustment Date, to equal the sum, rounded to the next
highest or nearest 0.125% (as provided in the Mortgage Note), of the Index,
determined as set forth in the related Mortgage Note, plus the related Gross
Margin subject to the limitations set forth in the related Mortgage Note. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.

         "Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of a fee simple estate in a parcel of
real property improved by a Residential Dwelling.

                                       30
<PAGE>

         "Mortgagor":  The obligor on a Mortgage Note.

         "Net Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan or any other disposition of related Mortgaged Property (including REO
Property), the related Liquidation Proceeds net of Advances, Servicing Advances,
Servicing Fees and any other accrued and unpaid Servicing Fees received and
retained in connection with the liquidation of such Mortgage Loan or Mortgaged
Property in accordance with the terms of this Agreement.

         "Net Monthly Excess Cashflow": With respect to each Distribution Date,
the sum of (a) any Overcollateralization Release Amount for such Distribution
Date and (b) the excess of (x) Available Funds for such Distribution Date over
(y) the sum for such Distribution Date of (A) the Monthly Interest Distributable
Amounts for the Class A Certificates, the Class S Certificates and the Mezzanine
Certificates, (B) the Unpaid Interest Shortfall Amounts for the Class A
Certificates and the Class S Certificates, (C) the Principal Remittance Amount,
(D) the Guarantor Reimbursement Amount and (E) the Guaranty Fee.

         "Net Mortgage Rate": With respect to any Mortgage Loan (or the related
REO Property), as of any date of determination, a per annum rate of interest
equal to the then applicable Mortgage Rate for such Mortgage Loan minus the
Servicing Fee Rate.

         "Net Prepayment Interest Shortfall": With respect to any Distribution
Date, the excess, if any, of any Prepayment Interest Shortfalls for such date
over the related Compensating Interest.

         "Net WAC Rate":

         For any Distribution Date and the Class A-1 Certificates, (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Mortgage Rates of the Group I Mortgage Loans, weighted on the basis
of the Stated Principal Balances thereof as of the Due Date in the month
preceding the month of such Distribution Date, over (ii) the sum of (A) the
product of (I) the Guaranty Fee Rate and (II) the percentage equivalent of a
fraction, the numerator of which is (w) the Certificate Principal Balance of the
Class A-1 Certificates, and the denominator of which is (x) the aggregate Stated
Principal Balance of the Group I Mortgage Loans as of the first date of the
month preceding the month of such Distribution Date and (B) the percentage
equivalent of a fraction, the numerator of which is (y) the Pass-Through Rate
for the Class S-1 Certificates for such Distribution Date multiplied by the
Class S-1 Notional Amount and the denominator of which is (z) the aggregate
Stated Principal Balance of the Group I Mortgage Loans as of the first day of
the month preceding the month of such Distribution Date multiplied by (b) a
fraction the numerator of which is 30 and the denominator of which is the actual
number of days elapsed in the related Accrual Period.

         For any Distribution Date and the Class A-2 Certificates, (a) a per
annum rate equal to the excess, if any, weighted on the basis of the Stated
Principal Balances thereof as of the Due Date in the month preceding the month
of such Distribution Date, of (i) the weighted average of the Adjusted Net
Mortgage Rates of the Group II Mortgage Loans, over (ii) the percentage
equivalent of a fraction, the numerator of which is (x) the Pass-Through Rate
for the Class S-2

                                       31
<PAGE>

Certificates for such Distribution Date multiplied by the Class S-2 Notional
Amount and the denominator of which is (y) the aggregate Stated Principal
Balance of the Group II Mortgage Loans as of the Due Date preceding the month of
such Distribution Date multiplied by (b) a fraction the numerator of which is 30
and the denominator of which is the actual number of days elapsed in the related
Accrual Period.

         For any Distribution Date and the Mezzanine Certificates, a per annum
rate equal to the lesser of the Net WAC Rate with respect to the Class A-1
Certificates and the Net WAC Rate with respect to the Class A-2 Certificates, in
either case for such Distribution Date.

         "Net WAC Rate Carryover Amount": With respect to the Class A-1
Certificates, the Class A-2 Certificates and the Mezzanine Certificates and any
Distribution Date for which the Pass-Through Rate for such Class for such
Distribution Date is the Net WAC Rate, the sum of (i) the positive excess of (A)
the amount of interest that would have been payable to such Class of
Certificates on such Distribution Date if the Pass-Through Rate for such Class
for such Distribution Date were calculated at the related Formula Rate over (B)
the amount of interest payable on such Class of Certificates at the Net WAC Rate
for such Distribution Date and (ii) the related Net WAC Rate Carryover Amount
for the previous Distribution Date not previously paid together with interest
thereon at a rate equal to the related Formula Rate for such Class of
Certificates for the most recently ended Accrual Period.

         "New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed or extended on behalf of the Trust if the
Trust has the right to renegotiate the terms of such lease.

         "NIM Notes": The notes to be issued pursuant to the Indenture.

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

         "Notional Amount": Immediately prior to any Distribution Date, with
respect to the Class S-1 Certificates, an amount equal to the Uncertificated
Principal Balance of REMIC 1A Regular Interest LT1A-2. Immediately prior to any
Distribution Date, with respect to the Class S-2 Certificates, an amount equal
to the Uncertificated Principal Balance of REMIC 1B Regular Interest LT1B-2.
Immediately prior to any Distribution Date, with respect to the Class C
Certificates, the aggregate of the Uncertificated Principal Balances of the
REMIC 2 Regular Interests.

         "Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Seller
or the Depositor, as applicable.

                                       32
<PAGE>

         "Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Master Servicer,
reasonably acceptable to the Trustee, if such opinion is delivered to the
Trustee, except that any opinion of counsel relating to (a) the qualification of
any Trust REMIC as a REMIC or (b) compliance with the REMIC Provisions must be
an opinion of Independent counsel.

         "Optional Termination Date": The first Distribution Date on which the
Master Servicer may elect to terminate the Trust Fund pursuant to Section 9.01.

         "Original Class Certificate Principal Balance": With respect to the
Class A Certificates, the Mezzanine Certificates and the Class P Certificate,
the corresponding Certificate Principal Balance on the Closing Date

         "Original Mortgage Loan": Any of the Mortgage Loans included in the
Trust Fund as of the Closing Date. The aggregate scheduled principal balance of
the Original Mortgage Loans as of the Closing Date is equal to $1,001,006,146.

         "Original Notional Amount": With respect to the Class S-1 Certificates,
$68,334,000. With respect to the Class S-2 Certificates, $31,766,000. With
respect to the Class C Certificates, $1,001,006,146.

         "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization Target
Amount exceeds the Overcollateralized Amount on such Distribution Date (assuming
that 100% of the aggregate Principal Remittance Amount is applied as a principal
payment on such Distribution Date).

         "Overcollateralization Floor":  $5,005,031.

         "Overcollateralization Release Amount": With respect to any
Distribution Date, the lesser of (x) the aggregate Principal Remittance Amount
for such Distribution Date and (y) the Excess Overcollateralized Amount.

         "Overcollateralization Target Amount": With respect to any Distribution
Date (i) prior to the Stepdown Date, $15,015,092, (ii) on or after the Stepdown
Date provided a Trigger Event is not in effect, the greater of (x) 3.00% of the
aggregate Stated Principal Balance of the Mortgage Loans on the last day of the
related Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (y) the Overcollateralization Floor, and (iii) on or after the
Stepdown Date if a Trigger Event is in effect, the Overcollateralization Target
Amount for the immediately preceding Distribution Date. Notwithstanding the
foregoing, the Overcollateralization Target Amount shall never exceed the
initial Overcollateralization Target Amount.

         "Overcollateralized Amount": For any Distribution Date, the amount, if
any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans
on the last day of the related

                                       33
<PAGE>

Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) exceeds
(ii) the sum of the aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates and the Class P Certificates as of such
Distribution Date (after giving effect to distributions to be made on such
Distribution Date).

         "Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.

         "Pass-Through Rate":

         With respect to the Class A Certificates and the Mezzanine Certificates
and any Distribution Date, the lesser of (x) the related Formula Rate for such
Distribution Date and (y) the related Net WAC Rate for such Certificates for
such Distribution Date.

         With respect to the Class S Certificates and any Distribution Date, a
per annum rate equal to 4.50% for the Distribution Date in October 2001 through
the Distribution Date in July 2002, 3.50% for the Distribution Date in August
2002 through the Distribution Date in May 2003, 2.50% for the Distribution Date
in June 2003 through the Distribution Date in March 2004 and 0.00% thereafter;
provided, however, for federal income tax purposes and under the REMIC
Provisions, (A) the Class S Certificates will not have a Pass-Through Rate, (B)
the Monthly Interest Distributable Amount for the Class S-1 Certificates and any
Distribution Date will be deemed to be the Uncertificated Accrued Interest for
REMIC 2 Regular Interest LT2S-1A, the Uncertificated Accrued Interest for REMIC
2 Regular Interest LT2S-1B and the Uncertificated Accrued Interest for REMIC 2
Regular Interest LT2S-1C for such Distribution Date, (C) the Monthly Interest
Distributable Amount for the Class S-2 Certificates and any Distribution Date
will be deemed to be the Uncertificated Accrued Interest for REMIC 2 Regular
Interests LT2S-2A, the Uncertificated Accrued Interest for REMIC 2 Regular
Interest LT2S-2B and the Uncertificated Accrued Interest for REMIC 2 Regular
Interest LT2S-2C for such Distribution Date, (D) the sum of the Monthly Interest
Distributable Amount and the Unpaid Interest Shortfall Amount for the Class S-1
Certificates and any Distribution Date will be deemed to be 100% of the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1A, the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1B and the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1C for such
Distribution Date, and (E) the sum of the Monthly Interest Distributable Amount
and the Unpaid Interest Shortfall Amount for the Class S-2 Certificates and any
Distribution Date will be deemed to be 100% of the Uncertificated Accrued
Interest for REMIC 2 Regular Interest LT2S-2A, the Uncertificated Accrued
Interest for REMIC 2 Regular Interest LT2S-2B and the Uncertificated Accrued
Interest for REMIC 2 Regular Interest LT2S-2C.

         With respect to the Class C Certificates and any Distribution Date, a
per annum rate equal to the percentage equivalent of a fraction, the numerator
of which is the excess of (a) the sum of the amounts calculated pursuant to
clauses (A) through (N) below over (b) the Guarantee Fee for

                                       34
<PAGE>

such Distribution Date, and the denominator of which is the aggregate of the
Uncertificated Principal Balances of the REMIC 2 Regular Interests. For purposes
of calculating the Pass-Through Rate for the Class C Certificates, the numerator
is equal to the sum of the following components:

                  (A) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2A-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2A-1;

                  (B) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2B-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2B-1;

                  (C) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2C-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2C-1;

                  (D) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2D-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D-1;

                  (E) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2E-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2E-1;

                  (F) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2F-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2F-1;

                  (G) 100% of the interest on REMIC 2 Regular Interest LT2P-1;

                  (H) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2A-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2A-2;

                  (I) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2B-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2B-2;

                  (J) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2C-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2C-2;

                  (K) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2D-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D-2;

                                       35
<PAGE>

                  (L) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2E-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2E-2;

                  (M) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2F-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2F-2;

                  (N) 100% of the interest on REMIC 2 Regular Interest LT2P-2.

         "Percentage Interest": With respect to any Certificate (other than a
Class R Certificate), a fraction, expressed as a percentage, the numerator of
which is the Initial Certificate Principal Balance or Initial Notional Amount
represented by such Certificate and the denominator of which is the Original
Class Certificate Principal Balance or Original Class Notional Amount of the
related Class. With respect to a Class R Certificate, the portion of the Class
evidenced thereby, expressed as a percentage, as stated on the face of such
Certificate; provided, however, with respect to each Class referred to in this
paragraph, that the sum of all such percentages for each such Class totals 100%.

         "Periodic Rate Cap": With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage Rate for such
Mortgage Loan may increase or decrease (without regard to the Maximum Mortgage
Rate or the Minimum Mortgage Rate) on such Adjustment Date from the Mortgage
Rate in effect immediately prior to such Adjustment Date.

         "Permitted Investments": Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued or managed by the Depositor, the Master Servicer, the Trustee
or any of their respective Affiliates or for which an Affiliate of the Trustee
serves as an advisor:

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

                  (ii) (A) demand and time deposits in, certificates of deposit
         of, bankers' acceptances issued by or federal funds sold by any
         depository institution or trust company (including the Trustee or its
         agents acting in their commercial capacities) incorporated under the
         laws of the United States of America or any state thereof and subject
         to supervision and examination by federal and/or state authorities, so
         long as, at the time of such investment or contractual commitment
         providing for such investment, such depository institution or trust
         company (or, if the only Rating Agency is S&P, in the case of the
         principal depository institution in a depository institution holding
         company, debt obligations of the depository institution holding
         company) or its ultimate parent has a short-term uninsured debt rating
         in one of the two highest available ratings of Fitch and

                                       36
<PAGE>

         the highest available rating category of Moody's and S&P and provided
         that each such investment has an original maturity of no more than 365
         days; and provided further that, if the only Rating Agency is S&P and
         if the depository or trust company is a principal subsidiary of a bank
         holding company and the debt obligations of such subsidiary are not
         separately rated, the applicable rating shall be that of the bank
         holding company; and, provided further that, if the original maturity
         of such short-term obligations of a domestic branch of a foreign
         depository institution or trust company shall exceed 30 days, the
         short-term rating of such institution shall be A-1+ in the case of S&P
         if S&P is the Rating Agency; and (B) any other demand or time deposit
         or deposit which is fully insured by the FDIC;

                  (iii) repurchase obligations with a term not to exceed 30 days
         with respect to any security described in clause (i) above and entered
         into with a depository institution or trust company (acting as
         principal) rated F-1+ or higher by Fitch, rated A-1+ or higher by S&P
         and rated A2 or higher by Moody's;

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

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

                  (vi) units of money market funds that have been rated "AAA" by
         Fitch (if rated by Fitch), "AAAm" or "AAAm-G" by S&P and "Aaa" by
         Moody's; and

                  (vii) if previously confirmed in writing to the Trustee, any
         other demand, money market or time deposit, or any other obligation,
         security or investment, as may be acceptable to the Rating Agencies in
         writing as a permitted investment of funds backing securities having
         ratings equivalent to its highest initial rating of the Class A
         Certificates;

provided, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.

         "Permitted Transferee": Any transferee of a Residual Certificate other
than a Disqualified Organization or a non-U.S. Person.

                                       37
<PAGE>

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

         "Plan": Any employee benefit plan or certain other retirement plans and
arrangements, including individual retirement accounts and annuities, Keogh
plans and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.

         "Prepayment Assumption": The pricing prepayment assumption as described
in the Prospectus Supplement.

         "Prepayment Charge": With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof (other than any Master
Servicer Prepayment Charge Payment Amount).

         "Prepayment Charge Schedule": As of the Cut-off Date, a list attached
hereto as Schedule I (including the Prepayment Charge Summary attached thereto),
setting forth the following information with respect to each Prepayment Charge:

                  (i)      the Mortgage Loan identifying number;

                  (ii)     a code indicating the type of Prepayment Charge;

                  (iii)    the state of origination of the related Mortgage
                           Loan;

                  (iv)     the date on which the first monthly payment was due
                           on the related Mortgage Loan;

                  (v)      the term of the related Prepayment Charge; and

                  (vi)     the principal balance of the related Mortgage Loan as
                           of the Cut-off Date.

         The Prepayment Charge Schedule shall be amended from time to time by
the Master Servicer in accordance with the provisions of this Agreement.

         "Prepayment Interest Shortfall": With respect to any Distribution Date,
for each Mortgage Loan that was during the related Prepayment Period the subject
of a Principal Prepayment in full or in part that was applied by the Master
Servicer to reduce the outstanding principal balance of such loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the related Prepayment Period. The
obligations of the Master Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.

                                       38
<PAGE>

         "Prepayment Period": With respect to any Distribution Date, the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs.

         "Prime Rate": The prime rate of United States money center commercial
banks as published in The Wall Street Journal.

         "Principal Balance": As to any Mortgage Loan other than a Liquidated
Mortgage Loan, and any day, the related Cut-off Date Principal Balance, minus
all collections credited against the Cut-off Date Principal Balance of any such
Mortgage Loan. For purposes of this definition, a Liquidated Mortgage Loan shall
be deemed to have a Principal Balance equal to the Principal Balance of the
related Mortgage Loan as of the final recovery of related Liquidation Proceeds
and a Principal Balance of zero thereafter. As to any REO Property and any day,
the Principal Balance of the related Mortgage Loan shall equal the Principal
Balance of the related Mortgage Loan immediately prior to such Mortgage Loan
becoming REO Property minus any REO Principal Amortization received with respect
thereto on or prior to such day.

         "Principal Distribution Amount": With respect to any Distribution Date,
the sum of the Group I Principal Distribution Amount and the Group II Principal
Distribution Amount.

         "Principal Prepayment": Any payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing the full amount
of scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.

         "Principal Remittance Amount": With respect to any Distribution Date,
the sum of the Group I Principal Remittance Amount and the Group II Principal
Remittance Amount.

         "Prospectus Supplement": That certain Prospectus Supplement dated
September 19, 2001 relating to the public offering of the Class A-2
Certificates, the Class S-2 Certificates and the Mezzanine Certificates.

         "Purchase Price": With respect to any Mortgage Loan or REO Property to
be purchased pursuant to or as contemplated by Section 2.03, Section 3.16(c) or
Section 9.01, and as confirmed by an Officers' Certificate from the Master
Servicer to the Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of purchase (or such other price as
provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last paid by
the Mortgagor or by an advance by the Master Servicer through the end of the
calendar month in which the purchase is to be effected and (y) an REO Property,
the sum of (1) accrued interest on such Stated Principal Balance at the
applicable Net Mortgage Rate in effect from time to time from the Due Date as to
which interest was last paid by the Mortgagor or by an advance by the Master
Servicer through the end of the calendar month immediately preceding the
calendar month in which such REO Property was acquired, plus (2) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending

                                       39
<PAGE>

with the calendar month in which such purchase is to be effected, net of the
total of all net rental income, Insurance Proceeds, Liquidation Proceeds and
Advances that as of the date of purchase had been distributed in respect of REO
Imputed Interest pursuant to Section 4.01, (iii) any unreimbursed Servicing
Advances, Advances and Nonrecoverable Advances and any unpaid Servicing Fees
allocable to such Mortgage Loan or REO Property, (iv) any amounts previously
withdrawn from the Collection Account in respect of such Mortgage Loan or REO
Property pursuant to Section 3.11 (a)(ix) and Section 3.16(b), and (v) in the
case of a Mortgage Loan required to be purchased pursuant to Section 2.03,
enforcement expenses reasonably incurred or to be incurred by the Master
Servicer, the Guarantor or the Trustee in respect of the breach or defect giving
rise to the purchase obligation.

         Notwithstanding the foregoing, if in excess of $20,020,123 in aggregate
principal balance of Mortgage Loans have previously been repurchased (exclusive
of any Mortgage Loans purchased by the Master Servicer pursuant to Section
3.16(c)) or substituted for, then in addition to those requirements set forth
above, the Purchase Price shall include the amount of any related Prepayment
Charge (other than with respect to a Purchase Price paid in connection with
Section 9.01).

         "Qualified Insurer":  Any insurance company acceptable to Fannie Mae.

         "Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement or the Mortgage
Loan Purchase Agreement which must, on the date of such substitution, (i) have
an outstanding principal balance (or in the case of a substitution of more than
one mortgage loan for a Deleted Mortgage Loan, an aggregate principal balance),
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of, and not more than 5.00%
less than, the outstanding principal balance of the Deleted Mortgage Loan as of
the Due Date in the calendar month during which the substitution occurs, (ii)
have a Mortgage Rate not less than (and not more than one percentage point in
excess of) the Mortgage Rate of the Deleted Mortgage Loan, (iii) if the
Qualified Substitute Mortgage Loan is an Adjustable Rate Mortgage Loan, have a
Maximum Mortgage Rate not greater than the Maximum Mortgage Rate on the Deleted
Mortgage Loan and have a Minimum Mortgage Rate not less than the Minimum
Mortgage Rate of the Deleted Mortgage Loan, (iv) if the Qualified Substitute
Mortgage Loan is an Adjustable Rate Mortgage Loan, have a Gross Margin equal to
or greater than the Gross Margin of the Deleted Mortgage Loan, (v) if the
Qualified Substitute Mortgage Loan is an Adjustable Rate Mortgage Loan, have a
next Adjustment Date not more than two months later than the next Adjustment
Date on the Deleted Mortgage Loan, (vi) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan, (vii) be current (with no contractual delinquencies outstanding) as of the
date of substitution, (viii) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (ix) have a risk grading determined by the Seller
at least equal to the risk grading assigned on the Deleted Mortgage Loan, (x)
have been underwritten or reunderwritten by the Seller in accordance with the
same or, as determined by the Seller, more favorable, underwriting criteria and
guidelines as the Deleted Mortgage Loan, (xi) with respect to Qualified
Substituted Mortgage Loans

                                       40
<PAGE>

substituted for Deleted Mortgage Loans that are Group I Mortgage Loans, have had
an original Principal Balance that conformed to Fannie Mae loan limits as of the
date of its origination, (xii) be secured by the same property type as the
Deleted Mortgage Loan, (xiii) have a lien priority the same as or superior to
that of the Deleted Mortgage Loan, and (xiv) conform to each representation and
warranty set forth in Section 3.01 of the Mortgage Loan Purchase Agreement
applicable to the Deleted Mortgage Loan. In the event that one or more mortgage
loans are substituted for one or more Deleted Mortgage Loans, the amounts
described in clause (i) hereof shall be determined on the basis of aggregate
principal balances, the Mortgage Rates described in clauses (ii) through (v)
hereof shall be satisfied for each such mortgage loan, the risk gradings
described in clause (ix) hereof shall be satisfied as to each such mortgage
loan, the terms described in clause (vi) hereof shall be determined on the basis
of weighted average remaining term to maturity (provided that no such mortgage
loan may have a remaining term to maturity longer than the Deleted Mortgage
Loan), the Loan-to-Value Ratios described in clause (viii) hereof shall be
satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (xiv) hereof must be satisfied as to each Qualified Substitute Mortgage
Loan or in the aggregate, as the case may be.

         Notwithstanding the foregoing, if in excess of $20,020,123 in aggregate
principal balance of Mortgage Loans have previously been repurchased (exclusive
of any Mortgage Loans purchased by the Master Servicer pursuant to Section
3.16(c)) or substituted for, then in addition to clauses (i) through (xiv)
above, each Qualified Substitute Mortgage Loan shall also have a Prepayment
Charge provision at least as favorable to the Holders of the Class P
Certificates as the Prepayment Charge provisions in the Deleted Mortgage Loan.

         "Rating Agency or Rating Agencies": Fitch, Moody's and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and Master Servicer.

         "Realized Loss": With respect to any Liquidated Mortgage Loan, the
amount of loss realized equal to the portion of the Principal Balance remaining
unpaid after application of all Net Liquidation Proceeds and Insurance Proceeds
in respect of such Mortgage Loan.

         "Record Date": With respect to (i) the Class S Certificates, the Class
P Certificates, the Class C Certificates, the Class R Certificates and any
Definitive Certificates, the Close of Business on the last Business Day of the
calendar month preceding the month in which the related Distribution Date occurs
and (ii) with respect to the Class A-1 Certificates, the Class A-2 Certificates
and the Mezzanine Certificates, the Close of Business on the Business Day
immediately preceding the related Distribution Date; provided, however, that
following the date on which Definitive Certificates for a Class A Certificate or
a Mezzanine Certificate are available pursuant to Section 5.02, the Record Date
for such Certificates shall be the last Business Day of the calendar month
preceding the month in which the related Distribution Date occurs.

                                       41
<PAGE>

         "Reference Banks": Those banks (i) with an established place of
business in London, England, (ii) not controlling, under the control of or under
common control with the Depositor, the Seller or the Master Servicer or any
affiliate thereof and (iii) which have been designated as such by the Trustee;
provided, however, that if fewer than two of such banks provide a LIBOR rate,
then any leading banks selected by the Trustee which are engaged in transactions
in United States dollar deposits in the international Eurocurrency market.

         "Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.

         "Regular Certificate": Any of the Class A Certificates, Class S
Certificates, Mezzanine Certificates, Class C Certificates or Class P
Certificates.

         "Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.

         "Relief Act Interest Shortfall": With respect to any Distribution Date,
for any Mortgage Loan with respect to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Due Period as
a result of the application of the Relief Act, the amount by which (i) interest
collectible on such Mortgage Loan during such Due Period is less than (ii) one
month's interest on the Principal Balance of such Mortgage Loan at the Mortgage
Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.

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

         "REMIC 1A": The segregated pool of assets subject hereto, constituting
a primary trust created hereby and to be administered hereunder, with respect to
which a REMIC election is to be made consisting of: (i) such Group I Mortgage
Loans as from time to time are subject to this Agreement, together with the
Mortgage Files relating thereto, and together with all collections thereon and
proceeds thereof, (ii) any REO Property acquired with respect to a Group I
Mortgage Loan, together with all collections thereon and proceeds thereof, (iii)
the Trustee's rights with respect to the Group I Mortgage Loans under all
insurance policies required to be maintained pursuant to this Agreement and any
proceeds thereof, (iv) the Depositor's rights with respect to the Group I
Mortgage Loans under the Mortgage Loan Purchase Agreement (including any
security interest created thereby), (v) the obligations of the Guarantor to the
Holders of the Guaranteed Certificates under the Guaranty and, (vi) solely to
the extent that they relate to the Group I Mortgage Loans or payments or
property received on or with respect to the Group I Mortgage Loans, the
Collection Account, the Distribution Account (subject to the last sentence of
this definition) and any REO Account and such assets that are deposited therein
from time to time and any investments thereof, together with any and all income,
proceeds and payments with respect thereto. Notwithstanding the foregoing,
however, a REMIC election will not be made with respect to the Reserve Fund and
Master Servicer Prepayment Charge Payment Amounts.

         "REMIC 1A Regular Interest LT1A-1": One of the separate
non-certificated beneficial ownership interests in REMIC 1A issued hereunder and
designated as a Regular Interest in

                                       42
<PAGE>

REMIC 1A. REMIC 1A Regular Interest LT1A-1 shall accrue interest at the related
Uncertificated REMIC 1A Pass-Through Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto.

         "REMIC 1A Regular Interest LT1A-2": One of the separate
non-certificated beneficial ownership interests in REMIC 1A issued hereunder and
designated as a Regular Interest in REMIC 1A. REMIC 1A Regular Interest LT1A-2
shall accrue interest at the related Uncertificated REMIC 1A Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.

         "REMIC 1A Regular Interest LT1A-P": One of the separate
non-certificated beneficial ownership interests in REMIC 1A issued hereunder and
designated as a Regular Interest in REMIC 1A. REMIC 1A Regular Interest LT1A-P
shall accrue interest at the related Uncertificated REMIC 1A Pass-Through Rate
in effect from time to time, and shall be entitled to any Prepayment Charges
relating to the Group I Mortgage Loans collected by the Master Servicer and to a
distribution of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.

         "REMIC 1A Regular Interests": REMIC 1A Regular Interest LT1A-1, REMIC 1
Regular Interest LT1A-2, and REMIC 1 Regular Interest LT1A-P.

         "REMIC 1B": The segregated pool of assets subject hereto, constituting
a primary trust created hereby and to be administered hereunder, with respect to
which a REMIC election is to be made consisting of: (i) such Group II Mortgage
Loans as from time to time are subject to this Agreement, together with the
Mortgage Files relating thereto, and together with all collections thereon and
proceeds thereof, (ii) any REO Property acquired with respect to a Group II
Mortgage Loan, together with all collections thereon and proceeds thereof, (iii)
the Trustee's rights with respect to the Group II Mortgage Loans under all
insurance policies required to be maintained pursuant to this Agreement and any
proceeds thereof, (iv) the Depositor's rights with respect to the Group II
Mortgage Loans under the Mortgage Loan Purchase Agreement (including any
security interest created thereby), and (v) solely to the extent that they
relate to the Group II Mortgage Loans or payments or property received on or
with respect to the Group II Mortgage Loans, the Collection Account, the
Distribution Account (subject to the last sentence of this definition) and any
REO Account and such assets that are deposited therein from time to time and any
investments thereof, together with any and all income, proceeds and payments
with respect thereto. Notwithstanding the foregoing, however, a REMIC election
will not be made with respect to the Reserve Fund and Master Servicer Prepayment
Charge Payment Amounts.

         "REMIC 1B Regular Interest LT1B-1": One of the separate
non-certificated beneficial ownership interests in REMIC 1B issued hereunder and
designated as a Regular Interest in

                                       43
<PAGE>

REMIC 1B. REMIC 1B Regular Interest LT1B-1 shall accrue interest at the related
Uncertificated REMIC 1B Pass-Through Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto.

         "REMIC 1B Regular Interest LT1B-2": One of the separate
non-certificated beneficial ownership interests in REMIC 1B issued hereunder and
designated as a Regular Interest in REMIC 1B. REMIC 1B Regular Interest LT1B-2
shall accrue interest at the related Uncertificated REMIC 1B Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.

          "REMIC 1B Regular Interest LT1B-P": One of the separate
non-certificated beneficial ownership interests in REMIC 1B issued hereunder and
designated as a Regular Interest in REMIC 1B. REMIC 1B Regular Interest LT1B-P
shall accrue interest at the related Uncertificated REMIC 1B Pass-Through Rate
in effect from time to time, and shall be entitled to any Prepayment Charges
relating to the Group II Mortgage Loans collected by the Master Servicer and to
a distribution of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.

         "REMIC 2": The segregated pool of assets consisting of all of the REMIC
1A Regular Interests and the REMIC 1B Regular Interests conveyed in trust to the
Trustee, for the benefit of REMIC 3, as holder of the REMIC 2 Regular Interests
and the Class R Certificateholders, as holders of the Class R-2 Interest,
pursuant to Article II hereunder, and all amounts deposited therein, with
respect to which a separate REMIC election is to be made.

         "REMIC 2 Group I Diverted Excess Spread": 1% of any amount otherwise
payable as accrued interest on the Class C Certificates in respect of the Group
I Mortgage Loans that, pursuant to Section 4.01(d)(ix), is used to increase the
REMIC 2 Overcollateralized Amount 2 on any Group II Loans.

         "REMIC 2 Group II Diverted Excess Spread": 1% of any amount otherwise
payable as accrued interest on the Class C Certificates in respect of the Group
II Mortgage Loans that, pursuant to Section 4.01(d)(ix), is used to increase the
REMIC 2 Overcollateralized Amount 1 on any Group I Loans.

         "REMIC 2 Group I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2A-1 minus Marker Rate 1, divided by (b) 12.

                                       44
<PAGE>

         "REMIC 2 Group II Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2A-2 minus Marker Rate 2, divided by (b) 12.

         "REMIC 2 Overcollateralization Target Amount": 1% of the
Overcollateralization Target Amount.

         "REMIC 2 Overcollateralized Amount 1": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC 2 Regular Interest LT2A-1, REMIC 2 Regular Interest LT2B-1, REMIC 2
Regular Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC 2 Regular
Interest LT2E-1, REMIC 2 Regular Interest LT2F-1, and REMIC 2 Regular Interest
LT2P-1 minus (ii) the aggregate of the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2
Regular Interest LT2D-1, and REMIC 2 Regular Interest LT2E-1, in each case as of
such date of determination.

         "REMIC 2 Overcollateralized Amount 2": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular Interest LT2B-2, REMIC 2
Regular Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC 2 Regular
Interest LT2E-2, REMIC 2 Regular Interest LT2F-2, and REMIC 2 Regular Interest
LT2P-2 minus (ii) the aggregate of the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2B-2, REMIC 2 Regular Interest LT2C-2, REMIC 2
Regular Interest LT2D-2, and REMIC 2 Regular Interest LT2E-2 in each case as of
such date of determination.

         "REMIC 2 Principal Loss Allocation Amount 1": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is 2 times the
aggregate of the Uncertificated Principal Balances of REMIC 2 Regular Interest
LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, and
REMIC 2 Regular Interest LT2E-1, and the denominator of which is the aggregate
of the Uncertificated Principal Balances of REMIC 2 Regular Interest LT2B-1,
REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC 2
Regular Interest LT2E-1, and REMIC 2 Regular Interest LT2F-1.

         "REMIC 2 Principal Loss Allocation Amount 2": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is 2 times the
aggregate of the Uncertificated Principal Balances of REMIC 2 Regular Interest
LT2B-2, REMIC 2 Regular Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC
2 Regular Interest LT2E-2, and REMIC 2 Regular Interest LT2F-2 and the
denominator of which is the aggregate of the Uncertificated Principal Balances
of REMIC 2 Regular Interest LT2B-2, REMIC 2 Regular Interest LT2C-2, REMIC 2
Regular Interest LT2D-2, REMIC 2 Regular Interest LT2E-2 and REMIC 2 Regular
Interest LT2F-2.

                                       45
<PAGE>

         "REMIC 2 Regular Interest LT2A-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2A-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2A-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2A-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2B-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2B-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2B-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2B-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2C-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2C-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2C-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2C-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2D-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2D-1 shall accrue
interest at the related Uncertificated

                                       46
<PAGE>

REMIC 2 Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.

         "REMIC 2 Regular Interest LT2D-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2D-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2E-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2E-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2E-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2E-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2F-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2F-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2F-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2F-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2P-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2P-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to any amounts distributed to REMIC 1
Regular Interest LT1P-1.

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<PAGE>

         "REMIC 2 Regular Interest LT2P-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2P-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to any amounts distributed to REMIC 1
Regular Interest LT1P-2.

         "REMIC 2 Regular Interest LT2S-1A": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-1A
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-1B": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-1B
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-1C": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-1C
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-2A": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-2A
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-2B": One of the separate
non-certificated beneficial ownership interests in REMIC-2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-2B
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-2C": One of the separate
non-certificated beneficial ownership interests in REMIC-2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-2C
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interests": REMIC 2 Regular Interest LT2A-1, REMIC 2
Regular Interest LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular
Interest LT2D-1, REMIC 2 Regular Interest LT2E-1, REMIC 2 Regular Interest
LT2F-1, REMIC 2 Regular

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<PAGE>

Interest LT2P-1, REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular Interest
LT2B-2, REMIC 2 Regular Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC
2 Regular Interest LT2E-2, REMIC 2 Regular Interest LT2F-2, REMIC 2 Regular
Interest LT2P-2, REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular Interest
LT2S-1B, REMIC 2 Regular Interest LT2S-1C, REMIC 2 Regular Interest LT2S-2A,
REMIC 2 Regular Interest LT2S-2B, and REMIC 2 Regular Interest LT2S-2C.

         "REMIC 3": The segregated pool of assets consisting of all of the REMIC
2 Regular Interests conveyed in trust to the Trustee, for the benefit of the
Holders of the Regular Certificates, pursuant to Article II hereunder, and all
amounts deposited therein, with respect to which a separate REMIC election is to
be made.

         "REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits which appear at Section 860A through
860G of SubChapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.

         "REMIC Regular Interests": The REMIC 1A Regular Interests, the REMIC 1B
Regular Interests and the REMIC 2 Regular Interests.

         "Remittance Report": A report prepared by the Master Servicer and
delivered to the Trustee pursuant to Section 4.04.

         "Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.

         "REO Account": The account or accounts maintained by the Master
Servicer in respect of an REO Property pursuant to Section 3.23.

         "REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.

         "REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Mortgage Rate on the Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the Close of Business on the
Distribution Date in such calendar month.

         "REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 9.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i) payable pursuant
to Section 3.23 in respect of the proper operation, management and maintenance
of

                                       49
<PAGE>

such REO Property or (ii) payable or reimbursable to the Master Servicer
pursuant to Section 3.23 for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and Advances in respect of
such REO Property or the related Mortgage Loan, over (b) the REO Imputed
Interest in respect of such REO Property for such calendar month.

         "REO Property": A Mortgaged Property acquired by the Master Servicer on
behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23.

         "Request for Release": A release signed by a Servicing Representative,
in the form of Exhibit E-1 or E-2 attached hereto.

         "Reserve Fund": The reserve fund established and maintained pursuant to
Section 3.26.

         "Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
0.03125%) of the one-month United States dollar lending rates which banks in The
City of New York selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, in the case of any Interest Determination Date after the
initial Interest Determination Date, the lowest one-month United States dollar
lending rate which such New York banks selected by the Trustee are quoting on
such Interest Determination Date to leading European banks.

         "Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a Fannie Mae eligible condominium project, (iv) a
manufactured home, or (v) a detached one-family dwelling in a planned unit
development, none of which is a co-operative or mobile home.

         "Residual Certificates":  The Class R Certificates.

         "Residual Interest": The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.

         "Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, any vice president, any assistant vice president,
the Secretary, any assistant secretary, the Treasurer, any assistant treasurer,
the Cashier, any assistant cashier, any trust officer or assistant trust
officer, the Controller and any assistant controller or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and, with respect to a particular matter, to whom
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject.

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<PAGE>

         "S&P": Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., or its successor in interest.

         "Seller": Long Beach Mortgage Company, a Delaware corporation, or its
successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.

         "Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.

         "Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and expenses)
incurred by the Master Servicer in the performance of its servicing obligations
in connection with a default, delinquencies or other unanticipated event or
where reimbursement is otherwise permitted in accordance with any of the terms
of this Agreement, including, but not limited to, the cost of (i) the
preservation, restoration, inspection and protection of the Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Sections 3.01, 3.09, 3.16, and 3.23.

         "Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. A
portion of such Servicing Fee may be retained by any Sub-Servicer as its
servicing compensation.

         "Servicing Fee Rate": 0.50% per annum.

         "Servicing Representative": Any officer or employee of the Master
Servicer involved in, or responsible for, the administration and servicing of
Mortgage Loans, whose name and specimen signature appear on a list of servicing
representatives furnished by the Master Servicer to the Trustee and the
Depositor on the Closing Date, as such list may from time to time be amended.

         "Specially Serviced Mortgage Loan": A Mortgage Loan that (i) has been
delinquent in payment with respect to three or more monthly payments (provided,
however, that the third such payment shall not be deemed to be delinquent for
purposes of this clause (i) until the close of business on the last day of the
month in which such payment first became due), and (ii) has been transferred to
the Special Servicer in accordance with Section 3.13.

         "Startup Day": As defined in Section 10.01(b) hereof.

         "Stated Principal Balance": With respect to any Mortgage Loan: (a) as
of any date of determination up to but not including the Distribution Date on
which the proceeds, if any, of a

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<PAGE>

Liquidation Event with respect to such Mortgage Loan would be distributed, the
related Cut-off Date Principal Balance, as shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, to the extent received from the Mortgagor
or advanced by the Master Servicer and distributed pursuant to Section 4.01 on
or before such date of determination, (ii) all Principal Prepayments received
after the Cut-off Date, to the extent distributed pursuant to Section 4.01 on or
before such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds to the extent distributed pursuant to Section 4.01 on or before such
date of determination, and (iv) any Realized Loss incurred with respect thereto
as a result of a Deficient Valuation made during or prior to the Due Period for
the most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of the Trust Fund, minus the aggregate amount of REO Principal Amortization in
respect of such REO Property for all previously ended calendar months, to the
extent distributed pursuant to Section 4.01 on or before such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.

         "Stayed Funds": If the Master Servicer is the subject of a proceeding
under the federal Bankruptcy Code and the making of a Remittance (as defined in
Section 7.02(b)) is prohibited by Section 362 of the federal Bankruptcy Code,
funds that are in the custody of the Master Servicer, a trustee in bankruptcy or
a federal bankruptcy court and should have been the subject of such Remittance
absent such prohibition.

         "Stepdown Date": The earlier of (a) the Distribution Date in October
2004 and (b) the date on which the aggregate Certificate Principal Balance of
the Class A-1 Certificates and Class A-2 Certificates has been reduced to zero.

         "Sub-Servicer": Any Person with which the Master Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.

         "Sub-Servicing Account": An account established by a Sub-Servicer which
meets the requirements set forth in Section 3.08 and is otherwise acceptable to
the applicable Master Servicer.

         "Sub-Servicing Agreement": The written contract between the Master
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.

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<PAGE>

         "Substitution Adjustment": An amount equal to the excess of the
Principal Balance of the related Deleted Mortgage Loan over the Principal
Balance of such Qualified Substitute Mortgage Loan that the Seller is required
to deposit in the Collection Account on or prior to the next succeeding
Determination Date in connection with a substitution of a Qualified Substitute
Mortgage Loan.

         "Substitution Shortfall Amount": As defined in Section 2.03(d) hereof.

         "Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed by the Trustee on behalf of each REMIC, together with any and
all other information reports or returns that may be required to be furnished to
the Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.

         "Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).

         "Termination Price": As defined in Section 9.01(a) hereof.

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

         "Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.

         "Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.

         "Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if the Delinquency Percentage exceeds 50% of the Credit
Enhancement Percentage.

         "Trust": Long Beach Mortgage Loan Trust 2001-3, the trust created
hereunder.

         "Trust Fund": All of the assets of the Trust, which is the trust
created hereunder consisting of REMIC 1A, REMIC 1B, REMIC 2, REMIC 3, the
Reserve Fund and any Master Servicer Prepayment Charge Payment Amounts.

         "Trust REMIC": Any of REMIC 1A, REMIC 1B, REMIC 2 and/or REMIC 3.

         "Trustee": Bankers Trust Company of California, N.A., a national
banking association, or its successor in interest, or any successor trustee
appointed as herein provided.

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<PAGE>

         "Uncertificated Accrued Interest": With respect to each REMIC Regular
Interest on each Distribution Date, an amount equal to one month's interest at
the related Uncertificated Pass-Through Rate on the Uncertificated Principal
Balance or Uncertificated Notional Amount of such REMIC Regular Interest. In
each case, Uncertificated Accrued Interest will be reduced by any Net Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls allocated to such REMIC
Regular Interests pursuant to Section 1.03.

         "Uncertificated Notional Amount":

         (a) With respect to REMIC 2 Regular Interest LT2S-1A and any date of
determination, the Uncertificated Principal Balance of REMIC 1A Regular Interest
LT1A-2 for such Distribution Date;

         (b) With respect to REMIC 2 Regular Interest LT2S-1B and any date of
determination, the Uncertificated Principal Balance of REMIC 1A Regular Interest
LT1A-2 for such Distribution Date;

         (c) With respect to REMIC 2 Regular Interest LT2S-1C and any date of
determination, the Uncertificated Principal Balance of REMIC 1A Regular Interest
LT1A-2 for such Distribution Date;

         (d) With respect to REMIC 2 Regular Interest LT2S-2A and any date of
determination, the Uncertificated Principal Balance of REMIC 1B Regular Interest
LT1B-2 for such Distribution Date;

         (e) With respect to REMIC 2 Regular Interest LT2S-2B and any date of
determination, the Uncertificated Principal Balance of REMIC 1B Regular Interest
LT1B-2 for such Distribution Date; and

         (f) With respect to REMIC 2 Regular Interest LT2S-2C and any date of
determination, the Uncertificated Principal Balance of REMIC 1B Regular Interest
LT1B-2 for such Distribution Date.

         "Uncertificated Pass-Through Rate": The Uncertificated REMIC 1A
Pass-Through Rate, the Uncertificated REMIC 1B Pass-Through Rate, or the
Uncertificated REMIC 2 Pass-Through Rate.

         "Uncertificated Principal Balance": With respect to each REMIC Regular
Interest (other than REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular Interest
LT2S-1B, REMIC 2 Regular Interest LT2S-1C, REMIC 2 Regular Interest LT2S-2A,
REMIC 2 Regular Interest LT2S-2B, and REMIC 2 Regular Interest LT2S-2C) the
amount of such REMIC Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC Regular Interest (other than REMIC 2 Regular Interest LT2S-1A, REMIC
2 Regular Interest LT2S-1B and REMIC 2 Regular Interest LT2S-1C, REMIC 2 Regular
Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B and REMIC 2 Regular Interest

                                       54
<PAGE>

LT2S-2C) shall equal the amount set forth in the Preliminary Statement hereto as
its initial Uncertificated Principal Balance. On each Distribution Date, the
Uncertificated Principal Balance of each REMIC Regular Interest shall be reduced
by all distributions of principal made on such REMIC Regular Interest on such
Distribution Date pursuant to Section 4.05 and, if and to the extent necessary
and appropriate, shall be further reduced on such Distribution Date by Realized
Losses as provided in Section 4.06, and the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2F-1 and REMIC 2 Regular Interest LT2F-2 shall be
increased by interest deferrals as provided in Section 4.05. The Uncertificated
Principal Balance of each REMIC Regular Interest that has an Uncertificated
Principal Balance shall never be less than zero. REMIC 2 Regular Interest
LT2S-1A, REMIC 2 Regular Interest LT2S-1B, REMIC 2 Regular Interest LT2S-1C,
REMIC 2 Regular Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B and REMIC 2
Regular Interest LT2S-2C will not have Uncertificated Principal Balances.

         "Uncertificated REMIC 1A Pass-Through Rate": For any Distribution Date,
for REMIC 1A Regular Interest LT1A-1, REMIC 1A Regular Interest LT1A-2, and
REMIC 1A Regular Interest LT1A-P, a per annum rate equal to the weighted average
of the Adjusted Net Mortgage Rates of the Group I Mortgage Loans, weighted on
the basis of the Stated Principal Balances thereof as of the Due Date preceding
the month of such Distribution Date.

         "Uncertificated REMIC 1B Pass-Through Rate": For any Distribution Date,
for REMIC 1B Regular Interest LT1B-1, REMIC 1B Regular Interest LT1B-2, and
REMIC 1B Regular Interest LT1B-P, a per annum rate equal to the weighted average
of the Adjusted Net Mortgage Rates of the Group II Mortgage Loans, weighted on
the basis of the Stated Principal Balances thereof as of the Due Date preceding
the month of such Distribution Date.

         "Uncertificated REMIC 2 Pass-Through Rate":

         (a) With respect to REMIC 2 Regular Interest LT2A-1, REMIC 2 Regular
Interest LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular Interest
LT2D-1, REMIC 2 Regular Interest LT2E-1, REMIC 2 Regular Interest LT2F-1, and
REMIC 2 Regular Interest LT2P-1, and any Distribution Date, a per annum rate
equal to the weighted average of (x) the Uncertificated REMIC 1A Pass-Through
Rate with respect to REMIC 1A Regular Interest LT1A-1 and REMIC 1 Regular
Interest LT1A-P for such Distribution Date and (y) the excess, if any, of (i)
the Uncertificated REMIC 1A Pass-Through Rate with respect to REMIC 1A Regular
Interest LT1A-2 for such Distribution Date over (ii) 4.5% per annum (in the case
of the Distribution Date in October 2001 through the Distribution Date in July
2002), 3.5% per annum (in the case of the Distribution Date in August 2002
through the Distribution Date in May 2003), 2.5% per annum (in the case of the
Distribution Date in June 2003 through the Distribution Date in March 2004) or
0.00% per annum (in the case of any Distribution Date thereafter) weighted on
the basis of the Uncertificated Principal Balances of REMIC 1A Regular Interest
LT1A-1, REMIC 1A Regular Interest LT1A-P, and REMIC 1A Regular Interest LT1A-2,
respectively, multiplied by a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related Accrual
Period;

                                       55
<PAGE>

         (b) With respect to REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular
Interest LT2B-2, REMIC 2 Regular Interest LT2C-2, REMIC 2 Regular Interest
LT2D-2, REMIC 2 Regular Interest LT2E-2, REMIC 2 Regular Interest LT2F-2, and
REMIC 2 Regular Interest LT2P-2 and any Distribution Date, a per annum rate
equal to the weighted average of (x) the Uncertificated REMIC 1B Pass-Through
Rate with respect to REMIC 1B Regular Interest LT1B-1 and REMIC 1B Regular
Interest LT1B-P for such Distribution Date and (y) the excess, if any, of (i)
the Uncertificated REMIC 1B Pass-Through Rate with respect to REMIC 1B Regular
Interest LT1B-2 for such Distribution Date over (ii) 4.5% per annum (in the case
of the Distribution Date in October 2001 through the Distribution Date in July
2002), 3.5% per annum (in the case of the Distribution Date in August 2002
through the Distribution Date in May 2003), 2.5% per annum (in the case of the
Distribution Date in June 2003 through the Distribution Date in March 2004) or
0.00% per annum (in the case of any Distribution Date thereafter) weighted on
the basis of the Uncertificated Principal Balances of REMIC 1B Regular Interest
LT1B-1, REMIC 1B Regular Interest LT1B-P, and REMIC 1B Regular Interest LT1B-2,
respectively, multiplied by a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related Accrual
Period;

         (c) With respect to REMIC 2 Regular Interest LT2S-1A and any
Distribution Date from the Distribution Date in October 2001 through the
Distribution Date in March 2004, 2.50% per annum; with respect to REMIC 2
Regular Interest LT2S-1A and any Distribution Date thereafter, 0.00% per annum;

         (d) With respect to REMIC 2 Regular Interest LT2S-1B and any
Distribution Date from the Distribution Date in October 2001 through the
Distribution Date in May 2003, 1.00% per annum; with respect to REMIC 2 Regular
Interest LT2S-1B and any Distribution Date thereafter, 0.00% per annum;

         (e) With respect to REMIC 2 Regular Interest LT2S-1C and any
Distribution Date from the Distribution Date in October 2001 through the
Distribution Date in July 2002, 1.00% per annum; with respect to REMIC 2 Regular
Interest LT2S-1C and any Distribution Date thereafter, 0.00% per annum.

         (f) With respect to REMIC 2 Regular Interest LT2S-2A and any
Distribution Date from the Distribution Date in October 2001 through the
Distribution Date in March 2004, 2.50% per annum; with respect to REMIC 2
Regular Interest LT2S-2A and any Distribution Date thereafter, 0.00% per annum;

         (g) With respect to REMIC 2 Regular Interest LT2S-2B and any
Distribution Date from the Distribution Date in October 2001 through the
Distribution Date in May 2003, 1.00% per annum; with respect to REMIC 2 Regular
Interest LT2S-2B and any Distribution Date thereafter, 0.00% per annum; and

         (h) With respect to REMIC 2 Regular Interest LT2S-2C and any
Distribution Date from the Distribution Date in October 2001 through the
Distribution Date in July 2002, 1.00%

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<PAGE>

per annum; with respect to REMIC 2 Regular Interest LT2S-2C and any
Distribution Date thereafter, 0.00% per annum.

         "Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14.

         "United States Person" or "U.S. Person": (i) A citizen or resident of
the United States; (ii) a corporation, partnership or other entity classified as
a corporation or partnership for tax purposes created or organized in, or under
the laws of, the United States or any political subdivision thereof (except, in
the case of a partnership or entity treated as a partnership, to the extent
provided in regulations) provided that, solely for purposes of the restrictions
on the transfer of the Class R Certificates, no partnership or other entity
treated as a partnership shall be treated as a United States Person unless all
persons that own an interest in such partnership or other entity, either
directly or through any entity that is not a corporation for United States
federal income tax purposes, are required by the applicable operative agreement
to be United States Persons; (iii) an estate the income of which is subject to
United States federal income taxation regardless of its source, or (iv) a trust
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States Persons have the
authority to control all substantial decisions of the trust or if the trust was
in existence on August 20, 1996, was treated as a United States Person on August
19, 1996, and made a valid election to continue to be treated as a United States
Person. The term "United States" shall have the meaning set forth in Section
7701 of the Code or successor provisions.

         "Unpaid Interest Shortfall Amount": With respect to the Class A
Certificates, the Class S Certificates and the Mezzanine Certificates and (i)
the first Distribution Date, zero, and (ii) any Distribution Date after the
first Distribution Date, the amount, if any, by which (a) the sum of (1) the
Monthly Interest Distributable Amount for such Class for the immediately
preceding Distribution Date and (2) the outstanding Unpaid Interest Shortfall
Amount, if any, for such Class for such preceding Distribution Date exceeds (b)
the aggregate amount distributed on such Class in respect of interest pursuant
to clause (a) of this definition on such preceding Distribution Date, plus
interest on the amount of interest due but not paid on the Certificates of such
Class on such preceding Distribution Date, to the extent permitted by law, at
the Pass-Through Rate for such Class for the related Accrual Period.

         "Value": With respect to any Mortgaged Property, the lesser of (i) the
value thereof as determined by an appraisal made for the originator of the
Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser
who met the minimum requirements of Fannie Mae, and (ii) the purchase price paid
for the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan, provided, however, in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the value determined
by an appraisal made for the originator of such Refinanced Mortgage Loan at the
time of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of Fannie Mae.

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<PAGE>

         "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates shall have
97% of the Voting Rights (allocated among the Holders of the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates in
proportion to the then outstanding Certificate Principal Balances of their
respective Certificates), the Class S Certificates shall have 1% of the Voting
Rights, the Class P Certificates shall have 1% of the Voting Rights and the
Class R Certificates shall have 1% of the Voting Rights. The Voting Rights
allocated to any Class of Certificates (other than the Class P Certificates and
the Class R Certificates) shall be allocated among all Holders of each such
Class in proportion to the outstanding Certificate Principal Balance or Notional
Amount of such Certificates and the Voting Rights allocated to the Class P
Certificates and the Class R Certificates shall be allocated among all Holders
of each such Class in proportion to such Holders' respective Percentage
Interest; provided, however, that when none of the Regular Certificates are
outstanding, 100% of the Voting Rights shall be allocated among Holders of the
Class R Certificates in accordance with such Holders' respective Percentage
Interests in the Certificates of such Class. Notwithstanding any of the
foregoing, on any date on which any Guaranteed Certificates are outstanding or
any amounts are owed the Guarantor under this Agreement, all of the Voting
Rights allocated to the Guaranteed Certificates shall be vested in the
Guarantor.

Section 1.02 Accounting.

         Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.

Section 1.03 Allocation of Certain Interest Shortfalls.

         For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class A Certificates, the Class S Certificates, the
Mezzanine Certificates and the Class C Certificates for any Distribution Date,
(1) the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, among the Class C Certificates on a
pro rata basis based on, and to the extent of, one month's interest at the then
applicable Pass-Through Rate on the Notional Amount of each such Certificate
and, thereafter, among the Class A Certificates, the Class S Certificates and
the Mezzanine Certificates on a pro rata basis based on, and to the extent of,
interest for the related Accrual Period at the then applicable respective
Pass-Through Rate on the respective Certificate Principal Balance or Notional
Amount of each such Certificate and (2) the aggregate amount of any Realized
Losses and Net WAC Rate Carryover Amounts incurred for any Distribution Date
shall be allocated among the Class C Certificates on a pro rata basis based on,
and to the extent of, interest for the related Accrual Period at the then
applicable Pass-Through Rate on the Notional Amount of each such Certificate.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC 1A Regular Interests for any Distribution
Date, the aggregate amount of

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any Net Prepayment Interest Shortfalls and any Relief Act Interest Shortfalls
incurred in respect of the Group I Mortgage Loans for any Distribution Date
shall be allocated first to REMIC 1A Regular Interest LT1A-1 and then to REMIC
1A Regular Interest LT1A-2, in each case to the extent of interest for the
related Accrual Period at the then applicable respective Uncertificated REMIC 1A
Pass-Through Rate on the respective Uncertificated Principal Balance of each
such Uncertificated REMIC 1A Regular Interest.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertified REMIC 1B Regular Interests for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Group II Mortgage
Loans for any Distribution Date shall be allocated first to REMIC 1B Regular
Interest LT1B-1 and then to REMIC 1B Regular Interest LT1B-2, in each case to
the extent of interest for the related Accrual Period at the then applicable
respective Uncertificated REMIC 1B Pass-Through Rate on the respective
Uncertificated Principal Balance of each such Uncertificated REMIC 1B Regular
Interest.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC 2 Regular Interests for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Group I Mortgage Loans
for any Distribution Date shall be allocated first, pro rata to REMIC 2 Regular
Interest LT2A-1 and REMIC 2 Regular Interest LT2F-1, up to an aggregate amount
equal to the REMIC 2 Group I Interest Loss Allocation Amount, with allocations
between REMIC 2 Regular Interest LT2A-1 and REMIC 2 Regular Interest LT2F-1
being made 98% and 2%, respectively. Thereafter, Net Prepayment Interest
Shortfalls and any Relief Act Interest Shortfalls incurred in respect of the
Group I Mortgage Loans for any Distribution Date shall be allocated pro rata
among REMIC 2 Regular Interest LT2A-1, REMIC 2 Regular Interest LT2B-1, REMIC 2
Regular Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC 2 Regular
Interest LT2E-1, REMIC 2 Regular Interest LT2F-1, REMIC 2 Regular Interest
LT2S-1A, REMIC 2 Regular Interest LT2S-1B, and REMIC 2 Regular Interest LT2S-1C.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC 2 Regular Interests for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Group II Mortgage
Loans for any Distribution Date shall be allocated first, pro rata to REMIC 2
Regular Interest LT2A-2 and REMIC 2 Regular Interest LT2F-2, up to an aggregate
amount equal to the REMIC 2 Group II Interest Loss Allocation Amount, with
allocations between REMIC 2 Regular Interest LT2A-2 and REMIC 2 Regular Interest
LT2F-2 being made 98% and 2%, respectively. Thereafter, Net Prepayment Interest
Shortfalls and any Relief Act Interest Shortfalls incurred in respect of the
Group II Mortgage Loans for any Distribution Date shall be allocated pro rata
among REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular Interest LT2B-2, REMIC 2
Regular Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC 2 Regular
Interest LT2E-2, REMIC 2 Regular Interest LT2F-2, REMIC 2 Regular Interest
LT2S-2A, REMIC 2 Regular Interest LT2S-2B, and REMIC 2 Regular Interest LT2S-2C.

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<PAGE>

         For purposes of the preceding four paragraphs, pro rata allocations
shall be based on interest for the related Accrual Period at the then applicable
respective Uncertificated REMIC 2 Pass-Through Rate, Uncertificated REMIC 1A
Pass-Through Rate or Uncertificated REMIC 1B Pass-Through Rate on the respective
Uncertificated Principal Balance or Uncertificated Notional Amount of each such
Uncertificated REMIC 2 Regular Interest, Uncertificated REMIC 1A Regular
Interest or Uncertificated REMIC 1B Regular Interest.

Section 1.04 Rights of the Guarantor.

         Notwithstanding anything to the contrary anywhere in this Agreement,
all rights of the Guarantor hereunder, except any rights to indemnification,
shall permanently terminate upon the later to occur of (A) such time as the
Guaranteed Certificates shall no longer be outstanding and (B) the payment in
full to the Guarantor of any amounts owed to the Guarantor in respect of its
guarantee of payment on the Guaranteed Certificates; provided that the Guarantor
shall not have any rights hereunder, except indemnification rights, so long as
any default has occurred and is continuing under the Guaranty.

Section 1.05 Guarantor Purchase Option.

         If the Master Servicer has not exercised its right to purchase all of
the Mortgage Loans and each REO Property in both Loan Groups remaining in REMIC
1A and REMIC 1B pursuant to Sections 9.01(a) and (b) and the Class A-1
Certificates are outstanding, the Guarantor shall have the right to purchase all
of the Group I Mortgage Loans and each REO Property in Loan Group I remaining in
REMIC 1A during any Prepayment Period following the Stepdown Date and the
Optional Termination Date; provided, that the aggregate Stated Principal Balance
of the Group I Mortgage Loans and each REO Property in Loan Group I remaining in
the Trust Fund on the immediately preceding Distribution Date is equal to or
less than 5% aggregate Stated Principal Balance of the Group I Mortgage Loans as
of the Cut-off Date. The price payable by the Guarantor upon the exercise of the
foregoing option shall be equal to the aggregate Purchase Price of all of the
Mortgage Loans included in REMIC 1A, plus the appraised value of each REO
Property (if any) in REMIC 1A, such appraisal to be conducted by an appraiser
mutually agreed upon by the Master Servicer, the Guarantor and the Trustee in
their reasonable discretion, plus any unpaid Guarantor Reimbursement Amount and
unpaid Guaranty Fee, and any additional amounts necessary to pay all interest
accrued on, as well as amounts necessary to pay in full the principal balance
of, the NIM Notes and the Class A-1 Certificates.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01 Conveyance of Mortgage Loans.

         The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse for the benefit of the

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<PAGE>

Certificateholders all the right, title and interest of the Depositor, including
any security interest therein for the benefit of the Depositor, in and to the
Original Mortgage Loans identified on the Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreement (other than the
Depositor's rights under Section 17 and Section 18 thereof), and all other
assets included or to be included in REMIC 1A or REMIC 1B. Such assignment
includes all interest and principal received by the Depositor or the Master
Servicer on or with respect to the Original Mortgage Loans (other than payments
of principal and interest due on such Mortgage Loans on or before the Cut-off
Date). The Depositor herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement.

         If the assignment and transfer of the Original Mortgage Loans and the
other property specified in Section 2.01 from the Depositor to the Trustee
pursuant to this Agreement is held or deemed not to be a sale or is held or
deemed to be a pledge of security for a loan, the Depositor intends that the
rights and obligations of the parties shall be established pursuant to the terms
of this Agreement and that, in such event, (i) the Depositor shall be deemed to
have granted and does hereby grant to the Trustee as of the Closing Date a
perfected, first priority security interest in the entire right, title and
interest of the Depositor in and to the Original Mortgage Loans and all other
property conveyed to the Trust Fund pursuant to this Section 2.01 and all
proceeds thereof and (ii) this Agreement shall constitute a security agreement
under applicable law.

         In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, the Trustee the following documents or
instruments with respect to each Original Mortgage Loan so transferred and
assigned (each, a "Mortgage File"):

                  (a) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of Bankers Trust Company of California, N.A.,
as Trustee under the applicable agreement, without recourse," with all prior and
intervening endorsements showing a complete chain of endorsement from the
originator to the Person so endorsing to the Trustee or (in the case of not more
than 1.00% of the Mortgage Loans, by aggregate principal balance as of the
Cut-off Date) a copy of such original Mortgage Note with an accompanying Lost
Note Affidavit executed by the Seller;

                  (b) the original Mortgage with evidence of recording thereon,
and a copy, certified by the appropriate recording office, of the recorded power
of attorney, if the Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;

                  (c) an original Assignment in blank;

                  (d) the original recorded Assignment or Assignments showing a
complete chain of assignment from the originator to the Person assigning the
Mortgage to the Trustee or in blank;

                  (e) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and

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<PAGE>

                  (f) the original lender's title insurance policy, together
with all endorsements or riders issued with or subsequent to the issuance of
such policy, insuring the priority of the Mortgage as a first lien on the
Mortgaged Property represented therein as a fee interest vested in the
Mortgagor, or in the event such original title policy is unavailable, a written
commitment or uniform binder or preliminary report of title issued by the title
insurance or escrow company.

         The Master Servicer, in its capacity as Seller, shall promptly (and in
no event later than thirty (30) Business Days, subject to extension upon a
mutual agreement between the Master Servicer and the Trustee), following the
later of the Closing Date and the date of receipt by the Master Servicer of the
recording information for a Mortgage submit or cause to be submitted for
recording, at no expense to the Trust Fund, the Trustee or the Depositor, in the
appropriate public office for real property records, each Assignment referred to
in Sections 2.01(c) and (d) above and shall execute each original Assignment
referred to in clause (c) above in the following form: "Bankers Trust Company of
California, N.A., as Trustee under applicable agreement, without recourse." In
the event that any such Assignment is lost or returned unrecorded because of a
defect therein, the Master Servicer, in its capacity as Seller, shall promptly
prepare or cause to be prepared a substitute Assignment or cure or cause to be
cured such defect, as the case may be, and thereafter cause each such Assignment
to be duly recorded. Notwithstanding the foregoing, however, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
Assignments shall not be required to be completed and submitted for recording
with respect to any Mortgage Loan if either (x) the Trustee, the Guarantor and
each Rating Agency has received an opinion of counsel, reasonably satisfactory
to the Trustee, the Guarantor and each Rating Agency, to the effect that the
recordation of such Assignments in any specific jurisdiction is not necessary to
protect the Trust's interest in the related Mortgage Note or (y) each Rating
Agency shall have determined that no such opinion is required in order for such
Rating Agency to assign the initial ratings to the Class A Certificates, the
Class S Certificates, the Mezzanine Certificates and the NIM Notes; provided
further, however, notwithstanding the delivery of any opinion of counsel, each
Assignment shall be submitted for recording by the Master Servicer, in its
capacity as Seller, in the manner described above, at no expense to the Trust
Fund or the Trustee, upon the earliest to occur of: (i) reasonable direction by
Holders of Certificates entitled to at least 25% of the Voting Rights, (ii) the
occurrence of a Master Servicer Event of Default, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Seller, (iv) the
occurrence of a servicing transfer as described in Section 7.02 hereof and (iv)
if the Seller is not the Master Servicer and with respect to any one Assignment,
the occurrence of a bankruptcy, insolvency or foreclosure relating to the
Mortgagor under the related Mortgage. Notwithstanding the foregoing, if the
Master Servicer is unable to pay the cost of recording the Assignments, such
expense will be paid by the Trustee and shall be reimbursable to the Trustee as
an Extraordinary Trust Fund Expense.

         If any of the documents referred to in Sections 2.01(b), (c), (d) or
(e) above has as of the Closing Date been submitted for recording but either (x)
has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Depositor to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Trustee of a copy of each such
document certified by the Seller in the case of (x) above or the applicable
public recording office

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<PAGE>

in the case of (y) above to be a true and complete copy of the original that was
submitted for recording and (2) if such copy is certified by the Seller,
delivery to the Trustee promptly upon receipt thereof, and in any event no later
than one year after the Closing Date, of either the original or a copy of such
document certified by the applicable public recording office to be a true and
complete copy of the original. If the original lender's title insurance policy
was not delivered pursuant to Section 2.01(f) above, the Depositor shall deliver
or cause to be delivered to the Trustee promptly after receipt thereof, and in
any event within 120 days after the Closing Date, the original lender's title
insurance policy. The Depositor shall deliver or cause to be delivered to the
Trustee promptly upon receipt thereof any other original documents constituting
a part of a Mortgage File received with respect to any Mortgage Loan, including,
but not limited to, any original documents evidencing an assumption or
modification of any Mortgage Loan.

         All original documents relating to the Mortgage Loans that are not
delivered to the Trustee are and shall be held by or on behalf of the Seller,
the Depositor or the Master Servicer, as the case may be, in trust for the
benefit of the Trustee on behalf of the Certificateholders. In the event that
any such original document is required pursuant to the terms of this Section to
be a part of a Mortgage File, such document shall be delivered promptly to the
Trustee. Any such original document delivered to or held by the Depositor that
is not required pursuant to the terms of this Section to be a part of a Mortgage
File, shall be delivered promptly to the Master Servicer.

Section 2.02 Acceptance of REMIC 1A and REMIC 1B by the Trustee.

         Subject to the provisions of Section 2.01 and subject to any exceptions
noted on the exception report described in the next paragraph below, the Trustee
acknowledges receipt of the documents referred to in Section 2.01 above and all
other assets included in the definition of "REMIC 1A" under clauses (i), (iii),
(iv) and (vi) (to the extent of amounts deposited into the Distribution Account)
and the definition of REMIC 1B under clauses (i), (iii), (iv) and (v) (to the
extent of amounts deposited into the Distribution Account) and declares that it
holds and will hold such documents and the other documents delivered to it
constituting the Mortgage File, and all such assets and such other assets
included in the definition of "REMIC 1A" and "REMIC 1B" in trust for the
exclusive use and benefit of all present and future Certificateholders.

         The Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File on or before the Closing Date and to certify to the
Guarantor, the Depositor and the Master Servicer in substantially the form
attached hereto as Exhibit F-1 that, as to each Original Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Original Mortgage Loan paid in full
or any Original Mortgage Loan specifically identified in the exception report
annexed thereto as not being covered by such certification), (i) all documents
constituting part of such Mortgage File (other than such documents described in
Section 2.01(e)) required to be delivered to it pursuant to this Agreement are
in its possession, (ii) such documents have been reviewed by the Trustee and are
not mutilated, torn or defaced unless initialed by the related borrower and
relate to such Original Mortgage Loan and (iii) based on the Trustee's
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i), (ii), (vi), (ix), (xii)
(xiv) (to the extent of the Periodic Rate Cap for the first Adjustment

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<PAGE>

Date and subsequent Adjustment Dates) and (xvi) of the definition of "Mortgage
Loan Schedule" accurately reflects information set forth in the Mortgage File.
It is herein acknowledged that, in conducting such review, the Trustee was under
no duty or obligation (i) to inspect, review or examine any such documents,
instruments, certificates or other papers to determine whether they are genuine,
enforceable, or appropriate for the represented purpose (including with respect
to Section 2.01(f), whether such title insurance policy (a) contains all
necessary endorsements, (b) insures the priority of the Mortgage as a first lien
or (c) whether the interest vested in the Mortgagor is a fee interest) or
whether they have actually been recorded or that they are other than what they
purport to be on their face or (ii) to determine whether any Mortgage File
should include any of the documents specified in clause (e) of Section 2.01.

         Prior to the first anniversary date of this Agreement, the Trustee
shall deliver to the Depositor, the Master Servicer and the Guarantor a final
certification in the form annexed hereto as Exhibit F-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon.

         If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
finds any document or documents constituting a part of a Mortgage File to be
missing or defective in any material respect, at the conclusion of its review
the Trustee shall so notify the Depositor, the Seller, the Guarantor and the
Master Servicer. In addition, upon the discovery by the Depositor, the Master
Servicer, the Guarantor or the Trustee of a breach of any of the representations
and warranties made by the Seller in the Mortgage Loan Purchase Agreement in
respect of any Mortgage Loan which materially and adversely affects the value of
such Original Mortgage Loan or the interests of the related Certificateholders
in such Original Mortgage Loan, the party discovering such breach shall give
prompt written notice to the other parties.

Section 2.03 Cure, Repurchase or Substitution of Mortgage Loans by the
             Seller; Remedies for Breaches by Depositor or Master Servicer;
             Remedies for Breaches Relating to Prepayment Charges.

             (a) Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, the Mortgage File or of the
breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially and adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders (in the case of any such representation or
warranty made to the knowledge or the best of knowledge of the Seller, as to
which the Seller has no knowledge, without regard to the Seller's lack of
knowledge with respect to the substance of such representation or warranty being
inaccurate at the time it was made), the Trustee shall promptly notify the
Depositor, the Seller, the Guarantor and the Master Servicer of such defect,
missing document or breach and request that the Seller deliver such missing
document or cure such defect or breach within 90 days from the date the Seller
was notified of such missing document, defect or breach, and if the Seller does
not deliver such missing document or cure such defect or breach in all material
respects during such period, the Master Servicer (or, in accordance with Section
3.02(b), the Trustee) shall enforce the obligations of the Seller under

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<PAGE>

the Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from REMIC
1A or REMIC 1B at the Purchase Price within 90 days after the date on which the
Seller was notified (subject to Section 2.03(e)) of such missing document,
defect or breach, if and to the extent that the Seller is obligated to do so
under the Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Collection Account, and the
Trustee, upon receipt of written certification from the Master Servicer of such
deposit, shall release to the Seller the related Mortgage File, and the Trustee
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the Seller shall furnish to it and as shall be
necessary to vest in the Seller any Mortgage Loan released pursuant hereto, and
the Trustee shall not have any further responsibility with regard to such
Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided above,
if so provided in the Mortgage Loan Purchase Agreement, the Seller may cause
such Mortgage Loan to be removed from REMIC 1A or REMIC 1B (in which case it
shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the limitations set forth
in Section 2.03(d). It is understood and agreed that the obligation of the
Seller to cure or to repurchase (or to substitute for) any Mortgage Loan as to
which a document is missing, a material defect in a constituent document exists
or as to which such a breach has occurred and is continuing shall constitute the
sole remedy respecting such omission, defect or breach available to the
Certificateholders, the Trustee on behalf of the Certificateholders and the
Guarantor.

             (b) Within 90 days of the earlier of discovery by the Depositor or
receipt of notice by the Depositor of the breach of any representation or
warranty of the Depositor set forth in Section 2.05 with respect to any Mortgage
Loan, which materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Depositor shall cure such breach
in all material respects.

             (c) As promptly as practicable (and no later than 90 days) after
the earlier of discovery by the Master Servicer or receipt of notice by the
Master Servicer of the breach of any representation, warranty or covenant of the
Master Servicer set forth in Section 2.04 which materially and adversely affects
the value of any Mortgage Loan or the interests of the Certificateholders in any
Mortgage Loan, the Master Servicer shall cure such breach in all material
respects.

         Within 90 days of the earlier of discovery by the Master Servicer or
receipt of notice by the Master Servicer of the breach of any representation,
warranty or covenant of the Master Servicer set forth in Section 2.04(a)(vii) or
(viii) which materially and adversely affects the interests of the Holders of
the Class P Certificates to any Prepayment Charge, the Master Servicer shall
cure such breach in all material respects. If the representation made by the
Master Servicer in its capacity as Seller in Section 2.04(a)(vii) is breached,
the Master Servicer in its capacity as Seller shall pay into the Collection
Account the amount of the scheduled Prepayment Charge, less any amount
previously collected and deposited by, or paid by, the Master Servicer into the
Collection Account; and if the covenant made by the Master Servicer in Section
2.04(a)(viii) is breached, the Master Servicer shall pay into the Collection
Account the amount of the waived Prepayment Charge.

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<PAGE>

             (d) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) shall be effected prior
to the date which is two years after the Startup Date for REMIC 1A or REMIC 1B.

         As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected
by the Seller delivering to the Trustee, for such Qualified Substitute Mortgage
Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee,
and such other documents and agreements, with all necessary endorsements
thereon, as are required by Section 2.01, together with an Officers' Certificate
providing that each such Qualified Substitute Mortgage Loan satisfies the
definition thereof and specifying the Substitution Shortfall Amount (as
described below), if any, in connection with such substitution. The Trustee
shall acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans
and, within ten Business Days thereafter, review such documents as specified in
Section 2.02 and deliver to the Depositor, the Master Servicer and the
Guarantor, with respect to such Qualified Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit F-1, with any
applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Depositor, the Seller, the
Guarantor and the Master Servicer a certification substantially in the form of
Exhibit F-2 hereto with respect to such Qualified Substitute Mortgage Loan or
Loans, with any applicable exceptions noted thereon. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans in the month of substitution are
not part of REMIC 1A or REMIC 1B, as the case may be, and will be retained by
the Seller. For the month of substitution, distributions to Certificateholders
will reflect the Monthly Payment due on such Deleted Mortgage Loan on or before
the Due Date in the month of substitution, and the Seller shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. The Trustee shall give or cause to be given written notice to the
Guarantor and the Certificateholders that such substitution has taken place, and
the Master Servicer shall amend or cause to be amended 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 and shall deliver a copy of such amended Mortgage Loan Schedule to the
Guarantor and the Trustee. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be
subject in all respects to the terms of this Agreement and the Mortgage Loan
Purchase Agreement, including all applicable representations and warranties
thereof included in the Mortgage Loan Purchase Agreement as of the date of
substitution.

         For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (the "Substitution Shortfall Amount"), if
any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans
exceeds the aggregate of, as to each such Qualified Substitute Mortgage Loan,
the Stated Principal Balance thereof as of the date of substitution, together
with one month's interest on such Stated Principal Balance at the applicable Net
Mortgage Rate, plus all outstanding Advances and Servicing Advances. On the date
of such substitution, the Seller will deliver or cause to be delivered to the
Master Servicer for deposit in the Collection Account an amount equal to the
Substitution Shortfall Amount, if any, and the Trustee, upon receipt of the

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related Qualified Substitute Mortgage Loan or Loans and certification by the
Master Servicer of such deposit, shall release to the Depositor or the Seller,
as the case may be, the related Mortgage File or Files and the Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as the Depositor or the Seller, as the case may be, shall
deliver to it and as shall be necessary to vest therein any Deleted Mortgage
Loan released pursuant hereto.

         In addition, the Master Servicer in its capacity as Seller shall obtain
at its own expense and deliver to the Guarantor and the Trustee an Opinion of
Counsel to the effect that such substitution will not cause (a) any federal tax
to be imposed on REMIC 1A or REMIC 1B, created hereunder, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup date" under
Section 860G(d)(1) of the Code, or (b) any Trust REMIC hereunder to fail to
qualify as a REMIC at any time that any Certificate is outstanding.

             (e) Upon discovery by the Depositor, the Seller, the Master
Servicer or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties. In connection therewith, the Master Servicer in its
capacity as Seller shall repurchase or, subject to the limitations set forth in
Section 2.03(d), substitute one or more Qualified Substitute Mortgage Loans for
the affected Mortgage Loan within 90 days of the earlier of discovery or receipt
of such notice with respect to such affected Mortgage Loan. Any such repurchase
or substitution shall be made in the same manner as set forth in Section
2.03(a). The Trustee shall reconvey to the Seller the Mortgage Loan to be
released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.

Section 2.04 Representations, Warranties and Covenants of the Master Servicer.

             (a) The Master Servicer hereby represents, warrants and covenants
to the Trustee, for the benefit of the Trustee and the Certificateholders, and
to the Guarantor and Depositor, that as of the Closing Date or as of such date
specifically provided herein:

                  (i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, is duly authorized and qualified to transact any and all business
contemplated by this Agreement and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good standing
in the states where the Mortgaged Properties are located if the laws of such
state require licensing or qualification in order to conduct business of the
type conducted by the Master Servicer or to ensure the enforceability or
validity of each Mortgage Loan and, in any event, is in compliance with the
doing business laws of any such State, to the extent necessary to ensure its
ability to enforce each Mortgage Loan and to service the Mortgage Loans in
accordance with the terms of this Agreement;

                  (ii) The Master Servicer has the full power and authority to
service each Mortgage Loan, to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary action on

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<PAGE>

the part of the Master Servicer the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization, execution and
delivery thereof by the Depositor, the Guarantor and the Trustee, constitutes a
legal, valid and binding obligation of the Master Servicer, enforceable against
the Master Servicer in accordance with its terms, except to the extent that (a)
the enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally and
(b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.

                  (iii) The execution and delivery of this Agreement by the
Master Servicer, the servicing of the Mortgage Loans by the Master Servicer
hereunder, the consummation by the Master Servicer of any other of the
transactions herein contemplated, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of the Master Servicer and
will not (A) result in a breach of any term or provision of the charter or
by-laws of the Master Servicer or (B) conflict with, result in a breach,
violation or acceleration of, or result in a default under, the terms of any
other material agreement or instrument to which the Master Servicer is a party
or by which it may be bound, or any statute, order or regulation applicable to
the Master Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Master Servicer; and the Master
Servicer is not a party to, bound by, or in breach or violation of any indenture
or other agreement or instrument, or subject to or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which materially and adversely
affects or, to the Master Servicer's knowledge, would in the future materially
and adversely affect, (x) the ability of the Master Servicer to perform its
obligations under this Agreement or (y) the business, operations, financial
condition, properties or assets of the Master Servicer taken as a whole;

                  (iv) The Master Servicer is an approved seller/servicer for
Fannie Mae or Freddie Mac in good standing and is a HUD approved mortgagee
pursuant to Section 203 and Section 211 of the National Housing Act;

                  (v) No litigation is pending against the Master Servicer that
would materially and adversely affect the execution, delivery or enforceability
of this Agreement or the ability of the Master Servicer to service the Mortgage
Loans or to perform any of its other obligations hereunder in accordance with
the terms hereof;

                  (vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master Servicer
with, this Agreement or the consummation by the Master Servicer of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained prior to
the Closing Date;

                  (vii) 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

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<PAGE>

information is furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms under applicable law upon the
Mortgagor's full and voluntary principal prepayment (except to the extent that:
(1) the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors' rights
generally; or (2) the collectibility thereof may be limited due to acceleration
in connection with a foreclosure or other involuntary prepayment); provided that
the representation, warranty and covenant contained in this clause (vii) is made
by the Master Servicer only in its capacity as Seller; and

                  (viii) The Master Servicer will not waive any Prepayment
Charge or part of a Prepayment Charge unless such waiver is related to a default
or a reasonably foreseeable default and would maximize recovery of total
proceeds taking into account the value of such Prepayment Charge and related
Mortgage Loan and doing so is standard and customary in servicing mortgage loans
similar to the Mortgage Loans (including any waiver of a Prepayment Charge in
connection with a refinancing of a Mortgage Loan that is related to a default or
a reasonably foreseeable default).

                  (ix) For each Mortgage Loan, the Master Servicer will
accurately, fully and in a timely manner report its borrower credit files to
each of Equifax, Transunion, and Experian (the "Credit Repositories").

             (b) It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.04 shall survive delivery
of the Mortgage Files to the Trustee and shall inure to the benefit of the
Trustee, the Depositor and the Certificateholders. Upon discovery by any of the
Depositor, the Master Servicer or the Trustee of a breach of any of the
foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan, Prepayment Charge or the
interests therein of the Certificateholders, the party discovering such breach
shall give prompt written notice (but in no event later than two Business Days
following such discovery) to the other of such parties. The obligation of the
Master Servicer set forth in Section 2.03(c) to cure breaches (or, in the case
of (a)(vii) or (a)(viii) above, to pay a Master Servicer Prepayment Charge
Payment Amount) shall constitute the sole remedy against the Master Servicer
available to the Certificateholders, the Depositor, the Guarantor, or the
Trustee on behalf of the Certificateholders respecting a breach of the
representations, warranties and covenants contained in this Section 2.04. The
preceding sentence shall not, however, limit any remedies available to the
Certificateholders, the Depositor, the Guarantor or the Trustee on behalf of the
Certificateholders, (i) pursuant to the Mortgage Loan Purchase Agreement signed
by the Master Servicer in its capacity as Seller, respecting a breach of the
representations, warranties and covenants of the Master Servicer in its capacity
as Seller contained in the Mortgage Loan Purchase Agreement or (ii) pursuant to
Section 7.01 hereof.

Section 2.05 Representations and Warranties of the Depositor.

         The Depositor hereby represents, warrants and covenants to the Trustee,
for the benefit of the Trustee and the Certificateholders, and to the Guarantor
and the Master Servicer, that as of the Closing Date or as of such date
specifically provided herein:

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<PAGE>

                  (i) Each of this agreement and the Mortgage Loan Purchase
Agreement constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general an except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity);

                  (ii) Immediately prior to the sale and assignment by the
Depositor to the Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor had good and marketable title to each Mortgage Loan subject to no
prior lien, claim, participation interest, mortgage, security interest, pledge,
charge or other encumbrance or other interest of any nature;

                  (iii) As of the Closing Date, the Depositor has transferred
all right, title interest in the Mortgage Loans to the Trustee on behalf of the
Trust;

                  (iv) The Depositor is solvent and will not be made insolvent
by the transfer of the Mortgage Loans. The Depositor has not transferred the
Mortgage Loans to the Trustee with any intent to hinder, delay or defraud any of
its creditors;

                  (v) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware, with full
corporate power and authority to own its assets and conduct its business as
presently being conducted;

                  (vi) The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Depositor is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial condition,
earnings, affairs or business of the Depositor or which might materially and
adversely affect the properties or assets, taken as a whole, of the Depositor;

                  (vii) The execution, delivery and performance of this
Agreement and the Mortgage Loan Purchase Agreement by the Depositor, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not result in a material breach or violation of any of the terms or
provisions of, or, to the knowledge of the Depositor, constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Depositor is a party or by which the Depositor is
bound or to which any of the property or assets of the Depositor is subject, nor
will such actions result in any violation of the provisions of the articles of
incorporation or by-laws of the Depositor or, to the best of the Depositor's
knowledge without independent investigation, any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Depositor or any of its properties or assets (except for such conflicts,
breaches, violations and defaults as would not have a material adverse effect on
the ability of the Depositor to perform its obligations under this Agreement or
the Mortgage Loan Purchase Agreement);

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<PAGE>

                  (viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body of the United States or any other jurisdiction is required for the issuance
of the Certificates, or the consummation by the Depositor of the other
transactions contemplated by this Agreement or the Mortgage Loan Purchase
Agreement, except such consents, approvals, authorizations, registrations or
qualifications as (a) may be required under State securities or blue sky laws,
(b) have been previously obtained or (c) the failure of which to obtain would
not have a material adverse effect on the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or the
Mortgage Loan Purchase Agreement;

                  (ix) There are no actions, proceedings or investigations
pending before or, to the Depositor's knowledge, threatened by any court,
administrative agency or other tribunal to which the Depositor is a party or of
which any of its properties is the subject: (a) which if determined adversely to
the Depositor would have a material adverse effect on the business, results of
operations or financial condition of the Depositor; (b) asserting the invalidity
of this Agreement, the Mortgage Loan Purchase Agreement or the Certificates; (c)
seeking to prevent the issuance of the Certificates or the consummation by the
Depositor of any of the transactions contemplated by this Agreement or the
Mortgage Loan Purchase Agreement, as the case may be; or (d) which might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or the
Mortgage Loan Purchase Agreement; and

                  (x) The Depositor has the full power and authority to execute,
deliver and perform, and to enter into and consummate the transactions
contemplated by this Agreement and has duly authorized by all necessary action
on the part of the Depositor the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization, execution and
delivery thereof by the Depositor, the Guarantor and the Trustee, constitutes a
legal, valid and binding obligation of the Depositor, enforceable against the
Depositor in accordance with its terms, except to the extent that (a) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally and
(b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.

Section 2.06 Issuance of Certificates.

         The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery to it of the Mortgage Files, subject to the provisions of Sections
2.01 and 2.02, together with the assignment to it of all other assets included
in the Trust Fund, receipt of which is hereby acknowledged. Concurrently with
such assignment and delivery and in exchange therefor, the Trustee, pursuant to
the written request of the Depositor executed by an officer of the Depositor,
has executed, authenticated and delivered to or upon the written order of the
Depositor, the Certificates in authorized denominations. The interests evidenced
by the Certificates constitute the entire beneficial ownership interest in the
Trust Fund.

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<PAGE>

Section 2.07      Conveyance of REMIC Regular Interests and Acceptance
                  of REMIC 1A and REMIC 1B by the Trustee; Issuance of
                  Certificates.
                  ----------------------------------------------------

         (a) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC 1A Regular Interests for the benefit of the holders of the
REMIC 2 Regular Interests and the Class R-2 Interest. The Depositor,
concurrently with the execution and delivery hereof, does hereby transfer,
assign, set over and otherwise convey in trust to the Trustee without recourse
all the right, title and interest of the Depositor in and to the REMIC 1B
Regular Interests for the benefit of the holders of the REMIC 2 Regular
Interests and the Class R-2 Interest. The Trustee acknowledges receipt of the
REMIC 1A Regular Interests (which are uncertificated) and declares that it holds
and will hold the same in trust for the exclusive use and benefit of the holders
of the REMIC 2 Regular Interests and the Class R-2 Interest. The Trustee
acknowledges receipt of the REMIC 1B Regular Interests (which are
uncertificated) and declares that it holds and will hold the same in trust for
the exclusive use and benefit of the holders of the REMIC 2 Regular Interests
and the Class R-2 Interest. The interests evidenced by the Class R-2 Interest,
together with the REMIC 2 Regular Interests, constitute the entire beneficial
ownership interest in REMIC 2.

         (b) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC 2 Regular Interests for the benefit of the holders of the
Certificates. The Trustee acknowledges receipt of the REMIC 2 Regular Interests
(which are uncertificated) and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the holders of the Certificates. The
interests evidenced by the Class R-3 Interest, together with the Regular
Certificates, constitute the entire beneficial ownership interest in REMIC 3.

         (c) In exchange for the REMIC 2 Regular Interests and, concurrently
with the assignment to the Trustee thereof, pursuant to the written request of
the Depositor executed by an officer of the Depositor, the Trustee has executed,
authenticated and delivered to or upon the order of the Depositor, the Regular
Certificates in authorized denominations evidencing (together with the Class R-3
Interest) the entire beneficial ownership interest in REMIC 3.

         (d) Concurrently with (i) the assignment and delivery to the Trustee of
REMIC 1A (including the Residual Interest therein represented by the Class R-1A
Interest) and the acceptance by the Trustee thereof, pursuant to Section 2.01,
Section 2.02 and Section 2.07(a), (ii) the assignment and delivery to the
Trustee of REMIC 1B (including the Residual Interest therein represented by the
Class R-1B Interest) and the acceptance by the Trustee thereof, pursuant to
Section 2.01, Section 2.02 and Section 2.07(a), and (iii) the assignment and
delivery to the Trustee of REMIC 2 (including the Residual Interest therein
represented by the Class R-2 Interest) and the acceptance by the Trustee
thereof, pursuant to Section 2.07(b), and the assignment and delivery to the
Trustee of REMIC 3 (including the Residual Interest therein represented by the
Class R-3 Interest) and the acceptance by the Trustee thereof, pursuant to
Section 2.07(c), the Trustee, pursuant to the written request of the Depositor

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<PAGE>

executed by an officer of the Depositor, has executed, authenticated and
delivered to or upon the order of the Depositor, the Class R Certificates in
authorized denominations evidencing the Class R-1A Interest, the Class R-1B
Interest, the Class R-2 Interest and the Class R-3 Interest.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                             OF THE MORTGAGE LOANS

Section 3.01      Master Servicer to Act as Master Servicer.
                  -----------------------------------------

         The Master Servicer shall service and administer the Mortgage Loans on
behalf of the Trustee and in the best interests of and for the benefit of the
Certificateholders (as determined by the Master Servicer in its reasonable
judgment) in accordance with the terms of this Agreement and the respective
Mortgage Loans and, to the extent consistent with such terms, in the same manner
in which it services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:

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

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

                  (ii) the Master Servicer's obligation to make Advances or
         Servicing Advances; or

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

         To the extent consistent with the foregoing, the Master Servicer shall
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes. Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, the Master
Servicer shall have full power and authority, acting alone or through
Sub-Servicers as provided in Section 3.02, to do or cause to be done any and all
things in connection with such servicing and administration in accordance with
policies and procedures generally accepted in the mortgage banking industry.
Without limiting the generality of the foregoing, the Master Servicer in its own
name or in the name of a Sub-Servicer is hereby authorized and empowered by the
Trustee when the Master Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver,
on behalf of the Certificateholders and the Trustee, and upon notice to the
Trustee, any and all instruments of satisfaction or cancellation, or of partial

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<PAGE>

or full release or discharge, and all other comparable instruments, with respect
to the Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee and Certificateholders. The Master Servicer
shall service and administer the Mortgage Loans in accordance with applicable
state and federal law and shall provide to the Mortgagors any reports required
to be provided to them thereby. The Master Servicer shall also comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any standard hazard insurance policy. Subject to Section 3.17, the
Trustee shall execute, at the written request of the Master Servicer, and
furnish to the Master Servicer and any Sub-Servicer such documents as are
necessary or appropriate to enable the Master Servicer or any Sub-Servicer to
carry out their servicing and administrative duties hereunder, and the Trustee
hereby grants to the Master Servicer a power of attorney to carry out such
duties including a power of attorney to take title to Mortgaged Properties after
foreclosure on behalf of the Trustee and the Certificateholders. The Trustee
shall execute a separate power of attorney in favor of the Master Servicer for
the purposes described herein to the extent necessary or desirable to enable the
Master Servicer to perform its duties hereunder. The Trustee shall not be liable
for the actions of the Master Servicer or any Sub-Servicers under such powers of
attorney.

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

         Notwithstanding anything in this Agreement to the contrary, the Master
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.04) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or final, temporary or proposed Treasury regulations promulgated thereunder)
and (B) cause any Trust REMIC to fail to qualify as a REMIC under the Code or
the imposition of any tax on "prohibited transactions" or "contributions after
the startup date" under the REMIC Provisions.

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<PAGE>

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

         For each Mortgage Loan, the Master Servicer will accurately and fully
report its borrower credit files to each of the Credit Repositories in a timely
manner.

Section 3.02   Sub-Servicing Agreements Between the Master Servicer
               and Sub-Servicers.

         (a) The Master Servicer may enter into Sub-Servicing Agreements
provided (i) that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the ratings on any Class of Certificates or
the NIM Notes, as evidenced by a letter to that effect delivered by each Rating
Agency to the Depositor and the Guarantor and (ii) that, except in the case of
any Sub-Servicing Agreements the Master Servicer may enter into with Washington
Mutual, Inc. or any Affiliate thereof, the Guarantor shall have consented to
such Sub-Servicing Agreements (which consent shall not be unreasonably withheld)
with Sub-Servicers, for the servicing and administration of the Mortgage Loans.
The Trustee is hereby authorized to acknowledge, at the request of the Master
Servicer, any Sub-Servicing Agreement that meets the requirements applicable to
Sub-Servicing Agreements set forth in this Agreement and that is otherwise
permitted under this Agreement.

         Each Sub-Servicer shall be (i) authorized to transact business in the
state or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution the deposit accounts in which
are insured by the FDIC and (iii) a Fannie Mae approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08. The Master Servicer will examine
each Sub-Servicing Agreement and will be familiar with the terms thereof. The
terms of any Sub-Servicing Agreement will not be inconsistent with any of the
provisions of this Agreement. The Master Servicer and the Sub-Servicers may
enter into and make amendments to the Sub-Servicing Agreements or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Agreement, and that no such amendment or different form shall
be made or entered into which could be reasonably expected to be materially
adverse to the interests of the Certificateholders, without the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any
variation without the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights from the provisions set forth in Section 3.08
relating to insurance or priority requirements of Sub-Servicing Accounts, or
credits and charges to the Sub-Servicing Accounts or the timing and amount of
remittances by the Sub-Servicers to the Master Servicer, are conclusively deemed
to be inconsistent with this Agreement and therefore prohibited. The Master
Servicer shall deliver to the Guarantor and the Trustee copies of all
Sub-Servicing Agreements, and any amendments or modifications thereof, promptly
upon the Master Servicer's execution and delivery of such instruments.

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<PAGE>

         (b) As part of its servicing activities hereunder, the Master Servicer
(except as otherwise provided in the last sentence of this paragraph), for the
benefit of the Trustee and the Certificateholders, shall enforce the obligations
of each Sub-Servicer under the related Sub-Servicing Agreement and, subject to
the last sentence of this paragraph, of the Seller under the Mortgage Loan
Purchase Agreement, including, without limitation, any obligation to make
advances in respect of delinquent payments as required by a Sub-Servicing
Agreement, or to purchase or otherwise remedy as contemplated herein a Mortgage
Loan on account of missing or defective documentation or on account of a breach
of a representation, warranty or covenant, as described in Section 2.03(a). Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements, and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement, to
the extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the party against whom such enforcement is directed.
Enforcement of the Mortgage Loan Purchase Agreement against the Seller shall be
effected by the Master Servicer to the extent it is not the Seller, and
otherwise by the Trustee, in accordance with the foregoing provisions of this
paragraph.

Section 3.03      Successor Sub-Servicers.

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

         Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, and the Trustee shall be entitled
to so terminate such Sub-Servicing Agreement in the event that the Master
Servicer (or the Trustee, if then acting as Master Servicer) shall, for any
reason, no longer be the Master Servicer (including termination due to a Master
Servicer Event of Default).

Section 3.04     Liability of the Master Servicer.

         Notwithstanding any Sub-Servicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub-Servicer or reference to actions taken through a Sub-Servicer
or otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of

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the Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Sub-Servicing
Agreements or arrangements or by virtue of indemnification from the Sub-Servicer
and to the same extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Mortgage Loans. The Master
Servicer shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification and no such indemnification shall be an expense of the Trust.

Section 3.05      No Contractual Relationship Between Sub-Servicers and the
                  Trustee or Certificateholders.

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

Section 3.06     Assumption or Termination of Sub-Servicing Agreements by
                 Trustee.

         In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of the occurrence of a Master Servicer
Event of Default), the Trustee or its designee shall thereupon assume all of the
rights and obligations of the Master Servicer under each Sub-Servicing Agreement
that the Master Servicer may have entered into, unless the Trustee elects to
terminate any Sub-Servicing Agreement in accordance with its terms as provided
in Section 3.03. Upon such assumption, the Trustee, its designee or the
successor servicer for the Trustee appointed pursuant to Section 7.02 shall be
deemed, subject to Section 3.03, to have assumed all of the Master Servicer's
interest therein and to have replaced the Master Servicer as a party to each
Sub-Servicing Agreement to the same extent as if each Sub-Servicing Agreement
had been assigned to the assuming party, except that (i) the Master Servicer
shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Master Servicer
and (ii) none of the Trustee, its designee or any successor Master Servicer
shall be deemed to have assumed any liability or obligation of the Master
Servicer that arose before it ceased to be the Master Servicer.

         The Master Servicer at its own expense and without reimbursement shall,
upon request of the Trustee, deliver to the assuming party all documents and
records relating to each Sub-Servicing Agreement and the Mortgage Loans then
being serviced and an accounting of amounts collected and held by or on behalf
of it, and otherwise use its best efforts to effect the orderly and efficient
transfer of the Sub-Servicing Agreements to the assuming party.

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Section 3.07      Collection of Certain Mortgage Loan Payments.

         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 and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or, if applicable, any penalty interest, or (ii) extend the due
dates for the Monthly Payments due on a Mortgage Note for a period of not
greater than 180 days; provided that any extension pursuant to this clause (ii)
shall not affect the amortization schedule of any Mortgage Loan for purposes of
any computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Master Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.04
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, subject to Section 4.04(d)
pursuant to which the Master Servicer shall not be required to make any such
advances that are Nonrecoverable Advances. Notwithstanding the foregoing, in the
event that any Mortgage Loan is in default or, in the judgment of the Master
Servicer, such default is reasonably foreseeable, the Master Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan no later than two years with
respect to a Group I Mortgage Loan), accept payment from the related Mortgagor
of an amount less than the Stated Principal Balance in final satisfaction of
such Mortgage Loan (such payment, a "Short Pay-off") or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor; provided, that in the judgment of the Master
Servicer, any such modification, waiver or amendment could reasonably be
expected to result in collections and other recoveries in respect of such
Mortgage Loans in excess of Net Liquidation Proceeds that would be recovered
upon the foreclosure of, or other realization upon, such Mortgage Loan. If the
Mezzanine Certificates and Class C Certificates are no longer outstanding, the
Master Servicer shall not take any action pursuant to the preceding sentence
with respect to a Group I Mortgage Loan without obtaining the prior written
consent of the Guarantor to such modification. The Master Servicer shall submit
to the Guarantor with its request for consent, such information related to the
proposed modification as can be expected to be needed by the Guarantor to
evaluate the Master Servicer's request, including the terms of the proposed
modification and the reasons for the Master Servicer's decision that such Group
I Mortgage Loan should be modified. The Guarantor shall be deemed to have
consented to the Master Servicer's request in the event that the Guarantor does
not either provide the Master Servicer with its written consent to such
requested modification or written notice of its objection to such modification
within five Business Days of its receipt of the Master Servicer's request.
Requests for modification shall be sent to the Guarantor at: Fannie Mae, 3900
Wisconsin Avenue, N.W., Washington, D.C. 20016, Attn: Vice President-Loss
Mitigation. The Master Servicer shall give written notice to the Guarantor with
respect to each Group I Mortgage Loan which is modified with the consent of the
Guarantor to the following address: Fannie Mae, 4000 Wisconsin Avenue, N.W.,
Washington, D.C. 20016, Attn: Bond Administration. Such notice shall be

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delivered within thirty Business Days following such modification and shall
include information with respect to the modification, including, without
limitation, the interest rate, the principal balance and the maturity date of
such Group I Mortgage Loan before and after such modification.

Section 3.08      Sub-Servicing Accounts.

         In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub-Servicing Agreement, the Sub-Servicer shall be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall be
entitled "Bankers Trust Company of California, N.A., as Trustee, in trust for
registered Holders of Long Beach Mortgage Loan Trust 2001-3, Asset-Backed
Certificates, Series 2001-3. The Sub-Servicer shall be required to deposit in
the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the deposit of such funds into the clearing
account. The Sub-Servicer shall thereafter be required to deposit such proceeds
in the Collection Account or remit such proceeds to the Master Servicer for
deposit in the Collection Account not later than two Business Days after the
deposit of such amounts in the Sub-Servicing Account. For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on the
Mortgage Loans when the Sub-Servicer receives such payments.

Section 3.09      Collection of Taxes, Assessments and Similar Items;
                  Servicing Accounts.

         The Master Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts").
Servicing Accounts shall be Eligible Accounts. The Master Servicer shall deposit
in the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Master Servicer's receipt thereof, all
collections from the Mortgagors (or related advances from Sub-Servicers) for the
payment of taxes, assessments, hazard insurance premiums and comparable items
for the account of the Mortgagors ("Escrow Payments") collected on account of
the Mortgage Loans and shall thereafter deposit such Escrow Payments in the
Servicing Accounts, in no event more than two Business Days after the deposit of
such funds in the clearing account, for the purpose of effecting the payment of
any such items as required under the terms of this Agreement. Withdrawals of
amounts from a Servicing Account may be made only to (i) effect payment of
taxes, assessments, hazard insurance premiums, and comparable items; (ii)
reimburse the Master Servicer (or a Sub-Servicer to the extent provided in the
related Sub-Servicing Agreement) out of related collections for any advances
made pursuant to Section 3.01 (with respect to taxes and assessments) and
Section 3.14 (with respect to hazard insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages; (iv) pay interest, if required and as

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described below, to Mortgagors on balances in the Servicing Account; (v) clear
and terminate the Servicing Account upon the termination of the Master
Servicer's obligations and responsibilities in respect of the Mortgage Loans
under this Agreement in accordance with Article IX or (vi) recover amounts
deposited in error. As part of its servicing duties, the Master Servicer or
Sub-Servicers shall pay to the Mortgagors interest on funds in Servicing
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Servicing Accounts is insufficient, to pay such interest from
its or their own funds, without any reimbursement therefor. To the extent that a
Mortgage does not provide for Escrow Payments, the Master Servicer shall
determine whether any such payments are made by the Mortgagor in a manner and at
a time that avoids the loss of the Mortgaged Property due to a tax sale or the
foreclosure of a tax lien. The Master Servicer assumes full responsibility for
the payment of all such bills within such time and shall effect payments of all
such bills irrespective of the Mortgagor's faithful performance in the payment
of same or the making of the Escrow Payments and shall make advances from its
own funds to effect such payments; provided, however, that such advances shall
constitute Servicing Advances.

Section 3.10      Collection Account and Distribution Account.

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

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

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

                  (iii) all Insurance Proceeds and Liquidation Proceeds (other
         than proceeds collected in respect of any particular REO Property and
         amounts paid by the Master Servicer in connection with a purchase of
         Mortgage Loans and REO Properties pursuant to Section 9.01);

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

                  (v) any amounts required to be deposited by the Master
         Servicer pursuant to the second paragraph of Section 3.14(a) in respect
         of any blanket policy deductibles;

                  (vi) all proceeds of any Mortgage Loan repurchased or
         purchased in accordance with Section 2.03, Section 3.16 or Section 9.01
         and all Master Servicer Prepayment Charge Payment Amounts required to
         be deposited in the Collection Account pursuant to Section 2.03;

                  (vii) all Substitution Shortfall Amounts; and

                  (viii) all Prepayment Charges collected by the Master
         Servicer.

         For purposes of the immediately preceding sentence, the Cut-off Date
with respect to any Qualified Substitute Mortgage Loan shall be deemed to be the
date of substitution.

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

         (b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Trustee and the
Certificateholders. On behalf of the Trust Fund, the Master Servicer shall
deliver to the Trustee in immediately available funds for deposit in the
Distribution Account on or before 3:00 p.m. New York time on the Master Servicer
Remittance Date, (i) that portion of the Available Funds (calculated without
regard to the references in the definition thereof to amounts that may be
withdrawn from the Distribution Account) for the related Distribution Date then
on deposit in the Collection Account, the amount of all Prepayment Charges on
the Prepayment Charge Schedule collected by the Master Servicer in connection
with any of the Mortgage Loans and any Master Servicer Prepayment Charge Payment
Amounts then on deposit in the Collection Account and the amount of any funds
reimbursable to an Advancing Person pursuant to Section 3.27 and (ii) on each
Business Day as of the commencement of which the balance on deposit in the
Collection Account exceeds $75,000 following any withdrawals pursuant to the
next succeeding sentence, the amount of such excess, but only if the Collection

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Account constitutes an Eligible Account solely pursuant to clause (ii) of the
definition of "Eligible Account." If the balance on deposit in the Collection
Account exceeds $75,000 as of the commencement of business on any Business Day
and the Collection Account constitutes an Eligible Account solely pursuant to
clause (ii) of the definition of "Eligible Account," the Master Servicer shall,
on or before 3:00 p.m. New York time on such Business Day, withdraw from the
Collection Account any and all amounts payable or reimbursable to the Depositor,
the Master Servicer, the Trustee, the Seller or any Sub-Servicer pursuant to
Section 3.11 and shall pay such amounts to the Persons entitled thereto.

         (c) Funds in the Collection Account and the Distribution Account may be
invested in Permitted Investments in accordance with the provisions set forth in
Section 3.12. The Master Servicer shall give notice to the Trustee, the
Guarantor and the Depositor of the location of the Collection Account maintained
by it when established and prior to any change thereof. The Trustee shall give
notice to the Master Servicer, the Guarantor and the Depositor of the location
of the Distribution Account when established and prior to any change thereof.

         (d) Funds held in the Collection Account at any time may be delivered
by the Master Servicer to the Trustee for deposit in an account (which may be
the Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of the Collection Account; provided,
however, that the Trustee shall have the sole authority to withdraw any funds
held pursuant to this subsection (d). In the event the Master Servicer shall
deliver to the Trustee for deposit in the Distribution Account any amount not
required to be deposited therein, it may at any time request that the Trustee
withdraw, and the Trustee shall withdraw, such amount from the Distribution
Account and remit to the Master Servicer any such amount, any provision herein
to the contrary notwithstanding. In addition, the Master Servicer shall deliver
to the Trustee from time to time for deposit, and the Trustee shall so deposit,
in the Distribution Account:

                  (i) any Advances, as required pursuant to Section 4.04, unless
         delivered directly to the Trustee by an Advancing Person;

                  (ii) any amounts required to be deposited pursuant to Section
         3.23(d) or (f) in connection with any REO Property;

                  (iii) any amounts to be paid by the Master Servicer in
         connection with a purchase of Mortgage Loans and REO Properties
         pursuant to Section 9.01;

                  (iv) any amounts required to be deposited pursuant to Section
         3.24 in connection with any Prepayment Interest Shortfalls; and

                  (v) any Stayed Funds, as soon as permitted by the federal
         bankruptcy court having jurisdiction in such matters.

         (e) Promptly upon receipt of any Stayed Funds, whether from the Master
Servicer, a trustee in bankruptcy, federal bankruptcy court or other source, the
Trustee shall deposit such funds in the Distribution Account, subject to
withdrawal thereof pursuant to Section 7.02(b) or as otherwise permitted
hereunder.

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Section 3.11      Withdrawals from the Collection Account and
                  Distribution Account.

         (a) The Master Servicer shall, from time to time, make withdrawals from
the Collection Account, for any of the following purposes or as described in
Section 4.04, without priority:

                  (i) to remit to the Trustee for deposit in the Distribution
         Account the amounts required to be so remitted pursuant to Section
         3.10(b) or permitted to be so remitted pursuant to the first sentence
         of Section 3.10(d);

                  (ii) subject to Section 3.16(d), to reimburse the Master
         Servicer for Advances, but only to the extent of amounts received which
         represent Late Collections (net of the related Servicing Fees) of
         Monthly Payments on the related Mortgage Loans in accordance with the
         provisions of Section 4.04;

                  (iii) subject to Section 3.16(d), to pay the Master Servicer
         or any Sub-Servicer (a) any unpaid Servicing Fees or (b) any
         unreimbursed Servicing Advances with respect to each Mortgage Loan, but
         only to the extent of any Late Collections, Liquidation Proceeds,
         Insurance Proceeds or other amounts as may be collected by the Master
         Servicer from a Mortgagor, or otherwise received with respect to such
         Mortgage Loan;

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

                  (v) to pay to the Master Servicer or the Seller, as the case
         may be, with respect to each Mortgage Loan that has previously been
         purchased or replaced pursuant to Section 2.03 or Section 3.16(c) all
         amounts received thereon subsequent to the date of purchase or
         substitution, as the case may be;

                  (vi) to reimburse the Master Servicer for any Advance or
         Servicing Advance previously made which the Master Servicer has
         determined to be a Nonrecoverable Advance in accordance with the
         provisions of Section 4.04;

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

                  (viii) to reimburse the Guarantor (with respect to Group I
         Mortgage Loans only), the Master Servicer or the Trustee, as the case
         may be, for enforcement expenses reasonably incurred in respect of the
         breach or defect giving rise to the purchase obligation under Section
         2.03 of this Agreement that were included in the Purchase Price of the
         Mortgage Loan, including any expenses arising out of the enforcement of
         the purchase obligation;

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                  (ix) to pay, or to reimburse the Master Servicer for advances
         in respect of, expenses incurred in connection with any Mortgage Loan
         pursuant to Section 3.16(b); and

                  (x) to clear and terminate the Collection Account pursuant to
         Section 9.01.

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

          (b) The Trustee shall, from time to time, make withdrawals from
the Distribution Account, for any of the following purposes, without priority:

                  (i) to make distributions to Certificateholders in accordance
         with Section 4.01;

                  (ii) to pay to itself amounts to which it is entitled pursuant
         to Section 8.05 or to pay any other Extraordinary Trust Fund Expenses;

                  (iii) to pay to itself any interest income earned on funds
         deposited in the Distribution Account pursuant to Section 3.12(c);

                  (iv) to reimburse itself pursuant to Section 7.02 or pursuant
         to Section 7.01 to the extent such amounts in Section 7.01 were not
         reimbursed by the Master Servicer;

                  (v) to pay any amounts in respect of taxes pursuant to Section
         10.01(g);

                  (vi) to remit to the Master Servicer any amount deposited in
         the Distribution Account by the Master Servicer but not required to be
         deposited therein in accordance with Section 3.10(d);

                  (vii) to pay to an Advancing Person reimbursements for
         Advances and/or Servicing Advances pursuant to Section 3.27; and

                  (viii) to clear and terminate the Distribution Account
         pursuant to Section 9.01.

Section 3.12      Investment of Funds in the Collection Account and the
                  Distribution Account.

         (a) The Master Servicer may direct any depository institution
maintaining the Collection Account and any REO Account (for purposes of this
Section 3.12, an "Investment Account"), and the Trustee, in its individual
capacity, may direct any depository institution maintaining the Distribution
Account, (for purposes of this Section 3.12, the Distribution Account is also an
"Investment Account"), to invest the funds in such Investment Account in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,

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unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee is the
obligor thereon and (ii) no later than the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement, if the Trustee is
the obligor thereon. All such Permitted Investments shall be held to maturity,
unless payable on demand. Any investment of funds in an Investment Account shall
be made in the name of the Trustee (in its capacity as such), or in the name of
a nominee of the Trustee. The Trustee shall be entitled to sole possession
(except with respect to investment direction of funds held in the Collection
Account and any REO Account and any income and gain realized thereon) over each
such investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Trustee shall:

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

                  (y)      demand payment of all amounts due thereunder promptly
                           upon actual notice by a Responsible Officer of the
                           Trustee that such Permitted Investment would not
                           constitute a Permitted Investment in respect of funds
                           thereafter on deposit in the Investment Account.

         (b) All income and gain realized from the investment of funds deposited
in the Collection Account and any REO Account held by or on behalf of the Master
Servicer shall be for the benefit of the Master Servicer and shall be subject to
its withdrawal in accordance with Section 3.11 or Section 3.23, as applicable.
The Master Servicer shall deposit in the Collection Account or any REO Account,
as applicable, the amount of any loss of principal incurred in respect of any
such Permitted Investment made with funds in such accounts immediately upon
realization of such loss.

         (c) All income and gain realized from the investment of funds deposited
in the Distribution Account held by or on behalf of the Trustee shall be for the
benefit of the Trustee and shall be subject to its withdrawal at any time. The
Trustee shall deposit in the Distribution Account, the amount of any loss of
principal incurred in respect of any such Permitted Investment made with funds
in such accounts immediately upon realization of such loss.

         (d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may, and subject to Section 8.01 and Section 8.02(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates shall, take such action

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as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.

Section 3.13      Agreement to Appoint a Special Servicer.

         (a) The Guarantor may require the Master Servicer to enter into a
special subservicing agreement with a servicer with expertise in servicing
delinquent mortgage loans as designated by the Guarantor (the "Special
Servicer") on or after the earliest Distribution Date with respect to which the
aggregate Certificate Principal Balance of the Class M-1, Class M-2, Class M-3
and Class C Certificates has been reduced to zero. Such special subservicing
agreement shall relate to the servicing of only Group I Mortgage Loans that (x)
have been delinquent in payment with respect to three or more Monthly Payments
(provided, however, that the third such Monthly Payment shall not be deemed to
be delinquent for purposes of this clause (x) until the close of business on the
last day of the month in which such Monthly Payment first became due) and (y)
have been transferred to the Special Servicer in accordance with this Section
3.13 and the related special subservicing agreement (a "Specially Serviced
Mortgage Loan").

         (b) The special subservicing agreement shall be consistent with the
provisions of this Agreement, including but not limited to this Section 3.13,
Section 3.02 (a), Section 3.02 (b), and Section 3.08, except as provided
otherwise in this Section 3.13. In addition, the special subservicing agreement
shall be on terms which shall be reasonably acceptable to the Guarantor and the
Master Servicer and shall provide, at a minimum that:

                  (1) the Special Servicer shall at all times, meet the
         eligibility criteria described in Section 3.02(a);

                  (2) the Special Servicer shall service only the Specially
         Serviced Mortgage Loans in a manner consistent with the provisions with
         this Agreement except as provided otherwise in the special subservicing
         agreement; (3) the Special Servicer shall use the Fannie Mae
         foreclosure network (and pay the customary fees therefor) for
         foreclosures and bankruptcies relating to Specially Serviced Mortgage
         Loans;

                  (4) the Special Servicer shall use the Fannie Mae disposition
         service (and pay the customary fees therefor) for the disposition of
         REO Property related to Specially Serviced Mortgage Loans;

                  (5) the Special Servicer shall make Servicing Advances on the
         Specially Serviced Mortgage Loans to the same extent and in the same
         manner as the Master Servicer with respect to the Group I Mortgage
         Loans pursuant to this Agreement;

                  (6) the Special Servicer shall be entitled to receive the
         Servicing Fee with respect to all Specially Serviced Mortgage Loans;

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                  (7) prior to the transfer of servicing to the Special
         Servicer, the Master Servicer and the Special Servicer shall have
         provided all notices relating to such transfer of servicing as required
         to be delivered to the borrowers by applicable state and federal law;

                  (8) the Special Servicer shall indemnify the Master Servicer
         and the Trustee for any liabilities to them arising from failures of
         the Special Servicer to perform its obligations according to the terms
         of the subservicing agreement;

                  (9) the Master Servicer shall promptly give notice thereof to
         the Trustee and the Guarantor of the transfer of servicing to the
         Special Servicer, including the loan number together with the
         borrower's name and the unpaid principal balance of the transferred
         Mortgage Loan at the time of transfer;

                  (10) each of the respective obligations, duties, and
         liabilities of the Master Servicer and the Special Servicer (or either
         of them) with respect to the servicing of the Specially Serviced
         Mortgage Loans that have arisen prior to the date on which the
         servicing of such Specially Serviced Mortgage Loan was transferred to
         the Special Servicer (the "Effective Date"), or that arise on and after
         the Effective Date, under this Agreement and the subservicing agreement
         and that remain unperformed or unsatisfied shall survive any transfer
         of servicing;

                  (11) once a Group I Mortgage Loan becomes a Specially Serviced
         Mortgage Loan, such Mortgage Loan shall remain a Specially Serviced
         Mortgage Loan, and shall continue to be serviced by the Special
         Servicer, until the earlier of the liquidation or other disposition of
         such Mortgage Loan or the termination of the subservicing agreement,
         regardless of delinquency status or otherwise;

                  (12) the Guarantor may remove the Special Servicer if the
         Special Servicer at any time fails to meet any of the above criteria or
         otherwise, in the judgment of the Guarantor, fails to perform according
         to the terms of the subservicing agreement and the provisions of this
         Section 3.13; provided that prior to any such removal the Guarantor
         shall designate a successor Special Servicer meeting the requirements
         of this Section 3.13, and no removal of a Special Servicer shall be
         effective until a successor Special Servicer has entered into a special
         subservicing agreement meeting the requirements of this Section 3.13
         and agreed to assume the duties of the Special Servicer or the Master
         Servicer has undertaken such duties; and

                  (13) in connection with any transfer of a Group I Mortgage
         Loan to the Special Servicer as a Specially Serviced Mortgage Loan, the
         Master Servicer shall execute any appropriate assignments or other
         documents reasonable and necessary to further the prosecution of the
         Special Servicer obligations under the special subservicing agreement.

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Section 3.14      Maintenance of Hazard Insurance and Errors and Omissions
                  and Fidelity Coverage.

         (a) The Master Servicer shall cause to be maintained for each Mortgage
Loan fire insurance with extended coverage on the related Mortgaged Property in
an amount which is at least equal to the least of (i) the then current principal
balance of such Mortgage Loan, (ii) the amount necessary to fully compensate for
any damage or loss to the improvements that are a part of such property on a
replacement cost basis and (iii) the maximum insurable value of the improvements
which are a part of such Mortgaged Property, in each case in an amount not less
than such amount as is necessary to avoid the application of any coinsurance
clause contained in the related hazard insurance policy. The Master Servicer
shall also cause to be maintained fire insurance with extended coverage on each
REO Property in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements which are a part of such property
and (ii) the outstanding principal balance of the related Mortgage Loan at the
time it became an REO Property, plus accrued interest at the Mortgage Rate and
related Servicing Advances. The Master Servicer will comply in the performance
of this Agreement with all reasonable rules and requirements of each insurer
under any such hazard policies. Any amounts to be collected by the Master
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or amounts
to be released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing loans held for its own account,
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.11, if received in respect of a Mortgage Loan, or in the REO Account,
subject to withdrawal pursuant to Section 3.23, if received in respect of an REO
Property. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Master Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).

         In the event that the Master Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer

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shall, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Collection Account
from its own funds the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.

         (b) The Master Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of Fannie Mae if it were the purchaser of the Mortgage
Loans, unless the Master Servicer or any of its Affiliates has obtained a waiver
of such requirements from Fannie Mae. The Master Servicer shall also maintain a
fidelity bond in the form and amount that would meet the requirements of Fannie
Mae, unless the Master Servicer or any of its Affiliates has obtained a waiver
of such requirements from Fannie Mae. The Master Servicer shall provide the
Trustee and the Guarantor (upon such party's reasonable request) with copies of
any such insurance policies and fidelity bond. The Master Servicer shall be
deemed to have complied with this provision if an Affiliate of the Master
Servicer has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Master Servicer. Any such errors and omissions policy
and fidelity bond shall by its terms not be cancelable without thirty days'
prior written notice to the Trustee. The Master Servicer shall also cause each
Sub-Servicer to maintain a comparable policy of insurance covering errors and
omissions and a fidelity bond meeting such requirements.

Section 3.15      Enforcement of Due-On-Sale Clauses; Assumption Agreements.

         The Master Servicer shall, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Master Servicer shall not be required to take such action if in its
sole business judgment the Master Servicer believes that the collections and
other recoveries in respect of such Mortgage Loans could reasonably be expected
to be maximized if the Mortgage Loan were not accelerated, and the Master
Servicer shall not exercise any such rights if prohibited by law from doing so.
If the Master Servicer reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, or if any of the other conditions set forth
in the proviso to the preceding sentence apply, the Master Servicer will enter
into an assumption and modification agreement from or with the person to whom
such property has been conveyed or is proposed to be conveyed, pursuant to which
such person becomes liable under the Mortgage Note and, to the extent permitted
by applicable state law, the Mortgagor remains liable thereon. The Master
Servicer may also enter into a substitution of liability agreement with such

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person, pursuant to which the original Mortgagor is released from liability and
such person is substituted as the Mortgagor and becomes liable under the
Mortgage Note, provided that no such substitution shall be effective unless such
person satisfies the underwriting criteria of the Master Servicer and has a
credit risk rating at least equal to that of the original Mortgagor. In
connection with any assumption, modification or substitution, the Master
Servicer shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. The
Master Servicer shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable under the circumstances)
it shall have received confirmation, in writing, of the continued effectiveness
of any applicable hazard insurance policy, or a new policy meeting the
requirements of this Section is obtained. Any fee collected by the Master
Servicer in respect of any assumption or substitution of liability agreement
will be retained by the Master Servicer as additional servicing compensation. In
connection with any such assumption, no material term of the Mortgage Note
(including but not limited to the related Mortgage Rate and the amount of the
Monthly Payment) may be amended or modified, except as otherwise required
pursuant to the terms thereof. The Master Servicer shall notify the Trustee and
the Guarantor that any such substitution, modification or assumption agreement
has been completed by forwarding to the Trustee the executed original of such
substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. If the Mezzanine Certificates and Class C
Certificates are no longer outstanding, the Master Servicer shall not take or
enter into any substitution, assumption or modification agreement without
obtaining the prior written consent of the Guarantor to such substitution,
assumption or modification agreement. The Master Servicer shall submit to the
Guarantor with its request for consent, such information related to the proposed
substitution, assumption or modification agreement as can be expected to be
needed by the Guarantor to evaluate the Master Servicer's request, including the
terms of the proposed substitution, assumption or modification and the reasons
for the Master Servicer's decision that such substitution, assumption or
modification agreement should be taken or entered into with respect to such
Group I Mortgage Loan. The Guarantor shall be deemed to have consented to the
Master Servicer's request in the event that the Guarantor does not either
provide the Master Servicer with its written consent to such requested
substitution, assumption or modification agreement or written notice of its
objection to such substitution, assumption or modification agreement within five
Business Days of its receipt of the Master Servicer's request. Such requests
shall be sent to the Guarantor at: Fannie Mae, 3900 Wisconsin Avenue, N.W.,
Washington, D.C. 20016, Attn: Vice President-Loss Mitigation. The Master
Servicer shall give written notice to the Guarantor with respect to each
substitution, assumption or modification agreement which is entered into with
the consent of the Guarantor to the following address: Fannie Mae, 4000
Wisconsin Avenue, N.W., Washington, D.C. 20016, Attn: Bond Administration. Such
notice shall be delivered within thirty Business Days following the date of such
substitution, assumption or modification agreement.

         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

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a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Master Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale of the Mortgaged Property subject
to the Mortgage that is not accompanied by an assumption or substitution of
liability agreement.

Section 3.16      Realization Upon Defaulted Mortgage Loans.

         (a) The Master Servicer shall use reasonable efforts consistent with
the servicing standard set forth in Section 3.01, to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07. The Master Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
costs and expenses will constitute and be recoverable as Servicing Advances by
the Master Servicer as contemplated in Section 3.11 and Section 3.23. The
foregoing is subject to the provision that, in any case in which Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Master Servicer
shall not be required to expend its own funds toward the restoration of such
property unless it shall determine in its sole and absolute discretion that such
restoration will increase the proceeds of liquidation of the related Mortgage
Loan after reimbursement to itself for such expenses.

        (b) Notwithstanding the foregoing provisions of this Section 3.16 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Master Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Master Servicer shall not, on behalf of the Trustee, either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Fund or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless the Master Servicer has also
previously determined, based on its reasonable judgment and a report prepared by
an Independent Person who regularly conducts environmental audits using
customary industry standards, that:

                  (1) such Mortgaged Property is in compliance with applicable
                  environmental laws or, if not, that it would be in the best
                  economic interest of the Trust Fund to take such actions as
                  are necessary to bring the Mortgaged Property into compliance
                  therewith; and

                  (2) there are no circumstances present at such Mortgaged
                  Property relating to the use, management or disposal of any
                  hazardous substances, hazardous materials, hazardous wastes,
                  or petroleum-based materials for which investigation, testing,
                  monitoring, containment, clean-up or remediation could be
                  required under any federal, state or local law or regulation,
                  or that if any such materials are present for which such

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                  action could be required, that it would be in the best
                  economic interest of the Trust Fund to take such actions with
                  respect to the affected Mortgaged Property.

         Notwithstanding the foregoing, with respect to Group I Mortgage Loans,
if such environmental audit reveals, or if the Master Servicer has knowledge or
notice, that the Mortgaged Property secured by such Group I Mortgage Loans
contains such wastes or substances or is within one mile of the site of such
wastes or substances, the Master Servicer shall not foreclose or accept a deed
in lieu of foreclosure without the prior written consent of the Guarantor.

         The cost of the environmental audit report contemplated by this Section
3.16 shall be advanced by the Master Servicer, subject to the Master Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans. It is understood
by the parties hereto that any such advance will constitute a Servicing Advance.

         If the Master Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(ix), such right of
reimbursement being prior to the rights of Certificateholders to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans. It is understood by the parties hereto that any
such advance will constitute a Servicing Advance.

          (c) The Master Servicer may at its option purchase from REMIC 1A or
REMIC 1B, as applicable, any Mortgage Loan or related REO Property that is 90
days or more delinquent or that has been otherwise in default for 90 days or
more, which the Master Servicer determines in good faith will otherwise become
subject to foreclosure proceedings (evidence of such determination to be
delivered in writing to the Trustee prior to purchase), at a price equal to the
Purchase Price; provided, however, that the Master Servicer shall purchase any
such Mortgage Loans or related REO Properties on the basis of delinquency or
default, purchasing first the Mortgage Loans or related REO Properties that
became delinquent or otherwise in default on an earlier date; and provided,
further, that such option shall expire as of the last day of the calendar
quarter during which such Mortgage Loan or related REO Property became 90 days
delinquent or otherwise in default for 90 days or more. In the event the Master
Servicer does not exercise its option to purchase from REMIC 1A any such
Mortgage Loan or related REO Property prior to the expiration of such option,
the Guarantor shall be entitled to purchase such Mortgage Loan or related REO
Property at any time thereafter. The Purchase Price for any Mortgage Loan or

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related REO Property purchased hereunder shall be deposited in the Collection
Account, and the Trustee, upon receipt of written certification from the Master
Servicer of such deposit, shall release or cause to be released to the Master
Servicer or the Guarantor, as applicable, the related Mortgage File and the
Trustee shall execute and the Trustee shall deliver such instruments of transfer
or assignment, in each case without recourse, as the Master Servicer or the
Guarantor, as applicable, shall furnish and as shall be necessary to vest in the
Master Servicer or the Guarantor, as applicable, title to any Mortgage Loan or
related REO Property released pursuant hereto.

         (d) Proceeds received (other than any Prepayment Charges received) in
connection with any Final Recovery Determination, as well as any recovery
resulting from a partial collection of Insurance Proceeds or Liquidation
Proceeds, in respect of any Mortgage Loan, will be applied in the following
order of priority: first, to reimburse the Master Servicer or any Sub-Servicer
for any related unreimbursed Servicing Advances and Advances, pursuant to
Section 3.11(a)(ii) or (a)(iii); second, to accrued and unpaid interest on the
Mortgage Loan, to the date of the Final Recovery Determination, or to the Due
Date prior to the Distribution Date on which such amounts are to be distributed
if not in connection with a Final Recovery Determination; and third, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than the full amount of accrued and unpaid
interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Master Servicer as follows: first, to unpaid Servicing Fees;
and second, to the balance of the interest then due and owing. The portion of
the recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Master Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii).

Section 3.17      Trustee to Cooperate; Release of Mortgage Files.

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

          (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall, upon
request of the Master Servicer and delivery to the Trustee of a Request for
Release in the form of Exhibit E-l, release the related Mortgage File to the
Master Servicer, and the Trustee shall, at the direction of the Master Servicer,
execute such documents as shall be necessary to the prosecution of any such
proceedings and the Master Servicer shall retain such Mortgage File in trust for
the benefit of the Certificateholders. Such Request for Release shall obligate
the Master Servicer to return each and every document previously requested from

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the Mortgage File to the Trustee when the need therefor by the Master Servicer
no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or the Mortgage File or such document has been delivered to
an attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered to the Trustee a certificate of a Servicing
Representative certifying as to the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a Servicing Representative stating
that such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation that are required to be deposited
into the Collection Account have been so deposited, or that such Mortgage Loan
has become an REO Property, a copy of the Request for Release shall be released
by the Trustee to the Master Servicer or its designee.

         (c) Upon written certification of a Servicing Representative, the
Trustee shall execute and deliver to the Master Servicer any court pleadings,
requests for trustee's sale or other documents reasonably necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity, or shall exercise and deliver to the Master Servicer a power of
attorney sufficient to authorize the Master Servicer to execute such documents
on its behalf, provided that the Trustee shall be obligated to execute the
documents identified above if necessary to enable the Master Servicer to perform
its duties hereunder. Each such certification shall include a request that such
pleadings or documents be executed by the Trustee and a statement as to the
reason such documents or pleadings are required.

Section 3.18      Servicing Compensation.

         As compensation for the activities of the Master Servicer hereunder,
the Master Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Master Servicer shall
be entitled to recover unpaid Servicing Fees out of Late Collections, Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Master Servicer's responsibilities and obligations under this Agreement;
provided, however, that the Master Servicer may pay from the Servicing Fee any
amounts due to a Sub-Servicer pursuant to a Sub-Servicing Agreement entered into
under Section 3.02.

         Additional servicing compensation in the form of assumption or
modification fees, late payment charges, NSF fees, reconveyance fees and other
similar fees and charges (other than Prepayment Charges) shall be retained by
the Master Servicer (subject to Section 3.24) only to the extent such fees or

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charges are received by the Master Servicer. The Master Servicer shall also be
entitled pursuant to Section 3.11(a)(iv) to withdraw from the Collection
Account, and pursuant to Section 3.23(b) to withdraw from any REO Account, as
additional servicing compensation, interest or other income earned on deposits
therein, subject to Section 3.12. The Master Servicer shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder (including premiums for the insurance required by Section 3.14, to the
extent such premiums are not paid by the related Mortgagors or by a
Sub-Servicer, it being understood however, that payment of such premiums by the
Master Servicer shall constitute Servicing Advances and servicing compensation
of each Sub-Servicer, and to the extent provided herein and in Section 8.05, the
fees and expenses of the Trustee) and shall not be entitled to reimbursement
therefor except as specifically provided herein.

Section 3.19      Reports to the Trustee; Collection Account Statements.

         Not later than fifteen days after each Distribution Date, the Master
Servicer shall forward to the Trustee and the Depositor (and, upon request, the
Guarantor) a statement prepared by the Master Servicer setting forth the status
of the Collection Account as of the close of business on such Distribution Date
and showing, for the period covered by such statement, the aggregate amount of
deposits into and withdrawals from the Collection Account of each category of
deposit specified in Section 3.10(a) and each category of withdrawal specified
in Section 3.11. Such statement may be in the form of the then current Fannie
Mae Monthly Accounting Report for its Guaranteed Mortgage Pass-Through Program
with appropriate additions and changes, and shall also include information as to
the aggregate of the outstanding principal balances of all of the Mortgage Loans
as of the last day of the calendar month immediately preceding such Distribution
Date. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Master Servicer to the
Trustee.

Section 3.20      Statement as to Compliance.

         The Master Servicer shall deliver to the Trustee, the Depositor, the
Guarantor and each Rating Agency on or before April 15 of each calendar year
commencing in 2002, an Officers' Certificate stating, as to each signatory
thereof, that (i) a review of the activities of the Master Servicer during the
preceding year and of performance under this Agreement has been made under such
officers' supervision and (ii) to the best of such officers' knowledge, based on
such review, the Master Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Copies of any such statement shall be
provided by the Trustee to any Certificateholder and to any Person identified to
the Trustee as a prospective transferee of a Certificate, upon the request and
at the expense of the requesting party, provided that such statement is
delivered by the Master Servicer to the Trustee.

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Section 3.21      Independent Public Accountants' Servicing Report.

         Not later than April 15 of each calendar year commencing in 2002, the
Master Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Master Servicer a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer which includes an
assertion that the Master Servicer has complied with certain minimum residential
mortgage loan servicing standards, identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America, with respect to the servicing of residential mortgage loans during the
most recently completed fiscal year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by
Sub-Servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Sub-Servicers. Immediately upon receipt of such report, the Master
Servicer shall furnish a copy of such report to the Trustee, the Guarantor and
each Rating Agency. Copies of such statement shall be provided by the Trustee to
any Certificateholder upon request at the Master Servicer's expense, provided
that such statement is delivered by the Master Servicer to the Trustee. In the
event such firm of independent certified public accountants requires the Trustee
to agree to the procedures performed by such firm, the Master Servicer shall
direct the Trustee in writing to so agree; it being understood and agreed that
the Trustee will deliver such letter of agreement in conclusive reliance upon
the direction of the Master Servicer, and the Trustee has not made any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures.

Section 3.22      Access to Certain Documentation.

         The Master Servicer shall provide to the Office of Thrift Supervision,
the FDIC and any other federal or state banking or insurance regulatory
authority that may exercise authority over any Certificateholder access to the
documentation regarding the Mortgage Loans serviced by the Master Servicer under
this Agreement, as may be required by applicable laws and regulations. Such
access shall be afforded without charge, but only upon reasonable request and
during normal business hours at the offices of the Master Servicer designated by
it. In addition, access to the documentation regarding the Mortgage Loans
serviced by the Master Servicer under this Agreement will be provided to any
Certificateholder, the Guarantor (with respect to Group I Mortgage Loans only),
the Trustee and to any Person identified to the Master Servicer as a prospective
transferee of a Certificate, upon reasonable request during normal business
hours at the offices of the Master Servicer designated by it at the expense of
the Person requesting such access.

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Section 3.23      Title, Management and Disposition of REO Property.

         (a) The deed or certificate of sale of any REO Property shall be taken
in the name of the Trustee, or its nominee, in trust for the benefit of the
Certificateholders. The Master Servicer, on behalf of REMIC 1A or REMIC 1B, as
applicable (and on behalf of the Trustee for the benefit of the
Certificateholders), shall sell any REO Property as soon as practicable and, in
any event, shall either sell any REO Property before the close of the third
taxable year after the year REMIC 1A or REMIC 1B, as applicable, acquires
ownership of such REO Property for purposes of Section 860G(a)(8) of the Code or
request from the Internal Revenue Service, no later than 60 days before the day
on which the three-year grace period would otherwise expire, an extension of the
three-year grace period, unless the Master Servicer shall have delivered to the
Trustee, the Guarantor and the Depositor an Opinion of Counsel, addressed to the
Trustee, the Guarantor and the Depositor, to the effect that the holding by
REMIC 1A or REMIC 1B of such REO Property subsequent to three years after its
acquisition will not result in the imposition on any Trust REMIC of taxes on
"prohibited transactions" thereof, as defined in Section 860F of the Code, or
cause any Trust REMIC to fail to qualify as a REMIC under Federal law at any
time that any Certificates are outstanding. If an extension of the three-year
period is granted, the Master Servicer shall sell the related REO Property no
later than 60 days prior to the expiration of such extension period. The Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by any Trust REMIC of any "income from non-permitted
assets" within the meaning of Section 860F(a)(2)(B) of the Code, or any "net
income from foreclosure property" which is subject to taxation under the REMIC
Provisions.

         (b) The Master Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain, or
cause to be established and maintained, with respect to REO Properties an
account held in trust for the Trustee for the benefit of the Certificateholders
(the "REO Account"), which shall be an Eligible Account. The Master Servicer may
allow the Collection Account to serve as the REO Account, subject to separate
ledgers for each REO Property. The Master Servicer may retain or withdraw any
interest income paid on funds deposited in the REO Account.

         (c) The Master Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Master Servicer manages and operates similar property owned
by the Master Servicer or any of its Affiliates, all on such terms and for such
period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Master
Servicer's receipt thereof and shall thereafter deposit in the REO Account, in

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no event more than two Business Days after the deposit of such funds into the
clearing account, all revenues received by it with respect to an REO Property
and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of such REO Property including, without limitation:

                  (i) all insurance premiums due and payable in respect of such
         REO Property;

                  (ii) all real estate taxes and assessments in respect of such
         REO Property that may result in the imposition of a lien thereon; and

                  (iii) all costs and expenses necessary to maintain such REO
         Property.

         To the extent that amounts on deposit in the REO Account with respect
to an REO Property are insufficient for the purposes set forth in clauses (i)
through (iii) above with respect to such REO Property, the Master Servicer shall
advance from its own funds as Servicing Advances such amount as is necessary for
such purposes if, but only if, the Master Servicer would make such advances if
the Master Servicer owned the REO Property and if such Servicing Advance would
not constitute a Nonrecoverable Advance.

         Notwithstanding the foregoing, neither the Master Servicer nor the
Trustee shall:

                  (i)      authorize the Trust Fund to enter into, renew or
                           extend any New Lease with respect to any REO
                           Property, if the New Lease by its terms will give
                           rise to any income that does not constitute Rents
                           from Real Property;

                  (ii)     authorize any amount to be received or accrued under
                           any New Lease other than amounts that will constitute
                           Rents from Real Property;

                  (iii)    authorize any construction on any REO Property, other
                           than construction permitted under Section
                           856(e)(4)(B) of the Code; or

                  (iv)     authorize any Person to Directly Operate any REO
                           Property on any date more than 90 days after its date
                           of acquisition by the Trust Fund;

unless, in any such case, the Master Servicer has obtained an Opinion of Counsel
(the cost of which shall constitute a Servicing Advance), a copy of which shall
be provided to the Trustee, to the effect that such action will not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by REMIC 1A or REMIC
1B, in which case the Master Servicer may take such actions as are specified in
such Opinion of Counsel.

         The Master Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:

                  (i)      the terms and conditions of any such contract shall
                           not be inconsistent herewith;

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                  (ii)     any such contract shall require, or shall be
                           administered to require, that the Independent
                           Contractor pay all costs and expenses incurred in
                           connection with the operation and management of such
                           REO Property, including those listed above, and remit
                           all related revenues (net of such costs and expenses)
                           to the Master Servicer as soon as practicable, but in
                           no event later than thirty days following the receipt
                           thereof by such Independent Contractor;

                  (iii)    none of the provisions of this Section 3.23(c)
                           relating to any such contract or to actions taken
                           through any such Independent Contractor shall be
                           deemed to relieve the Master Servicer of any of its
                           duties and obligations to the Trustee on behalf of
                           the Certificateholders with respect to the operation
                           and management of any such REO Property; and

                  (iv)     the Master Servicer shall be obligated with respect
                           thereto to the same extent as if it alone were
                           performing all duties and obligations in connection
                           with the operation and management of such REO
                           Property.

         The Master Servicer shall be entitled to enter into any agreement with
any Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.

         (d) In addition to the withdrawals permitted under Section 3.23(c), the
Master Servicer may from time to time make withdrawals from the REO Account for
any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees in
respect of the related Mortgage Loan; and (ii) to reimburse itself or any
Sub-Servicer for unreimbursed Servicing Advances and Advances made in respect of
such REO Property or the related Mortgage Loan. On the Master Servicer
Remittance Date, the Master Servicer shall withdraw from each REO Account
maintained by it and deposit into the Distribution Account in accordance with
Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).

         (e) Subject to the time constraints set forth in Section 3.23(a), each
REO Disposition shall be carried out by the Master Servicer at such price and
upon such terms and conditions as the Master Servicer shall deem necessary or
advisable, as shall be normal and usual in its general servicing activities for
similar properties.

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         (f) The proceeds from the REO Disposition, net of any amount required
by law to be remitted to the Mortgagor under the related Mortgage Loan and net
of any payment or reimbursement to the Master Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Master Servicer Remittance Date in the month
following the receipt thereof for distribution on the related Distribution Date
in accordance with Section 4.01. Any REO Disposition shall be for cash only
(unless changes in the REMIC Provisions made subsequent to the Startup Day allow
a sale for other consideration).

         (g) The Master Servicer shall file information returns with respect to
the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.

Section 3.24      Obligations of the Master Servicer in Respect of
                  Prepayment Interest Shortfalls.

         The Master Servicer shall deliver to the Trustee for deposit into the
Distribution Account on or before 3:00 p.m. New York time on the Master Servicer
Remittance Date from its own funds an amount ("Compensating Interest") equal to
the lesser of (i) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting solely from Principal Prepayments during the
related Prepayment Period and (ii) the amount of its aggregate Servicing Fee for
the most recently ended calendar month.

Section 3.25      Obligations of the Master Servicer in Respect of
                  Mortgage Rates and Monthly Payments.

         In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or Stated Principal Balances that were made by
the Master Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Master Servicer, upon discovery or receipt
of notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor,
the Guarantor and any successor master servicer in respect of any such
liability; provided, that in the case of the Guarantor such indemnity shall only
apply with respect to Group I Mortgage Loans. Such indemnities shall survive the
termination or discharge of this Agreement. Notwithstanding the foregoing, this
Section 3.25 shall not limit the ability of the Master Servicer to seek recovery
of any such amounts from the related Mortgagor under the terms of the related
Mortgage Note, as permitted by law and shall not be an expense of the Trust.

Section 3.26      Reserve Fund.

         No later than the Closing Date, the Trustee, on behalf of the
Certificateholders, shall establish and maintain with itself a separate,

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segregated trust account titled, "Reserve Fund, Bankers Trust Company of
California, N.A., in trust for registered Holders of Long Beach Mortgage Loan
Trust 2001-3, Asset-Backed Certificates, Series 2001-3." On the Closing Date,
the Depositor shall deposit, or cause to be deposited, into the Reserve Fund
$1,000.

         On each Distribution Date as to which there is a Net WAC Rate Carryover
Amount payable to the Class A-1 Certificates, Class A-2 Certificates or
Mezzanine Certificates, the Trustee has been directed by the Class C
Certificateholders to, and therefore will, deposit into the Reserve Fund the
amounts described in Section 4.01(d)(viii), rather than distributing such
amounts to the Class C Certificateholders. On each such Distribution Date, the
Trustee shall hold all such amounts for the benefit of the Holders of the Class
A-1 Certificates, Class A-2 Certificates and Mezzanine Certificates, and will
distribute such amounts to the Holders of the Class A-1 Certificates, Class A-2
Certificates and Mezzanine Certificates in the amounts and priorities set forth
in Section 4.01(d). If no Net WAC Rate Carryover Amounts are payable on a
Distribution Date, the Trustee shall deposit into the Reserve Fund on behalf of
the Class C Certificateholders, from amounts otherwise distributable to the
Class C Certificateholders, an amount such that when added to other amounts
already on deposit in the Reserve Fund, the aggregate amount on deposit therein
is equal to $1,000.

         For federal and state income tax purposes, the Class C
Certificateholders shall be deemed to be the owners of the Reserve Fund and all
amounts deposited into the Reserve Fund (other than the initial deposit therein
of $1,000) shall be treated as amounts distributed by REMIC 3 to the Holders of
the Class C Certificates. Upon the termination of the Trust, or the payment in
full of the Class A-1 Certificates, Class A-2 Certificates and Mezzanine
Certificates, all amounts remaining on deposit in the Reserve Fund will be
released by the Trustee and distributed to the Class C Certificateholders or
their designees. The Reserve Fund will be part of the Trust but not part of any
REMIC and any payments to the Holders of the Class A-1 Certificates, Class A-2
Certificates or Mezzanine Certificates of Net WAC Rate Carryover Amounts will
not be payments with respect to a "regular interest" in a REMIC within the
meaning of Code Section 860(G)(a)(1).

         By accepting a Class C Certificate, each Class C Certificateholder
shall be deemed to have directed the Trustee, and the Trustee shall pursuant to
such direction, deposit into the Reserve Fund the amounts described above on
each Distribution Date as to which there is any Net WAC Rate Carryover Amount
rather than distributing such amounts to the Class C Certificateholders. By
accepting a Class C Certificate, each Class C Certificateholder further agrees
that such direction is given for good and valuable consideration, the receipt
and sufficiency of which is acknowledged by such acceptance.

         At the direction of the Holders of a majority in Percentage Interest in
the Class C Certificates, the Trustee shall direct any depository institution
maintaining the Reserve Fund to invest the funds in such account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee or an
Affiliate manages or advises such investment, and (ii) no later than the date on

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which such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trustee or an Affiliate manages or advises such investment. If
no investment direction of the Holders of a majority in Percentage Interest in
the Class C Certificates with respect to the Reserve Fund is received by the
Trustee, the Trustee shall invest the funds in such account in Permitted
Investments managed by the Trustee or an Affiliate of the kind described in
clause (vi) of the definition of Permitted Investments. Notwithstanding the
foregoing, any funds in the Reserve Fund shall be invested in Bankers Trust's
Institutional Cash Management Fund 1679 for so long as such investment complies
with clause (vi) of the definition of Permitted Investments. All income and gain
earned upon such investment shall be deposited into the Reserve Fund.

         For federal tax return and information reporting, the right of the
Holders of the Class A-1 Certificates, the Holders of the Class A-2 Certificates
and the Holders of the Mezzanine Certificates to receive payments from the
Reserve Fund in respect of any Net WAC Rate Carryover Amount shall be assigned a
value of zero.

Section 3.27      Advance Facility.

         (a) The Trustee and the Trust Fund, at the direction of the Master
Servicer and with the consent of the Guarantor, is hereby authorized to enter
into a facility with any Person which provides that such Person (an "Advancing
Person") may make all or a portion of the Advances and/or Servicing Advances to
the Trust Fund under this Agreement, although no such facility shall reduce or
otherwise affect the Master Servicer's obligation to fund such Advances and/or
Servicing Advances. To the extent that an Advancing Person makes all or a
portion of any Advance or any Servicing Advance and provides the Trustee with
notice acknowledged by the Master Servicer that such Advancing Person is
entitled to reimbursement, such Advancing Person shall be entitled to receive
reimbursement pursuant to this Agreement for such amount to the extent provided
in Section 3.27(b). Such notice from the Advancing Person shall specify the
amount of the reimbursement and shall specify which Section of this Agreement
permits the applicable Advance or Servicing Advance to be reimbursed. The
Trustee shall be entitled to rely without independent investigation on the
Advancing Person's statement with respect to the amount of any reimbursement
pursuant to this Section 3.27 and with respect to the Advancing Person's
statement with respect to the Section of this Agreement that permits the
applicable Advance or Servicing Advance to be reimbursed. An Advancing Person
whose obligations are limited to the making of Advances and/or Servicing
Advances shall not be required to meet the qualifications of a Master Servicer
or a Sub-Servicer pursuant to Article VI hereof and will not be deemed to be a
Sub-Servicer under this Agreement. If the terms of a facility proposed to be
entered into with an Advancing Person by the Trust Fund would not materially and
adversely affect the interests of any Certificateholder, then the Guarantor
shall not withhold its consent to the Trust Fund's entering into such facility.

         (b) If an advancing facility is entered into, then the Master Servicer
shall not be permitted to reimburse itself under any Section specified or for
any amount specified by the Advancing Person in the notice described under
Section 3.27(a) above and acknowledged by the Master Servicer prior to the
remittance to the Trust Fund, but instead the Master Servicer shall include such
amounts in the applicable remittance to the Trustee made pursuant to Section

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3.10(a). The Trustee is hereby authorized to pay to the Advancing Person
reimbursements for Advances and Servicing Advances from the Distribution Account
to the same extent the Master Servicer would have been permitted to reimburse
itself for such Advances and/or Servicing Advances in accordance with the
specified Sections had the Master Servicer itself made such Advance or Servicing
Advance. The Trustee is hereby authorized to pay directly to the Advancing
Person such portion of the Servicing Fee as the parties to any advancing
facility may agree.

         (c) All Advances and Servicing Advances made pursuant to the terms of
this Agreement shall be deemed made and shall be reimbursed on a "first in-first
out" (FIFO) basis.

                                   ARTICLE IV

                                  FLOW OF FUNDS

Section 4.01      Distributions.

         (a) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account that portion of the Available Funds for such Distribution
Date consisting of the Group I Interest Remittance Amount and the Group II
Interest Remittance Amount for such Distribution Date, and make the following
disbursements and transfers in the order of priority described below, in each
case to the extent of the Group I Interest Remittance Amount or Group II
Interest Remittance Amount, as applicable, remaining for such Distribution Date:

         (i) the Group I Interest Remittance Amount will be distributed:

                  (A) first, to the Guarantor for payment of (i) the Guaranty
                  Fee and (ii) any Guarantor Reimbursement Amount then due;

                  (B) second, concurrently, to pay the Class A-1 Certificates
                  and the Class S-1 Certificates the Monthly Interest
                  Distributable Amount and any Unpaid Interest Shortfall Amount,
                  allocated between the Class A-1 Certificates and the Class S-1
                  Certificates pro rata based on entitlement pursuant to this
                  clause (i)(B); and

                  (C) third, concurrently, to pay the Class A-2 Certificates and
                  the Class S-2 Certificates the Monthly Interest Distributable
                  Amount and any Unpaid Interest Shortfall Amount, in each case
                  to the extent not paid pursuant to Section 4.01(a)(ii)(A)
                  below, allocated between the Class A-2 Certificates and the
                  Class S-2 Certificates pro rata based on entitlement pursuant
                  to this clause (i)(C);

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                  (ii) the Group II Interest Remittance Amount will be
         distributed:

                  (A) first, concurrently, to pay the Class A-2 Certificates and
                  the Class S-2 Certificates the Monthly Interest Distributable
                  Amount and any Unpaid Interest Shortfall Amount, allocated
                  between the Class A-2 Certificates and the Class S-2
                  Certificates pro rata based on entitlement pursuant to this
                  clause (ii)(A); and

                  (B) second, concurrently, to pay the Class A-1 Certificates
                  and the Class S-1 Certificates the Monthly Interest
                  Distributable Amount and any Unpaid Interest Shortfall Amount,
                  in each case to the extent not paid pursuant to Section
                  4.01(a)(i)(B) above, allocated between the Class A-1
                  Certificates and the Class S-1 Certificates pro rata based on
                  entitlement pursuant to this clause (ii)(B);

                  (iii) any Group I Interest Remittance Amount and Group II
         Interest Remittance Amount remaining undistributed following the
         distributions pursuant to clauses (i) and (ii) above will be
         distributed:

                  first, to the Holders of the Class M-1 Certificates, the
                  related Monthly Interest Distributable Amount for such Class
                  for such Distribution Date;

                  second, to the Holders of the Class M-2 Certificates, the
                  related Monthly Interest Distributable Amount for such Class
                  for such Distribution Date; and

                  third, to the Holders of the Class M-3 Certificates, the
                  related Monthly Interest Distributable Amount for such Class
                  for such Distribution Date; and

                  (iv) any Group I Interest Remittance Amount or Group II
         Interest Remittance Amount remaining undistributed following the
         distributions pursuant to clause (iii) above will be used in
         determining the amount of Net Monthly Excess Cashflow, if any, for such
         Distribution Date.

         (b) On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, the Holders of the Class A Certificates and
Mezzanine Certificates shall be entitled to receive distributions in respect of
principal to the extent of the Group I Principal Distribution Amount and the
Group II Principal Distribution Amount in the following amounts and order of
priority:

(i)      first,

         (A) (x) an amount equal to the Group I Principal Distribution Amount
         will be distributed in the following order of priority:

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                  (1) first, to the Guarantor for payment of (i) the Guaranty
                  Fee and (ii) any Guarantor Reimbursement Amount then due (to
                  the extent not paid from the Group I Interest Remittance
                  Amount for such Distribution Date);

                  (2) second, to the Holders of the Class A-1 Certificates until
                  the Certificate Principal Balance thereof has been reduced to
                  zero; and then

                  (y) any portion of the Group II Principal Distribution Amount
         distributable pursuant to Section 4.01(b)(i)(B)(x) that remains
         following distribution to the Holders of the Class A-2 Certificates
         will be distributed as set forth in Section 4.01(b)(i)(A)(x) above;

         (B) (x) an amount equal to the Group II Principal Distribution Amount
         will be distributed to the Holders of the Class A-2 Certificates, until
         the Certificate Principal Balance thereof has been reduced to zero; and
         then

                  (y) any portion of the Group I Principal Distribution Amount
         distributable pursuant to Section 4.01(b)(i)(A)(x) that remains
         following distribution to the Holders of the Class A-1 Certificates, to
         the Holders of the Class A-2 Certificates, until the Certificate
         Principal Balance of the Class A-2 Certificates has been reduced to
         zero;

         (ii) second, any Group I Principal Distribution Amount and Group II
Principal Distribution Amount remaining undistributed following the
distributions pursuant to clause (i) above will be distributed:

                  first, to the Holders of the Class M-l Certificates, until the
                  Certificate Principal Balance thereof has been reduced to
                  zero;

                  second, to the Holders of the Class M-2 Certificates, until
                  the Certificate Principal Balance thereof has been reduced to
                  zero; and

                  third, to the Holders of the Class M-3 Certificates, until the
                  Certificate Principal Balance thereof has been reduced to
                  zero; and

         (iii) any Principal Distribution Amount remaining undistributed
following the distributions pursuant to clauses (i) and (ii) above will be used
in determining the amount of Net Monthly Excess Cashflow, if any, for such
Distribution Date.

         (c) On each Distribution Date (a) on or after the Stepdown Date and (b)
on which a Trigger Event is not in effect, the Holders of the Class A
Certificates and Mezzanine Certificates shall be entitled to receive
distributions in respect of principal to the extent of the Group I Principal
Distribution Amount and the Group II Principal Distribution Amount in the
following amounts and order of priority:

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                  (i)      first,

         (A) (x) an amount equal to the Class A-1 Principal Distribution Amount
         will be distributed in the following order of priority:

                  (1) first, to the Guarantor for payment of (i) the Guaranty
                  Fee and (ii) any Guarantor Reimbursement Amount then due (to
                  the extent not paid from the Group I Interest Remittance
                  Amount for such Distribution Date);

                  (2) second, to the Holders of the Class A-1 Certificates,
                  until the Certificate Principal Balance thereof has been
                  reduced to zero; then

                  (y) any portion of the Class A-2 Principal Distribution Amount
         distributable pursuant to Section 4.01(c)(i)(B)(x) that remains
         following distribution to the Holders of the Class A-2 Certificates
         will be distributed as set forth in Section 4.01(c)(i)(A)(x) above;
         then

         (B) (x) an amount equal to the Class A-2 Principal Distribution Amount
         will be distributed to the Holders of the Class A-2 Certificates, until
         the Certificate Principal Balance thereof has been reduced to zero; and
         then

                  (y) any portion of the Class A-1 Principal Distribution Amount
         distributable pursuant to Section 4.01(c)(i)(A)(x) that remains
         following distribution to the Holders of the Class A-1 Certificates, to
         the Holders of the Class A-2 Certificates, until the Certificate
         Principal Balance of the Class A-2 Certificates has been reduced to
         zero;

                  (ii) second, any Group I Principal Distribution Amount and
         Group II Principal Distribution Amount remaining undistributed
         following the distribution pursuant to clause (i) will be distributed:

                  first, to the Holders of the Class M-1 Certificates, the Class
                  M-1 Principal Distribution Amount, until the Certificate
                  Principal Balance of such Class has been reduced to zero;

                  second, to the Holders of the Class M-2 Certificates, the
                  Class M-2 Principal Distribution Amount, until the Certificate
                  Principal Balance of such Class has been reduced to zero; and

                  third, to the Holders of the Class M-3 Certificates, the Class
                  M-3 Principal Distribution Amount, until the Certificate
                  Principal Balance of such Class has been reduced to zero; and

                  (iii) any Principal Distribution Amount remaining
         undistributed following the distributions pursuant to clauses (i) and
         (ii) above will be used in determining the amount of Net Monthly Excess
         Cashflow, if any, for such Distribution Date.

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<PAGE>

         (d) On each Distribution Date, any Net Monthly Excess Cashflow shall be
paid in the following order or priority, in each case to the extent of the Net
Monthly Excess Cashflow remaining undistributed:

                  (i) to the Holders of the Class or Classes of Certificates
         then entitled to receive distributions in respect of principal, in an
         amount equal to any Extra Principal Distribution Amount, payable to
         such Holders as part of the Principal Distribution Amount pursuant to
         Section 4.01(b) or Section 4.01(c) above, as applicable;

                  (ii) to the Holders of the Class M-1 Certificates, in an
         amount equal to the Unpaid Interest Shortfall Amount, if any, for such
         Class for such Distribution Date;

                  (iii) to the Holders of the Class M-1 Certificates, in an
         amount equal to the Allocated Realized Loss Amount, if any, for such
         Class for such Distribution Date;

                  (iv) to the Holders of the Class M-2 Certificates, in an
         amount equal to the Unpaid Interest Shortfall Amount, if any, for such
         Class for such Distribution Date;

                  (v) to the Holders of the Class M-2 Certificates, in an amount
         equal to the Allocated Realized Loss Amount, if any, for such Class for
         such Distribution Date;

                  (vi) to the Holders of the Class M-3 Certificates, in an
         amount equal to the Unpaid Interest Shortfall Amount, if any, for such
         Class for such Distribution Date;

                  (vii) to the Holders of the Class M-3 Certificates, in an
         amount equal to the Allocated Realized Loss Amount, if any, for such
         Class for such Distribution Date;

                  (viii) to the Reserve Fund, the amount of any Net WAC Rate
         Carryover Amounts with respect to the Class A Certificates and
         Mezzanine Certificates for such Distribution Date (or, if no Net WAC
         Rate Carryover Amounts are payable on such Distribution Date, to the
         Reserve Fund, an amount such that when added to other amounts already
         on deposit in the Reserve Fund, the aggregate amount on deposit therein
         is equal to $1,000);

                  (ix) to the Holders of the Class C Certificates, the Monthly
         Interest Distributable Amount for such Class and any
         Overcollateralization Release Amount for such Distribution Date (net of
         such portion of amounts payable pursuant to this clause (ix) that were
         paid pursuant to clause (viii) above);

                  (x) if such Distribution Date follows the Prepayment Period
         during which occurs the latest date on which a Prepayment Charge may be
         required to be paid in respect of any Mortgage Loans, to the Holders of
         the Class P Certificates, in reduction of the Certificate Principal
         Balance thereof, until the Certificate Principal Balance thereof is
         reduced to zero; and

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                  (xi) any remaining amounts to the Holders of the Residual
         Certificates (in respect of the appropriate Class R Interest).

         On each Distribution Date, after making the distributions of the
Available Funds as provided above, the Trustee shall withdraw from the Reserve
Fund the amount on deposit therein and shall distribute such amounts to the
Holders of the Class A Certificates and Mezzanine Certificates in the following
order and priority, in each case to the extent of amounts remaining in the
Reserve Fund and in each case to the extent of the Net WAC Rate Carryover Amount
for such Class or Classes for such Distribution Date: first, to the Class A
Certificates, on a pro rata basis based on the Net WAC Rate Carryover Amount for
the Class A-1 Certificates and Class A-2 Certificates for such Distribution
Date; second, to the Class M-1 Certificates; third, to the Class M-2
Certificates; and fourth, to the Class M-3 Certificates. Any remaining amount
shall be re-deposited into the Reserve Fund (to the extent of the required
amount of $1,000).

         On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Mortgage Loans received during the related Prepayment Period
and any Master Servicer Prepayment Charge Amounts paid by or collected by the
Master Servicer during the related Prepayment Period will be withdrawn from the
Distribution Account and distributed by the Trustee to the Holders of the Class
P Certificates and shall not be available for distribution to the Holders of any
other Class of Certificates. The payment of the foregoing amounts to the Holders
of the Class P Certificates shall not reduce the Certificate Principal Balance
thereof.

         Without limiting the provisions of Section 9.01(b), by acceptance of
the Residual Certificates, the Holders of the Residual Certificates agree, for
so long as the NIM Notes are outstanding, in connection with any amount
distributable to the Holders of the Residual Certificates pursuant to clause
(xi) above, to assign and transfer any such amounts, and to the extent received
to pay any such amounts, to the Holders of the Class C Certificates.

          (e) All distributions made with respect to each Class of Certificates
on each Distribution Date shall be allocated pro rata among the outstanding
Certificates in such Class based on their respective Percentage Interests.
Payments in respect of each Class of Certificates on each Distribution Date will
be made to the Holders of the respective Class of record on the related Record
Date (except as otherwise provided in this Section 4.01 or Section 9.01
respecting the final distribution on such Class), based on the aggregate
Percentage Interest represented by their respective Certificates, and shall be
made by wire transfer of immediately available funds to the account of any such
Holder at a bank or other entity having appropriate facilities therefor, if such
Holder shall have so notified the Trustee in writing at least five Business Days
prior to the Record Date immediately prior to such Distribution Date and is the
registered owner of Certificates having an initial aggregate Certificate
Principal Balance or Notional Amount that is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the Original Class Certificate Principal
Balance or Original Notional Amount of such Class of Certificates, or otherwise
by check mailed by first class mail to the address of such Holder appearing in
the Certificate Register. Notwithstanding the foregoing, the Holders of the
Class A-1 Certificates and the Class S-1 Certificates shall receive all
distributions pursuant to this Section 4.01(e) by wire transfer of immediately
available funds. The final distribution on each Certificate will be made in like

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manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trustee or such other location specified in the
notice to Certificateholders of such final distribution.

         Payments to the Guarantor on each Distribution Date will be made by
wire transfer of immediately available funds to the following account:

                  FNMA Federal Reserve Account
                  Telegraphic FNMA NYC ABA 021039500
                  Ref. GR466 01-T9

         Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Certificates. None of the Trustee, the Depositor, the Master Servicer or the
Seller shall have any responsibility therefor except as otherwise provided by
applicable law.

         (f) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement. None of the Holders of
any Class of Certificates, the Trustee or the Master Servicer shall in any way
be responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.

         (g) Except as otherwise provided in Section 9.01, whenever the Trustee
expects that the final distribution with respect to any Class of Certificates
will be made on the next Distribution Date, the Trustee shall, no later than
three (3) days before the related Distribution Date, mail to the Guarantor and
each Holder on such date of such Class of Certificates a notice to the effect
that:

                  (i) the Trustee expects that the final distribution with
         respect to such Class of Certificates will be made on such Distribution
         Date but only upon presentation and surrender of such Certificates at
         the office of the Trustee therein specified, and

                  (ii) no interest shall accrue on such Certificates from and
         after the end of the related Accrual Period;

provided, that such notice shall be sent to the Guarantor only with respect to
Guaranteed Certificates.

         Any funds not distributed to any Holder or Holders of Certificates of
such Class on such Distribution Date because of the failure of such Holder or

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Holders to tender their Certificates shall, on such date, be set aside and held
in trust by the Trustee and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(g) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee shall, directly or through an agent, mail a final
notice to the remaining non-tendering Certificateholders concerning surrender of
their Certificates but shall continue to hold any remaining funds for the
benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Greenwich Capital Markets, Inc. all such
amounts, and all rights of non-tendering Certificateholders in or to such
amounts shall thereupon cease. No interest shall accrue or be payable to any
Certificateholder on any amount held in trust by the Trustee as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 4.01(g).

          (h) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate or a
Mezzanine Certificate be reduced more than once in respect of any particular
amount both (a) allocated to such Certificate in respect of Realized Losses
pursuant to Section 4.06 and (b) distributed to the Holder of such Certificate
in reduction of the Certificate Principal Balance thereof pursuant to this
Section 4.01 from Net Monthly Excess Cashflow, (ii) in no event shall the
Uncertificated Principal Balance of a REMIC 2 Regular Interest be reduced more
than once in respect of any particular amount both (a) allocated to such REMIC 2
Regular Interest in respect of Realized Losses pursuant to Section 4.06 and (b)
distributed on such REMIC 2 Regular Interest in reduction of the Uncertificated
Principal Balance thereof pursuant to Section 4.05 and (iii) in no event shall
the Uncertificated Principal Balance of a REMIC 1A Regular Interest or REMIC 1B
Regular Interest be reduced more than once in respect of any particular amount
both (a) allocated to such REMIC 1A Regular Interest or REMIC 1B Regular
Interest in respect of Realized Losses pursuant to Section 4.06 and (b)
distributed on such REMIC 1A Regular Interest or REMIC 1B Regular Interest in
reduction of the Uncertificated Principal Balance thereof pursuant to this
Section 4.05.

Section 4.02      [Reserved]

Section 4.03      Statements.

(a) On each Distribution Date, based, as applicable, on information provided to
it by the Master Servicer, the Trustee shall prepare and make available by
electronic medium (as set forth in the penultimate paragraph of this Section

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4.03(a)) to each Holder of the Regular Certificates, the Master Servicer, the
Guarantor and the Rating Agencies, a statement as to the distributions made on
such Distribution Date:

                  (i) the amount of the distribution made on such Distribution
         Date to the Holders of each Class of Regular Certificates (other than
         the Class S Certificates), separately identified, allocable to
         principal and the amount of the distribution made to the Holders of the
         Class P Certificates allocable to Prepayment Charges and Master
         Servicer Prepayment Charge Payment Amounts;

                  (ii) the amount of the distribution made on such Distribution
         Date to the Holders of each Class of Regular Certificates (other than
         the Class P Certificates) allocable to interest, separately identified;

                  (iii) the Overcollateralized Amount, the Overcollateralization
         Release Amount, the Overcollateralization Deficiency Amount and the
         Overcollateralization Target Amount as of such Distribution Date and
         the Excess Overcollateralized Amount for the Mortgage Pool for such
         Distribution Date;

                  (iv) the aggregate amount of servicing compensation received
         by the Master Servicer with respect to the related Due Period and such
         other customary information as the Trustee deems necessary or
         desirable, or which a Certificateholder reasonably requests, to enable
         Certificateholders to prepare their tax returns;

                  (v) the Deficiency Amount, the Guarantor Payments and the
         Guarantor Reimbursement Amount for such Distribution Date;

                  (vi)     the aggregate amount of Advances for the related Due
         Period;

                  (vii) the aggregate Stated Principal Balance of the Mortgage
         Loans at the Close of Business at the end of the related Due Period;

                  (viii) the number, aggregate principal balance, weighted
         average remaining term to maturity and weighted average Mortgage Rate
         of the Mortgage Loans as of the related Determination Date;

                  (ix) the number and aggregate unpaid principal balance of
         Mortgage Loans (a) delinquent 30-59 days, (b) delinquent 60-89 days,
         (c) delinquent 90 or more days in each case, as of the last day of the
         preceding calendar month provided, however that any aggregate unpaid
         principal balance of Mortgage Loans shall be reported as of the last
         day of the related Due Period, (d) as to which foreclosure proceedings
         have been commenced and (e) with respect to which the related Mortgagor
         has filed for protection under applicable bankruptcy laws, with respect
         to whom bankruptcy proceedings are pending or with respect to whom
         bankruptcy protection is in force;

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<PAGE>

                  (x) with respect to any Mortgage Loan that became an REO
         Property during the preceding Prepayment Period, the unpaid principal
         balance and the Principal Balance of such Mortgage Loan as of the date
         it became an REO Property;

                  (xi) the total number and cumulative principal balance of all
         REO Properties as of the Close of Business of the last day of the
         preceding Prepayment Period;

                  (xii) the aggregate amount of Principal Prepayments made
         during the related Prepayment Period;

                  (xiii) the aggregate amount of Realized Losses incurred during
         the related Prepayment Period and the cumulative amount of Realized
         Losses;

                  (xiv) the aggregate amount of Extraordinary Trust Fund
         expenses withdrawn from the Collection Account or the Distribution
         Account for such Distribution Date;

                  (xv) the Certificate Principal Balance of the Class A
         Certificates, the Mezzanine Certificates and the Class C Certificates,
         after giving effect to the distributions made on such Distribution
         Date, and the Notional Amount of the Class S Certificates and the Class
         C Certificates, after giving effect to the distributions made on such
         Distribution Date;

                  (xvi) the Monthly Interest Distributable Amount in respect of
         the Class A Certificates, the Class S Certificates, the Mezzanine
         Certificates and the Class C Certificates for such Distribution Date
         and the Unpaid Interest Shortfall Amount, if any, with respect to the
         Class A Certificates, the Class S Certificates and the Mezzanine
         Certificates for such Distribution Date;

                  (xvii) the aggregate amount of any Prepayment Interest
         Shortfalls for such Distribution Date, to the extent not covered by
         payments by the Master Servicer pursuant to Section 3.24, and the
         aggregate amount of any Relief Act Interest Shortfalls for such
         Distribution Date;

                  (xviii) the Credit Enhancement Percentage for such
         Distribution Date;

                  (xix) the Net WAC Rate Carryover Amount for the Class A-1
         Certificates, Class A-2 Certificates and the Mezzanine Certificates, if
         any, for such Distribution Date and the amount remaining unpaid after
         reimbursements therefor on such Distribution Date;

                  (xx)      [reserved];

                  (xxi) the date when the Stepdown Date or a Trigger Event has
         occurred;

                  (xxii)   the Available Funds;

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                  (xxiii) the respective Pass-Through Rates applicable to the
         Class A Certificates, the Class S Certificates, the Mezzanine
         Certificates and the Class C Certificates for such Distribution Date
         and the Pass-Through Rate applicable to the Class A Certificates and
         the Mezzanine Certificates for the immediately succeeding Distribution
         Date;

                  (xxiv) the Guaranty Fee to be paid to the Guarantor with
         respect to the Guaranteed Certificates for such Distribution Date; and

                  (xxv) any other information that is required by the Code and
         regulations thereunder to be made available to Certificateholders.

         Subject to Section 4.03(f) below, the Trustee will make such statement
(and, at its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders, the Master
Servicer, the Guarantor and the Rating Agencies via the Trustee's internet
website. The Trustee's internet website shall initially be located at
"http:\\www-apps.gis.deutsche-bank.com/invr. Assistance in using the website can
be obtained by calling the Trustee's customer service desk at 1-800-735-7777.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change the
way such statements are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes.

         In the case of information furnished pursuant to subclauses (i) through
(iii) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Closing Date.

         (b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall, upon written request, furnish to each Person who at any
time during the calendar year was a Certificateholder of a Regular Certificate,
if requested in writing by such Person, such information as is reasonably
necessary to provide to such Person a statement containing the information set
forth in subclauses (i) through (iii) above, aggregated for such calendar year
or applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.

         (c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate.

         (d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a

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statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.

         (e) On each Distribution Date the Trustee shall provide Bloomberg
Financial Markets, L.P. ("Bloomberg") CUSIP level factors for each Class of
Certificates as of such Distribution Date, using a format and media mutually
acceptable to the Trustee and Bloomberg.

         (f) On the third Business Day preceding each Distribution Date, the
Trustee shall deliver to the Guarantor (by electronic medium as specified in the
next sentence) a statement identifying the Class Factor for each Class of
Certificates. The Trustee shall deliver such statement on or before 12:00 noon
(New York time) on such day via the internet using the following domain name:
bond_admin@fanniemae.com. If a Guarantor Payment will be payable on a
Distribution Date, all information required under Section 4.03(a) must also be
similarly delivered to Guarantor on such third Business Day proceeding such
Distribution Date. The second consecutive failure by the Trustee to deliver the
Class Factor to the Guarantor shall constitute an event of default and permit
the Guarantor to remove the Trustee for cause; provided that each such failure
was caused by the willful misconduct, bad faith, or negligence of the Trustee
and that the Master Servicer had delivered the Remittance Report for the related
Distribution Date to the Trustee pursuant to Section 4.04.

Section 4.04      Remittance Reports; Advances.

         (a) Within one Business Day after each Determination Date, the Master
Servicer shall deliver to the Guarantor and the Trustee by telecopy or
electronic mail (or by such other means as the Master Servicer, the Guarantor
and the Trustee may agree from time to time) a Remittance Report with respect to
the related Distribution Date. Not later than each Master Servicer Remittance
Date (or, in the case of certain information, as agreed between the Trustee and
the Master Servicer, not later than four Business Days after the end of each Due
Period), the Master Servicer shall deliver or cause to be delivered to the
Trustee in addition to the information provided on the Remittance Report, such
other information reasonably available to it with respect to the Mortgage Loans
as the Trustee may reasonably require to perform the calculations necessary to
make the distributions contemplated by Section 4.01 and to prepare the
statements to Certificateholders contemplated by Section 4.03. The Trustee shall
not be responsible to recompute, recalculate or verify any information provided
to it by the Master Servicer.

         (b) The amount of Advances to be made by the Master Servicer for any
Distribution Date shall equal, subject to Section 4.04(d), the sum of (i) the
aggregate amount of Monthly Payments (with each interest portion thereof net of
the related Servicing Fee), due on the related Due Date in respect of the
Mortgage Loans, which Monthly Payments were delinquent as of the close of
business on the related Determination Date, plus (ii) with respect to each REO
Property, which REO Property was acquired during or prior to the related

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Prepayment Period and as to which such REO Property an REO Disposition did not
occur during the related Prepayment Period, an amount equal to the excess, if
any, of the Monthly Payments (with each interest portion thereof net of the
related Servicing Fee) that would have been due on the related Due Date in
respect of the related Mortgage Loans, over the net income from such REO
Property transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date.

         On or before 3:00 p.m. New York time on the Master Servicer Remittance
Date, the Master Servicer shall remit in immediately available funds to the
Trustee for deposit in the Distribution Account an amount equal to the aggregate
amount of Advances, if any, to be made in respect of the Mortgage Loans and REO
Properties for the related Distribution Date either (i) from its own funds or
(ii) from the Collection Account, to the extent of funds held therein for future
distribution (in which case, it will cause to be made an appropriate entry in
the records of Collection Account that amounts held for future distribution have
been, as permitted by this Section 4.04, used by the Master Servicer in
discharge of any such Advance) or (iii) in the form of any combination of (i)
and (ii) aggregating the total amount of Advances to be made by the Master
Servicer with respect to the Mortgage Loans and REO Properties. Any amounts held
for future distribution and so used shall be appropriately reflected in the
Master Servicer's records and replaced by the Master Servicer by deposit in the
Collection Account on or before any future Master Servicer Remittance Date to
the extent that the Available Funds for the related Distribution Date
(determined without regard to Advances to be made on the Master Servicer
Remittance Date) shall be less than the total amount that would be distributed
to the Classes of Certificateholders pursuant to Section 4.01 on such
Distribution Date if such amounts held for future distributions had not been so
used to make Advances. The Trustee will provide notice to the Guarantor and the
Master Servicer by telecopy by the close of business on any Master Servicer
Remittance Date in the event that the amount remitted by the Master Servicer to
the Trustee on such date is less than the Advances required to be made by the
Master Servicer for the related Distribution Date.

         (c) The obligation of the Master Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
Mortgage Loan is paid in full or until the recovery of all Liquidation Proceeds
thereon.

         (d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Master Servicer
if such Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance or Servicing Advance, if
made, would constitute a Nonrecoverable Advance, shall be evidenced by an
Officers' Certificate of the Master Servicer delivered to the Guarantor, the
Depositor and the Trustee.

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Section 4.05      Distributions on the REMIC Regular Interests.

         (a) On each Distribution Date, the Trustee shall cause the Available
Funds, in the following order of priority, to be distributed by REMIC 1A to
REMIC 2 on account of the REMIC 1A Regular Interests or withdrawn from the
Distribution Account and distributed to the Holders of the Class R Certificates
(in respect of the Class R-1A Interest), as the case may be:

                  (1) first, Available Funds equal to the Group I Interest
         Remittance Amount shall be distributed to (i) first, to the Holders of
         REMIC 1A Regular Interest LT1A-2, in an amount equal to (A) the
         Uncertificated Accrued Interest for such Distribution Date, plus (B)
         any amounts in respect thereof remaining unpaid from previous
         Distribution Dates; (ii) second, to the Holders of REMIC 1A Regular
         Interest LT1A-1 and REMIC 1A Regular Interest LT1A-P, in an amount
         equal to (A) the Uncertificated Accrued Interest for such Distribution
         Date, plus (B) any amounts in respect thereof remaining unpaid from
         previous Distribution Dates;

                  (2) second, the remainder of the Available Funds attributable
         to the Group I Mortgage Loans after the distribution of the Group I
         Interest Remittance Amount pursuant to clause (1) above shall be
         distributed to the Holders of REMIC 1A Regular Interests as follows:

                           (A) to the Holders of REMIC 1A Regular Interest
                  LT1A-P, on the Distribution Date immediately following the
                  expiration of the latest Prepayment Charge as identified on
                  the Prepayment Charge Schedule or any Distribution Date
                  thereafter until $100 has been distributed pursuant to this
                  clause;

                           (B) to the Holders of REMIC 1A Regular Interest
                  LT1A-1, until the Uncertificated Principal Balance of REMIC 1a
                  Regular Interest LT1A-1 is reduced to zero;

                           (C) to the Holders of REMIC 1A Regular Interest
                  LT1A-2, until the Uncertificated Principal Balance of REMIC 1A
                  Regular Interest LT1A-2 is reduced to zero; then

                           (D) any remaining amount to the Holders of the Class
                  R-1A Certificates (in respect of the Class R-1A Interest).

         On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Group I Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC 1A to the Holders of REMIC 1A Regular
Interest LT1A-P. The payment of the foregoing amounts to the Holders of REMIC 1A
Regular Interest LT1A-P shall not reduce the Uncertificated Principal Balances
thereof

         (b) On each Distribution Date, the Trustee shall cause the Available
Funds, in the following order of priority, to be distributed by REMIC 1B to

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REMIC 2 on account of the REMIC 1B Regular Interests or withdrawn from the
Distribution Account and distributed to the Holders of the Class R Certificates
(in respect of the Class R-1B Interest), as the case may be:

                  (1) first, Available Funds equal to the Group II Interest
         Remittance Amount shall be distributed (i) first, to the Holders of
         REMIC 1B Regular Interest LT1B-2, in an amount equal to (A) the
         Uncertificated Accrued Interest for such Distribution Date, plus (B)
         any amounts in respect thereof remaining unpaid from previous
         Distribution Dates; (ii) second, to the Holders of REMIC 1B Regular
         Interest LT1B-1 and REMIC 1B Regular Interest LT1B-P, in an amount
         equal to (A) the Uncertificated Accrued Interest for such Distribution
         Date, plus (B) any amounts in respect thereof remaining unpaid from
         previous Distribution Dates; and

                  (2) second, the remainder of the Available Funds attributable
         to the Group II Mortgage Loans after the distribution of the Group II
         Interest Remittance Amount pursuant to clause (1) above shall be
         distributed to the Holders of REMIC 1B Regular Interests as follows:

                           (A) to the Holders of REMIC 1B Regular Interest
                  LT1B-P, on the Distribution Date immediately following the
                  expiration of the latest Prepayment Charge as identified on
                  the Prepayment Charge Schedule or any Distribution Date
                  thereafter until $100 has been distributed pursuant to this
                  clause;

                           (B) to the Holders of REMIC 1B Regular Interest
                  LT1B-1, until the Uncertificated Principal Balance of REMIC 1B
                  Regular Interest LT1B-1 is reduced to zero;

                           (C) to the Holders of REMIC 1B Regular Interest
                  LT1B-2, until the Uncertificated Principal Balance of REMIC 1B
                  Regular Interest LT1B-2 is reduced to zero; then

                           (D) any remaining amount to the Holders of the Class
                  R-1B Certificates (in respect of the Class R-1B Interest).

         On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Group II Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC 1B to the Holders of REMIC 1B Regular
Interest LT1B-P. The payment of the foregoing amounts to the Holders of REMIC 1B
Regular Interest LT1B-P shall not reduce the Uncertificated Principal Balance
thereof.

         (c) On each Distribution Date, the Trustee shall cause in the following
order of priority, the following amounts to be distributed by REMIC 2 to REMIC 3
on account of the REMIC 2 Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates (in respect
of the Class R-2 Interest), as the case may be:

                  (1) first, Available Funds equal to the Group I Interest
         Remittance Amount shall be distributed (i) first, to the Holders of

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         REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular Interest LT2S-1B and
         REMIC 2 Regular Interest LT2S-1C, pro rata, in an amount equal to (A)
         the Uncertificated Accrued Interest for such Distribution Date, plus
         (B) any amounts in respect thereof remaining unpaid from previous
         Distribution Dates; and (ii) second, to Holders of REMIC 2 Regular
         Interest LT2A-1, REMIC 2 Regular Interest LT2B-1, REMIC 2 Regular
         Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC 2 Regular
         Interest LT2E-1, REMIC 2 Regular Interest LT2F-1 and REMIC 2 Regular
         Interest LT2P-1, pro rata, in an amount equal to (A) the Uncertificated
         Accrued Interest for such Distribution Date, plus (B) any amounts in
         respect thereof remaining unpaid from previous Distribution Dates;
         provided, however, that amounts payable as Uncertificated Accrued
         Interest in respect of REMIC 2 Regular Interest LT2F-1 shall be
         reduced, when the REMIC 2 Overcollateralized Amount 1 is less than the
         product of the REMIC 2 Overcollateralization Target Amount multiplied
         by 0.68266, by the lesser of (x) the amount of such difference and (y)
         the Maximum LT2F-1 Uncertificated Accrued Interest Deferral Amount;

                  (2) second, Available Funds equal to the Group II Interest
         Remittance Amount shall be distributed (i) first, to the Holders of
         REMIC 2 Regular Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B and
         REMIC 2 Regular Interest LT2S-2C, pro rata, in an amount equal to (A)
         the Uncertificated Accrued Interest for such Distribution Date, plus
         (B) any amounts in respect thereof remaining unpaid from previous
         Distribution Dates; and (ii) second, to Holders of REMIC 2 Regular
         Interest LT2A-2, REMIC 2 Regular Interest LT2B-2, REMIC 2 Regular
         Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC 2 Regular
         Interest LT2E-2, REMIC 2 Regular Interest LT2F-2, and REMIC 2 Regular
         Interest LT2P-2, pro rata, in an amount equal to (A) the Uncertificated
         Accrued Interest for such Distribution Date, plus (B) any amounts in
         respect thereof remaining unpaid from previous Distribution Dates;
         provided, however, that amounts payable as Uncertificated Accrued
         Interest in respect of REMIC 2 Regular Interest LT2F-2 shall be
         reduced, when the REMIC 2 Overcollateralized Amount 2 is less than the
         product of the REMIC 2 Overcollateralization Target Amount multiplied
         by 0.31734, by the lesser of (x) the amount of such difference and (y)
         the Maximum LT2F-2 Uncertificated Accrued Interest Deferral Amount;

                  (3) third, to the Holders of REMIC 2 Regular Interests, in an
         amount equal to the remainder of the Available Funds for such
         Distribution Date attributable to the Group I Mortgage Loans after the
         distributions made pursuant to clause (1) above, allocated as follows:

                           (A) (i) 98% to the Holders of REMIC 2 Regular
                  Interest LT2A-1, (ii) 1.00% to the Holders of REMIC 2 Regular
                  Interest LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2
                  Regular Interest LT2D-1, REMIC 2 Regular Interest LT2E-1 and
                  REMIC 2 Regular Interest LT2F-1, in the same proportion as
                  principal payments are allocated to the Corresponding
                  Certificates, and (iii) 1.00% to the Holders of REMIC 2
                  Regular Interest LT2G-1, until the Uncertificated Principal
                  Balance of all such Uncertificated REMIC 2 Regular Interests
                  is reduced to zero;

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                           (B) then, to the Holders of REMIC 2 Regular Interest
                  LT2P-2, on the Distribution Date immediately following the
                  expiration of the latest Prepayment Charge as identified on
                  the Prepayment Charge Schedule or any Distribution Date
                  thereafter until $100 has been distributed pursuant to this
                  clause; and

                           (C) then, any remaining amount to the Holders of the
                  Class R Certificates (in respect of the Class R-2 Interest);

                  (4) fourth, to the Holders of REMIC 2 Regular Interests, in an
         amount equal to the remainder of the Available Funds for such
         Distribution Date attributable to the Group II Mortgage Loans after the
         distributions made pursuant to clause (1) above, allocated as follows:

                           (A) (i) 98% to the Holders of REMIC 2 Regular
                  Interest LT2A-2, (ii) 1.00% pro rata to the Holders of REMIC 2
                  Regular Interest LT2B-2, REMIC 2 Regular Interest LT2C-2,
                  REMIC 2 Regular Interest LT2D-2, and REMIC 2 Regular Interest
                  LT2E-2, and (iii) 1.00% to the Holders of REMIC 2 Regular
                  Interest LT2F-2, until the Uncertificated Principal Balance of
                  all such Uncertificated REMIC 2 Regular Interests is reduced
                  to zero;

                           (B) then, to the Holders of REMIC 2 Regular Interest
                  LT2P-2, on the Distribution Date immediately following the
                  expiration of the latest Prepayment Charge as identified on
                  the Prepayment Charge Schedule or any Distribution Date
                  thereafter until $100 has been distributed pursuant to this
                  clause;

                           (C) then, any remaining amount to the Holders of
                  the Class R Certificates (in respect of the Class R-2
                  Interest); and

                  (5) fifth, to REMIC 2 Regular Interest LT2P-1, 100% of the
         amount of Prepayment Charges paid in respect of REMIC 1 Regular
         Interest LT1P-1, and to REMIC 2 Regular Interest LT2P-2, 100% of the
         amount of Prepayment Charges paid in respect of REMIC 1 Regular
         Interest LT1P-2

provided, however, that 98% and 2% of any principal payments that are
attributable to an Overcollateralization Release Amount with respect to the
Group I Mortgage Loans shall be allocated to Holders of REMIC 2 Regular Interest
LT2A-1 and REMIC 2 Regular Interest LT2G-1, respectively, and 98% and 2% of any
principal payments that are attributable to an Overcollateralization Release
Amount with respect to the Group II Mortgage Loans shall be allocated to Holders
of REMIC 2 Regular Interest LT2A-2 and REMIC 2 Regular Interest LT2F-2,
respectively.

Section 4.06      Allocation of Realized Losses.

(a) Prior to each Determination Date, the Master Servicer shall determine as to
each Mortgage Loan and REO Property: (i) the total amount of Realized Losses, if
any, incurred in connection with any Final Recovery Determinations made during
the related Prepayment Period; (ii) whether and the extent to which such

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Realized Losses constituted Bankruptcy Losses; and (iii) the respective portions
of such Realized Losses allocable to interest and allocable to principal. Prior
to each Determination Date, the Master Servicer shall also determine as to each
Mortgage Loan: (i) the total amount of Realized Losses, if any, incurred in
connection with any Deficient Valuations made during the related Prepayment
Period; and (ii) the total amount of Realized Losses, if any, incurred in
connection with Debt Service Reductions in respect of Monthly Payments due
during the related Due Period. The information described in the two preceding
sentences that is to be supplied by the Master Servicer shall be evidenced by an
Officers' Certificate delivered to the Trustee by the Master Servicer prior to
the Determination Date immediately following the end of (i) in the case of
Bankruptcy Losses allocable to interest, the Due Period during which any such
Realized Loss was incurred, and (ii) in the case of all other Realized Losses,
the Prepayment Period during which any such Realized Loss was incurred.

         (b) All Realized Losses on the Mortgage Loans allocated to any Regular
Certificate shall be allocated by the Trustee on each Distribution Date as
follows: first, to Net Monthly Excess Cashflow; second, to the Class C
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; third, to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; fourth, to the Class M-2 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; and
fifth, to the Class M-1 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero. All Realized Losses to be allocated to the
Certificate Principal Balances of all Classes on any Distribution Date shall be
so allocated after the actual distributions to be made on such date as provided
above. All references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.

         Any allocation of Realized Losses to a Mezzanine Certificate on any
Distribution Date shall be made by reducing the Certificate Principal Balance
thereof by the amount so allocated; any allocation of Realized Losses to a Class
C Certificate shall be made by reducing the amount otherwise payable in respect
thereof pursuant to Section 4.01(d)(ix). No allocations of any Realized Losses
shall be made to the Certificate Principal Balances of the Class A Certificates,
the Class S Certificates or the Class P Certificates.

         (c) All Realized Losses on the Group I Mortgage Loans shall be
allocated by the Trustee on each Distribution Date to REMIC 1A Regular Interest
LT1A-1 until the Uncertificated Principal Balance has been reduced to zero and
then to REMIC 1B Regular Interest LT1B-1 until the Uncertificated Principal
Balance has been reduced to zero. All Realized Losses on the Group II Mortgage
Loans shall be allocated by the Trustee on each Distribution Date to REMIC 1
Regular Interest LT1A-2 until the Uncertificated Principal Balance has been
reduced to zero and then to REMIC 1 Regular Interest LT1B-2 until the
Uncertificated Principal Balance has been reduced to zero.

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         (d) All Realized Losses on the Group I Mortgage Loans shall be deemed
to have been allocated in the specified percentages, as follows: first, to
Uncertificated Accrued Interest payable to the REMIC 2 Regular Interest LT2A-1
and REMIC 2 Regular Interest LT2F-1 up to an aggregate amount equal to the REMIC
2 Interest Loss Allocation Amount 1, 98% and 2.00%, respectively; second, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A-1 and REMIC 2
Regular Interest LT2F-1 up to an aggregate amount equal to the REMIC 2 Principal
Loss Allocation Amount, 98% and 2.00%, respectively; third, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A-1, REMIC 2
Regular Interest LT2E-1 and REMIC 2 Regular Interest LT2F-1, 98%, 1.00% and
1.00%, respectively, until the Uncertificated Principal Balance of REMIC 2
Regular Interest LT2E-1 has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC 2 Regular Interest LT2A-1, REMIC 2 Regular Interest
LT2D-1 and REMIC 2 Regular Interest LT2F-1, 98%, 1.00% and 1.00%, respectively,
until the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D-1
has been reduced to zero; and fifth, to the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2A-1, REMIC 2 Regular Interest LT2C-1 and REMIC 2
Regular Interest LT2F-1, 98%, 1.00% and 1.00%, respectively, until the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2C-1 has been
reduced to zero.

         (e) All Realized Losses on the Group II Mortgage Loans shall be deemed
to have been allocated in the specified percentages, as follows: first, to
Uncertificated Accrued Interest payable to the REMIC 2 Regular Interest LT2A-2
and REMIC 2 Regular Interest LT2F-2 up to an aggregate amount equal to the REMIC
2 Interest Loss Allocation Amount 1, 98% and 2.00%, respectively; second, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A-2 and REMIC 2
Regular Interest LT2F-2 up to an aggregate amount equal to the REMIC 2 Principal
Loss Allocation Amount, 98% and 2.00%, respectively; third, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A-2, REMIC 2
Regular Interest LT2E-2 and REMIC 2 Regular Interest LT2F-2, 98%, 1.00% and
1.00%, respectively, until the Uncertificated Principal Balance of REMIC 2
Regular Interest LT2E-2 has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular Interest
LT2D-2 and REMIC 2 Regular Interest LT2F-2, 98%, 1.00% and 1.00%, respectively,
until the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D-2
has been reduced to zero; and fifth, to the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular Interest LT2C-2 and REMIC 2
Regular Interest LT2F-2, 98%, 1.00% and 1.00%, respectively, until the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2C-2 has been
reduced to zero.

Section 4.07      Compliance with Withholding Requirements.

         Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.

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Section 4.08      Commission Reporting.

         (a) Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards and applicable regulations, file with the
Commission via the Electronic Data Gathering Analysis and Retrieval system, a
Form 8-K with a copy of the statement to Certificateholders for such
Distribution Date as an Exhibit thereto. Prior to January 30, 2002, the Trustee
shall in accordance with industry standards file a Form 15 Suspension
Notification with respect to the Trust Fund, if applicable. Prior to March 30,
2002, the Trustee shall file a Form 10-K, in substance conforming to industry
standards and applicable regulations, with respect to the Trust Fund. The
Depositor hereby grants to the Trustee a limited power of attorney to execute
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until the earlier of (i) receipt by the Trustee from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this Section.

Section 4.09      The Guaranty.

         On each Distribution Date following receipt of a statement (as set
forth in Section 4.03) that indicates a Deficiency Amount for such Distribution
Date, the Guarantor shall distribute to the Trustee a Guarantor Payment in an
aggregate amount equal to the Deficiency Amount for such Distribution Date
directly to the Holders of the Guaranteed Certificates, without first depositing
such amount in the Distribution Account, as follows: (i) the Guaranteed Interest
Distribution Amount shall be distributed as interest in the order provided in
Section 4.01(a)(i)(B); and (ii) the Guaranteed Principal Distribution Amount
shall be distributed as principal in the order provided in Section
4.01(b)(i)(A)(x)(2) or Section 4.01(c)(i)(A)(x)(2), as applicable.

                                   ARTICLE V

                                THE CERTIFICATES

Section 5.01      The Certificates.

         (a) The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC 1. At the Closing Date, the aggregate Certificate Principal
Balance of the Certificates (other than the Class S Certificates) will equal the
aggregate Stated Principal Balance of the Mortgage Loans.

         The Certificates will be substantially in the forms annexed hereto as
Exhibits A-1 through A-10. The Certificates of each Class will be issuable in

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registered form only, in denominations of authorized Percentage Interests as
described in the definition thereof. Each Certificate will share ratably in all
rights of the related Class.

         Upon original issue, the Certificates shall be executed by the Trustee
and authenticated and delivered by the Trustee, to or upon the order of the
Depositor. The Certificates shall be executed and attested by manual or
facsimile signature on behalf of the Trustee by an authorized signatory.
Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided herein executed by the Trustee by manual signature, and
such certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.

         (b) The Book Entry Certificates shall initially be issued as one or
more Certificates held by the Book-Entry Custodian or, if appointed to hold such
Certificates as provided below, the Depository and registered in the name of the
Depository or its nominee and, except as provided below, registration of the
Book-Entry Certificates may not be transferred by the Trustee except to another
Depository that agrees to hold the Book-Entry for the respective Certificate
Owners with Ownership Interests therein. The Certificate Owners shall hold their
respective Ownership Interests in and to the Book-Entry Certificates through the
book-entry facilities of the Depository and, except as provided below, shall not
be entitled to definitive, fully registered Certificates ("Definitive
Certificates") in respect of such Ownership Interests. All transfers by
Certificate Owners of their respective Ownership Interests in the Book-Entry
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such Certificate Owner.
Each Depository Participant shall only transfer the Ownership Interests in the
Book-Entry Certificates of Certificate Owners it represents or of brokerage
firms for which it acts as agent in accordance with the Depository's normal
procedures. The Trustee is hereby initially appointed as the Book-Entry
Custodian and hereby agrees to act as such in accordance herewith and in
accordance with the agreement that it has with the Depository authorizing it to
act as such. The Book-Entry Custodian may, and if it is no longer qualified to
act as such, the Book-Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, the Master Servicer, and if the Trustee is not the
Book-Entry Custodian, the Trustee and any other transfer agent (including the
Depository or any successor Depository) to act as Book-Entry Custodian under
such conditions as the predecessor Book-Entry Custodian and the Depository or
any successor Depository may prescribe, provided that the predecessor Book-Entry
Custodian shall not be relieved of any of its duties or responsibilities by
reason of any such appointment of other than the Depository. If the Trustee
resigns or is removed in accordance with the terms hereof, successor trustee or,
if it so elects, the Depository shall immediately succeed to its predecessor's
duties as Book-Entry Custodian. The Depositor shall have the right to inspect,
and to obtain copies of, any Certificates held as Book-Entry Certificates by the
Book-Entry Custodian.

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         The Trustee, the Master Servicer and the Depositor may for all purposes
(including the making of payments due on the Book-Entry Certificates) deal with
the Depository as the authorized representative of the Certificate Owners with
respect to the Book-Entry Certificates for the purposes of the exercise by
Certificateholders of the rights of Certificateholders hereunder. The rights of
Certificate Owners with respect to the Book-Entry Certificates shall be limited
to those established by law and agreements between such Certificate Owners and
the Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the Book-Entry Certificates with respect to any particular matter
shall not be deemed inconsistent if they are made with respect to different
Certificate Owners. The Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by Certificateholders
and shall give notice to the Depository of such record date.

         If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (iii) after the occurrence of a Master Servicer Event of Default, Certificate
Owners representing in the aggregate not less than 51% of the Ownership
Interests of the Book-Entry Certificates advise the Trustee through the
Depository, in writing, that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book-Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, accompanied by registration instructions from the Depository for
registration of transfer, the Trustee shall issue the Definitive Certificates.
Such Definitive Certificates will be issued in minimum denominations of $50,000,
except that any beneficial ownership that was represented by a Book-Entry
Certificate in an amount less than $50,000 immediately prior to the issuance of
a Definitive Certificate shall be issued in a minimum denomination equal to the
amount represented by such Book-Entry Certificate. None of the Depositor, the
Master Servicer or the Trustee shall be liable for any delay in the delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates all
references herein to obligations imposed upon or to be performed by the
Depository shall be deemed to be imposed upon and performed by the Trustee, to
the extent applicable with respect to such Definitive Certificates, and the
Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.

Section 5.02      Registration of Transfer and Exchange of Certificates.

         (a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided.

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         (b) No transfer, sale, pledge or other disposition of any Class C
Certificate, Class P Certificate or Class R Certificate shall be made unless
such disposition is exempt from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and any applicable state securities
laws or is made in accordance with the 1933 Act and laws. In the event of any
such transfer (other than in connection with the initial transfer of any Class C
Certificate, Class P Certificate or Class R Certificates by the Depositor to the
Seller or the transfer of any Class C Certificate, Class P Certificate or Class
R Certificates by the Seller to an affiliate of the Seller or to a trust, the
depositor of which is an affiliate of the Seller) (i) unless such transfer is
made in reliance upon Rule 144A (as evidenced by the investment letter delivered
to the Trustee, in substantially the form attached hereto as Exhibit J) under
the 1933 Act, the Trustee and the Depositor shall require a written Opinion of
Counsel (which may be in-house counsel) acceptable to and in form and substance
reasonably satisfactory to the Trustee and the Depositor that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from the 1933 Act or is being made pursuant to the 1933 Act,
which Opinion of Counsel shall not be an expense of the Trustee or the Depositor
or (ii) the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached hereto as Exhibit L) and the
transferee to execute an investment letter (in substantially the form attached
hereto as Exhibit J) acceptable to and in form and substance reasonably
satisfactory to the Depositor and the Trustee certifying to the Depositor and
the Trustee the facts surrounding such transfer, which investment letter shall
not be an expense of the Trustee or the Depositor. The Holder of a Class C
Certificate, Class P Certificate or Class R Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Trust Fund against any liability that may result if the transfer is not
so exempt or is not made in accordance with such federal and state laws.

         (c) Each Transferee of a Mezzanine Certificate will be deemed to have
represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 90-59, 55 F.
R. 36724 (September 6, 1990), as amended by PTE 2000-58, 65 F. R. 67765
(November 13, 2000) (the "Exemption"), and that it understands that there are
certain conditions to the availability of the Exemption including that such
Certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by a Rating Agency or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company general account" (as defined in U.S. Department of Labor Prohibited
Transaction Class Exemption ("PTCE") 95-60, and (iii) the conditions set forth
in Sections I and III of PTCE 95-60 have been satisfied.

         No transfer of a Class C Certificate, Class P Certificate or Class R
Certificate or any interest therein shall be made to any Plan subject to ERISA
or Section 4975 of the Code, any Person acting, directly or indirectly, on
behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Depositor,
the Trustee and the Master Servicer are provided with an Opinion of Counsel

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<PAGE>

which establishes to the satisfaction of the Depositor, the Trustee and the
Master Servicer that the purchase of such Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor, the
Master Servicer, the Trustee or the Trust Fund to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Depositor, the Master Servicer, the Trustee or
the Trust Fund. Neither an Opinion of Counsel nor any certification will be
required in connection with the initial transfer of any Class C Certificate,
Class P Certificate or Class R Certificates by the Depositor to the Seller or
the transfer of any Class C Certificate, Class P Certificate or Class R
Certificates by the Seller to an affiliate of the Seller or to a trust, the
depositor of which is an affiliate of the Seller (in which case, the Depositor,
the Seller and any such affiliate shall have deemed to have represented that the
applicable transferee is not a Plan or a Person investing Plan Assets) and the
Trustee shall be entitled to conclusively rely upon a representation (which,
upon the request of the Trustee, shall be a written representation) from the
Depositor of the status of each transferee the Seller or such an affiliate. Each
transferee of a Class C Certificate, Class P Certificate or Class R Certificate
shall sign a letter substantially in the form of Exhibit I to demonstrate its
compliance with this Section 5.02(c) (other than in connection with the initial
transfer of any Class C Certificate, Class P Certificate or Class R Certificates
by the Depositor to the Seller or the transfer of any Class C Certificate, Class
P Certificate or Class R Certificates by the Seller to an affiliate of the
Seller or to a trust, the depositor of which is an affiliate of the Seller).

         If any Mezzanine Certificate, Class C Certificate, Class P Certificate
or Class R Certificate or any interest therein is acquired or held in violation
of the provisions of the preceding paragraphs, the next preceding permitted
beneficial owner will be treated as the beneficial owner of that Certificate
retroactive to the date of transfer to the purported beneficial owner. Any
purported beneficial owner whose acquisition or holding of any such Certificate
or interest therein was effected in violation of the provisions of the preceding
paragraph shall indemnify and hold harmless the Depositor, the Master Servicer,
the Trustee and the Trust Fund from and against any and all liabilities, claims,
costs or expenses incurred by those parties as a result of that acquisition or
holding.

         (d) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Depositor or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (v) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:

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

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                  (ii)     No Person shall acquire an Ownership Interest in a
                           Class R Certificate unless such Ownership Interest is
                           a pro rata undivided interest.

                  (iii)    In connection with any proposed transfer of any
                           Ownership Interest in a Class R Certificate, the
                           Trustee shall as a condition to registration of the
                           transfer, require delivery to it, in form and
                           substance satisfactory to it, of each of the
                           following:

                           A.       an affidavit in the form of Exhibit K hereto
                                    from the proposed transferee to the effect
                                    that such transferee is a Permitted
                                    Transferee and that it is not acquiring its
                                    Ownership Interest in the Class R
                                    Certificate that is the subject of the
                                    proposed transfer as a nominee, trustee or
                                    agent for any Person who is not a Permitted
                                    Transferee; and

                           B.       a covenant of the proposed transferee to the
                                    effect that the proposed transferee agrees
                                    to be bound by and to abide by the transfer
                                    restrictions applicable to the Class R
                                    Certificates.

                  (iv)     Any attempted or purported transfer of any Ownership
                           Interest in a Class R Certificate in violation of the
                           provisions of this Section shall be absolutely null
                           and void and shall vest no rights in the purported
                           transferee. If any purported transferee shall, in
                           violation of the provisions of this Section, become a
                           Holder of a Class R Certificate, then the prior
                           Holder of such Class R Certificate that is a
                           Permitted Transferee shall, upon discovery that the
                           registration of transfer of such Class R Certificate
                           was not in fact permitted by this Section, be
                           restored to all rights as Holder thereof retroactive
                           to the date of registration of transfer of such Class
                           R Certificate. The Trustee shall be under no
                           liability to any Person for any registration of
                           transfer of a Class R Certificate that is in fact not
                           permitted by this Section or for making any
                           distributions due on such Class R Certificate to the
                           Holder thereof or taking any other action with
                           respect to such Holder under the provisions of this
                           Agreement so long as the Trustee received the
                           documents specified in clause (iii). The Trustee
                           shall be entitled to recover from any Holder of a
                           Class R Certificate that was in fact not a Permitted
                           Transferee at the time such distributions were made
                           all distributions made on such Class R Certificate.
                           Any such distributions so recovered by the Trustee
                           shall be distributed and delivered by the Trustee to
                           the prior Holder of such Class R Certificate that is
                           a Permitted Transferee.

                  (v)      If any Person other than a Permitted Transferee
                           acquires any Ownership Interest in a Class R
                           Certificate in violation of the restrictions in this
                           Section, then the Trustee shall have the right but
                           not the obligation, without notice to the Holder of
                           such Class R Certificate or any other Person having

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                           an Ownership Interest therein, to notify the
                           Depositor to arrange for the sale of such Class R
                           Certificate. The proceeds of such sale, net of
                           commissions (which may include commissions payable to
                           the Depositor or its affiliates in connection with
                           such sale), expenses and taxes due, if any, will be
                           remitted by the Trustee to the previous Holder of
                           such Class R Certificate that is a Permitted
                           Transferee, except that in the event that the Trustee
                           determines that the Holder of such Class R
                           Certificate may be liable for any amount due under
                           this Section or any other provisions of this
                           Agreement, the Trustee may withhold a corresponding
                           amount from such remittance as security for such
                           claim. The terms and conditions of any sale under
                           this clause (v) shall be determined in the sole
                           discretion of the Trustee and it shall not be liable
                           to any Person having an Ownership Interest in a Class
                           R Certificate as a result of its exercise of such
                           discretion.

                  (vi)     If any Person other than a Permitted Transferee
                           acquires any Ownership Interest in a Class R
                           Certificate in violation of the restrictions in this
                           Section, then the Trustee will provide to the
                           Internal Revenue Service, and to the persons
                           specified in Sections 860E(e)(3) and (6) of the Code,
                           information needed to compute the tax imposed under
                           Section 860E(e)(1) of the Code on transfers of
                           residual interests to disqualified organizations.

         The foregoing provisions of this Section shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section will not cause such Rating
Agency to downgrade its rating of the NIM Notes or the Certificates and (ii) an
Opinion of Counsel to the effect that such removal will not cause any REMIC
created hereunder to fail to qualify as a REMIC.

         (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee designated from time to time for such purpose pursuant to Section 8.12,
the Trustee shall execute and authenticate and deliver, in the name of the
designated Transferee or Transferees, one or more new Certificates of the same
Class of a like aggregate Percentage Interest.

         (f) At the option of the Holder thereof, any Certificate may be
exchanged for other Certificates of the same Class with authorized denominations
and a like aggregate Percentage Interest, upon surrender of such Certificate to
be exchanged at any office or agency of the Trustee maintained for such purpose
pursuant to Section 8.12. Whenever any Certificates are so surrendered for
exchange the Trustee shall execute, authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written

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instrument of transfer in the form satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing.

         (g) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Trustee 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.

         All Certificates surrendered for registration of transfer or exchange
shall be canceled by the Trustee and disposed of pursuant to its standard
procedures.

Section 5.03      Mutilated, Destroyed, Lost or Stolen Certificates.

         If (i) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (ii) there is delivered to the Trustee and the Depositor
such security or indemnity as may be required by them to save each of them, and
the Trust Fund, harmless, then, in the absence of notice to the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Percentage Interest. Upon the issuance of any new Certificate under
this Section, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) in
connection therewith. Any duplicate Certificate issued pursuant to this Section,
shall constitute complete and indefeasible 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 5.04      Persons Deemed Owners.

         The Master Servicer, the Depositor, the Trustee, the Guarantor and any
agent of the Master Servicer, the Depositor, the Trustee or the Guarantor may
treat the Person, including a Depository, in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 4.01 and for all other purposes whatsoever,
and none of the Master Servicer, the Depositor, the Trustee, the Guarantor nor
any agent of any of them shall be affected by notice to the contrary.

                                   ARTICLE VI

                      THE MASTER SERVICER AND THE DEPOSITOR

Section 6.01      Liability of the Master Servicer and the Depositor.

         The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement and undertaken hereunder by the Depositor and the Master
Servicer herein.

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Section 6.02      Merger or Consolidation of the Depositor or the
                  Master Servicer.

         Subject to the following paragraph, the Depositor will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. Subject to the following paragraph, the
Master Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the jurisdiction of its incorporation and its
qualification as an approved conventional seller/servicer for Fannie Mae or
Freddie Mac in good standing. The Depositor and the Master Servicer each will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Certificates or
any of the Mortgage Loans and to perform its respective duties under this
Agreement.

         The Depositor or the Master Servicer may be merged or consolidated with
or into any Person, or transfer all or substantially all of its assets to any
Person, in which case any Person resulting from any merger or consolidation to
which the Depositor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Fannie Mae; and provided further that the Rating Agencies' ratings of the NIM
Notes, the Class A Certificates and the Mezzanine Certificates in effect
immediately prior to such merger or consolidation will not be qualified, reduced
or withdrawn as a result thereof (as evidenced by a letter to such effect from
the Rating Agencies to the Trustee).

Section 6.03      Limitation on Liability of the Depositor, the Master
                  Servicer and Others.

         None of the Depositor, the Master Servicer or any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on the Master Servicer
pursuant hereto, or against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
The Depositor, the Master Servicer and any director, officer, employee or agent
of the Depositor or the Master Servicer may rely in good faith on any document
of any kind which, prima facie, is properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Master Servicer and
any director, officer, employee or agent of the Depositor or the Master Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
relating to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this

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Agreement) or any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder. Neither the
Depositor nor the Master Servicer shall be under any obligation to appear in,
prosecute or defend any legal action unless such action is related to its
respective duties under this Agreement and, in its opinion, does not involve it
in any expense or liability; provided, however, that each of the Depositor and
the Master Servicer may in its discretion undertake any such action which it may
deem necessary or desirable with respect to this Agreement and the rights and
duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, unless the Depositor or the Master Servicer acts
without the consent of Holders of Certificates entitled to at least 51% of the
Voting Rights (which consent shall not be necessary in the case of litigation or
other legal action by either to enforce their respective rights or defend
themselves hereunder), the legal expenses and costs of such action and any
liability resulting therefrom (except any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder) shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor and the Master Servicer shall be entitled to be reimbursed therefor
from the Collection Account as and to the extent provided in Section 3.11, any
such right of reimbursement being prior to the rights of the Certificateholders
to receive any amount in the Collection Account.

         The Master Servicer (except the Trustee to the extent it has succeeded
the Master Servicer as required hereunder) indemnifies and holds the Trustee,
the Depositor and the Trust Fund harmless against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor or the Trust Fund 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. The Master Servicer shall
immediately notify the Trustee and the Depositor if a claim is made that may
result in such claims, losses, penalties, fines, forfeitures, legal fees or
related costs, judgments, or any other costs, fees and expenses, and the Master
Servicer shall assume (with the consent of the Trustee) the defense of any such
claim and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the Master Servicer, the Trustee, the Depositor and/or the
Trust Fund in respect of such claim. The provisions of this paragraph shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.

Section 6.04      Limitation on Resignation of Master Servicer.

         The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that its duties hereunder are
no longer permissible under applicable law or (ii) with the written consent of
the Trustee and the Guarantor and written confirmation from each Rating Agency
(which confirmation shall be furnished to the Depositor and the Trustee) that
such resignation will not cause such Rating Agency to reduce the then current
rating of the NIM Notes, the Class A Certificates or the Mezzanine Certificates.
Any such determination pursuant to clause (i) of the preceding sentence
permitting the resignation of the Master Servicer shall be evidenced by an

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Opinion of Counsel to such effect obtained at the expense of the Master Servicer
and delivered to the Trustee. No resignation of the Master Servicer shall become
effective until the Trustee or a successor servicer reasonably acceptable to the
Guarantor shall have assumed the Master Servicer's responsibilities, duties,
liabilities (other than those liabilities arising prior to the appointment of
such successor) and obligations under this Agreement.

         Except as expressly provided herein, the Master Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, nor delegate to or subcontract with, nor authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. The foregoing prohibition on
assignment shall not prohibit the Master Servicer from designating a
Sub-Servicer as payee of any indemnification amount payable to the Master
Servicer hereunder; provided, however, that as provided in Section 3.06 hereof,
no Sub-Servicer shall be a third-party beneficiary hereunder and the parties
hereto shall not be required to recognize any Sub-Servicer as an indemnitee
under this Agreement. If, pursuant to any provision hereof, the duties of the
Master Servicer are transferred to a successor master servicer, the entire
amount of the Servicing Fee and other compensation payable to the Master
Servicer pursuant hereto shall thereafter be payable to such successor master
servicer but in no instance shall such Servicing Fees exceed the current
Servicing Fee.

Section 6.05    Rights of the Depositor in Respect of the Master Servicer.

         The Master Servicer shall afford (and any Sub-Servicing Agreement shall
provide that each Sub-Servicer shall afford) the Depositor, the Guarantor and
the Trustee, upon reasonable notice, during normal business hours, access to all
records maintained by the Master Servicer (and any such Sub-Servicer) in respect
of the Master Servicer's rights and obligations hereunder and access to officers
of the Master Servicer (and those of any such Sub-Servicer) responsible for such
obligations; provided, that access to records for the Guarantor shall be limited
to those related to Group I Mortgage Loans. Upon request, the Master Servicer
shall furnish to the Depositor, the Guarantor and the Trustee its (and any such
Sub-Servicer's) most recent financial statements and such other information
relating to the Master Servicer's capacity to perform its obligations under this
Agreement that it possesses; provided, that any such information furnished to
the Guarantor shall be limited to that which is related to Group I Mortgage
Loans. To the extent such information is not otherwise available to the public,
the Depositor, the Guarantor the Trustee shall not disseminate any information
obtained pursuant to the preceding two sentences without the Master Servicer's
(or any such Sub-Servicer's) written consent, except as required pursuant to
this Agreement or to the extent that it is necessary to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies,
rating agencies or reinsurers or (ii) pursuant to any law, rule, regulation,
order, judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Depositor, the Guarantor, the Trustee or
the Trust Fund, and in either case, the Depositor, the Guarantor or the Trustee,
as the case may be, shall use its best efforts to assure the confidentiality of
any such disseminated non-public information. The Depositor may, but is not
obligated to, enforce the obligations of the Master Servicer under this
Agreement and may, but is not obligated to, perform, or cause a designee to
perform, any defaulted obligation of the Master Servicer under this Agreement or

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exercise the rights of the Master Servicer under this Agreement; provided that
the Master Servicer shall not be relieved of any of its obligations under this
Agreement by virtue of such performance by the Depositor or its designee. The
Depositor shall not have any responsibility or liability for any action or
failure to act by the Master Servicer and is not obligated to supervise the
performance of the Master Servicer under this Agreement or otherwise.

                                   ARTICLE VII

                                     DEFAULT

Section 7.01      Master Servicer Events of Default.

         "Master Servicer Event of Default," wherever used herein, means any one
of the following events:

                  (i) any failure by the Master Servicer to remit to the Trustee
                  for distribution to the Certificateholders any payment (other
                  than an Advance required to be made from its own funds on any
                  Master Servicer Remittance Date pursuant to Section 4.04)
                  required to be made under the terms of the Certificates and
                  this Agreement which continues unremedied for a period of one
                  Business Day after the date upon which written notice of such
                  failure, requiring the same to be remedied, shall have been
                  given to the Master Servicer by the Depositor, the Trustee (in
                  which case notice shall be provided by telecopy), or to the
                  Master Servicer, the Depositor and the Trustee by the
                  Guarantor or the Holders of Certificates entitled to at least
                  25% of the Voting Rights; or

                  (ii) any failure on the part of the Master Servicer duly to
                  observe or perform in any material respect any of the
                  covenants or agreements on the part of the Master Servicer
                  contained in this Agreement which continues unremedied for a
                  period of 45 days (30 days in the case of any failure to
                  maintain a Sub-Servicing Agreement with an eligible
                  Sub-Servicer to the extent required in accordance with Section
                  3.02(c)) after the earlier of (i) the date on which written
                  notice of such failure, requiring the same to be remedied,
                  shall have been given to the Master Servicer by the Depositor
                  or the Trustee, or to the Master Servicer, the Depositor and
                  the Trustee by the Guarantor or the Holders of Certificates
                  entitled to at least 25% of the Voting Rights and (ii) actual
                  knowledge of such failure by a Servicing Representative of the
                  Master Servicer; or

                  (iii) a decree or order of a court or agency or supervisory
                  authority having jurisdiction in the premises in an
                  involuntary case under any present or future federal or state
                  bankruptcy, insolvency or similar law or the appointment of a
                  conservator or receiver or liquidator in any insolvency,
                  readjustment of debt, marshaling of assets and liabilities or
                  similar proceeding, or for the winding-up or liquidation of

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                  its affairs, shall have been entered against the Master
                  Servicer and if such proceeding is being contested by the
                  Master Servicer in good faith, such decree or order shall have
                  remained in force undischarged or unstayed for a period of 60
                  days or results in the entry of an order for relief or any
                  such adjudication or appointment; or

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

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

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

                  (vii) any failure of the Master Servicer to make, or cause an
                  Advancing Person to make, any Advance on any Master Servicer
                  Remittance Date required to be made from its own funds
                  pursuant to Section 4.04 which continues unremedied until 3:00
                  p.m. New York time on the Business Day immediately following
                  the Master Servicer Remittance Date; or

         If a Master Servicer Event of Default described in clauses (i) through
(vi) of this Section shall occur, then, and in each and every such case, so long
as such Master Servicer Event of Default shall not have been remedied, the
Depositor or the Trustee may, and at the written direction of the Guarantor, or
the Holders of Certificates entitled to at least 51% of Voting Rights, the
Trustee shall, by notice in writing to the Guarantor and the Master Servicer
(and to the Depositor if given by the Trustee or to the Trustee if given by the
Depositor), terminate all of the rights and obligations of the Master Servicer
in its capacity as Master Servicer under this Agreement, to the extent permitted
by law, and in and to the Mortgage Loans and the proceeds thereof. If a Master
Servicer Event of Default described in clause (vii) hereof shall occur, the
Trustee shall, by notice in writing to the Master Servicer, the Guarantor and
the Depositor, terminate all of the rights and obligations of the Master
Servicer in its capacity as Master Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof. On or after the 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 Certificates (other
than as a Holder of any Certificate) or the Mortgage Loans or otherwise, shall
pass to and be vested in the Trustee pursuant to and under this Section and,
without limitation, the Trustee is hereby authorized and empowered, as
attorney-in-fact or otherwise, to execute and deliver on behalf of and at the
expense of the Master Servicer, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. The Master Servicer agrees, at its sole cost and expense, promptly

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(and in any event no later than ten Business Days subsequent to such notice) to
provide the Trustee with all documents and records requested by it to enable it
to assume the Master Servicer's functions under this Agreement, and to cooperate
with the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights under this Agreement, including, without limitation,
the transfer within one Business Day to the Trustee for administration by it of
all cash amounts which at the time shall be or should have been credited by the
Master Servicer to the Collection Account held by or on behalf of the Master
Servicer, or any REO Account or Servicing Account held by or on behalf of the
Master Servicer or thereafter be received with respect to the Mortgage Loans or
any REO Property (provided, however, that the Master Servicer shall continue to
be entitled to receive all amounts accrued or owing to it under this Agreement
on or prior to the date of such termination, whether in respect of Advances or
otherwise, and shall continue to be entitled to the benefits of Section 6.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Master Servicer Event of Default unless a
Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any event which is in fact such a Master Servicer Event of Default is received
by the Trustee and such notice references the Certificates, any of the Trust
REMICs or this Agreement.

         The Trustee shall be entitled to be reimbursed by the Master Servicer
(or by the Trust Fund if the Master Servicer is unable to fulfill its
obligations hereunder) for all costs associated with the transfer of servicing
from the predecessor master servicer, including without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Mortgage Loans properly and
effectively.

Section 7.02      Trustee to Act; Appointment of Successor.

(a) On and after the time the Master Servicer receives a notice of termination,
the Trustee 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 herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto and arising thereafter, which shall be assumed
by the Trustee (except for any representations or warranties of the Master
Servicer under this Agreement, the responsibilities, duties and liabilities
contained in Section 2.03(c) and its obligation to deposit amounts in respect of
losses pursuant to Section 3.12) by the terms and provisions hereof including,
without limitation, the Master Servicer's obligations to make Advances pursuant
to Section 4.04; provided, however, that if the Trustee is prohibited by law or
regulation from obligating itself to make advances regarding delinquent Mortgage
Loans, then the Trustee shall not be obligated to make Advances pursuant to
Section 4.04; and provided further, that any failure to perform such duties or
responsibilities caused by the Master Servicer's failure to provide information
required by Section 7.01 shall not be considered a default by the Trustee as
successor to the Master Servicer hereunder; provided, however, it is understood
and acknowledged by the parties that there will be a period of transition (not
to exceed 90 days) before the servicing transfer is fully effected. As

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compensation therefor, the Trustee shall be entitled to the Servicing Fee and
all funds relating to the Mortgage Loans to which the Master Servicer would have
been entitled if it had continued to act hereunder (other than amounts which
were due or would become due to the Master Servicer prior to its termination or
resignation). Notwithstanding anything herein to the contrary, in no event shall
the Trustee be liable for any Servicing Fee or for any differential in the
amount of the Servicing Fee paid hereunder and the amount necessary to induce
any successor Master Servicer to act as successor Master Servicer under this
Agreement and the transactions set forth or provided for herein. After the
Master Servicer receives a notice of termination, notwithstanding the above and
subject to the next paragraph, the Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act or if it is prohibited by law from
making advances regarding delinquent Mortgage Loans, or if the Guarantor or the
Holders of Certificates entitled to at least 51% of the Voting Rights so request
in writing to the Trustee, promptly appoint, or petition a court of competent
jurisdiction to appoint, an established Mortgage Loan servicing institution
acceptable to each Rating Agency, having a net worth of not less than
$15,000,000 and reasonably acceptable to the Guarantor as the successor to the
Master Servicer under this Agreement in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer under this
Agreement.

         No appointment of a successor to the Master Servicer under this
Agreement shall be effective until the assumption by the successor of all of the
Master Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Master Servicer as such hereunder. The Depositor, the Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Pending appointment of a successor to the Master
Servicer under this Agreement, the Trustee shall act in such capacity as
hereinabove provided.

         Upon removal or resignation of the Master Servicer, the Trustee, with
the cooperation of the Depositor, (x) shall solicit bids for a successor Master
Servicer as described below and (y) pending the appointment of a successor
Master Servicer as a result of soliciting such bids, shall serve as Master
Servicer of the Mortgage Loans serviced by such predecessor Master Servicer. The
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth in the first paragraph of this Section 7.02 (including
the Trustee or any affiliate thereof). Such public announcement shall specify
that the successor Master Servicer shall be entitled to the servicing
compensation agreed upon between the Trustee, the successor Master Servicer and
the Depositor; provided, however, that no such fee shall exceed the Servicing
Fee. Within thirty days after any such public announcement, the Trustee with the
cooperation of the Depositor, shall negotiate in good faith and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest satisfactory bid as to the price
they will pay to obtain such servicing. The Trustee, upon receipt of the
purchase price shall pay such purchase price to the Master Servicer being so
removed, after deducting from any sum received by the Trustee from the successor

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to the Master Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities reasonably incurred
hereunder. After such deductions, the remainder of such sum shall be paid by the
Trustee to the Master Servicer at the time of such sale.

         (b) If the Master Servicer fails to remit to the Trustee for
distribution to the Certificateholders any payment required to be made under the
terms of this Agreement (for purposes of this Section 7.02(b), a "Remittance")
because the Master Servicer is the subject of a proceeding under the Bankruptcy
Code and the making of such Remittance is prohibited by Section 362 of the
Bankruptcy Code, the Trustee shall upon written notice of such prohibition,
regardless of whether it has received a notice of termination under Section
7.01, shall be treated as though it had succeeded to the Master Servicer and
shall advance the amount of such Remittance by depositing such amount in the
Distribution Account on the related Distribution Date. The Trustee shall be
obligated to make such advance only if (i) such advance, in the good faith
judgment of the Trustee can reasonably be expected to be ultimately recoverable
from Stayed Funds and (ii) the Trustee is not prohibited by law from making such
advance or obligating itself to do so. Upon remittance of the Stayed Funds to
the Trustee or the deposit thereof in the Distribution Account by the Master
Servicer, a trustee in bankruptcy or a federal bankruptcy court, the Trustee may
recover the amount so advanced, without interest, by withdrawing such amount
from the Distribution Account; however, nothing in this Agreement shall be
deemed to affect the Trustee's rights to recover from the Master Servicer's own
funds interest on the amount of any such advance. If the Trustee at any time
makes an advance under this Subsection which it later determines in its good
faith judgment will not be ultimately recoverable from the Stayed Funds with
respect to which such advance was made, the Trustee shall be entitled to
reimburse itself for such advance, without interest, by withdrawing from the
Distribution Account, out of amounts on deposit therein, an amount equal to the
portion of such advance attributable to the Stayed Funds.

Section 7.03      Notification to Certificateholders.

         (a) Upon any termination of the Master Servicer pursuant to Section
7.01 above or any appointment of a successor to the Master Servicer pursuant to
Section 7.02 above, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to the Guarantor.

         (b) Not later than the later of 60 days after the occurrence of any
event, which constitutes or which, with notice or lapse of time or both, would
constitute a Master Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates and to the
Guarantor notice of each such occurrence, unless such default or Master Servicer
Event of Default shall have been cured or waived.

Section 7.04      Waiver of Master Servicer Events of Default.

         The Holders representing at least 66% of the Voting Rights evidenced by
all Classes of Certificates affected by any default or Master Servicer Event of

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Default hereunder may, with the consent of the Guarantor, waive such default or
Master Servicer Event of Default; provided, however, that a default or Master
Servicer Event of Default under clause (i) or (vii) of Section 7.01 may be
waived only by all of the Holders of the Regular Certificates and the Guarantor
(as evidenced by the written consent of the Guarantor). Upon any such waiver of
a default or Master Servicer Event of Default, such default or Master Servicer
Event of Default shall cease to exist and shall be deemed to have been remedied
for every purpose hereunder. No such waiver shall extend to any subsequent or
other default or Master Servicer Event of Default or impair any right consequent
thereon except to the extent expressly so waived.

                                  ARTICLE VIII

                                   THE TRUSTEE

Section 8.01      Duties of Trustee.

         The Trustee, prior to the occurrence of a Master Servicer Event of
Default and after the curing of all Master Servicer Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Master Servicer Event of
Default, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.

         The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders.

         No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:

                  (i) Prior to the occurrence of a Master Servicer Event of
         Default, and after the curing of all such Master Servicer Events of
         Default which may have occurred, the duties and obligations of the
         Trustee shall be determined solely by the express provisions of this
         Agreement, the Trustee shall not be liable except for the performance
         of such duties and obligations as are specifically set forth in this
         Agreement, no implied covenants or obligations shall be read into this
         Agreement against the Trustee and, in the absence of bad faith on the
         part of the Trustee, the Trustee may conclusively rely, as to the truth
         of the statements and the correctness of the opinions expressed

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         therein, upon any certificates or opinions furnished to the Trustee
         that conform to the requirements of this Agreement;

                  (ii) The Trustee shall not be personally liable for an error
         of judgment made in good faith by a Responsible Officer or Responsible
         Officers of the Trustee unless it shall be proved that the Trustee was
         negligent in ascertaining the pertinent facts; and

                  (iii) The Trustee shall not be personally liable with respect
         to any action taken, suffered or omitted to be taken by it in good
         faith in accordance with the direction of the Guarantor or the Holders
         of Certificates entitled to at least 25% of the Voting Rights relating
         to the time, method and place of conducting any proceeding for any
         remedy available to the Trustee, or exercising any trust or power
         conferred upon the Trustee, under this Agreement.

Section 8.02      Certain Matters Affecting the Trustee.

         (a) Except as otherwise provided in Section 8.01:

                  (i) The Trustee may request and rely conclusively upon and
         shall be fully protected in acting or refraining from acting upon any
         resolution, Officers' Certificate, certificate of auditors or any other
         certificate, statement, instrument, opinion, report, notice, request,
         consent, order, appraisal, bond or other paper or document reasonably
         believed by it to be genuine and to have been signed or presented by
         the proper party or parties and the manner of obtaining consents and
         evidencing the authorization of the execution thereof shall be subject
         to such reasonable regulations as the Trustee may prescribe;

                  (ii) The Trustee may consult with counsel and any Opinion of
         Counsel shall be full and complete authorization and protection in
         respect of any action taken or suffered or omitted by it hereunder in
         good faith and in accordance with such Opinion of Counsel;

                  (iii) The Trustee shall not be under any obligation to
         exercise any of the trusts or powers vested in it by this Agreement or
         to institute, conduct or defend any litigation hereunder or in relation
         hereto at the request, order or direction of any of the
         Certificateholders, pursuant to the provisions of this Agreement,
         unless such Certificateholders shall have offered to the Trustee
         security or indemnity satisfactory to it against the costs, expenses
         and liabilities which may be incurred therein or thereby; nothing
         contained herein shall, however, relieve the Trustee of the obligation,
         upon the occurrence of a Master Servicer Event of Default (which has
         not been cured or waived), to exercise such of the rights and powers
         vested in it by this Agreement, and to use the same degree of care and
         skill in their exercise as a prudent person would exercise or use under
         the circumstances in the conduct of such person's own affairs;

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

                  (v) Prior to the occurrence of a Master Servicer Event of
         Default hereunder and after the curing of all Master Servicer Events of
         Default which may have occurred, the Trustee shall not be bound to make
         any investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         consent, order, approval, bond or other paper or document, unless
         requested in writing to do so by the Holders of Certificates entitled
         to at least 25% of the Voting Rights; provided, however, that if the
         payment within a reasonable time to the Trustee of the costs, expenses
         or liabilities likely to be incurred by it in the making of such
         investigation is, in the opinion of the Trustee not reasonably assured
         to the Trustee by such Certificateholders, the Trustee may require
         reasonable indemnity against such expense, or liability from such
         Certificateholders as a condition to taking any such action;

                  (vi) The Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents custodians, nominees or attorneys and shall not be
         responsible for any willful misconduct or negligence of such agents,
         custodians, nominees or attorneys (as long as such agents, custodians,
         nominees or attorneys are appointed with due and proper care);

                  (vii) The Trustee shall not be personally liable for any loss
         resulting from the investment of funds held in the Collection Account
         at the direction of the Master Servicer pursuant to Section 3.12; and

                  (viii) Except as otherwise expressly provided herein, none of
         the provisions of this Agreement shall require the Trustee to expend or
         risk its own funds or otherwise to incur any liability, financial or
         otherwise, in the performance of any of its duties hereunder, or in the
         exercise of any of its rights or powers (not including expenses,
         disbursements and advances incurred or made by the Trustee, including
         the compensation and the expenses and disbursements of its agents and
         counsel, in the ordinary course of the Trustee performance in
         accordance with the provisions of this Agreement) if it shall have
         reasonable grounds for believing that repayment of such funds or
         indemnity satisfactory to it against such risk or liability is not
         assured to it.

         (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.

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Section 8.03      Trustee not Liable for Certificates or Mortgage Loans.

         The recitals contained herein and in the Certificates (other than the
signature of the Trustee, the execution and authentication of the Trustee on the
Certificates, the acknowledgments of the Trustee contained in Article II and the
representations and warranties of the Trustee in Section 8.13) shall be taken as
the statements of the Depositor, and the Trustee shall not assume any
responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth in Section 8.13) or of the Certificates (other than
execution and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of the Certificates, or for the use or application of any funds paid to
the Depositor or the Master Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Collection Account by the Master Servicer,
other than any funds held by or on behalf of the Trustee in accordance with
Section 3.10.

Section 8.04      Trustee May own Certificates.

         The Trustee in its individual capacity or any other capacity may become
the owner or pledgee of Certificates with the same rights it would have if it
were not Trustee and may transact banking and/or trust business with the Seller,
the Depositor, the Master Servicer, the Guarantor or their Affiliates.

Section 8.05      Trustee's Fees and Expenses.

         (a) The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself one day's interest earnings (net of losses)
on amounts on deposit in the Distribution Account. In addition to such interest
earnings, the compensation to be paid to the Trustee in respect of its
obligations under this Agreement will be the amounts paid by the Seller pursuant
to a letter agreement between the Trustee and the Seller.

         The Trustee, and any director, officer, employee or agent of the
Trustee, shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense (not including expenses, disbursements and advances
incurred or made by the Trustee, including the compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of the Trustee's
performance in accordance with the provisions of this Agreement) incurred by the
Trustee arising out of or in connection with the acceptance or administration of
its obligations and duties under this Agreement, other than any loss, liability
or expense (i) resulting from the Master Servicer's actions or omissions in
connection with this Agreement and the Mortgage Loans, (ii) that constitutes a
specific liability of the Trustee pursuant to Section 10.01(c) or (iii) any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or as a result of a breach of the
Trustee's obligations under Article X hereof. Any amounts payable to the Trustee
or any director, officer, employee or agent of the Trustee, in respect of the
indemnification provided by this paragraph (a), or pursuant to any other right
of reimbursement from the Trust Fund that the Trustee, or any director, officer,

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employee or agent of the Trustee, may have hereunder in its capacity as such,
may be withdrawn by the Trustee from the Distribution Account at any time. Such
indemnity shall survive the termination of this Agreement and the resignation of
the Trustee.

         As a limitation on the foregoing with respect to certain expenses of
the Trustee, the Trustee shall receive from the Trust Fund amounts with respect
to indemnification for counsel fees and expenses (collectively, "Legal Fees") in
connection with any third-party litigation or other claims alleging violations
of laws or regulations relating to consumer lending and/or servicing of the
Trust Fund (collectively, "Third Party Claims") in an amount not greater than
$25,000 per month, and $600,000 in the aggregate (with amounts in excess of
$25,000 for any month carried-forward to subsequent months, until the $600,000
aggregate maximum is reached). The Trustee shall not have any obligation to
incur additional expenses for which reimbursement is limited pursuant to this
paragraph in excess of the aggregate limit set forth above unless it has
received reasonable security or indemnity for such additional expenses. The
Certificateholders shall hold the Trustee harmless for any consequences to such
Certificateholders resulting from any failure of the Trustee to incur any such
additional expenses in excess of the aforementioned aggregate limit.

(b) Without limiting the Master Servicer's indemnification obligations under
Section 6.03, the Master Servicer agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense resulting from a breach of
the Master Servicer's obligations and duties under this Agreement. Such
indemnity shall survive the termination or discharge of this Agreement and the
resignation or removal of the Trustee. Any payment under this Section 8.05(b)
made by the Master Servicer to the Trustee shall be from the Master Servicer's
own funds, without reimbursement from the Trust Fund therefor.

Section 8.06      Eligibility Requirements for Trustee.

         The Trustee hereunder shall at all times be a corporation or an
association (other than the Depositor, the Seller, the Master Servicer or any
Affiliate of the foregoing) organized and doing business under the laws of any
state or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
conditions so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.07.

Section 8.07      Resignation or Removal of Trustee.

         The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Guarantor, the Depositor,

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the Master Servicer and the Certificateholders. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the resigning
Trustee and to the successor trustee acceptable to the Guarantor and to the
Holders of Certificates entitled to at least 51% of the Voting Rights. A copy of
such instrument shall be delivered to the Certificateholders, the Trustee and
the Master Servicer by the Depositor. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.

         If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor or the Guarantor, or if at any time the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor or the Guarantor may remove the Trustee and the
Depositor may appoint a successor trustee acceptable to the Guarantor and to the
Holders of Certificates entitled to at least 51% of the Voting Rights, by
written instrument, in duplicate, which instrument shall be delivered to the
Trustee so removed and to the successor trustee. A copy of such instrument shall
be delivered to the Certificateholders and the Master Servicer by the Depositor.

         The Holders of Certificates entitled to at least 51% of the Voting
Rights, with the consent of the Guarantor, may at any time remove the Trustee
and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Depositor, one
complete set to the Trustee so removed and one complete set to the successor so
appointed. A copy of such instrument shall be delivered to the
Certificateholders and the Master Servicer by the Depositor.

         Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.

Section 8.08      Successor Trustee.

         Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor, and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and related documents and statements, as well as all moneys, held
by it hereunder (other than any Mortgage Files at the time held by a Custodian,
which Custodian shall become the agent of any successor trustee hereunder), and
the Depositor and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more

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fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.

         No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06 and the appointment of such
successor trustee shall not result in a downgrading of the NIM Notes or any
Class of Certificates by either Rating Agency, as evidenced by a letter from
each Rating Agency.

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

Section 8.09      Merger or Consolidation of Trustee.

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

Section 8.10      Appointment of Co-Trustee or Separate Trustee.

         Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of REMIC 1A or REMIC 1B, or property securing the same may at the time be
located, the Master Servicer and the Trustee, acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee and the Guarantor, to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC 1A or REMIC 1B, as applicable, and to vest in such
Person or Persons, in such capacity, such title to REMIC 1A and/or REMIC 1B, or
any part thereof and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Master Servicer and the
Trustee may consider necessary or desirable. If the Master Servicer shall not
have joined in such appointment or the Guarantor shall not have approved such
appointment within 15 days after the receipt by it of a request so to do, or in
case a Master Servicer Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 8.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.08 hereof. If such appointment is at the request of the
Master Servicer then any expense of the Trustee shall be deemed a Servicing

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Advance for all purpose of this Agreement, otherwise it will be an expense of
the Trustee and will be payable out of the Trustee's funds.

         In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the Master Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of title to
REMIC 1A or REMIC 1B, or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.

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

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

Section 8.11      Appointment of Custodians.

         The Trustee may, with the consent of the Depositor and the Master
Servicer, appoint one or more Custodians to hold all or a portion of the
Mortgage Files as agent for the Trustee, by entering into a Custodial Agreement.
The Trustee shall initially serve as the Custodian and this Agreement shall
serve as the Custodial Agreement. The appointment of any Custodian may at any
time be terminated and a substitute Custodian appointed therefor upon the
reasonable request of the Master Servicer to the Trustee and the consent of the
Guarantor, the consent to which shall not be unreasonably withheld. The Trustee
shall pay any and all fees and expenses of any Custodian in accordance with each
Custodial Agreement. Subject to Article VIII hereof, the Trustee agrees to
comply with the terms of each Custodial Agreement and to enforce the terms and
provisions thereof against the Custodian for the benefit of the
Certificateholders having an interest in any Mortgage File held by such
Custodian. Each Custodian shall be a depository institution or trust company
subject to supervision by federal or state authority, shall have combined
capital and surplus of at least $10,000,000 and shall be qualified to do

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business in the jurisdiction in which it holds any Mortgage File. Each Custodial
Agreement may be amended only as provided in Section 11.01. In no event shall
the appointment of any Custodian pursuant to a Custodial Agreement diminish the
obligations of the Trustee hereunder.

Section 8.12      Appointment of Office or Agency.

         The Trustee will appoint an office or agency in the City of New York
where the Certificates may be surrendered for registration of transfer or
exchange, and presented for final distribution, and where notices and demands to
or upon the Trustee in respect of the Certificates and this Agreement may be
served. As of the Closing Date, the Trustee designates its offices located at
123 Washington Street, New York, New York 10006 for such purpose.

Section 8.13      Representations and Warranties of the Trustee.

         The Trustee hereby represents and warrants to the Master Servicer, the
Guarantor and the Depositor, as of the Closing Date, that:

                  (i) it is a national banking association duly organized,
         validly existing and in good standing under the laws of the United
         States.

                  (ii) the execution and delivery of this Agreement, and the
         performance and compliance with the terms of this Agreement, will not
         violate the Trustee's charter or bylaws or constitute a default (or an
         event which, with notice or lapse of time, or both, would constitute a
         default) under, or result in the breach of, any material agreement or
         other instrument to which it is a party or which is applicable to it or
         any of its assets.

                  (iii) it has the full power and authority to enter into and
         consummate all transactions contemplated by this Agreement, has duly
         authorized the execution, delivery and performance of this Agreement,
         and has duly executed and delivered this Agreement.

                  (iv) this Agreement, assuming due authorization, execution and
         delivery by the Master Servicer and the Depositor, constitutes a valid,
         legal and binding obligation of the Trustee, enforceable against the
         Trustee in accordance with the terms hereof, subject to (A) applicable
         bankruptcy, insolvency, receivership, reorganization, moratorium and
         other laws affecting the enforcement of creditors' rights generally,
         and (B) general principles of equity, regardless of whether such
         enforcement is considered in a proceeding in equity or at law.

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                                   ARTICLE IX

                                   TERMINATION

Section 9.01      Termination Upon Purchase or Liquidation of
                  All Mortgage Loans.

         (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Guarantor and the Trustee (other than the obligations of the Master Servicer to
the Trustee pursuant to Section 8.05 and of the Master Servicer to provide for
and the Trustee to make payments in respect of the REMIC 1A Regular Interests,
REMIC 1B Regular Interests, REMIC 2 Regular Interests and the Classes of
Certificates as hereinafter set forth) shall terminate upon the later of (A) the
payment in full of all amounts owing to the Guarantor hereunder unless the
Guarantor shall otherwise consent and (B) payment to the Certificateholders and
the deposit of all amounts held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Master Servicer of all
Mortgage Loans and each REO Property remaining in REMIC 1A and REMIC 1B and (ii)
the final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan or REO Property remaining in REMIC 1A or REMIC 1B;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof. The purchase by the Master
Servicer of all Mortgage Loans and each REO Property remaining in REMIC 1A and
REMIC 1B shall be at a price (the "Termination Price") equal to the greater of
(A) the aggregate Purchase Price of all the Mortgage Loans included in REMIC 1A
and REMIC 1B, plus the appraised value of each REO Property, if any, included in
REMIC 1A and REMIC 1B, such appraisal to be conducted by an appraiser mutually
agreed upon by the Master Servicer and the Trustee in their reasonable
discretion, any unpaid Guarantor Reimbursement Amount and unpaid Guaranty Fee
and (B) the aggregate fair market value of all of the assets of REMIC 1A and
REMIC 1B (as determined by the Master Servicer and the Trustee, as of the close
of business on the third Business Day next preceding the date upon which notice
of any such termination is furnished to Certificateholders pursuant to the third
paragraph of this Section 9.01) plus any unpaid Guarantor Reimbursement Amount
and unpaid Guaranty Fee, and in the case of both clauses (A) and (B) of this
sentence, any additional amounts necessary to pay all interest accrued on, as
well as amounts necessary to pay in full the principal balance of, the NIM
Notes.

         (b) The Master Servicer shall have the right to purchase all of the
Mortgage Loans and each REO Property in both Loan Groups remaining in REMIC 1A
and REMIC 1B pursuant to clause (i) of the preceding paragraph no later than the
Determination Date in the month immediately preceding the Distribution Date on
which the Certificates will be retired; provided, however, that the Master
Servicer may elect to purchase all of the Mortgage Loans and each REO Property
remaining in REMIC 1A and REMIC 1B pursuant to clause (i) above only if the
aggregate Stated Principal Balance of the Mortgage Loans and each REO Property
remaining in the Trust Fund at the time of such election is equal to or less
than 10% of the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date. The Master Servicer shall not be entitled to exercise this

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right, without the Guarantor's consent, if the distribution of the Termination
Price according to such priorities would result in the Guarantor being required
to make a Guarantor Payment on the applicable Distribution Date. By acceptance
of the Residual Certificates, the Holders of the Residual Certificates agree, in
connection with any termination hereunder, to assign and transfer any amounts in
excess of par, and to the extent received in respect of such termination, to pay
any such amounts to the Holders of the Class C Certificates.

         (c) Notice of the liquidation of the REMIC 1A Regular Interests and
REMIC 1B Regular Interests shall be given promptly by the Trustee by letter to
Certificateholders mailed (a) in the event such notice is given in connection
with the purchase of the Mortgage Loans and each REO Property by the Master
Servicer, not earlier than the 15th day and not later than the 25th day of the
month next preceding the month of the final distribution on the Certificates or
(b) otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which the Trust Fund will terminate and final payment in respect of
the REMIC 1A Regular Interests, REMIC 1B Regular Interests and the Certificates
will be made upon presentation and surrender of the related Certificates at the
office of the Trustee therein designated, (ii) the amount of any such final
payment, (iii) that no interest shall accrue in respect of the REMIC 1A Regular
Interests, REMIC 1B Regular Interests or the Certificates from and after the
Accrual Period relating to the final Distribution Date therefor and (iv) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee designated in such notice for purposes
of such surrender. In the event such notice is given in connection with the
purchase of all of the Mortgage Loans and each REO Property remaining in REMIC
1A and REMIC 1B by the Master Servicer, the Master Servicer shall deliver to the
Trustee for deposit in the Distribution Account not later than the last Business
Day of the month next preceding the month of the final distribution on the
Certificates an amount in immediately available funds equal to the
above-described purchase price. The Trustee shall remit to the Master Servicer
from such funds deposited in the Distribution Account (i) any amounts which the
Master Servicer would be permitted to withdraw and retain from the Collection
Account pursuant to Section 3.11 and (ii) any other amounts otherwise payable by
the Trustee to the Master Servicer from amounts on deposit in the Distribution
Account pursuant to the terms of this Agreement, in each case prior to making
any final distributions pursuant to Section 9.01(d) below. Upon certification to
the Trustee by a Servicing Representative of the making of such final deposit,
the Trustee shall promptly release or cause to be released to the Master
Servicer the Mortgage Files for the remaining Mortgage Loans, and the Trustee
shall execute all assignments, endorsements and other instruments necessary to
effectuate such transfer.

         (d) Upon presentation of the Certificates by the Certificateholders on
the final Distribution Date, the Trustee shall distribute to each
Certificateholder so presenting and surrendering its Certificates the amount
otherwise distributable on such Distribution Date in accordance with Section
4.01 in respect of the Certificates so presented and surrendered. On the final
Distribution Date, the Trustee will withdraw from the Distribution Account and
remit to the Guarantor amounts otherwise payable to the Guarantor on such
Distribution Date in accordance with Section 4.01. Any funds not distributed to

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any Holder or Holders of Certificates being retired on such Distribution Date
because of the failure of such Holder or Holders to tender their Certificates
shall, on such date, be set aside and held in trust by the Trustee and credited
to the account of the appropriate non-tendering Holder or Holders. If any
Certificates as to which notice has been given pursuant to this Section 9.01
shall not have been surrendered for cancellation within six months after the
time specified in such notice, the Trustee shall mail a second notice to the
remaining non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trustee shall, directly or through an
agent, mail a final notice to remaining related non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the trust funds. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Greenwich Capital Markets, Inc. all such
amounts, and all rights of non-tendering Certificateholders in or to such
amounts shall thereupon cease. No interest shall accrue or be payable to any
Certificateholder on any amount held in trust by the Trustee as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 9.01.

         Immediately following the deposit of funds in trust hereunder in
respect of the Certificates, the Trust Fund shall terminate.

Section 9.02      Additional Termination Requirements.

         (a) In the event that the Master Servicer purchases all the Mortgage
Loans and each REO Property or the final payment on or other liquidation of the
last Mortgage Loan or REO Property remaining in REMIC 1A and REMIC 1B pursuant
to Section 9.01, the Trust Fund shall be terminated in accordance with the
following additional requirements:

                  (i) The Trustee shall specify the first day in the 90-day
                  liquidation period in a statement attached to each Trust
                  REMIC's final Tax Return pursuant to Treasury regulation
                  Section 1.860F-l and shall satisfy all requirements of a
                  qualified liquidation under Section 860F of the Code and any
                  regulations thereunder, as evidenced by an Opinion of Counsel
                  delivered to the Guarantor, the Trustee, and the Depositor
                  obtained at the expense of the Master Servicer;

                  (ii) During such 90-day liquidation period, and at or prior to
                  the time of making of the final payment on the Certificates,
                  the Trustee shall sell all of the assets of REMIC 1A and REMIC
                  1B to the Master Servicer for cash; and

                  (iii) At the time of the making of the final payment on the
                  Certificates, the Trustee shall distribute or credit, or cause
                  to be distributed or credited, to the Holders of the Residual
                  Certificates all cash on hand in the Trust Fund (other than
                  cash retained to meet claims), and the Trust Fund shall
                  terminate at that time.

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         (b) At the expense of the Master Servicer, the Trustee shall prepare or
cause to be prepared the documentation required in connection with the adoption
of a plan of liquidation of each Trust REMIC pursuant to this Section 9.02.

         (c) By their acceptance of Certificates, the Holders thereof hereby
agree to authorize the Trustee to specify the 90-day liquidation period for each
Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.

                                   ARTICLE X

                                REMIC PROVISIONS

Section 10.01     REMIC Administration.

         (a) The Trustee shall elect to treat each Trust REMIC as a REMIC under
the Code and, if necessary, under applicable state law. Each such election will
be made on Form 1066 or other appropriate federal tax or information return
(including Form 8811) or any appropriate state return for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued. For the purposes of the REMIC election in respect of REMIC 1A, the REMIC
1A Regular Interests shall be designated as the Regular Interests in REMIC 1A
and the Class R-1A Interest shall be designated as the Residual Interest in
REMIC 1A. For the purposes of the REMIC election in respect of REMIC 1B, the
REMIC 1B, the REMIC 1B Regular Interests shall be designated as the Regular
Interests in REMIC 1B, and the Class R-1B Interest shall be designated as the
Residual Interest in REMIC 1B. For the purposes of the REMIC election in respect
of REMIC 2, the REMIC 2 Regular Interests shall be designated as the Regular
Interest in REMIC 2 and the Class R-2 Interest shall be designated as the
Residual Interests in REMIC 2. For the purposes of the REMIC election in respect
of REMIC 3, the Regular Certificates shall be designated as the Regular
Interests in REMIC 3 and the Class R-3 Interest shall be designated as the
Residual Interest in REMIC 3. The Trustee shall not permit the creation of any
"interests" in REMIC 1A, REMIC 1B, REMIC 2 or REMIC 3 (within the meaning of
Section 860G of the Code) other than the REMIC 1A Regular Interests, the REMIC
1B Regular Interests, the REMIC 2 Regular Interests and the interests
represented by the Certificates.

         (b) The Closing Date is hereby designated as the "Startup Day" of each
Trust REMIC within the meaning of Section 860G(a)(9) of the Code.

         (c) The Trustee shall pay out of funds on deposit in the Distribution
Account, any and all expenses relating to any tax audit of the Trust Fund
(including, but not limited to, any professional fees or any administrative or
judicial proceedings with respect to any Trust REMIC that involve the Internal
Revenue Service or state tax authorities) unless such expenses, professional
fees or any administrative or judicial proceedings are incurred by reason of the
Trustee's willful misfeasance, bad faith or negligence. The Trustee, as agent
for all each Trust REMIC's tax matters person, shall (i) act on behalf of the
Trust Fund in relation to any tax matter or controversy involving any Trust
REMIC and (ii) represent, after consultation with the Guarantor and upon

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accommodation of the Guarantor's reasonable requests, the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto and will be entitled to
reimbursement from the Trust Fund for any expenses incurred by the Trustee in
connection therewith unless such administrative or judicial proceeding relating
to an examination or audit by any governmental taxing authority is incurred by
reason of the Trustee's willful misfeasance, bad faith or negligence. The holder
of the largest Percentage Interest of the Class R Certificates shall be
designated, in the manner provided under Treasury regulations section
1.860F-4(d) and Treasury regulations Section 301.6231(a)(7)-1, as the tax
matters person of each related Trust REMIC created hereunder. By their
acceptance thereof, the holder of the largest Percentage Interest of the
Residual Certificates hereby agrees to irrevocably appoint the Trustee or an
Affiliate as its agent to perform all of the duties of the tax matters person
for the Trust Fund.

         (d) The Trustee shall prepare, sign and file in a timely manner all of
the Tax Returns in respect of each REMIC created hereunder. The expenses of
preparing and filing such returns shall be borne by the Trustee without any
right of reimbursement therefor. The Master Servicer shall provide on a timely
basis to the Trustee or its designee such information with respect to the assets
of the Trust Fund as is in its possession and reasonably required by the Trustee
to enable it to perform its obligations under this Article.

         (e) The Trustee shall perform on behalf of each Trust REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Trustee shall provide (i) to any Transferor of a
Residual Certificate such information as is necessary for the application of any
tax relating to the transfer of a Residual Certificate to any Person who is not
a Permitted Transferee, (ii) to the Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including reports
relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption as required) and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of each Trust REMIC. The Master Servicer shall
provide on a timely basis to the Trustee such information with respect to the
assets of the Trust Fund, including, without limitation, the Mortgage Loans, as
is in its possession and reasonably required by the Trustee to enable it to
perform its obligations under this subsection. In addition, the Depositor shall
provide or cause to be provided to the Trustee, within ten (10) days after the
Closing Date, all information or data that the Trustee reasonably determines to
be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

         (f) The Trustee shall take such action and shall cause each Trust REMIC
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist the Trustee, to the extent reasonably requested by
the Trustee to do specific actions in order to assist in the maintenance of such
status). The Trustee shall not take any action, cause the Trust Fund to take any

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action or fail to take (or fail to cause to be taken) any action that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger
the status of any Trust REMIC as a REMIC or (ii) result in the imposition of a
tax upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee and the Guarantor have
received an Opinion of Counsel, addressed to the Trustee and the Guarantor (at
the expense of the party seeking to take such action but in no event at the
expense of the Trustee) to the effect that the contemplated action will not,
with respect to any Trust REMIC, endanger such status or result in the
imposition of such a tax, nor shall the Master Servicer take or fail to take any
action (whether or not authorized hereunder) as to which the Trustee has advised
it in writing that it has received an Opinion of Counsel to the effect that an
Adverse REMIC Event could occur with respect to such action; provided that the
Master Servicer may conclusively rely on such Opinion of Counsel and shall incur
no liability for its action or failure to act in accordance with such Opinion of
Counsel. The Trustee shall deliver to the Guarantor a copy of any such advice or
opinion. In addition, prior to taking any action with respect to any Trust REMIC
or the respective assets of each, or causing any Trust REMIC to take any action,
which is not contemplated under the terms of this Agreement, the Master Servicer
will consult with the Trustee or its designee, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur with respect to
a Trust REMIC, and the Master Servicer shall not take any such action or cause
any Trust REMIC to take any such action as to which the Trustee has advised it
in writing that an Adverse REMIC Event could occur; provided that the Master
Servicer may conclusively rely on such writing and shall incur no liability for
its action or failure to act in accordance with such writing. The Trustee may
consult with counsel to make such written advice, and the cost of same shall be
borne by the party seeking to take the action not permitted by this Agreement,
but in no event shall such cost be an expense of the Trustee. At all times as
may be required by the Code, the Trustee will ensure that substantially all of
the assets of both REMIC 1A and REMIC 1B will consist of "qualified mortgages"
as defined in Section 860G(a)(3) of the Code and "permitted investments" as
defined in Section 860G(a)(5) of the Code.

         (g) In the event that any tax is imposed on "prohibited transactions"
of any Trust REMIC created hereunder as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of such REMIC as defined in
Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trustee pursuant to Section 10.03 hereof,
if such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article X, (ii) to the Master Servicer pursuant to
Section 10.03 hereof, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under Article III or this Article X,
or otherwise (iii) against amounts on deposit in the Distribution Account and
shall be paid by withdrawal therefrom.

         (h) On or before April 15 of each calendar year, commencing April 15,
2002, the Trustee shall deliver to the Master Servicer, the Guarantor and each
Rating Agency a Certificate from a Responsible Officer of the Trustee stating
the Trustee's compliance with this Article X.

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         (i) The Trustee shall, for federal income tax purposes, maintain books
and records with respect to each Trust REMIC on a calendar year and on an
accrual basis.

         (j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to any Trust REMIC other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the Trust Fund will not cause any Trust REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding or
subject any Trust REMIC to any tax under the REMIC Provisions or other
applicable provisions of federal, state and local law or ordinances.

         (k) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which any Trust REMIC will receive a fee or other compensation
for services nor permit any Trust REMIC to receive any income from assets other
than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code.

Section 10.02     Prohibited Transactions and Activities.

         None of the Depositor, the Master Servicer or the Trustee shall sell,
dispose of or substitute for any of the Mortgage Loans (except in connection
with (i) the foreclosure of a Mortgage Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of REMIC 1A or REMIC 1B, (iii) the termination
of REMIC 1A or REMIC 1B pursuant to Article IX of this Agreement, (iv) a
substitution pursuant to Article II of this Agreement or (v) a purchase of
Mortgage Loans pursuant to Article II or III of this Agreement), nor acquire any
assets for any Trust REMIC (other than REO Property acquired in respect of a
defaulted Mortgage Loan), nor sell or dispose of any investments in the
Collection Account or the Distribution Account for gain, nor accept any
contributions to any Trust REMIC after the Closing Date (other than a Qualified
Substitute Mortgage Loan delivered in accordance with Section 2.03), unless it
and the Guarantor have received an Opinion of Counsel, addressed to the Trustee
and the Guarantor (at the expense of the party seeking to cause such sale,
disposition, substitution, acquisition or contribution but in no event at the
expense of the Trustee) that such sale, disposition, substitution, acquisition
or contribution will not (a) affect adversely the status of any Trust REMIC as a
REMIC or (b) cause any Trust REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.

Section 10.03     Trustee, Master Servicer and Depositor Indemnification.

         (a) The Trustee agrees to indemnify the Trust Fund, the Depositor and
the Master Servicer for any taxes and costs including, without limitation, any
reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Depositor or the Master Servicer as a result of a breach of the Trustee's
covenants set forth in this Article X or any state, local or franchise taxes
imposed upon the Trust as a result of the location of the Trustee.

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         (b) The Master Servicer agrees to indemnify the Trust Fund, the
Depositor and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor or the Trustee as a result of a breach of the Master Servicer's
covenants set forth in Article III or this Article X or any state, local or
franchise taxes imposed upon the Trust as a result of the location of the Master
Servicer or any subservicer.

         (c) The Depositor agrees to indemnify the Trust Fund, the Master
Servicer and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Master Servicer or the Trustee as a result of a breach of the Depositor's
covenants set forth in this Article X.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

Section 11.01     Amendment.

         This Agreement or any Custodial Agreement may be amended from time to
time by the Depositor, the Master Servicer, the Trustee, the Guarantor and, if
applicable, the Custodian, and without the consent of any of the
Certificateholders, (i) to cure any ambiguity or defect, (ii) to correct, modify
or supplement any provisions herein (including to give effect to the
expectations of Certificateholders), or in any Custodial Agreement, (iii) to
modify, eliminate or add to any of its provisions to such extent as shall be
necessary or desirable to maintain the qualification of the Trust Fund as a
REMIC at all times that any Certificate is outstanding or to avoid or minimize
the risk of the imposition of any tax on the Trust Fund pursuant to the Code
that would be a claim against the Trust Fund, provided that the Trustee, the
Guarantor, the Depositor and the Master Servicer have received an Opinion of
Counsel to the effect that (A) such action is necessary or desirable to maintain
such qualification or to avoid or minimize the risk of the imposition of any
such tax and (B) such action will not adversely affect the status of the Trust
Fund as a REMIC or adversely affect in any material respect the interest of any
Certificateholder or (iv) to make any other provisions with respect to matters
or questions arising under this Agreement or in any Custodial Agreement which
shall not be inconsistent with the provisions of this Agreement or such
Custodial Agreement, provided that such action shall not, as evidenced by an
Opinion of Counsel delivered to the parties hereto, adversely affect in any
material respect the interests of any Certificateholder and, provided, further,
that (A) such action will not affect in any material respect the permitted
activities of the Trust and (B) such action will not increase in any material
respect the degree of discretion which the Master Servicer is allowed to
exercise in servicing the Mortgage Loans. No amendment shall be deemed to
adversely affect in any material respect the interests of any Certificateholder
who shall have consented thereto, and no Opinion of Counsel shall be required to
address the effect of any such amendment on any such consenting
Certificateholder.

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<PAGE>

         This Agreement or any Custodial Agreement may also be amended from time
to time by the Depositor, the Master Servicer, the Trustee, the Guarantor and,
if applicable, the Custodian, and with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or any Custodial Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner, other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Depositor or the Master Servicer or any Affiliate thereof shall be entitled
to Voting Rights with respect to matters affecting such Certificates.

         Notwithstanding any contrary provision of this Agreement, the Trustee
and the Guarantor shall be entitled to receive an Opinion of Counsel to the
effect that such amendment will not result in the imposition of any tax on any
Trust REMIC pursuant to the REMIC Provisions or cause any Trust REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding.

         Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Certificateholder.

         It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.

         The cost of any Opinion of Counsel to be delivered pursuant to this
Section 11.01 shall be borne by the Person seeking the related amendment, but in
no event shall such Opinion of Counsel be an expense of the Trustee.

         The Trustee may, but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.

Section 11.02     Recordation of Agreement; Counterparts.

         To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate

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public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Trust, but only upon direction of
Certificateholders accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.

         For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.

Section 11.03     Limitation on Rights of Certificateholders.

         The death or incapacity of any Certificateholder shall not (i) operate
to terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.

         Except as expressly provided for herein, no Certificateholder shall
have any right to vote 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 Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.

         No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 15 days after
its receipt of such notice, request and offer of indemnity, shall have neglected
or refused to institute any such action, suit or proceeding. It is understood
and intended, and expressly covenanted by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 11.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

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Section 11.04     Governing Law; Jurisdiction.

         This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

Section 11.05     Notices.

         All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first class mail, postage prepaid, by facsimile or by express delivery service,
to (a) in the case of the Master Servicer, Long Beach Mortgage Company, 1100
Town & Country Road, Suite 1600, Orange, California 92868, Attention: General
Counsel (telecopy number: (714) 543-6847), or such other address or telecopy
number as may hereafter be furnished to the Depositor and the Trustee in writing
by the Master Servicer, (b) in the case of the Trustee, Bankers Trust Company of
California, N.A., 1761 St. Andrew Place, Santa Anna, California 92705-6478,
Attention: Trust Administration Services (telecopy number (714) 247-6000) or
such other address or telecopy number as may hereafter be furnished to the
Depositor and the Master Servicer in writing by the Trustee, (c) in the case of
the Depositor, Long Beach Securities Corp., 1100 Town & Country Road, Suite
1600, Orange California 92868, Attention: General Counsel (telecopy number:
(714) 543-6847), or such other address or telecopy number as may be furnished to
the Master Servicer and the Trustee in writing by the Depositor, and (d) in the
case of Guarantor, Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, D.C.
20016, Attention: Vice President-Capital Markets (telecopy number (202)
752-6890). Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Notice of any Master Servicer
default shall be given by telecopy and by certified mail. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have duly been given when mailed, whether or not the Certificateholder receives
such notice. A copy of any notice required to be telecopied hereunder shall also
be mailed to the appropriate party in the manner set forth above.

Section 11.06     Severability of Provisions.

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

Section 11.07     Notice to the Rating Agencies and Guarantor.

         The Trustee shall use its best efforts promptly to provide notice to
the Rating Agencies and the Guarantor with respect to each of the following of
which it has actual knowledge:

         1.       Any amendment to this Agreement;

                                      157
<PAGE>

         2.       The occurrence of any Master Servicer Event of Default that
                  has not been cured or waived;

         3.       The resignation or termination of the Master Servicer or the
                  Trustee;

         4.       The repurchase or substitution of Mortgage Loans pursuant to
                  or as contemplated by Section 2.03;

         5.       The final payment to the Holders of any Class of Certificates;

         6.       Any change in the location of the Collection Account or the
                  Distribution Account;

         7.       The Trustee, were it to succeed as Master Servicer, is unable
                  to make advances regarding delinquent Mortgage Loans; and

         8.       The filing of any claim under the Master Servicer's blanket
                  bond and errors and omissions insurance policy required by
                  Section 3.14 or the cancellation or material modification of
                  coverage under any such instrument.

         In addition, the Trustee shall promptly make available to each Rating
Agency copies of each Statement to Certificateholders described in Section 4.03
hereof and the Master Servicer shall promptly furnish to each Rating Agency
copies of the following:

         1.       each annual statement as to compliance described in Section
                  3.20 hereof;

         2.       each annual independent public accountants' servicing report
                  described in Section 3.21 hereof.

         Any such notice pursuant to this Section 11.07 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to Moody's
Investors Service, Inc., 99 Church Street, New York, NY 10048, Attention: MBS
Monitoring/Long Beach Mortgage Loan Trust 2001-3; Fitch, Inc., One State Street
Plaza, New York, New York 10004, Standard & Poor's Rating Services, Inc., 55
Water Street, New York, New York 10004, and the Guarantor at the address
provided in Section 11.05.

Section 11.08     Article and Section References.

         All Article and Section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.

Section 11.09     [Reserved]

                                      158
<PAGE>

Section 11.10     Grant of Security Interest.

         It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Depositor to the Trustee be, and be construed as, a
sale of the Mortgage Loans by the Depositor and not a pledge of the Mortgage
Loans by the Depositor to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then, (a)
it is the express intent of the parties that such conveyance be deemed a pledge
of the Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans 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, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) 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 Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obligations described in clause (3) of the preceding
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.

                                      159
<PAGE>

         IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Guarantor
and the Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year first above
written.

                               LONG BEACH SECURITIES CORP.,
                                 as Depositor

                               By:
                                    ---------------------------------
                               Name:      Jeffery A. Sorensen
                               Title:     Vice President

                               LONG BEACH MORTGAGE COMPANY,
                                 as Master Servicer

                               By:
                                    ---------------------------------
                               Name:      Jeffery A Sorensen
                               Title:     Vice President

                               BANKERS TRUST COMPANY OF
                               CALIFORNIA, N.A.,
                               as Trustee

                               By:
                                    ---------------------------------
                               Name:      Ronaldo Reyes
                               Title:     Associate

                               FEDERAL NATIONAL MORTGAGE
                               ASSOCIATION,
                               as Guarantor (with respect to the Class A-1
                               Certificates and the Class S-1 Certificates)

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

                                      160
<PAGE>

STATE OF WASHINGTON     )
                        )  ss.:
COUNTY OF KING          )

         On the ___th day of September, 2001 before me, a notary public in and
for said State, personally appeared Jeffrey A. Sorensen known to me to be a Vice
President of Long Beach Securities Corp., a Delaware corporation that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                    ---------------------------------
                                               Notary Public

                                      161
<PAGE>

STATE OF WASHINGTON                         )
                                            )  ss.:
COUNTY OF KING                              )

         On the ___th day of September, 2001 before me, a notary public in and
for said State, personally appeared Jeffrey A. Sorensen known to me to be a Vice
President of Long Beach Mortgage Company, a corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                    ---------------------------------
                                            Notary Public

                                      162
<PAGE>

STATE OF        )
                )  ss.:
COUNTY OF       )

         On the ___th day of ________, 2001 before me, a notary public in and
for said State, personally appeared ____________, known to me to be a
____________ of Bankers Trust Company of California, N.A., a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said association, and acknowledged to me
that such corporation executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                    ---------------------------------
                                            Notary Public

                                      163
<PAGE>

STATE OF         )
                 )  ss.:
COUNTY OF        )

         On the ___th day of ________, 2001 before me, a notary public in and
for said State, personally appeared ____________, known to me to be a
____________ of Federal National Mortgage Association, a ____________ that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, and acknowledged to me that such
corporation executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                    ---------------------------------
                                          Notary Public

<PAGE>

                                   EXHIBIT A-1

<PAGE>

                             CLASS A-1 CERTIFICATES

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :   1
Cut-off Date                               :   With respect to any Mortgage
                                               Loan, September 1, 2001
First Distribution Date                    :   October 25, 2001
Initial Certificate Principal Balance of
this Certificate ("Denomination")          :   $[____]
Original Class Certificate Principal
Balance of this Class                      :   $[____]
Percentage Interest                        :   [      ]
Pass-Through Rate                          :   Variable
CUSIP                                          [____]
Class                                      :   A-1
Assumed Maturity Date                      :   September 25, 2031

                                      A-1-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                    Class A-1

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class A-1 Certificate (obtained by
dividing the Denomination of this Class A-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of September 1, 2001 (the "Agreement") among
the Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class A-1 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class A-1 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

                                      A-1-2

<PAGE>

         Reference is hereby made to the further provisions of this Class A-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class A-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      A-1-3

<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                                LONG BEACH MORTGAGE LOAN TRUST 2001-3

                                By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                    not in its individual capacity, but
                                    solely as Trustee

                                By
                                  --------------------------------------------

This is one of the Class A-1 Certificates
referenced in the within-mentioned Agreement

By
  --------------------------------------------------
         Authorized Signatory of
         Bankers Trust Company of California, N.A.,
         as Trustee

                                     A-1-4
<PAGE>

                       [Reverse of Class A-1 Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                     A-1-5
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denomi-nations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     A-1-6
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                 --------------------------------------------------------------
-------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

Dated:
      ------------------------------

                                          ------------------------------------
                                          Signature by or on behalf of assignor

                                     A-1-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                               ------------------------------------------------

--------------------------------------------------------------------------------
for the account of
                   ------------------------------------------------------------
account number                  , or, if mailed by check, to                  .
               -----------------                             ------------------

--------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          -----------------------------------  .

         This information is provided by                                      ,
                                         ------------------------------------
the assignee named above, or                                                  ,
                             ------------------------------------------------
as its agent.

                                     A-1-8
<PAGE>

                             CLASS A-1 CERTIFICATES

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :   2
Cut-off Date                               :   With respect to any Mortgage
                                               Loan, September 1, 2001
First Distribution Date                    :   October 25, 2001
Initial Certificate Principal Balance of
this Certificate ("Denomination")          :   $_____]
Original Class Certificate Principal
Balance of this Class                      :   $[____]
Percentage Interest                        :   [_____]
Pass-Through Rate                          :   Variable
CUSIP                                          [____]
Class                                      :   A-1
Assumed Maturity Date                      :   September 25, 2031

                                     A-1-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                    Class A-1

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class A-2 Certificate (obtained by
dividing the Denomination of this Class A-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of September 1, 2001 (the "Agreement") among
the Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class A-1 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class A-1 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

                                     A-1-2
<PAGE>

         Reference is hereby made to the further provisions of this Class A-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class A-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                     A-1-3
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                              LONG BEACH MORTGAGE LOAN TRUST 2001-3

                              By:      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                       not in its individual capacity, but
                                       solely as Trustee

                              By
                                -----------------------------------------------

This is one of the Class A-1 Certificates
referenced in the within-mentioned Agreement

By
  --------------------------------------------------
         Authorized Signatory of
         Bankers Trust Company of California, N.A.,
         as Trustee

                                     A-1-4
<PAGE>

                       [Reverse of Class A-1 Certificate]

                     LONG BEACH MORTGAGE LOAN TRUST 2001-3
                           Asset-Backed Certificates,
                                 Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                     A-1-5
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     A-1-6
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                --------------------------------------------------------------
------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

Dated:
      ------------------------------

                                          -------------------------------------
                                          Signature by or on behalf of assignor

                                     A-1-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                               ------------------------------------------------

-------------------------------------------------------------------------------
for the account of                                                            ,
                   ------------------------------------------------------------
account number             , or, if mailed by check, to                       .
               -------------                             --------------------

-------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          -------------------------------------
                                                                             .
-----------------------------------------------------------------------------

         This information is provided by                                      ,
                                         ------------------------------------
the assignee named above, or                                                  ,
                             -------------------------------------------------
as its agent.

                                     A-1-8
<PAGE>

                                   EXHIBIT A-2

<PAGE>

                             CLASS A-2 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :  1
Cut-off Date                               :  With respect to any Mortgage Loan,
                                              September 1, 2001
First Distribution Date                    :  October 25, 2001
Initial Certificate Principal Balance of
this Certificate ("Denomination")          :  $[____]
Original Class Certificate Principal
Balance of this Class                      :  $[____]
Percentage Interest                        :  100.00%
Pass-Through Rate                          :  Variable
CUSIP                                      :  [____]
Class                                      :  A-2
Assumed Maturity Date                      :  September 25, 2031

                                     A-2-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                    Class A-2

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-2 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class A-2 Certificate (obtained by
dividing the Denomination of this Class A-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of September 1, 2001 (the "Agreement") among
the Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class A-2 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class A-2 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         Reference is hereby made to the further provisions of this Class A-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class A-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                     A-2-2
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                            LONG BEACH MORTGAGE LOAN TRUST 2001-3

                            By:      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                     not in its individual capacity, but
                                     solely as Trustee

                            By
                              -----------------------------------------------

This is one of the Class A-2 Certificates
referenced in the within-mentioned Agreement

By
  -----------------------------------------------------
  Authorized Signatory of
  Bankers Trust Company of California, N.A.,
  as Trustee

                                     A-2-3
<PAGE>

                       [Reverse of Class A-2 Certificate]

                     LONG BEACH MORTGAGE LOAN TRUST 2001-3
                           Asset-Backed Certificates,
                                 Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                     A-2-4
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     A-2-5
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                --------------------------------------------------------------

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

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

Dated:
      ------------------------------

                                          -------------------------------------
                                          Signature by or on behalf of assignor

                                     A-2-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                               ------------------------------------------------

-------------------------------------------------------------------------------
for the account of                                                            ,
                   -----------------------------------------------------------
account number               , or, if mailed by check, to                     .
               --------------                             --------------------

------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          ------------------------------------
                                                                              .
------------------------------------------------------------------------------

         This information is provided by
                                             , the assignee named above, or
---------------------------------------------
                                                       , as its agent.
------------------------------------------------------

                                     A-2-7
<PAGE>

                                   EXHIBIT A-3

<PAGE>

                             CLASS S-1 CERTIFICATES

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :  1
Cut-off Date                               :  With respect to any Mortgage Loan,
                                              September 1, 2001
First Distribution Date                    :  October 25, 2001
Initial Certificate Notional Amount of
this Certificate ("Denomination")          :  $[____]
Original Class Certificate Notional
Amount of this Class                       :  $[____]
Percentage Interest                        :  100.00%
CUSIP                                         [____]
Pass-Through Rate                          :  Variable
Class                                      :  S-1
Assumed Maturity Date                      :  March 25, 2004

                                     S-1-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                    Class S-1

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         This Class S-1 Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Master Servicer or the
Trustee referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class S-1 Certificate (obtained by
dividing the Denomination of this Class S-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of September 1, 2001 (the "Agreement") among
the Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class S-1 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class S-1 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

         Reference is hereby made to the further provisions of this Class S-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                                     S-1-2
<PAGE>

         This Class S-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                     S-1-3
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                         LONG BEACH MORTGAGE LOAN TRUST 2001-3

                         By:      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                  not in its individual capacity, but
                                  solely as Trustee

                         By
                           -----------------------------------------------

This is one of the Class S-1 Certificates
referenced in the within-mentioned Agreement

By
  ------------------------------------------------------------
         Authorized Signatory of
         Bankers Trust Company of California, N.A.,
         as Trustee

                                     S-1-4
<PAGE>

                       [Reverse of Class S-1 Certificate]

                     LONG BEACH MORTGAGE LOAN TRUST 2001-3
                           Asset-Backed Certificates,
                                 Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                     S-1-5
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     S-1-6
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                 -------------------------------------------------------------

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

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

Dated:
      ------------------------------

                                          -------------------------------------
                                          Signature by or on behalf of assignor

                                     S-1-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                               ------------------------------------------------

-------------------------------------------------------------------------------
for the account of                                                            ,
                   ----------------------------------------------------------
account number              , or, if mailed by check, to                      .
               -------------                             --------------------

--------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          --------------------------------------

--------------------------------------------------------------------------------
         This information is provided by                                       ,
                                         --------------------------------------
the assignee named above, or                                                   ,
                             --------------------------------------------------
as its agent.

                                     S-1-8
<PAGE>

                                   EXHIBIT A-4

<PAGE>

                             CLASS S-2 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :  1
Cut-off Date                               :  With respect to any Mortgage Loan,
                                              September 1, 2001
First Distribution Date                    :  October 25, 2001
Initial Certificate Notional Amount of
this Certificate ("Denomination")          :  $[____]
Original Class Certificate Notional
Amount of this Class                       :  $[____]
Percentage Interest                        :  100.00%
Pass-Through Rate                          :  Variable
CUSIP                                      :  [____]
Class                                      :  S-2
Assumed Maturity Date                      :  March 25, 2004

                                     S-2-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                    Class S-2

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         This Class S-2 Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Master Servicer or the
Trustee referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class S-2 Certificate (obtained by
dividing the Denomination of this Class S-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of September 1, 2001 (the "Agreement") among
the Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class S-2 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class S-2 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         Reference is hereby made to the further provisions of this Class S-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class S-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                     S-2-2
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                             LONG BEACH MORTGAGE LOAN TRUST 2001-3

                             By:      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                      not in its individual capacity, but
                                      solely as Trustee

                             By
                               -----------------------------------------------

This is one of the Class S-2 Certificates
referenced in the within-mentioned Agreement

By
  ---------------------------------------------------
         Authorized Signatory of
         Bankers Trust Company of California, N.A.,
         as Trustee

                                     S-2-3
<PAGE>

                       [Reverse of Class S-2 Certificate]

                     LONG BEACH MORTGAGE LOAN TRUST 2001-3
                           Asset-Backed Certificates,
                                 Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                     S-2-4
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     S-2-5
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                 --------------------------------------------------------------

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

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

Dated:
      ------------------------------

                                          -------------------------------------
                                          Signature by or on behalf of assignor

                                     S-2-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                                -----------------------------------------------

------------------------------------------------------------------------------
for the account of                                                            ,
                   -----------------------------------------------------------
account number               , or, if mailed by check, to                     .
               -------------                             ----------------------

------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          -------------------------------------

------------------------------------------------------------------------------
         This information is provided by                                      ,
                                         ------------------------------------
the assignee named above, or                                                  ,
                             -------------------------------------------------
as its agent.

                                     S-2-7
<PAGE>

                                   EXHIBIT A-5

<PAGE>

                             CLASS M-1 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES AND THE CLASS S-2 CERTIFICATES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :  1
Cut-off Date                               :  With respect to any Mortgage Loan,
                                              September 1, 2001
First Distribution Date                    :  October 25, 2001
Initial Certificate Principal Balance of
this Certificate ("Denomination")          :  $[____]
Original Class Certificate Principal
Balance of this Class                      :  $[____]
Percentage Interest                        :  100.00%
Pass-Through Rate                          :  Variable
CUSIP                                      :  [____]
Class                                      :  M-1
Assumed Maturity Date                      :  September 25, 2031

                                     M-1-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                    Class M-1

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-1 Certificate (obtained by
dividing the Denomination of this Class M-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of September 1, 2001 (the "Agreement") among
the Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class M-1 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class M-1 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class M-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                     M-1-2
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                            LONG BEACH MORTGAGE LOAN TRUST 2001-3

                            By:      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                     not in its individual capacity, but
                                     solely as Trustee

                            By
                              -----------------------------------------------

This is one of the Class M-1 Certificates
referenced in the within-mentioned Agreement

By
  -------------------------------------------------------------
         Authorized Signatory of
         Bankers Trust Company of California, N.A.,
         as Trustee

                                     M-1-3
<PAGE>

                       [Reverse of Class M-1 Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer and the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                     M-1-4
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     M-1-5
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                 -------------------------------------------------------------

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

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

Dated:
      ------------------------------

                                           -------------------------------------
                                           Signature by or on behalf of assignor

                                     M-1-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to
                    -----------------------------------------------------------

-------------------------------------------------------------------------------
for the account of                                                            ,
                   -----------------------------------------------------------
account number               , or, if mailed by check, to                     .
               -------------                             ---------------------

-------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          -------------------------------------
                                                                              .
------------------------------------------------------------------------------

         This information is provided by                                      ,
                                         -------------------------------------
the assignee named above, or                                                  ,
                             -------------------------------------------------
as its agent.

                                     M-1-7
<PAGE>

                                   EXHIBIT A-6

<PAGE>

                             CLASS M-2 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES, THE CLASS S-2 CERTIFICATES AND THE
CLASS M-1 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :  1
Cut-off Date                               :  With respect to any Mortgage Loan,
                                              September 1, 2001
First Distribution Date                    :  October 25, 2001
Initial Certificate Principal Balance of
this Certificate ("Denomination")          :  $[____]
Original Class Certificate Principal
Balance of this Class                      :  $[____]
Percentage Interest                        :  100.00%
Pass-Through Rate                          :  Variable
CUSIP                                      :  [____]
Class                                      :  M-2
Assumed Maturity Date                      :  September 25, 2031

                                     M-2-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                    Class M-2

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-2 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-2 Certificate (obtained by
dividing the Denomination of this Class M-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of September 1, 2001 (the "Agreement") among
the Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class M-2 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class M-2 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class M-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                     M-2-2
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                            LONG BEACH MORTGAGE LOAN TRUST 2001-3

                            By:      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                     not in its individual capacity, but
                                     solely as Trustee

                            By
                             -----------------------------------------------

This is one of the Class M-2 Certificates
referenced in the within-mentioned Agreement

By
  -------------------------------------------------
         Authorized Signatory of
         Bankers Trust Company of California, N.A.,
         as Trustee

                                     M-2-3
<PAGE>

                       [Reverse of Class M-2 Certificate]

                     LONG BEACH MORTGAGE LOAN TRUST 2001-3
                           Asset-Backed Certificates,
                                 Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                     M-2-4
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certifcates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     M-2-5
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                 --------------------------------------------------------------

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

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

Dated:
      ------------------------------

                                          -------------------------------------
                                          Signature by or on behalf of assignor

                                     M-2-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                               ------------------------------------------------

-------------------------------------------------------------------------------
for the account of                                                             ,
                   ------------------------------------------------------------
account number                 , or, if mailed by check, to                   .
               ----------------                             ------------------

-------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          -------------------------------------
                                                                           .
---------------------------------------------------------------------------

         This information is provided by                                      ,
                                         -------------------------------------
the assignee named above, or                                                  ,
                             -------------------------------------------------
as its agent.

                                     M-2-7
<PAGE>

                                   EXHIBIT A-7

<PAGE>

                             CLASS M-3 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES, THE CLASS S-2 CERTIFICATES, THE CLASS
M-1 CERTIFICATES AND THE CLASS M-2 CERTIFICATES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :  1
Cut-off Date                               :  With respect to any Mortgage Loan,
                                              September 1, 2001
First Distribution Date                    :  October 25, 2001
Initial Certificate Principal Balance of
this Certificate ("Denomination")          :  $[____]
Original Class Certificate Principal
Balance of this Class                      :  $[____]
Percentage Interest                        :  100.00%
Pass-Through Rate                          :  Variable
CUSIP                                      :  [____]
Class                                      :  M-3
Assumed Maturity Date                      :  September 25, 2031

                                     M-3-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                    Class M-3

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-3 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-3
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-3 Certificate (obtained by
dividing the Denomination of this Class M-3 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of September 1, 2001 (the "Agreement") among
the Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class M-3 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class M-3 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-3
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class M-3 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                     M-3-2
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                            LONG BEACH MORTGAGE LOAN TRUST 2001-3

                            By:      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                     not in its individual capacity, but
                                     solely as Trustee

                            By
                              -----------------------------------------------

This is one of the Class M-3 Certificates
referenced in the within-mentioned Agreement

By
  --------------------------------------------------
         Authorized Signatory of
         Bankers Trust Company of California, N.A.,
         as Trustee

                                     M-3-3
<PAGE>

                       [Reverse of Class M-3 Certificate]

                     LONG BEACH MORTGAGE LOAN TRUST 2001-3
                           Asset-Backed Certificates,
                                 Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                     M-3-4
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                     M-3-5
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                 --------------------------------------------------------------

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

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

Dated:
      ------------------------------

                                       ------------------------------------
                                       Signature by or on behalf of assignor

                                     M-3-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                               ------------------------------------------------

-------------------------------------------------------------------------------
for the account of                                                             ,
                   -----------------------------------------------------------
account number            , or, if mailed by check, to                        .
               -----------                             -----------------------

-------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          -------------------------------------
                                                                              .
------------------------------------------------------------------------------

         This information is provided by                                      ,
                                         -------------------------------------
the assignee named above, or                                                   ,
                             -------------------------------------------------
as its agent.

                                     M-3-7
<PAGE>

                                   EXHIBIT A-8

<PAGE>

                              CLASS C CERTIFICATES

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE
CLASS M-3 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.

Certificate No.                          :   1
Cut-off Date                             :   With respect to any Mortgage Loan,
                                             September 1, 2001
First Distribution Date                  :   October 25, 2001
Initial Notional Amount of this
Certificate ("Denomination")             :   $[____]
Original Notional Amount of this Class   :   $[____]
Percentage                               :   100.00%
Class                                    :   C

                                      C-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                     Class C

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class C
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class C
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Class C Certificate (obtained
by dividing the Denomination of this Class C Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of September 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class C Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class C Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

                                      C-2
<PAGE>

         No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

         Reference is hereby made to the further provisions of this Class C
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class C Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      C-3
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                            LONG BEACH MORTGAGE LOAN TRUST 2001-3

                            By:      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                     not in its individual capacity, but
                                     solely as Trustee

                            By
                              -----------------------------------------------

This is one of the Class C Certificates
referenced in the within-mentioned Agreement

By
  -----------------------------------------
  Authorized Signatory of
  Bankers Trust Company of California, N.A.,
  as Trustee

                                      C-4
<PAGE>

                        [Reverse of Class C Certificate]

                     Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                 Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                      C-5
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                      C-6
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                 --------------------------------------------------------------

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

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         ------------------------------------------------------

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

Dated:
      ------------------------------

                                          ------------------------------------
                                          Signature by or on behalf of assignor

                                      C-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                              -------------------------------------------------

-------------------------------------------------------------------------------
for the account of                                                             ,
                   ------------------------------------------------------------
account number                , or, if mailed by check, to                    .
               ---------------                             -------------------

-------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          -------------------------------------
                                                                               .
-------------------------------------------------------------------------------

         This information is provided by                                      ,
                                         -------------------------------------
the assignee named above, or                                                   ,
                             --------------------------------------------------
as its agent.

                                      C-8
<PAGE>

                                   EXHIBIT A-9

<PAGE>

                               CLASS P CERTIFICATE

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.

Certificate No.                            :  1
Cut-off Date                               :  With respect to any Mortgage Loan,
                                              September 1, 2001
First Distribution Date                    :  October 25, 2001
Initial Certificate Principal Balance of
this Certificate ("Denomination")          :  $200.00
Original Class Certificate Principal
Balance of this Class                      :  $200.00
Percentage Interest                        :  100.00%
Class                                      :  P

                                      P-1
<PAGE>

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                     Class P

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class P
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class P
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Class P Certificate (obtained
by dividing the Denomination of this Class P Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of September 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Bankers Trust
Company of California, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Class P Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class P Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         This Certificate does not have a pass-through rate and will be entitled
to distributions only to the extent set forth in the Agreement.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the

                                      P-2
<PAGE>

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

         No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

         Reference is hereby made to the further provisions of this Class P
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class P Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      P-3
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                     LONG BEACH MORTGAGE LOAN TRUST 2001-3

                     By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                         not in its individual capacity, but solely as Trustee

                     By
                       -----------------------------------------------

This is one of the Class P Certificates
referenced in the within-mentioned Agreement

By
  ------------------------------------------------------
         Authorized Signatory of
         Bankers Trust Company of California, N.A.,
         as Trustee

                                      P-4
<PAGE>

                        [Reverse of Class P Certificate]

                      Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                      P-5
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                      P-6
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                 --------------------------------------------------------------

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

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                          ------------------------------------------------------

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

Dated:
      ------------------------------

                                          -------------------------------------
                                          Signature by or on behalf of assignor

                                      P-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                              -------------------------------------------------

-------------------------------------------------------------------------------
for the account of                                                           ,
                   ----------------------------------------------------------
ccount number             , or, if mailed by check, to                        .
               -----------                             -----------------------

-------------------------------------------------------------------------------
Applicable statements should be mailed to
                                          -------------------------------------
                                                                              .
------------------------------------------------------------------------------

         This information is provided by                                      ,
                                         -------------------------------------
the assignee named above, or                                                  ,
                             ------------------------------------------------
as its agent.

                                      P-8
<PAGE>

                                  EXHIBIT A-10

<PAGE>

                              CLASS R CERTIFICATES

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
"RESIDUAL INTERESTS" IN THREE SEPARATE "REAL ESTATE MORTGAGE INVESTMENT
CONDUITS," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.

Certificate No.                :  1
Cut-off Date                   :  With respect to any Mortgage Loan,
                                  September 1, 2001
First Distribution Date        :  October 25, 2001
Percentage Interest            :  100.00%
Class                          :  R

                                      R-1
<PAGE>

                      Long Beach MORTGAGE LOAN TRUST 2001-3
                           Asset-Backed Certificates,
                                  Series 2001-3
                                     Class R

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting primarily of a pool of first lien and second lien,
         fixed rate and adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Master Servicer or the Trustee
referred to below or any of their respective affiliates.

         This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in a Trust consisting primarily of the Mortgage Loans
deposited by Long Beach Securities Corp. (the "Depositor"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of September 1,
2001 (the "Agreement") among the Depositor, Long Beach Mortgage Corporation, as
master servicer (the "Master Servicer"), Federal National Mortgage Association,
as guarantor with respect to the Class A-1 Certificates and the Class S-1
Certificates and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         This Certificate does not have a principal balance or pass-through rate
and will be entitled to distributions only to the extent set forth in the
Agreement. In addition, any distribution of the proceeds of any remaining assets
of the Trust will be made only upon presentment and surrender of this
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in Santa Ana, California.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the

                                      R-2
<PAGE>

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

         No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

         Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee. Pursuant to the Agreement, The Trustee will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to disqualified organizations, if any person
other than a Permitted Transferee acquires an Ownership Interest on a Class R
Certificate in violation of the restrictions mentioned above.

         Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.

                                      R-3
<PAGE>

         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  September___, 2001

                     LONG BEACH MORTGAGE LOAN TRUST 2001-3

                     By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                         not in its individual capacity, but solely as Trustee

                     By
                       -----------------------------------------------

This is one of the Class R Certificates
referenced in the within-mentioned Agreement

By
  ------------------------------------------------------------
         Authorized Signatory of
         Bankers Trust Company of California, N.A.,
         as Trustee

                                      R-4
<PAGE>

                        [Reverse of Class R Certificate]

                     Long Beach Mortgage Loan Trust 2001-3
                           Asset-Backed Certificates,
                                 Series 2001-3

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-3, Asset-Backed Certificates,
Series 2001-3 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                                      R-5
<PAGE>

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer may
purchase, in whole, from the Trust the Mortgage Loans in the manner and at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
for the Certificates other than the Class S Certificates in September, 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.

                                      R-6
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
                 --------------------------------------------------------------

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

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

Dated:
      ------------------------------

                                          -------------------------------------
                                          Signature by or on behalf of assignor

                                      R-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
                               ------------------------------------------------

-------------------------------------------------------------------------------
for the account of                                                            ,
                   -----------------------------------------------------------
account number              , or, if mailed by check, to                      .
               --------------                             --------------------

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

Applicable statements should be mailed to
                                          -------------------------------------
                                                                               .
-------------------------------------------------------------------------------

         This information is provided by                                      ,
                                         -------------------------------------
he assignee named above, or                                                   ,
                             --------------------------------------------------
as its agent.

                                      R-8
<PAGE>

                                    EXHIBIT B

                                   [RESERVED]

                                       B-1

<PAGE>

                                    EXHIBIT C

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

         This is a Mortgage Loan Purchase Agreement (the "Agreement"), dated
September ___, 2001, between Long Beach Securities Corp., a Delaware corporation
(the "Purchaser") and Long Beach Mortgage Company, a Delaware corporation (the
"Seller").

                              Preliminary Statement

         The Seller intends to sell the Mortgage Loans (as hereinafter defined)
to the Purchaser on the terms and subject to the conditions set forth in this
Agreement. The Purchaser intends to deposit the Mortgage Loans into a mortgage
pool constituting the trust fund. The trust fund will be evidenced by fixed rate
and adjustable rate asset backed certificates designated as Long Beach Mortgage
Loan Trust Series 2001-3, Asset-Backed Certificates 2001-3 (the "Certificates").
The Certificates will consist of ten classes of certificates. The Certificates
will be issued pursuant to a Pooling and Servicing Agreement, dated as of
September 1, 2001 (the "Pooling and Servicing Agreement"), among the Purchaser,
as depositor, Bankers Trust Company of California, N.A., as trustee, Fannie Mae,
as guarantor with respect to the Class A-1 Certificates and the Class S-1
Certificates (the "Guarantor"), and the Seller, as master servicer (in such
capacity, the "Master Servicer"). Capitalized terms used but not defined herein
shall have the meanings set forth in the Pooling and Servicing Agreement.

         The parties hereto agree as follows:

SECTION 1. Agreement to Purchase.

         The Seller agrees to sell, and the Purchaser agrees to purchase, on or
before September ___, 2001 (the "Closing Date"), certain fixed-rate and
adjustable-rate conventional residential mortgage loans (the "Mortgage Loans"),
having an aggregate principal balance as of the close of business on September
___, 2001 (the "Cut-off Date") of approximately $____________ after giving
effect to all payments due on the Mortgage Loans on or before the Cut-off Date,
whether or not received.

SECTION 2. Mortgage Loan Schedule.

         The Purchaser and the Seller have agreed upon which of the mortgage
loans owned by the Seller are to be purchased by the Purchaser pursuant to this
Agreement on the Closing Date and the Seller will prepare or cause to be
prepared on or prior to the Closing Date a final schedule (the "Closing
Schedule") that shall describe such Mortgage Loans and set forth all of the
Mortgage Loans to be purchased under this Agreement. The Closing Schedule will
conform to the requirements set forth in this Agreement and to the definition of
"Mortgage Loan Schedule" under the Pooling and Servicing Agreement. The Closing
Schedule shall be used as the Mortgage Loan Schedule under the Pooling and
Servicing Agreement.

                                      C-1
<PAGE>

SECTION 3. Consideration.

         In consideration for the Mortgage Loans to be purchased hereunder, the
Purchaser shall on the Closing Date, as described in Section 8 hereof, (i) pay
to or upon the order of the Seller in immediately available funds an amount (the
"Purchase Price") equal to the net sale proceeds of the Class A Certificates,
the Class S Certificates and the Mezzanine Certificates and (ii) deliver to Long
Beach Asset Holdings Corp. upon the order of the Seller the Class C
Certificates, the Class P Certificates and the Class R Certificates (the "Long
Beach Certificates").

         The Purchaser or any assignee, transferee or designee of the Purchaser
shall be entitled to all scheduled payments of principal due after the Cut-off
Date, all other payments of principal due and collected after the Cut-off Date,
and all payments of interest on the Mortgage Loans allocable to the period after
the Cut-off Date. All scheduled payments of principal and interest due on or
before the Cut-off Date and collected after the Cut-off Date shall belong to the
Seller.

         Pursuant to the Pooling and Servicing Agreement, the Purchaser will
transfer, assign, set over and otherwise convey to the Trustee without recourse
for the benefit of the Certificateholders, all the right, title and interest of
the Purchaser in and to the Mortgage Loans (other than Sections 17 and 18
hereof), together with its rights under this Agreement.

SECTION 4.  Transfer of the Mortgage Loans.

         (a) Possession of Mortgage Files. The Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser, without recourse but
subject to the terms of this Agreement, all of its right, title and interest in,
to and under the Mortgage Loans. The contents of each Mortgage File not
delivered to the Purchaser or to any assignee, transferee or designee of the
Purchaser on or prior to the Closing Date are and shall be held in trust by the
Seller for the benefit of the Purchaser or any assignee, transferee or designee
of the Purchaser and promptly transferred to the Trustee. Upon the sale of the
Mortgage Loans the ownership of each Mortgage Note, the related Mortgage and the
other contents of the related Mortgage File is vested in the Purchaser and the
ownership of all records and documents with respect to the related Mortgage Loan
prepared by or that come into the possession of the Seller on or after the
Closing Date shall immediately vest in the Purchaser and shall be delivered
promptly to the Purchaser or as otherwise directed by the Purchaser. All amounts
received by the Seller after the Cut-off Date but prior to the date hereof with
respect to the Mortgage Loans, to which amounts the Seller is not entitled, will
be deposited into the Collection Account within one Business Day after the
Closing Date;

         (b) Delivery of Mortgage Loan Documents. The Seller will, on or prior
to the Closing Date, deliver or cause to be delivered to the Purchaser or any
assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:

         i. the original Mortgage Note, endorsed in blank or in the following
form: "Pay to the order of Bankers Trust Company of California, N.A. as Trustee
under the applicable agreement, without recourse," with all prior and
intervening endorsements, showing a complete chain of endorsement from the

                                      C-2
<PAGE>

originator to the Person so endorsing to the Trustee or (in the case of not more
than 1.00% of the Mortgage Loans, by aggregate principal balance as of the
Cut-off Date) a copy of such original Mortgage Note with an accompanying Lost
Note Affidavit executed by the Seller;

         ii. the original Mortgage with evidence of recording thereon, and a
copy, certified by the appropriate recording office, of the recorded power of
attorney, if the Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;

         iii. an original Assignment executed in blank;

         iv. the original Assignment or Assignments showing a complete chain of
assignment from the originator to the Person assigning the Mortgage to the
Trustee or in blank;

         v. the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and

         vi. the original lender's title insurance policy, together with all
endorsements or riders issued with or subsequent to the issuance of such policy,
insuring the priority of the Mortgage as a first lien or second lien on the
Mortgaged Property represented therein as a fee interest vested in the
Mortgagor, or in the event such original title policy is unavailable, a written
commitment or uniform binder or preliminary report of the title issued by the
title insurance or escrow company.

         The Seller shall promptly (and in no event later than thirty (30)
Business Days, subject to extension upon a mutual agreement between the Seller
and the Purchaser), following the later of the Closing Date and the date of
receipt by the Seller of the recording information for a Mortgage, submit or
cause to be submitted for recording, at no expense to the Purchaser, in the
appropriate public office for real property records, each Assignment referred to
in (iii) and (iv) above and shall execute each original Assignment referred to
in clause (iii) above in the following form: "Bankers Trust Company of
California, N.A., as Trustee under the applicable agreement, without recourse."
In the event that any such Assignment is lost or returned unrecorded because of
a defect therein, the Seller shall promptly prepare or cause to be prepared a
substitute Assignment or cure or cause to be cured such defect, as the case may
be, and thereafter cause each such Assignment to be duly recorded.
Notwithstanding the foregoing, for administrative convenience and facilitation
of servicing and to reduce closing costs, the Assignments shall not be required
to be completed and submitted for recording with respect to any Mortgage Loan if
either (x) the Trustee, the Guarantor and each Rating Agency has received an
opinion of counsel, reasonably satisfactory to the Trustee, the Guarantor and
each Rating Agency, to the effect that the recordation of such Assignments in
any specific jurisdiction is not necessary to protect the Trust's interest in
the related Mortgage Note, or (y) each Rating Agency shall have determined that
no such opinion is required for such Rating Agency to assign the initial ratings
to the Class A Certificates, the Class S Certificates, the Mezzanine
Certificates and the NIMS Notes; provided, however, that notwithstanding the
delivery of any opinion of counsel, each Assignment shall be submitted for
recording by the Seller, in the manner described above, at no expense to the
Trust Fund or the Trustee, upon the earliest to occur of: (i) reasonable
direction by Holders of Certificates entitled to at least 25% of the Voting

                                      C-3
<PAGE>

Rights, (ii) the occurrence of a Master Servicer Event of Default, (iii) the
occurrence of a bankruptcy, insolvency or foreclosure relating to the Seller,
(iv) the occurrence of a servicing transfer as described in Section 7.02 of the
Pooling and Servicing Agreement and (v) if the Seller is not the Master Servicer
and with respect to any one Assignment, the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgagor under the related Mortgage.

         If any document referred to in Section 4(b)(ii), Section 4(b)(iii) or
Section 4(b)(iv) above has as of the Closing Date been submitted for recording
but either (x) has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained the original
of such document, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Purchaser of a copy of each
such document certified by the Seller in the case of (x) above or the applicable
public recording office in the case of (y) above to be a true and complete copy
of the original that was submitted for recording and (2) if such copy is
certified by the Seller, delivery to the Purchaser upon receipt thereof, and in
any event no later than one year after the Closing Date, of either the original
or a copy of such document certified by the applicable public recording office
to be a true and complete copy of the original. If the original lender's title
insurance policy was not delivered pursuant to Section 4(b)(vi) above, the
Seller shall deliver or cause to be delivered to the Purchaser or any assignee,
transferee or designee of the Purchaser promptly after receipt thereof, and in
any event within 120 days after the Closing Date, the original lender's title
insurance policy. The Seller shall deliver or cause to be delivered to the
Purchaser or any assignee, transferee or designee of the Purchaser promptly upon
receipt thereof any other original documents constituting a part of a Mortgage
File received with respect to any Mortgage Loan, including, but not limited to,
any original documents evidencing an assumption or modification of any Mortgage
Loan.

         Each original document relating to a Mortgage Loan which is not
delivered to the Purchaser or its assignee, transferee or designee, if held by
the Seller, shall be so held for the benefit of the Purchaser or its assignee,
transferee or designee. In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage File, such
document shall be delivered promptly to the Trustee.

         (c) Acceptance of Mortgage Loans. The documents delivered pursuant to
Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before, on and after the
Closing Date (and with respect to each document permitted to be delivered after
the Closing Date within seven days of its delivery) to ascertain that all
required documents have been executed and received and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule.

         (d) Transfer of Interest in Agreements. The Purchaser has the right to
assign its interest under this Agreement (other than Sections 17 and 18 hereof),
in whole or in part, to the Trustee, as may be required to effect the purposes
of the Pooling and Servicing Agreement, without the consent of the Seller, and
the Trustee shall succeed to the rights and obligations hereunder of the
Purchaser. Any expense reasonably incurred by or on behalf of the Purchaser or
the Trustee in connection with enforcing any obligations of the Seller under
this Agreement will be promptly reimbursed by the Seller.

                                      C-4
<PAGE>

         (e) Examination of Mortgage Files. Prior to the Closing Date, the
Seller shall either (i) deliver in escrow to the Purchaser or to any assignee,
transferee or designee of the Purchaser, for examination, the Mortgage File
pertaining to each Mortgage Loan, or (ii) make such Mortgage Files available to
the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser or the Trustee, and
their respective designees, upon reasonable notice to the Seller during normal
business hours at any time before or after the Closing Date. If any such person
makes such examination prior to the Closing Date and identifies any Mortgage
Loans with respect to which the Seller's representations and warranties
contained in this Agreement are not correct, such Mortgage Loans shall be
deleted from the Closing Schedule. The Purchaser may, at its option and without
notice to the Seller, purchase all or part of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Purchaser or
any person has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not affect the rights of the Purchaser
or any assignee, transferee or designee of the Purchaser to demand repurchase or
other relief as provided herein or under the Pooling and Servicing Agreement.

SECTION 5. Representations, Warranties and Covenants of the Seller.

         The Seller hereby represents and warrants to the Purchaser, as of the
date hereof and as of the Closing Date, and covenants, that:

         i. The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly authorized and
qualified to transact any and all business contemplated by this Agreement to be
conducted by the Seller in any state in which a Mortgaged Property is located or
is otherwise not required under applicable law to effect such qualification and,
in any event, is in compliance with the doing business laws of any such state,
to the extent necessary to ensure its ability to enforce each Mortgage Loan and
to service the Mortgage Loans in accordance with the terms of the Pooling and
Servicing Agreement;

         ii. The Seller had the full corporate power and authority to originate,
hold and sell each Mortgage Loan and has the full corporate power and authority
to service each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on the part of the Seller the
execution, delivery and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery thereof by the Purchaser,
constitutes a legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except to the extent that the
enforceability thereof may be limited by (a) bankruptcy, insolvency, moratorium,
receivership, conservatorship, arrangement, moratorium and other similar laws
relating to creditors' rights generally and (b) the general principles of
equity, whether such enforcement is sought in equity or at law;

         iii. The execution and delivery of this Agreement by the Seller, the
servicing of the Mortgage Loans by the Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions herein

                                      C-5
<PAGE>

contemplated, and the fulfillment of or compliance with the terms hereof are in
the ordinary course of business of the Seller and does not (A) result in a
breach of any term or provision of the charter or by-laws of the Seller, (B)
conflict with, result in a breach, violation or acceleration of, or result in a
default under, the terms of any other material agreement, instrument or
indenture to which the Seller is a party or by which it may be bound, or any
statute, order or regulation applicable to the Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over the
Seller or any of its property or (C) result 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; and the Seller is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to the Seller's knowledge, would in the
future result 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 or materially
and adversely affect (x) the ability of the Seller to perform its obligations
under this Agreement or the Pooling and Servicing Agreement or (y) the business,
operations, financial condition, properties or assets of the Seller taken as a
whole;

         iv. No consent, approval, authorization, or order of, any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this Agreement
or the consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, the Seller has obtained
the same;

         v. The Seller is an approved seller/servicer for Fannie Mae or Freddie
Mac in good standing and is a HUD approved mortgagee pursuant to Section 203 and
Section 211 of the National Housing Act;

         vi. No litigation or proceeding is pending or, to the best knowledge of
the Seller, threatened, against the Seller that would materially and adversely
affect the execution, delivery or enforceability of this Agreement or the
Pooling and Servicing Agreement or the issuance of the Certificates or the
ability of the Seller to service the Mortgage Loans or to perform any of its
other obligations hereunder in accordance with the terms hereof and the terms of
the Pooling and Servicing Agreement or, that would result in a material adverse
change in the financial or operating conditions of the Seller;

         vii. No certificate of an officer, statement or other information
furnished in writing or report delivered by the Seller to the Purchaser, any
Affiliate of the Purchaser, the Guarantor or the Trustee for use in connection
with the purchase of the Mortgage Loans and the transactions contemplated
hereunder and under the Pooling and Servicing Agreement contains any untrue
statement of a material fact, or omits a material fact necessary to make the
information, certificate, statement or report not misleading in any material
respect;

         viii. The Seller has not dealt with any broker, investment banker,
agent or other person, except for the Purchaser or any of its affiliates, that
may be entitled to any commission or compensation in connection with the sale of
the Mortgage Loans;

                                      C-6
<PAGE>

         ix. Each Mortgage Note, each Mortgage, each Assignment and any other
document required to be delivered by or on behalf of the Seller under this
Agreement or the Pooling and Servicing Agreement to the Purchaser or any
assignee, transferee or designee of the Purchaser for each Mortgage Loan has
been or will be, in accordance with Section 4(b) hereof, delivered to the
Purchaser or any such assignee, transferee or designee. With respect to each
Mortgage Loan, the Seller is in possession of a complete Mortgage File in
compliance with the Pooling and Servicing Agreement, except for such documents
that have been delivered (1) to the Purchaser or any assignee, transferee or
designee of the Purchaser or (2) for recording to the appropriate public
recording office and have not yet been returned;

         x. The Seller (A) is a solvent entity and is paying its debts as they
become due, (B) immediately after giving effect to the transfer of the Mortgage
Loans, will be a solvent entity and will have sufficient resources to pay its
debts as they become due and (C) did not sell the Mortgage Loans to the
Purchaser with the intent to hinder, delay or defraud any of its creditors;

         xi. The transfer of the Mortgage Loans to the Purchaser at the Closing
Date will be treated by the Seller for financial accounting and reporting
purposes as a sale of assets; and

         xii. Seller currently operates or actively participates in an on-going
business (A) to originate single family mortgage loans, and/or (B) to make
periodic purchases of single family mortgage loans from originators or sellers,
and/or (C) to issue and/or purchase securities or bonds supported by single
family mortgage loans, a portion of which loans are made to borrowers who are
low-income families (families with incomes of 80% or less of area median income)
living in low-income areas (a census tract or block numbering area in which the
median income does not exceed 80 percent of the area median income.

SECTION 6.  Representations and Warranties of the Seller Relating to
            the Individual Mortgage Loans.

         The Seller hereby represents and warrants to the Purchaser, that as of
the Closing Date:

         i. The information set forth on the Mortgage Loan Schedule with respect
to each Mortgage Loan is complete, true and correct in all material respects as
of the Cut-off Date, unless another date is set forth on the Mortgage Loan
Schedule;

         ii. The Mortgage Loans are in compliance with the characteristics of
the Mortgage Loans as set forth on Exhibit 1;

         iii. [RESERVED];

         iv. Each Mortgage is a valid and enforceable first lien or second lien
on the Mortgaged Property, including all improvements thereon, subject only to
(a) the lien of non-delinquent current real property taxes and assessments, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection with the

                                      C-7
<PAGE>

origination of the related Mortgage Loan and which do not materially interfere
with the benefits of the security intended to be provided by such Mortgage, (c)
other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by such Mortgage and (d) in the case of a second lien, only to a first lien on
such Mortgaged Property;

         v. Immediately prior to the assignment of the Mortgage Loans to the
Purchaser, the Seller had good title to, and was the sole legal and beneficial
owner of, each Mortgage Loan free and clear of any pledge, lien, encumbrance or
security interest and has full right and authority, subject to no interest or
participation of, or agreement with, any other party to sell and assign the
same. The form of endorsement of each Mortgage Note satisfied the requirement,
if any, of endorsement in order to transfer all right, title and interest of the
party so endorsing, as noteholder or assignee thereof, in and to that Mortgage
Note; and each Assignment to be delivered hereunder is in recordable form and is
sufficient to effect the assignment of and to transfer to the assignee
thereunder the benefits of the assignor, as mortgagee or assignee thereof, under
each Mortgage to which that Assignment relates;

         vi. To the best of the Seller's knowledge, there is no delinquent tax
or assessment lien against any Mortgaged Property;

         vii. There is no valid offset, defense or counterclaim to any Mortgage
Note or Mortgage, including the obligation of the Mortgagor to pay the unpaid
principal of or interest on such Mortgage Note, nor will the operation of any of
the terms of the Mortgage Note and the Mortgage, or the exercise of any right
thereunder, render 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;

         viii. To the best of the Seller's knowledge, there are no mechanics'
liens or claims for work, labor or material affecting any Mortgaged Property
which are or may be a lien prior to, or equal with, the lien of the related
Mortgage, except those which are insured against by the title insurance policy
referred to in (xii) below;

         ix. To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and is at least in average repair;

         x. Each Mortgage Loan at origination complied in all material respects
with applicable local, state and federal laws, including, without limitation,
usury, equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby, including without limitation the receipt of interest does
not involve the violation of any such laws;

         xi. Neither the Seller nor any prior holder of any Mortgage has
modified the Mortgage in any material respect, satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related Mortgaged
Property in whole or in part from the lien of such Mortgage; or executed any
instrument of release, cancellation, modification or satisfaction with respect

                                      C-8
<PAGE>

thereto (except that a Mortgage Loan may have been modified by a written
instrument signed by the Seller or a prior holder of the Mortage Loan which has
been recorded, if necessary, to protect the interests of the Seller and the
Purchaser and which has been delivered to the Purchaser or any assignee,
transferee or designee of the Purchaser as part of the Mortgage File, and the
terms of which are reflected in the Mortgage Loan Schedule);

         xii. A lender's policy of title insurance together with a condominium
endorsement and extended coverage endorsement, if applicable, and, with respect
to each Adjustable Rate Mortgage Loan, an adjustable rate mortgage endorsement
in an amount at least equal to the balance of the Mortgage Loan as of the
Cut-off Date, or a commitment (binder) to issue the same was effective on the
date of the origination of each Mortgage Loan, each such policy is valid and
remains in full force and effect, the transfer of the related Mortgage Loan to
the Purchaser and Trustee does not affect the validity or enforceability of such
policy and each such policy was issued by a generally acceptable title insurer
qualified to do business in the jurisdiction where the Mortgaged Property is
located which policy insures the Seller and successor owners of indebtedness
secured by the insured Mortgage, as to the first or second, as the case may be,
priority lien of the Mortgage; to the best of the Seller's knowledge, no claims
have been made under such mortgage title insurance policy and no prior holder of
the related Mortgage, including the Seller, has done, by act or omission,
anything which would impair the coverage of such mortgage title insurance
policy;

         xiii. Each Mortgage Loan was originated by the Seller (or, if generated
on behalf of the Seller by a Person other than the Seller, is subject to the
same standards and procedures used by the Seller in originating mortgage loans
directly) or by a savings and loan association, savings bank, commercial bank,
credit union, insurance company or similar institution which is supervised and
examined by a federal or state authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of
the National Housing Act;

         xiv. With respect to each Adjustable Rate Mortgage Loan on each
Adjustment Date, the Mortgage Rate will be adjusted to equal the Index plus the
Gross Margin, rounded to the nearest 0.125%, subject to the Periodic Rate Cap,
the Maximum Mortgage Rate and the Minimum Mortgage Rate. The related Mortgage
Note is payable on the first day of each month in self-amortizing monthly
installments of principal and interest, with interest payable in arrears, and
requires a Monthly Payment which is sufficient to fully amortize the outstanding
principal balance of the Mortgage Loan over its remaining term and to pay
interest at the applicable Mortgage Rate. No Mortgage Loan is subject to
negative amortization. All rate adjustments have been performed in accordance
with the terms of the related Mortgage Note or subsequent modifications, if any;

         xv. To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the Value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines of such
property, and no improvements on adjoining properties encroach upon the
Mortgaged Property;

         xvi. All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to

                                      C-9
<PAGE>

certificates of occupancy, have been made or obtained from the appropriate
authorities and to the best of the Seller's knowledge, the Mortgaged Property is
lawfully occupied under applicable law;

         xvii. All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) in compliance with any and
all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located;

         xviii. The Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the Mortgagor enforceable against
the Mortgagor by the mortgagee or its representative 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 law. To the best of the Seller's knowledge,
all parties to the Mortgage Note and the Mortgage had full legal capacity to
execute all Mortgage Loan documents and to convey the estate purported to be
conveyed by the Mortgage and each Mortgage Note and Mortgage have been duly and
validly executed by such parties;

         xix. The proceeds of each Mortgage Loan have been fully disbursed,
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making, closing or recording the Mortgage Loans
were paid;

         xx. The related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the 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 to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;

         xxi. 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 Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;

         xxii. There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for repayment
thereof have not been made, and no escrow deposits or payments of other charges
or payments due the Seller have been capitalized under the Mortgage or the
related Mortgage Note;

         xxiii. The origination, underwriting and collection practices used by
the Seller with respect to each Mortgage Loan have been in all respects legal,
proper, prudent and customary in the subprime mortgage servicing business.

                                      C-10
<PAGE>

         xxiv. There is no pledged account or other security other than real
estate securing the Mortgagor's obligations;

         xxv. No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;

         xxvi. None of the Mortgage Loans provide for primary mortgage
insurance;

         xxvii. The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy with a generally acceptable carrier
that provides for fire extended coverage and coverage of such other hazards as
are customarily covered by hazard insurance policies with extended coverage in
the area where the Mortgaged Property is located representing coverage not less
than the lesser of the outstanding principal balance of the related Mortgage
Loan or the minimum amount required to compensate for damage or loss on a
replacement cost basis. All individual insurance policies and flood policies
referred to in this clause (xxvii) and in clause (xxviii) below contain a
standard mortgagee clause naming the Seller or the original mortgagee, and its
successors in interest, as mortgagee, and the Seller has received no notice that
any premiums due and payable thereon have not been paid; the Mortgage obligates
the Mortgagor thereunder to maintain all such insurance, including flood
insurance, at the Mortgagor's cost and expense, and upon the Mortgagor's failure
to do so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement therefor
from the Mortgagor;

         xxviii. If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as subject to
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood 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 (A) the
original outstanding principal balance of the Mortgage Loan, (B) the minimum
amount required to compensate for damage or loss on a replacement cost basis or
(C) the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973;

         xxix. There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note; and neither the Seller
nor any other entity involved in originating or servicing the Mortgage Loan has
waived any default, breach, violation or event of acceleration;

         xxx. Each Mortgaged Property is improved by a one- to four-family
residential dwelling, including condominium units and dwelling units in planned
unit developments, which, to the best of the Seller's knowledge, does not
include cooperatives and does not constitute property other than real property
under state law. Each manufactured housing constituting any portion of any
Mortgaged Property is a "single family residence" as defined in Section
25(e)(10) of the Code;

         xxxi. There is no obligation on the part of the Seller or any other
party under the terms of the Mortgage or related Mortgage Note to make payments
in addition to those made by the Mortgagor;

                                      C-11
<PAGE>

         xxxii. Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the related Mortgage Loan Schedule. The
consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan;

         xxxiii. Each Mortgage Loan was underwritten in accordance with the
Seller's underwriting guidelines as described in the Prospectus Supplement as
applicable to its credit grade;

         xxxiv. Each appraisal of a Mortgage Loan that was used to determine the
appraised value of the related Mortgaged Property was conducted generally in
accordance with the Seller's underwriting guidelines, and included an assessment
of the fair market value of the related Mortgaged Property at the time of the
appraisal. The Mortgage File contains an appraisal of the applicable Mortgaged
Property;

         xxxv. None of the Mortgage Loans is a graduated payment Mortgage Loan,
nor is any Mortgage Loan subject to a temporary buydown or similar arrangement;

         xxxvi. With respect to each Mortgage Loan, the related Mortgagor shall
not fail to make the first Monthly Payment due under the terms of the Mortgage
Loan by the second succeeding Due Date after the Due Date on which such Monthly
Payment was due;

         xxxvii. Each Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder;

         xxxviii. To the best of the Seller's knowledge no 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;

         xxxix. Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code;

         xl. The information set forth in the Prepayment Charge Schedule is
complete, true and correct in all material respects at the date or dates
respecting with such information is furnished and each Prepayment Charge is
permissible and enforceable in accordance with its terms upon the Mortgagor's
full and voluntary Principal Prepayment (except to the extent that: (1) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally; (2)
the collectability thereof may be limited due to acceleration in connection with
a foreclosure or other involuntary prepayment; or (3) subsequent changes in
applicable law may limit or prohibit enforceability thereof) under applicable
law. No Mortgage Loan has a Prepayment Charge for a term in excess of five years
from the date of its origination;

                                      C-12
<PAGE>

         xli. The Loan-to-Value Ratio for each Mortgage Loan was no greater than
100% at the time of origination;

         xlii. The first date on which each Mortgagor must make a payment on the
related Mortgage Note is no later than 60 days from the date of this Agreement;

         xliii. [Reserved];

         xliv. The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any relevant
jurisdiction, except any as may have been complied with;

         xlv. There are no defaults in complying with the terms of the Mortgage,
and either (1) any taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges or ground rents which previously became due and
owing have been paid, or (2) an escrow of funds has been established in an
amount sufficient to pay for every such item which remains unpaid and which has
been assessed but is not yet due and payable. Except for payments in the nature
of escrow payments, including without limitation, taxes and insurance payments,
the Seller has not advanced funds, or induced, solicited or knowingly received
any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage Note, except
for interest accruing from the date of the Mortgage Note or date of disbursement
of the Mortgage proceeds, whichever is greater, to the day which precedes by one
month the Due Date of the first installment of principal and interest;

         xlvi. There is no proceeding pending, or to best of the Seller's
knowledge threatened, for the total or partial condemnation of the Mortgaged
Property or the taking by eminent domain of any Mortgaged Property;

         xlvii. None of the Mortgage Loans is subject to the Home Ownership and
Equity Protection Act of 1994 or any comparable state law and any breach of this
representation will be deemed to materially and adversely affect the value of
the related loan;

         xlviii. No proceeds from any Mortgage Loans were used to finance
single-premium credit insurance policies;

         xlix. The Seller did not select the Mortgage Loans with the intent to
adversely affect the interests of the Purchaser; and

         l. The Seller has not received any notice that any Mortgagor has field
for any bankruptcy or similar legal protection.

SECTION 7.  Repurchase Obligation for Defective Documentation and for
            Breach of Representation and Warranty.

         (a) The representations and warranties contained in Section 5 (ix) and
Section 6 shall not be impaired by any review and examination of loan files or

                                      C-13
<PAGE>

other documents evidencing or relating to the Mortgage Loans or any failure on
the part of the Seller or the Purchaser to review or examine such documents and
shall inure to the benefit of any assignee, transferee or designee of the
Purchaser, including the Trustee for the benefit of holders of asset-backed
certificates evidencing an interest in all or a portion of the Mortgage Loans.

         Upon discovery by the Seller, the Guarantor the Purchaser or any
assignee, transferee or designee of the Purchaser of any materially defective
document in, or that any material document was not transferred by the Seller (as
listed on the Trustee's initial certification), as part of, any Mortgage File or
of a breach of any of the representations and warranties contained in Section 5
or Section 6 that materially and adversely affects the value of any Mortgage
Loan or the interest of the Purchaser, the Guarantor or the Purchaser's
assignee, transferee or designee in any Mortgage Loan, the party discovering the
breach shall give prompt written notice to the others. Within ninety (90) days
of its discovery or its receipt of notice of any such missing documentation
which was not transferred to the Purchaser as described above or materially
defective documentation or any such breach of a representation and warranty, the
Seller promptly shall deliver such missing document or cure such defect or
breach in all material respects, or in the event the Seller cannot deliver such
missing document or such defect or breach cannot be cured, the Seller shall,
within 90 days of its discovery or receipt of notice, either (i) repurchase the
affected Mortgage Loan at a price equal to the Purchase Price (as defined in the
Pooling and Servicing Agreement) or (ii) pursuant to the provisions of the
Pooling and Servicing Agreement, cause the removal of such Mortgage Loan from
the Trust Fund and substitute one or more Qualified Substitute Mortgage Loans;
provided, however, that in the case of a breach of the representation and
warranty concerning the Mortgage Loan Schedule contained in Section 6(i), if
such breach relates to any field on the Mortgage Loan Schedule which identifies
any Prepayment Charge and such Prepayment Charge has been triggered pursuant to
the terms of the related Mortgage Note, then in lieu of purchasing such Mortgage
Loan from the Trust Fund at the Purchase Price (as defined in the Pooling and
Servicing Agreement), the Seller shall pay the amount of the incorrectly
identified Prepayment Charge (net of any amount previously collected by or paid
to the Trust Fund in respect of such Prepayment Charge), and the Seller shall
have no obligation to repurchase or substitute for such Mortgage Loan. The
Seller shall amend the Closing Schedule to reflect the withdrawal of such
Mortgage Loan from the terms of this Agreement and the Pooling and Servicing
Agreement and the addition, if any, of a Qualified Substitute Mortgage Loan. The
Seller shall deliver to the Purchaser such amended Closing Schedule and shall
deliver such other documents as are required by this Agreement or the Pooling
and Servicing Agreement within five (5) days of any such amendment. Any
repurchase pursuant to this Section 7(a) shall be accomplished by deposit in the
Collection Account of the amount of the Purchase Price (as defined in the
Pooling and Servicing Agreement) in accordance with Section 2.03 of the Pooling
and Servicing Agreement. Any repurchase or substitution required by this Section
shall be made in a manner consistent with Section 2.03 of the Pooling and
Servicing Agreement and any remedy by the Seller for a breach of a
representation or warranty that materially and adversely affects the value of
any Prepayment Charge shall be made in a manner consistent with Section 2.03(c)
of the Pooling and Servicing Agreement.

         (b) It is understood and agreed that the obligations of the Seller set
forth in this Section 7 to cure, repurchase or substitute for a defective
Mortgage Loan constitute the sole remedies of the Purchaser against the Seller

                                      C-14
<PAGE>

respecting a missing or defective document or a breach of the representations
and warranties contained in Section 5 or Section 6.

SECTION 8. Closing; Payment for the Mortgage Loans.

         The closing of the purchase and sale of the Mortgage Loans shall be
held at the Fifth Avenue, New York City office of Heller Ehrman White &
McAuliffe LLP, at 10:00 am New York City time on the Closing Date.

         The Purchaser's obligation to close the transactions contemplated by
this Agreement shall be subject to each of the following conditions:

         (a) All of the representations and warranties of the Seller under this
Agreement shall be true and correct in all material respects as of the date as
of which they are made and no event shall have occurred which, with notice or
the passage of time, would constitute a default under this Agreement;

         (b) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from escrow at the time
of closing), all Closing Documents as specified in Section 9 of this Agreement,
in such forms as are agreed upon and acceptable to the Purchaser, duly executed
by all signatories other than the Purchaser as required pursuant to the
respective terms thereof;

         (c) The Seller shall have delivered or caused to be delivered and
released to the Purchaser or to its designee, all documents (including without
limitation, the Mortgage Loans) required to be so delivered by the Purchaser
pursuant to Section 2.01 of the Pooling and Servicing Agreement; and

         (d) All other terms and conditions of this Agreement to be complied
with by Seller, shall have been complied with.

         Subject to the foregoing conditions, the Purchaser shall deliver or
cause to be delivered to the Seller on the Closing Date, against delivery and
release by the Seller to the Trustee of all documents required pursuant to the
Pooling and Servicing Agreement, the consideration for the Mortgage Loans as
specified in Section 3 of this Agreement, by delivery to the Seller of the
Purchase Price in immediately available funds and delivery of the Long Beach
Certificates to Long Beach Asset Holdings Corp.

SECTION 9.  Closing Documents.

         Without limiting the generality of Section 8 hereof, the closing shall
be subject to delivery of each of the following documents:

         (a) An Officers' Certificate of the Seller, dated the Closing Date,
upon which the Purchaser, Greenwich Capital Markets, Inc., as representative of
the several underwriters (the "Representative") and the Guarantor may rely and

                                      C-15
<PAGE>

attached thereto copies of the certificate of incorporation, by-laws and
certificate of good standing of the Seller under the laws of the State of
Delaware;

         (b) An Officers' Certificate of the Seller, dated the Closing Date,
upon which the Purchaser, the Representative and the Guarantor may rely, with
respect to certain facts regarding the sale of the Mortgage Loans by the Seller
to the Purchaser;

         (c) An Opinion of Counsel of the Seller (which may be in-house counsel
of the Seller), dated the Closing Date and addressed to the Purchaser, the
Representative and the Guarantor;

         (d) Such opinions of counsel as the Rating Agencies, the
Representative, the Trustee, or the Guarantor may reasonably request in
connection with the sale of the Mortgage Loans by the Seller to the Purchaser or
the Seller's execution and delivery of, or performance under, this Agreement;

         (e) A letter from Deloitte & Touche L.L.P., certified public
accountants, dated the date hereof and to the effect that they have performed
certain specified procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature set forth in the
Prospectus Supplement under the captions "Summary of Terms--Mortgage Loans,"
"Risk Factors," "The Mortgage Pool," and "Long Beach Mortgage Company," agrees
with the records of the Seller;

         (f) The Seller shall deliver to the Purchaser for inclusion in the
Prospectus Supplement under the caption "Long Beach Mortgage Company" or for
inclusion in other offering materials, such publicly available information
regarding the Seller, its financial condition and its mortgage loan delinquency,
foreclosure and loss experience, underwriting standards, lending activities and
loan sales, production, and servicing and collection practices, and any similar
nonpublic, unaudited financial information and a computer tape with respect to
the pool information, as the Representative may reasonably request;

         (g) Letters from at least two nationally recognized statistical rating
agencies rating the Offered Certificates (as defined in the Prospectus
Supplement); and

         (h) Such further information, certificates, opinions and documents as
the Purchaser, the Guarantor or the Representative may reasonably request.

SECTION 10.  Costs.

         The Seller shall pay (or shall reimburse the Purchaser or any other
Person to the extent that the Purchaser or such other Person shall pay) all
costs and expenses incurred in connection with the transfer and delivery of the
Mortgage Loans, including without limitation, recording fees, fees for title
policy endorsements and continuations and the fees for recording Assignments,
the fees and expenses of the Seller's in-house accountants and in-house
attorneys, the costs and expenses incurred in connection with determining the
Seller's loan loss, foreclosure and delinquency experience, the costs and
expenses incurred in connection with obtaining the documents referred to in
Sections 9(d) and 9(e), the cost of an opinion of counsel regarding the true

                                      C-16
<PAGE>

sale and non-consolidation of the mortgage loans, the costs and expenses of
printing (or otherwise reproducing) and delivering this Agreement, the Pooling
and Servicing Agreement, the Certificates, the prospectus, the Prospectus
Supplement, the Information Supplement, any blue sky filings and private
placement memorandum relating to the Certificates and other related documents,
costs and expenses of the Trustee, the fees and expenses of the Purchaser's
counsel in connection with the preparation of all documents relating to the
securitization of the Mortgage Loans, the filing fee charged by the Securities
and Exchange Commission for registration of the Certificates, the cost of any
opinions of outside special counsel that may be required for the Seller and the
fees charged by any Rating Agency to rate the Certificates. All other costs and
expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expense.

SECTION 11.  Servicing.

         The Seller has represented to the Purchaser that the Mortgage Loans are
being serviced in accordance with the terms of the Pooling and Servicing
Agreement, and it is understood and agreed by and between the Seller and the
Purchaser that any interim servicing arrangements with the Seller will be
superseded by the servicing arrangements set forth in the Pooling and Servicing
Agreement.

SECTION 12.  Mandatory Delivery; Grant of Security Interest.

         The sale and delivery on the Closing Date of the Mortgage Loans
described on the Mortgage Loan Schedule in accordance with the terms and
conditions of this Agreement is mandatory. It is specifically understood and
agreed that each Mortgage Loan is unique and identifiable on the date hereof and
that an award of money damages would be insufficient to compensate the Purchaser
for the losses and damages incurred by the Purchaser in the event of the
Seller's failure to deliver the Mortgage Loans on or before the Closing Date.
The Seller hereby grants to the Purchaser a lien on and a continuing security
interest in the Seller's interest in each Mortgage Loan and each document and
instrument evidencing each such Mortgage Loan to secure the performance by the
Seller of its obligation hereunder, and the Seller agrees that it holds such
Mortgage Loans in custody for the Purchaser, subject to (i) the Purchaser's
right, prior to the Closing Date, to reject any Mortgage Loan to the extent
permitted by this Agreement and (ii) the Purchaser's obligation to deliver or
cause to be delivered the consideration for the Mortgage Loans pursuant to
Section 8 hereof. Any Mortgage Loans rejected by the Purchaser shall
concurrently therewith be automatically released from the security interest
created hereby. The Seller agrees that, upon acceptance of the Mortgage Loans by
the Purchaser or its designee and delivery of payment to the Seller, that its
security interest in the Mortgage Loans shall be released. All rights and
remedies of the Purchaser under this Agreement are distinct from, and cumulative
with, any other rights or remedies under this Agreement or afforded by law or
equity and all such rights and remedies may be exercised concurrently,
independently or successively.

         Notwithstanding the foregoing, if on the Closing Date, each of the
conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price or shall
not have delivered or caused to be delivered the Long Beach Certificates to Long
Beach Asset Holding Corp., or any such condition shall not have been waived or

                                      C-17
<PAGE>

satisfied and the Purchaser determines not to pay or cause to be paid the
Purchase Price or not to deliver or cause to be delivered the Long Beach
Certificates to Long Beach Asset Holding Corp, the Purchaser shall immediately
effect the re-delivery of the Mortgage Loans, if delivery to the Purchaser has
occurred and the security interest created by this Section 12 shall be deemed to
have been released.

SECTION 13.  Notices.

         All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered to or mailed
by registered mail, postage prepaid, or transmitted by telex or telegraph and
confirmed by a similar mailed writing, if to the Purchaser, addressed to the
Purchaser at 1100 Town & Country Road, Suite 1650, Orange, California 92868,
Attention: General Counsel, or such other address as may hereafter be furnished
to the Seller in writing by the Purchaser; if to the Seller, addressed to the
Seller at 1100 Town & Country Road, Suite 1650, Orange, California 92868,
Attention: General Counsel, or to such other address as the Seller may designate
in writing to the Purchaser.

SECTION 14.  Severability of Provisions.

         Any part, provision, representation or warranty of this Agreement which
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.

SECTION 15.  Agreement of Parties.

         The Seller and the Purchaser each agree to execute and deliver such
instruments (including UCC financing statements and continuation statements) and
take such actions as either of the others may, from time to time, reasonably
request in order to effectuate the purpose and to carry out the terms of this
Agreement and the Pooling and Servicing Agreement.

SECTION 16.  Survival.

         The Seller agrees that the representations, warranties and agreements
made by it herein and in any certificate or other instrument delivered pursuant
hereto shall be deemed to be relied upon by the Purchaser and its successors and
assigns, notwithstanding any investigation heretofore or hereafter made by the
Purchaser or on its behalf, and that the representations, warranties and
agreements made by the Seller herein or in any such certificate or other
instrument shall survive the delivery of and payment for the Mortgage Loans and
shall continue in full force and effect, notwithstanding any restrictive or

                                      C-18
<PAGE>

qualified endorsement on the Mortgage Notes and notwithstanding subsequent
termination of this Agreement, the Pooling and Servicing Agreement or the Trust
Fund.

SECTION 17.  Indemnification, Representative.

         (a) The Seller will indemnify and hold harmless each of (i) the
Purchaser and (ii) each person, if any, who controls the Purchaser within the
meaning of Section 15 of the Securities Act of 1933, as amended (the "1933 Act")
or the Securities Exchange Act of 1934, as amended (the "1934 Act") ((i) and
(ii) together, the "Indemnified Party") against any and all losses, claims,
expenses, damages or liabilities, to which the Indemnified Party may become
subject, under the 1933 Act or otherwise, and will reimburse each Indemnified
Party for any legal or other expenses incurred by the Indemnified Party in
connection with investigating or defending any such loss, claim, expenses,
damage, liability or action insofar as such losses, claims, expenses, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Prospectus Supplement dated September ___, 2001 (the "Prospectus
Supplement"), as amended or supplemented, relating to the public offering of the
Class A-2 Certificates, the Class S-2 Certificates and the Mezzanine
Certificates, representing interests in the Mortgage Loans, or in any other
offering document (the "Private Placement Memorandum") relating to the offering
by the Purchaser or an affiliate thereof, of the Class C, Class P and Class R
Certificates, or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances in which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with (i) information furnished in writing to the
Purchaser or any of its affiliates by the Seller specifically for use therein,
which shall include, with respect to the Prospectus Supplement, the information
set forth under the captions "Summary of Terms--Mortgage Loans," "Risk Factors"
(but only to the extent that the information under "Risk Factors" has been
furnished by the Seller), "The Mortgage Pool" and "Long Beach Mortgage Company"
and, with respect to any Private Placement Memorandum, any information of a
comparable nature, (ii) the data files containing information with respect to
the Mortgage Loans as transmitted electronically to the Purchaser by the Seller
or any of its affiliates (as such transmitted information may have been amended
in writing by the Seller or any of its affiliates and received by the Purchaser
subsequent to transmission) specifically for use therein, which shall include,
with respect to the Prospectus Supplement, the information set forth under the
captions "Summary of Terms--Mortgage Loans," "Risk Factors" (but only to the
extent that the information under "Risk Factors" has been furnished by the
Seller) and "The Mortgage Pool" and, with respect to any Private Placement
Memorandum, any information of a comparable nature or (iii) any representation,
warranty or covenant made by the Seller or any affiliate of the Seller in this
Agreement and the Pooling and Servicing Agreement, on which the Indemnified
Party has relied ((i) through (iii) collectively "Seller Information"), provided
however, that to the extent that any such losses, claims, expenses, damages or
liabilities to which the Indemnified Party may become subject arise out of or
are based upon both (1) statements, omissions, representations, warranties or
covenants of the Seller described above and (2) any other factual basis, the
Seller shall indemnify and hold harmless the Indemnified Party only to the
extent that the losses, claims expenses, damages or liabilities of the person or
persons asserting the claim are determined to arise from or be based only upon

                                      C-19
<PAGE>

matters set forth in clause (1) above. The Seller's liability under this Section
17 shall be in addition to any other liability the Seller may otherwise have.

         (b) The Purchaser agrees to indemnify and hold harmless the Seller, its
officers and its directors, and each person who controls the Seller within the
meaning of either the 1933 Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the 1933
Act, or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Prospectus
Supplement, the prospectus or Private Placement Memorandum, or in any revision
or amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made therein in reliance upon
and in conformity with the Seller's Information and will reimburse the Seller
and any controlling person for any legal or other expenses reasonably incurred
by such Seller and any controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. The Purchaser's
liability under this Section 17 shall be in addition to any other liability the
Purchaser may otherwise have.

         (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either Section 17(a) or 17(b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party. It is understood that
the indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by the Purchaser, in the case of parties
indemnified pursuant to clause 17(a) and by the Seller, in the case of parties
indemnified pursuant to clause 17(b). The indemnifying party may, at its option,
at any time upon written notice to the indemnified party, assume the defense of
any proceeding and may designate counsel satisfactory to the indemnified party
in connection therewith provided that the counsel so designated would have no
actual or potential conflict of interest in connection with such representation.
Unless it shall assume the defense of any proceeding, the indemnifying party
shall not be liable for any settlement of any proceeding effected without its

                                      C-20
<PAGE>

written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. If the indemnifying party assumes the defense of any
proceeding, it shall be entitled to settle such proceeding with the prior
written consent of the indemnified party or, if (i) such settlement does not
include a statement as to, or on admission of fault, culpability or failure to
act by or on behalf of the indemnified party and (ii) such settlement provides
for an unconditional release of the indemnified party in connection with all
matters relating to the proceeding which have been asserted against the
indemnified party in such proceeding by the other parties to such settlement,
without the prior written consent of the indemnified party.

         (d) If the indemnification provided for in this Section 17 is
unavailable to an indemnified party under Section 17(a) or 17(b) hereof or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities, in
such proportion as is appropriate to reflect the relative fault of the
indemnified and indemnifying parties in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
indemnified and indemnifying parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

         (e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 17 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Seller on grounds of policy or otherwise, the
Seller on the one hand and the Purchaser on the other hand shall contribute to
the aggregate losses, claims, damages and liabilities (including legal and other
expenses reasonably incurred in connection with investigating or defending same)
(collectively, "Losses") to which the Seller on the one hand and the Purchaser
on the other hand may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Seller on the one hand and the Purchaser
on the other hand from the sale of the Mortgage Loans; provided, however, that
in no case shall the Purchaser be responsible for any amount in excess of ____%
of the aggregate initial principal balance of the Mortgage Loans. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Seller on the one hand and the Purchaser on the other hand shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Seller on the one hand and
the Purchaser on the other hand in connection with the statements or omissions
that resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Seller shall be deemed to be equal to
the total net proceeds from the sale (before deducting expenses) plus the value
of all Certificates retained by the Seller or one of its affiliates and benefits
received by the Purchaser shall be deemed to be equal to ____% of the aggregate
initial principal balance of the Mortgage Loans. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to the information provided by the Seller on the one hand or the

                                      C-21
<PAGE>

Purchaser on the other hand. The Seller and the Purchaser agree that it would
not be just and equitable if contribution were determined by pro rata allocation
or any other method of allocation that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
subsection (e) the Representative shall not be required to contribute any amount
in excess of the amount by which the total price at which the related Offered
Certificates (as defined in the Prospectus Supplement) underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Representative has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 17, each person, if any, who controls the Purchaser within the meaning
of the Securities Act or the 1934 Act and each director, officer, employee and
agent of the Purchaser shall have the same rights to contribution as the
Purchaser, and each person, if any, who controls the Seller within the meaning
of either the Securities Act or the 1934 Act and each director of the Seller
shall have the same rights to contribution as the Seller, subject in each case
to the applicable terms and conditions of this paragraph 17(e).

         (f) The indemnity and contribution agreements contained in this Section
17 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by the Purchaser or
any person controlling the Purchaser or by or on behalf of the Seller and their
respective directors or officers or any person controlling the Seller, and (iii)
acceptance of and payment for any of the Certificates.

SECTION 18.  Indemnification, Guarantor.

         (a) [reserved]

SECTION 19.  GOVERNING LAW.

         THIS AGREEMENT AND THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES
OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS AND DECISIONS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF
LAW PRINCIPLES. THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.

SECTION 20.  Miscellaneous.

         This Agreement may be executed in two or more counterparts, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof. Neither
this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is

                                      C-22
<PAGE>

sought. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.

         It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Seller to the Purchaser as provided in Section 4
hereof be, and be construed as, a sale of the Mortgage Loans by the Seller to
the Purchaser and not as a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. However, in the
event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then, (a) it is the
express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller and (b) (1) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code; (2) the conveyance provided for in Section 4 hereof
shall be deemed to be a grant by the Seller to the Purchaser of a security
interest in all of the Seller's right, title and interest in and to the Mortgage
Loans 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, other than investment
earnings, from time to time held or invested in the Collection Account whether
in the form of cash, instruments, securities or other property; (3) the
possession by the Purchaser or its agent of Mortgage Notes, the related
Mortgages and such other items of property that constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York Uniform Commercial Code; and (4) 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 Purchaser for the purpose of perfecting
such security interest under applicable law. Any assignment of the interest of
the Purchaser pursuant to Section 4(d) hereof shall also be deemed to be an
assignment of any security interest created hereby. The Seller and the Purchaser
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement and the Pooling and
Servicing Agreement.

SECTION 21.  Third Party Beneficiary.

         The Trustee shall be a third party beneficiary hereof (except with
respect to Section 17 and Section 18) and shall be entitled to enforce the
provisions hereof as if a party hereto, except the provisions of Section 17 and
Section 18 hereof. The Representative, on behalf of the underwriters, shall be a
third party beneficiary hereof solely with respect to Section 17 and shall be
entitled to enforce the provisions of Section 17 as if it were a party hereto.
The Guarantor shall be a third party beneficiary hereof solely with respect to
Section 18 and shall be entitled to enforce the provisions of Section 18 as if
it were a party hereto.

                                      C-23
<PAGE>

         IN WITNESS WHEREOF, the Purchaser and the Seller have caused their
names to be signed by their respective officers thereunto duly authorized as of
the date first above written.

                               LONG BEACH SECURITIES CORP.

                               By:
                                  -----------------------------------------
                               Name:   Jeffery A. Sorensen
                               Title:  Vice President

                               LONG BEACH MORTGAGE COMPANY

                               By:
                                  -----------------------------------------
                               Name:   Jeffery A. Sorensen
                               Title:  Vice President

                                      C-24
<PAGE>

                                    EXHIBIT 1

         Pool Characteristics of the Mortgage Loans as delivered on the Closing
Date:

         All percentages set forth herein are based upon the aggregate Principal
Balance as of the Cut-off Date.

         (1) No Group I Mortgage Loan or Group II Mortgage Loan had a
Loan-to-Value Ratio at origination in excess of approximately ____% and ____%,
respectively;

         (2) No more than approximately ____% and ____% of the Group I Mortgage
Loans and Group II Mortgage Loans, respectively, are related to Mortgaged
Properties located in any one zip code area;

         (3) Each Mortgaged Property related to a Group I Mortgage Loan and
Group II Mortgage Loan, respectively, is located in one of the states listed in
the chart entitled "Geographic Distribution of the Mortgaged Properties relating
to the Group I Mortgage Loans" and "Geographic Distribution of the Mortgaged
Properties relating to the Group II Mortgage Loans," respectively, in the
Prospectus Supplement;

         (4) No more than approximately ____% and ____% of the Group I Mortgage
Loans and Group II Mortgage Loans, respectively, are secured by condominium
units and all condominium Mortgage Loans have been originated on a form
acceptable to Fannie Mae or Freddie Mac with such riders as have been acceptable
to Fannie Mae or Freddie Mac, as the case may be;

         (5) No more than approximately ____% and ____% of the Group I Mortgage
Loans and Group II Mortgage Loans, respectively, are secured by two- to
four-family dwellings. No more than approximately ____% of the Group I Mortgage
Loans are secured by town houses. None of the Group II Mortgage Loans are
secured by town houses. No more than approximately ____% of the Group I Mortgage
Loans are secured by manufactured housing. None of the Group II Mortgage Loans
are secured by manufactured housing. No more than approximately ____% and ____%
of the Group I Mortgage Loans and Group II Mortgage Loans, respectively, are
secured by dwelling units in PUDs. None of the Mortgage Loans are secured by
mobile homes;

         (6) No Group I Mortgage Loan or Group II Mortgage Loan had a principal
balance in excess of approximately $__________ and $__________, respectively, at
origination;

         (7) Each Mortgage Loan has a first Due Date on or after September___,
2001 and each Adjustable Rate Mortgage Loan has a next Adjustment Date no later
than ________ 2006;

         (8) On the basis of representations made by the Mortgagors in their
loan applications, no more than approximately ____% and ____% of the Group I
Mortgage Loans and Group II Mortgage Loans, respectively, are secured by
non-owner occupied properties and at least approximately ____% and ____% of the
Group I Mortgage Loans and Group II Mortgage Loans, respectively, are
owner-occupied Mortgaged Properties;

                                      I-1
<PAGE>

         (9) The Mortgage Rates borne by the Group I Mortgage Loans and Group II
Mortgage Loans as of the Cut-off Date ranged from approximately ____% and ____%
per annum, respectively, to approximately ____% and ____% per annum
respectively, and the weighted average Mortgage Rate as of the Cut-off Date was
approximately ____% and ____% per annum respectively;

         (10) Approximately ____% and ____% of the Group I Mortgage Loans and
Group II Mortgage Loans, respectively, were rate/term refinancings,
approximately ____% and ____% of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were cash out refinancings and approximately ____%
and ____% of the Group I Mortgage Loans and Group II Mortgage Loans,
respectively, were made to purchase the related Mortgaged Properties;

         (11) As of the Cut-off Date, the Gross Margins for the Group I Mortgage
Loans and the Group II Mortgage Loans (which are Adjustable Rate Mortgage Loans)
range from approximately ____% and ____% to approximately, ____% and ____% per
annum, respectively, and the weighted average Gross Margin for the Group I
Mortgage Loan and the Group II Mortgage Loans (which are Adjustable Rate
Mortgage Loans) as of the Cut-off Date was approximately ____% and ____%,
respectively;

         (12) No less than approximately ____% and ____% of the Group I Mortgage
Loans and Group II Mortgage Loans, respectively, were originated by the Seller
under the Seller's "Full Documentation" mortgage loan program, no more than
approximately ____% and ____% of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were originated by the Seller under the Seller's
"Limited Documentation" mortgage loan program and no more than approximately
____% and ____% of the Group I Mortgage Loans and Group II Mortgage Loans,
respectively, were originated by the Seller under the Seller's "Stated Income
Documentation" mortgage loan program;

         (13) With respect to the Seller's underwriting risk categories,
approximately ____%, ____%, ____%, ____% and ____% of the Group I Mortgage Loans
constitute "A-" Risk Mortgage Loans, "B" Risk Mortgage Loans, "B-" Risk Mortgage
Loans, "C" Risk Mortgage Loans and "D" Risk Mortgage Loans, respectively and
approximately ____%, ____%, ____%, ____% and ____% of the Group II Mortgage
Loans constitute "A-" Risk Mortgage Loans, "B" Risk Mortgage Loans, "B-" Risk
Mortgage Loans, "C" Risk Mortgage Loans and "D" Risk Mortgage Loans,
respectively; and

         (14) As of the Cut-off Date, there were no Group I Mortgage Loans or
Group II Mortgage Loans with respect to which the monthly payment due thereon in
___________ 2001 had not been made and none of the Mortgage Loans has been
contractually delinquent for more than 30 days more than once during the
preceding twelve months and, except as provided above, no Mortgage Loan has ever
experienced a delinquency of 60 or more days since the origination thereof.

                                      I-2
<PAGE>

                                   EXHIBIT D

                             MORTGAGE LOAN SCHEDULE

                                [FILED BY PAPER]

                                       D-1

<PAGE>

                                   EXHIBIT E-1

                               REQUEST FOR RELEASE
                             (for Trustee/Custodian)

Loan Information

         Name of Mortgagor:
                              --------------------------------------------

         Master Servicer
         Loan No.:
                              --------------------------------------------

Trustee/Custodian

         Name:
                              --------------------------------------------

         Address:
                              --------------------------------------------

         Trustee/Custodian
         Mortgage File No.:
                              --------------------------------------------

Depositor

         Name:                LONG BEACH SECURITIES CORP.

         Address:
                              --------------------------------------------

         Certificates:        Long Beach Mortgage Certificates, Series 2001-3.

                                      E-1
<PAGE>

         The undersigned Master Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of Long Beach
Mortgage Loan Trust 2001-3, Asset-Backed Certificates, Series 2001-3, the
documents referred to below (the "Documents"). All capitalized terms not
otherwise defined in this Request for Release shall have the meanings given them
in the Pooling and Servicing Agreement, dated as of September___, 2001, among
the Trustee, the Depositor, Federal National Mortgage Association and the Master
Servicer (the "Pooling and Servicing Agreement").

(a) Promissory Note dated _______________, 20__, in the original principal sum
of $__________, made by ___________________, payable to, or endorsed to the
order of, the Trustee.

(b) Mortgage recorded on _____________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________ in book/reel/docket _________________
of official records at page/image _____________.

(c) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ______________.

(d) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County Recorder's Office
of the County of _______________, State of _______________________ in
book/reel/docket ____________ of official records at page/image ____________.

(e) Other documents, including any amendments, assignments or other assumptions
of the Mortgage Note or Mortgage.

(f)
    ---------------------------------------------

(g)
    ---------------------------------------------

(h)
    ---------------------------------------------

(i)
    ---------------------------------------------

         The undersigned Master Servicer hereby acknowledges and agrees as
follows:

         (1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.

         (2) The Master Servicer shall not cause or permit the Documents to
become subject to, or encumbered by, any claim, liens, security interest,
charges, writs of attachment or other impositions nor shall the Master Servicer
assert or seek to assert any claims or rights of setoff to or against the
Documents or any proceeds thereof.

                                      E-2
<PAGE>

         (3) The Master Servicer shall return each and every Document previously
requested from the Mortgage File to the Trustee when the need therefor no longer
exists, unless the Mortgage Loan relating to the Documents has been liquidated
and the proceeds thereof have been remitted to the Collection Account and except
as expressly provided in the Agreement.

         (4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Master Servicer shall at
all times be ear-marked for the account of the Trustee, and the Master Servicer
shall keep the Documents and any proceeds separate and distinct from all other
property in the Master Servicer's possession, custody or control.

Dated:

                            LONG BEACH MORTGAGE COMPANY

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

                                      E-3
<PAGE>

                                   EXHIBIT E-2

                               REQUEST FOR RELEASE
                          [Mortgage Loans Paid in Full]

                     OFFICERS' CERTIFICATE AND TRUST RECEIPT
                     MORTGAGE LOAN PASS-THROUGH CERTIFICATES
                                  SERIES 2001-3

____________________________________________________ HEREBY CERTIFIES
THAT HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH
BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:

WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.

LOAN NUMBER:                     BORROWER'S NAME:
            -------------------                  ----------------------------

COUNTY:
       ------------------------

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
[3.10] OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.

                                     DATED:
                                           ---------------------------------

--------------------------------------------
/ / VICE PRESIDENT

/ / ASSISTANT VICE PRESIDENT

                                      E-4
<PAGE>

                                   EXHIBIT F-1

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                                [Date]

Long Beach Securities Corp.                     Long Beach Mortgage Company
1100 Town & Country Road                        1100 Town & Country Road
Orange, California 92868                        Orange, California 92868

Federal National Mortgage Association
3900 Wisconsin Avenue, NW
Washington, DC  20016

         Re:      Pooling and Servicing Agreement (the "Pooling and Servicing
                  Agreement"), dated as of September 1, 2001 among Long Beach
                  Securities Corp., Long Beach Mortgage Company, Federal
                  National Mortgage Association and Bankers Trust Company of
                  California, N.A., Long Beach Mortgage Loan Trust 2001-3,
                  Asset-Backed Certificates, Series 2001-3

Ladies and Gentlemen:

         Pursuant to Section 2.02 of the Pooling and Servicing Agreement, the
undersigned, as Trustee, hereby acknowledges receipt of each Mortgage File and
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 specifically
identified in the exception report annexed hereto as not being covered by this
certification), (i) all documents constituting part of such Mortgage File (other
than such documents described in Section 2.01(e) of the Pooling and Servicing
Agreement) required to be delivered to it pursuant to the Pooling and Servicing
Agreement are in its possession, (ii) such documents have been reviewed by it
and are not mutilated, torn or defaced unless initialed by the related borrower
and relate to such Mortgage Loan and (iii) based on its examination and only as
to the foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i), (ii), (ix), (xii), (xiv) (to the extent of the
Periodic Rate Cap for the first Adjustment Date and subsequent Adjustment Dates)
and (xvi) of the definition of "Mortgage Loan Schedule" of the Pooling and
Servicing Agreement accurately reflects information set forth in the Mortgage
File.

         The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
due authorization, recordability or genuineness of any of the documents
contained in the Mortgage File of any of the Mortgage Loans identified on the

                                      F-1
<PAGE>

Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan.

                               BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

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

                                      F-2
<PAGE>

                                   EXHIBIT F-2

                       FORM OF TRUSTEE FINAL CERTIFICATION

                                               [Date]

Long Beach Securities Corp.                    Long Beach Mortgage Company
1100 Town & Country Road                       1100 Town & Country Road
Orange, California 92868                       Orange, California 92868

Federal National Mortgage Association
3900 Wisconsin Avenue, NW
Washington, DC  20016

         Re:      Pooling and Servicing Agreement (the "Pooling and Servicing
                  Agreement"), dated as of September 1, 2001 among Long Beach
                  Securities Corp., Long Beach Mortgage Company, Federal
                  National Mortgage Association and Bankers Trust Company of
                  California, N.A., Long Beach Mortgage Loan Trust 2001-3,
                  Asset-Backed Certificates, Series 2001-3

Ladies and Gentlemen:

         In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto), it or a Custodian on its
behalf has received:

                  (a) the original Mortgage Note, endorsed in blank or in the
         following form: "Pay to the order of Bankers Trust Company of
         California, N.A., as Trustee under the applicable agreement, without
         recourse," with all prior and intervening endorsements showing a
         complete chain of endorsement from the originator to the Person so
         endorsing to the Trustee or a copy of such original Mortgage Note with
         an accompanying Lost Note Affidavit executed by the Seller;

                  (b) the original Mortgage with evidence of recording thereon,
         and a copy, certified by the appropriate recording office, of the
         recorded power of attorney, if the Mortgage was executed pursuant to a
         power of attorney, with evidence of recording thereon;

                  (c) an original Assignment in blank;

                  (d) the original recorded Assignment or Assignments
         showing a complete chain of assignment from the originator to the
         Person assigning the Mortgage to the Trustee or in blank;

                  (e) the original or copies of each assumption,
         modification, written assurance or substitution agreement, if any; and

                                      F-3
<PAGE>

                  (f) the original lender's title insurance policy, together
         with all endorsements or riders issued with or subsequent to the
         issuance of such policy, insuring the priority of the Mortgage as a
         first lien or second lien on the Mortgaged Property represented therein
         as a fee interest vested in the Mortgagor, or in the event such
         original title policy is unavailable, a written commitment or uniform
         binder or preliminary report of title issued by the title insurance or
         escrow company.

         The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                          BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

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

                                      F-4

<PAGE>

                                    EXHIBIT G

                                   [Reserved]

                                       G-1

<PAGE>

                                    EXHIBIT H

                           FORM OF LOST NOTE AFFIDAVIT

         Personally appeared before me the undersigned authority to administer
oaths, __________ who first being duly sworn deposes and says: Deponent is
__________ of __________ , successor by merger to __________ ("Seller") and who
has personal knowledge of the facts set out in this affidavit.

On __________, __________ did execute and deliver a promissory note in the
principal amount of $__________.

         That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.

         Seller executes this Affidavit for the purpose of inducing Bankers
Trust Company of California, N.A., as Trustee on behalf of Long Beach Mortgage
Loan Trust 2001-3, to accept the transfer of the above described loan from
Seller.

         Seller agrees to indemnify Bankers Trust Company of California, N.A.,
Long Beach Securities Corp. and Long Beach Mortgage Corporation harmless for any
losses incurred by such parties resulting from the above described promissory
note has been lost or misplaced.

By:
     ---------------------------------------

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

STATE OF                                    )
                                            )   SS:
COUNTY OF                                   )

         On this ______ day of ______________, 20_, before me, a Notary Public,
in and for said County and State, appeared ____________________, who
acknowledged the extension of the foregoing and who, having been duly sworn,
states that any representations therein contained are true.

         Witness my hand and Notarial Seal this _________ day of 20__.

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

------------------------------------------
My commission expires                     .
                      --------------------

                                      H-1
<PAGE>

                                    EXHIBIT I
                          FORM OF ERISA REPRESENTATION

Long Beach Securities Corp.
1100 Town & Country Road
Orange, California 92868

Bankers Trust Company of California, N.A.
1761 East St. Andrew Place
Santa Ana, California 92705

         Re:      Long Beach Mortgage Loan Trust 2001-3, Asset-Backed
                  Certificates, Series 2001-3
                  -----------------------------------------------------

Ladies and Gentlemen:

         ___________________ (the "Transferee") intends to acquire from
__________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of Long Beach Mortgage Loan Trust 2001-3, Asset-Backed
Certificates, Series 2001-3, [Class C, Class P, Class R] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement dated as of September 1,
2001 (the "Agreement") among the Depositor, Long Beach Mortgage Company, as
master servicer (the "Master Servicer"), Federal National Mortgage Association,
as guarantor with respect to the Class A-1 Certificates and the Class S-1
Certificates, and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). Capitalized terms used herein and not otherwise defined shall have
the meanings assigned thereto in the Pooling and Servicing Agreement. The
Transferee hereby certifies, represents and warrants to, and covenants with the
Depositor, the Trustee, Federal National Mortgage Association and the Master
Servicer that the following statements in either (1) or (2) are accurate:

         _____ (1) The Certificates (i) are not being acquired by, and will not
         be transferred to, any employee benefit plan within the meaning of
         section 3(3) of the Employee Retirement Income Security Act of 1974, as
         amended ("ERISA"), or other retirement arrangement, including
         individual retirement accounts and annuities, Keogh plans and bank
         collective investment funds and insurance company general or separate
         accounts in which such plans, accounts or arrangements are invested,
         that is subject to Section 406 of ERISA or Section 4975 of the Internal
         Revenue Code of 1986 (the "Code") (any of the foregoing, a "Plan"),
         (ii) are not being acquired with "plan assets" of a Plan within the
         meaning of the Department of Labor ("DOL") regulation, 29 C.F.R. ss.
         2510.3-101, and (iii) will not be transferred to any entity that is
         deemed to be investing in plan assets within the meaning of the DOL
         regulation at 29 C.F.R. ss. 2510.3-101; or

         _____ (2) The Transferee will provide an Opinion of Counsel to the
         Depositor, the Trustee, the Trustee and the Master Servicer which
         establishes to the satisfaction of the Depositor, the Trustee and the
         Master Servicer that the purchase of such Certificates is permissible
         under applicable law, will not constitute or result in any prohibited
         transaction under ERISA or Section 4975 of the Code and will not
         subject the Depositor, the Master Servicer, the Trustee, the Trustee or
         the Trust Fund to any obligation or liability (including obligations or

                                      I-1
<PAGE>

         liabilities under ERISA or Section 4975 of the Code) in addition to
         those undertaken in this Agreement.

         IN WITNESS WHEREOF, the Transferee executed this certificate.

                                 --------------------------------------------
                                 [Transferee]

                                 By:
                                     ----------------------------------------

                                 Name:
                                       --------------------------------------

                                 Title:
                                        -------------------------------------

                                      I-2
<PAGE>

                                   EXHIBIT J

                   FORM OF INVESTMENT LETTER [NON-RULE 144A]

                                     [DATE]

Long Beach Securities Corp.
1100 Town & Country Road
Orange, California 92868

Bankers Trust Company of California, N.A.
1761 East St. Andrew Place
Santa Ana, California 92705

                  Re:      Long Beach Mortgage Loan Trust 2001-3,
                           Asset-Backed Certificates Series 2001-3
                           ---------------------------------------

Ladies and Gentlemen:

         In connection with our acquisition of the above-captioned Certificates,
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) 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, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or

                                      J-1
<PAGE>

transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.

                                 Very truly yours,

                                 [NAME OF TRANSFEREE]

                                 By:
                                     ---------------------------------------
                                                Authorized Officer

                                      J-2
<PAGE>

                       FORM OF RULE 144A INVESTMENT LETTER

                                     [DATE]

Long Beach Securities Corp.
1100 Town & Country Road
Orange, California 92868

Bankers Trust Company of California, N.A.
1761 East St. Andrew Place
Santa Ana, California 92705

                  Re:      Long Beach Mortgage Loan Trust 2001-3,
                           Asset-Backed Certificates Series 2001-3
                           ----------------------------------------

Ladies and Gentlemen:

         In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we are not an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or a plan that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor
are we acting on behalf of any such plan, (d) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (e) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the

                                      J-3
<PAGE>

account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.

                                Very truly yours,

                                [NAME OF TRANSFEREE]

                                By:
                                    ----------------------------------------
                                               Authorized Officer

                                      J-4
<PAGE>

                                                           ANNEX 1 TO EXHIBIT J

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.

         2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $________(1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.

         _____ Corporation, etc. The Buyer is a corporation (other than a bank,
         savings and loan association or similar institution), Massachusetts or
         similar business trust, partnership, or charitable organization
         described in Section 501(c)(3) of the Internal Revenue Code of 1986, as
         amended.

         _____ Bank. The Buyer (a) is a national bank or banking institution
         organized under the laws of any State, territory or the District of
         Columbia, the business of which is substantially confined to banking
         and is supervised by the State or territorial banking commission or
         similar official or is a foreign bank or equivalent institution, and
         (b) has an audited net worth of at least $25,000,000 as demonstrated in
         its latest annual financial statements, a copy of which is attached
         hereto.

         _____ Savings and Loan. The Buyer (a) is a savings and loan
         association, building and loan association, cooperative bank, homestead
         association or similar institution, which is supervised and examined by
         a State or Federal authority having supervision over any such
         institutions or is a foreign savings and loan association or equivalent
         institution and (b) has an audited net worth of at least $25,000,000 as
         demonstrated in its latest annual financial statements, a copy of which
         is attached hereto.

         _____ Broker-dealer.  The Buyer is a dealer registered pursuant to
         Section 15 of the Securities Exchange Act of 1934.

--------

(1) Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.

                                       J-5
<PAGE>

         _____ Insurance Company. The Buyer is an insurance company whose
         primary and predominant business activity is the writing of insurance
         or the reinsuring of risks underwritten by insurance companies and
         which is subject to supervision by the insurance commissioner or a
         similar official or agency of a State, territory or the District of
         Columbia.

         _____ State or Local Plan. The Buyer is a plan established and
         maintained by a State, its political subdivisions, or any agency or
         instrumentality of the State or its political subdivisions, for the
         benefit of its employees.

         _____ ERISA Plan. The Buyer is an employee benefit plan within the
         meaning of Title I of the Employee Retirement Income Security Act of
         1974.

         _____ Investment Advisor.  The Buyer is an investment advisor
         registered under the Investment Advisors Act of 1940.

         _____ Small Business Investment Company. Buyer is a small business
         investment company licensed by the U.S. Small Business Administration
         under Section 301(c) or (d) of the Small Business Investment Act of
         1958.

         _____ Business Development Company.  Buyer is a business development
         company as defined in Section 202(a)(22) of the Investment Advisors Act
         of 1940.

         3. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.

         4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

         5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

                                      J-6
<PAGE>

         6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                              --------------------------------------------
                                           Print Name of Buyer

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

                              Date:
                                   ---------------------------------------

                                      J-7
<PAGE>

                                                          ANNEX 2 TO EXHIBIT J

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.

         2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyers Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

         _____ The Buyer owned $_________ in securities (other than the excluded
         securities referred to below) as of the end of the Buyer's most recent
         fiscal year (such amount being calculated in accordance with Rule
         144A).

         _____ The Buyer is part of a Family of Investment Companies which owned
         in the aggregate $___________ in securities (other than the excluded
         securities referred to below) as of the end of the Buyer's most recent
         fiscal year (such amount being calculated in accordance with Rule
         144A).

         3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

         4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

                                      J-8
<PAGE>

         5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

         6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

                             --------------------------------------------
                                     Print Name of Buyer or Adviser

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

                             IF AN ADVISER:

                             --------------------------------------------
                                       Print Name of Buyer

                             Date:
                                  ---------------------------------------

                                      J-9

<PAGE>

                                   EXHIBIT K

                        TRANSFER AFFIDAVIT AND AGREEMENT

                     LONG BEACH MORTGAGE LOAN TRUST 2001-3,
                    ASSET-BACKED CERTIFICATES, SERIES 2001-3

STATE OF CALIFORNIA        )
                           ) ss.:
COUNTY OF ORANGE           )

         The undersigned, being first duly sworn, deposes and says as follows:

         1. The undersigned is an officer of ________________________, the
proposed Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Certificates, among Long Beach
Securities Corp., as depositor (the "Depositor"), Long Beach Mortgage Company,
as master servicer (the "Master Servicer"), Federal National Mortgage
Association, as guarantor with respect to the Class A-1 Certificates and Class
S-1 Certificates, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"). Capitalized terms used, but not defined herein shall have the
meanings ascribed to such terms in the Agreement. The Transferee has authorized
the undersigned to make this affidavit on behalf of the Transferee.

         2. The Transferee is, as of the date hereof and will be, as of the date
of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.

         3. The Transferee has been advised and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) of
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.

         4. The Transferee has been advised and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)

                                      K-1
<PAGE>

         5. The Transferee has reviewed the provisions of Section 5.02(d) of the
Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.

         6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit L to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.

         7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.

         8. The Transferee's taxpayer identification number is 33-0882187.

         9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).

         10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest
will remain liable for any taxes due with respect to the income on such residual
interest, if a significant purpose of the transfer was to impede the assessment
or collection of tax. The Transferee understands that, as the holder of a
noneconomic residual interest, the Transferee may incur tax liabilities in
excess of any cash flows generated by the Certificate. The Transferee intends to
pay taxes associated with holding the Certificate as they become due.

         11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor is it acting on
behalf of such a plan.

                                      K-2
<PAGE>

         IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
Vice President, attested by its Assistant Secretary, this ___ day of September,
2001.

                             [Transferee NAME]

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

[Corporate Seal]

ATTEST:

--------------------------------------
[Assistant] Secretary

         Personally appeared before me the above-named ____________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ____________________ of the Transferee, and
acknowledged that he executed the same as his free act and deed and the free act
and deed of the Transferee.

         Subscribed and sworn before me this ____ day of September, 2001.

                                            -----------------------------------
                                                      NOTARY PUBLIC
                                                My Commission expires the
                                                day of _____________, 20__.

                                      K-3

<PAGE>

                                    EXHIBIT L

                         FORM OF TRANSFEROR CERTIFICATE

                                     [DATE]

Long Beach Securities Corp.
1100 Town & Country Road
Orange, California 92868

                  Re:      Long Beach Mortgage Loan Trust 2001-3,
                           Asset-Backed Certificates Series 2001-3
                           ----------------------------------------

Ladies and Gentlemen:

         In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of a Class [ ] Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [ ] Certificate is to impede the assessment or collection
of tax.

                                  Very truly yours,

                                  TRANSFEROR

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

                                       L-1

<PAGE>

                                   SCHEDULE I

                          PREPAYMENT PREMIUM SCHEDULE

                            [AVAILABLE UPON REQUEST]

                                       I-1

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