Document:

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                                                                    EXHIBIT 10.3

                            FORM OF NOVEMBER WARRANT

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE WARRANT UNDER SUCH ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO GENAERA CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.

                               GENAERA CORPORATION

               WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK

No. W-[   ]                                                       [    ] Shares

     THIS CERTIFIES that, for value received, Genaera Corporation, a Delaware
corporation (the "Company"), upon the surrender of this Warrant to the Company
at the address specified herein, at any time during the Exercise Period (as
defined below) will upon receipt of the Exercise Price (as defined below), sell
and deliver to [ ] (the "Holder") up to the number of duly authorized, validly
issued and fully paid and nonassessable shares of common stock of the Company,
par value $0.002 per share, set forth above. The term "Common Stock" shall mean
the aforementioned common stock of the Company together with any other equity
securities that may be issued by the Company in connection therewith or in
substitution therefor, as provided herein, that is not limited as to final sum
or percentage in respect of the rights of the holders thereof to participate in
dividends or in distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company. Except as set forth in
Section A of this Warrant, the "Exercise Period" shall begin on November 23,
2004 and shall end on May 23, 2008. During the Exercise Period, the Holder may
purchase such number of shares of Common Stock at a purchase price per share
equal to $1.37 as appropriately adjusted pursuant to Section H hereof (the
"Exercise Price").

     The number of shares of Common Stock to be received upon the exercise of
this Warrant and the price to be paid for a share of Common Stock are subject to
adjustment from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares."

<PAGE>

Section A. Exercise of Warrant. This Warrant may be exercised in whole or in
part, at any time or from time to time, during the Exercise Period by
presentation and surrender hereof to the Company at its principal office at 5110
Campus Drive, Plymouth Meeting, Pennsylvania 19462 (or at such other address as
the Company or its agent may hereafter designate in writing to the Holder), or
at the office of its warrant agent, with the Notice of Exercise Form contained
herein duly executed and accompanied by a wire transfer of immediately available
funds, cash or a certified or official bank check drawn to the order of "Genaera
Corporation" in the amount of the Exercise Price multiplied by the number of
Warrant Shares specified in such form. If this Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant, promptly execute
and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of the Warrant Shares purchasable hereunder. This Warrant
may also be exercised prior to commencement of the Exercise Period if Holder
exercises on a net exercise basis as provided in Section A(1) hereof ("Early
Exercise"). Any Warrant Shares received by Holder pursuant to an Early Exercise
must be held by Holder until the commencement of the Exercise Period and may not
be sold, transferred, pledged, or otherwise disposed of prior thereto, nor may
the Warrant Shares received upon Early Exercise be utilized in any hedging or
short trading transactions prior to commencement of the Exercise Period. Upon
receipt by the Company during the Exercise Period of this Warrant and such
Notice of Exercise Form, in proper form for exercise, together with proper
payment of the Exercise Price, at such office, or by the warrant agent of the
Company at its office, the Holder shall be deemed to be the holder of record of
the number of Warrant Shares specified in such form; provided, however, that if
the date of such receipt by the Company or its agent is a date on which the
stock transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding business day on which the stock transfer books of the
Company are open. The Company shall pay any and all documentary, stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
such Warrant Shares. Any new or substitute Warrant issued under this Section A
or any other provision of this Warrant shall be dated the date of this Warrant.
Upon exercise of this Warrant, the Company or its warrant agent shall promptly
cause to be issued and shall promptly deliver upon written order of the Holder
of this Warrant, and in such name or names as such Holder may designate, a
certificate or certificates for the Warrant Shares.

          1. As an alternative means of exercising this Warrant, the holder
     hereof may elect to receive shares equal to the value of this Warrant (or
     the portion of the Warrant being cancelled) by surrender of this Warrant at
     the principal office of the Company together with notice of such election
     in which event the Company shall issue to such holder that number of shares
     of the Company's Common Stock computed using the following formula:

                 Y(A - B)
             X = --------
                     A

     Where:

<PAGE>

          X:   the number of shares of Common Stock to be issued to the holder
               hereof.

          Y:   the number of shares of Common Stock purchasable under this
               Warrant.

          A:   the fair market value of one share of the Company's Common Stock.

          B:   the Exercise Price (as adjusted to the date of such
               calculations).

               For purposes of this Section A(1), the fair market value of one
     share of the Company's Common Stock shall be based on the average of the
     closing bid and asked prices of the closing price quoted on any exchange on
     which the Common Stock is listed, as published in the Eastern Edition of
     The Wall Street Journal for the twenty (20) trading days immediately prior
     to the date of determination of fair market value. If the Common Stock is
     not traded on an exchange, the fair market value of the Company's Common
     Stock shall be determined in good faith by the Board of Directors of the
     Company and the Holder; provided, however, that if the Board of Directors
     of the Company and the Holder fail to agree to a fair market value of the
     Common Stock, such fair market value shall be determined by an independent
     arbitrator selected by the Company and reasonably acceptable to the Holder;
     and further provided that the costs of such independent arbitrator shall be
     borne by the party whose estimate of the fair market value of the Common
     Stock was further from the determination of fair market value made by such
     arbitrator.

     Section B. Warrant Register. This Warrant will be registered in a register
(the "Warrant Register") to be maintained by the Company or its agent at its
principal office in the name of the recordholder to whom it has been
distributed. The Company may deem and treat the registered holder of this
Warrant as the absolute owner thereof (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise thereof
or any distribution to the holder thereof and for all other purposes, and the
Company shall not be affected by any notice to the contrary.

     Section C. Reservation of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant all shares of its Common Stock or other shares of capital stock of the
Company from time to time issuable upon exercise of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise in
accordance with the terms of this Warrant, shall be validly issued, fully paid
and nonassessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
rights.

     Section D. Transfer of Warrant. This Warrant may not be transferred by the
Holder, except in its entirety to a wholly-owned subsidiary of the Holder, to a
party that acquires all or substantially all of the assets of the Holder or to
an Affiliate (as defined below). Subject to the foregoing, this Warrant shall
inure to the benefit of the successors to the Holder. This Warrant and all
rights hereunder, in whole or in part, is registrable at the office or agency of
the

<PAGE>

Company referred to above by the Holder hereof in person or by his duly
authorized attorney, upon surrender of this Warrant properly endorsed.
"Affiliate" shall mean, with respect to any Person (as defined below), any other
Person controlling, controlled by or under direct or indirect common control
with such Person (for the purposes of this definition "control," when used with
respect to any specified Person, shall mean the power to direct the management
and policies of such person, directly or indirectly, whether through ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing). "Person" shall
mean any person, individual, corporation, limited liability company,
partnership, trust or other non-governmental entity or any governmental agency,
court, authority or other body (whether foreign, federal, state, local or
otherwise).

     Section E. Registration of Warrant Shares. The Warrant Shares shall have
the registration rights described in Section 6 of the Series C-1 and C-2
Preferred Stock and Warrant Purchase Agreement dated May 23, 2003 between the
Company and the Purchasers thereto and Section 6 shall be incorporated herein by
reference.

     Section F. Lost, Mutilated or Missing Warrant. Upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company, at its expense, shall execute and
deliver a new Warrant of like tenor and date.

     Section G. Rights of the Holder. Subject to applicable law, the Holder
shall not, by virtue hereof, be entitled to any rights or subject to any
obligation or liability of a shareholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in this
Warrant.

     Section H. Adjustments. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as follows:

          1.    Stock Dividend, Split or Subdivision of Shares. If the number of
     shares of Common Stock outstanding at any time after the date hereof is
     increased by a stock dividend payable to all holders of Common Stock in
     shares of Common Stock or by a subdivision or split-up of shares of Common
     Stock, then, following the record date fixed for the determination of
     holders of Common Stock entitled to receive such stock dividend,
     subdivision or split-up, the Exercise Price shall be appropriately
     decreased and the number of shares of Common Stock issuable on exercise of
     each Warrant shall be increased in proportion to such increase in
     outstanding shares.

          2.    Combination of Shares. If, at any time after the date hereof,
     the number of shares of Common Stock outstanding is decreased by a
     combination or consolidation of the outstanding shares of Common Stock, by
     reclassification, reverse stock split or otherwise, then, following the
     record date for such combination, the Exercise Price shall be appropriately
     increased and the number of shares of Common Stock issuable on

<PAGE>

     exercise of each Warrant shall be decreased in proportion to such decrease
     in outstanding shares.

          3.    Calculations. All calculations under this Section shall be made
     to the nearest one-tenth of a cent ($.001), or to the nearest one-tenth of
     a share, as the case may be.

          4.    Merger and Consolidation. If at any time there is a capital
     reorganization or reclassification of shares of Common Stock, or a merger
     or consolidation of the Company with or into another corporation where the
     Company is not the surviving corporation, or the sale of all or
     substantially all of the Company's properties and assets to any other
     person, then as part of such reorganization, merger, consolidation or sale,
     lawful provision shall be made so that the Holder shall thereafter be
     entitled to receive upon exercise of its rights to purchase Common Stock,
     the number of shares of Common Stock, cash, property or shares of the
     successor corporation resulting from such merger or consolidation, to which
     a holder of Common Stock, deliverable upon exercise of the rights to
     purchase Common Stock hereunder, would have been entitled in such capital
     reorganization, merger or consolidation or sale if the right to purchase
     such Common Stock hereunder had been exercised immediately prior to such
     capital reorganization, merger, consolidation or sale. In any such event,
     appropriate adjustment shall be made in the application of the provisions
     of this Warrant with respect to the rights and interests of the Holder
     after such capital reorganization, merger, consolidation or sale so that
     the provisions of this Warrant (including Exercise Price and the number of
     shares of Common Stock purchasable pursuant to the terms and conditions of
     this Warrant) shall be applicable after that event as near as reasonably
     may be, in relation to any shares deliverable upon the exercise of the
     Holder's rights to purchase Common Stock pursuant to this Warrant.

          5.    Certificate as to Adjustments. Upon the occurrence of each
     adjustment or readjustment pursuant to this Section H, the Company, at its
     own expense, shall promptly compute such adjustment or readjustment in
     accordance with the terms hereof and furnish to each Holder a certificate
     setting forth such adjustment or readjustment and showing in detail the
     facts upon which such adjustment or readjustment is based. The Company
     shall, upon the written request, at any time, of any such Holder, furnish
     or cause to be furnished to such Holder a like certificate setting forth:
     (a) such adjustments and readjustments; (b) the Exercise Price at the time
     in effect; and (c) the number of shares and the amount, if any of other
     property that at the time would be received upon the exercise of the
     Warrant.

     Section I. Fractional Shares. No fractional shares of the Company's Common
Stock will be issued in connection with any purchase hereunder but in lieu of
such fractional shares the Company shall make a cash refund therefor equal in
amount to the product of the applicable fraction multiplied by the Exercise
Price paid by the Holder for one Warrant Share upon such exercise.

<PAGE>

     Section J. Notices of Certain Events. In the event:

          1.    the Company authorizes the issuance to all holders of its Common
     Stock of rights or warrants to subscribe for or purchase shares of its
     Common Stock or of any other subscription rights or warrants; or

          2.    the Company authorizes the distribution to all holders of its
     Common Stock of evidences of its indebtedness or assets (other than cash
     dividends or distributions except extraordinary cash dividends or
     distributions); or

          3.    of any capital reorganization or reclassification of the Common
     Stock (other than a subdivision or combination of the outstanding Common
     Stock and other than a change in par value of the Common Stock) or of any
     consolidation or merger to which the Company is a party or of the
     conveyance or transfer of all or substantially all of the properties and
     assets of the Company; or

          4.    of the voluntary or involuntary dissolution, liquidation or
     winding-up of the Company; or

          5.    any other actions would require an adjustment under Section H
     hereof;

then the Company will cause to be mailed to the Holder, at least 5 days before
the applicable record or effective date hereinafter specified, a notice stating
(A) the date as of which the holders of Common Stock of record entitled to
receive any such rights, warrants or distributions are to be determined, or (B)
the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding-up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record will be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up.

     Section K. Listing on Securities Exchanges. The Company will list on the
Nasdaq Small Cap Market System and each national securities exchange on which
any Common Stock may at any time be listed all shares of Common Stock from time
to time issuable upon the exercise of this Warrant, subject to official notice
of issuance upon the exercise of this Warrant, and will maintain such listing so
long as any other shares of its Common Stock are so listed; and the Company
shall so list on the Nasdaq Small Cap Market System and each national securities
exchange, and shall maintain such listing of, any other shares of capital stock
of the Company issuable upon the exercise of this Warrant if and so long as any
shares of capital stock of the same class are listed on the Nasdaq Small Cap
Market System and such national securities exchange by the Company. Any such
listing will be at the Company's expense.

<PAGE>

     Section L. Successors. All the provisions of this Warrant by or for the
benefit of the Company shall bind and inure to the benefit of its respective
successors and assigns.

     Section M. Headings. The headings of sections of this Warrant have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.

     Section N. Amendments. The terms and provisions of this Warrant may not be
modified or amended, or any provisions hereof waived, temporarily or
permanently, except by written consent of the Company and the Holder hereof.

     Section O. Notices. Unless otherwise provided in this Warrant, all notices,
requests, consents and other communications hereunder shall be in writing, shall
be sent by U.S. Mail or a nationally recognized overnight express courier
postage prepaid, and shall be deemed given one day after being so sent, or if
delivered by hand shall be deemed given on the date of such delivery to such
party, or if sent to such party (in the case of a Holder) at its address in the
Warrant Register that will be maintained by the Company or its agent in
accordance with Section B hereof or (in the case of the Company) at its address
set forth above, Attention: Chief Financial Officer, or to such other address as
is designated by written notice, similarly given to each other party hereto.

     Section P. Governing Law. This Warrant shall be deemed to be a contract
made under the laws of the Commonwealth of Pennsylvania and for all purposes
shall be construed in accordance with the laws of said Commonwealth as applied
to contracts made and to be performed in Pennsylvania between Pennsylvania
residents.

<PAGE>

     IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed
and attested by its duly authorized officer and to be dated as of May 23, 2003.

                                       GENAERA CORPORATION

                                       By:________________________________
                                       Name:  Roy C. Levitt, M.D.
                                       Title: President and Chief Executive
                                              Officer

<PAGE>

                               NOTICE OF EXERCISE

                                                 Date: ___________________, 20__

     The undersigned hereby elects to exercise this Warrant to purchase ____
shares of Common Stock and hereby makes payment of $____________ in payment of
the exercise price thereof.

                                                 _______________________________
                                                 [Holder's Name]

                                                 By:____________________________
                                                 Name:
                                                 Title:<PAGE>

                                                                   EXHIBIT 10.10

                                                                  EXECUTION COPY

                   STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,
                                     Seller

                      DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                     Trustee

                      DEUTSCHE BANK TRUST COMPANY DELAWARE,
                                Delaware Trustee

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                                 Master Servicer

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                            Securities Administrator

                                       and

                       THORNBURG MORTGAGE HOME LOANS, INC.

                  ---------------------------------------------
                     TRUST, POOLING AND SERVICING AGREEMENT

                            Dated as of March 1, 2003
                  ---------------------------------------------

                   THORNBURG MORTGAGE SECURITIES TRUST 2003-2,
                       Mortgage Pass-Through Certificates,
                                  Series 2003-2

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                                TABLE OF CONTENTS

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<S>                                                                                                      <C>
                                    ARTICLE I

                                   Definitions

Section 1A.01.        Name of Trust .................................................................    33
Section 1A.02.        Office ........................................................................    33
Section 1A.03.        Declaration of Trust ..........................................................    33
Section 1A.04.        Purpose and Powers ............................................................    33
Section 1A.05.        Liability of the Certificateholders ...........................................    33
Section 1A.06.        Title To Trust Property .......................................................    34
Section 1A.07.        Situs of Trust ................................................................    34
Section 1A.08.        The Delaware Trustee ..........................................................    34

                                   ARTICLE II

         Conveyance of Mortgage Loans; Original Issuance of Certificates

Section 2.01          Conveyance of Mortgage Loans and Other Assets to the Trust ....................    36
Section 2.02          Acceptance of Mortgage Loans and Other Trust Assets by Trustee.................    40
Section 2.03          Mortgage Loan Purchase Agreement ..............................................    43
Section 2.04          Substitution of Mortgage Loans ................................................    43
Section 2.05          Issuance of Certificates ......................................................    45
Section 2.06          Representations and Warranties Concerning the Seller ..........................    45
Section 2.07          Representations and Warranties Concerning the Mortgage Loans ..................    46
Section 2.08          Appointment of Custodian ......................................................    47
Section 2.09          Yield Maintenance Agreements ..................................................    47

                                   ARTICLE III

                 Administration and Servicing of Mortgage Loans

Section 3.01          Master Servicer ...............................................................    48
Section 3.02          REMIC-Related Covenants .......................................................    49
Section 3.03          Monitoring of Servicers .......................................................    49
Section 3.04          Fidelity Bond .................................................................    50
Section 3.05          Power to Act; Procedures ......................................................    51
Section 3.06          Due-on-Sale Clauses; Assumption Agreements ....................................    52
Section 3.07          Release of Mortgage Files .....................................................    52
Section 3.08          Documents, Records and Funds in Possession of Master Servicer To
                      Be Held for Trust. ............................................................    53
Section 3.09          Standard Hazard Insurance and Flood Insurance Policies ........................    53
Section 3.10          Presentment of Claims and Collection of Proceeds ..............................    54
Section 3.11          Maintenance of the Primary Mortgage Insurance Policies ........................    54
</TABLE>

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<TABLE>
<S>                                                                                                      <C>
Section 3.12          Trustee to Retain Possession of Certain Insurance Policies and
                      Documents......................................................................    55
Section 3.13          Realization Upon Defaulted Mortgage Loans .....................................    55
Section 3.14          Additional Compensation to the Master Servicer ................................    55
Section 3.15          REO Property ..................................................................    56
Section 3.16          Annual Officer's Certificate as to Compliance .................................    56
Section 3.17          Annual Independent Accountant's Servicing Report ..............................    57
Section 3.18          Reports Filed with Securities and Exchange Commission .........................    57
Section 3.19          Amendments to Master Servicing Guide and Correspondent Sellers
                      Guide .........................................................................    58
Section 3.20          UCC ...........................................................................    58
Section 3.21          Purchase of Certain Mortgage Loans ............................................    58
Section 3.22          Instructions to the Trustee ...................................................    60

                                   ARTICLE IV

                                    Accounts

Section 4.01          Servicer Accounts .............................................................    61
Section 4.02          Master Servicer Collection Account ............................................    62
Section 4.03          Permitted Withdrawals and Transfers from the Master Servicer
                      Collection Account ............................................................    63
Section 4.04          Distribution Account ..........................................................    65
Section 4.05          Permitted Withdrawals and Transfers from the Distribution Account .............    66
Section 4.06          Yield Maintenance Account......................................................    67

                                    ARTICLE V

                                  Certificates

Section 5.01          Certificates ..................................................................    69
Section 5.02          Registration of Transfer and Exchange of Certificates .........................    74
Section 5.03          Mutilated, Destroyed, Lost or Stolen Certificates .............................    76
Section 5.04          Persons Deemed Owners .........................................................    76
Section 5.05          Transfer Restrictions on Residual Certificates ................................    76
Section 5.06          Restrictions on Transferability of Private Certificates .......................    77
Section 5.07          ERISA Restrictions ............................................................    78
Section 5.08          Rule 144A Information .........................................................    78
Section 5.09          Optional Purchase of Certificates..............................................    78

                                   ARTICLE VI

                         Payments to Certificateholders

Section 6.01          Distributions on the Certificates..............................................    81
Section 6.02          Allocation of Losses ..........................................................    83
Section 6.03          Payments ......................................................................    83
</TABLE>

                                     - ii -

<PAGE>

<TABLE>
<S>                                                                                                     <C>
Section 6.04          Statements to the Trustee, the Certificateholders and Others ..................    84
Section 6.05          Monthly Advances ..............................................................    87
Section 6.06          Reserved ......................................................................    87
Section 6.07          Compensating Interest Payments ................................................    87

                                   ARTICLE VII

                               The Master Servicer

Section 7.01          Liabilities of the Master Servicer ............................................    89
Section 7.02          Merger or Consolidation of the Master Servicer.................................    89
Section 7.03          Indemnification of the Trustee, the Delaware Trustee, the Seller, the
                      Master Servicer and the Securities Administrator ..............................    89
Section 7.04          Limitations on Liability of the Master Servicer and Others ....................    90
Section 7.05          Master Servicer Not to Resign .................................................    91
Section 7.06          Successor Master Servicer .....................................................    91
Section 7.07          Sale and Assignment of Master Servicing .......................................    92

                                  ARTICLE VIII

                                     Default

Section 8.01          Events of Default .............................................................    93
Section 8.02          Trustee to Act; Appointment of Successor ......................................    94
Section 8.03          Notification to Certificateholders ............................................    95
Section 8.04          Waiver of Defaults ............................................................    95
Section 8.05          List of Certificateholders ....................................................    96

                                   ARTICLE IX

             Concerning the Trustee and the Securities Administrator

Section 9.01          Duties of Trustee and Securities Administrator ................................    97
Section 9.02          Certain Matters Affecting the Trustee and the Securities Administrator ........    99
Section 9.03          Trustee and Securities Administrator Not Liable for Certificates or
                      Mortgage Loans ................................................................   101
Section 9.04          Trustee, Custodian, Delaware Trustee, Master Servicer and Securities
                      Administrator May Own Certificates ............................................   102
Section 9.05          Trustee's, Delaware Trustee's and Securities Administrator's Fees and
                      Expenses ......................................................................   102
Section 9.06          Eligibility Requirements for Trustee, Securities Administrator and
                      Delaware Trustee ..............................................................   103
Section 9.07          Insurance .....................................................................   103
Section 9.08          Resignation and Removal of the Trustee and Securities Administrator ...........   103
Section 9.09          Successor Trustee and Successor Securities Administrator ......................   104
Section 9.10          Merger or Consolidation of Trustee or Securities Administrator ................   105
Section 9.11          Appointment of Co-Trustee or Separate Trustee .................................   105
</TABLE>

                                     - iii -

<PAGE>

<TABLE>
<S>                                                                                                     <C>
Section 9.12          Federal Information Returns and Reports to Certificateholders;
                      REMIC Administration ..........................................................   106

                                    ARTICLE X

                                   Termination

Section 10.01         Termination Upon Repurchase by Thornburg or its Designee or
                      Liquidation of the Mortgage Loans..............................................   109
Section 10.02         Additional Termination Requirements ...........................................   111

                                   ARTICLE XI

                            Miscellaneous Provisions

Section 11.01         Intent of Parties .............................................................   113
Section 11.02         Amendment .....................................................................   113
Section 11.03         Recordation of Agreement ......................................................   114
Section 11.04         Limitation on Rights of Certificateholders ....................................   114
Section 11.05         Acts of Certificateholders ....................................................   115
Section 11.06         Governing Law .................................................................   116
Section 11.07         Notices .......................................................................   116
Section 11.08         Severability of Provisions ....................................................   117
Section 11.09         Successors and Assigns ........................................................   117
Section 11.10         Article and Section Headings ..................................................   117
Section 11.11         Counterparts ..................................................................   117
Section 11.12         Notice to Rating Agency .......................................................   117
</TABLE>

                                     - iv -

<PAGE>

EXHIBITS
Exhibit A-1       -   Form of Class A Certificates
Exhibit A-2       -   Form of Class M Certificates
Exhibit A-3       -   Form of Class B-IO Certificates
Exhibit A-4       -   Form of Class R Certificates
Exhibit B         -   Mortgage Loan Schedule
Exhibit C-1       -   Form of Initial Certification
Exhibit C-2       -   Form of Interim Certification
Exhibit C-3       -   Form of Final Certification
Exhibit D         -   Request for Release of Documents
Exhibit E         -   Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1       -   Form of Investment Letter
Exhibit F-2       -   Form of Rule 144A and Related Matters Certificate
Exhibit G         -   Form of Custodial Agreement
Exhibit H         -   List of Servicers and Servicing Agreements
Exhibit I         -   Mortgage Loan Purchase Agreement
Exhibit J         -   Certificate of Trust
Exhibit K         -   1998-1 Mortgage Loans Mortgage File
Exhibit L         -   Notice of Exercise of Optional Securities Purchase Right

                                      - v -

<PAGE>

                     TRUST, POOLING AND SERVICING AGREEMENT

        Trust, Pooling and Servicing Agreement (this "Agreement"), dated as of
March 1, 2003, among Structured Asset Mortgage Investments Inc., a Delaware
corporation, as seller (the "Seller"), Deutsche Bank National Trust Company, a
national banking association, not in its individual capacity but solely as
trustee (the "Trustee"), Deutsche Bank Trust Company Delaware, a Delaware
banking corporation, not in its individual capacity but solely as Delaware
trustee (the "Delaware Trustee"), Wells Fargo Bank Minnesota, National
Association, a national banking association, as master servicer (in such
capacity, the "Master Servicer") and as securities administrator (in such
capacity, the "Securities Administrator"), and Thornburg Mortgage Home Loans,
Inc. ("Thornburg").

                              PRELIMINARY STATEMENT

        On April 1, 2003 the Seller formed Thornburg Mortgage Securities Trust
2003-2, as a Delaware statutory trust (the "Trust") pursuant to the Trust
Agreement, dated April 1, 2003 (the "Original Trust Agreement"), among the
Seller, the Trustee and the Delaware Trustee.

        The parties to this Agreement desire to amend and restate the Original
Trust Agreement in its entirety, and, as evidenced by their signatures hereto,
the Original Trust Agreement is hereby amended, restated and replaced in its
entirety on the Closing Date by this Agreement.

        Through this Agreement, the Seller intends to cause the issuance and
sale of the Trust's Mortgage Pass-Through Certificates, Series 2003-2 (the
"Certificates") representing in the aggregate the entire beneficial ownership of
the Trust, the primary assets of which are the Mortgage Loans (as defined
below).

        On or prior to the Closing Date, the Seller acquired the Mortgage Loans
from Thornburg. On the Closing Date, the Seller will sell the Mortgage Loans and
certain other property to the Trust and receive in consideration therefor
Certificates evidencing the entire beneficial ownership interest in the Trust.

        The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC I to be treated for federal income tax purposes as a REMIC.
On the Startup Day, the REMIC I Regular Interests will be designated "regular
interests" in such REMIC and the Class R-1 Certificate will be designated the
"residual interest" in such REMIC.

        The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC II to be treated for federal income tax purposes as a REMIC.
On the Startup Day, the REMIC II Regular Certificates will be designated
"regular interests" in such REMIC and the Class R-2 Certificate will be
designated the "residual interest" in such REMIC.

        The Mortgage Loans will have an Outstanding Principal Balance as of the
Cut-off Date, after deducting all Scheduled Principal due on or before the
Cut-off Date, of $1,060,891,769.76. The initial principal amount of the
Certificates will not exceed the sum of such Outstanding Principal Balance and
the cash deposit made on the Closing Date pursuant to Section 2.01(a).

<PAGE>

        In consideration of the mutual agreements herein contained, the Seller,
the Master Servicer, the Securities Administrator, Thornburg, the Delaware
Trustee and the Trustee agree as follows:

                                      - 2 -

<PAGE>

                                    ARTICLE I

                                   Definitions

        Whenever used in this Agreement, the following words and phrases, unless
otherwise expressly provided or unless the context otherwise requires, shall
have the meanings specified in this Article.

        1998-1 Mortgage Loans: Those Mortgage Loans that were purchased by the
Mortgage Loan Seller from the 1998-1 Trust.

        1998-1 Primary Servicer: A Primary Servicer of the 1998-1 Mortgage
Loans.

        1998-1 Trust: TMA Mortgage Funding Trust I.

        Accepted Master Servicing Practices: With respect to any Mortgage Loan,
as applicable, either (x) those customary mortgage servicing practices of
prudent mortgage servicing institutions that master service mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, to the extent applicable to the Trustee
or the Master Servicer (except in its capacity as successor to a Servicer), or
(y) as provided in the applicable Servicing Agreement, to the extent applicable
to any Servicer, but in no event below the standard set forth in clause (x).

        Account: The Master Servicer Collection Account, the Distribution
Account, the Yield Maintenance Account and each Servicer Account, as the context
may require.

        Additional Collateral: With respect to any Additional Collateral
Mortgage Loan, the marketable securities or other assets subject to a security
interest pursuant to a related pledge agreement.

        Additional Collateral Mortgage Loan: Each Mortgage Loan identified as
such in the Mortgage Loan Schedule and as to which Additional Collateral is then
required to be provided as security therefor.

        Affiliate: As to any Person, any other Person controlling, controlled by
or under common control with such Person. "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. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.

        Aggregate Expense Rate: With respect to any Mortgage Loan, the sum of
the applicable Servicing Fee Rates, the Master Servicing Fee Rate, the Trustee
Fee Rate, the Lender-Paid PMI Rate (if applicable), and the Retained Interest
Rate (if applicable).

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

                                      - 3 -

<PAGE>

        Applicable Credit Rating: For any long-term deposit or security, a
credit rating of "AAA" in the case of S&P and "Aaa" in the case of Moody's. For
any short-term deposit or security, a rating of "A-l+" in the case of S&P and
P-1 in the case of Moody's.

        Applicable Margin: The Class A Margin, the Class M-1 Margin or the Class
M-2 Margin, as applicable.

        Applicable State Law: For purposes of Section 9.12(d), the Applicable
State Law shall be (a) the law of the State of Delaware and (b) such other state
law whose applicability shall have been brought to the attention of the
Securities Administrator and the Trustee by either (i) an Opinion of Counsel
reasonably acceptable to the Securities Administrator and the Trustee delivered
to it by the Master Servicer, Thornburg or the Seller, or (ii) written notice
from the appropriate taxing authority as to the applicability of such state law.

        Applied Realized Loss Amount: With respect to any Class of Subordinate
Certificates and as to any Distribution Date, the sum of the Realized Losses
with respect to the Mortgage Loans which have been applied in reduction of the
Current Principal Amount of such Class which shall, on any such Distribution
Date, equal with respect to the Class M-2 Certificates and Class M-1
Certificates in that order so long as their respective Current Principal Amounts
have not been reduced to zero, the amount, if any, by which, (i) the aggregate
Current Principal Amount of all of the Certificates (after all distributions of
principal on such Distribution Date) exceeds (ii) the aggregate Scheduled
Principal Balance of all of the Mortgage Loans as of the last day of the related
Due Period.

        Appraised Value: For any Mortgaged Property related to a Mortgage Loan,
the amount, if any, set forth as the appraised value of such Mortgaged Property
in any appraisal made for the mortgage originator in connection with its
origination of the related Mortgage Loan.

        Assumed Final Distribution Date: The Distribution Date in April 2043.

        Basis Risk Shortfall: As of any Distribution Date and for any Class of
Certificates (other than the Class B-IO Certificates or the Residual
Certificates), the excess of (i) the amount of Current Interest that such Class
would have been entitled to receive on such Distribution Date had the applicable
Pass-Through Rate been calculated based upon the lesser of 11.500% and One-Month
LIBOR plus the Applicable Margin for the related Interest Accrual Period over
(ii) the sum of interest for such Class calculated at the Interest Rate Cap for
such Distribution Date and any amount paid to such Class under the Yield
Maintenance Agreements, expressed as a per annum rate.

        Basis Risk Shortfall Carry Forward Amount: As of any Distribution Date
and for any Class of Certificates (other than the Class B-IO Certificates and
the Residual Certificates), the sum of (i) if on such Distribution Date the
applicable Pass-Through Rate for such Class is based upon the Interest Rate Cap,
the applicable Basis Risk Shortfall; and (ii) the Basis Risk Shortfall for all
previous Distribution Dates not previously paid (including interest accrued
thereon at the applicable Pass-Through Rate for the applicable Interest Accrual
Period with respect to each such prior Distribution Date), together with
interest thereon at a rate equal to the applicable Pass-Through Rate for such
Distribution Date. Payments of Basis Risk Shortfall Carry Forward

                                      - 4 -

<PAGE>

Amounts shall be treated for federal income tax purposes as paid to the Yield
Maintenance Account.

        Book-Entry Certificates: Any Certificate registered in the name of the
Depository or its nominee, beneficial interests in which are reflected on the
books and records of the Depository or on the books of a Person maintaining an
account with such Depository (directly or indirectly as an indirect participant
in accordance with the rules of such Depository). Initially, all Classes of
Certificates other than the Private Certificates and the Residual Certificates.

        Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which the New York Stock Exchange or Federal Reserve is closed or on
which banking institutions or the jurisdiction in which the Trustee, the Master
Servicer, any Servicer or the Securities Administrator are authorized or
obligated by law or executive order to be closed.

        Certificate: Any mortgage pass-through certificate evidencing a
beneficial ownership interest in the Trust signed and countersigned by the
Trustee in substantially the forms annexed hereto as Exhibits A-1, A-2, A-3 and
A-4, with the blanks therein appropriately completed.

        Certificate Owner: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.

        Certificate Register: The register maintained pursuant to Section 5.02.

        Certificateholder: A Holder of a Certificate.

        Class: With respect to the Certificates the class designated as, Class
A, Class M-1, Class M-2, Class B-IO, Class R-1 and Class R-2.

        Class A Certificate: Any Certificate designated as a "Class A
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its share of distributions provided for the Class A
Certificates as set forth in Section 6.03.

        Class A Margin: For any Distribution Date (i) on or prior to the
Optional Securities Purchase Date, 0.34% per annum and (ii) thereafter, 0.68%
per annum.

        Class A Pass-Through Rate: For the first Distribution Date, 1.64% per
annum, and on any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Interest Accrual Period plus the Class A Margin for such
Distribution Date, subject to the Interest Rate Cap and (ii) 11.500% for such
Distribution Date.

        Class A Principal Distribution Amount: With respect to any applicable
Distribution Date, an amount equal to the excess, if any, of (i) the aggregate
Current Principal Amount of the Class A Certificates immediately prior to such
Distribution Date, over (ii) the excess of (a) the aggregate Scheduled Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after reduction for Realized Losses incurred during the related Prepayment
Period) over (b) the aggregate Scheduled Principal Balance of the Mortgage Loans
as of the last day of the related Due Period (after reduction for Realized
Losses incurred during the related

                                      - 5 -

<PAGE>

Prepayment Period) multiplied by the sum of 4.00% and the Current Specified
Overcollateralization Percentage for that Distribution Date.

        Class B-IO Certificate: Any Certificate designated as a "Class B-IO
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its share of distributions provided for the Class B-IO
Certificates as set forth in Section 6.03.

        Class B-IO Distribution Amount: With respect to any Distribution Date,
an amount equal to the cumulative amount allocable to the Class B-IO
Certificates as provided in Section 5.01(c), note 3, plus the Initial
Overcollateralization Amount, less prior distributions thereof to the Class B-IO
Certificates. Payments will be considered first allocable to interest to the
extent payable pursuant to Section 5.01(c), footnote (3), and then to principal.

        Class B-IO Notional Amount: With respect to the Class B-IO Certificates,
initially $1,060,891,769.76, and on any Distribution Date thereafter, the
aggregate Scheduled Principal Balance of the Mortgage Loans as of the last day
of the related Due Period.

        Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its share of distributions provided for the Class M-1
Certificates as set forth in Section 6.03.

        Class M-1 Margin: For any Distribution Date (i) on or prior to the
Optional Securities Purchase Date, 0.75% per annum and (ii) thereafter, 1.125%
per annum.

        Class M-1 Pass-Through Rate: For the first Distribution Date, 2.05% per
annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Interest Accrual Period plus the Class M-1 Margin for such
Distribution Date, subject to the Interest Rate Cap for such Distribution Date
and (ii) 11.500%.

        Class M-1 Principal Distribution Amount: With respect to any applicable
Distribution Date, an amount equal to the excess, if any, of (i) the aggregate
Current Principal Amount of the Class M-1 Certificates immediately prior to such
Distribution Date over (ii) the excess of (a) the aggregate Scheduled Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after reduction for Realized Losses incurred during the related Prepayment
Period) over (b) the sum of (1) aggregate the Current Principal Amount of the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date) and (2) the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the last day of the
related Due Period (after reduction for Realized Losses incurred during the
related Prepayment Period), multiplied by the sum of 2.00% and the Current
Specified Overcollateralization Percentage for such Distribution Date.

        Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its share of distributions provided for the Class M-2
Certificates as set forth in Section 6.03.

        Class M-2 Margin: For any Distribution Date (i) on or prior to the
Optional Securities Purchase Date, 1.50% per annum and (ii) thereafter, 2.25%
per annum.

                                      - 6 -

<PAGE>

        Class M-2 Pass-Through Rate: For the first Distribution Date, 2.80% per
annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Interest Accrual Period plus the Class M-2 Margin for such
Distribution Date, subject to the Interest Rate Cap for such Distribution Date
and (ii) 11.500%.

        Class M-2 Principal Distribution Amount: With respect to any applicable
Distribution Date, an amount equal to the excess, if any, of (i) the Current
Principal Amount of the Class M-2 Certificates immediately prior to such
Distribution Date over (ii) the excess of (a) the aggregate Scheduled Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after reduction for Realized Losses incurred during the related Prepayment
Period) over (b) the sum of (1) the aggregate Current Principal Amount of the
Class A Certificates and the Class M-1 Certificates (after taking into account
the payment of the Class A Principal Distribution Amount and the Class M-1
Principal Distribution Amount on such Distribution Date) and (2) the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the last day of the
related Due Period (after reduction for Realized Losses incurred during the
related Prepayment Period) multiplied by the Current Specified
Overcollateralization Percentage for such Distribution Date. On each
Distribution Date on and after the aggregate Current Principal Amount of the
Class A and Class M-1 Certificates have been reduced to zero, the Class M-2
Principal Distribution Amount will equal 100% of the Principal Distribution
Amount.

        Class R Certificates: The Class R-1 and Class R-2 Certificates.

        Class R-1 Certificate: Any Certificate designated as a "Class R-1
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-4 hereto, and evidencing ownership of the residual interest in REMIC I and
representing the right to the distributions provided for the Class R-1
Certificate as set forth in Section 6.03.

        Class R-2 Certificate: Any Certificate designated as a "Class R-2
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-4 hereto, and evidencing ownership of the residual interest in REMIC II and
representing the right to the distributions provided for the Class R-2
Certificate as set forth in Section 6.03.

        Closing Date: April 3, 2003.

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

        Compensating Interest Payment: With respect to any Distribution Date,
the aggregate amount required to be paid in respect of Interest Shortfalls
(other than any shortfalls resulting from application of the Relief Act) by the
Servicers, with respect to such Distribution Date, or by the Master Servicer
pursuant to Section 6.07 for such Distribution Date.

        Converted Mortgage Loan: Any Convertible Mortgage Loan as to which the
related Mortgagor has exercised the right to convert the Mortgage Rate from an
adjustable to a fixed rate.

        Converted Mortgage Loan Schedule: With respect to each Distribution
Date, a schedule listing each Convertible Mortgage Loan that has become a
Converted Mortgage Loan during the

                                      - 7 -

<PAGE>

immediately preceding Due Period, and the Repurchase Price for each such
Converted Mortgage Loan.

        Convertible Mortgage Loan: Any Mortgage Loan which, at the option of the
Mortgagor and in accordance with the terms of the related Mortgage Note, may
have the related Mortgage Rate converted from an adjustable rate to a fixed
rate.

        Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.

        Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.

        Cooperative Loan Documents: As to any Cooperative Loan, (i) the
Cooperative Shares, together with a stock power in blank; (ii) the original
executed Security Agreement and the assignment of the Security Agreement
endorsed in blank; (iii) the original executed Proprietary Lease and the
assignment of the Proprietary Lease endorsed in blank; (iv) the original
executed Recognition Agreement and the assignment of the Recognition Agreement
(or a blanket assignment of all Recognition Agreements) endorsed in blank; (v)
the executed UCC-1 financing statement with evidence of recording thereon, which
has been filed in all places required to perfect the security interest in the
Cooperative Shares and the Proprietary Lease; and (vi) executed UCC-3 financing
statements (or copies thereof) or other appropriate UCC financing statements
required by state law, evidencing a complete and unbroken line from the
mortgagee to the Trust with evidence of recording thereon (or in a form suitable
for recordation).

        Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.

        Cooperative Shares: Shares issued by a Cooperative Corporation.

        Cooperative Unit: A single-family dwelling located in a Cooperative
Property.

        Corporate Trust Office: The office of the Trustee (x) maintained for
registration of transfer and exchange of Certificates, which at the date of
execution of this Agreement, is located at c/o DTC Transfer Agent Services, 55
Water Street, Jeanette Park Entrance, New York, New York 10041, or (y)
otherwise, at which at any particular time its corporate trust business is
administered, which office, at the date of the execution of this Agreement, is
located at 1761 East St. Andrew Place, Santa Ana, California 92705, Attention:
Thornburg 2003-2 (TM0302).

        Correspondent Sellers Guide: The Mortgage Loan Seller's Correspondent
Sellers Guide, revised March 2002 and as revised from time to time.

        Current Interest: With respect to each Class of Certificates (other than
the Class B-IO Certificates and the Residual Certificates) and each Distribution
Date, (i) the interest accrued at

                                      - 8 -

<PAGE>

the applicable Pass-Through Rate (including for such purpose any application of
the Interest Rate Cap) for the applicable Interest Accrual Period on the Current
Principal Amount of such Class plus (ii) any amount previously distributed with
respect to interest for such Class that is recovered as a voidable preference by
a trustee in bankruptcy, reduced by (iii) any Net Interest Shortfalls, provided,
that for purposes of calculating Current Interest for any such Class, amounts
specified in clause (iii) hereof for any such Distribution Date shall be
allocated first to the Class B-IO Certificates and the Residual Certificates in
reduction of amounts otherwise distributable to such Classes on such
Distribution Date and then to each of the Class A, Class M-1 and Class M-2
Certificates, pro rata, based on the respective amounts of interest accrued
pursuant to clause (i) hereof with respect to each such Class for such
Distribution Date.

        Current Principal Amount: With respect to each Class of Certificates
(other than the Class B-IO Certificates) and any Distribution Date, the original
principal balance of such Class on the Closing Date, less the sum of (i) all
amounts in respect of principal distributed to such Class on previous
Distribution Dates and (ii) in the case of the Subordinate Certificates, any
Applied Realized Loss Amounts allocated to such Class on previous Distribution
Dates. Notwithstanding the foregoing, solely for purposes of giving consents,
directions, waivers, approvals, requests and notices based on the Fractional
Undivided Interest of a Certificate of each of the Class R-1 and Class R-2
Certificates, the Class R-1 and Class R-2 Certificates after the Distribution
Date on which they each receive the distribution of the last dollar of their
respective original principal amount shall be deemed to have Current Principal
Amounts equal to their respective Current Principal Amounts on the day
immediately preceding such Distribution Date.

        Current Specified Overcollateralization Percentage: For any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is the
Specified Overcollateralization Amount, and the denominator of which is the
aggregate Scheduled Principal Balance of the Mortgage Loans as of the last day
of the related Due Period.

        Custodial Agreement: A Custodial Agreement entered into by the Trustee
and a successor Custodian, substantially in the form of Exhibit G hereto

        Custodian: The Trustee, acting in its capacity as custodian of the
Mortgage Loans hereunder, or any successor custodian appointed pursuant to a
Custodial Agreement.

        Cut-off Date: March 1, 2003.

        Cut-off Date Balance: $1,060,891,769.76.

        Delaware Statutory Trust Statute: As defined in Section 1A.03.

        Delaware Trustee: Deutsche Bank Trust Company Delaware.

        Delinquency Event: A Delinquency Event shall have occurred and be
continuing if at any time the three-month rolling average of the aggregate
Scheduled Principal Balance of the Mortgage Loans that are 60 days or more
delinquent or are in bankruptcy or foreclosure or are REO Properties, as a
percentage of the aggregate Scheduled Principal Balance of all of the

                                      - 9 -

<PAGE>

Mortgage Loans as of the last day of the related Due Period, equals or exceeds
50% of the aggregate Current Principal Amount of the Subordinate Certificates
plus the Overcollateralization Amount, after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date, as
a percentage of the aggregate Scheduled Principal Balance of the Mortgage Loans
as of the last day of the related Due Period.

        Depository: The Depository Trust Company, the nominee of which is Cede &
Co., or any successor thereto.

        Depository Agreement: The meaning specified in Subsection 5.01(a)
hereof.

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

        Determination Date: The date each month, as set forth in the related
Servicing Agreement, on which a Servicer determines the amount of all funds
(including, without limitation, Monthly Advances and Compensating Interest
Payments) required to be remitted to the Master Servicer on the related Servicer
Remittance Date with respect to the Mortgage Loans such Servicer is servicing or
sub-master servicing, as applicable.

        Disqualified Organization: Any of the following: (i) the United States,
any State or political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the Freddie Mac or any successor thereto, a majority of its
board of directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code or (v) any
other Person so designated by the Trustee based upon an Opinion of Counsel that
the holding of an ownership interest in a Residual Certificate by such Person
may cause any REMIC contained in the Trust or any Person having an ownership
interest in the Residual Certificate (other than such Person) to incur a
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in a Residual Certificate
to such Person. The terms "United States," "State" and "international
organization" shall have the meanings set forth in Section 7701 of the Code or
successor provisions.

        Distribution Account: The trust account or accounts created and
maintained pursuant to Section 4.04, which shall be denominated "Deutsche Bank
National Trust Company, as Trustee f/b/o Thornburg Mortgage Securities Trust
2003-2, Mortgage Pass-Through Certificates, Series 2003-2 - Distribution
Account."

        Distribution Account Deposit Date: With respect to each Distribution
Date, the Business Day immediately preceding such Distribution Date.

                                     - 10 -

<PAGE>

        Distribution Date: The 25th day of any month, beginning in April 2003,
or, if such 25th day is not a Business Day, the Business Day immediately
following.

        DTC Custodian: Deutsche Bank National Trust Company, or its successors
in interest as custodian for the Depository.

        Due Date: With respect to any Mortgage Loan, the date in each month on
which its Scheduled Payment is due if such due date is the first day of a month
and otherwise is deemed to be the first day of the following month or such other
date specified in the related Servicing Agreement.

        Due Period: With respect to any Distribution Date and as to any Mortgage
Loan, the period commencing on the second day of the month preceding the
calendar month in which such Distribution Date occurs and ending at the close of
business on the first day of the month in which such Distribution Date occurs.

        Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company acceptable to
each Rating Agency, including any account maintained at Wells Fargo Bank
Minnesota, National Association, or at Deutsche Bank National Trust Company, or
(ii) an account or accounts the deposits in which are insured by the FDIC to the
limits established by such corporation, provided that any such deposits not so
insured shall be maintained in an account at a depository institution or trust
company whose commercial paper or other short term debt obligations (or, in the
case of a depository institution or trust company which is the principal
subsidiary of a holding company, the commercial paper or other short term debt
or deposit obligations of such holding company or depository institution, as the
case may be) have been rated by each Rating Agency in its highest short-term
rating category, or (iii) a segregated trust account or accounts (which shall be
a "special deposit account") maintained with the Trustee or any other federal or
state chartered depository institution or trust company, acting in its fiduciary
capacity, in a manner acceptable to the Trustee and each Rating Agency. Eligible
Accounts may bear interest unless otherwise specified herein.

        Employee Loan: Any Mortgage Loan identified as such in the Mortgage Loan
Schedule, which provides for an increase in the Mortgage Rate thereof in the
event of the change of employment of the Mortgagor thereunder.

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

        Event of Default: An event of default described in Section 8.01.

        Excess Cashflow: With respect to any Distribution Date, the sum of (a)
the Excess Overcollateralization Amount and (b) the Remaining Excess Spread, in
each case for such Distribution Date.

        Excess Overcollateralization Amount: With respect to any Distribution
Date, the lesser of (1) Principal Funds and (2) the excess, if any, of (a) the
Overcollateralization Amount over (b) the Specified Overcollateralization
Amount, in each case for such Distribution Date.

                                     - 11 -

<PAGE>

        Excess Spread: With respect to any Distribution Date, the excess, if
any, of the Interest Funds (other than any Prepayment Penalty Amount) for such
Distribution Date over the sum of Current Interest on the Certificates (other
than Class B-IO Certificates or the Residual Certificates) and Interest Carry
Forward Amounts on the Class A Certificates on such Distribution Date, which,
for the avoidance of doubt, does not include any payments under the Yield
Maintenance Agreements on such Distribution Date.

        Excess Yield Maintenance Amount: With respect to any Distribution Date,
the excess, if any, of (a) the sum of the amounts received under the Yield
Maintenance Agreements for such Distribution Date, over (b) the amount required
to pay Current Interest on such Distribution Date on the Class A, Class M-1 and
Class M-2 Certificates at the applicable Pass-Through Rate, calculated at the
lesser of (1) One-Month LIBOR plus the Applicable Margin for the related
Interest Accrual Period or (2) 11.500% per annum, to the extent not otherwise
paid from Interest Funds.

        Extra Principal Distribution Amount: With respect to any Distribution
Date, the lesser of (a) the excess, if any, of the Specified
Overcollateralization Amount for such Distribution Date over the
Overcollateralization Amount for such Distribution Date (after giving effect to
distributions of principal on the Certificates other than any Extra Principal
Distribution Amount) and (b) the Excess Spread for such Distribution Date.

        Fannie Mae: Fannie Mae (also known as the Federal National Mortgage
Association) or any successor thereto.

        FDIC: Federal Deposit Insurance Corporation or any successor thereto.

        Final Certification: The certification substantially in the form of
Exhibit C-3 hereto.

        Five-Year Hybrid Mortgage Loans: Those Mortgage Loans identified on the
Mortgage Loan Schedule as hybrid adjustable rate mortgage loans with an initial
fixed-rate period of five years.

        Fractional Undivided Interest: With respect to any Class of
Certificates, the fractional undivided interest evidenced by any Certificate of
such Class, which is a fraction (i) in the case of the Class B-IO Certificates,
the numerator of which is the Class B-IO Notional Amount of such Class B-IO
Certificate and the denominator of which is the aggregate Class B-IO Notional
Amount of all Class B-IO Certificates and (ii) in the case of any other such
Class, the numerator of which is the Current Principal Amount of such
Certificate and the denominator of which is the Current Principal Amount of such
Class. With respect to the Certificates in the aggregate, the fractional
undivided interest evidenced by (i) a Residual Certificate will be deemed to
equal 1% multiplied by the percentage interest of such Residual Certificate,
(ii) a Class B-IO Certificate, 2% times a fraction, the numerator of which is
the Class B-IO Notional Amount of such Certificate and the denominator of which
is the aggregate Class B-IO Notional Amount of all Class B-IO Certificates and
(iii) a Certificate of any other Class will be deemed to equal 96% multiplied by
a fraction, the numerator of which is the Current Principal Amount of such
Certificate and the denominator of which is the aggregate Current Principal
Amount of all such Certificates.

                                     - 12 -

<PAGE>

        Freddie Mac: Freddie Mac (also known as the Federal Home Loan Mortgage
Corporation) or any successor thereto.

        Gross Margin: As to each Mortgage Loan, the fixed percentage set forth
in the related Mortgage Note and indicated on the Mortgage Loan Schedule which
percentage is added to the related Index on each Interest Adjustment Date to
determine (subject to rounding, the minimum and maximum Mortgage Rate and the
Periodic Rate Cap) the Mortgage Rate until the next Interest Adjustment Date.

        Holder: The Person in whose name a Certificate is registered in the
Certificate Register except that, subject to Subsections 11.02(b) and 11.05(e)
solely for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Seller, the Master Servicer or the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Fractional Undivided Interest
evidenced thereby necessary to effect any such consent has been obtained.

        Indemnified Persons: The Trustee, the Delaware Trustee, the Master
Servicer, the Seller and the Securities Administrator and their officers,
directors, agents, employees and affiliates and with respect to the Trustee, any
separate co trustee and its officers, directors, agents, employees and
affiliates.

        Independent: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Seller or the Master
Servicer and of any Affiliate of the Seller or the Master Servicer, (b) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer or any Affiliate of the Seller or the
Master Servicer and (c) is not connected with the Seller or the Master Servicer
or any Affiliate as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.

        Index: The index, if any, specified in a Mortgage Note by reference to
which the related Mortgage Rate will be adjusted from time to time.

        Individual Certificate: Any Private Certificate registered in the name
of a Holder other than the Depository or its nominee. The Class B-IO
Certificates will be issued as Individual Certificates.

        Initial Certification: The certification substantially in the form of
Exhibit C-1 hereto.

        Initial Overcollateralization Amount: $69.76

        Institutional Accredited Investor: Any Person meeting the requirements
of Rule 501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act or
any entity all of the equity holders in which come within such paragraphs.

        Insurance Policy: With respect to any Mortgage Loan, any standard hazard
insurance policy, flood insurance policy, title insurance policy or Primary
Mortgage Insurance Policy and,

                                     - 13 -

<PAGE>

with respect to an Additional Collateral Mortgage Loan originated by MLCC, the
MLCC Limited Purpose Surety Bond.

        Insurance Proceeds: With respect to any Mortgage Loans, the proceeds of
any Insurance Policy, to the extent such proceeds are not applied to the
restoration of the property or released to the related Mortgagor in accordance
with the related Servicer's normal servicing procedures, other than proceeds
that represent reimbursement of the related Servicer's costs and expenses
incurred in connection with presenting claims under the related Insurance
Policy.

        Interest Accrual Period: With respect to each Distribution Date, for
each Class of Certificates, the period from and including the prior Distribution
Date (or the Closing Date, in the case of the Distribution Date in April 2003)
to but excluding such Distribution Date.

        Interest Adjustment Date: With respect to a Mortgage Loan, the date, if
any, specified in the related Mortgage Note on which the Mortgage Rate is
subject to adjustment.

        Interest Carry Forward Amount: With respect to each Class of
Certificates (other than the Class B-IO Certificates and the Residual
Certificates) and each Distribution Date, the sum of (i) the excess of (a)
Current Interest for such Class with respect to prior Distribution Dates, over
(b) the amount of interest actually distributed to such Class on such prior
Distribution Dates (other than any amounts paid under the Yield Maintenance
Agreements in respect of Basis Risk Shortfalls and allocated to such Class
pursuant to Section 4.06 or Section 6.01) and (ii) interest on such excess (to
the extent permitted by applicable law), at the applicable Pass-Through Rate for
the related Interest Accrual Period, including the Interest Accrual Period
relating to such Distribution Date.

        Interest Determination Date: With respect to each Class of Certificates
(other than the Class B-IO Certificates or the Residual Certificates), for the
first Interest Accrual Period, March 31, 2003, and with respect to any Interest
Accrual Period thereafter, the second LIBOR Business Day preceding the
commencement of such Interest Accrual Period.

        Interest Funds: With respect to a Distribution Date, an amount equal to
(i) the sum, without duplication, of (a) all interest received during the
related Due Period, less the related Servicing Fee of the Primary Servicer and,
if applicable, the Sub-Master Servicer, and the Master Servicing Fee, (b) all
Monthly Advances relating to interest, (c) all Compensating Interest, (d) Net
Liquidation Proceeds and Insurance Proceeds, to the extent they relate to
interest, (e) the interest portion of proceeds of the repurchase of any Mortgage
Loans by Thornburg pursuant to Sections 2.02, 2.03 or 3.21 and by TMI pursuant
to Section 3.21, (f) the interest portion of the purchase price of the assets of
the Trust upon exercise by Thornburg Mortgage Home Loans, Inc., as a Servicer,
of its Optional Termination Right, (g) the interest portion of any amounts
received under the MLCC Limited Purpose Surety Bond and (h) any Prepayment
Penalty Amounts, less (ii) any Retained Interest or the Trustee Fee or other
amounts relating to interest withdrawn pursuant to Sections 4.03 or 4.05 and
used to pay the Trustee Fee or to reimburse the Trustee, the Delaware Trustee,
the Securities Administrator, the Master Servicer or any Servicer for amounts
due under this Agreement or the applicable Servicing Agreement that have not
been retained by or paid to such party.

                                     - 14 -

<PAGE>

        Interest Rate Cap: For any Distribution Date and the Class A, Class M-1
and Class M-2 Certificates, the weighted average of the Net Mortgage Rates of
the Mortgage Loans as of the last day of the related Due Period, adjusted, if
applicable, to an effective rate reflecting accrual of interest on the basis of
the actual number of days elapsed in the Interest Accrual Period and a 360 day
year.

        Interest Shortfall: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Principal Prepayment or constitutes a Relief Act Mortgage Loan, an amount
determined as follows:

        (a)     Partial principal prepayments received during the relevant
Prepayment Period: The difference between (i) one month's interest at the
applicable Net Mortgage Rate on the amount of such prepayment and (ii) the
amount of interest for the calendar month of such prepayment (adjusted to the
applicable Net Mortgage Rate) received at the time of such prepayment;

        (b)     Principal prepayments in full received during the relevant
Prepayment Period: The difference between (i) one month's interest at the
applicable Net Mortgage Rate on the Scheduled Principal Balance of such Mortgage
Loan immediately prior to such prepayment and (ii) the amount of interest for
the calendar month of such prepayment (adjusted to the applicable Net Mortgage
Rate) received at the time of such prepayment; and

        (c)     As to any Relief Act Mortgage Loan, the excess of (i) 30 days'
interest (or, in the case of a principal prepayment in full, interest to the
date of prepayment) on the Scheduled Principal Balance thereof (or, in the case
of a principal prepayment in part, on the amount so prepaid) at the related Net
Mortgage Rate over (ii) 30 days' interest (or, in the case of a principal
prepayment in full, interest to the date of prepayment) on such Scheduled
Principal Balance (or, in the case of a Principal Prepayment in part, on the
amount so prepaid) at the Net Mortgage Rate required to be paid by the Mortgagor
as limited by application of the Relief Act.

        Interim Certification: The certification substantially in the form of
Exhibit C-2 hereto.

        Intervening Assignment: The meaning set forth in Subsection 2.01(b)(vi).

        Investment Letter: The letter to be furnished by each Institutional
Accredited Investor which purchases any of the Private Certificates in
connection with such purchase, substantially in the form set forth as Exhibit
F-1 hereto; provided that Thornburg or any of its Affiliates shall not be
required to furnish an Investment Letter in connection with the initial
registration or subsequent transfer to an Affiliate of the Private Certificates.

        Lender-Paid PMI Rate: With respect to each Mortgage Loan covered by a
lender-paid Primary Mortgage Insurance Policy, the amount payable to the related
insurer, as stated in the Mortgage Loan Schedule.

        LIBOR Business Day: A day on which banks are open for dealing in foreign
currency and exchange in London and New York City.

                                     - 15 -

<PAGE>

        Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
related Primary Servicer, the Master Servicer or, if applicable, the Sub-Master
Servicer has determined that all amounts it expects to recover from or on
account of such Mortgage Loan have been recovered.

        Liquidation Date: With respect to any Liquidated Mortgage Loan, the date
on which the Master Servicer, the related Primary Servicer or, if applicable,
the Sub-Master Servicer, Servicer has certified that such Mortgage Loan has
become a Liquidated Mortgage Loan.

        Liquidation Expenses: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer, the Sub-Master Servicer, if applicable, or the related Primary
Servicer, such expenses including (a) property protection expenses, (b) property
sales expenses, (c) foreclosure and sale costs, including court costs and
reasonable attorneys' fees, and (d) similar expenses reasonably paid or incurred
in connection with liquidation.

        Liquidation Proceeds: Cash, other than Insurance Proceeds, received in
connection with the liquidation of a defaulted Mortgage Loan, whether through
trustee's sale, foreclosure or otherwise, or the sale of the related Mortgaged
Property and any related Additional Collateral if the Mortgaged Property and
such Additional Collateral is acquired in satisfaction of the Mortgage Loan,
including any amounts remaining in the related Servicer Account, (or, in the
case of a 1998-1 Mortgage Loan that has become a defaulted Liquidated Mortgage
Loan, the Servicer Account of each of the related Primary Servicers and the
Sub-Master Servicer).

        Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the
Original Value of the related Mortgaged Property.

        Loss Event: As the last day of the related Due Period, for the
Distribution Date in each of the months indicated, Realized Losses since the
Closing Date, as a percentage of the aggregate Scheduled Principal Balance of
the Mortgage Loans on the Closing Date, exceed, for (i) 37 months through 48
months following the Closing Date, 0.25%; (ii) 49 months through 72 months
following the Closing Date, 0.50%; and (iii) 73 months following the Closing
Date and each month thereafter, 0.75%.

        Lost Note Affidavit: With respect to any Lost Note, an affidavit from
Thornburg or one of its affiliates certifying that the original Mortgage Note
has been lost, misplaced (including, in the case of certain Mortgage Loans, as
to which the Mortgage File has been released to the related Servicer and not
returned) or destroyed (together with a copy of the related Mortgage Note, if
available).

        Lost Notes: Any Mortgage Loan as to which the original Mortgage Note has
been lost, misplaced (including, in the case of certain Mortgage Loans, as to
which the Mortgage File has been released to the related Servicer and not
returned) or destroyed and has not been replaced, as indicated on the Mortgage
Loan Schedule.

                                     - 16 -

<PAGE>

        Master Servicer: As of the Closing Date, Wells Fargo Bank Minnesota,
National Association and, thereafter, its respective successors in interest
which meet the qualifications of this Agreement.

        Master Servicer Certification: A written certification covering
servicing of the Mortgage Loans by all Servicers and signed by an officer of the
Master Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the Sarbanes-Oxley Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superceded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time pursuant
to the Sarbanes-Oxley Act of 2002, which in any such case affects the form or
substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the Master Servicer Certification shall be as agreed to by the
Master Servicer, the Seller and the Mortgage Loan Seller following a negotiation
in good faith to determine how to comply with any such new requirements.

        Master Servicer Collection Account: The trust account or accounts
created and maintained pursuant to Section 4.02, which shall be denominated
"Deutsche Bank National Trust Company, as Trustee f/b/o Thornburg Mortgage
Securities Trust 2003-2, Mortgage Pass-Through Certificates, Series 2003-2 -
Master Servicer Collection Account."

        Master Servicing Fee: As to any Distribution Date and each Mortgage
Loan, an amount equal to the product of one-twelfth of the Master Servicing Fee
Rate and the aggregate Scheduled Principal Balances of the Mortgage Loans as of
the first day of the related Due Period. As additional compensation and as to
any Distribution Date, the Master Servicer shall be entitled to receive certain
income and gain realized from the investment of funds on deposit in the Master
Servicer Collection Account to the extent provided in Section 4.02(c).

        Master Servicing Fee Rate: 0.0175% per annum.

        Master Servicing Guide: Wells Fargo Conduit and Norwest Conduit
Servicing Guide, dated January, 1997, as amended July 2001.

        Maximum Lifetime Mortgage Rate: The maximum level to which a Mortgage
Rate can adjust in accordance with its terms, regardless of changes in the
applicable Index.

        MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.

        MERS Mortgage Loan: Any Mortgage Loan as to which (i) the related
Security Instrument or related assignment, has been or will be recorded in the
name of MERS, as agent

                                     - 17 -

<PAGE>

for the holder from time to time of the Mortgage Note, and (ii) such Mortgage
Loan has been or will be registered on the MERS System.

        MERS System: The electronic registration system maintained by MERS.

        Minimum Lifetime Mortgage Rate: The minimum level to which a Mortgage
Rate can adjust in accordance with its terms, regardless of changes in the
applicable Index.

        MLCC: Merrill Lynch Credit Corp., a Delaware corporation, and its
successors and assigns.

        MLCC Limited Purpose Surety Bond: A limited purpose surety bond, Policy
No. AB0039BE, issued by AMBAC Assurance Corporation to guarantee certain
shortfalls in net proceeds realized from liquidation of Additional Collateral
(as defined therein) for an Additional Collateral Mortgage Loan (as defined
therein) originated by MLCC.

        MLCC Mortgage Loan: A 1998-1 Mortgage Loan originated by MLCC.

        Modifiable Mortgage Loan: Any Mortgage Loan which, at the option of the
Mortgagor and in accordance with the terms of the related Mortgage Note, may
have the related Mortgage Rate modified to any adjustable rate or hybrid product
offered at the time by the related originator.

        Modified Mortgage Loan: Any Modifiable Mortgage Loan as to which the
related Mortgagor has exercised the right to modify the Mortgage Rate.

        Modified Mortgage Loan Schedule: With respect to each Distribution Date,
a schedule listing each Modifiable Mortgage Loan that has become a Modified
Mortgage Loan during the immediately preceding Due Period, and the Repurchase
Price for each such Modified Mortgage Loan.

        Monthly Advance: An advance of delinquent payments of principal or
interest with respect to a Mortgage Loan required to be made by the applicable
Servicer (including the SubMaster Servicer, if applicable) pursuant to the
related Servicing Agreement or the Master Servicer pursuant to Section 6.05.

        Monthly Payment: With respect to any Mortgage Loan and any Due Period,
the scheduled payment of principal and interest due during such Due Period on
such Mortgage Loan which either is payable by a Mortgagor in such Due Period
under the related Mortgage Note or, in the case of REO Property, would otherwise
have been payable under the related Mortgage Note.

        Moody's: Moody's Investors Service, Inc. and its successors in interest.

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

                                     - 18 -

<PAGE>

        Mortgage Loan: A mortgage loan transferred and assigned to the Trustee
on behalf of the Trust pursuant to Section 2.01 or Section 2.04 and held as a
part of the Trust, as identified in the Mortgage Loan Schedule, including a
mortgage loan the property securing which has become an REO Property.

        Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement
dated as of March 1, 2003, between Thornburg, as seller, and Structured Asset
Mortgage Investments Inc., as purchaser, and all amendments thereof and
supplements thereto.

        Mortgage Loan Schedule: The schedule, attached hereto as Exhibit B with
respect to the Mortgage Loans and as amended from time to time to reflect the
repurchase or substitution of Mortgage Loans pursuant to this Agreement.

        Mortgage Loan Seller: Thornburg, as mortgage loan seller under the
Mortgage Loan Purchase Agreement.

        Mortgage Note: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.

        Mortgage Rate: The annual rate at which interest accrues from time to
time on any Mortgage Loan pursuant to the related Mortgage Note, which rate at
the Cut-Off Date is equal to the "Mortgage Rate" set forth with respect thereto
on the Mortgage Loan Schedule.

        Mortgaged Property: Either of (x) the fee simple interest in real
property, together with improvements thereto including any exterior improvements
to be completed within 120 days of disbursement of the related Mortgage Loan
proceeds, or (y) or, in the case of REO Property, such REO Property, or (z) in
the case of a Cooperative Loan, the related Cooperative Shares and Proprietary
Lease, securing the indebtedness of the Mortgagor under the related Mortgage
Loan.

        Mortgagor: The obligor on a Mortgage Note.

        Net Interest Shortfall: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.

        Net Liquidation Proceeds: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation Expenses which are payable therefrom
by the related Servicer, if applicable, the Sub-Master Servicer or the Master
Servicer in accordance with the related Servicing Agreement or this Agreement,
(ii) unreimbursed advances by the related Servicer, if applicable, the
Sub-Master Servicer or the Master Servicer and (iii) Monthly Advances.

        Net Mortgage Rate: With respect to each Mortgage Loan, the Mortgage Rate
in effect from time to time less the Aggregate Expense Rate.

        Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan.

                                     - 19 -

<PAGE>

        Nonrecoverable Advance: Any advance or Monthly Advance (i) which was
previously made or is proposed to be made by the Master Servicer, the Trustee
(as successor Master Servicer) or applicable Servicer and (ii) which, in the
good faith judgment of the Master Servicer, the Trustee or applicable Servicer,
will not or, in the case of a proposed advance or Monthly Advance, would not, be
ultimately recoverable by the Master Servicer, the Trustee (as successor Master
Servicer) or applicable Servicer from Liquidation Proceeds, Insurance Proceeds
or future payments on the Mortgage Loan for which such advance or Monthly
Advance was made.

        Offered Certificate: Any Senior Certificate, Subordinate Certificate, or
Residual Certificate

        Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President or
Assistant Vice President or other authorized officer of the Master Servicer, the
Mortgage Loan Seller or the Seller, as applicable, and delivered to the Trustee,
as required by this Agreement.

        One-Month LIBOR: With respect to any Interest Accrual Period, the rate
determined by the Securities Administrator on the related Interest Determination
Date on the basis of the rate for U.S. dollar deposits for one month that
appears on Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such
Interest Determination Date; provided that the parties hereto acknowledge that
One-Month LIBOR for the first Interest Accrual Period shall equal 1.30% per
annum. If such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered, such
other service for displaying One-Month LIBOR or comparable rates as may be
reasonably selected by the Securities Administrator), One-Month LIBOR for the
applicable Interest Accrual Period will be the Reference Bank Rate. If no such
quotations can be obtained by the Securities Administrator and no Reference Bank
Rate is available, One-Month LIBOR will be One-Month LIBOR applicable to the
preceding Interest Accrual Period. The establishment of One-Month LIBOR on each
Determination Date by the Securities Administrator and the Securities
Administrator's calculation of the rate of interest applicable to the
Certificates bearing interest based on One-Month LIBOR shall, in the absence of
manifest error, be conclusive and binding.

        Opinion of Counsel: A written opinion of counsel who is or are
acceptable to the Trustee and who, unless required to be Independent (an
"Opinion of Independent Counsel"), may be internal counsel for Thornburg, the
Master Servicer or the Seller.

        Optional Securities Purchase Date: The first Distribution Date that the
aggregate Scheduled Principal Balance of the Mortgage Loans as of the end of the
immediately preceding Due Period is equal to or less than 20% of the Cut-off
Date Balance.

        Optional Securities Purchase Right: The right of Thornburg to purchase
the outstanding Offered Certificates in accordance with Section 5.09.

        Optional Termination Right: The right of Thornburg, in its capacity as
Servicer, to purchase all of the Mortgage Loans in accordance with Section
10.01.

                                     - 20 -

<PAGE>

        Original Value: The lesser of (i) the Appraised Value or (ii) the sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except in instances where either clauses (i) or (ii) is unavailable, the other
may be used to determine the Original Value, or if both clauses (i) and (ii) are
unavailable, Original Value may be determined from other sources reasonably
acceptable to the Seller.

        Outstanding Mortgage Loan: With respect to any Due Date, a Mortgage Loan
which, prior to such Due Date, was not the subject of a Principal Prepayment in
full, did not become a Liquidated Mortgage Loan and was not purchased or
replaced.

        Outstanding Principal Balance: As of the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor at the time such property was
acquired by the Trust less any Net Liquidation Proceeds with respect thereto to
the extent applied to principal.

        Overcollateralization Amount: With respect to any Distribution Date, the
excess, if any, of (a) the aggregate Scheduled Principal Balance of the Mortgage
Loans as of the last day of the related Due Period over (b) the Current
Principal Amount of the Certificates (other than the Class B-IO Certificates) on
such Distribution Date (after taking into account the payment of principal other
than any Extra Principal Distribution Amount on such Certificates).

        Pass-Through Rate: The Class A Pass-Through Rate, the Class M-1
Pass-Through Rate or the Class M-2 Pass-Through Rate, as applicable.

        Periodic Rate Cap: With respect to each Mortgage Loan, the maximum
adjustment that can be made to the Mortgage Rate on each Interest Adjustment
Date in accordance with its terms, regardless of changes in the applicable
Index.

        Permitted Investments: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders:

                (i)     direct obligations of, and obligations the timely
        payment of which are fully guaranteed by the United States of America or
        any agency or instrumentality of the United States of America the
        obligations of which are backed by the full faith and credit of the
        United States of America;

                (ii)    (a) demand or time deposits, federal funds or bankers'
        acceptances issued by any depository institution or trust company
        incorporated under the laws of the United States of America or any state
        thereof (including the Trustee or the Master Servicer each acting in its
        commercial banking capacity) and subject to supervision and examination
        by federal and/or state banking authorities, provided that the
        commercial paper and/or the short-term debt rating and/or the long-term
        unsecured debt obligations of such depository institution or trust
        company at the time of such investment or contractual commitment
        providing for such investment have the Applicable Credit Rating or
        better from each Rating Agency and (b) any other demand or time deposit
        or certificate of deposit that is fully insured by the Federal Deposit
        Insurance Corporation;

                                     - 21 -

<PAGE>

                (iii)   repurchase obligations with respect to (a) any security
        described in clause (i) above or (b) any other security issued or
        guaranteed by an agency or instrumentality of the United States of
        America, the obligations of which are backed by the full faith and
        credit of the United States of America, in either case entered into with
        a depository institution or trust company (acting as principal)
        described in clause (ii)(a) above where the Trustee holds the security
        therefor;

                (iv)    securities bearing interest or sold at a discount issued
        by any corporation (including the Trustee or the Master Servicer)
        incorporated under the laws of the United States of America or any state
        thereof that have the Applicable Credit Rating or better from each
        Rating Agency at the time of such investment or contractual commitment
        providing for such investment; provided, however, that securities issued
        by any particular corporation will not be Permitted Investments to the
        extent that investments therein will cause the then outstanding
        principal amount of securities issued by such corporation and held as
        part of the Trust to exceed 10% of the aggregate Outstanding Principal
        Balances of all the Mortgage Loans and Permitted Investments held as
        part of the Trust;

                (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 one year after the date of issuance
        thereof) having the Applicable Credit Rating or better from each Rating
        Agency at the time of such investment;

                (vi)    a Reinvestment Agreement issued by any bank, insurance
        company or other corporation or entity;

                (vii)   any other demand, money market or time deposit,
        obligation, security or investment as may be acceptable to each Rating
        Agency as evidenced in writing by each Rating Agency to the Trustee; and

                (viii)  any money market or common trust fund having the
        Applicable Credit Rating or better from each Rating Agency, including
        any such fund for which the Trustee or Master Servicer or any affiliate
        of the Trustee or Master Servicer acts as a manager or an advisor;
        provided, however, that no instrument or security shall be a Permitted
        Investment if such instrument or security evidences a right to receive
        only interest payments with respect to the obligations underlying such
        instrument or if such security provides for payment of both principal
        and interest with a yield to maturity in excess of 120% of the yield to
        maturity at par or if such instrument or security is purchased at a
        price greater than par.

        Permitted Transferee: Any Person other than a Disqualified Organization
or an "electing large partnership" (as defined by Section 775 of the Code).

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

                                     - 22 -

<PAGE>

        Physical Certificate: Any Residual Certificate registered in the name of
a Holder that is not the Depository or its nominee.

        Prepayment Penalty Amount: With respect to the Mortgage Loans and each
Distribution Date, all premiums or charges, if any, paid by Mortgagors under the
related Mortgage Notes as a result of full or partial Principal Prepayment
collected by the applicable Servicer during the immediately preceding Prepayment
Period, but only to the extent required to be remitted to the Master Servicer on
the applicable Servicer Remittance Date under the terms of the related Servicing
Agreement.

        Prepayment Period: With respect to any Mortgage Loan and any
Distribution Date, the immediately preceding calendar month.

        Primary Mortgage Insurance Policy: Each policy of primary mortgage
guaranty insurance or any replacement policy therefor with respect to any
Mortgage Loan, including any lender-paid policy.

        Primary Servicer: A Servicer responsible for performing (and not
supervising) servicing activities in respect of any Mortgage Loans pursuant to
the applicable Servicing Agreement, including the Master Servicer or the
Sub-Master Servicer as a successor Servicer to a Servicer pursuant to this
Agreement or the related Servicing Agreement, as applicable, irrespective of
whether such Servicer has engaged the services of a sub-servicer to perform
servicing activities on its behalf. For purposes of the Master Servicer's
responsibilities with respect to Servicers pursuant to Article III or any other
provision of this Agreement applicable to the Master Servicer, a Primary
Servicer shall not include those Primary Servicers under the supervision of the
Sub-Master Servicer.

        Principal Distribution Amount: With respect to each Distribution Date,
an amount equal to (i) the Principal Funds for such Distribution Date, plus (ii)
any Extra Principal Distribution Amount for such Distribution Date, less (iii)
any Excess Overcollateralization Amount for such Distribution Date.

        Principal Funds: An amount equal to (i) the sum, without duplication, of
(a) the Monthly Payments collected during the related Due Period or advanced by
a Servicer or the Master Servicer on or before the related Distribution Account
Deposit Date, (b) prepayments, exclusive of any prepayment charges, collected in
the related Prepayment Period, (c) the Scheduled Principal Balance of each
Mortgage Loan that was repurchased by Thornburg pursuant to Section 2.02, 2.03
or 3.21 or by TMI pursuant to Section 3.21, (d) any Substitution Adjustment
Amounts paid by the Mortgage Loan Seller or similar amounts by any Servicer
pursuant to its Servicing Agreement in connection with delivery of a Substitute
Mortgage Loan, (e) the principal portion of all Net Liquidation Proceeds and
Insurance Proceeds collected during the related Prepayment Period and remitted
to the Master Servicer Collection Account less all non-recoverable Monthly
Advances relating to principal reimbursed pursuant to Section 4.03 or 4.05, (f)
the principal portion of the purchase price of the assets of the Trust upon the
exercise by Thornburg of the Optional Termination Right and (g) the principal
portion of any amounts received under the MLCC Limited Purpose Surety Bond, less
(ii) amounts relating to principal used to provide expense reimbursements
pursuant to Section 4.03 or 4.05 and any losses on

                                     - 23 -

<PAGE>

investments in the Master Servicer Collection Account or the Distribution
Account not reimbursed as specified in Section 4.02 or 4.04.

        Principal Prepayment: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and the purchase price in connection with any purchase of a Mortgage Loan, any
cash deposit in connection with the substitution of a Mortgage Loan, but
excluding any Net Liquidation Proceeds.

        Private Certificate: Any Class B-IO Certificate.

        Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.

        QIB: A Qualified Institutional Buyer as defined in Rule 144A promulgated
under the Securities Act.

        Qualified Insurer: Any insurance company duly qualified as such under
the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as the claims
paying ability of which is acceptable to each Rating Agency for pass-through
certificates having the same rating as the Certificates rated by each Rating
Agency as of the Closing Date.

        Rating Agency: Each of S&P and Moody's.

        Realized Loss: With respect to a defaulted Mortgage Loan, the excess of
the Scheduled Principal Balance of such defaulted Mortgage Loan over the Net
Liquidation Proceeds with respect thereto that are allocated to principal.

        Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the related Cooperative Corporation and the originator of such
Mortgage Loan to establish the rights of such originator in the related
Cooperative Property.

        Record Date: With respect to the Class B-IO Certificates and the
Residual Certificates and (a) the first Distribution Date, the Closing Date, and
(b) with respect to any other Distribution Date, the close of business on the
last Business Day of the month preceding the month in which such Distribution
Date occurs. With respect to any Distribution Date and the Class A, Class M-1
and Class M-2 Certificates, so long as such Certificates are Book-Entry
Certificates, the Business Day preceding such Distribution Date, and otherwise,
the close of business on the last Business Day of the month preceding the month
in which such Distribution Date occurs.

        Reference Banks: Leading banks selected by the Securities Administrator
and engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an

                                     - 24 -

<PAGE>

established place of business in London, (ii) which have been designated as such
by the Securities Administrator and (iii) which are not controlling, controlled
by, or under common control with, the Seller, the Mortgage Loan Seller or the
Master Servicer.

        Reinvestment Agreements: One or more reinvestment agreements, acceptable
to each Rating Agency, from a bank, insurance company or other corporation or
entity (including the Trustee).

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

        Relief Act Mortgage Loan: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.

        Remaining Excess Spread: With respect to any Distribution Date, the
Excess Spread less any Extra Principal Distribution Amount, in each case for
such Distribution Date.

        REMIC: A real estate mortgage investment conduit, as defined in the
Code.

        REMIC I: The segregated pool of assets described in Section 5.01(c).

        REMIC I Certificates: The REMIC I Regular Interests and the Class R-1
Certificates.

        REMIC I Regular Interests: As defined in Section 5.01(c).

        REMIC II: The segregated pool of assets described in Section 5.01(d).

        REMIC II Certificates: The REMIC II Regular Interests and the Class R-2
Certificates.

        REMIC II Regular Interests: As defined in Section 5.01(d).

        REMIC Opinion: An Opinion of Independent Counsel, to the effect that the
proposed action described therein would not, under the REMIC Provisions, (i)
cause REMIC I or REMIC II to fail to qualify as a REMIC while any regular
interest in such REMIC is outstanding, (ii) result in a tax on prohibited
transactions with respect to any REMIC or (iii) constitute a taxable
contribution to any REMIC after the Startup Day.

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

        REO Property: A Mortgaged Property acquired in the name of the Trustee,
for the benefit of Certificateholders, by foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.

        Repurchase Price: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased by the Mortgage Loan
Seller or TMI pursuant to the Mortgage Loan Purchase Agreement or Article II of
this Agreement, as applicable, an amount

                                     - 25 -

<PAGE>

equal to the sum of (i) 100% of the Outstanding Principal Balance of such
Mortgage Loan as of the date of repurchase (or if the related Mortgaged Property
was acquired with respect thereto, 100% of the Outstanding Principal Balance at
the date of the acquisition), plus (ii) accrued but unpaid interest on the
Outstanding Principal Balance at the related Mortgage Rate, through and
including the last day of the month of repurchase, (iii) any premiums due the
insurer under any Primary Mortgage Insurance Policy, and reduced by (iv) any
portion of any Servicing Fee or the Master Servicing Fee, Monthly Advances and
advances payable to the purchaser of the Mortgage Loan.

        Request for Release: A request for release in the form attached hereto
as Exhibit D.

        Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.

        Residual Certificates: The Class R Certificates.

        Responsible Officer: When used with respect to the Trustee, any Vice
President, Assistant Vice President, Secretary, Assistant Secretary, Treasurer,
Assistant Treasurer, any trust officer or any other officer associated with the
Corporate Trust Office customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement, and any other officer
of the Trustee to whom a matter arising hereunder may be referred because of
that officer's knowledge of and familiarity with the particular subject.

        Retained Interest: Interest in respect of each Employee Loan, retained
by the Retained Interest Holder at the Retained Interest Rate.

        Retained Interest Holder: With respect to each Employee Loan, the
Mortgage Loan Seller or any successor in interest by assignment or otherwise.

        Retained Interest Rate: As of the Cut-off Date, and for each Due Period
thereafter, 0.00% per annum; provided, however, if the related Mortgagor of the
Employee Loan ceases to be an employee or a director of Thornburg or its
Affiliates, the amount of the increase in the per annum rate set forth in the
related Mortgage Note.

        Rule 144A Certificate: The certificate to be furnished by each purchaser
of a Private Certificate which is a Qualified Institutional Buyer as defined
under Rule 144A promulgated under the Securities Act, substantially in the form
set forth as Exhibit F-2 hereto; provided that Thornburg or any of its
Affiliates shall not be required to furnish Rule 144A Certificate in connection
with the initial registration or subsequent transfer of the Private Certificates
to Thornburg or an Affiliate of Thornburg, or from such Affiliate to Thornburg.

        S&P: Standard & Poor's Ratings Services, a Division of the McGraw-Hill
Companies, Inc. and its successors in interest.

        Scheduled Principal: The principal portion of any Monthly Payment.

                                     - 26 -

<PAGE>

        Scheduled Principal Balance: For any Mortgage Loan or related REO
Property with respect to a Distribution Date, its principal balance as of the
Cut-Off Date minus the sum of (i) the principal portion of the Monthly Payments
due from Mortgagors with respect to such Mortgage Loan during each Due Period
ending prior to such Distribution Date (and irrespective of any delinquency in
their payment), (ii) all Principal Prepayments with respect to such Mortgage
Loan received prior to or during the related Prepayment Period, and all Net
Liquidation Proceeds and Insurance Proceeds to the extent applied by the related
Servicer as recoveries of principal in accordance with Section 3.13 of this
Agreement that were received by the related Servicer by the close of business on
the last day of the Prepayment Period related to such Distribution Date, and
(iii) any Realized Loss with respect to such Mortgage Loan incurred during the
related Prepayment Period. The Scheduled Principal Balance of any Liquidated
Mortgage Loan is zero.

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

        Securities Administrator: Wells Fargo Bank Minnesota, National
Association, or its successor in interest, or any successor securities
administrator appointed as herein provided.

        Securities Legend: [in the case of the Class B-IO Certificates:] THIS
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS. THE
HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY
BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH
THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING
THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT OR ANY
ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING
NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE
TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER
APPLICABLE JURISDICTION.

        [in the case of the Class R-1 and R-2 and Class B-IO Certificates:] THIS
CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN

                                     - 27 -

<PAGE>

EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, AND/OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

        [in the case of the Class B-IO Certificates:], UNLESS THE PROPOSED
TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND/OR
OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED
TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED
TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION
EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II)
WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE SELLER,
THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER, THE TRUSTEE, THE DELAWARE
TRUSTEE OR ANY SERVICER, WHICH WILL BE EVIDENCED BY A REPRESENTATION OR AN
OPINION OF COUNSEL TO SUCH EFFECT.

        Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note that defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.

        Security Instrument: A written instrument creating a valid first lien on
a Mortgaged Property securing a Mortgage Note, which may be any applicable form
of mortgage, deed of trust, deed to secure debt or security deed, including any
riders or addenda thereto.

        Seller: Structured Asset Mortgage Investments Inc., a Delaware
corporation, or its successors in interest.

        Senior Certificates: The Class A Certificates.

        Servicer: Each of the several servicers of the Mortgage Loans as set
forth and as individually defined in Exhibit H hereto and any successors thereto
(which include the Primary Servicers and the Sub-Master Servicer); provided,
that for purposes of the Master Servicer's responsibilities with respect to
Servicers pursuant to Article III or any other provision in this Agreement
applicable to the Master Servicer, a Servicer shall not include those Primary
Servicers under the supervision of the Sub-Master Servicer.

        Servicer Account: Any account established and maintained for the benefit
of the Master Servicer or the Trust by each Servicer with respect to the related
Mortgage Loans and any REO Property, pursuant to the terms of the respective
Servicing Agreement.

        Servicer Remittance Date: With respect to each Mortgage Loan other than
a 1998-1 Mortgage Loan, the 18th day of each month, or, if such day is not a
Business Day, the next Business Day, and with respect to each 1998-1 Mortgage
Loan, the date specified in the related Servicing Agreement.

                                     - 28 -

<PAGE>

        Servicing Agreements: The servicing agreements relating to the Mortgage
Loans as set forth in Exhibit H hereto (including that of the Sub-Master
Servicer), servicing arrangements for any Mortgage Loans under the Mortgage Loan
Seller's Correspondents Sellers Guide, and any other servicing agreement entered
into between a successor servicer and the Mortgage Loan Seller or the Trustee on
behalf of the Trust pursuant to the terms hereof.

        Servicing Certification: A written certification of a Servicer
(including the Master Servicer when acting as a direct servicer of Mortgage
Loans) provided to the Master Servicer or to such other Person as may be
providing the certification required by the Sarbanes-Oxley Act of 2002 as
back-up for such latter certification, in the form attached as an exhibit to or
provided for in the applicable Servicing Agreement.

        Servicing Fee: As to any Mortgage Loan and Distribution Date, an amount
equal to the product of (i) the Scheduled Principal Balance of such Mortgage
Loan as of the Due Date in the preceding calendar month and (ii) the applicable
Servicing Fee Rate.

        Servicing Fee Rate: As to any Mortgage Loan, a per annum rate as set
forth in the Mortgage Loan Schedule for the related Primary Servicer and, if
applicable, the Sub-Master Servicer.

        Seven- and Ten-Year Hybrid Mortgage Loans: Those Mortgage Loans
designated on the Mortgage Loan Schedule as hybrid adjustable rate mortgage
loans with an initial fixed-rate period of seven or ten years.

        Significant Modification: The meaning given to such term in Section
3.21(b) hereto.

        Significant Modification Mortgage Loan: The meaning given to such term
in Section 3.21(b) hereto.

        Specified Overcollateralization Amount: 0.25% of the Cut-off Date
Balance of the Mortgage Loans.

        Startup Day: April 3, 2003.

        Stepdown Date: The earlier to occur of (i) the Distribution Date on
which the aggregate Current Principal Amount of the Class A Certificates has
been reduced to zero and (ii) the later to occur of (a) the Distribution Date
occurring in April 2006 and (ii) the first Distribution Date on which the
aggregate Current Principal Amount of the Subordinate Certificates plus the
Overcollateralization Amount for such Distribution Date divided by the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the end of the related
Due Period is greater than or equal to 4.50%.

        Sub-Master Servicer: Washington Mutual Mortgage Securities Corp., a
Delaware corporation, as Master Servicer of the 1998-1 Mortgage Loans, and its
successor and assigns.

        Subordinate Certificates: The Class M-1 and Class M-2 Certificates.

                                     - 29 -

<PAGE>

        Substitute Mortgage Loan: A mortgage loan tendered to the Trustee on
behalf of the Trust pursuant to the related Servicing Agreement, the Mortgage
Loan Purchase Agreement or Section 2.04 of this Agreement, as applicable, in
each case, (i) which has an Outstanding Principal Balance not greater nor
materially less than the Mortgage Loan for which it is to be substituted; (ii)
which has a Mortgage Rate and Net Mortgage Rate not less than, and not
materially greater than, such Mortgage Loan; (iii) which has a maturity date not
materially earlier or later than such Mortgage Loan and not later than the
latest maturity date of any Mortgage Loan; (iv) which is of the same property
type and occupancy type as such Mortgage Loan; (v) which has a Loan-to-Value
Ratio not greater than the Loan-to-Value Ratio of such Mortgage Loan; (vi) which
is current in payment of principal and interest as of the date of substitution;
(vii) as to which the payment terms do not vary in any material respect from the
payment terms of the Mortgage Loan for which it is to be substituted, (viii) is
not a Cooperative Loan unless such Mortgage Loan was a Cooperative Loan; (ix)
which has a Gross Margin, Periodic Rate Cap and Maximum Lifetime Mortgage Rate
no less than those of such Mortgage Loan, has the same Index and interval
between Interest Adjustment Dates as such Mortgage Loan, and a Minimum Lifetime
Mortgage Rate no lower than that of such Mortgage Loan; and (x) is a "qualified
mortgage" as defined in Section 860G(a)(3) of the Code; provided, however, that
no mortgage loan will be eligible to become a Substitute Mortgage Loan if its
inclusion in the Trust would be in violation of the provisions of Section 2.04
hereof.

        Substitution Adjustment Amount: The meaning set forth in Section 2.04.

        Tax Administration and Tax Matters Person: The Securities Administrator
or any successor thereto or assignee thereof shall serve as tax administrator
hereunder and as agent for each Tax Matters Person. The Holder of each Class of
Residual Certificates shall be the Tax Matters Person for the related REMIC, as
more particularly set forth in Section 9.12 hereof.

        Three-Year Hybrid Mortgage Loans: Those Mortgage Loans designated on the
Mortgage Loan Schedule as hybrid adjustable rate mortgage loans with an initial
fixed-rate period of three years.

        TMI: Thornburg Mortgage Inc., a Maryland corporation, and its successors
and assigns.

        Trigger Event: With respect to any Distribution Date on or after the
Stepdown Date, the occurrence of either a Delinquency Event or a Loss Event.

        Trust: Thornburg Mortgage Securities Trust 2003-2, the Delaware
statutory trust created pursuant to this Agreement, and the assets of which
consist of the Mortgage Loans and the other assets described in Section 2.01(a).

        Trustee: Deutsche Bank National Trust Company, or its successor in
interest, or any successor trustee appointed as herein provided.

        Trustee Fee: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of one-twelfth of the Trustee Fee Rate and the
aggregate Scheduled Principal Balances of the Mortgage Loans as of the first day
of the related Due Period.

                                     - 30 -

<PAGE>

        Trustee Fee Rate: 0.00065% per annum.

        UCC: The Uniform Commercial Code as in effect in the applicable
jurisdiction.

        Uncertificated Principal Balance: With respect to any REMIC I Regular
Interest, the balance thereof as indicated in Section 5.01, as reduced by
amounts allocated thereto in reduction thereof in accordance with Section 5.01.

        Uninsured Cause: Any cause of damage to a Mortgaged Property or related
REO Property such that the complete restoration of such Mortgaged Property or
related REO Property is not fully reimbursable by the hazard insurance policies
required to be maintained pursuant the related Servicing Agreement, without
regard to whether or not such policy is maintained.

        United States Person: A citizen or resident of the United States, a
corporation or partnership (including an entity treated as a corporation or
partnership for federal income tax purposes) created or organized in, or under
the laws of, the United States or any state thereof or the District of Columbia
(except, in the case of a partnership, to the extent provided in regulations),
provided that, for purposes solely of the Class R Certificates, no partnership
or other entity treated as a partnership for United States federal income tax
purposes shall be treated as a United States Person unless all persons that own
an interest in such partnership either directly or through any entity that is
not a corporation for United States federal income tax purposes are United
States Persons, or an estate whose income is subject to United States federal
income tax regardless of its source, or 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 such United States Persons have the authority to control
all substantial decisions of the trust. To the extent prescribed in regulations
by the Secretary of the Treasury, a trust which was in existence on August 20,
1996 (other than a trust treated as owned by the grantor under subpart E of part
I of subchapter J of chapter 1 of the Code), and which was treated as a United
States person on August 20, 1996 may elect to continue to be treated as a United
States person notwithstanding the previous sentence.

        Unpaid Applied Realized Loss Amount: With respect to any Class of the
Subordinate Certificates and as to any Distribution Date, the excess of (i) the
Applied Realized Loss Amount with respect to such Class over (ii) the sum of all
distributions in reduction of the Applied Realized Loss Amounts for such Class
on all previous Distribution Dates. Any amounts distributed to a Class of
Subordinate Certificates in respect of any Unpaid Applied Realized Loss Amount
will not be applied to reduce the Current Principal Amount of such Class.

        Yield Maintenance Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.06 in the name of the Trustee
for the benefit of the Class A Certificateholders, the Class M-1
Certificateholders and the Class M-2 Certificateholders and designated "Deutsche
Bank National Trust Company, in trust for registered holders of Thornburg
Mortgage Securities Trust 2003-2, Mortgage Pass-Through Certificates, Series
2003-2, Class A, Class M-1 and Class M-2 Certificates." The Yield Maintenance
Account shall not constitute an asset of any REMIC hereunder, but shall be
treated as owned by the Holders of the Class B-IO Certificates, and for federal
income tax purposes, all payments to the Yield Maintenance Account shall be
treated as payments to the Holders of the Class B-IO Certificates.

                                     - 31 -

<PAGE>

        Yield Maintenance Agreements: The three Agreements, to be dated as of
April 11, 2003, but which are effective as of April 3, 2003, by and between the
Yield Maintenance Provider and the Trust, Ref. Nos. FXTMST0321 - Amended,
FXTMST0322 - Amended and FXTMST0323 - Amended, which each include the related
ISDA Master Agreement, the Schedule thereto and the related Confirmation.

        Yield Maintenance Payment: For each Yield Maintenance Agreement and a
Distribution Date, the amount, if any, to be paid pursuant to such Yield
Maintenance Agreement, as calculated by the Yield Maintenance Provider based on
information in the Remittance Report delivered to it pursuant to Section 6.04 on
the Business Day prior to the immediately preceding Distribution Date.

        Yield Maintenance Provider: Bear Stearns Financial Products Inc.

                                     - 32 -

<PAGE>

                                   ARTICLE IA

                                  ORGANIZATION

        Section 1A.01. Name of Trust. The name of the Trust formed hereby shall
be "Thornburg Mortgage Securities Trust 2003-2," in which name the Trustee may
conduct the business and affairs of the Trust, make and execute contracts and
agreements on behalf of the Trust and sue and be sued.

        Section 1A.02. Office. The office of the Trust shall be in care of the
Delaware Trustee, and an additional office of the Trust shall be in care of the
Trustee. In the case of the Delaware Trustee the office of the Trust shall be
located at 1011 Centre Street, Suite 200, Wilmington, Delaware 19805 and in the
case of the Trustee, the office of the Trust shall be located at its Corporate
Trust Office, or at such other address as the Delaware Trustee or the Trustee
may designate by written notice to the Certificateholders, each Rating Agency
and the other parties to this Agreement.

        Section 1A.03. Declaration of Trust. The Seller hereby appoints Deutsche
Bank National Trust Company as Trustee of the Trust, to have all the rights
powers and duties set forth herein. The Seller hereby appoints Deutsche Bank
Trust Company Delaware to act as Delaware Trustee hereunder. It is the intention
of the parties hereto that the Trust constitute a statutory trust under Chapter
38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et seq., as the
same may be amended from time to time (the "Delaware Statutory Trust Statute"),
and that this Agreement constitute the governing instrument of such statutory
trust. Effective as of the date hereof, the Trustee shall have all rights,
powers and duties set forth in the Delaware Statutory Trust Statute with respect
to accomplishing the purposes of the Trust. The Trustee and the Delaware Trustee
are hereby authorized to file a Certificate of Trust in substantially the form
of Exhibit J with the Secretary of State of Delaware, on behalf of the Trust.

        Section 1A.04. Purpose and Powers. The purposes of the Trust are (i) to
issue the Certificates and to sell the Certificates to or at the direction of
the Seller; (ii) with the proceeds of the sale of the Certificates, to purchase
the Mortgage Loans and all related assets and to pay any organizational start-up
and transactional expenses of the Trust; (iii) to enter into this Agreement and
to perform its obligations hereunder; (iv) to enter into the Yield Maintenance
Agreements, (v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and (vi) subject to
compliance with this Agreement, to engage in such other activities as may be
required in connection with the conservation of the assets of the Trust and the
making of distributions to the Certificateholders. The Trust is hereby
authorized to engage in the foregoing activities. The Trust shall not engage in
any activity other than in connection with the foregoing or other than as
required or authorized by the terms of this Agreement.

        Section 1A.05. Liability of the Certificateholders. The
Certificateholders shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.

                                     - 33 -

<PAGE>

        Section 1A.06. Title To Trust Property. Legal title to the assets of the
Trust shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust to be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Trustee, the Delaware Trustee, a co-trustee and/or a
separate trustee, as the case may be, and in each case on behalf of the Trust.
The Certificateholders shall not have legal title to any part of the assets of
the Trust. No transfer by operation of law or otherwise of any interest of the
Certificateholders shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it of
any part of the assets of the Trust. The Trustee, in such capacity and in its
capacity as Custodian, is hereby authorized to hold all assets of the Trust on
behalf of the Trust, for the benefit of the Certificateholders.

        Section 1A.07. Situs of Trust. The Trust will be located in the State of
Delaware and administered in the States of Delaware, California and Maryland.
Nothing herein shall restrict or prohibit the Trustee from having employees
within or without the State of Delaware. The Trust may also be qualified to do
business in the State of New York.

        Section 1A.08. The Delaware Trustee. (a) The Delaware Trustee is
appointed to serve as the trustee of the Trust in the State of Delaware for the
sole purpose of satisfying the requirement of Section 3807(a) of the Delaware
Statutory Trust Act that the Trust have at least one trustee with a principal
place of business in the State of Delaware. It is understood and agreed by the
parties hereto that the Delaware Trustee shall have none of the duties or
liabilities of the Trustee.

        (b)     The duties of the Delaware Trustee shall be limited to (i)
accepting legal process served on the Trust in the State of Delaware and (ii)
the execution of any certificates required to be filed with the Delaware
Secretary of State which the Delaware Trustee is required to execute under
Section 3811 of the Delaware Statutory Trust Act. To the extent that, at law or
in equity, the Delaware Trustee has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or the Certificateholders, it is
hereby understood and agreed by the other parties hereto that such duties and
liabilities are replaced by the duties and liabilities of the Delaware Trustee
expressly set forth in this Agreement. The Delaware trustee shall have no
liability for the acts or omissions of the Trustee.

        (c)     The Delaware Trustee may be removed by the Trustee upon thirty
days prior written notice to the Delaware Trustee. The Delaware Trustee may
resign upon thirty days prior written notice to the Trustee. No resignation or
removal of the Delaware Trustee shall be effective except upon the appointment
of a successor Delaware trustee. If no successor has been appointed within such
thirty day period, the Delaware Trustee or the Trustee may, at the expense of
the Trust, petition a court to appoint a successor Delaware trustee.

        (d)     Any Person into which the Delaware Trustee may be merged or with
which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Delaware Trustee shall be a party, or any Person
which succeeds to all or substantially all of the corporate trust business of
the Delaware Trustee, shall be the successor Delaware Trustee under this

                                     - 34 -

<PAGE>

Agreement without the execution, delivery or filing of any paper or instrument
or further act to be done on the part of the parties hereto, except as may be
required by applicable law.

        (e)     The Delaware Trustee shall be entitled to all of the same
rights, protections indemnities and immunities under this Agreement and with
respect to the Trust as the Trustee. No amendment or waiver of any provision of
this Agreement which adversely affects the Delaware Trustee shall be effective
against it without its prior written consent.

        (f)     In the event of the appointment of a successor Delaware Trustee,
such successor shall cause an amendment to the certificate of trust to be filed
with the Secretary of State of Delaware in accordance with Section 3810 of the
Delaware Statutory Trust Act, indicating the change of such Delaware Trustee's
identity. In addition, until the termination of the Trust and this Agreement,
either the Trustee or Delaware Trustee shall at all times fulfill the
requirements of the Delaware Statutory Trust Act.

                                     - 35 -

<PAGE>

                                   ARTICLE II

                          Conveyance of Mortgage Loans;
                        Original Issuance of Certificates

        Section 2.01 Conveyance of Mortgage Loans and Other Assets to the Trust.
(a) The Seller concurrently with the execution and delivery of this Agreement,
sells, transfers and assigns to the Trust without recourse all its right, title
and interest in and to (i) the Mortgage Loans identified in the Mortgage Loan
Schedule, including all interest and principal due with respect to the Mortgage
Loans after the Cut-off Date, but excluding any payments of principal and
interest due on or prior to the Cut-off Date (and excluding any Retained
Interest on a Mortgage Loan); (ii) such assets relating to the Mortgage Loans as
from time to time may be held by the Servicers in each Servicer Account, the
Master Servicer in the Master Servicer Collection Account and the Trustee in the
Distribution Account and the Yield Maintenance Account (but, in each case,
excluding all investment earnings thereon), for the benefit of the Trust, (iii)
any REO Property, (iv) the Required Insurance Policies and any amounts paid or
payable by the insurer under any Insurance Policy (to the extent the mortgagee
has a claim thereto), (v) the rights of the Seller in, but none of the
obligations of the Seller with respect to, the Mortgage Loan Purchase Agreement,
including but not limited to Seller's rights and obligations pursuant to each of
the Servicing Agreements (noting that the Mortgage Loan Seller has also retained
the right in the event of breach of the representations, warranties and
covenants, if any, with respect to the related Mortgage Loans of the related
Servicer under the related Servicing Agreement to enforce the provisions thereof
and to seek all or any available remedies), (vi) its rights with respect to each
of the Servicing Agreements, (vii) with respect to Additional Collateral
Mortgage Loans (a) its rights as assignee under any security agreements, pledge
agreements or guarantees relating to the Additional Collateral supporting any
Additional Collateral Mortgage Loan, (b) its security interest in and to any
Additional Collateral, and (c) its right to receive payments in respect of any
Additional Collateral Mortgage Loan pursuant to the related Servicing Agreement,
in each case, as previously conveyed to the Mortgage Loan Seller, and the
Seller, (viii) its rights under the MLCC Limited Purpose Insurance Policy, and
(ix) any proceeds of the foregoing. The Mortgage Loan Seller hereby consents to
such transfer of the Seller's right, title and interest as set forth above.

        The foregoing sale, transfer, assignment, set-over, deposit and
conveyance does not and is not intended to result in creation or assumption by
the Trustee of any obligation of the Mortgage Loan Seller or the Seller or any
other Person in connection with the Mortgage Loans or any other agreement or
instrument relating thereto. The obligations of the Mortgage Loan Seller to
substitute or repurchase, as applicable, a Mortgage Loan shall be the Trustee's,
the Trust's and the Certificateholders' sole remedy for any breach thereof. At
the request of the Trustee, the Seller shall take such actions as may be
necessary to enforce the above right, title and interest on behalf of the
Trustee and the Trust or shall execute such further documents as the Trustee may
reasonably require in order to enable the Trustee to carry out such enforcement.
The Mortgage Loan Seller hereby consents to such transfer of the Seller's right,
title and interest as set forth above.

                                     - 36 -

<PAGE>

        In addition to the foregoing, the Seller shall deliver to the Trustee on
the Closing Date, for deposit into the Distribution Account, the sum of $100.00,
to be distributed in accordance with Section 6.01(a)(i)(A) hereof.

        For purposes of complying with the requirements of the Asset-Backed
Securities Facilitation Act of the State of Delaware, 6 Del. C. Section 2701A,
et seq. (the "Securitization Act"), each of the parties hereto hereby agrees
that:

                (i)     any property, assets or rights purported to be
        transferred, in whole or in part, by the Seller pursuant to this
        Agreement shall be deemed to no longer be the property, assets or rights
        of the Seller;

                (ii)    none of the Seller, its creditors or, in any insolvency
        proceeding with respect to the Seller or the Seller's property, a
        bankruptcy trustee, receiver, debtor, debtor in possession or similar
        person, to the extent the issue is governed by Delaware law, shall have
        any rights, legal or equitable, whatsoever to reacquire (except pursuant
        to a provision of this Agreement), reclaim, recover, repudiate,
        disaffirm, redeem or recharacterize as property of the Seller any
        property, assets or rights purported to be transferred, in whole or in
        part, by the Seller pursuant to this Agreement (including the
        Assignment);

                (iii)   in the event of a bankruptcy, receivership or other
        insolvency proceeding with respect to the Seller or the Seller's
        property, to the extent the issue is governed by Delaware law, such
        property, assets and rights shall not be deemed to be part of the
        Seller's property, assets, rights or estate; and

                (iv)    the transaction contemplated by this Agreement shall
        constitute a "securitization transaction" as such term is used in the
        Securitization Act.

        Although it is the intent of the parties to this Agreement that the
conveyance of the Seller's right, title and interest in and to the Mortgage
Loans and other assets in the Trust pursuant to this Agreement shall constitute
a purchase and sale and not a loan, in the event that such conveyance is deemed
to be a loan, it is the intent of the parties to this Agreement that the Seller
shall be deemed to have granted to the Trustee a first priority perfected
security interest in all of the Seller's right, title and interest in, to and
under the Mortgage Loans and other assets in the Trust, and that this Agreement
shall constitute a security agreement under applicable law.

        (b)     In connection with such transfer and assignment, the Mortgage
Loan Seller, on behalf of the Seller does hereby deliver to, and deposit with,
or cause to be delivered to and deposited with, the Trustee, and/or any
Custodian acting on the Trustee's behalf, if applicable, the following documents
or instruments with respect to each Mortgage Loan except, in the case of the
1998-1 Mortgage Loans, those documents and instruments listed on Exhibit K
hereto (each a "Mortgage File") so transferred and assigned:

                (i)     with respect to each Mortgage Loan, (a) the original
        Mortgage Note endorsed without recourse, in blank or in substantially
        the following form: pay to the order of Deutsche Bank National Trust
        Company, as Trustee for Thornburg Mortgage

                                     - 37 -

<PAGE>

        Securities Trust 2003-2, without recourse" (in each case, with all
        necessary intervening endorsements as applicable), or (b) with respect
        to 38 Mortgage Loans, Lost Note Affidavits in lieu thereof;

                (ii)    the original of any guarantee, security agreement or
        pledge agreement relating to any Additional Collateral, if applicable,
        and executed in connection with the Mortgage Note, assigned to the
        Trustee on behalf of the Trust;

                (iii)   with respect to each Mortgage Loan (other than a
        Cooperative Loan), the original recorded Security Instrument with
        evidence of recording indicated thereon and the original recorded power
        of attorney, if the Security Instrument was executed pursuant to a power
        of attorney, with evidence of recording thereon or, if such Security
        Instrument or power of attorney has been submitted for recording but has
        not been returned from the applicable public recording office, has been
        lost or is not otherwise available, a copy of such Security Instrument
        or power of attorney, as the case may be, certified to be a true and
        complete copy of the original submitted for recording. If, in connection
        with any Mortgage Loan, the Mortgage Loan Seller cannot deliver the
        Security Instrument with evidence of recording thereon on or prior to
        the Closing Date because of a delay caused by the public recording
        office where such Security Instrument has been delivered for recordation
        or because such Security Instrument has been lost, the Mortgage Loan
        Seller shall deliver or cause to be delivered to the Trustee (or its
        Custodian) on behalf of the Trust, in the case of a delay due to
        recording, a true copy of such Security Instrument, pending delivery of
        the original thereof, together with an Officer's Certificate of the
        Mortgage Loan Seller certifying that the copy of such Security
        Instrument delivered to the Trustee (or its Custodian) is a true copy
        and that the original of such Security Instrument has been forwarded to
        the public recording office, or, in the case of a Security Instrument
        that has been lost, a copy thereof (certified as provided for under the
        laws of the appropriate jurisdiction) and a written Opinion of Counsel
        acceptable to the Trustee and the Seller that an original recorded
        Security Instrument is not required to enforce the Trustee's interest in
        the Mortgage Loan;

                (iv)    the original of each assumption, modification or
        substitution agreement, if any, relating to the Mortgage Loans, or, as
        to any assumption, modification or substitution agreement which cannot
        be delivered on or prior to the Closing Date because of a delay caused
        by the public recording office where such assumption, modification or
        substitution agreement has been delivered for recordation, a photocopy
        of such assumption, modification or substitution agreement, pending
        delivery of the original thereof, together with an Officer's Certificate
        of the Mortgage Loan Seller certifying that the copy of such assumption,
        modification or substitution agreement delivered to the Trustee (or its
        custodian) on behalf of the Trust is a true copy and that the original
        of such agreement has been forwarded to the public recording office;

                (v)     with respect to each Non-MERS Mortgage Loan (other than
        a Cooperative Loan), the original assignment of mortgage for each
        Mortgage Loan;

                                     - 38 -

<PAGE>

                (vi)    if applicable, such original intervening assignments of
        the Security Instrument, notice of transfer or equivalent instrument
        (each, an "Intervening Assignment"), as may be necessary to show a
        complete chain of assignment from the originator, or, in the case of an
        Intervening Assignment that has been lost, a written Opinion of Counsel
        acceptable to the Trustee that such original Intervening Assignment is
        not required to enforce the Trustee's interest in the Mortgage Loans;

                (vii)   the original Primary Mortgage Insurance Policy, if any,
        or certificate, if private mortgage guaranty insurance is required;

                (viii)  with respect to each Mortgage Loan (other than a
        Cooperative Loan), the original mortgagee title insurance policy or
        attorney's opinion of title and abstract of title;

                (ix)    the original of any security agreement, chattel mortgage
        or equivalent executed in connection with the Security Instrument or as
        to any security agreement, chattel mortgage or their equivalent that
        cannot be delivered on or prior to the Closing Date because of a delay
        caused by the public recording office where such document has been
        delivered for recordation, a photocopy of such document, pending
        delivery of the original thereof, together with an Officer's Certificate
        of the Mortgage Loan Seller certifying that the copy of such security
        agreement, chattel mortgage or their equivalent delivered to the Trustee
        (or its custodian) on behalf of the Trust is a true copy and that the
        original of such document has been forwarded to the public recording
        office; and

                (x)     with respect to any Cooperative Loan, the Cooperative
        Loan Documents.

        (c)     (i)     Assignments of each Security Instrument with respect to
each Non-MERS Mortgage Loan (other than a Cooperative Loan) shall be recorded;
provided, however, that such assignments need not be recorded if, in the Opinion
of Counsel (which must be from Independent counsel and not at the expense of the
Trust or the Trustee) acceptable to the Trustee, each Rating Agency and the
Master Servicer, recording in such states is not required to protect the Trust's
interest in the related Non-MERS Mortgage Loans; provided, however,
notwithstanding the delivery of any Opinion of Counsel, each assignment of
Security Instrument shall be submitted for recording by the Mortgage Loan Seller
(or the Mortgage Loan Seller will cause the applicable Servicer to submit each
such assignment for recording), at the cost and expense of the Mortgage Loan
Seller, in the manner described above, at no expense to the Trust or Trustee,
upon the earliest to occur of (1) reasonable direction by the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust, (2) the occurrence of a bankruptcy or insolvency relating to
the Mortgage Loan Seller or the Seller, or (3) with respect to any one
assignment of Security Instrument, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage. Subject to the
preceding sentence, as soon as practicable after the Closing Date (but in no
event more than 3 months thereafter except to the extent delays are caused by
the applicable recording office), the Mortgage Loan Seller shall properly record
(or the Mortgage Loan Seller will cause the applicable Servicer to properly
record), at the expense of the Mortgage Loan Seller (with the cooperation of the
Seller, the Trustee and the Master Servicer), in each public recording office

                                     - 39 -

<PAGE>

where the related Mortgages are recorded, each assignment referred to in
subsection (b)(v) above with respect to a Non-MERS Mortgage Loan.

                (ii)    With respect to each Cooperative Loan, the Mortgage Loan
        Seller will take (or shall cause the applicable Servicer to take), at
        the expense of the Mortgage Loan Seller (with the cooperation of the
        Seller, the Trustee and the Master Servicer), such actions as are
        necessary under applicable law in order to perfect the interest of the
        Trust in the related Mortgaged Property.

                (iii)   With respect to each MERS Mortgage Loan, the Mortgage
        Loan Seller will take (or shall cause the applicable Servicer to take),
        at the expense of the Mortgage Loan Seller (with the cooperation of the
        Seller, the Trustee and the Master Servicer), such actions as are
        necessary to cause the Trust to be clearly identified as the owner of
        each such Mortgage Loan on the records of MERS for purposes of the
        system of recording transfers of beneficial ownership of mortgages
        maintained by MERS.

        (d)     In addition, in instances where a title insurance policy is
required to be delivered to the Trustee, or to the Custodian on behalf of the
Trustee, under clause (b)(viii) above or, with respect to the 1998-1 Mortgage
Loans, pursuant to Exhibit K, and is not so delivered, the Mortgage Loan Seller
will provide a copy of such title insurance policy to the Trustee, or to the
Custodian on behalf of the Trustee, as promptly as practicable after the
execution and delivery hereof, but in any case within 180 days of the Closing
Date.

        (e)     For Mortgage Loans (if any) that have been prepaid in full after
the Cut-off Date and prior to the Closing Date, the Mortgage Loan Seller, in
lieu of delivering the above documents, herewith delivers to the Trustee, or to
the Custodian on behalf of the Trustee, an Officer's Certificate which shall
include a statement to the effect that all amounts received in connection with
such prepayment that are required to be deposited in the Distribution Account
are to be remitted by the related Servicers in accordance with their respective
Servicing Agreements. All original documents that are not delivered to the
Trustee or the Custodian on behalf of the Trustee shall be held by the Master
Servicer or the applicable Servicer in trust for the Trustee, for the benefit of
the Trust and the Certificateholders.

        (f)     With respect to each Mortgage Loan as to which a Lost Note
Affidavit has been delivered in lieu of an original Mortgage Note, the Mortgage
Loan Seller indemnifies the Trustee and the Trust and holds them harmless
against any losses resulting from an inability to enforce the Mortgagor's
obligations under such Mortgage Loan or to foreclose on the related Mortgaged
Property, or any reduction in Liquidation Proceeds on foreclosure, or any other
loss, in each case resulting from lack of possession of the original Mortgage
Note.

        Section 2.02 Acceptance of Mortgage Loans and Other Trust Assets by
Trustee.

        (a)     The Trustee acknowledges the sale, transfer and assignment of
the Mortgage Loans and other assets as provided in Section 2.01(a) to the Trust
by the Seller and receipt of, subject to further review and the exceptions which
may be noted pursuant to the procedures described below, and declares that it
holds, the documents (or certified copies thereof) delivered to it pursuant to
Section 2.01(b), and declares that it will continue to hold those documents and

                                     - 40 -

<PAGE>

any amendments, replacements or supplements thereto and all other assets of the
Trust delivered to it as Trustee in trust for the Trust (for the benefit of all
present and future Holders of the Certificates). On the Closing Date, the
Trustee (or Custodian on its behalf), with respect to the Mortgage Loans, shall
acknowledge with respect to each Mortgage Loan by an Initial Certification
substantially in the form of Exhibit C-1 hereto receipt of the Mortgage File,
but without review of such Mortgage File, except to the extent necessary to
confirm that such Mortgage File contains the related Mortgage Note or Lost Note
Affidavit. No later than 90 days after the Closing Date (or, with respect to any
Substitute Mortgage Loan, within five Business Days after the receipt by the
Trustee or Custodian thereof), the Trustee agrees, for the benefit of the
Certificateholders, to review, or cause to be reviewed by a Custodian on its
behalf (under a Custodial Agreement), each Mortgage File delivered to it and to
execute and deliver, or cause to be executed and delivered, to the Mortgage Loan
Seller, the Seller and the Master Servicer, an Interim Certification
substantially in the form annexed as Exhibit C-2 hereto. In conducting such
review, the Trustee (or Custodian) will ascertain whether all required documents
have been executed and received, and based on the Mortgage Loan Schedule,
whether those documents relate, determined on the basis of the Mortgagor name,
original principal balance and loan number, to the Mortgage Loans it has
received, as identified in the Mortgage Loan Schedule. In performing any such
review, the Trustee (or the Custodian, as its agent) may conclusively rely on
the purported due execution and genuineness of any such document and on the
purported genuineness of any signature thereon. If the Trustee (or the
Custodian, as its agent) finds any document constituting part of the Mortgage
File not to have been executed or received, or to be unrelated to the Mortgage
Loans identified in Exhibit B or to appear to be defective on its face, the
Trustee or the Custodian, as its agent, shall promptly notify the Mortgage Loan
Seller (provided, however, that with respect to those documents described in
subsection (b)(iv), (b)(vi), (b)(vii) and (b)(ix) of Section 2.01 (or, with
respect to the 1998-1 Mortgage Loans, any such documents described in Exhibit
K), the Trustee's obligations shall extend only to the documents actually
delivered pursuant to such subsections). In accordance with the Mortgage Loan
Purchase Agreement, the Mortgage Loan Seller shall correct or cure any such
defect within ninety (90) days from the date of notice from the Trustee (or the
Custodian, as its agent) of the defect and if the Mortgage Loan Seller fails to
correct or cure the defect within such period, and such defect materially and
adversely affects the interests of the Trust or the Certificateholders in the
related Mortgage Loan, the Trustee or the Custodian, as its agent, shall enforce
the Mortgage Loan Seller's obligation pursuant to the Mortgage Loan Purchase
Agreement, within 90 days from the Trustee's or the Custodian's notification, to
purchase such Mortgage Loan at the Repurchase Price; provided that, if such
defect would cause the Mortgage Loan to be other than a "qualified mortgage" as
defined in Section 860G(a)(3) of the Code, any such cure or repurchase must
occur within 90 days from the date such breach was discovered. The foregoing
repurchase obligation shall not apply in the event that the Mortgage Loan Seller
cannot deliver such original or copy of any document submitted for recording to
the appropriate recording office in the applicable jurisdiction because such
document has not been returned by such office; provided that the Mortgage Loan
Seller shall instead deliver a recording receipt of such recording office or, if
such receipt is not available, an Officer's Certificate confirming that such
documents have been accepted for recording, and delivery to the Trustee (or the
Custodian, as its agent) shall be effected by the Mortgage Loan Seller within
thirty days of its receipt of the original recorded document.

                                     - 41 -

<PAGE>

        (b)     No later than 180 days after the Closing Date, the Trustee (or
the Custodian, as its agent) will determine whether all documents required to be
in the Mortgage Files were delivered to it and will execute and deliver or cause
to be executed and delivered to the Mortgage Loan Seller, the Seller and the
Master Servicer a Final Certification substantially in the form annexed as
Exhibit C-3 hereto. In making such determination, the Trustee (or the Custodian,
as its agent) will ascertain whether an original of each document required to be
recorded has been returned from the recording office with evidence of recording
thereon or a certified copy has been obtained from the recording office. If the
Trustee (or the Custodian, as its agent) finds any document constituting part of
the Mortgage File has not been received, or to be unrelated, determined on the
basis of the Mortgagor name, original principal balance and loan number, to the
Mortgage Loans identified in Exhibit B or to appear defective on its face, the
Trustee (or the Custodian, as its agent) shall promptly notify the Mortgage Loan
Seller (provided, however, that with respect to those documents described in
subsection (b)(iv), (b)(vi), (b)(vii) and (b)(ix) of Section 2.01 (or, with
respect to the 1998-1 Mortgage Loans, any such documents described in Exhibit
K), the Trustee's obligations shall extend only to the documents actually
delivered pursuant to such subsections). In accordance with the Mortgage Loan
Purchase Agreement, the Mortgage Loan Seller shall correct or cure any such
defect or the Mortgage Loan Seller shall deliver to the Trustee an Opinion of
Counsel to the effect that such defect does not materially or adversely affect
the interests of the Trust or the Certificateholders in such Mortgage Loan
within 90 days from the date of notice from the Trustee of the defect and if the
Mortgage Loan Seller is unable to cure such defect within such period, and if
such defect materially and adversely affects the interests of the Trust or the
Certificateholders in the related Mortgage Loan, the Trustee shall enforce the
Mortgage Loan Seller's obligation under the Mortgage Loan Purchase Agreement to
purchase such Mortgage Loan at the Repurchase Price. The foregoing repurchase
obligation shall not apply in the event that the Mortgage Loan Seller cannot
deliver such original or copy of any document submitted for recording to the
appropriate recording office in the applicable jurisdiction because such
document has not been returned by such office; provided that the Mortgage Loan
Seller shall instead deliver a recording receipt of such recording office or, if
such receipt is not available, an Officer's Certificate confirming that such
documents have been accepted for recording, and delivery to the Trustee (or the
Custodian, as its agent) shall be effected by the Mortgage Loan Seller within
thirty days of its receipt of the original recorded document.

        (c)     In the event that a Mortgage Loan is purchased by the Mortgage
Loan Seller in accordance with Subsections 2.02(a) or (b) above or as a
consequence of a breach of representation or warranty under Section 2.07 below,
the Mortgage Loan Seller shall remit to the Trustee the Repurchase Price for
deposit in the Distribution Account and the Mortgage Loan Seller shall provide
to the Trustee written details concerning the components of the Repurchase
Price. Upon deposit of the Repurchase Price in the Distribution Account, the
Trustee shall notify the Seller and the Master Servicer, and the Trustee (or the
Custodian, as its agent) (upon receipt of a Request for Release to be executed
by the Mortgage Loan Seller in the form of Exhibit D attached hereto with
respect to such Mortgage Loan), shall release to the Mortgage Loan Seller the
related Mortgage File and the Trustee shall execute and deliver all instruments
of transfer or assignment, without recourse, furnished to it by the Mortgage
Loan Seller as are necessary to vest in the Mortgage Loan Seller title to and
rights under the Mortgage Loan. Such purchase shall be deemed to have occurred
on the date on which the Repurchase Price in available funds is

                                     - 42 -

<PAGE>

received by the Trustee. The Trustee shall amend the Mortgage Loan Schedule,
which was previously delivered to it by the Seller in a form agreed to between
the Seller and the Trustee, to reflect such repurchase and shall promptly notify
each Rating Agency and the Master Servicer of such amendment. The obligation of
the Mortgage Loan Seller to repurchase any Mortgage Loan as to which such a
defect in a constituent document exists shall be the sole remedy respecting such
defect available to the Trust, the Certificateholders, or to the Trustee on
their behalf.

        Section 2.03  Mortgage Loan Purchase Agreement. If the Seller, the
Master Servicer, the Mortgage Loan Seller, the Securities Administrator or the
Trustee discovers a breach of any of the representations and warranties set
forth in the Mortgage Loan Purchase Agreement as incorporated by reference
herein pursuant to Section 2.07, which breach materially and adversely affects
the value of the interests of the Trust, the Certificateholders or the Trustee
in the related Mortgage Loan, the party discovering the breach shall give prompt
written notice of the breach to the other parties. The Mortgage Loan Seller,
within 90 days of its discovery or receipt of notice that such breach has
occurred (whichever occurs earlier), shall cure the breach in all material
respects or, subject to the Mortgage Loan Purchase Agreement or Section 2.04 of
this Agreement, as applicable, shall purchase the Mortgage Loan or any property
acquired with respect thereto from the Trust; provided, however, that if there
is a breach of any representation set forth in the Mortgage Loan Purchase
Agreement or Section 2.04 of this Agreement, as applicable, and the Mortgage
Loan or the related property acquired with respect thereto has been sold, then
the Mortgage Loan Seller shall pay, in lieu of the Repurchase Price, any excess
of the Repurchase Price over the Net Liquidation Proceeds received upon such
sale. (If the Net Liquidation Proceeds exceed the Repurchase Price, any excess
shall be paid to the Mortgage Loan Seller to the extent not required by law to
be paid to the borrower.) Any such purchase by the Mortgage Loan Seller shall be
made by providing an amount equal to the Repurchase Price to the Trustee for
deposit in the Distribution Account and written notification containing details
of the components of such Repurchase Price. Upon receipt of notice from the
Trustee of the deposit of the Repurchase Price in the Distribution Account, the
Mortgage Loan Seller shall execute and deliver a Request for Release in the form
of Exhibit D attached hereto with respect to such Mortgage Loan, and the Trustee
shall release, or the Trustee shall cause the Custodian to release, to the
Mortgage Loan Seller the related Mortgage File and the Trustee shall execute and
deliver all instruments of transfer or assignment furnished to it by the
Mortgage Loan Seller, without recourse, as are necessary to vest in the Mortgage
Loan Seller title to and rights under the Mortgage Loan or any property acquired
with respect thereto. Such purchase shall be deemed to have occurred on the date
on which the Repurchase Price in available funds is received by the Trustee. The
Trustee shall amend the Mortgage Loan Schedule to reflect such repurchase and
shall promptly notify the Master Servicer and each Rating Agency of such
amendment. Enforcement of the obligation of the Mortgage Loan Seller to purchase
(or substitute a Substitute Mortgage Loan for) any Mortgage Loan or any property
acquired with respect thereto (or pay the Repurchase Price as set forth in the
above proviso) as to which a breach has occurred and is continuing shall
constitute the sole remedy respecting such breach available to the Trust, the
Certificateholders or the Trustee on their behalf.

        Section 2.04  Substitution of Mortgage Loans. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to the Mortgage Loan Purchase Agreement or Sections 2.02 or 2.03 of
this Agreement, the Mortgage Loan Seller may,

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<PAGE>

no later than the date by which such purchase by the Mortgage Loan Seller would
otherwise be required, tender to the Trustee, on behalf of the Trust, a
Substitute Mortgage Loan accompanied by a certificate of an authorized officer
of the Mortgage Loan Seller that such Substitute Mortgage Loan conforms to the
requirements set forth in the definition of "Substitute Mortgage Loan" in the
Mortgage Loan Purchase Agreement and this Agreement; provided, however, that
substitution pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of
this Agreement, as applicable, in lieu of purchase shall not be permitted after
the termination of the two-year period beginning on the Startup Day; provided,
further, that if the breach would cause the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such cure
or substitution must occur within 90 days from the date the breach was
discovered. The Trustee or the Custodian, as its agent, shall examine the
Mortgage File for any Substitute Mortgage Loan in the manner set forth in
Section 2.02(a) and the Trustee or the Custodian, as its agent, shall notify the
Mortgage Loan Seller, in writing, within five Business Days after receipt,
whether or not the documents relating to the Substitute Mortgage Loan satisfy
the requirements of the fourth sentence of Subsection 2.02(a). Within two
Business Days after such notification, the Mortgage Loan Seller shall provide to
the Trustee for deposit in the Distribution Account the amount, if any, by which
the Outstanding Principal Balance as of the next preceding Due Date of the
Mortgage Loan for which substitution is being made, after giving effect to
Scheduled Principal due on such date, exceeds the Outstanding Principal Balance
as of such date of the Substitute Mortgage Loan, after giving effect to
Scheduled Principal due on such date (a "Substitution Adjustment Amount"), which
amount shall be treated for the purposes of this Agreement as if it were the
payment by the Mortgage Loan Seller of the Repurchase Price for the purchase of
a Mortgage Loan by the Mortgage Loan Seller. After such notification to the
Mortgage Loan Seller and, if any such excess exists, upon receipt of such
deposit, the Trustee, on behalf of the Trust, shall accept such Substitute
Mortgage Loan which shall thereafter be deemed to be a Mortgage Loan hereunder.
In the event of such a substitution, accrued interest on the Substitute Mortgage
Loan for the month in which the substitution occurs and any Principal
Prepayments made thereon during such month shall be the property of the Trust,
and accrued interest for such month on the Mortgage Loan being repurchased by
the Mortgage Loan Seller and any Principal Prepayments made thereon during such
month shall be the property of the Mortgage Loan Seller. The Scheduled Principal
on a Substitute Mortgage Loan due on the Due Date in the month of substitution
shall be the property of the Mortgage Loan Seller and the Scheduled Principal on
the Mortgage Loan for which the substitution is made due on such Due Date shall
be the property of the Trust. Upon acceptance of the Substitute Mortgage Loan
(and delivery to the Trustee (or Custodian) of a Request for Release for such
Mortgage Loan), the Trustee shall release to the Mortgage Loan Seller the
related Mortgage File related to any Mortgage Loan released pursuant to the
Mortgage Loan Purchase Agreement or Section 2.04 of this Agreement, as
applicable, and shall execute and deliver all instruments of transfer or
assignment, without recourse, in form as provided to it as are necessary to vest
in the Mortgage Loan Seller title to and rights under any Mortgage Loan released
pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable. The Mortgage Loan Seller shall deliver the documents
related to the Substitute Mortgage Loan in accordance with the provisions of the
Mortgage Loan Purchase Agreement or Subsections 2.01(b) and 2.02(b) of this
Agreement, as applicable, with the date of acceptance of the Substitute Mortgage
Loan deemed to be the Closing Date for purposes of the time periods set forth in
those Subsections. The representations and warranties set forth in the Mortgage
Loan Purchase Agreement shall be

                                     - 44 -

<PAGE>

deemed to have been made by the Mortgage Loan Seller with respect to each
Substitute Mortgage Loan as of the date of acceptance of such Mortgage Loan by
the Trustee on behalf of the Trust. The Master Servicer shall amend the Mortgage
Loan Schedule to reflect such substitution and shall provide a copy of such
amended Mortgage Loan Schedule to the Trustee and each Rating Agency.

        Section 2.05 Issuance of Certificates. The Trustee on behalf of the
Trust acknowledges the assignment to it of the Mortgage Loans and the other
assets comprising the Trust and, concurrently therewith, has signed, and
countersigned and delivered to the Seller, in exchange therefor, Certificates in
such authorized denominations representing such Fractional Undivided Interests
as the Seller has requested. The Trustee agrees that it will hold the Mortgage
Loans and such other assets as may from time to time be delivered to it
segregated on the books of the Trustee in trust for the benefit of the Trust and
the Certificateholders.

        The Seller, 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 Seller in and to the
REMIC I Regular Interests and the other assets of REMIC II for the benefit of
the holders of the REMIC II Interests. The Trustee acknowledges receipt of the
REMIC I Regular Interests (which are uncertificated) and the other assets of
REMIC II and declares that it holds and will hold the same in trust for the
exclusive use and benefit of the holders of the REMIC II Certificates.

        Section 2.06 Representations and Warranties Concerning the Seller. The
Seller hereby represents and warrants to the Trustee, the Master Servicer and
the Securities Administrator as follows:

                (i)     the Seller (a) is a corporation duly organized, validly
        existing and in good standing under the laws of the State of Delaware
        and (b) is qualified and in good standing as a foreign corporation to do
        business in each jurisdiction where such qualification is necessary,
        except where the failure so to qualify would not reasonably be expected
        to have a material adverse effect on the Seller's business as presently
        conducted or on the Purchaser's ability to enter into this Agreement and
        to consummate the transactions contemplated hereby;

                (ii)    the Seller has full corporate power to own its property,
        to carry on its business as presently conducted and to enter into and
        perform its obligations under this Agreement;

                (iii)   the execution and delivery by the Seller of this
        Agreement have been duly authorized by all necessary corporate action on
        the part of the Seller; and neither the execution and delivery of this
        Agreement, nor the consummation of the transactions herein contemplated,
        nor compliance with the provisions hereof, will conflict with or result
        in a breach of, or constitute a default under, any of the provisions of
        any law, governmental rule, regulation, judgment, decree or order
        binding on the Seller or its properties or the articles of incorporation
        or by-laws of the Seller, except those conflicts, breaches or defaults
        which would not reasonably be expected to have a material adverse

                                     - 45 -

<PAGE>

        effect on the Seller's ability to enter into this Agreement and to
        consummate the transactions contemplated hereby;

                (iv)    the execution, delivery and performance by the Seller of
        this Agreement and the consummation of the transactions contemplated
        hereby do not require the consent or approval of, the giving of notice
        to, the registration with, or the taking of any other action in respect
        of, any state, federal or other governmental authority or agency, except
        those consents, approvals, notices, registrations or other actions as
        have already been obtained, given or made;

                (v)     this Agreement has been duly executed and delivered by
        the Seller and, assuming due authorization, execution and delivery by
        the other parties hereto, constitutes a valid and binding obligation of
        the Seller enforceable against it in accordance with its terms (subject
        to applicable bankruptcy and insolvency laws and other similar laws
        affecting the enforcement of the rights of creditors generally);

                (vi)    there are no actions, suits or proceedings pending or,
        to the knowledge of the Seller, threatened against the Seller, before or
        by any court, administrative agency, arbitrator or governmental body (i)
        with respect to any of the transactions contemplated by this Agreement
        or (ii) with respect to any other matter which in the judgment of the
        Seller will be determined adversely to the Seller and will if determined
        adversely to the Seller materially and adversely affect the Seller's
        ability to enter into this Agreement or perform its obligations under
        this Agreement; and the Seller is not in default with respect to any
        order of any court, administrative agency, arbitrator or governmental
        body so as to materially and adversely affect the transactions
        contemplated by this Agreement; and

                (vii)   immediately prior to the transfer and assignment to the
        Trustee on behalf of the Trust, each Mortgage Note and each Mortgage
        were not subject to an assignment or pledge, and the Seller had good and
        marketable title to and was the sole owner thereof and had full right to
        transfer and sell such Mortgage Loan to the Trustee on behalf of the
        Trust free and clear of any encumbrance, equity, lien, pledge, charge,
        claim or security interest.

        Section 2.07 Representations and Warranties Concerning the Mortgage
Loans. (a) The representations and warranties of the Mortgage Loan Seller with
respect to the Mortgage Loans contained in Section 7 of the Mortgage Loan
Purchase Agreement (including Exhibit 4 thereto) are incorporated by reference
herein and are hereby restated in their entirety, as of the Closing Date, by the
Mortgage Loan Seller for the benefit of the Trust and the Certificateholders.

        (b)     The Seller hereby represents and warrants to the Trustee and the
Trust, as of the Closing Date, with respect to each Mortgage Loan being sold by
it that (i) it had good and transferable title to each such Mortgage Loan at the
time of its sale to the Trust, and (ii) each Mortgage Loan constitutes a
"qualified mortgage" under Section 860G(a)(3)(A) of the Code and Treasury
Regulation Section 1.860G-2(a)(1).

        (c)     In the event of a breach of a representation or warranty
regarding a Mortgage Loan by the Mortgage Loan Seller, the Mortgage Loan Seller,
shall repurchase or substitute for

                                     - 46 -

<PAGE>

such Mortgage Loan in accordance with the provisions of Section 2.03 or 2.04
hereof, and in the event of a breach of a representation or warranty regarding a
Mortgage Loan by the Seller, the Seller, shall repurchase or substitute for such
Mortgage Loan in accordance with the provisions of Section 2.03 or 2.04 hereof
as if the Seller were the Mortgage Loan Seller. None of the Trustee, the Trust
or the Certificateholders shall have any remedy other than the requirement that
a Mortgage Loan be repurchased or substituted for by either the Mortgage Loan
Seller or the Seller, as applicable, with respect to any breaches of
representations or warranties with respect to such Mortgage Loan.

        (d)     Notwithstanding that any representation or warranty made by the
Mortgage Loan Seller in Section 7 of the Mortgage Loan Purchase Agreement
(including Exhibit 4 thereto) is made only to the best of the Mortgage Loan
Seller's knowledge, the Mortgage Loan Seller shall be obligated under this
Section 2.07 to repurchase or substitute for any Mortgage Loan with respect to
which such representation or warranty was untrue as of the Cut-off Date, the
Closing Date, or otherwise, as applicable, irrespective of the Mortgage Loan
Seller's lack of knowledge thereof.

        Section 2.08  Appointment of Custodian. The Trustee is hereby appointed
Custodian of the Mortgage Loans and the related Mortgage Files. The Trustee
shall be compensated for its services as Custodian by Thornburg, pursuant to a
separate agreement between Thornburg and Deutsche Bank National Trust Company.
In the event that the Trustee is owed any sums not paid by Thornburg, the
Trustee shall be entitled to reimbursement for such amounts as an expense of the
Trust pursuant to Section 9.05 hereof. The Trustee, with the consent of
Thornburg, may enter into an agreement with a third-party to assume the role of
custodian hereunder, provided that (i) such Agreement shall be substantially in
the form of Exhibit G hereto, (ii) such custodian shall be acceptable to each
Rating Agency and the Seller, and (iii) the Trustee, unless such successor
Custodian is appointed at the request of Thornburg, then Thornburg, shall be
responsible for all costs and expenses relating to the transference of the
Mortgage Files to such successor custodian.

        Section 2.09  Yield Maintenance Agreements. The Trustee is hereby
authorized and directed to cause the Trust to enter into the Yield Maintenance
Agreements and to execute and deliver such Yield Maintenance Agreements on its
behalf solely in its capacity as trustee of the Trust.

                                     - 47 -

<PAGE>

                                   ARTICLE III

                 Administration and Servicing of Mortgage Loans

        Section 3.01 Master Servicer. The Master Servicer shall supervise,
monitor and oversee the obligation of the Servicers to service or sub-master
service, as applicable, and administer their respective Mortgage Loans in
accordance with the terms of the applicable Servicing Agreement and, where
applicable, the Correspondent Sellers Guide and the Master Servicing Guide, and
shall have full power and authority to do any and all things which it may deem
necessary or desirable in connection with such master servicing and
administration. In performing its obligations hereunder, the Master Servicer
shall act in a manner consistent with Accepted Master Servicing Practices and,
where applicable, the Master Servicing Guide. Furthermore, the Master Servicer
shall oversee and consult with each Servicer as necessary from time-to-time to
carry out the Master Servicer's obligations hereunder, shall receive, review and
evaluate all reports, information and other data provided to the Master Servicer
by each Servicer and shall cause each Servicer to perform and observe the
covenants, obligations and conditions to be performed or observed by such
Servicer under the applicable Servicing Agreement. The Master Servicer shall
independently and separately monitor each Servicer's servicing activities with
respect to each related Mortgage Loan, reconcile the results of such monitoring
with such information provided in the previous sentence on a monthly basis and
coordinate corrective adjustments to the Servicers' and Master Servicer's
records, and based on such reconciled and corrected information, prepare the
statements specified in Section 6.04 and any other information and statements
required hereunder. The Master Servicer shall reconcile the results of its
Mortgage Loan monitoring with the actual remittances of the Servicers to the
related Servicer Accounts pursuant to the applicable Servicing Agreements. The
Master Servicer is hereby directed, solely in its capacity as master servicer
and on behalf of the Trust, to enter into the Servicing Agreement specified on
Exhibit H with the Sub-Master Servicer.

        The Trustee shall furnish the Servicers and the Master Servicer with any
limited powers of attorney and other documents in form as provided to it
necessary or appropriate to enable the Servicers and the Master Servicer to
service and administer the related Mortgage Loans and REO Property, which
limited powers of attorney shall provide that the Trustee will not be liable for
the actions or omissions of the Servicers or Master Servicer in exercising such
powers.

        The Trustee shall provide access to the records and documentation in
possession of the Trustee (including in its capacity as Custodian hereunder)
regarding the related Mortgage Loans and REO Property and the servicing thereof
to the Certificateholders, the FDIC, and the supervisory agents and examiners of
the FDIC, such access being afforded only upon reasonable prior written request
and during normal business hours at the office of the Trustee; provided,
however, that, unless otherwise required by law, the Trustee shall not be
required to provide access to such records and documentation if the provision
thereof would violate the legal right to privacy of any Mortgagor. The Trustee
shall allow representatives of the above entities to photocopy any of the
records and documentation and shall provide equipment for that purpose at a
charge that covers the Trustee's actual costs.

                                     - 48 -

<PAGE>

        The Trustee shall execute and deliver to the related Servicer and the
Master Servicer any court pleadings, requests for trustee's sale or other
documents necessary or desirable to (i) the foreclosure or trustee's sale with
respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Security Instrument;
(iii) obtain a deficiency judgment against the Mortgagor; or (iv) enforce any
other rights or remedies provided by the Mortgage Note or Security Instrument or
otherwise available at law or equity.

        Section 3.02  REMIC-Related Covenants. For as long as each REMIC shall
exist, the Trustee and the Securities Administrator shall act in accordance
herewith to assure continuing treatment of such REMIC as a REMIC, and the
Trustee and the Securities Administrator shall comply with any directions of the
Seller, the related Servicer or the Master Servicer to assure such continuing
treatment. In particular, the Trustee shall not (a) sell or permit the sale of
all or any portion of the Mortgage Loans or of any investment of deposits in an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust; and (b) other than with respect to a substitution
pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable, accept any contribution to any REMIC after the Startup
Day without receipt of a REMIC Opinion.

        Section 3.03  Monitoring of Servicers. (a) The Master Servicer shall be
responsible for reporting to the Trustee (on behalf of the Trust) and the Seller
the compliance by each Servicer with its duties under the related Servicing
Agreement. In the review of each Servicer's activities, the Master Servicer may
rely upon an officer's certificate of the Servicer with regard to such
Servicer's compliance with the terms of its Servicing Agreement. In the event
that the Master Servicer, in its judgment, determines that a Servicer should be
terminated in accordance with its Servicing Agreement, or that a notice should
be sent pursuant to such Servicing Agreement with respect to the occurrence of
an event that, unless cured, would constitute grounds for such termination, the
Master Servicer shall notify the Seller and the Trustee thereof and the Master
Servicer shall issue such notice or take such other action as it deems
appropriate.

        (b)     The Master Servicer, for the benefit of the Trust and the
Certificateholders, shall (acting as agent of the Trust when enforcing the
Trust's rights under each Servicing Agreement) (i) enforce the obligations of
each Servicer under the related Servicing Agreement and (ii) in the event that a
Servicer fails to perform its obligations in accordance with the related
Servicing Agreement, subject to the preceding paragraph, terminate the rights
and obligations of such Servicer thereunder and act as servicer of the related
Mortgage Loans or as successor sub-master servicer to the Sub-Master Servicer or
cause the Trustee to enter in to a new Servicing Agreement with a successor
Servicer selected by the Master Servicer; provided, however, it is understood
and acknowledged by the parties hereto that there will be a period of transition
(not to exceed 90 days) before the actual servicing functions can be fully
transferred to such successor Servicer. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of 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, provided that the Master Servicer shall not be required to prosecute or
defend any legal action except to the

                                     - 49 -

<PAGE>

extent that the Master Servicer shall have received reasonable indemnity for its
costs and expenses in pursuing such action.

        (c)     To the extent that the costs and expenses of the Master Servicer
related to any termination of a Servicer, appointment of a successor Servicer or
the transfer and assumption of servicing by the Master Servicer with respect to
any Servicing Agreement (including, without limitation, (i) all legal costs and
expenses and all due diligence costs and expenses associated with an evaluation
of the potential termination of the Servicer as a result of an event of default
by such Servicer and (ii) all costs and expenses associated with the complete
transfer of servicing, including all servicing files and all servicing data and
the completion, correction or manipulation of such servicing data as may be
required by the successor servicer to correct any errors or insufficiencies in
the servicing data or otherwise to enable the successor servicer to service the
Mortgage Loans in accordance with the related Servicing Agreement) are not fully
and timely reimbursed by the terminated Servicer, the Master Servicer shall be
entitled to reimbursement of such costs and expenses from the Master Servicer
Collection Account.

        (d)     The Master Servicer shall require each Servicer to comply with
the remittance and certification requirements and other obligations set forth in
the related Servicing Agreement.

        (e)     If the Master Servicer acts as Servicer, it will not assume
liability for the representations and warranties of the Servicer, if any, that
it replaces.

        (f)     With respect to Additional Collateral Mortgage Loans, the Master
Servicer shall have no duty or obligation to supervise, monitor or oversee the
activities of any Servicer under its Servicing Agreement with respect to
Additional Collateral, except (a) with respect to any instances where a
Servicer, in the course of fulfilling its obligations under the related
Servicing Agreement seeks directions, instructions, consents or waivers from the
Master Servicer with respect to any item of Additional Collateral, or (b) upon
the occurrence of the following events (i) in the case of a final liquidation of
any Mortgaged Property secured by Additional Collateral, the Master Servicer
shall enforce the obligation of the Servicer under the related Servicing
Agreement to liquidate such Additional Collateral as required by such Servicing
Agreement, and (ii) if the Master Servicer assumes the obligations of such
Servicer as successor Servicer under the related Servicing Agreement pursuant to
this Section 3.03, as successor Servicer, it shall be bound to service and
administer the Additional Collateral in accordance with the provisions of such
Servicing Agreement. Notwithstanding any provision of this Agreement to the
contrary, the Master Servicer shall have no duty or obligation to supervise,
monitor or oversee the activities of any Primary Servicer under its Servicing
Agreement for which the Sub-Master Servicer is the master servicer.

        Section 3.04  Fidelity Bond. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The errors and omissions insurance policy and the fidelity bond shall be in such
form and amount generally acceptable for entities serving as master servicers or
trustees.

                                     - 50 -

<PAGE>

        Section 3.05  Power to Act; Procedures. The Master Servicer shall master
service the Mortgage Loans and shall have full power and authority, subject to
the REMIC Provisions and the provisions of Article X hereof, to do any and all
things that it may deem necessary or desirable in connection with the master
servicing and administration of the Mortgage Loans, including but not limited to
the power and authority (i) to execute and deliver, on behalf of the
Certificateholders, the Trust and the Trustee, customary consents or waivers and
other instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate,
in its own name, on behalf the Trust, or in the name of the Trust, foreclosure
or other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan, in each case, in accordance with the provisions of this Agreement
and the related Servicing Agreement, as applicable; provided, however, that the
Master Servicer shall not (and, consistent with its responsibilities under
Section 3.03, shall not permit any Servicer to) knowingly or intentionally take
any action, or fail to take (or fail to cause to be taken) any action reasonably
within its control and the scope of duties more specifically set forth herein,
that, under the REMIC Provisions, if taken or not taken, as the case may be,
would cause REMIC I or REMIC II to fail to qualify as a REMIC or result in the
imposition of a tax upon the Trust (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) unless the
Master Servicer has received an Opinion of Counsel (but not at the expense of
the Master Servicer) to the effect that the contemplated action will not cause
REMIC I or REMIC II to fail to qualify as a REMIC or result in the imposition of
a tax upon REMIC I or REMIC II, as the case may be. The Trustee shall furnish
the Master Servicer, upon written request from a servicing officer, with any
limited powers of attorney empowering the Master Servicer or any Servicer to
execute and deliver instruments of satisfaction or cancellation, or of partial
or full release or discharge, and to foreclose upon or otherwise liquidate
Mortgaged Property, and to appeal, prosecute or defend in any court action
relating to the Mortgage Loans or the Mortgaged Property, in accordance with the
applicable Servicing Agreement and this Agreement, and the Trustee shall execute
and deliver such other documents, as the Master Servicer may request, to enable
the Master Servicer to master service and administer the Mortgage Loans and
carry out its duties hereunder, in each case in accordance with Accepted Master
Servicing Practices (and the Trustee shall have no liability for misuse of any
such powers of attorney by the Master Servicer or any Servicer). In instituting
foreclosures or similar proceedings, the Master Servicer shall institute such
proceedings either in its own name on behalf of the Trust or in the name of the
Trust (or cause the related Servicer, pursuant to the related Servicing
Agreement, to institute such proceedings either in the name of such Servicer on
behalf of the Trust or in the name of the Trust), unless otherwise required by
law or otherwise appropriate. If the Master Servicer or the Trustee has been
advised that it is likely that the laws of the state in which action is to be
taken prohibit such action if taken in the name of the Trust or the Trustee on
its behalf or that the Trust or the Trustee, as applicable, would be adversely
affected under the "doing business" or tax laws of such state if such action is
taken in its name, the Master Servicer shall join with the Trustee, on behalf of
the Trust, in the appointment of a co-trustee pursuant to Section 9.11 hereof.
In the performance of its duties hereunder, the Master Servicer shall be an
independent contractor and shall not, except in those instances where it is
taking action in the name of the Trustee, be deemed to be the agent of the
Trustee.

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        Section 3.06  Due-on-Sale Clauses; Assumption Agreements. To the extent
provided in the applicable Servicing Agreement and to the extent Mortgage Loans
contain enforceable due-on-sale clauses, the Master Servicer shall cause the
Servicers to enforce such clauses in accordance with the applicable Servicing
Agreement. If applicable law prohibits the enforcement of a due-on-sale clause
or such clause is otherwise not enforced in accordance with the applicable
Servicing Agreement, and, as a consequence, a Mortgage Loan is assumed, the
original Mortgagor may be released from liability in accordance with the
applicable Servicing Agreement.

        Section 3.07  Release of Mortgage Files. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by any Servicer of a
notification that payment in full has been escrowed in a manner customary for
such purposes for payment to Certificateholders on the next Distribution Date,
the Master Servicer will cause the Servicer, if required under the applicable
Servicing Agreement, to promptly furnish to the Custodian, on behalf of the
Trustee, two copies of a certification substantially in the form of Exhibit D
hereto signed by a servicing officer or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
servicing officer (which certification shall include a statement to the effect
that all amounts received in connection with such payment that are required to
be deposited in the related Servicer Account maintained by the applicable
Servicer pursuant to Section 4.01 or by the applicable Servicer pursuant to its
Servicing Agreement have been or will be so deposited) and shall request that
the Trustee (or the Custodian, on behalf of the Trustee) deliver to the
applicable Servicer the related Mortgage File. Upon receipt of such
certification and request, the Trustee (or the Custodian, on behalf of the
Trustee), shall promptly release the related Mortgage File to the applicable
Servicer and the Trustee (and the Custodian, if applicable) shall have no
further responsibility with regard to such Mortgage File. Upon any such payment
in full, each Servicer is authorized, to give, as agent for the Trustee, as the
mortgagee under the Mortgage that secured the Mortgage Loan, an instrument of
satisfaction (or assignment of mortgage without recourse) regarding the
Mortgaged Property subject to the Mortgage, which instrument of satisfaction or
assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of such payment, it being understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
related Servicer Account.

        (b)     From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with the applicable Servicing
Agreement, the Trustee shall execute such documents as shall be prepared and
furnished to the Trustee by a Servicer or the Master Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Trustee (or the Custodian, on behalf of the Trustee),
shall, upon the request of a Servicer or the Master Servicer, and delivery to
the Trustee (the Custodian, on behalf of the Trustee), of two copies of a
request for release signed by a servicing officer substantially in the form of
Exhibit D (or in a mutually agreeable electronic format which will, in lieu of a
signature on its face, originate from a servicing officer), release the related
Mortgage File held in its possession or control to the Servicer or the Master
Servicer, as applicable. Such trust receipt shall obligate the Servicer or the
Master Servicer to return the Mortgage File to the Trustee (or the Custodian on
behalf of the Trustee) when the need therefor by the Servicer or the Master
Servicer no longer exists unless the Mortgage Loan shall be

                                     - 52 -

<PAGE>

liquidated, in which case, upon receipt of a certificate of a servicing officer
similar to that hereinabove specified, the Mortgage File shall be released by
the Trustee (or the Custodian on behalf of the Trustee), to the Servicer or the
Master Servicer.

        Section 3.08  Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trust.

        (a)     The Master Servicer shall transmit and each Servicer (to the
extent required by the related Servicing Agreement) shall transmit to the
Trustee (or Custodian) such documents and instruments coming into the possession
of the Master Servicer or such Servicer from time to time as are required by the
terms hereof, or in the case of the Servicers, the applicable Servicing
Agreement, to be delivered to the Trustee (or Custodian). Any funds received by
the Master Servicer or by a Servicer in respect of any Mortgage Loan or which
otherwise are collected by the Master Servicer or by a Servicer as Net
Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall
be held for the benefit of the Trust and the Certificateholders subject to the
Master Servicer's right to retain or withdraw from the Master Servicer
Collection Account the Master Servicing Fee, any additional compensation
pursuant to Section 3.14 and any other amounts provided in this Agreement, and
to the right of each Servicer to retain its Servicing Fee and any other amounts
as provided in the applicable Servicing Agreement. The Master Servicer shall,
and (to the extent provided in the applicable Servicing Agreement) shall cause
each Servicer to, provide access to information and documentation regarding the
Mortgage Loans to the Trustee, its agents and accountants at any time upon
reasonable request and during normal business hours, and to Certificateholders
that are savings and loan associations, banks or insurance companies, the Office
of Thrift Supervision, the FDIC and the supervisory agents and examiners of such
Office and Corporation or examiners of any other federal or state banking or
insurance regulatory authority if so required by applicable regulations of the
Office of Thrift Supervision or other regulatory authority, such access to be
afforded without charge but only upon reasonable request in writing and during
normal business hours at the offices of the Master Servicer designated by it. In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.

        (b)     All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Net Liquidation
Proceeds or Insurance Proceeds, shall be held by the Master Servicer for and on
behalf of the Trust and the Certificateholders and shall be and remain the sole
and exclusive property of the Trust; provided, however, that the Master Servicer
and each Servicer shall be entitled to setoff against, and deduct from, any such
funds any amounts that are properly due and payable to the Master Servicer or
such Servicer under this Agreement or the applicable Servicing Agreement.

        Section 3.09  Standard Hazard Insurance and Flood Insurance Policies.

        (a)     For each Mortgage Loan (other than a Cooperative Loan), the
Master Servicer shall enforce any obligation of the Servicers under the related
Servicing Agreements to maintain or cause to be maintained standard fire and
casualty insurance and, where applicable, flood insurance, all in accordance
with the provisions of the related Servicing Agreements. It is

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understood and agreed that such insurance shall be with insurers meeting the
eligibility requirements set forth in the applicable Servicing Agreement and
that no earthquake or other additional insurance is to be required of any
Mortgagor or to be maintained on property acquired in respect of a defaulted
loan, other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance.

        (b)     Pursuant to Section 4.01 and 4.02, any amounts collected by the
Servicers or the Master Servicer, or by any Servicer, under any insurance
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or released to the Mortgagor in
accordance with the applicable Servicing Agreement) shall be deposited into the
Master Servicer Collection Account, subject to withdrawal pursuant to Section
4.02 and 4.03. Any cost incurred by the Master Servicer or any Servicer in
maintaining any such insurance if the Mortgagor defaults in its obligation to do
so shall be added to the amount owing under the Mortgage Loan where the terms of
the Mortgage Loan so permit; provided, however, that the addition of any such
cost shall not be taken into account for purposes of calculating the
distributions to be made to Certificateholders and shall be recoverable by the
Master Servicer or such Servicer pursuant to Section 4.02 and 4.03.

        Section 3.10  Presentment of Claims and Collection of Proceeds. The
Master Servicer shall (to the extent provided in the applicable Servicing
Agreement) cause the related Servicer to, prepare and present on behalf of the
Trustee, the Trust and the Certificateholders all claims under the Insurance
Policies and take such actions (including the negotiation, settlement,
compromise or enforcement of the insured's claim) as shall be necessary to
realize recovery under such policies. Any proceeds disbursed to the Master
Servicer (or disbursed to a Servicer and remitted to the Master Servicer) in
respect of such policies, bonds or contracts shall be promptly deposited in the
Master Servicer Collection Account upon receipt, except that any amounts
realized that are to be applied to the repair or restoration of the related
Mortgaged Property as a condition precedent to the presentation of claims on the
related Mortgage Loan to the insurer under any applicable Insurance Policy need
not be so deposited (or remitted).

        Section 3.11  Maintenance of the Primary Mortgage Insurance Policies.

        (a)     The Master Servicer shall not take, or permit any Servicer (to
the extent such action is prohibited under the applicable Servicing Agreement)
to take, any action that would result in noncoverage under any applicable
Primary Mortgage Insurance Policy of any loss which, but for the actions of such
Master Servicer or Servicer, would have been covered thereunder. The Master
Servicer shall use its best reasonable efforts to cause each Servicer (to the
extent required under the related Servicing Agreement) to keep in force and
effect (to the extent that the Mortgage Loan requires the Mortgagor to maintain
such insurance), primary mortgage insurance applicable to each Mortgage Loan
(including any lender-paid Primary Mortgage Insurance Policy) in accordance with
the provisions of this Agreement and the related Servicing Agreement, as
applicable. The Master Servicer shall not, and shall not permit any Servicer (to
the extent required under the related Servicing Agreement) to, cancel or refuse
to renew any such Primary Mortgage Insurance Policy that is in effect at the
date of the initial issuance of the Mortgage Note and is required to be kept in
force hereunder except in accordance with the provisions of this Agreement and
the related Servicing Agreement, as applicable.

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        (b)     The Master Servicer agrees to cause each Servicer (to the extent
required under the related Servicing Agreement) to present, on behalf of the
Trustee, the Trust and the Certificateholders, claims to the insurer under any
Primary Mortgage Insurance Policies and, in this regard, to take such reasonable
action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policies respecting defaulted Mortgage Loans. Pursuant to Section 4.01
and 4.02, any amounts collected by the Servicer under any Primary Mortgage
Insurance Policies shall be deposited in the Master Servicer Collection Account,
subject to withdrawal pursuant to Section 4.03.

        Section 3.12 Trustee to Retain Possession of Certain Insurance Policies
and Documents.

        The Trustee (or the Custodian, as directed by the Trustee), shall retain
possession and custody of the originals (to the extent available) of any Primary
Mortgage Insurance Policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer otherwise
has fulfilled its obligations under this Agreement, the Trustee (or its
Custodian, if any, as directed by the Trustee) shall also retain possession and
custody of each Mortgage File in accordance with and subject to the terms and
conditions of this Agreement. The Master Servicer shall promptly deliver or
cause to be delivered to the Trustee (or the Custodian, as directed by the
Trustee), upon the execution or receipt thereof the originals of any Primary
Mortgage Insurance Policies, any certificates of renewal, and such other
documents or instruments that constitute portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.

        Section 3.13  Realization Upon Defaulted Mortgage Loans. The Master
Servicer shall cause each Servicer (to the extent required under the related
Servicing Agreement) to foreclose upon, repossess or otherwise comparably
convert the ownership of Mortgaged 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, all in
accordance with the applicable Servicing Agreement.

        Section 3.14  Additional Compensation to the Master Servicer. Pursuant
to Section 4.02(c), certain income and gain realized from any investment of
funds in the Master Servicer Collection Account shall be for the benefit of the
Master Servicer as additional compensation. Servicing compensation in the form
of assumption fees, if any, late payment charges, as collected, if any, or
otherwise (but, unless otherwise specifically permitted in a Servicing
Agreement, not including any Prepayment Penalty Amounts) shall be retained by
the applicable Servicer, or the Master Servicer, and shall not be deposited in
the related Servicer Account or Master Servicer Collection Account. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its activities hereunder and shall not be entitled to reimbursement therefor
except as provided in this Agreement. The amount of the aggregate compensation
payable as set forth in this Section 3.14 plus the Master Servicing Fee due to
the Master Servicer in respect of any Distribution Date shall be reduced in
accordance with Section 6.07.

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        Section 3.15 REO Property.

        (a)     In the event the Trust (or the Trustee on its behalf) acquires
ownership of any REO Property in respect of any related Mortgage Loan, the deed
or certificate of sale shall be issued to the Trust, or if required under
applicable law, to the Trustee, or to its nominee, on behalf of the Trust. The
Master Servicer shall, to the extent provided in the applicable Servicing
Agreement, cause the applicable Servicer to sell, any REO Property as
expeditiously as possible (and in no event later than three years after
acquisition) and in accordance with the provisions of this Agreement and the
related Servicing Agreement, as applicable. Pursuant to its efforts to sell such
REO Property, the Master Servicer shall cause the applicable Servicer to protect
and conserve, such REO Property in the manner and to the extent required by the
applicable Servicing Agreement, in accordance with the REMIC Provisions and in a
manner that does not result in a tax on "net income from foreclosure property"
or cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code.

        (b)     The Master Servicer shall, to the extent required by the related
Servicing Agreement, cause the applicable Servicer to deposit all funds
collected and received in connection with the operation of any REO Property in
the related Servicer Account.

        (c)     The Master Servicer and the applicable Servicer, upon the final
disposition of any REO Property, shall be entitled to reimbursement for any
related unreimbursed Monthly Advances and other unreimbursed advances as well as
any unpaid Servicing Fees from Liquidation Proceeds received in connection with
the final disposition of such REO Property; provided, that any such unreimbursed
Monthly Advances as well as any unpaid Servicing Fees may be reimbursed or paid,
as the case may be, prior to final disposition, out of any net rental income or
other net amounts derived from such REO Property.

        (d)     To the extent provided in the related Servicing Agreement, the
Liquidation Proceeds from the final disposition of the REO Property, net of any
payment to the Master Servicer and the applicable Servicer as provided above
shall be deposited in the related Servicer Account on or prior to the applicable
Determination Date in the month following receipt thereof and be remitted by
wire transfer in immediately available funds to the Master Servicer for deposit
into the related Master Servicer Collection Account on the next succeeding
Remittance Date.

        Section 3.16 Annual Officer's Certificate as to Compliance.

        (a)     The Master Servicer shall deliver to the Securities
Administrator, the Seller, the Trustee and each Rating Agency on or before March
1 of each year, commencing in March, 2004, an Officer's Certificate, certifying
that with respect to the period ending December 31 of the prior year: (i) the
officer certifying such Officer's Certificate has reviewed the activities of
such Master Servicer during the preceding calendar year or portion thereof and
its performance under this Agreement, (ii) to the best of such officer's
knowledge, based on such review, such Master Servicer has performed and
fulfilled its duties, responsibilities and obligations under this Agreement in
all material respects throughout such year, or, if there has been a default in
the fulfillment of any such duties, responsibilities or obligations, specifying
each such default known to such officer and the nature and status thereof and
(iii) nothing has come to the attention of

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such officer to lead such officer to believe that any Servicer has failed to
perform any of its duties, responsibilities and obligations under its Servicing
Agreement in all material respects throughout such year, or, if there has been a
material default in the performance or fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
officer and the nature and status thereof.

        (b)     Copies of such statements shall be provided by the Trustee to
any Certificateholder upon request at the Master Servicer's expense, provided
that such statement shall have been delivered to the Trustee.

        Section 3.17  Annual Independent Accountant's Servicing Report. If the
Master Servicer has, during the course of any calendar year, directly serviced
any of the Mortgage Loans, the Master Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Securities Administrator, the Trustee, the Rating
Agencies and the Seller by March 1, 2004, and by March 1 of each year
thereafter, in each case for the immediately preceding calendar year, to the
effect that, with respect to the most recently ended calendar year, such firm
has examined certain records and documents relating to the Master Servicer's
performance of its servicing obligations under this Agreement and pooling and
servicing and trust agreements in material respects similar to this Agreement
and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
Freddie Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by Freddie Mac
requires it to report. Copies of such statements shall be provided to any
Certificateholder, upon request, by the Master Servicer, or by the Trustee at
the expense of the Master Servicer if the Master Servicer shall fail to provide
such copies. If any such report discloses exceptions that are material, the
Master Servicer shall advise the Trustee whether such exceptions have been or
are susceptible of cure, and will take prompt action to do so.

        Section 3.18  Reports Filed with Securities and Exchange Commission.
Within 15 days after each Distribution Date, the Securities Administrator shall,
in accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System ("EDGAR"), a Form 8-K with a copy
of the statement to the Trustee who shall furnish a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30 in the first year that it has received prior instructions from the
Seller to do so, the Securities Administrator shall, in accordance with industry
standards and only if instructed by the Seller, file a Form 15 Suspension Notice
with respect to the Trust, if applicable. On or prior to (i) March 1, 2004 and
(ii) unless and until a Form 15 Suspension Notice shall have been filed, on or
prior to March 1 of each year thereafter, the Master Servicer shall provide the
Securities Administrator with a Master Servicer Certification, together with a
copy of the annual independent accountant's servicing report and annual
statement of compliance of each Servicer, in each case, required to be delivered
pursuant to its Servicing Agreement, and, if applicable, the

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annual independent accountant's servicing report and annual statement of
compliance to be delivered by the Master Servicer pursuant to Section 3.16 and
3.17. On or prior to March 31, 2004 and, unless and until a Form 15 Suspension
Notice shall have been filed, on or prior to March 31 of each year thereafter,
the Securities Administrator shall file a Form 10-K, in substance conforming to
industry standards, with respect to the Trust. Such Form 10-K shall include the
Master Servicer Certification and other documentation provided by the Master
Servicer pursuant to the second preceding sentence. The Seller hereby grants to
the Securities Administrator a limited power of attorney to execute and file
each such document on behalf of the Seller. Such power of attorney shall
continue until either the earlier of (i) receipt by the Securities Administrator
from the Seller of written termination of such power of attorney and (ii) the
termination of the Trust. The Seller agrees to promptly furnish to the
Securities Administrator, from time to time upon request, such further
information, reports and financial statements within its control related to this
Agreement, the Mortgage Loans as the Securities Administrator reasonably deems
appropriate to prepare and file all necessary reports with the Commission. The
Securities Administrator shall have no responsibility to file any items other
than those specified in this Section 3.18; provided, however, the Securities
Administrator will cooperate with the Seller in connection with any additional
filings with respect to the Trust as the Seller deems necessary under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Copies of all
reports filed by the Securities Administrator under the Exchange Act shall be
sent to: the Seller c/o Bear, Stearns & Co. Inc., Attn: Managing
Director-Analysis and Control, One Metrotech Center North, Brooklyn, New York
11202-3859. Fees and expenses incurred by the Securities Administrator in
connection with this Section 3.18 shall not be reimbursable from the Trust.

        Section 3.19  Amendments to Master Servicing Guide and Correspondent
Sellers Guide. The Mortgage Loan Seller and the Master Servicer hereby agree not
to amend the Master Servicing Guide or the Correspondent Sellers Guide with
respect to the Mortgage Loans (which are Securitized Loans (as defined therein))
which amendment would (i) change the Servicer Remittance Date or date for
remittance of any servicer reports or monthly remittance advices, (ii) change
the manner in which any Servicer makes Advances, servicing advances or amounts
to compensate for Interest Shortfalls or (iii) otherwise have a material adverse
effect on the Trust or the Certificateholders unless such changes are made
pursuant to the provisions of Section 11.02 hereof.

        Section 3.20  UCC. The Trustee agrees to file continuation statements
for any Uniform Commercial Code financing statements which the Seller has
informed the Trustee were filed on the Closing Date in connection with the
Trust. The Seller shall file any financing statements or amendments thereto
required by any change in the Uniform Commercial Code.

        Section 3.21 Purchase of Certain Mortgage Loans.

        (a)     Thornburg, in its capacity as a Servicer of a substantial
portion of the Mortgage Loans, shall have the right to purchase from the Trust
any Mortgage Loan which as of the first day of a Calendar Quarter is delinquent
in payment by 90 days or more or is an REO Property, at a price equal to the
Repurchase Price; provided however (i) that such Mortgage Loan is still 90 days
or more delinquent or is an REO Property as of the date of such purchase and
(ii) this

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purchase option, if not theretofore exercised, shall terminate on the date prior
to the last day of the related Calendar Quarter. This purchase option, if not
exercised, shall not be thereafter reinstated unless the delinquency is cured
and the Mortgage Loan thereafter again becomes 90 days or more delinquent or
becomes an REO Property, in which case the option shall again become exercisable
as of the first day of the related Calendar Quarter.

        (b)     (i)     In addition, Thornburg, in its capacity as the Mortgage
        Loan Seller, may, but is not required to, repurchase any Mortgage Loan
        as to which the Mortgagor has requested a Significant Modification and
        such Mortgagor has a satisfactory payment history under such Mortgage
        Loan and meets the credit standards of the Mortgage Loan Seller for the
        loan program selected (a "Significant Modification Loan"). A
        "Significant Modification" shall mean any modification to the interest
        rate of the greater of (a) 0.25% added or subtracted from the existing
        rate and (b) a change equal to the product of (1) 5% and (2) the annual
        existing interest rate thereon, which is not provided for in the related
        Mortgage Note. The purchase price for any such repurchase pursuant to
        this Section 3.21(b)(i) shall be the applicable Repurchase Price. In
        order to exercise its repurchase rights hereunder, the Mortgage Loan
        Seller shall deliver to the Master Servicer and the Trustee a
        certificate identifying the Mortgage Loan to be repurchased and
        certifying that (i) such Mortgage Loan is a Significant Modification
        Loan, and (ii) that the Significant Modification Loan will be entered
        into on the date of such repurchase.

                (ii)    No later than the fourth Business Day prior to each
        Distribution Date, Thornburg will provide to the Master Servicer a list
        identifying all Mortgage Loans that became Converted Mortgage Loans or
        Modified Mortgage Loans during the related Due Period. On the third
        Business Day prior to each Distribution Date, provided that it has
        received such list from Thornburg, the Master Servicer shall prepare and
        provide to TMI a Converted Mortgage Loan Schedule and a Modified
        Mortgage Loan Schedule with respect to such Due Period. No later than
        1:00 PM Eastern Time on the second Business Day prior to each
        Distribution Date, TMI shall purchase each Converted Mortgage Loan and
        Modified Mortgage Loan, to the extent specified in a Converted Mortgage
        Loan Schedule or Modified Mortgage Loan Schedule delivered to it by the
        Master Servicer for such Distribution Date, at the applicable Repurchase
        Price for each such Converted Mortgage Loan or Modified Mortgage Loan,
        as applicable, and shall remit such Repurchase Price to the Master
        Servicer for deposit in the Master Servicer Collection Account.

        (c)     If at any time Thornburg or TMI, as applicable, remits to the
Master Servicer a payment for deposit in the Master Servicer Collection Account
covering the amount of the Repurchase Price for a Mortgage Loan of the type set
forth in clauses (a) or (b) above, and Thornburg or TMI, as applicable, provides
to the Trustee a certification signed by a servicing or other responsible
officer stating that the amount of such payment has been deposited in the Master
Servicer Collection Account, then the Trustee shall execute the assignment of
such Mortgage Loan at the request of Thornburg or TMI, as applicable, without
recourse to Thornburg or TMI, as applicable, which shall succeed to all the
Trust's and/or the Trustee's right, title and interest in and to such Mortgage
Loan, and all security and documents relative thereto. Such assignment shall be
an assignment outright and not for security. Thornburg or TMI, as

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applicable, will thereupon own such Mortgage Loan, and all such security and
documents, free of any further obligation to the Trust, the Trustee or the
Certificateholders with respect thereto.

        Section 3.22  Instructions to the Trustee. In the event that the Trustee
is required under a Servicing Agreement to give any waivers, consents or
instructions to the related Servicer, if the Trustee reasonably believes that
such actions (i) are not ministerial in nature, (ii) involve the waiver of any
defaults by a Servicer, or (iii) pertain to the termination of a Servicer or the
Servicing Agreement, the Trustee may seek written directions from the Holders of
51% of the Fractional Undivided Interests in the Class of Subordinate
Certificates with the highest numerical designation then outstanding. In the
absence of such instruction from the requisite applicable Certificateholders,
the Trustee may seek such instruction from the Holders of 51% of the aggregate
the Fractional Undivided Interests in all of the Certificates. If the Trustee
does not receive any such requested instructions, the Trustee may refrain from
giving any consent, waiver, instruction or direction to the related Servicer and
shall not be liable for any losses or damages resulting from such failure to
give such requested consents, waivers, instructions or directions.

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                                   ARTICLE IV

                                    Accounts

        Section 4.01  Servicer Accounts. (a) The Master Servicer shall enforce
the obligation of each Servicer to establish and maintain one or more Servicer
Accounts in accordance with the applicable Servicing Agreement, with records to
be kept with respect thereto on a Mortgage Loan by Mortgage Loan basis, into
which accounts shall be deposited within 48 hours (or as of such other time
specified in the related Servicing Agreement) of receipt all collections of
principal and interest on any Mortgage Loan and with respect to any REO Property
received by a Servicer, including Principal Prepayments, Insurance Proceeds, Net
Liquidation Proceeds, and advances made from the Servicer's own funds (less, in
the case of each Servicer, the applicable servicing compensation, in whatever
form and amounts as permitted by the applicable Servicing Agreement) and all
other amounts to be deposited in each such Servicer Account. The Servicer is
hereby authorized to make withdrawals from and deposits to the related Servicer
Account for purposes required or permitted by this Agreement and the applicable
Servicing Agreement. For the purposes of this Agreement, Servicer Accounts shall
also include such other accounts as the Servicer maintains for the escrow of
certain payments, such as taxes and insurance, with respect to certain Mortgaged
Properties. Each Servicing Agreement sets forth the criteria for the
segregation, maintenance and investment of each related Servicer Account, the
contents of which are acceptable to the parties hereto as of the date hereof and
changes to which shall not be made unless such changes are made in accordance
with the provisions of Section 11.02 hereof.

        (b)     [Reserved];

        (c)     To the extent provided in the related Servicing Agreement and
subject to this Article IV, on or before each applicable Servicer Remittance
Date, each Servicer shall withdraw or shall cause to be withdrawn from the
related Servicer Accounts and shall immediately deposit or cause to be deposited
in the Master Servicer Collection Account amounts representing the following
collections and payments (other than with respect to principal of or interest on
the Mortgage Loans due on or before the Cut-off Date) with respect to each of
the Mortgage Loans it is servicing:

                (i)     Scheduled Payments on the Mortgage Loans received or any
        related portion thereof advanced by the Servicers pursuant to the
        Servicing Agreements which were due on or before the related Due Date,
        net of the amount thereof comprising the Servicing Fees;

                (ii)    Full Principal Prepayments and any Net Liquidation
        Proceeds received by the Servicers with respect to such Mortgage Loans
        in the related Prepayment Period, with interest to the date of
        prepayment or liquidation, net of the amount thereof comprising the
        Servicing Fees;

                (iii)   Partial Principal Prepayments received by the Servicers
        for such Mortgage Loans in the related Prepayment Period;

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                (iv)    Prepayment Penalty Amounts, if any, and only if required
        under the related Servicing Agreement; and

                (v)     Any amount to be used as a Monthly Advance or
        Compensating Interest Payment.

        (d)     Withdrawals may be made from a Servicer Account only to make
remittances as provided in Section 4.01(c), 4.02 and 4.03; to reimburse the
Master Servicer or a Servicer for Monthly Advances which have been recovered by
subsequent collection from the related Mortgagor; to remove amounts deposited in
error; to remove fees, charges or other such amounts deposited on a temporary
basis; or to clear and terminate the account at the termination of this
Agreement in accordance with Section 10.01. As provided in Sections 4.01(c) and
4.02(b), certain amounts otherwise due to the Servicers may be retained by them
and need not be deposited in the Master Servicer Collection Account.

        Section 4.02  Master Servicer Collection Account. (a) The Master
Servicer shall establish and maintain in the name of the Trustee, for the
benefit of the Trust and the Certificateholders, the Master Servicer Collection
Account as a segregated account, each of which shall be an Eligible Account. The
Master Servicer will deposit in the Master Servicer Collection Account as
identified by the Master Servicer and as received by the Master Servicer, the
following amounts:

                (i)     Any amounts withdrawn from a Servicer Account;

                (ii)    Any Monthly Advance and any Compensating Interest
        Payments received from a Servicer, or required to be made by the Master
        Servicer to the extent required but not made by a Servicer;

                (iii)   Any Insurance Proceeds or Liquidation Proceeds received
        by or on behalf of the Master Servicer or which were not deposited in a
        Servicer Account;

                (iv)    The Repurchase Price with respect to any Mortgage Loans
        purchased by the Mortgage Loan Seller or pursuant to Section 2.02 or
        2.03, any amounts which are to be treated pursuant to Section 2.04 of
        this Agreement as the payment of such a Repurchase Price, the Repurchase
        Price with respect to any Mortgage Loans purchased by Thornburg or TMI
        pursuant to Section 3.21, and all proceeds of any Mortgage Loans or
        property acquired with respect thereto repurchased by the Thornburg
        pursuant to Section 10.01;

                (v)     Any amounts required to be deposited with respect to
        losses on investments of deposits in the Master Servicer Collection
        Account; and

                (vi)    Any other amounts received by or on behalf of the Master
        Servicer or the Trustee and required to be deposited in the Master
        Servicer Collection Account pursuant to this Agreement.

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        (b)     All amounts deposited to the Master Servicer Collection Account
shall be held by the Master Servicer in the name of the Trustee in trust for the
benefit of the Trust and Certificateholders in accordance with the terms and
provisions of this Agreement. The requirements for crediting the Master Servicer
Collection Account or the Distribution Account shall be exclusive, it being
understood and agreed that, without limiting the generality of the foregoing,
payments in the nature of (i) late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges (but excluding all Prepayment Penalty Amounts) and (ii) the
items enumerated in Subsections 4.03(a)(i), (ii), (iii), (iv), (vi), (vii), (ix)
and (x) with respect to the Securities Administrator, need not be credited by
the Master Servicer or the related Servicer to the Distribution Account or the
Master Servicer Collection Account, as applicable. In the event that the Master
Servicer shall deposit or cause to be deposited to the Distribution Account any
amount not required to be credited thereto, the Trustee, upon receipt of a
written request therefor signed by a servicing officer of the Master Servicer,
shall promptly transfer such amount to the Master Servicer, any provision herein
to the contrary notwithstanding.

        (c)     The amount at any time credited to the Master Servicer
Collection Account shall be invested, in the name of the Trustee, or its
nominee, for the benefit of the Trust, in Permitted Investments as follows. All
Permitted Investments shall be for the benefit of Thornburg, in its capacity as
Servicer, except that the investment income with respect to the investment of
funds in the Master Servicer Collection Account made on the Business Day prior
to the Distribution Account Deposit Date shall be for the benefit of the Master
Servicer. All Permitted Investments made for the benefit of Thornburg shall be
made at the written direction of Thornburg to the Master Servicer (or, if no
such written direction is received, in investments of the type specified in
clause (v) of the definition of Permitted Investments), shall mature or be
subject to redemption or withdrawal on or before, and shall be held until, the
Business Day prior to the next succeeding Distribution Account Deposit Date. Any
and all investment earnings from such Permitted Investments shall be paid to
Thornburg, and the risk of loss of moneys resulting from such investments shall
be borne by and be the risk of Thornburg. Thornburg shall deposit the amount of
any such loss in the Master Servicer Collection Account within two Business Days
of receipt of notification of such loss but not later than the next succeeding
Distribution Account Deposit Date.

        All Permitted Investments for the benefit of the Master Servicer shall
be in such Permitted Investments as shall be selected by the Master Servicer and
shall mature (and be subject to withdrawal and held until) the next succeeding
Distribution Account Deposit Date. Any and all investment earnings from such
Permitted Investments shall be paid to the Master Servicer and the risk of loss
on such Permitted Investments shall be borne by and be the risk of the Master
Servicer. The Master Servicer shall deposit the amount of any such loss in the
Master Servicer Collection Account no later than the next succeeding
Distribution Account Deposit Date.

        Section 4.03  Permitted Withdrawals and Transfers from the Master
Servicer Collection Account. (a) The Master Servicer will, from time to time on
demand of a Servicer, the Securities Administrator, or for its own account as
set forth below, make or cause to be made such withdrawals or transfers from the
Master Servicer Collection Account, in the case of a demand

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by a Servicer, as the applicable Servicer has designated for such transfer or
withdrawal pursuant to the applicable Servicing Agreement, or in the case of a
demand by the Securities Administrator as the Securities Administrator has
demanded pursuant hereto, or as the Master Servicer has determined to be
appropriate in accordance herewith, for the following purposes:

                (i)     to reimburse the Master Servicer or any Servicer for any
        Monthly Advance of its own funds or any advance of such Servicer's own
        funds, the right of the Master Servicer or a Servicer to reimbursement
        pursuant to this subclause (i) being limited to amounts received on a
        particular Mortgage Loan (including, for this purpose, the Repurchase
        Price therefor, Insurance Proceeds and Liquidation Proceeds) which
        represent late payments or recoveries of the principal of or interest on
        such Mortgage Loan respecting which such Monthly Advance or advance was
        made;

                (ii)    to reimburse the Master Servicer or any Servicer from
        Insurance Proceeds or Liquidation Proceeds relating to a particular
        Mortgage Loan for amounts expended by the Master Servicer or such
        Servicer in good faith in connection with the restoration of the related
        Mortgaged Property which was damaged by an Uninsured Cause or in
        connection with the liquidation of such Mortgage Loan;

                (iii)   to reimburse the Master Servicer or any Servicer from
        Insurance Proceeds relating to a particular Mortgage Loan for insured
        expenses incurred with respect to such Mortgage Loan and to reimburse
        the Master Servicer or such Servicer from Liquidation Proceeds from a
        particular Mortgage Loan for Liquidation Expenses incurred with respect
        to such Mortgage Loan;

                (iv)    to pay the Master Servicer or any Servicer, as
        appropriate, from Liquidation Proceeds or Insurance Proceeds received in
        connection with the liquidation of any Mortgage Loan, the amount which
        it or such Servicer would have been entitled to receive under subclause
        (ix) of this Subsection 4.03(a) as servicing compensation on account of
        each defaulted scheduled payment on such Mortgage Loan if paid in a
        timely manner by the related Mortgagor;

                (v)     to pay the Master Servicer or any Servicer from the
        Repurchase Price for any Mortgage Loan, the amount which it or such
        Servicer would have been entitled to receive under subclause (ix) of
        this Subsection (a) as servicing compensation;

                (vi)    to reimburse the Master Servicer or any Servicer for
        servicing related advances of funds, the right to reimbursement pursuant
        to this subclause being limited to amounts received on the related
        Mortgage Loan (including, for this purpose, the Repurchase Price
        therefor, Insurance Proceeds and Liquidation Proceeds) which represent
        late recoveries of the payments for which such servicing advances were
        made;

                (vii)   to reimburse the Master Servicer or any Servicer for any
        Monthly Advance or advance, after a Realized Loss has been allocated
        with respect to the related Mortgage Loan if the Monthly Advance or
        advance has not been reimbursed pursuant to clauses (i) and (vi);

                                     - 64 -

<PAGE>

                (viii)  to pay the Master Servicer its monthly Master Servicing
        Fee and any investment income and other additional servicing
        compensation payable pursuant to Section 3.14;

                (ix)    to reimburse the Master Servicer or the Securities
        Administrator for any expenses recoverable by the Master Servicer or the
        Securities Administrator pursuant to Sections 3.03, 7.04 and 9.05;

                (x)     to reimburse or pay any Servicer any such amounts as are
        due thereto under the applicable Servicing Agreement and have not been
        retained by or paid to the Servicer, to the extent provided in the
        related Servicing Agreement;

                (xi)    to remove amounts deposited in error; and

                (xii)   to clear and terminate the Master Servicer Collection
        Account pursuant to Section 10.01.

        (b)     In addition, on or before each Distribution Account Deposit
Date, the Master Servicer shall deposit in the Distribution Account (or remit to
the Trustee for deposit therein) any Monthly Advances or payments of
Compensating Interest, to the extent required but not made by the related
Servicer and required to be made by the Master Servicer with respect to the
Mortgage Loans.

        (c)     The Master Servicer shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
payments or reimbursements from the Master Servicer Collection Account pursuant
to subclauses (i) through (vii), inclusive, (ix) and (x) or with respect to any
such amounts which would have been covered by such subclauses had the amounts
not been retained by the Master Servicer without being deposited in the
Distribution Account under Section 4.02(b), and to allow the Securities
Administrator to calculate the amount of the Trustee Fee due the Trustee on the
related Distribution Date.

        (d)     No later than 3:00 p.m. New York time on each Distribution
Account Deposit Date, the Master Servicer will transfer all Interest Funds and
Principal Funds on deposit in the Master Servicer Collection Account net of the
Master Servicing Fee and any other amounts previously withdrawn pursuant to
Subsection 4.03(a) with respect to the related Distribution Date to the Trustee
for deposit in the Distribution Account.

        Section 4.04  Distribution Account. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Trust and the
Certificateholders, the Distribution Account as a segregated trust account or
accounts, each of which shall be a non-interest bearing Eligible Account.

        (b)     All amounts deposited to the Distribution Account shall be held
by the Trustee in the name of the Trustee in trust for the benefit of the Trust
and the Certificateholders in accordance with the terms and provisions of this
Agreement.

                                     - 65 -

<PAGE>

        (c)     The Distribution Account shall constitute a trust account of the
Trust segregated on the books of the Trustee and held by the Trustee in trust in
its Corporate Trust Office, and the Distribution Account and the funds deposited
therein shall not be subject to, and shall be protected from, all claims, liens,
and encumbrances of any creditors or depositors of the Trustee or the Master
Servicer (whether made directly, or indirectly through a liquidator or receiver
of the Trustee or the Master Servicer). The amount at any time credited to the
Distribution Account shall be (i) fully insured by the FDIC to the maximum
coverage provided thereby or (ii) invested by the Trustee, in such Permitted
Investments as it shall select. All Permitted Investments shall mature or be
subject to redemption or withdrawal on or before, and shall be held until, the
immediately succeeding Distribution Date. All investment earnings or income on
amounts on deposit in the Distribution Account from time to time shall be for
the account of the Trustee, which shall be permitted to withdraw such amounts
from the Distribution Account. The risk of loss of moneys required to be
distributed to the Certificateholders resulting from such investments shall be
borne by the Trustee, which shall deposit the amount of any such loss in the
Distribution Account on the Distribution Date immediately following the date of
the investment to which such loss relates. With respect to the Distribution
Account and the funds deposited therein, the Trustee shall take such action as
may be necessary to ensure that the Trust and the Certificateholders shall be
entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. Section
92a(e), and applicable regulations pursuant thereto, if applicable, or any
applicable comparable state statute applicable to state chartered banking
corporations, if applicable. The Trustee or its affiliates are permitted to
receive additional compensation that could be deemed to be in the Trustee's
economic self-interest for (i) serving as investment adviser, administrator,
shareholder, servicing agent, custodian or sub-custodian with respect to certain
of the Permitted Investments, (ii) using affiliates to effect transactions in
certain Permitted Investments and (iii) effecting transactions in certain
Permitted Investments.

        Section 4.05  Permitted Withdrawals and Transfers from the Distribution
Account. (a) The Trustee will, from time to time on demand of the Master
Servicer or the Securities Administrator, or for its own account as set forth
below, make or cause to be made such withdrawals or transfers from the
Distribution Account as the Master Servicer has designated for such transfer or
withdrawal pursuant to the Servicing Agreements or as the Securities
Administrator has instructed hereunder for the following purposes:

                (i)     to return to the Master Servicer or the applicable
        Servicer, any amounts which should have been withdrawn from the Master
        Servicer Collection Account pursuant to Section 4.03(a);

                (ii)    to pay the Trustee its monthly Trustee Fee;

                (iii)   to reimburse the Trustee and the Delaware Trustee for
        expenses, costs and liabilities incurred by or reimbursable to it
        pursuant to Sections 7.04 or 9.05 (including those related to the
        Custodian, to the extent not paid by Thornburg);

                (iv)    to make distributions of Retained Interest to the
        Retained Interest Holder on each Distribution Date;

                                     - 66 -

<PAGE>

                (v)     to pay to Thornburg any investment income;

                (vi)    to remove amounts deposited in error; and

                (vii)   to clear and terminate the Distribution Account pursuant
        to Section 10.01.

        (b)     On each Distribution Date, the Trustee shall distribute Interest
Funds and Principal Funds for such Distribution Date to the Holders of the
Certificates in accordance with Section 6.01.

        Section 4.06 Yield Maintenance Account.

        The Trustee shall establish and maintain in the name of the Trustee, for
the benefit of the Class A, Class M-1, Class M-2 and Class B-IO
Certificateholders, the Yield Maintenance Account as a segregated trust account.
The Yield Maintenance Account shall not constitute an asset of any REMIC
hereunder. Pursuant to each Yield Maintenance Agreement, the Yield Maintenance
Provider shall have provided the Trustee and the Securities Administrator with
notice of the Yield Maintenance Payment, if any, to be made pursuant to such
Yield Maintenance Agreement for each Distribution Date. Yield Maintenance
Amounts distributed to the Trustee pursuant to the Yield Maintenance Agreements
in connection with each such Distribution Date shall be deposited into the Yield
Maintenance Account and distributed on each Distribution Date, as follows:

        (a)     first, to the Class A Certificateholders, the lesser of (1) the
amount received under the Yield Maintenance Agreements, and (2) the amount of
Current Interest that each such Class would have been entitled to receive on
such Distribution Date had the Class A Pass-Through Rate been calculated at the
lesser of (A) One-Month LIBOR plus the Class A Margin for the related Interest
Accrual Period and (B) 11.500% per annum, to the extent not otherwise paid from
Interest Funds;

        (b)     second, to the Class M-1 Certificateholders, the lesser of (1)
the amount received under the Yield Maintenance Agreements remaining after
application pursuant to clause (a) above, and (2) the amount of Current Interest
that the Class M-1 Certificates would have been entitled to receive on such
Distribution Date had the Class M-1 Pass-Through Rate been calculated at the
lesser of (A) One-Month LIBOR plus the Class M-1 Margin for the related Interest
Accrual Period and (B) 11.500% per annum, to the extent not otherwise paid from
Interest Funds; and

        (c)     third, to the Class M-2 Certificateholders, the lesser of (1)
the amount received under the Yield Maintenance Agreements remaining after
application pursuant to clauses (a) and (b) above and (2) the amount of Current
Interest that the Class M-2 Certificates would have been entitled to receive on
such Distribution Date had the Class M-2 Pass-Through Rate been calculated at
the lesser of (A) One-Month LIBOR plus the Class M-2 Margin for the related
Interest Accrual Period and (B) 11.500% per annum, to the extent not otherwise
paid from Interest Funds.

                                     - 67 -

<PAGE>

        In the event that the amount received by the Trustee with respect
to the Yield Maintenance Agreements for any Distribution Date, exceeds the
amounts required under subclause (2) of clauses (a) through (c) above on such
Distribution Date, such excess amount will constitute the Excess Yield
Maintenance Amount and will be distributed by the Trustee on such Distribution
Date in the manner set forth in Section 6.01.

        Upon termination of all three Yield Maintenance Agreements and payment
of all amounts owed by the Yield Maintenance Provider thereunder, following
application by the Trustee of funds in the Yield Maintenance Account on the next
succeeding Distribution Date to pay amounts owed pursuant to clauses (a) through
(c) of this Section and Section 6.01, the Trustee shall terminate the Yield
Maintenance Account.

                                     - 68 -

<PAGE>

                                    ARTICLE V

                                  Certificates

        Section 5.01  Certificates. (a) The Depository, the Seller and the
Trustee have entered into a Depository Agreement dated as of the Closing Date
(the "Depository Agreement"). Except for the Residual Certificates and the
Individual Certificates and as provided in Subsection 5.01(b), the Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of such Certificates may not be
transferred by the Trustee except to a successor to the Depository; (ii)
ownership and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iii) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (iv) the Trustee shall deal with the
Depository (including its agents, employees, officers and directors) as absolute
owner of the Book-Entry Certificates for all purposes whatsoever, including, as
representative of such Certificate Owners of the respective Class of
Certificates for purposes of exercising the rights of Certificateholders under
this Agreement, and requests and directions for and votes of such representative
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; (v) the Depository Participants shall have no
direct rights or recourse under this Agreement or with respect to any of the
Book-Entry Certificates held on their behalf by the Depository, except through
the Depository acting on their behalf, and (vi) the Trustee may rely and shall
be fully protected in conclusively relying upon information furnished by the
Depository with respect to its Depository Participants.

        The Residual Certificates are Physical Certificates and the Class B-IO
Certificates are Individual Certificates.

        All transfers by Certificate Owners of interests in such respective
Classes of Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer interests in 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.

        (b)     If (i)(A) the Seller advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Seller is unable to
locate a qualified successor within 30 days or (ii) the Seller at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall request that the Depository notify all
Certificate Owners of the occurrence of any such event and of the availability
of definitive, fully registered Certificates to Certificate Owners requesting
the same. Upon surrender to the Trustee of the Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue the definitive Certificates. Neither the Seller nor the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.

                                     - 69 -

<PAGE>

        (c)     The Trustee shall elect that each of REMIC I and REMIC II shall
be treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of this Agreement shall
be resolved in a manner that preserves the validity of such REMIC elections. The
assets of REMIC I shall include the Mortgage Loans and all interest owing in
respect of and principal due thereon, the Master Servicer Collection Account,
the Distribution Account, any REO Property, and any proceeds of the foregoing.
The REMIC I Regular Interests shall constitute the assets of REMIC II.

        REMIC I will be evidenced by (x) the Class I-a, Class I-m1, Class I-m2
and Class I-Q (the "REMIC I Regular Interests"), which are hereby designated as
the "regular interests" in REMIC I and will be uncertificated and
non-transferable and (y) the Class R-1 Certificate, which is hereby designated
as the single "residual interest" in REMIC I (the REMIC I Regular Interests,
together with the Class R-1 Certificate, the "REMIC I Certificates"). The REMIC
I Regular Interests shall be recorded on the records of REMIC I as being issued
to and held by the Trustee on behalf of REMIC II.

        Interest on the REMIC I Regular Interests that corresponds to interest
on the Mortgage Loans that is allocable to payments of principal on the
Certificates (the "Turbo Amount") will not be paid directly as principal to the
REMIC I Regular Interests, but instead a portion of the interest otherwise
payable with respect to the Class I-Q REMIC I Regular Interest which equals
0.01% of the Turbo Amount will be payable as a reduction of the principal
balances of the Class I-a, Class I-m1, and Class I-m2 REMIC I Regular Interests
in the same proportions that the Turbo Amount is allocated among the Class A,
Class M-1 and Class M-2 Certificates, respectively, and will be accrued and
added to principal on the Class I-Q REMIC I Regular Interest.

        Principal payments on the Mortgage Loans held by REMIC I shall be
allocated 0.01% to the Class I-a, Class I-m1 and Class I-m2 REMIC I Regular
Interests. The remaining 99.99% shall be allocated to Class I-Q REMIC I Regular
Interest. The aggregate amount of principal allocated to Class I-a, Class I-m1
and Class I-m2 REMIC I Regular Interests shall be apportioned among such classes
in the same proportions as principal is payable with respect to the Class A,
Class M-1 and Class M-2 Certificates, respectively. Notwithstanding the above,
principal payments on REMIC I Regular Interests that are attributable to an
Excess Overcollateralization Amount shall be allocated to the Class I-Q REMIC I
Regular Interests. Cash of $50 will be deposited into REMIC I and shall be paid
out on the first Distribution Date to the Class R-1 Certificate.

        The REMIC I Certificates will have the following designations, initial
principal balances, pass-through rates and allocations of interest:

                                       Pass-      Allocation     Corresponding
  REMIC I       Initial Principal     Through         of            Class of
Certificates         Balance           Rate        Interest       Certificates
-------------   ------------------   --------    ------------   ----------------
     I-a        $      103,967.390         (1)        (2),(3)               A
    I-m1        $        1,060.890         (1)        (2),(3)               M-1
    I-m2        $        1,060.890         (1)        (2),(3)               M-2

                                     - 70 -

<PAGE>

<TABLE>
<CAPTION>
                                         Pass-        Allocation          Corresponding
  REMIC I       Initial Principal       Through           of                 Class of
Certificates         Balance             Rate          Interest            Certificates
-------------   ------------------     --------      ------------        ---------------
     <S>        <C>                          <C>              <C>                     <C>
     I-Q        $ 1,060,785,680.59           (1)                (2),(3)               --
     R-1        $            50.00(4)         0%(4)           --                      --
</TABLE>

----------

        (1)     The pass-through rate on this REMIC I Regular Interest shall at
        any time of determination equal the weighted average of the Net Mortgage
        Rates of the Mortgage Loans.

        (2)     Except as provided in note (3) below, interest will be allocated
        among the REMIC I Regular Interests in the same proportion as interest
        is payable on the corresponding Classes of Certificates (other than the
        Class B-IO Certificate).

        (3)     Any interest with respect to this REMIC I Regular Interest -- in
        excess of the product of (i) 10,000 times the weighted average coupon of
        the Class I-a, Class I-m1, Class I-m2 and Class I-Q REMIC I Regular
        Interests, where each of Class I-a, Class I-m1 and Class I-m2 REMIC I
        Regular Interests is first subject to a cap and floor equal to the
        lesser of (a) the Pass-Through Rates of the Class A, Class M-1 and Class
        M-2 Certificates, respectively, and (b) the weighted average of the Net
        Mortgage Rates of the Mortgage Loans, and the Class I-Q REMIC I Regular
        Interest is subject to a cap equal to 0%, and (ii) the principal balance
        of this REMIC I Regular Interest -- will be allocated to the Class B-IO
        Certificates. However, the Class B-IO Certificates shall be subordinated
        to the extent provided in Section 6.01.

        (4)     On each Distribution Date, amounts, if any, remaining in REMIC I
        after payments of interest and principal, as designated above, will be
        distributed to the Class R-1 Certificate.

        (d)     The Class A, Class M-1, Class M-2 and Class B-IO Certificates,
are hereby designated as "regular interests" with respect to REMIC II (the
"REMIC II Regular Interests") and the Class R-2 Certificate is hereby designated
as the single "residual interest" with respect to REMIC II. On each Distribution
Date, amounts, if any, remaining in REMIC II after payments of interest and
principal as designated herein shall be distributed to the Class R-2
Certificate. The terms of the REMIC II Regular Interests are set out below. Cash
of $50 will be deposited into REMIC II and shall be paid out on the first
Distribution Date to the Class R-2 Certificate.

        The Classes of the Certificates shall have the following designations,
initial principal or notional amounts and Pass-Through Rates:

                                 Initial Principal
Designation                      or Notional Amount          Pass-Through Rate
-------------------------     -------------------------      -----------------
A                             $        1,039,673,900.00                      (1)
M-1                           $           10,608,900.00                      (2)
M-2                           $           10,608,900.00                      (3)
B-IO                          $                        (4)                   (5)
R-2                           $                   50.00                     N/A

----------

        (1)     The Class A Certificates will bear interest at a variable
Pass-Through Rate equal to the Class A Pass-Through Rate.

                                     - 71 -

<PAGE>

        (2)     The Class M-1 Certificates will bear interest at a variable
Pass-Through Rate equal to the Class M-1 Pass-Through Rate.

        (3)     The Class M-2 Certificates will bear interest at a variable
Pass-Through Rate equal to the Class M-2 Pass-Through Rate.

        (4)     The Class B-IO has a principal balance equal to the Initial
Overcollateralization Amount and a notional balance initially equal to
$1,060,891,769.76 and thereafter equal to the aggregate Scheduled Principal
Balance of the Mortgage Loans as of the last day of the related Due Period.

        (5)     Interest is as provided in Section 5.01(c) Note 3.

        Payments of Basis Risk Carry Forward Shortfall Amounts and payments of
amounts under Yield Maintenance Agreements shall be deemed to be made to the
holder of the Class B-IO Certificate, who will be the owner of such amounts for
federal income tax purposes. The Class B-IO Certificateholder will be considered
to pay such amounts to the Class A, Class M-1 and Class M-2 Certificates, in
accordance with the priorities set forth in Sections 4.06 and 6.01, pursuant to
a notional principal contract.

        In addition to the principal described above, the Class R-1 and Class
R-2 Certificates shall each be entitled to all distributions from their
respective REMICs, if any, that are not otherwise provided for herein.

        (e)     Solely for purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loan with the latest maturity date in the Trust as of the
Start-up Day has been designated as the "latest possible maturity date" for the
REMIC I Regular Interests and the Certificates.

        (f)     With respect to each Distribution Date, each Class of
Certificates (other than the Residual Certificates) shall accrue interest during
the related Interest Accrual Period. With respect to each Distribution Date and
each such Class of Certificates, interest shall be calculated, on the basis of a
360-day year and the actual number of days elapsed in the related Interest
Accrual Period, based upon the respective Pass-Through Rate set forth, or
determined as provided, above and the Current Principal Amount of such Class
applicable to such Distribution Date.

        (g)     The Certificates shall be substantially in the forms set forth
in Exhibits A-1, A-2, A-3 and A-4. On original issuance, the Trustee shall sign,
countersign and shall deliver them at the direction of the Seller. Pending the
preparation of definitive Certificates of any Class, the Trustee may sign and
countersign temporary Certificates that are printed, lithographed or
typewritten, in authorized denominations for Certificates of such Class,
substantially of the tenor of the definitive Certificates in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers or authorized signatories executing such
Certificates may determine, as evidenced by their execution of such
Certificates. If temporary Certificates are issued, the Seller will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary

                                     - 72 -

<PAGE>

Certificates shall be exchangeable for definitive Certificates upon surrender of
the temporary Certificates at the office of the Trustee, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall sign and countersign and deliver in exchange
therefor a like aggregate principal amount, in authorized denominations for such
Class, of definitive Certificates of the same Class. Until so exchanged, such
temporary Certificates shall in all respects be entitled to the same benefits as
definitive Certificates.

        (h)     Each Class of Book-Entry Certificates will be registered as a
single Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of $25,000 and
in each case increments of $1,000 in excess thereof, except that, in each case,
one Certificate of each such Class may be issued in a different amount so that
the sum of the denominations of all outstanding Certificates of such Class shall
equal the Current Principal Amount of such Class on the Closing Date. On the
Closing Date, the Trustee shall execute and countersign the Residual
Certificates. The Private Certificates shall be issued in certificated, fully
registered form in minimum denominations of $10,000,000 and increments of
$1,000,000 in excess thereof except that one Certificate may be issued in a
different amount so that the sum of the denominations of all Class B-IO
Certificates shall equal the Class B-IO Notional Amount on the Closing Date.
Each Class of Residual Certificates shall be issued in certificated
fully-registered form as a single Certificate in the denomination of $50. On the
Closing Date, the Trustee shall execute and countersign in the case of (i) each
Class of Offered Certificates, the Certificate in the entire Current Principal
Amount of the respective Class, (ii) the Private Certificates, in permitted
denominations that aggregate $1,060,891,769.76 and (iii) the Residual
Certificates, each in the denomination of $50. The Certificates referred to in
clause (i) shall be delivered by the Seller to the Depository or, pursuant to
the Depository's instructions, shall be delivered by the Seller on behalf of the
Depository to and deposited with the DTC Custodian. The Trustee shall sign the
Certificates by facsimile or manual signature and countersign them by manual
signature on behalf of the Trustee by one or more authorized signatories, each
of whom shall be Responsible Officers of the Trustee or its agent. A Certificate
bearing the manual and facsimile signatures of individuals who were the
authorized signatories of the Trustee or its agent at the time of issuance shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to hold such positions prior to the delivery of such Certificate.

        (i)     No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
the manually executed countersignature of the Trustee or its agent, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued thereafter shall be dated the date of their
countersignature.

        (j)     The Closing Date is hereby designated as the "startup" day of
each REMIC within the meaning of Section 860G(a)(9) of the Code.

        (k)     For federal income tax purposes, each REMIC shall have a tax
year that is a calendar year and shall report income on an accrual basis.

                                     - 73 -

<PAGE>

        (l)     The Trustee on behalf of the Trust shall cause each REMIC to
timely elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of any
Trust established hereby shall be resolved in a manner that preserves the
validity of such elections.

        (m)     The applicable Securities Legend shall be placed on the
applicable Class or Classes of Certificates, whether upon original issuance or
upon issuance of any other Certificate of any such Class in exchange therefor or
upon transfer thereof.

        Section 5.02  Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall maintain at its Corporate Trust Office a Certificate
Register 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.

        (b)     Subject to Subsection 5.01(a) and, in the case of any Individual
Certificate upon the satisfaction of the conditions set forth below, upon
surrender for registration of transfer of any Certificate at any office or
agency of the Trustee maintained for such purpose, the Trustee shall sign,
countersign and shall deliver, in the name of the designated transferee or
transferees, a new Certificate of a like Class and aggregate Fractional
Undivided Interest, but bearing a different number.

        (c)     By acceptance of an Individual Certificate, whether upon
original issuance or subsequent transfer, each holder of such a Certificate
acknowledges the restrictions on the transfer of such Certificate set forth in
the Securities Legend and agrees that it will transfer such a Certificate only
as provided herein. In addition to the provisions of Subsection 5.02(h), the
following restrictions shall apply with respect to the transfer and registration
of transfer of an Individual Certificate:

                (i)     The Trustee shall register the transfer of an Individual
        Certificate if the requested transfer is being made to a transferee who
        has provided the Trustee with (x) a Rule 144A Certificate or (y)
        comparable evidence as to its QIB status and evidence as to its
        compliance with the applicable ERISA restrictions contained in the
        Securities Legend.

                (ii)    The Trustee shall register the transfer of any
        Individual Certificate if (x) the transferor has advised the Trustee in
        writing that the Certificate is being transferred to an Institutional
        Accredited Investor; and (y) prior to the transfer the transferee
        furnishes to the Trustee an Investment Letter (and the Trustee shall be
        fully protected in so doing), provided that, if based upon an Opinion of
        Counsel to the effect that the delivery of (x) and (y) above are not
        sufficient to confirm that the proposed transfer is being made pursuant
        to an exemption from, or in a transaction not subject to, the
        registration requirements of the Securities Act and other applicable
        laws, the Trustee shall as a condition of the registration of any such
        transfer require the transferor to furnish such other certifications,
        legal opinions or other information prior to registering the transfer of
        an Individual Certificate as shall be set forth in such Opinion of
        Counsel.

                (iii)   The Trustee shall register the transfer of any
        Individual Certificate without delivery of the documents required by
        sub-clauses (i) or (ii) above if such transfer is

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        being made by Thornburg or by any of its Affiliates, to Thornburg or to
        another Affiliate of Thornburg.

        (d)     Reserved.

        (e)     Reserved.

        (f)     Reserved.

        (g)     The applicable Securities Legend shall be placed on any
Individual Certificate issued in exchange for or upon transfer of another
Individual Certificate.

        (h)     Subject to the restrictions on transfer and exchange set forth
in this Section 5.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination of $10,000,000 or any integral multiple
of $1,000,000 in excess thereof) by surrendering such Certificate at the
Corporate Trust Office, or at the office of any transfer agent, together with an
executed instrument of assignment and transfer satisfactory in form and
substance to the Trustee in the case of transfer and a written request for
exchange in the case of exchange. Following a proper request for transfer or
exchange, the Trustee shall, within five Business Days of such request made at
such Corporate Trust Office, sign, countersign and deliver at such Corporate
Trust Office, to the transferee (in the case of transfer) or holder (in the case
of exchange) or send by first class mail at the risk of the transferee (in the
case of transfer) or holder (in the case of exchange) to such address as the
transferee or holder, as applicable, may request, an Individual Certificate or
Certificates, as the case may require, for a like aggregate Fractional Undivided
Interest and in such authorized denomination or denominations as may be
requested. The presentation for transfer or exchange of any Individual
Certificate shall not be valid unless made at the Corporate Trust Office by the
registered holder in person, or by a duly authorized attorney-in-fact.

        (i)     At the option of the Certificateholders, Individual Certificates
and Physical Certificates may be exchanged for other Certificates of authorized
denominations of a like Class and aggregate Fractional Undivided Interest, upon
surrender of the Individual Certificates and Physical Certificates to be
exchanged at any such office or agency; provided, however, that no Certificate
may be exchanged for new Certificates unless the original Fractional Undivided
Interest represented by each such new Certificate (i) is at least equal to the
minimum authorized denomination or (ii) is acceptable to the Seller as indicated
to the Trustee in writing. Whenever any such Certificates are so surrendered for
exchange, the Trustee shall sign and countersign and the Trustee shall deliver
the Certificates which the Certificateholder making the exchange is entitled to
receive.

        (j)     If the Trustee so requires, every Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer, with a signature guarantee, in
form satisfactory to the Trustee, duly executed by the holder thereof or his or
her attorney duly authorized in writing.

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        (k)     No service charge shall be made for any transfer or exchange of
Certificates, 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.

        (l)     The Trustee shall cancel all Certificates surrendered for
transfer or exchange but shall retain such Certificates in accordance with its
standard retention policy or for such further time as is required by the record
retention requirements of the Securities Exchange Act of 1934, as amended, and
thereafter may destroy such Certificates.

        Section 5.03  Mutilated, Destroyed, Lost or Stolen Certificates. (a) 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 such security or
indemnity as it may require to save it harmless, and (iii) the Trustee has not
received notice that such Certificate has been acquired by a third Person, the
Trustee shall sign, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Undivided Interest but in each case bearing a different
number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be
canceled of record by the Trustee and shall be of no further effect and evidence
no rights.

        (b)     Upon the issuance of any new Certificate under this Section
5.03, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith. Any duplicate Certificate issued pursuant to this Section 5.03 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. Prior to due presentation of a
Certificate for registration of transfer, the Seller, the Trustee and any agent
of the Seller or the Trustee may treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 6.01 and for all other purposes whatsoever.
Neither the Seller, the Trustee nor any agent of the Seller or the Trustee shall
be affected by notice to the contrary. No Certificate shall be deemed duly
presented for a transfer effective on any Record Date unless the Certificate to
be transferred is presented no later than the close of business on the third
Business Day preceding such Record Date.

        Section 5.05  Transfer Restrictions on Residual Certificates. (a)
Residual Certificates, or interests therein, may not be transferred without the
prior express written consent of the Tax Matters Person and the Seller. As a
prerequisite to such consent, the proposed transferee must provide the Tax
Matters Person, the Seller and the Trustee with an affidavit that the proposed
transferee is a Permitted Transferee (and, unless the Tax Matters Person and the
Seller consent to the transfer to a person who is not a U.S. Person, an
affidavit that it is a U.S. Person) as provided in Subsection 5.05(b).

        (b)     No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of a Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax
Matters Person, the Trustee and the Seller an affidavit in the form attached
hereto as

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Exhibit E stating, among other things, that as of the date of such transfer (i)
such transferee is a Permitted Transferee and that (ii) such transferee is not
acquiring such Residual Certificate for the account of any person who is not a
Permitted Transferee. The Tax Matters Person shall not consent to a transfer of
a Residual Certificate if it has actual knowledge that any statement made in the
affidavit issued pursuant to the preceding sentence is not true. Notwithstanding
any transfer, sale or other disposition of a Residual Certificate to any Person
who is not a Permitted Transferee, such transfer, sale or other disposition
shall be deemed to be of no legal force or effect whatsoever and such Person
shall not be deemed to be a Holder of a Residual Certificate for any purpose
hereunder, including, but not limited to, the receipt of distributions thereon.
If any purported transfer shall be in violation of the provisions of this
Subsection 5.05(b), then the prior Holder thereof shall, upon discovery that the
transfer of such Residual Certificate was not in fact permitted by this
Subsection 5.05(b), be restored to all rights as a Holder thereof retroactive to
the date of the purported transfer. None of the Trustee, the Tax Matters Person
or the Seller shall be under any liability to any Person for any registration or
transfer of a Residual Certificate that is not permitted by this Subsection
5.05(b) or for making payments due on such Residual Certificate to the purported
Holder thereof or taking any other action with respect to such purported Holder
under the provisions of this Agreement so long as the written affidavit referred
to above was received with respect to such transfer, and the Tax Matters Person,
the Trustee and the Seller, as applicable, had no knowledge that it was untrue.
The prior Holder shall be entitled to recover from any purported Holder of a
Residual Certificate that was in fact not a Permitted Transferee under this
Subsection 5.05(b) at the time it became a Holder all payments made on such
Residual Certificate. Each Holder of a Residual Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this Subsection 5.05(b) and to any amendment of this Agreement deemed necessary
(whether as a result of new legislation or otherwise) by counsel of the Tax
Matters Person or the Seller to ensure that the Residual Certificates are not
transferred to any Person who is not a Permitted Transferee and that any
transfer of such Residual Certificates will not cause the imposition of a tax
upon the Trust or cause any REMIC to fail to qualify as a REMIC.

        (c)     Unless the Tax Matters Person shall have consented in writing
(which consent may be withheld in the Tax Matters Person's sole discretion), the
Residual Certificates (including a beneficial interest therein) may not be
purchased by or transferred to any person who is not a United States Person.

        (d)     By accepting a Residual Certificate, the purchaser thereof
agrees to be a Tax Matters Person, and appoints the Securities Administrator to
act as its agent with respect to all matters concerning the tax obligations of
the Trust.

        Section 5.06  Restrictions on Transferability of Private Certificates.
(a) No offer, sale, transfer or other disposition (including pledge) of any
Private Certificate shall be made by any Holder thereof unless registered under
the Securities Act, or an exemption from the registration requirements of the
Securities Act and any applicable state securities or "Blue Sky" laws is
available and the prospective transferee of such Certificate (other than a
transfer by the Seller to Thornburg or any of its Affiliates, or from Thornburg
or any of its Affiliates to another Affiliate of Thornburg) signs and delivers
to the Trustee an Investment Letter, if the transferee is an Institutional
Accredited Investor, in the form set forth as Exhibit F-l hereto, or a Rule 144A

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Certificate, if the transferee is a QIB, in the form set forth as Exhibit F-2
hereto. In the case of a proposed transfer of a Private Certificate to a
transferee other than a QIB, the Trustee may require an Opinion of Counsel that
such transaction is exempt from the registration requirements of the Securities
Act. The cost of such opinion shall not be an expense of the Trustee or the
Trust.

        (b)     The Private Certificates shall each bear a Securities Legend.

        Section 5.07  ERISA Restrictions. (a) Subject to the provisions of
subsection (b), no Residual Certificates or Private Certificates may be acquired
directly or indirectly by, or on behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of ERISA and/or Section 4975
of the Code, unless (except in the case of a transfer by the Seller to Thornburg
or any of its Affiliates, or by Thornburg or any of its Affiliates to another
Affiliate of Thornburg) in the case of the Class B-IO Certificates a
certification is provided to the Trustee (upon which the Trustee is authorized
to rely) to the effect that the proposed transfer and/or holding of such a
Certificate and the servicing, management and operation of the Trust: (I) will
not result in a prohibited transaction under Section 406 of ERISA or Section
4975 of the Code which is not covered under an individual or class prohibited
transaction exemption including but not limited to Department of Labor
Prohibited Transaction Exemption ("PTE") 84-14 (Class Exemption for Plan Asset
Transactions Determined by Independent Qualified Professional Asset Managers);
PTE 91-38 (Class Exemption for Certain Transactions Involving Bank Collective
Investment Funds); PTE 90-1 (Class Exemption for Certain Transactions Involving
Insurance Company Pooled Separate Accounts), PTE 95-60 (Class Exemption for
Certain Transactions Involving Insurance Company General Accounts), and PTCE
96-23 (Class Exemption for Plan Asset Transactions Determined by In-House Asset
Managers and (II) will not subject the Seller, the Securities Administrator, the
Master Servicer or the Trustee, the Delaware Trustee or any Servicer to any
obligation in addition to those undertaken in the Agreement.

        Section 5.08  Rule 144A Information. For so long as any Certificates are
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
of the Securities Act, (1) the Seller will provide or cause to be provided to
any holder of such Certificates and any prospective purchaser thereof designated
by such a holder, upon the request of such holder or prospective purchaser, the
information required to be provided to such holder or prospective purchaser by
Rule 144A(d)(4) under the Securities Act; and (2) the Seller shall update such
information from time to time in order to prevent such information from becoming
false and misleading and will take such other actions as are necessary to ensure
that the safe harbor exemption from the registration requirements of the
Securities Act under Rule 144A is and will be available for resales of such
Certificates conducted in accordance with Rule 144A.

        Section 5.09  Optional Purchase of Certificates.

        (a)     All but not less than all of the Class A, Class M-1, Class M-2,
Class R-1 and Class R-2 Certificates (but not the Class B-IO Certificates) are
subject to purchase by Thornburg, at its option, on any Distribution Date on or
after the Optional Securities Purchase Date from the then Certificateholders
thereof; provided, however, that Thornburg may appoint a designee to purchase
one or both of the Residual Certificates. The purchase price for each Class A,
Class

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<PAGE>

M-1 or Class M-2 Certificate shall be equal to the sum of (i) the aggregate
Current Principal Amount of that Certificate, (ii) any accrued but unpaid
Current Interest thereon at the applicable Pass-Through Rate and (iii) any
Interest Carry Forward Amount with respect thereto for such Distribution Date.
The purchase price for each of the R-1 and R-2 Certificates shall be $1.00. In
order to exercise the Optional Securities Purchase Right, Thornburg must, no
later than the eighth Business Day prior to the applicable Distribution Date,
deliver to the Issuer, the Trustee and the Securities Administrator (with copies
to the Rating Agencies and the Master Servicer) written notice, in the form of
Exhibit L hereto, of its intent to purchase the Class A, Class M-1, Class M-2,
Class R-1 and Class R-2 Certificates and of the Distribution Date on which it
intends to do so. The Trustee shall furnish notice of the exercise of the
Optional Securities Purchase Right to the applicable Certificateholders in
compliance with Section 5.09(c). On the Distribution Date on which the Optional
Securities Purchase Right will be exercised, Thornburg shall deposit the
appropriate amount in cash with the Trustee. Such amount shall be deposited by
the Trustee into a separate sub-account of the Distribution Account. Such
amounts shall be paid by the Trustee to Holders of the applicable Certificates
as provided in Section 5.09(d).

        (b)     In the case of an exercise of the Optional Securities Purchase
Right, Thornburg shall be solely responsible for the costs and expenses of the
Trustee, the Securities Administrator and the Master Servicer.

        (c)     Notice of exercise of the Optional Securities Purchase Right
under Section 5.09(a) shall be given by the Trustee by facsimile or by
first-class mail, postage prepaid, transmitted or mailed not less than five
Business Days prior to the applicable Distribution Date, to each Holder of a
Class R-1 and Class R-2 Certificate as of the close of business on the Record
Date preceding such Distribution Date and to each Holder of a Class A, Class M-1
and Class M-2 Certificate as of a date not more than one Business Day preceding
the mailing of such notice, at such Holder's address appearing in the
Certificate Register.

        All such notices shall state:

                (i)     the Distribution Date upon which the Certificateholders
        will receive payment in full on the applicable Certificates;

                (ii)    the amount the applicable Certificateholders will be
        paid, separately stating amounts in respect of principal, Current
        Interest and Interest Carry Forward Amounts;

                (iii)   that the Record Date otherwise applicable to such
        Distribution Date is not applicable and that payments shall be made only
        upon presentation and surrender of the respective Certificates and the
        place where such Certificates are to be surrendered for payment; and

                (iv)    that interest on the respective Certificates shall cease
        to accrue for the benefit of the then Certificateholders on such
        Distribution Date and no interest shall accrue on the price paid for
        such Certificates.

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        The foregoing notice shall be given by the Trustee in the name and at
the expense of Thornburg. Failure to give notice of such purchase, or any defect
therein, to any Holder of any Certificate shall not impair or affect the
validity of the purchase of any other Certificate.

        (d)     The Certificates shall, following notice as required by Section
5.09(c), be purchased on the applicable Distribution Date by Thornburg at the
price specified in Section 5.09(a), and (unless Thornburg shall default in the
payment of such amount) no interest shall accrue on such amount for any period
after the date to which accrued interest is calculated for purposes of
calculating such amount.

        (e)     Subsequent to the purchase of the Certificates following
exercise of the Optional Securities Purchase Right, Thornburg shall be the sole
Holder of the Class A, Class M-1 and Class M-2 Certificates and it shall either
be the sole Holder of the Class R-1 and Class R-2 Certificates or may designate
a Person which meets the requirements of this Agreement to become the Holder
thereof. Thornburg may subsequently transfer some or all of the Certificates
acquired by it in accordance with the provisions hereof. All Certificates issued
to the Certificateholders prior to exercise of the Optional Securities Purchase
Right shall be deemed cancelled.

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                                   ARTICLE VI

                         Payments to Certificateholders

        Section 6.01  Distributions on the Certificates.

        (a)     On the first Distribution Date only and from the amount
deposited by the Seller in the Distribution Account on the Closing Date pursuant
to Section 2.01(a) hereof, to the Class R-1 and Class R-2 Certificates, pro
rata, in reduction of their respective Current Principal Amounts, until their
respective Current Principal Amounts have been reduced to zero.

        (b)     On each Distribution Date, an amount equal to the Interest Funds
and Principal Funds for such Distribution Date shall be withdrawn by the Trustee
from the Distribution Account and distributed as directed in accordance with the
Remittance Report provided by the Securities Administrator for such Distribution
Date (as adjusted by the Trustee to reflect any difference between amounts
estimated by the Securities Administrator to be paid under the Yield Maintenance
Agreements and amounts actually deposited into the Yield Maintenance Account),
in the manner set forth in clauses (i), (ii) and (iii) below:

                (i)     The Trustee shall apply Interest Funds (other than any
        Prepayment Penalty Amount) for such Distribution Date as follows:

                first, to the Class A Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;

                second, from remaining Interest Funds, to the Class M-1
Certificates and the Class M-2 Certificates, sequentially, in that order, the
Current Interest for each such Class;

                third, any Excess Spread to the extent necessary to meet a level
of overcollateralization equal to the Specified Overcollateralization Amount
will be the Extra Principal Distribution Amount and will be included as part of
the Principal Distribution Amount; and

                fourth, any Remaining Excess Spread will be added to any Excess
Overcollateralization Amount and will be included in Excess Cashflow and applied
as described under clause (iii) below.

                On any Distribution Date, any Net Interest Shortfalls will be
allocated, first, in reduction of amounts otherwise distributable to the Class
B-IO Certificates (other than any Prepayment Penalty Amount) and Residual
Certificates, and thereafter, to the Current Interest payable to the Class A,
Class M-1 and Class M-2 Certificates on such Distribution Date, on a pro rata
basis, based on the respective amounts of interest accrued on such Certificates
for such Distribution Date. The Holders of the Class A, Class M-1 and Class M-2
Certificates will not be entitled to reimbursement for any such Net Interest
Shortfalls.

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<PAGE>

                Notwithstanding the provisions of subclauses third and fourth of
clause (i) above, on the first Distribution Date, all Excess Spread will be paid
to the Holders of the Class B-IO Certificates.

                (ii)    The Trustee shall apply the Principal Distribution
        Amount for such Distribution Date as follows:

                (A)     for each Distribution Date (i) prior to the Stepdown
        Date or (ii) on which a Trigger Event is in effect:

                first, to the Class A Certificates, until the Current Principal
Amount thereof is reduced to zero;

                second, to the Class M-1 Certificates, any remaining Principal
Distribution Amount until the Current Principal Amount thereof is reduced to
zero; and

                third, to the Class M-2 Certificates, any remaining Principal
Distribution Amount until the Current Principal Amount thereof is reduced to
zero.

                (B)     For each Distribution Date on or after the Stepdown
        Date, so long as a Trigger Event is not in effect:

                first, to the Class A Certificates, the Class A Principal
Distribution Amount, until the Current Principal Amount thereof is reduced to
zero;

                second, to the Class M-1 Certificates, from any remaining
Principal Distribution Amount, the Class M-1 Principal Distribution Amount,
until the Current Principal Amount thereof is reduced to zero; and

                third, to the Class M-2 Certificates, from any remaining
Principal Distribution Amount, the Class M-2 Principal Distribution Amount,
until the Current Principal Amount thereof is reduced to zero.

                (iii)   The Trustee shall apply any Excess Cashflow, any Excess
        Yield Maintenance Amount and any Prepayment Penalty Amount for such
        Distribution Date as follows:

                first, to the Class A Certificates, from the sum of any Excess
Cashflow and any Excess Yield Maintenance Amount, an amount equal to any
remaining Interest Carry Forward Amount for such Class for such Distribution
Date;

                second, from the sum of any remaining Excess Cashflow and any
remaining Excess Yield Maintenance Amount, to the Class A Certificates, an
amount equal to any Basis Risk Shortfall Carry Forward Amount for such Class for
such Distribution Date;

                third, from the sum of any remaining Excess Cashflow and any
remaining Excess Yield Maintenance Amount, to the Class M-1 Certificates, an
amount equal to (a) any Interest

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Carry Forward Amount, (b) any Unpaid Applied Realized Loss Amount, and (c) any
Basis Risk Shortfall Carry Forward Amount, in that order, for such Class for
such Distribution Date;

                fourth, from the sum of any remaining Excess Cashflow and any
remaining Excess Yield Maintenance Amount, to the Class M-2 Certificates, an
amount equal to (a) any Interest Carry Forward Amount, (b) any Unpaid Applied
Realized Loss Amount, and (c) any Basis Risk Shortfall Carry Forward Amount, in
that order, for such Class for such Distribution Date;

                fifth, from any remaining Excess Cashflow, to the Class B-IO
Certificates, the Class B-IO Distribution Amount, any remaining Excess Yield
Maintenance Amount any Prepayment Penalty Amount, in each case for such
Distribution Date; and

                sixth, any remaining amounts to each of the Class R-1
Certificates and the Class R-2 Certificates, based on the related REMIC in which
such amounts remain.

        (c)     No Current Interest will be payable with respect to any Class of
Certificates after the Distribution Date on which the Current Principal Amount
of such Certificate has been reduced to zero.

        (d)     The expenses and fees of the Trust shall be paid by each of the
REMICs, to the extent that such expenses relate to the assets of each of such
respective REMICs, and all other expenses and fees of the Trust shall be paid
pro rata by both of the REMICs.

        Section 6.02  Allocation of Losses. (a) Any Realized Losses with respect
to the Mortgage Loans shall be applied on each Distribution Date after the
distributions provided for in Section 6.01 in reduction of the Current Principal
Amount of the Class or Classes of Subordinate Certificates as provided in the
definition of Applied Realized Loss Amount.

        (b)     Any amounts distributed to a Class of Subordinate Certificates
in respect of any Unpaid Applied Realized Loss Amount will not be applied to
reduce the Current Principal Amount of such Class.

        Section 6.03  Payments. (a) On each Distribution Date, other than the
final Distribution Date, the Trustee shall distribute to each Certificateholder
of record on the directly preceding Record Date the Certificateholder's pro rata
share of its Class (based on the aggregate Fractional Undivided Interest
represented by such Holder's Certificates) of all amounts required to be
distributed on such Distribution Date to such Class, based on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall calculate the amount to be distributed to each Class and,
based on such amounts, the Securities Administrator shall determine the amount
to be distributed to each Certificateholder. All of the Securities
Administrator's calculations of payments shall be based solely on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall not be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information.

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        (b)     Payment of the above amounts to each Certificateholder shall be
made (i) by check mailed to each Certificateholder entitled thereto at the
address appearing in the Certificate Register or (ii) upon receipt by the
Trustee on or before the fifth Business Day preceding the Record Date of written
instructions from a Certificateholder by wire transfer to a United States dollar
account maintained by the payee at any United States depository institution with
appropriate facilities for receiving such a wire transfer; provided, however,
that the final payment in respect of each Class of Certificates will be made
only upon presentation and surrender of such respective Certificates at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final payment. Notwithstanding the foregoing, so long as a Certificate
shall be a Book-Entry Certificate, distributions shall be made to the Depository
by wire transfer in immediately available funds.

        Section 6.04  Statements to the Trustee, the Certificateholders and
Others. (a) On or before 5:00 p.m. Central time on the third Business Day
immediately preceding each Distribution Date (or such other date as may be
agreed to by the Securities Administrator and the Master Servicer), the Master
Servicer shall deliver to the Securities Administrator with respect to all
Mortgage Loans, a report in the form of a computer readable magnetic tape (or by
such other means as the Master Servicer and the Securities Administrator may
agree from time to time) containing such data and information, as agreed to by
the Master Servicer and the Securities Administrator so as to permit the
Securities Administrator to prepare the monthly Remittance Report (as defined
below). The Securities Administrator shall deliver a Remittance Report to the
Trustee and the Yield Maintenance Provider on or before 5:00 p.m. Eastern time
on the Business Day immediately preceding each Distribution Date. Information in
the Remittance Report relating to or based on amounts available in the Yield
Maintenance Account shall be based on information provided by the Yield
Maintenance Provider regarding distributions to be made for the related
Distribution Date pursuant to the Yield Maintenance Agreements. The Trustee
shall confirm to the Securities Administrator receipt of such amounts in the
Yield Maintenance Account on the Business Day immediately preceding such
Distribution Date. On each Distribution Date, the Securities Administrator shall
make available to the other parties hereto and each Certificateholder on the
Securities Administrator's internet website as set forth below, a report (the
"Remittance Report") containing the following information, expressed with
respect to clauses (i) through (vii) in the aggregate and as a Fractional
Undivided Interest representing, in the case of a Class of Senior Certificates
or Subordinate Certificates, an initial Current Principal Amount of $25,000, in
the case of the Class B-IO Certificates, an initial Class B-IO Notional Amount
of $10,000,000, or in the case of each Class of Residual Certificates, an
initial Current Principal Amount of $50:

                (i)     the Current Principal Amount or Class B-IO Notional
        Amount of each Class of Certificates immediately prior to such
        Distribution Date;

                (ii)    the amount of the related distribution to each Class
        allocable to principal, separately identifying (A) the aggregate amount
        of any Principal Prepayments included therein, (B) the aggregate of all
        Monthly Payments of principal included therein, (C) the principal
        portion of all Net Liquidation Proceeds included therein and (D) the
        Extra Principal Distribution Amount (if any);

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                (iii)   the amount of such distribution to each Class allocable
        to interest, and, if applicable, the portion thereof allocable to
        amounts provided pursuant to the Yield Maintenance Agreements;

                (iv)    the Interest Carry Forward Amounts and any Unpaid
        Applied Realized Loss Amounts, if applicable, for each Class of
        Certificates (other than the Class B-IO Certificates and the Residual
        Certificates), if any;

                (v)     the Current Principal Amount or Class B-IO Notional
        Amount, as applicable, of each Class after giving effect (i) to all
        distributions allocable to principal on such Distribution Date and (ii),
        if applicable, the allocation of any Applied Realized Loss Amounts for
        such Distribution Date;

                (vi)    the cumulative amount of Applied Realized Loss Amounts
        to date and the Unpaid Applied Realized Loss Amounts for each Class of
        Subordinate Certificates after giving effect to the distributions and
        allocations of Applied Realized Loss Amounts on such Distribution Date;

                (vii)   the Net Interest Shortfall allocated to each Class of
        Certificates in reduction of Current Interest or, in the case of the
        Class B-IO Certificates and each class of Class R Certificates,
        distributions of Excess Cashflow otherwise distributable to each such
        class;

                (viii)  the Pass-Through Rate for each Class of Certificates
        with respect to the current Interest Accrual Period, and, if applicable,
        whether such Pass-Through Rate was limited by the Interest Rate Cap or
        the cap of 11.500% per annum;

                (ix)    the amount of any Excess Cashflow Amount and any Excess
        Yield Maintenance Amount;

                (x)     the aggregate of the Scheduled Principal Balances of (i)
        the hybrid Mortgage Loans, in their fixed rate period, stating
        separately the aggregate Scheduled Principal Balance of each of the
        Three-Year Hybrid Mortgage Loans, the Five-Year Hybrid Mortgage Loans,
        and the Seven- and Ten-Year hybrid Mortgage Loans, (ii) the Converted
        Mortgage Loans and the Modified Mortgage Loans, (iii) the adjustable
        rate Mortgage Loans (other than any such Mortgage Loans that have become
        Converted Mortgage Loans or Modified Mortgage Loans) and (iv) all of the
        Mortgage Loans as of the last day of the immediately preceding Due
        Period;

                (xi)    the related amount of the Master Servicing Fees paid to
        or retained by the Master Servicer and the Servicing Fees paid to or
        retained by each Servicer for the related Due Period;

                (xii)   the amount of any Monthly Advances, Compensating
        Interest Payments and outstanding unreimbursed advances by the Master
        Servicer or the Servicers included in such distribution;

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                (xiii)  the amount of Monthly Principal, Principal Prepayment
        and Net Liquidation Proceeds (including but separately identifying the
        principal amount of principal prepayments, Insurance Proceeds, the
        purchase price in connection with the purchase of Mortgage Loans, cash
        deposits in connection with substitutions of Mortgage Loans) and the
        number and principal balance of Mortgage Loans purchased or substituted
        for during the immediately preceding Prepayment Period or Due Period, as
        applicable, and cumulatively since the Cut-off Date;

                (xiv)   the number of Mortgage Loans (excluding REO Property)
        remaining in the Trust as of the end of the related Prepayment Period;

                (xv)    information regarding any Mortgage Loan delinquencies as
        of the end of the related Prepayment Period, including the aggregate
        number and aggregate Outstanding Principal Balance of Mortgage Loans (a)
        delinquent 30 to 59 days on a contractual basis, (b) delinquent 60 to 89
        days on a contractual basis, and (c) delinquent 90 or more days on a
        contractual basis, in each case as of the close of business on the last
        Business Day of the immediately preceding month;

                (xvi)   the number of Mortgage Loans in the foreclosure process
        as of the end of the related Due Period and the aggregate Outstanding
        Principal Balance of such Mortgage Loans;

                (xvii)  the number and aggregate Outstanding Principal Balance
        of all Mortgage Loans as to which the Mortgaged Property was REO
        Property as of the end of the related Due Period;

                (xviii) the three month rolling average of the aggregate
        Scheduled Principal Balance of Mortgage Loans that are 60 or more days
        delinquent or are in bankruptcy or foreclosure or are REO Properties, as
        a percentage of the aggregate Scheduled Principal Balance of the
        Mortgage Loans as of the last day of the related Due Period;

                (xix)   the aggregate amount of Realized Losses (i) during the
        related Prepayment Period and cumulatively since the Cut-off Date,
        including the amount and source (separately identified) of any
        distribution in respect thereof included in such distribution and (ii)
        since the Closing Date, as a percentage of the aggregate Scheduled
        Principal Balance of the Mortgage Loans on the Closing Date; and

                (xx)    whether a Trigger Event exists.

        The information set forth above shall be calculated or reported, as the
case may be, by the Securities Administrator, based solely on, and to the extent
of, information provided to the Securities Administrator by the Master Servicer
and any adjustments regarding payments under the Yield Maintenance Agreements
provided by the Trustee. The Securities Administrator may conclusively rely on
such information and shall not be required to confirm, verify or recalculate any
such information.

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<PAGE>

        The Securities Administrator may make available each month, to any
interested party, the monthly statement to Certificateholders via the
Securities Administrator's website initially located at "www.ctslink.com."
Assistance in using the website can be obtained by calling the Securities
Administrator's customer service desk at (301) 815-6600. Parties that are unable
to use the above distribution option are entitled to have a paper copy mailed to
them via first class mail by calling the customer service desk and indicating
such. The Securities Administrator shall have the right to change the way such
reports are distributed in order to make such distribution more convenient
and/or more accessible to the parties, and the Securities Administrator shall
provide timely and adequate notification to all parties regarding any such
change.

        (b)     By April 30 of each year beginning in 2004, the Trustee will
furnish such report to each Holder of the Certificates of record at any time
during the prior calendar year as to the aggregate of amounts reported pursuant
to subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation (which
information shall be provided on a timely basis to the Trustee by the Securities
Administrator) and such other customary information as the Securities
Administrator may determine and advises the Trustee to be necessary and/or to be
required by the Internal Revenue Service or by a federal or state law or rules
or regulations to enable such Holders to prepare their tax returns for such
calendar year. Such obligations shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Securities Administrator or the Trustee pursuant to the requirements of the
Code.

        Section 6.05  Monthly Advances. If the Scheduled Payment on a Mortgage
Loan that was due on a related Due Date and is delinquent, other than as a
result of application of the Relief Act, and for which the related Servicer was
required to make an advance pursuant to the related Servicing Agreement exceeds
the amount deposited in the Master Servicer Collection Account which will be
used for an advance with respect to such Mortgage Loan, the Master Servicer will
deposit in the Master Servicer Collection Account not later than the
Distribution Account Deposit Date immediately preceding each Distribution Date
an amount equal to such deficiency, net of the Servicing Fee and the Master
Servicing Fee, for such Mortgage Loan except to the extent the Master Servicer
determines any such advance to be nonrecoverable from Liquidation Proceeds,
Insurance Proceeds or future payments on the Mortgage Loan for which such
Monthly Advance was made. Subject to the foregoing, the Master Servicer shall
continue to make such advances through the date that the related Servicer is
required to do so under its Servicing Agreement. If applicable, on the
Distribution Account Deposit Date, the Master Servicer shall present an
Officer's Certificate to the Trustee (i) stating that the Master Servicer elects
not to make a Monthly Advance in a stated amount and (ii) detailing the reason
it deems the advance to be nonrecoverable.

        Section 6.06  Reserved.

        Section 6.07  Compensating Interest Payments. The Master Servicer shall
deposit into the Master Servicer Collection Account no later than Distribution
Account Deposit Date, the excess of Compensating Interest Payments required to
be paid by the Servicers (including, if applicable, the Sub-Master Servicer)
over amounts actually paid by such Servicers on their

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<PAGE>

respective Servicer Remittance Dates, in an amount not to exceed the aggregate
Master Servicing Fee payable in respect of such Distribution Date. The amount of
the Master Servicing Fee payable to the Master Servicer in respect of any
Distribution Date shall be reduced (but not below zero) by the amount of any
Compensating Interest Payment made by the Master Servicer for such Distribution
Date. Such amount shall not be treated as an Advance and shall not be
reimbursable to the Master Servicer.

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<PAGE>

                                   ARTICLE VII

                               The Master Servicer

        Section 7.01  Liabilities of the Master Servicer. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein.

        Section 7.02  Merger or Consolidation of the Master Servicer.

        (a)     The Master Servicer will keep in full force and effect its
existence, rights and franchises as a national banking association under the
laws of the United States, and 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 duties under this Agreement.

        (b)     Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.

        Section 7.03  Indemnification of the Trustee, the Delaware Trustee, the
Seller, the Master Servicer and the Securities Administrator. (a) The Master
Servicer agrees to indemnify the Indemnified Persons for, and to hold them
harmless against, any loss, liability or expense (except as otherwise provided
herein with respect to expenses) (including reasonable legal fees and
disbursements of counsel) incurred on their part that may be sustained in
connection with, arising out of, or relating to this Agreement or the
Certificates (i) related to the Master Servicer's failure to perform its duties
in compliance with this Agreement (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) or (ii) incurred by
reason of the Master Servicer's willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder, provided, in each case, that with
respect to any such claim or legal action (or pending or threatened claim or
legal action), the Trustee shall have given the Master Servicer and the Seller
written notice thereof promptly after the Trustee shall have with respect to
such claim or legal action knowledge thereof. The Trustee's failure to give such
notice shall not affect the Indemnified Person's right to indemnification
hereunder. This indemnity shall survive the resignation or removal of the
Trustee, Master Servicer or the Securities Administrator and the termination of
this Agreement.

        (b)     The Trust will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise indemnified by the
Master Servicer that is referred to in Subsection (a) above.

        (c)     The Securities Administrator agrees to indemnify the Indemnified
Persons (other than the Securities Administrator) for, and to hold them harmless
against, any loss, liability or

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<PAGE>

expense (except as otherwise provided herein with respect to expenses)
(including reasonable legal fees and disbursements of counsel) incurred on their
part (i) in connection with, arising out of, or relating to the Securities
Administrator's failure to file a Form 10-K in accordance with Section 3.18
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement), (ii) by reason of the Securities Administrator's
willful misfeasance, bad faith or gross negligence in the performance of such
obligations pursuant to Section 3.18 or (iii) by reason of the Securities
Administrator's reckless disregard of its obligations pursuant to Section 3.18,
provided, in each case, that with respect to any such claim or legal action (or
pending or threatened claim or legal action), the Trustee shall have given the
Securities Administrator written notice thereof promptly after the Trustee shall
have with respect to such claim or legal action knowledge thereof. The Trustee's
failure to give such notice shall not affect the Indemnified Person's right to
indemnification hereunder. This indemnity shall survive the resignation or
removal of the Trustee, Master Servicer or the Securities Administrator and the
termination of this Agreement.

        Section 7.04  Limitations on Liability of the Master Servicer and
Others. Subject to the obligation of the Master Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:

        (a)     Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Trust or the Certificateholders for taking any action
or for refraining from taking any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Master Servicer or any such Person against any breach of
warranties or representations made herein or any liability which would otherwise
be imposed by reason of such Person's willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder.

        (b)     The Master Servicer and any director, officer, employee or agent
of the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.

        (c)     The Master Servicer, the Delaware Trustee, the Trustee, the
Custodian (including for such purpose, the Trustee acting in its capacity as
Custodian) and any director, officer, employee or agent of the Master Servicer,
the Delaware Trustee, the Trustee or the Custodian shall be indemnified by the
Trust and held harmless thereby against any loss, liability or expense (except
as otherwise provided herein with respect to expenses) (including reasonable
legal fees and disbursements of counsel) incurred on their part that may be
sustained in connection with, arising out of, or relating to, this Agreement,
the Certificates or any Servicing Agreement or the transactions contemplated
hereby or thereby (except to the extent that the Master Servicer is indemnified
by the Servicer thereunder), other than (i) any such loss, liability or expense
related to the Master Servicer's or the Custodian's, as applicable, failure to
perform its duties in compliance with this Agreement or, if applicable, to the
Custodian's failure to perform its duties under the Custodial Agreement,
respectively, or (ii) any such loss, liability or expense incurred by reason of
the Master Servicer's, the Delaware Trustee's or the Custodian's willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or under a

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<PAGE>

Custodial Agreement, if applicable, or by reason of reckless disregard of
obligations and duties hereunder or under a Custodial Agreement, if applicable.

        (d)     The Master Servicer shall not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties
under this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, the Master Servicer may in its discretion, with
the consent of the Trustee (which consent shall not be unreasonably withheld),
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 Trust and the Certificateholders hereunder. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities of the Trust, and the Master Servicer
shall be entitled to be reimbursed therefor out of the Master Servicer
Collection Account as provided by Section 4.03. Nothing in this Subsection
7.04(d) shall affect the Master Servicer's obligation to supervise, or to take
such actions as are necessary to ensure, the servicing and administration of the
Mortgage Loans pursuant to Subsection 3.01(a).

        (e)     In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to investigate or make recommendations
concerning potential liabilities which the Trust might incur as a result of such
course of action by reason of the condition of the Mortgaged Properties but
shall give notice to the Trustee if it has notice of such potential liabilities.

        (f)     The Master Servicer shall not be liable for any acts or
omissions of any Servicer, except as otherwise expressly provided herein, or of
any Primary Servicer.

        Section 7.05  Master Servicer Not to Resign. Except as provided in
Section 7.07, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon a determination that any such duties
hereunder are no longer permissible under applicable law and such
impermissibility cannot be cured. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of
Independent Counsel to such effect delivered to the Trustee. No such resignation
by the Master Servicer shall become effective until the Trustee or a successor
to the Master Servicer reasonably satisfactory to the Trustee shall have assumed
the responsibilities and obligations of the Master Servicer in accordance with
Section 8.02 hereof. The Trustee shall notify each Rating Agency of the
resignation of the Master Servicer.

        Section 7.06  Successor Master Servicer. In connection with the
appointment of any successor master servicer or the assumption of the duties of
the Master Servicer, the Trustee may make such arrangements for the compensation
of such successor master servicer out of payments on the Mortgage Loans as the
Trustee and such successor master servicer shall agree. If the successor master
servicer does not agree that the proposed compensation is fair, such successor
master servicer shall obtain two quotations of market compensation from third
parties actively engaged in the servicing of single-family mortgage loans;
provided, however, that Thornburg, as a Servicer of a substantial portion of the
Mortgage Loans, shall have the right, but not the obligation, to be appointed
successor master servicer in the event that the Trustee, in its sole discretion,
decides not to assume the duties of the Master Servicer itself; and provided,
further,

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<PAGE>

that each Rating Agency shall confirm in writing that any appointment of a
successor Master Servicer (other than the Trustee) will not result in a
downgrade in the then current rating of any Class of Certificates.

        Section 7.07  Sale and Assignment of Master Servicing. The Master
Servicer may sell and assign its rights and delegate its duties and obligations
in their entirety as Master Servicer under this Agreement, with the written
consent of Thornburg in its capacity as a Servicer of a substantial portion of
the Mortgage Loans, to be given in its sole discretion, and provided further
that: (i) the purchaser or transferee accepting such assignment and delegation
(a) shall be a Person which shall be qualified to service mortgage loans for
Fannie Mae or Freddie Mac; (b) shall have a net worth of not less than
$10,000,000 (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below); (c) shall be reasonably satisfactory to Thornburg and the Trustee
(as evidenced in writing signed by Thornburg and the Trustee); and (d) shall
execute and deliver to the Trustee an agreement, in form and substance
reasonably satisfactory to the Trustee, which contains an assumption by such
Person of the due and punctual performance and observance of each covenant and
condition to be performed or observed by it as master servicer under this
Agreement, any custodial agreement from and after the effective date of such
agreement; (ii) each Rating Agency shall be given prior written notice of the
identity of the proposed successor to the Master Servicer and each Rating
Agency's ratings of the Certificates in effect immediately prior to such
assignment, sale and delegation will not be downgraded, qualified or withdrawn
as a result of such assignment, sale and delegation, as evidenced by a letter to
such effect delivered to the Master Servicer and the Trustee; and (iii) the
Master Servicer assigning and selling the master servicing shall deliver to the
Trustee an Officer's Certificate and an Opinion of Independent Counsel, each
stating that all conditions precedent to such action under this Agreement have
been completed and such action is permitted by and complies with the terms of
this Agreement. No such assignment or delegation shall affect any liability of
the Master Servicer arising prior to the effective date thereof.

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<PAGE>

                                  ARTICLE VIII

                                     Default

        Section 8.01    Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
only with respect to the defaulting Master Servicer:

                (i)     The Master Servicer fails to cause to be deposited in
        the Master Servicer Collection Account or the Distribution Account, as
        applicable, any amount so required to be deposited pursuant to this
        Agreement, and such failure continues unremedied for a period of three
        Business Days after the date upon which written notice of such failure,
        requiring the same to be remedied, shall have been given to the Master
        Servicer; or

                (ii)    The Master Servicer fails to observe or perform in any
        material respect any other material covenants and agreements set forth
        in this Agreement to be performed by it, which covenants and agreements
        materially affect the rights of Certificateholders, and such failure
        continues unremedied for a period of 60 days (or, in the case of a
        breach of its obligation to provide a Master Servicer Certification
        pursuant to Section 3.18, 30 days) after the date on which written
        notice of such failure, properly requiring the same to be remedied,
        shall have been given to the Master Servicer by the Trustee or to the
        Master Servicer and the Trustee by the Holders of Certificates
        evidencing Fractional Undivided Interests aggregating not less than 25%
        of the Trust; or

                (iii)   There is entered against the Master Servicer a decree or
        order by a court or agency or supervisory authority having jurisdiction
        in the premises for the appointment of a conservator, receiver or
        liquidator in any insolvency, readjustment of debt, marshaling of assets
        and liabilities or similar proceedings, or for the winding up or
        liquidation of its affairs, and the continuance of any such decree or
        order is unstayed and in effect for a period of 60 consecutive days, or
        an involuntary case is commenced against the Master Servicer under any
        applicable insolvency or reorganization statute and the petition is not
        dismissed within 60 days after the commencement of the case; or

                (iv)    The Master Servicer consents 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 the Master Servicer or substantially all of its property; or
        the Master Servicer admits in writing its inability to pay its debts
        generally as they become due, files a petition to take advantage of any
        applicable insolvency or reorganization statute, makes an assignment for
        the benefit of its creditors, or voluntarily suspends payment of its
        obligations; or

                (v)     The Master Servicer assigns or delegates its duties or
        rights under this Agreement in contravention of the provisions
        permitting such assignment or delegation under Sections 7.05.

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        In each and every such case, so long as such Event of Default with
respect to the Master Servicer shall not have been remedied, either the Trustee
or the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the principal of the Trust, by notice in
writing to the Master Servicer (and to the Trustee if given by such
Certificateholders), with a copy to each Rating Agency, and with the consent of
Thornburg (not to be unreasonably withheld), may terminate all of the rights and
obligations (but not the liabilities) of the Master Servicer under this
Agreement and in and to the Mortgage Loans and/or the REO Property serviced by
the Master Servicer and the proceeds thereof. Upon the receipt by the Master
Servicer of the written notice, all authority and power of the Master Servicer
under this Agreement, whether with respect to the Certificates, the Mortgage
Loans, REO Property or under any other related agreements (but only to the
extent that such other agreements relate to the Mortgage Loans or related REO
Property) shall, subject to Section 8.02, automatically and without further
action pass to and be vested in the Trustee pursuant to this Section 8.01; and,
without limitation, the Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Master Servicer as attorney-in-fact or otherwise,
any and all documents and other instruments and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The Master Servicer
agrees to cooperate with the Trustee in effecting the termination of the Master
Servicer's rights and obligations hereunder, including, without limitation, the
transfer to the Trustee of (i) the property and amounts which are then or should
be part of the Trust or which thereafter become part of the Trust; and (ii)
originals or copies of all documents of the Master Servicer reasonably requested
by the Trustee to enable it to assume the Master Servicer's duties thereunder.
In addition to any other amounts which are then, or, notwithstanding the
termination of its activities under this Agreement, may become payable to the
Master Servicer under this Agreement, the Master Servicer shall be entitled to
receive, out of any amount received on account of a Mortgage Loan or related REO
Property, that portion of such payments which it would have received as
reimbursement under this Agreement if notice of termination had not been given.
The termination of the rights and obligations of the Master Servicer shall not
affect any obligations incurred by the Master Servicer prior to such
termination.

        Section 8.02    Trustee to Act; Appointment of Successor.  (a) Upon the
receipt by the Master Servicer of a notice of termination pursuant to Section
8.01 or an Opinion of Independent Counsel pursuant to Section 7.05 to the effect
that the Master Servicer is legally unable to act or to delegate its duties to a
Person which is legally able to act, the Trustee shall automatically become the
successor in all respects to the Master Servicer in its capacity under this
Agreement and the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities, duties, liabilities and
limitations on liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; provided, however, that the Trustee shall have no
obligation whatsoever with respect to any liability (other than Monthly Advances
deemed recoverable and not previously made by the Master Servicer, which shall
be made by the Trustee in its place and stead) incurred by the Master Servicer
at or prior to the time of termination. As compensation therefor, but subject to
Section 7.06, the Trustee shall be entitled to all funds relating to the
Mortgage Loans which the Master Servicer would have been entitled to retain if
the Master Servicer had continued to act hereunder, except for those amounts due
the Master Servicer as reimbursement permitted under this Agreement for advances
previously made

                                     - 94 -

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or expenses previously incurred. Notwithstanding the above, the Trustee may, if
it shall be unwilling so to act, or shall, if it is legally unable so to act,
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution which is a Fannie Mae- or
Freddie Mac-approved servicer, and with respect to a successor to the Master
Servicer only, having a net worth of not less than $10,000,000, as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder;
provided, that the Trustee shall obtain a letter from each Rating Agency that
the ratings, if any, on each of the Certificates will not be lowered as a result
of the selection of the successor to the Master Servicer and such successor
Master Servicer shall be reasonably acceptable to Thornburg in the event that
Thornburg does not choose to become the Master Servicer pursuant to Section
8.02(b). Pending appointment of a successor to the Master Servicer hereunder,
the Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on the Mortgage Loans as it
and such successor shall agree; provided, however, that the provisions of
Section 7.06 shall apply, no such compensation shall be in excess of that
permitted the Trustee under this Subsection 8.02(a), and that such successor
shall undertake and assume the obligations of the Trustee to pay compensation to
any third Person acting as an agent or independent contractor in the performance
of master servicing responsibilities hereunder. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.

        (b)     If the Trustee shall succeed to any duties of the Master
Servicer respecting the Mortgage Loans as provided herein, it shall do so in a
separate capacity and not in its capacity as Trustee and, accordingly, the
provisions of Article IX shall be inapplicable to the Trustee in its duties as
the successor to the Master Servicer in the servicing of the Mortgage Loans
(although such provisions shall continue to apply to the Trustee in its capacity
as Trustee); the provisions of Article VII, however, shall apply to it in its
capacity as successor master servicer. In the event that the Trustee shall not
succeed to the duties of the Master Servicer pursuant to Section 7.06 hereof,
Thornburg shall have the right, but not the obligation, to be appointed
successor master servicer hereunder.

        Section 8.03    Notification to Certificateholders. Upon any termination
or appointment of a successor to the Master Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to each Rating Agency.

        Section 8.04    Waiver of Defaults. The Trustee shall transmit by mail
to all Certificateholders, within 60 days after the occurrence of any Event of
Default actually known to a Responsible Officer of the Trustee, unless such
Event of Default shall have been cured, notice of each such Event of Default
hereunder known to the Trustee. The Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than 51% of the Trust may,
on behalf of all Certificateholders, waive any default by the Master Servicer in
the performance of its obligations hereunder and the consequences thereof,
except a default in the making of or the causing to be made any required
distribution on the Certificates. Upon any such waiver of a past default, such
default shall be deemed to cease to exist, and any Event of Default arising

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therefrom shall be deemed to have been timely remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
The Trustee shall give notice of any such waiver to each Rating Agency.

        Section 8.05    List of Certificateholders. Upon written request of
three or more Certificateholders of record, for purposes of communicating with
other Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.

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                                   ARTICLE IX

             Concerning the Trustee and the Securities Administrator

        Section 9.01    Duties of Trustee and Securities Administrator. (a) The
Trustee, prior to the occurrence of an Event of Default (of which a Responsible
Officer of the Trustee shall have actual knowledge) and after the curing or
waiver of all Events of Default which may have occurred, and the Securities
Administrator each undertake to perform such duties and only such duties as are
specifically set forth in this Agreement as duties of the Trustee and the
Securities Administrator, respectively. If an Event of Default has occurred (of
which a Responsible Officer of the Trustee shall have actual knowledge) and has
not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and subject to Section 8.02(b) use the
same degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of his own affairs, unless the
Trustee is acting as successor Master Servicer, in which case it shall use the
same degree of care and skill as the Master Servicer hereunder.

        (b)     Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee and the Securities Administrator
pursuant to any provision of this Agreement, the Trustee and the Securities
Administrator, respectively, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that neither the Trustee
nor the Securities Administrator shall be responsible for the accuracy or
content of any resolution, certificate, statement, opinion, report, document,
order or other instrument furnished by the Master Servicer, any Servicer or any
other party pursuant to this Agreement; provided, further, that neither the
Trustee nor the Securities Administrator shall be responsible for the accuracy
or verification of any calculation provided to it pursuant to this Agreement.

        (c)     On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 6.01 and 10.01 herein based on
the report of the Securities Administrator. The Securities Administrator shall
file reports with the Securities Exchange Commission as specified in and in
accordance with Section 3.18.

        (d)     No provision of this Agreement shall be construed to relieve the
Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:

                (i)     Prior to the occurrence of an Event of Default (of which
        a Responsible Officer of the Trustee shall have actual knowledge), and
        after the curing or waiver of all such Events of Default which may have
        occurred, the duties and obligations of the Trustee and the Securities
        Administrator shall be determined solely by the express provisions of
        this Agreement, neither the Trustee nor the Securities Administrator
        shall be liable except for the performance of their respective 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 or the Securities Administrator and, in the

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<PAGE>

        absence of bad faith on the part of the Trustee or the Securities
        Administrator, respectively, the Trustee or the Securities
        Administrator, respectively, may conclusively rely, as to the truth of
        the statements and the correctness of the opinions expressed therein,
        upon any certificates or opinions furnished to the Trustee or the
        Securities Administrator, respectively, and conforming to the
        requirements of this Agreement;

                (ii)    Neither the Trustee nor the Securities Administrator
        shall be liable in its individual capacity or in any other capacity for
        an error of judgment made in good faith by a Responsible Officer or
        Responsible Officers of the Trustee or an officer of the Securities
        Administrator, respectively, unless it shall be proved that the Trustee
        or the Securities Administrator, respectively, was negligent in
        ascertaining the pertinent facts;

                (iii)   Neither the Trustee nor the Securities Administrator
        shall be liable with respect to any action taken, suffered or omitted to
        be taken by it in good faith in accordance with the directions of the
        Holders of Certificates evidencing Fractional Undivided Interests
        aggregating not less than 25% of the Trust, if such action or non-action
        relates to the time, method and place of conducting any proceeding for
        any remedy available to the Trustee or the Securities Administrator,
        respectively, or exercising any trust or other power conferred upon the
        Trustee or the Securities Administrator, respectively, under this
        Agreement;

                (iv)    The Trustee shall not be required to take notice or be
        deemed to have notice or knowledge of any default or Event of Default
        unless a Responsible Officer of the Trustee's Corporate Trust Office
        shall have actual knowledge thereof. In the absence of such notice, the
        Trustee may conclusively assume there is no such default or Event of
        Default;

                (v)     The Trustee shall not in any way be liable by reason of
        any insufficiency in any Account held by or in the name of Trustee
        unless it is determined by a court of competent jurisdiction that the
        Trustee's gross negligence or willful misconduct was the primary cause
        of such insufficiency (except to the extent that the Trustee is obligor
        and has defaulted thereon);

                (vi)    Anything in this Agreement to the contrary
        notwithstanding, in no event shall the Trustee or the Securities
        Administrator be liable for special, indirect or consequential loss or
        damage of any kind whatsoever (including but not limited to lost
        profits), even if the Trustee or the Securities Administrator,
        respectively, has been advised of the likelihood of such loss or damage
        and regardless of the form of action; and

                (vii)   Neither of the Securities Administrator nor the Trustee
        shall be responsible for the acts or omissions of the other, it being
        understood that this Agreement shall not be construed to render them
        partners, joint venturers or agents of one another.

        Neither the Trustee nor the Securities Administrator shall be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably

                                     - 98 -

<PAGE>

assured to it, and none of the provisions contained in this Agreement shall in
any event require the Trustee or the Securities Administrator to perform, or be
responsible for the manner of performance of, any of the obligations of the
Master Servicer under the Servicing Agreements, except during such time, if any,
as the Trustee shall be the successor to, and be vested with the rights, duties,
powers and privileges of, the Master Servicer in accordance with the terms of
this Agreement.

        (e)     All funds received by the Trustee and required to be deposited
in the Distribution Account pursuant to this Agreement will be promptly so
deposited by the Trustee.

        (f)     Except for those actions that the Trustee or the Securities
Administrator is required to take hereunder, neither the Trustee nor the
Securities Administrator shall have any obligation or liability to take any
action or to refrain from taking any action hereunder in the absence of written
direction as provided hereunder.

        (g)     The Trustee shall remit to the applicable Servicer or the Master
Servicer if the identity of the applicable Servicer cannot be ascertained, upon
receipt, any complaint, claim, demand, notice or other document relating to a
Mortgage Loan (i) which is delivered to the Corporate Trust Office of the
Trustee, (ii) of which a Responsible Officer has actual knowledge, and (iii)
which contains information sufficient to permit the Trustee to make a
determination that the real property to which such document relates is Mortgaged
Property. The Trustee shall not be liable for any damages or losses resulting
from the failure to remit such documentation unless the foregoing conditions had
been met.

        (h)     Except as otherwise provided herein, the Trustee shall have no
duty (a) to see to any recording, filing, or depositing of this Agreement or any
agreement or assignment referred to herein or any financing statement evidencing
a security interest, or to see to the maintenance of any such recording or
filing or depositing or to any re-recording, re-filing or re-depositing of any
thereof (except, as set forth in Section 3.20, with respect to the filing of
continuation statements with respect to the UCC-1 financing statements filed on
behalf of the Trust in office of the Secretary of State of the State of
Delaware, on or around the Closing Date, naming each of the Seller and the
Mortgage Loan Seller as the respective "Debtor" and covering the property of the
Trust as set forth in Section 2.01(a)), (b) to obtain any Insurance Policy with
respect to a Mortgage Loan, (c) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust (except
to the extent that a Responsible Officer of the Trustee has actual knowledge of
such owed amount and the Trustee reasonably could expect to be reimbursed by the
Trust pursuant to Section 9.05 for all such expenditures), or (d) to confirm or
verify the contents of any reports or certificates of the Master Servicer, any
Servicer, or any other party delivered to the Trustee pursuant to this Agreement
believed by the Trustee to be genuine and to have been signed or presented by
the proper party or parties.

        Section 9.02    Certain Matters Affecting the Trustee and the Securities
Administrator. Except as otherwise provided in Section 9.01:

                (i)     The Trustee and the Securities Administrator may request
        and rely and shall be fully protected in acting or refraining from
        acting in reliance on any resolution,

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<PAGE>

        certificate of a Seller, Master Servicer or Servicer, Officer's
        Certificate, Opinion of Counsel, certificate of auditors or any other
        certificate, statement, instrument, opinion, report, notice, request,
        consent, order, appraisal, bond or other paper or document believed by
        it to be genuine and to have been signed or presented by the proper
        party or parties and the Trustee and the Securities Administrator shall
        have no responsibility to ascertain or confirm the genuineness of any
        signature of any such party of parties;

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

                (iii)   Neither the Trustee nor the Securities Administrator
        shall be under any obligation to exercise any of the trusts or powers
        vested in it by this Agreement, other than its obligation to give
        notices pursuant to 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 reasonable security or indemnity satisfactory to the Trustee
        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 an Event of Default of
        which a Responsible Officer of the Trustee's Corporate Trust Office has
        actual knowledge (which has not been cured or waived), subject to
        Section 8.02(b), 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 under the circumstances in
        the conduct of his own affairs;

                (iv)    Neither the Trustee nor the Securities Administrator
        shall be liable in its individual capacity 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)     Neither the Trustee nor the Securities Administrator
        shall 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 Holders of
        Certificates evidencing Fractional Undivided Interests aggregating not
        less than 25% of the Trust and provided that the payment within a
        reasonable time to the Trustee or the Securities Administrator, as
        applicable, 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 or the Securities Administrator, as applicable, reasonably
        assured to the Trustee or the Securities Administrator, as applicable,
        by the security afforded to it by the terms of this Agreement. The
        Trustee or the Securities Administrator may require indemnity reasonably
        satisfactory to the Trustee or the Securities Administrator, as
        applicable, against such expense, cost or liability as a condition to
        taking any such action. The

                                     - 100 -

<PAGE>

        reasonable expense of every such examination shall be paid by the
        Certificateholders requesting the investigation;

                (vi)    The Trustee and the Securities Administrator may execute
        any of the trusts or powers hereunder or perform any duties hereunder
        either directly or through Affiliates, agents, custodians, accountants
        or attorneys. Neither the Trustee nor the Securities Administrator shall
        be liable or responsible for the misconduct or negligence of any of the
        Trustee's or the Securities Administrator's agents, custodians,
        accountants or attorneys, or a Custodian or paying agent appointed
        hereunder by the Trustee or the Securities Administrator with due care
        and, when required, with the consent of the Master Servicer;

                (vii)   Should the Trustee or the Securities Administrator deem
        the nature of any action required on its part to be unclear, the Trustee
        or the Securities Administrator, respectively, may require prior to such
        action that it be provided by the Seller with reasonable further
        instructions;

                (viii)  The right of the Trustee or the Securities Administrator
        to perform any discretionary act enumerated in this Agreement shall not
        be construed as a duty, and neither the Trustee nor the Securities
        Administrator shall be accountable for other than its negligence or
        willful misconduct in the performance of any such act;

                (ix)    Neither the Trustee nor the Securities Administrator
        shall be required to give any bond or surety with respect to the
        execution of the trust created hereby or the powers granted hereunder,
        except as provided in Subsection 9.07; and

                (x)     Neither the Trustee nor the Securities Administrator
        shall have any duty to conduct any affirmative investigation as to the
        occurrence of any condition requiring the repurchase of any Mortgage
        Loan by the Mortgage Loan Seller pursuant to this Agreement or the
        Mortgage Loan Purchase Agreement, as applicable, or the eligibility of
        any Mortgage Loan for purposes of this Agreement.

        Section 9.03    Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans. The recitals contained herein and in the
Certificates (other than the signature and countersignature of the Trustee on
the Certificates) shall be taken as the statements of the Seller or Thornburg,
and neither the Trustee nor the Securities Administrator shall have any
responsibility for their correctness. Neither the Trustee nor the Securities
Administrator makes any representation as to the validity or sufficiency of the
Certificates (other than the signature and countersignature of the Trustee on
the Certificates) or of any Mortgage Loan except as expressly provided in
Sections 2.02 and 2.04 hereof; provided, however, that the foregoing shall not
relieve the Trustee of the obligation to review the Mortgage Files pursuant to
Sections 2.02 and 2.04. The Trustee's signature and countersignature (or
countersignature of its agent) on the Certificates shall be solely in its
capacity as Trustee and shall not constitute the Certificates an obligation of
the Trustee in any other capacity. Neither the Trustee nor the Securities
Administrator shall be accountable for the use or application by the Seller of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Seller with respect to the Mortgage
Loans. Subject to the provisions of Section 2.05,

                                     - 101 -

<PAGE>

neither the Trustee nor the Securities Administrator shall be responsible for
the legality or validity of this Agreement or any document or instrument
relating to this Agreement, the validity of the execution of this Agreement or
of any supplement hereto or instrument of further assurance, or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
hereunder or intended to be issued hereunder. Neither the Trustee nor the
Securities Administrator shall at any time have any responsibility or liability
for or with respect to the legality, validity and enforceability of any Mortgage
or any Mortgage Loan, or the perfection and priority of any Mortgage or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust or its ability to generate the payments to be
distributed to Certificateholders, under this Agreement. Neither the Trustee nor
the Securities Administrator shall have any responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to record this Agreement other than any continuation
statements filed by the Trustee pursuant to Section 3.20.

        Section 9.04    Trustee, Custodian, Delaware Trustee, Master Servicer
and Securities Administrator May Own Certificates. The Trustee, the Custodian,
the Delaware Trustee, the Master Servicer and the Securities Administrator in
their respective individual capacities, or in any capacity other than as
Trustee, Custodian, Delaware Trustee, Master Servicer or Securities
Administrator hereunder, may become the owner or pledgee of any Certificates
with the same rights they would have if they were not Trustee, Custodian,
Delaware Trustee, Master Servicer or Securities Administrator, as applicable,
and may otherwise deal with the parties hereto.

        Section 9.05    Trustee's, Delaware Trustee's and Securities
Administrator's Fees and Expenses. As compensation for its services hereunder,
the Trustee shall be entitled to receive the Trustee Fee. The Delaware Trustee
shall be compensated by the Trustee for its services hereunder. The Securities
Administrator shall be compensated by the Master Servicer for its services
hereunder. In addition, the Trustee, the Delaware Trustee and the Securities
Administrator will be entitled to recover from the Distribution Account pursuant
to Section 4.05(a) all reasonable out-of-pocket expenses, disbursements and
advances and the expenses of the Trustee (including for such purpose, any fees
and expenses relating to its capacity as Custodian hereunder to the extent not
paid by Thornburg), the Delaware Trustee and the Securities Administrator,
respectively, including without limitation, in connection with any Event of
Default, any breach of this Agreement or any claim or legal action (including
any pending or threatened claim or legal action) incurred or made by the Trustee
or the Securities Administrator, respectively, in the administration of the
trusts hereunder (including the reasonable compensation, expenses and
disbursements of its counsel) except any such expense, disbursement or advance
as may arise from its negligence or intentional misconduct or which is
specifically designated herein as the responsibility of the Seller, the Mortgage
Loan Seller, the Master Servicer, the Certificateholders or the Trust hereunder.
If funds in the Master Servicer Collection Account and/or the Distribution
Account, as applicable, are insufficient therefor, the Trustee, the Delaware
Trustee, the Custodian and the Securities Administrator shall recover such
expenses from future collections on the Mortgage Loans or as otherwise agreed by
the Certificateholders. Such compensation and reimbursement obligation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust.

                                     - 102 -

<PAGE>

        Section 9.06    Eligibility Requirements for Trustee, Securities
Administrator and Delaware Trustee. The Trustee and any successor Trustee and
the Securities Administrator and any successor Securities Administrator shall
during the entire duration of this Agreement be a state bank or trust company or
a national banking association organized and doing business under the laws of
such state or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus and
undivided profits of at least $40,000,000 or, in the case of a successor
Trustee, $50,000,000, subject to supervision or examination by federal or state
authority and, in the case of the Trustee, rated "Baa2" or higher by each Rating
Agency with respect to any outstanding long-term unsecured unsubordinated debt,
and, in the case of a successor Trustee or successor Securities Administrator
other than pursuant to Section 9.10, rated in one of the two highest long-term
debt categories of, or otherwise acceptable to, each Rating Agency. If the
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section 9.06 the combined capital and surplus of such
corporation shall be deemed to be its total equity capital (combined capital and
surplus) as set forth in its most recent report of condition so published. In
case at any time the Trustee or the Securities Administrator shall cease to be
eligible in accordance with the provisions of this Section 9.06, the Trustee or
the Securities Administrator shall resign immediately in the manner and with the
effect specified in Section 9.08.

        (b)     The Delaware Trustee shall at all times be a trustee eligible to
serve in such capacity pursuant to the provisions of the Delaware Statutory
Trust Statute. There shall at all times be a Delaware trustee of the Trust, and
in the event, that the Delaware Trustee no longer serves as the Delaware
trustee, the Trustee shall be responsible for the appointment of a successor
Delaware trustee.

        Section 9.07    Insurance. The Trustee and the Securities Administrator,
at their own expense, shall at all times maintain and keep in full force and
effect: (i) fidelity insurance, (ii) theft of documents insurance and (iii)
forgery insurance (which may be collectively satisfied by a "Financial
Institution Bond" and/or a "Bankers' Blanket Bond"). All such insurance shall be
in amounts, with standard coverage and subject to deductibles, as are customary
for insurance typically maintained by banks or their affiliates which act as
custodians for investor-owned mortgage pools. A certificate of an officer of the
Trustee or the Securities Administrator as to the Trustee's or the Securities
Administrator's, respectively, compliance with this Section 9.07 shall be
furnished to any Certificateholder upon reasonable written request.

        Section 9.08    Resignation and Removal of the Trustee and Securities
Administrator. (a) The Trustee and the Securities Administrator may at any time
resign and be discharged from the Trust hereby created by giving written notice
thereof to the Seller and the Master Servicer, with a copy to each Rating
Agency. Upon receiving such notice of resignation, the Seller shall promptly
appoint a successor Trustee or successor Securities Administrator, as
applicable, by written instrument, in triplicate, one copy of which instrument
shall be delivered to each of the resigning Trustee or Securities Administrator,
as applicable, the successor Trustee or Securities Administrator, as applicable.
If no successor Trustee or Securities Administrator shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of

                                     - 103 -

<PAGE>

resignation, the resigning Trustee or Securities Administrator may petition any
court of competent jurisdiction for the appointment of a successor Trustee or
Securities Administrator.

        (b)     If at any time the Trustee or the Securities Administrator shall
cease to be eligible in accordance with the provisions of Section 9.06 and shall
fail to resign after written request therefor by the Seller or if at any time
the Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator, as applicable, or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or the
Securities Administrator, as applicable, or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Seller shall
promptly remove the Trustee, or shall be entitled to remove the Securities
Administrator, as applicable, and appoint a successor Trustee or Securities
Administrator, as applicable, by written instrument, in triplicate, one copy of
which instrument shall be delivered to each of the Trustee or Securities
Administrator, as applicable, so removed, the successor Trustee or Securities
Administrator, as applicable.

        (c)     The Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust may at any time remove the
Trustee or the Securities Administrator and appoint a successor Trustee or
Securities Administrator by written instrument or instruments, in quadruplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Seller, the Master Servicer,
the Securities Administrator (if the Trustee is removed), the Trustee (if the
Securities Administrator is removed), and the Trustee or Securities
Administrator so removed and the successor so appointed.

        (d)     No resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor Trustee or Securities Administrator
pursuant to any of the provisions of this Section 9.08 shall become effective
except upon appointment of and acceptance of such appointment by the successor
Trustee or Securities Administrator as provided in Section 9.09.

        (e)     Notwithstanding anything to the contrary contained herein, in
the event that the Master Servicer resigns or is removed as Master Servicer
hereunder, the Securities Administrator shall have the right to resign
immediately as Securities Administrator by giving written notice to the Seller
and the Trustee, with a copy to each Rating Agency.

        Section 9.09    Successor Trustee and Successor Securities
Administrator. (a) Any successor Trustee or Securities Administrator appointed
as provided in Section 9.08 shall execute, acknowledge and deliver to the Seller
and to its predecessor Trustee or Securities Administrator an instrument
accepting such appointment hereunder. The resignation or removal of the
predecessor Trustee or Securities Administrator shall then become effective and
such successor Trustee or Securities Administrator, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee or Securities Administrator herein. The predecessor
Trustee or Securities Administrator shall after payment of its outstanding fees
and expenses promptly deliver to the successor Trustee or Securities
Administrator, as applicable, all assets and records of the Trust held by it
hereunder, and the Seller and the

                                     - 104 -

<PAGE>

predecessor Trustee or Securities Administrator, as applicable, shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
Trustee or Securities Administrator, as applicable, all such rights, powers,
duties and obligations.

        (b)     No successor Trustee or Securities Administrator shall accept
appointment as provided in this Section 9.09 unless at the time of such
acceptance such successor Trustee or Securities Administrator shall be eligible
under the provisions of Section 9.06.

        (c)     Upon acceptance of appointment by a successor Trustee or
Securities Administrator as provided in this Section 9.09, the successor Trustee
or Securities Administrator shall mail notice of the succession of such Trustee
or Securities Administrator hereunder to all Certificateholders at their
addresses as shown in the Certificate Register and to each Rating Agency. The
Trust shall pay the cost of any mailing by the successor Trustee or Securities
Administrator.

        Section 9.10    Merger or Consolidation of Trustee or Securities
Administrator. Any person into which the Trustee or the Securities Administrator
may be merged or converted or with which it may be consolidated or any state
bank or trust company or national banking association resulting from any merger,
conversion or consolidation to which the Trustee or the Securities
Administrator, respectively, shall be a party, or any state bank or trust
company or national banking association succeeding to all or substantially all
of the corporate trust business of the Trustee or the Securities Administrator,
respectively, shall be the successor of the Trustee or the Securities
Administrator, respectively, hereunder, provided such state bank or trust
company or national banking association shall be eligible under the provisions
of Section 9.06. Such succession shall be valid 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 9.11    Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions hereof, and in addition to the appointment
of the Delaware Trustee pursuant to Section 1A.03 hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or property constituting the same may at the time be located, the
Seller 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 Seller to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust, and to
vest in such Person or Persons, in such capacity, such title to the Trust, or
any part thereof, and, subject to the other provisions of this Section 9.11,
such powers, duties, obligations, rights and trusts as the Seller and the
Trustee may consider necessary or desirable.

        (b)     If the Seller shall not have joined in such appointment within
15 days after the receipt by it of a written request so to do, the Trustee shall
have the power to make such appointment without the Seller.

        (c)     No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.06
hereunder and no notice to

                                     - 105 -

<PAGE>

Certificateholders of the appointment of co-trustee(s) or separate trustee(s)
shall be required under Section 9.08 hereof.

        (d)     In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.11, all rights, powers, duties and
obligations conferred or imposed upon the Trustee and required to be conferred
on such co-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 (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 the Trust 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.

        (e)     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 IX. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.

        (f)     To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or attorney-in-fact,
with full power and authority, to do any lawful act under or with respect to
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.

        (g)     No trustee under this Agreement shall be liable personally or
otherwise by reason of any act or omission of another trustee under this
Agreement. The Seller and the Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-trustee.

        Section 9.12    Federal Information Returns and Reports to
Certificateholders; REMIC Administration. (a) For federal income tax purposes,
the taxable year of each of REMIC I and REMIC II shall be a calendar year and
the Securities Administrator shall maintain or cause the maintenance of the
books of each such REMIC on the accrual method of accounting.

        (b)     The Securities Administrator shall prepare and file or cause to
be filed with the Internal Revenue Service, and the Trustee shall sign, Federal
tax information returns or elections required to be made hereunder with respect
to each of REMIC I and REMIC II, the Trust, if applicable, and the Certificates
containing such information and at the times and in the manner as may be
required by the Code or applicable Treasury regulations, and shall furnish to
each Holder of Certificates at any time during the calendar year for which such
returns or reports are made

                                     - 106 -

<PAGE>

such statements or information at the times and in the manner as may be required
thereby, including, without limitation, reports relating to interest, original
issue discount and market discount or premium (using a constant prepayment
assumption of 30% CPR). The Securities Administrator will apply for an Employee
Identification Number from the IRS under Form SS-4 or any other acceptable
method for all tax entities. In connection with the foregoing, the Securities
Administrator shall timely prepare and file, and the Trustee shall sign, IRS
Form 8811, which shall provide the name and address of the person who can be
contacted to obtain information required to be reported to the holders of
regular interests in each of REMIC I and REMIC II (the "REMIC Reporting Agent").
The Trustee shall make elections to treat each of REMIC I and REMIC II as a
REMIC (which elections shall apply to the taxable period ending December 31,
2003 and each calendar year thereafter) in such manner as the Code or applicable
Treasury regulations may prescribe, and as described by the Securities
Administrator. The Trustee shall sign all tax information returns filed pursuant
to this Section and any other returns as may be required by the Code. The Holder
of the Class R-1 Certificate is hereby designated as the "Tax Matters Person"
(within the meaning of Treas. Reg. Sections 1.860F-4(d)) for REMIC I, and the
Holder of the Class R-2 Certificate is hereby designated as the "Tax Matters
Person" for REMIC II. The Securities Administrator is hereby designated and
appointed as the agent of each such Tax Matters Person. Any Holder of a Residual
Certificate will by acceptance thereof appoint the Securities Administrator as
agent and attorney-in-fact for the purpose of acting as Tax Matters Person for
each of REMIC I and REMIC II during such time as the Securities Administrator
does not own any such Residual Certificate. In the event that the Code or
applicable Treasury regulations prohibit the Trustee from signing tax or
information returns or other statements, or the Securities Administrator from
acting as agent for the Tax Matters Person, the Trustee and the Securities
Administrator shall take whatever action that in its sole good faith judgment is
necessary for the proper filing of such information returns or for the provision
of a tax matters person, including designation of the Holder of a Residual
Certificate to sign such returns or act as tax matters person. Each Holder of a
Residual Certificate shall be bound by this Section.

        (c)     The Securities Administrator shall provide upon request and
receipt of reasonable compensation, such information as required in Section
860D(a)(6)(B) of the Code to the Internal Revenue Service, to any Person
purporting to transfer a Residual Certificate to a Person other than a
transferee permitted by Section 5.05(b), and to any regulated investment
company, real estate investment trust, common trust fund, partnership, trust,
estate, organization described in Section 1381 of the Code, or nominee holding
an interest in a pass-through entity described in Section 860E(e)(6) of the
Code, any record holder of which is not a transferee permitted by Section
5.05(b) (or which is deemed by statute to be an entity with a disqualified
member).

        (d)     The Securities Administrator shall prepare and file or cause to
be filed, and the Trustee shall sign, any state income tax returns required
under Applicable State Law with respect to each of REMIC I and REMIC II or the
Trust.

        (e)     Notwithstanding any other provision of this Agreement, the
Trustee and the Securities Administrator shall comply with all federal
withholding requirements respecting payments to Certificateholders of interest
or original issue discount on the Mortgage Loans, that the Trustee or the
Securities Administrator reasonably believes are applicable under the Code.

                                     - 107 -

<PAGE>

The consent of Certificateholders shall not be required for such withholding. In
the event the Trustee or the Securities Administrator withholds any amount from
interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Trustee or
the Securities Administrator shall, together with its monthly report to such
Certificateholders, indicate such amount withheld.

        (f)     The Trustee and the Securities Administrator agree to indemnify
the Trust and the Seller for any taxes and costs including, without limitation,
any reasonable attorneys fees imposed on or incurred by the Trust, the Seller or
the Master Servicer, as a result of a breach of the Trustee's covenants and the
Securities Administrator's covenants, respectively, set forth in this Section
9.12; provided, however, such liability and obligation to indemnify in this
paragraph shall not be joint and several and neither the Trustee nor the
Securities Administrator shall be liable or be obligated to indemnify the Trust
for the failure by the other to perform any duty under this Agreement or the
breach by the other of any covenant in this Agreement.

                                     - 108 -

<PAGE>

                                    ARTICLE X

                                   Termination

        Section 10.01   Termination Upon Repurchase by Thornburg or its Designee
or Liquidation of the Mortgage Loans.

        (a)     Subject to Section 10.02, the respective obligations and
responsibilities of the Seller, Thornburg, the Trustee, the Delaware Trustee,
the Custodian, the Master Servicer and the Securities Administrator created
hereby, other than the obligation of the Trustee to make payments to
Certificateholders as hereinafter set forth shall terminate upon:

                (i)     the repurchase by Thornburg, in its capacity as the
        Servicer of a substantial portion of the Mortgage Loans, or the Seller
        (as the case may be pursuant to Section 10.01(c) below) of all Mortgage
        Loans and all related REO Property remaining in the Trust at a price
        equal to (I) the sum of (a) 100% of the Scheduled Principal Balance of
        each Mortgage Loan (other than a Mortgage Loan related to REO Property)
        as of the date of repurchase, together with interest at the applicable
        Mortgage Rate accrued but unpaid to, but not including, the first day of
        the month of repurchase, (b) the appraised value of any related REO
        Property, together with interest at the applicable Mortgage Rate accrued
        on that balance but unpaid to, but not including, the first day of the
        month of repurchase, such appraisal to be calculated by an appraiser
        mutually agreed upon by Thornburg or the Seller, as applicable, and the
        Trustee, at the expense of Thornburg or the Seller, as applicable, (c)
        any unpaid Master Servicing Fee, Trustee Fee, Delaware Trustee Fee or
        Servicing Fee relating to such Mortgage Loans (to the extent that
        accrued interest paid by Thornburg at the related Mortgage Rate for each
        such Mortgage Loan for the immediately preceding Due Period is less than
        interest thereon at the Aggregate Expense Rate for such Due Period) and
        (d) any Monthly Advances, advances and other amounts then due and owing
        to the Master Servicer, any Servicer, the Securities Administrator, the
        Trustee and the Delaware Trustee under this Agreement minus (II) any
        Servicing Fee, Monthly Advances or advances by Thornburg, as Servicer
        relating to any such Mortgage Loans;

                (ii)    the later of the making of the final payment or other
        liquidation, or any advance with respect thereto, of the last Mortgage
        Loan remaining in the Trust or the disposition of all property acquired
        with respect to any Mortgage Loan; provided, however, that in the event
        that an advance has been made, but not yet recovered, at the time of
        such termination, the Person having made such advance shall be entitled
        to receive, notwithstanding such termination, any payments received
        subsequent thereto with respect to which such advance was made; or

                (iii)   the payment to Certificateholders of all amounts
        required to be paid to them pursuant to this Agreement.

        (b)     [Reserved];

                                     - 109 -

<PAGE>

        (c)     (i) The right of Thornburg to repurchase all the Mortgage Loans
pursuant to Subsection 10.01(a)(i) above shall be exercisable only if the
aggregate Scheduled Principal Balance of the Mortgage Loans at the time of any
such repurchase is less than 10% of the Cut-off Date Balance; and (ii) the right
of the Seller to repurchase all the Mortgage Loans pursuant to Subsection
10.01(a)(i) above shall be exercisable only if the Trustee or the Securities
Administrator, based upon an Opinion of Counsel (to be obtained at the expense
of the Seller), has determined that the REMIC status of the REMIC I or REMIC II
has been lost or that a substantial risk exists that such REMIC status will be
lost for the then-current taxable year. At any time thereafter, in the case of
(ii) above, the Securities Administrator, as agent of the Tax Matters Persons
may elect to terminate either or both of REMIC I and/or REMIC II at any time,
and upon such election the Seller shall repurchase all the Mortgage Loans.

        (d)     The Trustee shall give notice of any termination to the
Certificateholders, with a copy to the Master Servicer, the Delaware Trustee,
the Custodian, the Seller, the Mortgage Loan Seller, the Securities
Administrator and each Rating Agency, upon which the Certificateholders shall
surrender their Certificates to the Trustee for payment of the final
distribution and cancellation. Such notice shall be given by letter, mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution, and shall specify (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) 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 therein specified.

If the option of Thornburg or the Seller, as applicable, to repurchase or cause
the repurchase of all the Mortgage Loans under Subsection 10.01 (a)(i) above is
exercised, Thornburg or the Seller, as applicable, shall deliver to the Trustee
for deposit in the Distribution Account, by the Business Day prior to the
applicable Distribution Date, an amount equal to the repurchase price for the
Mortgage Loans being purchased by it and all property acquired with respect to
such Mortgage Loans remaining in REMIC I and REMIC II. Upon presentation and
surrender of the Certificates by the Certificateholders, the Trustee shall
distribute to the Certificateholders an amount determined as follows: with
respect to each Certificate (other than the Class B-IO Certificates and the
Class R Certificates), the outstanding Current Principal Amount, plus with
respect to each Certificate (other than the Class B-IO Certificates and the
Class R Certificates), one month's interest thereon at the applicable
Pass-Through Rate; with respect to the Class B-IO Certificates, an amount equal
to the Class B-IO Distribution Amount; and with respect to the Class R-1 and
Class R-2 Certificates, respectively, the amounts remaining in REMIC I and REMIC
II.

        (e)     Upon deposit of the required repurchase price and following such
final Distribution Date, the Trustee shall release promptly to Thornburg, or its
designee, the Mortgage Files for the remaining applicable Mortgage Loans, and
the Accounts with respect thereto shall terminate, subject to the Trustee's
obligation to hold any amounts payable to Certificateholders in trust without
interest pending final distributions pursuant to Subsection 10.01(g).

                                     - 110 -

<PAGE>

        (f)     In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above,
the Master Servicer shall deliver to the Trustee for deposit in the Distribution
Account all distributable amounts remaining in the Master Servicer Collection
Account. Upon the presentation and surrender of the Certificates, the Trustee
shall distribute to the remaining Certificateholders, in accordance with their
respective interests, all distributable amounts remaining in the Distribution
Account. Upon deposit by the Master Servicer of such distributable amounts, and
following such final Distribution Date, the Trustee shall release promptly to
Thornburg or the Seller, or its designee, as applicable, the Mortgage Files for
the remaining Mortgage Loans, and the Master Servicer Collection Account and the
Distribution Account shall terminate, subject to the Trustee's obligation to
hold any amounts payable to the Certificateholders in trust without interest
pending final distributions pursuant to Subsection 10.01(g).

        (g)     If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject to this Agreement.

        (h)     Upon the termination or liquidation of the REMICs, the Trustee
or the Delaware Trustee shall file a certificate of cancellation with the
Delaware Secretary of State in accordance with Section 3810(d) of the Delaware
Statutory Trust Statute, and the Trust's existence shall be terminated.

        Section 10.02   Additional Termination Requirements. (a) If the option
of Thornburg or the Seller, as applicable, to repurchase all the Mortgage Loans
under Subsection 10.01(a)(i) above is exercised, the Trust and each of REMIC I
and REMIC II shall be terminated in accordance with the following additional
requirements, unless the Securities Administrator and the Trustee have been
furnished with an Opinion of Counsel (at the expense of the Seller or Thornburg,
whichever is repurchasing the Mortgage Loans) to the effect that the failure of
the Trust to comply with the requirements of this Section 10.02 will not (i)
result in the imposition of taxes on "prohibited transactions" as defined in
Section 860F of the Code on each of REMIC I and REMIC II or (ii) cause any REMIC
to fail to qualify as a REMIC at any time that any Regular Certificates are
outstanding:

                (i)     within 90 days prior to the final Distribution Date, the
        Seller or Thornburg, whichever is purchasing the Mortgage Loans, shall
        prepare, and the Trustee and the Securities Administrator (as
        attorney-in-fact on behalf of the Holders of the Residual Certificates
        pursuant to Section 10.02(b)), shall adopt a plan of complete
        liquidation of REMIC I and REMIC II in the case of a termination under
        Subsection 10.01(a)(i), provided to it by the Seller or Thornburg, as
        applicable, meeting the

                                     - 111 -

<PAGE>

        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 Securities Administrator and the Trustee, at the
        expense of Thornburg or the Seller, whichever is repurchasing the
        Mortgage Loans; and

                (ii)    Thornburg or the Seller, as applicable, shall notify the
        Securities Administrator and the Trustee in writing at the commencement
        of such 90-day liquidation period and, at or prior to the time of making
        the final payment on the Certificates, the Trustee shall sell or
        otherwise dispose of all of the remaining assets of the Trust in
        accordance with the terms hereof; and REMIC I and REMIC II shall
        terminate at such time.

        (b)     By their acceptance of the Residual Certificates, the Holders
thereof hereby (i) agree to adopt such a plan of complete liquidation of REMIC I
and REMIC II upon the written request of the Seller or Thornburg, as applicable,
and to take such action in connection therewith as may be reasonably requested
by the Seller or Thornburg, as applicable, and (ii) appoint the Securities
Administrator as their attorney-in-fact, with full power of substitution, for
purposes of adopting such a plan of complete liquidation. The Trustee shall
adopt such plan of liquidation by filing the appropriate statement on the final
tax return of each REMIC. Upon complete liquidation or final distribution of all
of the assets of the Trust, the Trust and each of REMIC I and REMIC II shall
terminate.

                                     - 112 -

<PAGE>

                                   ARTICLE XI

                            Miscellaneous Provisions

        Section 11.01   Intent of Parties. The parties intend that each of REMIC
I and REMIC II shall be treated as a REMIC for federal income tax purposes and
that the provisions of this Agreement should be construed in furtherance of this
intent.

        Section 11.02   Amendment. (a) This Agreement may be amended from time
to time by the Seller, Thornburg, the Master Servicer, the Securities
Administrator, the Delaware Trustee and the Trustee, and the Servicing
Agreements may be amended from time to time by the parties thereto with, other
than those of the Primary Servicers supervised by the Sub-Master Servicer, the
consent of Thornburg, the Master Servicer and the Trustee if they are not
parties thereto, without notice to or the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein or therein that may be defective or inconsistent with any
other provisions herein or therein, to comply with any changes in the Code or to
make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Independent Counsel, addressed to the Trustee, adversely affect in
any material respect the interests of any Certificateholder.

        (b)     This Agreement may also be amended from time to time by the
Seller, Thornburg, the Master Servicer, the Securities Administrator, the
Delaware Trustee and the Trustee, and the Servicing Agreements may be amended
from time to time by the parties thereto with, other than those of the Primary
Servicers supervised by the Sub-Master Servicer, the consent of Thornburg, the
Master Servicer and the Trustee if they are not parties thereto and as to
amendments to this Agreement with the consent of the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust or of the applicable Class or Classes, if such amendment affects only such
Class or Classes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Certificateholders; 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) reduce
the aforesaid percentage of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding, or (iii) cause REMIC I or REMIC II to fail to
qualify as a REMIC for federal income tax purposes, as evidenced by an Opinion
of Independent Counsel which shall be provided to the Trustee other than at the
Trustee's expense. Notwithstanding any other provision of this Agreement, for
purposes of the giving or withholding of consents pursuant to Section 11.02(b),
Certificates registered in the name of or held for the benefit of the Seller,
the Securities Administrator, the Master Servicer, the Delaware Trustee, the
Custodian or the Trustee or any Affiliate thereof shall be entitled to vote
their Fractional Undivided Interests with respect to matters affecting such
Certificates.

                                     - 113 -

<PAGE>

        (c)     Promptly after the execution of any such amendment, the Trustee
shall furnish a copy of such amendment or written notification of the substance
of such amendment to each Certificateholder, with a copy to each Rating Agency.

        (d)     In the case of an amendment under Subsection 11.02(b) above, it
shall not be necessary for the Certificateholders to approve the particular form
of such an amendment. Rather, it shall be sufficient if the Certificateholders
approve the substance of the amendment. 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.

        (e)     Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee and the Securities Administrator may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's or the
Securities Administrator's own respective rights, duties, indemnities or
immunities under this Agreement.

        Section 11.03   Recordation of Agreement. 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 Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Seller shall
effect such recordation, at the expense of the Trust upon the request in writing
of a Certificateholder, but only if such direction is accompanied by an Opinion
of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.

        Section 11.04   Limitation on Rights of Certificateholders. (a) The
death or incapacity of any Certificateholder shall not terminate this Agreement
or the Trust, nor 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, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

        (b)     Except as expressly provided in this Agreement, no
Certificateholders 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 establish the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholders 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.

        (c)     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, under or with respect to this Agreement against the
Seller, Thornburg, the Securities Administrator, the Master Servicer or any
successor to any such parties unless (i) such Certificateholder previously shall
have given to the Trustee a written notice of a continuing default, as herein
provided, (ii) the

                                     - 114 -

<PAGE>

Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Trust 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 and expenses and liabilities to be incurred
therein or thereby, and (iii) the Trustee, for 60 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding.

        (d)     No one or more Certificateholders shall have any right by virtue
of any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, 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 11.04, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

        Section 11.05   Acts of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.

        (b)     The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.

        (c)     The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Delaware Trustee, the Custodian, the Securities Administrator, the
Seller, Thornburg, the Master Servicer nor any successor to any such parties
shall be affected by any notice to the contrary.

        (d)     Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if

                                     - 115 -

<PAGE>

applicable, or in lieu thereof with respect to anything done, omitted or
suffered to be done by the Trustee, the Delaware Trustee, the Custodian, the
Securities Administrator, the Seller, Thornburg, the Master Servicer or any
successor to any such party in reliance thereon, whether or not notation of such
action is made upon such Certificates.

        (e)     In determining whether the Holders of the requisite percentage
of Certificates evidencing Fractional Undivided Interests have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Delaware Trustee, the Custodian, the
Securities Administrator, the Seller, the Master Servicer or any Affiliate
thereof shall be disregarded, except as otherwise provided in Section 11.02(b)
and except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Certificates which the Trustee knows to be so owned shall be so
disregarded. Certificates which have been pledged in good faith to the Trustee,
the Delaware Trustee, the Custodian, the Securities Administrator, the Seller,
the Master Servicer or any Affiliate thereof may be regarded as outstanding if
the pledgor establishes to the satisfaction of the Trustee the pledgor's right
to act with respect to such Certificates and that the pledgor is not an
Affiliate of the Trustee, the Delaware Trustee, the Custodian, the Securities
Administrator, the Seller, or the Master Servicer, as the case may be.

        Section 11.06   Governing Law. THIS AGREEMENT AND THE CERTIFICATES SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

        Section 11.07   Notices. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at (including delivery by
facsimile) or mailed by registered mail, return receipt requested, postage
prepaid, or by recognized overnight courier, to (i) in the case of the Seller,
383 Madison Avenue, 11th Floor, New York, New York 10179, Attention: Vice
President-Servicing, telecopier number: (212) 272-5591, or to such other address
as may hereafter be furnished to the other parties hereto in writing; (ii) in
the case of the Trustee, at its Corporate Trust Office, or such other address as
may hereafter be furnished to the other parties hereto in writing; (iii) in the
case of Thornburg, 150 Washington Avenue, Suite 302, Santa Fe, New Mexico 87501,
Attention: Deborah Burns, Vice President--Mortgage Loan Securitization,
telecopier number: (505) 954-5300, or to such other address as may hereafter be
furnished to the other parties hereto in writing; (iv) in the case of the Master
Servicer or Securities Administrator, Wells Fargo Bank Minnesota, National
Association, P.O. Box 98, Columbia, Maryland 21046 (or, in the case of overnight
deliveries, 9062 Old Annapolis Road, Columbia, Maryland 21045), Attention:
Thornburg/SAMI 2003-2, facsimile no.: (410) 715-2380, or such other address as
may hereafter be furnished to the other parties hereto in writing; (v) in the
case of the Delaware Trustee, 1011 Centre Street, Suite 200, Wilmington,
Delaware 19805, Attention: Elizabeth Ferry, facsimile no.: (302) 636-3222 or
such other address as may hereafter be furnished to the other parties hereto in
writing; (vi) in the case of S&P, Standard & Poor's, 55 Water Street, New York,
New York 10041 Attention: Waqas Shaikh, facsimile no.: (212) 438-2661 or such
other address as may hereafter be furnished to the other parties hereto in
writing; (vii) in the case of Moody's, Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007,

                                     - 116 -

<PAGE>

Attention: George DeMarco, facsimile no.: (212) 553-4773 or such other address
as may hereafter be furnished to the other parties hereto in writing; or (viii)
to the Yield Maintenance Provider at 383 Madison Avenue, New York, New York
10179 Attention: DPC Manager-Suite 2700, facsimile no.: (212) 272-5823, with a
copy to One Metrotech Center North, Brooklyn, New York 11201, Attention:
Derivative Operations - 7th Floor, facsimile no.: (212) 272-1634, or such other
address as may hereafter be furnished to the other parties hereto in writing.
Any notice delivered to the Seller, Thornburg, the Master Servicer, the
Securities Administrator, the Delaware Trustee or the Trustee under this
Agreement shall be effective only upon receipt. Any notice required or permitted
to be mailed to a Certificateholder, unless otherwise provided herein, shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given when mailed, whether or not the Certificateholder receives
such notice.

        Section 11.08   Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severed 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 11.09   Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto.

        Section 11.10   Article and Section Headings. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.

        Section 11.11   Counterparts. 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.

        Section 11.12   Notice to Rating Agency. The article and section
headings herein are for convenience of reference only, and shall not limited or
otherwise affect the meaning hereof. The Trustee shall promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:

        1.      Any material change or amendment to this Agreement or the
Servicing Agreements;

        2.      The occurrence of any Event of Default that has not been cured;

        3.      The resignation or termination of the Master Servicer, the
Trustee, the Delaware Trustee, the Custodian or the Securities Administrator;

        4.      The repurchase or substitution of Mortgage Loans;

                                     - 117 -

<PAGE>

        5.      The final payment to Certificateholders; and

        6.      Any change in the location of the Master Servicer Collection
Account or the Distribution Account.

                                     - 118 -

<PAGE>

        IN WITNESS WHEREOF, the Seller, the Trustee (as trustee and as
custodian), the Delaware Trustee, the Master Servicer, the Securities
Administrator and Thornburg have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.

                                        STRUCTURED ASSET MORTGAGE
                                        INVESTMENTS INC., as Seller

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

                                        DEUTSCHE BANK NATIONAL TRUST
                                        COMPANY, as Trustee

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

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

                                        DEUTSCHE BANK TRUST COMPANY
                                        DELAWARE, as Delaware Trustee

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

                                     - 119 -

<PAGE>

                                        WELLS FARGO BANK MINNESOTA,
                                        NATIONAL ASSOCIATION, as Master
                                        Servicer

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

                                        WELLS FARGO BANK MINNESOTA,
                                        NATIONAL ASSOCIATION, as Securities
                                        Administrator

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

                                        THORNBURG MORTGAGE HOME LOANS, INC.

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

Agreed and Accepted
as to Section 3.21:

THORNBURG MORTGAGE INC.

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

                                     - 120 -

<PAGE>

STATE OF NEW YORK    )
                     ) ss:
COUNTY OF NEW YORK   )

        On the 3rd day of April 2003 before me, a notary public in and for said
State, personally appeared ____________________, known to me to be a
________________ of Structured Asset Mortgage Investments Inc., the 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

[Notarial Seal]

                                     - 121 -

<PAGE>

STATE OF CALIFORNIA  )
                     ) ss:
COUNTY OF ORANGE     )

        On the 3rd day of April 2003 before me, a notary public in and for said
State, personally appeared ________________, known to me to be a
________________ of Deutsche Bank National Trust Company, the national banking
association 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

[Notarial Seal]

                                     - 122 -

<PAGE>

STATE OF DELAWARE    )
                     ) ss:
COUNTY OF NEW CASTLE )

        On the 3rd day of April 2003 before me, a notary public in and for said
State, personally appeared ____________________, known to me to be a
_____________ of Deutsche Bank Trust Company Delaware, the Delaware banking
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

[Notarial Seal]

                                     - 123 -

<PAGE>

STATE OF MARYLAND    )
                     ) ss:
COUNTY OF HOWARD     )

        On the 3rd day of April 2003 before me, a notary public in and for said
State, personally appeared ____________________, known to me to be a
_______________ of Wells Fargo Bank Minnesota, National Association, the
national banking association 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

[Notarial Seal]

                                     - 124 -

<PAGE>

STATE OF NEW MEXICO  )
                     ) ss:
COUNTY OF SANTA FE   )

        On the 3rd day of April 2003 before me, a notary public in and for said
State, personally appeared _______________, known to me to be a
_________________ of Thornburg Mortgage Home Loans, Inc., the 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

[Notarial Seal]

                                     - 125 -

<PAGE>

                                                                     EXHIBIT A-1

                           FORM OF CLASS A 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 (THE "CODE").

                THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL
ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE
WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS
CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE
NAMED HEREIN.

                [If in book-entry form:] [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 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.]

                                      A-1-1

<PAGE>

Certificate No. A-___                      Variable Pass-Through Rate
Class A
Cut-off Date:                              Aggregate Initial Current Principal
March 1, 2003                              Amount of this Class as of the
                                           Cut-off Date:
                                           $1,039,673,900

First Distribution Date: April 25, 2003    Initial Current Principal Amount of
                                           this Certificate as of the Cut-off
                                           Date:
                                           $__________

Master Servicer: Wells Fargo Bank          CUSIP: 885220 DC 4
Minnesota, National Association

Trustee: Deutsche Bank National Trust      Assumed Final Distribution Date:
Company                                    April 25, 2043

                   THORNBURG MORTGAGE SECURITIES TRUST 2003-2
                 MORTGAGE PASS-THROUGH CERTIFICATE SERIES 2003-2

          evidencing a fractional undivided interest in the
          distributions allocable to the Class A Certificates issued
          by Thornburg Mortgage Securities Trust 2003-2, a Delaware
          statutory trust (the "Trust") consisting primarily of a pool
          of one- to four-family, first lien, hybrid and adjustable
          interest rate mortgage loans (the "Mortgage Loans").

                This Certificate is payable solely from the assets of the Trust,
and does not represent an obligation of or interest in SAMI, the Master
Servicer, the Securities Administrator, Thornburg, the Delaware Trustee or the
Trustee (each as defined below) or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by SAMI, the Master Servicer, the
Securities Administrator, Thornburg, the Delaware Trustee or the Trustee or any
of their affiliates or any other person.

                This certifies that __________ is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in the Trust,
which was created pursuant to the Trust, Pooling and Servicing Agreement dated
as of March 1, 2003 (the "Agreement"), among Structured Asset Mortgage
Investments Inc. ("SAMI"), as seller (the "Seller"), Wells Fargo Bank Minnesota,
National Association as master servicer (the "Master Servicer") and securities
administrator (the "Securities Administrator"), Deutsche Bank National Trust
Company, as trustee (the "Trustee"), Deutsche Bank Trust Company Delaware, as
Delaware trustee (the "Delaware Trustee") and Thornburg Mortgage Home Loans,
Inc. ("Thornburg"), a summary of certain of the pertinent provisions of which is
set forth hereafter. The Mortgage Loans were sold by Thornburg to SAMI pursuant
to the Mortgage Loan Purchase Agreement, dated as of March 1, 2003, and from
SAMI to the Trust pursuant to the Agreement. To the extent not defined herein,
capitalized

                                      A-1-2

<PAGE>

terms used herein shall have the meaning ascribed to them 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 its acceptance hereof assents and by which such Holder is bound.

                Interest on this Certificate will accrue for each Distribution
Date during the preceding Interest Accrual Period in an amount equal to the
product of (i) the actual number of days elapsed during such Interest Accrual
Period divided by 360, (ii) the Class A Pass-Through Rate and (iii) the Current
Principal Amount hereof immediately prior to such Distribution Date. The Trustee
will distribute on the 25th day of each month, or, if such 25th day is not a
Business Day, the immediately following Business Day (each, a "Distribution
Date"), commencing on the first Distribution Date specified above, to the Person
in whose name this Certificate is registered at the close of business on, if
this Certificate is a Book-Entry Certificate, the Business Day preceding such
Distribution Date and otherwise, the last Business Day of the calendar month
preceding the month of such Distribution Date, an amount equal to the product of
the Fractional Undivided Interest evidenced by this Certificate and the amount
(of interest and principal, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the Distribution Date in the month immediately following
the month of the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

                Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement by wire
transfer. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and designated in
such notice. Notwithstanding the forgoing, if this Certificate is a Book-Entry
Certificate, subject to the immediately preceding sentence regarding final
distributions on this Certificate, distributions shall be made to the Depository
by wire transfer in immediately available funds. The initial Current Principal
Amount of this Certificate is set forth above. The Current Principal Amount
hereof will be reduced to the extent of distributions allocable to principal
hereon.

                This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in six Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust formed pursuant to the Agreement.

                The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust for payment hereunder and no other
party to the Agreement is 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 hereby, and the rights,
duties and immunities of the Trustee.

                                      A-1-3

<PAGE>

                The Agreement permits, with certain exceptions therein provided,
the amendment thereof by the Seller, Thornburg, the Master Servicer, the
Securities Administrator, the Delaware Trustee and the Trustee with the consent
of the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust (or, if such amendment affects only
one or more classes, of such Class or Classes). 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 lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

                As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, accompanied by
an executed written instrument of assignment and transfer in form and substance
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.

                The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.

                No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. SAMI, the Master Servicer, the Securities Administrator, Thornburg,
the Delaware Trustee and the Trustee and any successor of any of them may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and none of SAMI, the Master Servicer, the Securities
Administrator, Thornburg, the Delaware Trustee or the Trustee or any such
successor shall be affected by notice to the contrary.

                The obligations created by the Agreement and the Trust created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, (ii) the optional repurchase by Thornburg of all the Mortgage Loans
and other assets of the Trust in accordance with the terms of the Agreement or
(iii) the payment to Certificateholders of all amounts required to be paid to
them pursuant to the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate Scheduled Principal Balance
of the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at March 1,
2003 (the "Cut-off Date"). The exercise of such right will effect the early
retirement of the Certificates.

                                      A-1-4

<PAGE>

                Thornburg has the right to effect early retirement of this
Certificate by exercising its Optional Securities Purchase Right on any
Distribution Date on or after the Distribution Date that the aggregate Scheduled
Principal Balance of the Mortgage Loans as of the end of the immediately
preceding Due Period is equal to or less than 20% of the Cut-Off Date Balance
thereof, as set forth in Section 5.09 of the Agreement. The Holder of this
Certificate shall be entitled to receive an amount equal to Current Interest,
principal and any Interest Carry-Forward Amount allocable to this Certificate as
specified in the Agreement. Following exercise of the Optional Securities
Purchase Right by Thornburg, this Certificate shall be deemed cancelled.

                Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

                                      A-1-5

<PAGE>

                IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:                                  DEUTSCHE BANK NATIONAL TRUST COMPANY
      ---------------                   Not in its individual capacity but
                                        solely as Trustee

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

                          CERTIFICATE OF AUTHENTICATION

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

                                        DEUTSCHE BANK NATIONAL TRUST COMPANY
                                        Authorized signatory of Deutsche Bank
                                        National Trust Company, not in its
                                        individual capacity but solely as
                                        Trustee

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

                                      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) a Fractional
Undivided Interest evidenced by the Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust.

                I (We) further direct the Certificate Registrar 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

                                        ----------------------------------------
                                        Signature Guaranteed

                            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-1-7

<PAGE>

                                                                     EXHIBIT A-2

                             CLASS [M-_] 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").

                THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.

                [If in book-entry form:] [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 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.]

                                      A-2-1

<PAGE>

Certificate No. [M-]-__                    Variable Pass-Through Rate
Class [M-_]
Cut-off Date:                              Aggregate Initial Current Principal
March 1, 2003                              Amount of this Class as of the
                                           Cut-off Date: $10,608,900

First Distribution Date: April 25, 2003    Initial Current Principal Amount of
                                           this Certificate as of the Cut-off
                                           Date:
                                           $__________

Master Servicer: Wells Fargo Bank          CUSIP: [M-1 - 885220 DD 2]
Minnesota, National Association                   [M-2 - 885220 DE 0]

Trustee: Deutsche Bank National Trust      Assumed Final Distribution Date:
Company                                    April 25, 2043

                   THORNBURG MORTGAGE SECURITIES TRUST 2003-2
                MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2003-2

          evidencing a fractional undivided interest in the
          distributions allocable to the Class [M-_] Certificates
          issued by Thornburg Mortgage Securities Trust 2003-2, a
          Delaware statutory trust (the "Trust") consisting
          primarily of a pool of one- to four-family, first lien,
          hybrid and adjustable interest rate mortgage loans (the
          "Mortgage Loans").

                This Certificate is payable solely from the assets of the Trust,
and does not represent an obligation of or interest in SAMI, the Master
Servicer, the Securities Administrator, Thornburg, the Delaware Trustee or the
Trustee (each as defined below) or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by SAMI, the Master Servicer, the
Securities Administrator, Thornburg, the Delaware Trustee or the Trustee or any
of their affiliates or any other person.

                This certifies that __________ is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in the Trust,
which was created pursuant to the Trust, Pooling and Servicing Agreement dated
as of March 1, 2003 (the "Agreement"), among Structured Asset Mortgage
Investments Inc. ("SAMI"), as seller (the "Seller"), Wells Fargo Bank Minnesota,
National Association as master servicer (the "Master Servicer") and securities
administrator (the "Securities Administrator"), Deutsche Bank National Trust
Company, as trustee (the "Trustee"), Deutsche Bank Trust Company Delaware, as
Delaware trustee (the "Delaware Trustee") and Thornburg Mortgage Home Loans,
Inc. ("Thornburg"), a summary of certain of the pertinent provisions of which is
set forth hereafter. The Mortgage Loans were sold by Thornburg to SAMI pursuant
to the Mortgage Loan Purchase Agreement, dated as of March 1, 2003, and from

                                      A-2-2

<PAGE>

SAMI to the Trust pursuant to the Agreement. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them 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 its acceptance hereof assents and by which such
Holder is bound.

                Interest on this Certificate will accrue for each Distribution
Date during the preceding Interest Accrual Period in an amount equal to the
product of (i) the actual number of days elapsed during such Interest Accrual
Period divided by 360, (ii) the applicable Pass-Through Rate and (iii) the
Current Principal Amount hereof immediately prior to such Distribution Date. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the first Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on, if this Certificate is a Book-Entry Certificate, the Business Day
preceding such Distribution Date and otherwise, the last Business Day of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Fractional Undivided Interest evidenced by this Certificate
and the amount (of interest and principal, if any) required to be distributed to
the Holders of Certificates of the same Class as this Certificate. The Assumed
Final Distribution Date is the Distribution Date in the month immediately
following the month of the latest scheduled maturity date of any Mortgage Loan
and is not likely to be the date on which the Current Principal Amount of this
Class of Certificates will be reduced to zero.

                Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement by wire
transfer. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and designated in
such notice. Notwithstanding the forgoing, if this Certificate is a Book-Entry
Certificate, subject to the immediately preceding sentence regarding final
distributions on this Certificate, distributions shall be made to the Depository
by wire transfer in immediately available funds. The initial Current Principal
Amount of this Certificate is set forth above. The Current Principal Amount
hereof will be reduced to the extent of distributions allocable to principal
hereon and any Realized Losses allocated hereto.

                This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in six Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust formed pursuant to the Agreement.

                The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust for payment hereunder and no other
party to the Agreement is 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.

                                      A-2-3

<PAGE>

                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 hereby, and the rights,
duties and immunities of the Trustee.

                The Agreement permits, with certain exceptions therein provided,
the amendment thereof by the Seller, Thornburg, the Master Servicer, the
Securities Administrator, the Delaware Trustee and the Trustee with the consent
of the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust (or, if such amendment affects only
one or more classes, of such Class or Classes). 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 lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

                As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, accompanied by
an executed written instrument of assignment and transfer in form and substance
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.

                The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.

                No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. SAMI, the Master Servicer, the Securities Administrator, Thornburg,
the Delaware Trustee and the Trustee and any successor of any of them may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and none of SAMI, the Master Servicer, the Securities
Administrator, Thornburg, the Delaware Trustee or the Trustee or any such
successor shall be affected by notice to the contrary.

                The obligations created by the Agreement and the Trust created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, (ii) the optional repurchase by Thornburg of all the Mortgage Loans
and other assets of the Trust in accordance with the terms of the Agreement or
(iii) the payment to Certificateholders of all amounts required to be paid to
them pursuant to the Agreement. Such optional repurchase may be made only on or

                                      A-2-4

<PAGE>

after the Distribution Date on which the aggregate Scheduled Principal Balance
of the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at March 1,
2003 (the "Cut-off Date"). The exercise of such right will effect the early
retirement of the Certificates.

                Thornburg has the right to effect early retirement of this
Certificate by exercising its Optional Securities Purchase Right on any
Distribution Date on or after the Distribution Date that the aggregate Scheduled
Principal Balance of the Mortgage Loans as of the end of the immediately
preceding Due Period is equal to or less than 20% of the Cut-Off Date Balance
thereof, as set forth in Section 5.09 of the Agreement. The Holder of this
Certificate shall be entitled to receive an amount equal to Current Interest,
principal and any Interest Carry-Forward Amount allocable to this Certificate as
specified in the Agreement. Following exercise of the Optional Securities
Purchase Right by Thornburg, this Certificate shall be deemed cancelled.

                Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

                                      A-2-5

<PAGE>

                IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:                                  DEUTSCHE BANK NATIONAL TRUST COMPANY
       --------------                   Not in its individual capacity but
                                        solely as Trustee

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

                          CERTIFICATE OF AUTHENTICATION

                This is one of the Class [M-_] Certificates referred to in the
within-mentioned Agreement.

                                        DEUTSCHE BANK NATIONAL TRUST COMPANY
                                        Authorized signatory of Deutsche Bank
                                        National Trust Company, not in its
                                        individual capacity but solely as
                                        Trustee

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

                                      A-2-6

<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) a Fractional
Undivided Interest evidenced by the Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust.

                I (We) further direct the Certificate Registrar 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

                                        ----------------------------------------
                                        Signature Guaranteed

                            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

                         FORM OF CLASS B-IO CERTIFICATE

                THIS CERTIFICATE HAS BOTH A PRINCIPAL BALANCE AND A NOTIONAL
BALANCE AND IS ENTITLED TO PRINCIPAL DISTRIBUTIONS IN RESPECT OF ITS PRINCIPAL.

                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 AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) TO AN "INSTITUTIONAL ACCREDITED
INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF
REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME
WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER
SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) THE RECEIPT BY THE
TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER,
RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION.

                THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY,
OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH
IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF

                                      A-3-1

<PAGE>

THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION
WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION
EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION
("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT
GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE SELLER, THE
SECURITIES ADMINISTRATOR, THE MASTER SERVICER, ANY SERVICER, THE TRUSTEE OR THE
DELAWARE TRUSTEE, WHICH WILL BE EVIDENCED BY A REPRESENTATION OR AN OPINION OF
COUNSEL TO SUCH EFFECT.

                                      A-3-2

<PAGE>

Certificate No. B-IO-__                    Interest Rate: N/A
Class B-IO
Cut-off Date:                              Aggregate Initial Notional Balance of
March 1, 2003                              this Class as of the Cut-off Date:
                                           $1,060,891,769.76

First Distribution Date: April 25, 2003    Initial Notional Balance of this
                                           Certificate as of the Cut-off Date:
                                           $__________

                                           Initial Principal Balance of this
                                           Class as of the Cut-off Date: $69.76

                                           Initial Principal Balance of this
                                           Certificate as of the Cut-Off Date:
                                           $__________

Master Servicer: Wells Fargo Bank          CUSIP: 885220 DH 3
Minnesota, National Association

Trustee: Deutsche Bank National Trust      Assumed Final Distribution Date:
Company                                    April 25, 2043

                   THORNBURG MORTGAGE SECURITIES TRUST 2003-2
                MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2003-2

                evidencing a fractional undivided interest in the
                distributions allocable to the Class B-IO Certificates
                issued by Thornburg Mortgage Securities Trust 2003-2,
                a Delaware statutory trust (the "Trust") consisting
                primarily of a pool of one- to four-family, first
                lien, hybrid and adjustable interest rate mortgage
                loans (the "Mortgage Loans").

                This Certificate is payable solely from the assets of the Trust,
and does not represent an obligation of or interest in SAMI, the Master
Servicer, the Securities Administrator, Thornburg, the Delaware Trustee or the
Trustee (each as defined below) or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by SAMI, the Master Servicer, the
Securities Administrator, Thornburg, the Delaware Trustee or the Trustee or any
of their affiliates or any other person.

                This certifies that __________ is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in the Trust,
which was created pursuant to the Trust, Pooling and Servicing Agreement dated
as of March 1, 2003 (the "Agreement"), among Structured Asset Mortgage
Investments Inc. ("SAMI"), as seller (the "Seller"), Wells Fargo Bank Minnesota,
National

                                      A-3-3

<PAGE>

Association as master servicer (the "Master Servicer") and securities
administrator (the "Securities Administrator"), Deutsche Bank National Trust
Company, as trustee (the "Trustee"), Deutsche Bank Trust Company Delaware, as
Delaware trustee (the "Delaware Trustee") and Thornburg Mortgage Home Loans,
Inc. ("Thornburg"), a summary of certain of the pertinent provisions of which is
set forth hereafter. The Mortgage Loans were sold by Thornburg to SAMI pursuant
to the Mortgage Loan Purchase Agreement, dated as of March 1, 2003, and from
SAMI to the Trust pursuant to the Agreement. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them 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 its acceptance hereof assents and by which such
Holder is bound.

                This Class B-IO Certificate has both a principal balance and a
notional balance and does not bear interest at a specified rate. The Trustee
will distribute on the 25th day of each month, or, if such 25th day is not a
Business Day, the immediately following Business Day (each, a "Distribution
Date"), commencing on the first Distribution Date specified above, to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day (or if such last day is not a Business Day, the Business Day
immediately preceding such last day) of the calendar month preceding the month
of such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate. The Assumed Final Distribution
Date is the Distribution Date in the month immediately following the month of
the latest scheduled maturity date of any Mortgage Loan.

                No transfer of this Certificate shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
transfer and such Certificateholder's prospective transferee shall provide to
the Trustee a Rule 144A Certificate or an Investment Letter and/or such other
documents as are required under, and such transfer shall otherwise be in
compliance with, the Agreement. The Seller shall provide to any Holder of this
Certificate and any prospective transferee designated by any such Holder,
information required under Rule 144A(d)(4) under the Securities Act.

                Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement by wire
transfer. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and designated in
such notice. Notwithstanding the forgoing, so long as this Certificate is a
Book-Entry Certificate, subject to the immediately preceding sentence regarding
final distributions on this Certificate, distributions shall be made to the
Depository by wire transfer in immediately available funds. The principal and
notional balance of this Certificate will be reduced as provided in the
Agreement.

                                      A-3-4

<PAGE>

                This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in six Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust formed pursuant to the Agreement.

                The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust for payment hereunder and no other
party to the Agreement is 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 hereby, and the rights,
duties and immunities of the Trustee.

                The Agreement permits, with certain exceptions therein provided,
the amendment thereof by the Seller, Thornburg, the Master Servicer, the
Securities Administrator, the Delaware Trustee and the Trustee with the consent
of the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust (or, if such amendment affects only
one or more classes, of such Class or Classes). 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 lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

                As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, accompanied by
an executed written instrument of assignment and transfer in form and substance
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.

                The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.

                No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. SAMI, the Master Servicer, the Securities Administrator, Thornburg,
the Delaware Trustee and the Trustee and any successor of any of them may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and none of SAMI, the Master Servicer, the Securities
Administrator, Thornburg, the Delaware Trustee or the Trustee or any such
successor shall be affected by notice to the contrary.

                                      A-3-5

<PAGE>

                The obligations created by the Agreement and the Trust created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, (ii) the optional repurchase by Thornburg of all the Mortgage Loans
and other assets of the Trust in accordance with the terms of the Agreement or
(iii) the payment to Certificateholders of all amounts required to be paid to
them pursuant to the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate Scheduled Principal Balance
of the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at March 1,
2003 (the "Cut-off Date"). The exercise of such right will effect the early
retirement of the Certificates.

                Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

                                      A-3-6

<PAGE>

                IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: _______________                  DEUTSCHE BANK NATIONAL TRUST COMPANY
                                        Not in its individual capacity but
                                        solely as Trustee

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

                          CERTIFICATE OF AUTHENTICATION

                This is one of the Class B-IO Certificates referred to in the
within-mentioned Agreement.

                                        DEUTSCHE BANK NATIONAL TRUST COMPANY
                                        Authorized signatory of Deutsche Bank
                                        National Trust Company, not in its
                                        individual capacity but solely as
                                        Trustee

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

                                      A-3-7

<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) a Fractional
Undivided Interest evidenced by the Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust.

                I (We) further direct the Certificate Registrar 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

                                        ----------------------------------------
                                        Signature Guaranteed

                            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-3-8

<PAGE>

                                                                     EXHIBIT A-4

                         FORM OF CLASS [R-] CERTIFICATE

                SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS
A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

                THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY,
OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH
IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

                ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
MASTER SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) 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, (B) 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, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER,
SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE
A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO,
THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED
TO THE PROVISIONS OF THIS PARAGRAPH.

                                      A-4-1

<PAGE>

Certificate No. [R-]-__                    Interest Rate: N/A
Class [R-_]
Cut-off Date:                              Aggregate Initial Current Principal
March 1, 2003                              Amount of this Class as of the
                                           Cut-off Date: $ 50.00
First Distribution Date:                   Initial Current Principal Amount of
April 25, 2003                             this Certificate as of the Cut-off
                                           Date: $50.00
Master Servicer: Wells Fargo Bank          CUSIP: [R-1 - 885220 DF 7]
Minnesota, National Association                   [R-2 - 885220 DG 5]

Trustee: Deutsche Bank National Trust      Assumed Final Distribution Date:
Company                                    April 25, 2043

                       THORNBURG MORTGAGE SECURITIES TRUST
                 MORTGAGE PASS-THROUGH CERTIFICATE SERIES 2003-2

          evidencing a fractional undivided interest in the
          distributions allocable to the Class [R-__] Certificates
          issued by Thornburg Mortgage Securities Trust 2003-2, a
          Delaware statutory trust (the "Trust") consisting primarily
          of a pool of one- to four-family, first lien, hybrid and
          adjustable interest rate mortgage loans (the "Mortgage
          Loans").

                This Certificate is payable solely from the assets of the Trust,
and does not represent an obligation of or interest in SAMI, the Master
Servicer, the Securities Administrator, Thornburg, the Delaware Trustee or the
Trustee (each as defined below) or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by SAMI, the Master Servicer, the
Securities Administrator, Thornburg, the Delaware Trustee or the Trustee or any
of their affiliates or any other person.

                This certifies that _______________ is the registered owner of
the Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in the Trust,
which was created pursuant to the Trust, Pooling and Servicing Agreement dated
as of March 1, 2003 (the "Agreement"), among Structured Asset Mortgage
Investments Inc. ("SAMI"), as seller (the "Seller"), Wells Fargo Bank Minnesota,
National Association as master servicer (the "Master Servicer") and securities
administrator (the "Securities Administrator"), Deutsche Bank National Trust
Company, as trustee (the "Trustee"), Deutsche Bank Trust Company Delaware, as
Delaware trustee (the "Delaware Trustee") and Thornburg Mortgage Home Loans,
Inc. ("Thornburg"), a summary of certain of the pertinent provisions of which is
set forth hereafter. The Mortgage Loans were sold by Thornburg to SAMI pursuant
to the Mortgage Loan Purchase Agreement, dated as of March 1, 2003, and from
SAMI to the Trust pursuant to the Agreement. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them 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 its acceptance hereof assents and by which such
Holder is bound.

                                      A-4-2

<PAGE>

                This Class R-___ Certificate will not bear interest. The Trustee
will distribute on the 25th day of each month, or, if such 25th day is not a
Business Day, the immediately following Business Day (each, a "Distribution
Date"), commencing on the first Distribution Date specified above, to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day (or if such last day is not a Business Day, the Business Day
immediately preceding such last day) of the calendar month preceding the month
of such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount (of principal,
if any) required to be distributed to the Holders of Certificates of the same
Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month immediately following the month of the latest
scheduled maturity date of any Mortgage Loan. The Residual Certificates are
scheduled to receive a payment of their respective initial principal balances on
the first Distribution Date.

                Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement by wire
transfer. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and designated in
such notice. The initial Current Principal Amount of this Certificate is set
forth above. The Current Principal Amount hereof will be reduced to the extent
of distributions allocable to principal hereon.

                Each Holder of this Certificate will be deemed to have agreed to
be bound by the restrictions set forth in the Agreement to the effect that (i)
each person holding or acquiring any Ownership Interest in this Certificate must
be a United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) 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, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Seller will have the right, in its
sole discretion and without notice to the Holder of this Certificate, to sell
this Certificate to a purchaser selected by the Company, which purchaser may be
the Seller, or any affiliate of the Seller, on such terms and conditions as the
Seller may choose.

                This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in six Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust formed pursuant to the Agreement.

                The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust for payment hereunder and no other
party to the Agreement is 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.

                                      A-4-3

<PAGE>

                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 hereby, and the rights,
duties and immunities of the Trustee.

                The Agreement permits, with certain exceptions therein provided,
the amendment thereof by the Seller, Thornburg, the Master Servicer, the
Securities Administrator, the Delaware Trustee and the Trustee with the consent
of the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust (or, if such amendment affects only
one or more classes, of such Class or Classes). 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 lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

                As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, accompanied by
an executed written instrument of assignment and transfer in form and substance
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.

                The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.

                No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. SAMI, the Master Servicer, the Securities Administrator, Thornburg,
the Delaware Trustee and the Trustee and any successor of any of them may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and none of SAMI, the Master Servicer, the Securities
Administrator, Thornburg, the Delaware Trustee or the Trustee or any such
successor shall be affected by notice to the contrary.

                The obligations created by the Agreement and the Trust created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, (ii) the optional repurchase by Thornburg of all the Mortgage Loans
and other assets of the Trust in accordance with the terms of the Agreement or
(iii) the payment to Certificateholders of all amounts required to be paid to
them pursuant to the Agreement. Such optional repurchase may be made only on or

                                      A-4-4

<PAGE>

after the Distribution Date on which the aggregate Scheduled Principal Balance
of the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at March 1,
2003 (the "Cut-off Date"). The exercise of such right will effect the early
retirement of the Certificates.

                Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

                                      A-4-5

<PAGE>

                IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:                                  DEUTSCHE BANK NATIONAL TRUST COMPANY
       -----------------                Not in its individual capacity but
                                        solely as Trustee

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

                          CERTIFICATE OF AUTHENTICATION

                This is one of the Class [R-_] Certificates referred to in the
within-mentioned Agreement.

                                        DEUTSCHE BANK NATIONAL TRUST COMPANY
                                        Authorized signatory of Deutsche Bank
                                        National Trust Company, not in its
                                        individual capacity but solely as
                                        Trustee

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

                                      A-4-6

<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) a Fractional
Undivided Interest evidenced by the Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust.

                I (We) further direct the Certificate Registrar 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

                                        ---------------------------------------
                                        Signature Guaranteed

                            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-4-7

<PAGE>

                                                                       EXHIBIT B

                             MORTGAGE LOAN SCHEDULE

                             [PROVIDED UPON REQUEST]

                                       B-1

<PAGE>

                                                                     EXHIBIT C-1

                          FORM OF INITIAL CERTIFICATION

                                                                          [Date]

[SELLER]

[MORTGAGE LOAN SELLER]

[MASTER SERVICER]

                Re:  Trust, Pooling and Servicing Agreement (the "Agreement"),
                     dated as of March 1, 2003, by and among Structured Asset
                     Mortgage Investments Inc., Wells Fargo Bank Minnesota,
                     National Association, Thornburg Mortgage Home Loans, Inc.,
                     Deutsche Bank National Trust Company and Deutsche Bank
                     Trust Company Delaware relating to Thornburg Mortgage
                     Securities Trust, Mortgage Pass-Through Certificates,
                     Series 2003-2

Ladies and Gentlemen:

                In accordance with Section 2.02(a) of the Agreement, the
undersigned, as Trustee, hereby certifies that it has received a an original
Mortgage Note or Lost Note Affidavit to the extent required in Section 2.01 of
the Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, with any exceptions listed on Schedule A attached hereto.

                The Trustee has made no independent examination of any documents
contained in the Mortgage File beyond the review specifically required in the
Agreement. The Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
contained in each Mortgage File or any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan. Notwithstanding anything herein to the
contrary, the Trustee has made no determination and makes no representations as
to whether (i) any endorsement is sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note or (ii) any assignment is in recordable form or sufficient to
effect the assignment of and transfer to the assignee thereof, under the
Mortgage to which the assignment relates.

                Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Agreement.

                                        DEUTSCHE BANK NATIONAL TRUST
                                        COMPANY, as Trustee and Custodian

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

                                      C-1-1

<PAGE>

                                                                     EXHIBIT C-2

                          FORM OF INTERIM CERTIFICATION

                                                                          [Date]

[SELLER]

[MORTGAGE LOAN SELLER]

[MASTER SERVICER]

                Re:  Trust, Pooling and Servicing Agreement (the "Agreement"),
                     dated as of March 1, 2003, by and among Structured Asset
                     Mortgage Investments Inc., Wells Fargo Bank Minnesota,
                     National Association, Thornburg Mortgage Home Loans, Inc.,
                     Deutsche Bank National Trust Company and Deutsche Bank
                     Trust Company Delaware relating to Thornburg Mortgage
                     Securities Trust, Mortgage Pass-Through Certificates,
                     Series 2003-2

Ladies and Gentlemen:

                In accordance with Section 2.02(a) of the above-captioned Trust,
Pooling and Servicing Agreement, the undersigned, as Trustee, hereby certifies
that it has received a Mortgage File to the extent required pursuant to Section
2.01 of the Agreement with respect to each Mortgage Loan listed in the Mortgage
Loan Schedule, and it has reviewed the Mortgage File and the Mortgage Loan
Schedule and has determined that: all required documents have been executed and
received and that such documents relate to the Mortgage Loans identified on the
Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.

                The Trustee has made no independent examination of any documents
contained in the Mortgage File beyond the review specifically required in the
Agreement. The Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
contained in each Mortgage File or any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan. Notwithstanding anything herein to the
contrary, the Trustee has made no determination and makes no representations as
to whether (i) any endorsement is sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note or (ii) any assignment is in recordable form or sufficient to
effect the assignment of and transfer to the assignee thereof, under the
Mortgage to which the assignment relates.

                Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Agreement.

                                        DEUTSCHE BANK NATIONAL TRUST COMPANY

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

                                      C-2-1

<PAGE>

                                                                     EXHIBIT C-3

                           FORM OF FINAL CERTIFICATION

                                                                          [Date]

[SELLER]

[MORTGAGE LOAN SELLER]

[MASTER SERVICER]

                Re:  Trust, Pooling and Servicing Agreement (the "Agreement"),
                     dated as of March 1, 2003, by and among Structured Asset
                     Mortgage Investments Inc., Wells Fargo Bank Minnesota,
                     National Association, Thornburg Mortgage Home Loans, Inc.,
                     Deutsche Bank National Trust Company and Deutsche Bank
                     Trust Company Delaware relating to Thornburg Mortgage
                     Securities Trust, Mortgage Pass-Through Certificates,
                     Series 2003-2

Ladies and Gentlemen:

                In accordance with Section 2.02(b) of the above-captioned
Agreement, the undersigned, as Trustee, hereby certifies that it has received a
Mortgage File to the extent required pursuant to Section 2.01 of the Agreement
with respect to each Mortgage Loan listed in the Mortgage Loan Schedule, and it
has reviewed the Mortgage File and the Mortgage Loan Schedule and has determined
that: all required documents have been executed and received and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule,
with any exceptions listed on Schedule A attached hereto.

                The Trustee has made no independent examination of any documents
contained in the Mortgage File beyond the review specifically required in the
Agreement. The Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
contained in each Mortgage File or any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan. Notwithstanding anything herein to the
contrary, the Trustee has made no determination and makes no representations as
to whether (i) any endorsement is sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note or (ii) any assignment is in recordable form or sufficient to
effect the assignment of and transfer to the assignee thereof, under the
Mortgage to which the assignment relates.

                Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Agreement.

                                        DEUTSCHE BANK NATIONAL TRUST COMPANY

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

                                      C-3-1

<PAGE>

                                                                       EXHIBIT D

                        REQUEST FOR RELEASE OF DOCUMENTS

To:     Deutsche Bank National Trust Company,
        as Trustee and Custodian
        1761 East St. Andrew Place
        Santa Ana, California 92705

RE:     Trust, Pooling and Servicing Agreement dated as of
        March 1, 2003, among Structured Asset Mortgage Investments Inc.,
        Wells Fargo Bank Minnesota,
        National Association, as master servicer
        and securities administrator,
        Thornburg Mortgage Home Loans, Inc.,
        Deutsche Bank National Trust Company, as Trustee
        and Deutsche Bank Trust Company Delaware, as Delaware trustee

                In connection with the administration of the Mortgage Loans held
by you pursuant to the above-captioned Trust, Pooling and Servicing Agreement,
we request the release, and hereby acknowledge receipt, of the Mortgage File for
the Mortgage Loan described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents
(check one):

______      1.      Mortgage Paid in Full and proceeds have been deposited into
                    the Custodial Account

______      2.      Foreclosure

______      3.      Substitution

______      4.      Other Liquidation

______      5.      Nonliquidation         Reason: ___________________

______      6.      California Mortgage Loan paid in full

                                       D-1

<PAGE>

                                        By:
                                             ------------------------------
                                             (authorized signer)

                                        Issuer:
                                                 ---------------------------
                                        Address:
                                                  -----------------------------
                                        Date:
                                               ----------------------------

                                       D-2

<PAGE>

                                                                       EXHIBIT E

                                        Affidavit pursuant to Section 860E(e)(4)
                                        of the Internal Revenue Code of 1986, as
                                        amended, and for other purposes

STATE OF            )
                    )ss:
COUNTY OF           )

                [NAME OF OFFICER], being first duly sworn, deposes and says:

                1.      That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ________] [the United States], on behalf of
which he makes this affidavit.

                2.      That (i) the Investor is not a "disqualified
organization" as defined in Section 860E(e)(5) of the Internal Revenue Code of
1986, as amended (the "Code"), and will not be a disqualified organization as of
[Closing Date] [date of purchase]; (ii) it is not acquiring the Thornburg
Mortgage Securities Trust, Mortgage Pass-Through Certificates, Series 2003-2,
Class [R-1] [R-2] Certificates (the "Residual Certificates") for the account of
a disqualified organization; (iii) it consents to any amendment of the Trust,
Pooling and Servicing Agreement that shall be deemed necessary by Structured
Asset Mortgage Investments Inc. (upon advice of counsel) to constitute a
reasonable arrangement to ensure that the Residual Certificates will not be
owned directly or indirectly by a disqualified organization; and (iv) it will
not transfer such Residual Certificates unless (a) it has received from the
transferee an affidavit in substantially the same form as this affidavit
containing these same four representations and (b) as of the time of the
transfer, it does not have actual knowledge that such affidavit is false.

                3.      That the Investor is one of the following: (i) a citizen
or resident of the United States, (ii) a corporation or partnership (including
an entity treated as a corporation or partnership for federal income tax
purposes) created or organized in, or under the laws of, the United States or
any state thereof or the District of Columbia (except, in the case of a
partnership, to the extent provided in regulations), provided that no
partnership or other entity treated as a partnership for United States federal
income tax purposes shall be treated as a United States Person unless all
persons that own an interest in such partnership either directly or through any
entity that is not a corporation for United States federal income tax purposes
are United States Persons, (iii) an estate whose income is subject to United
States federal income tax regardless of its source, or (iv) a trust other than a
"foreign trust," as defined in Section 7701 (a)(31) of the Code.

                4.      That the Investor's taxpayer identification number is
_______________.

                5.      That no purpose of the acquisition of the Residual
Certificates is to avoid or impede the assessment or collection of tax.

                                       E-1

<PAGE>

                6.      That the Investor understands that, as the holder of the
Residual Certificates, the Investor may incur tax liabilities in excess of any
cash flows generated by such Residual Certificates.

                7.      That the Investor intends to pay taxes associated with
holding the Residual Certificates as they become due.

                8.      That the Investor will not cause income from the
Residual Certificates to be attributed to a foreign permanent establishment or
fixed base of the Investor or another taxpayer.

                9.      That the Residual Certificate is not being acquired
either directly or indirectly, by or on behalf of, an employee benefit plan or
other retirement arrangement subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended or Section 4975 of the Code.

                                       E-2

<PAGE>

                IN WITNESS WHEREOF, the Investor has caused this instrument to
be executed on its behalf, pursuant to authority of its Board of Directors, by
its [Title of Officer] this ____ day of _________, 20__.

                                        [NAME OF INVESTOR]

                                        By:
                                             -----------------------------
                                             [Name of Officer]
                                             [Title of Officer]
                                             [Address of Investor for receipt of
                                             distributions]

                                             Address of Investor for receipt of
                                             tax information:

                Personally appeared before me the above-named [Name of Officer],
known or proved to me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Investor, and acknowledged to
me that he executed the same as his free act and deed and the free act and deed
of the Investor.

                Subscribed and sworn before me this ___ day of _________, 20___.

NOTARY PUBLIC

COUNTY OF

STATE OF

My commission expires the ___ day of ___________________, 20___.

                                       E-3

<PAGE>

                                                                     EXHIBIT F-1

                                                                          [Date]

                            FORM OF INVESTMENT LETTER

[SELLER]

Deutsche Bank National Trust Company,
as Trustee
1761 East St. Andrew Place
Santa Ana, California 92705

Structured Asset Mortgage Investments Inc.
383 Madison Avenue, 11th Floor
New York, New York 10179

Re:  Thornburg Mortgage Securities Trust, Mortgage Pass-Through Certificates,
     Series 2003-2 (the "Certificates"), Class B-IO Certificates
     (the "Private Certificates")

Dear Ladies and Gentlemen:

        In connection with our purchase of Private Certificates, we confirm
that:

        (i)     we understand that the Private Certificates are not being
                registered under the Securities Act of 1933, as amended (the
                "Act") or any applicable state securities or "Blue Sky" laws,
                and are being sold to us in a transaction that is exempt from
                the registration requirements of such laws;

        (ii)    any information we desired concerning the Certificates,
                including the Private Certificates, Thornburg Mortgage
                Securities Trust 2003-2 (the "Trust"), in which the Certificates
                represent the entire beneficial ownership interest or any other
                matter we deemed relevant to our decision to purchase the
                Private Certificates has been made available to us;

        (iii)   we are able to bear the economic risk of investment in the
                Private Certificates; we are an institutional "accredited
                investor" as defined in Section 501(a) of Regulation D
                promulgated under the Act and a sophisticated institutional
                investor;

        (iv)    we are acquiring the Private Certificates for our own account,
                not as nominee for any other person, and not with a present view
                to any distribution or other disposition of the Private
                Certificates;

        (v)     we agree the Private Certificates must be held indefinitely by
                us (and may not be sold, pledged, hypothecated or in any way
                disposed of) unless

                                      F-1-1

<PAGE>

                subsequently registered under the Act and any applicable state
                securities or "Blue Sky" laws or an exemption from the
                registration requirements of the Act and any applicable state
                securities or "Blue Sky" laws is available;

        (vi)    we agree that in the event that at some future time we wish to
                dispose of or exchange the Private Certificate (such disposition
                or exchange not being currently foreseen or contemplated), we
                will not transfer or exchange the Private Certificates unless:

                (A)     (1) the sale is to an Eligible Purchaser (as defined
                        below), (2) if required by the Trust, Pooling and
                        Servicing Agreement (as defined below) a letter to
                        substantially the same effect as either this letter or,
                        if the Eligible Purchaser is a Qualified Institutional
                        Buyer as defined under Rule 144A of the Act, the Rule
                        144A and Related Matters Certificate in the form
                        attached to the Trust, Pooling and Servicing Agreement
                        (as defined below) (or such other documentation as may
                        be acceptable to the Trustee) is executed promptly by
                        the purchaser and delivered to the addressees hereof and
                        (3) all offers or solicitations in connection with the
                        sale, whether directly or through any agent acting on
                        our behalf, are limited only to Eligible Purchasers and
                        are not made by means of any form of general
                        solicitation or general advertising whatsoever; and

                (B)     if the Private Certificates are not registered under the
                        Act (as to which we acknowledge you have no obligation),
                        the Private Certificates are sold in a transaction that
                        does not require registration under the Act and any
                        applicable state securities or "blue sky" laws and, if
                        Deutsche Bank National Trust Company (the "Trustee") so
                        requests, a satisfactory Opinion of Counsel is furnished
                        to such effect, which Opinion of Counsel shall be an
                        expense of the transferor or the transferee;

        (vii)   we agree to be bound by all of the terms (including those
                relating to restrictions on transfer) of the Trust, Pooling and
                Servicing, pursuant to which the Trust was formed; we have
                reviewed carefully and understand the terms of the Trust,
                Pooling and Servicing Agreement;

        (viii)  we either: (i) are not acquiring the Private Certificates
                directly or indirectly by, or on behalf of, an employee benefit
                plan or other retirement arrangement which is subject to Title I
                of the Employee Retirement Income Security Act of 1974, as
                amended, and/or section 4975 of the Internal Revenue Code of
                1986, as amended, or (ii) are providing a representation or an
                opinion of counsel to the effect that the proposed transfer
                and/or holding of a Private Certificate and the servicing,
                management and/or operation of the Trust and its assets: (I)
                will not result

                                      F-1-2

<PAGE>

                in any prohibited transaction which is not covered under an
                individual or class prohibited transaction exemption, including,
                but not limited to, Prohibited Transaction Exemption ("PTE")
                84-14, PTE 91-38, PTE 90-1, PTE 95-60, PTE 96-23 or Section
                401(c) of ERISA and the regulations promulgated thereunder and
                (II) will not give rise to any additional fiduciary duties on
                the part of the Seller, the Master Servicer, the Securities
                Administrator, any Servicer or the Trustee.

        (ix)    We understand that the Class B-IO Certificate bears, and will
                continue to bear, a legend to substantially the following
                effect: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
                REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS. THE
                HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS
                CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
                TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
                APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE
                SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER
                REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
                THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN
                ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE
                HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
                PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
                (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE
                144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) TO AN
                "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF
                IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT
                OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
                PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE
                SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A
                LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
                (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE
                TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS
                IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS
                OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
                LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION.
                THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY,
                OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
                ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE

                                      F-1-3

<PAGE>

                EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED,
                AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
                AMENDED, UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A
                CERTIFICATE AND THE SERVICING, MANAGEMENT AND/OR OPERATION OF
                THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED
                TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
                PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO,
                PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE
                90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY
                ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE SELLER, THE
                SECURITIES ADMINISTRATOR, THE MASTER SERVICER, ANY SERVICER, THE
                TRUSTEE OR THE DELAWARE TRUSTEE, WHICH WILL BE DEEMED
                REPRESENTED BY AN OWNER OF A GLOBAL CERTIFICATE AND WILL BE
                EVIDENCED BY A REPRESENTATION OR AN OPINION OF COUNSEL TO SUCH
                EFFECT."

        "Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.

        Terms not otherwise defined herein shall have the meanings assigned to
them in the Trust, Pooling and Servicing Agreement, dated as of March 1, 2003,
among Structured Asset Mortgage Investments Inc., Wells Fargo Bank Minnesota,
National Association as master servicer and securities administrator, Thornburg
Mortgage Home Loans, Inc., Deutsche Bank National Trust Company, as Trustee and
Deutsche Bank Trust Company Delaware, as Delaware trustee (the "Trust, Pooling
and Servicing Agreement').

        If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.

Name of Nominee (if any):

                                      F-1-4

<PAGE>

        IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ___ day of ________, 20___.

                                                Very truly yours,

                                                [PURCHASER]

                                                By:
                                                    --------------------------
                                                    (Authorized Officer)

                                                [By:
                                                    --------------------------
                                                    Attorney-in-fact]

                                      F-1-5

<PAGE>

                             Nominee Acknowledgment

        The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.

                                                [NAME OF NOMINEE]

                                                By:
                                                    --------------------------
                                                    (Authorized Officer)

                                                [By:
                                                    --------------------------
                                                    Attorney-in-fact]

                                      F-1-6

<PAGE>

                                                                     EXHIBIT F-2

                FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE

[SELLER]

Deutsche Bank National Trust Company,
as Trustee
1761 East St. Andrew Place
Santa Ana, California 92705

Structured Asset Mortgage Investments Inc.
383 Madison Avenue, 11th Floor
New York, New York 10179

Re:  Thornburg Mortgage Securities Trust, Mortgage Pass-Through Certificates,
     Series 2003-2 (the "Certificates"), Class B-IO Certificate (the "Private
     Certificates")

Dear Ladies and Gentlemen:

                In connection with our purchase of Private Certificates, the
undersigned certifies to each of the parties to whom this letter is addressed
that it is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act")) as follows:

1.      It owned and/or invested on a discretionary basis eligible securities
        (excluding affiliate's securities, bank deposit notes and CD's, loan
        participations, repurchase agreements, securities owned but subject to a
        repurchase agreement and swaps), as described below:

        Date: ______________, 20__ (must be on or after the close of its most
        recent fiscal year)

        Amount: $ _____________________; and

2.      The dollar amount set forth above is:

        a.      greater than $100 million and the undersigned is one of the
                following entities:

        (x)     [ ] an insurance company as defined in Section 2(13) of the
                Act/1/; or

        (y)     [ ] an investment company registered under the Investment
                Company Act or any business development company as defined in
                Section 2(a)(48) of the Investment Company Act of 1940; or

----------
/1/     A purchase by an insurance company for one or more of its separate
        accounts, as defined by Section 2(a)(37) of the Investment Company Act
        of 1940, which are neither registered nor required to be registered
        thereunder, shall be deemed to be a purchase for the account of such
        insurance company.

                                      F-2-1

<PAGE>

                (z)     [ ] 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; or

                (aa)    [ ] a plan (i) established and maintained by a state,
                        its political subdivisions, or any agency or
                        instrumentality of a state or its political
                        subdivisions, the laws of which permit the purchase of
                        securities of this type, for the benefit of its
                        employees and (ii) the governing investment guidelines
                        of which permit the purchase of securities of this type;
                        or

                (bb)    [ ] a business development company as defined in Section
                        202(a)(22) of the Investment Advisers Act of 1940; or

                (cc)    [ ] a corporation (other than a U.S. bank, savings and
                        loan association or equivalent foreign institution),
                        partnership, Massachusetts or similar business trust, or
                        an organization described in Section 501(c)(3) of the
                        Internal Revenue Code; or

                (dd)    [ ] a U.S. bank, savings and loan association or
                        equivalent foreign institution, which has an audited net
                        worth of at least $25 million as demonstrated in its
                        latest annual financial statements; or

                (ee)    [ ] an investment adviser registered under the
                        Investment Advisers Act; or

        b.      [ ] greater than $10 million, and the undersigned is a
                broker-dealer registered with the SEC; or

        c.      [ ] less than $ 10 million, and the undersigned is a
                broker-dealer registered with the SEC and will only purchase
                Rule 144A securities in transactions in which it acts as a
                riskless principal (as defined in Rule 144A); or

        d.      [ ] less than $100 million, and the undersigned is an investment
                company registered under the Investment Company Act of 1940,
                which, together with one or more registered investment companies
                having the same or an affiliated investment adviser, owns at
                least $100 million of eligible securities; or

        e.      [ ] less than $100 million, and the undersigned is an entity,
                all the equity owners of which are qualified institutional
                buyers.

                The undersigned further certifies that it is purchasing a
Private Certificate for its own account or for the account of others that
independently qualify as "Qualified Institutional Buyers" as defined in Rule
144A. It is aware that the sale of the Private Certificate is being made in
reliance on its continued compliance with Rule 144A. It is aware that the
transferor may rely on the exemption from the provisions of Section 5 of the Act
provided by Rule 144A. The undersigned understands that the Private Certificate
may be resold, pledged or transferred only to (i) a person reasonably believed
to be a Qualified Institutional Buyer that purchases for its own

                                      F-2-2

<PAGE>

account or for the account of a Qualified Institutional Buyer to whom notice is
given that the resale, pledge or transfer is being made in reliance in Rule
144A, or (ii) an institutional "accredited investor," as such term is defined
under Rule 501 of the Act in a transaction that otherwise does not constitute a
public offering.

                The undersigned agrees that if at some future time it wishes
to dispose of or exchange the Private Certificate, it will not transfer or
exchange the Private Certificate to a Qualified Institutional Buyer without
first obtaining a Rule 144A and Related Matters Certificate in the form hereof
from the transferee and delivering such certificate to the addressees hereof.
Prior to making any transfer of the Private Certificate, if the proposed
Transferee is an institutional "accredited investor," the transferor shall
obtain from the transferee and deliver to the addressees hereof an Investment
Letter in the form attached to the Trust, Pooling and Servicing Agreement, dated
as of March 1, 2003, among Structured Asset Mortgage Investments Inc., Wells
Fargo Bank Minnesota, National Association, Thornburg Mortgage Home Loans, Inc.,
Deutsche Bank National Trust Company, as Trustee and Deutsche Bank Trust Company
Delaware, pursuant to Certificates were issued.

                The undersigned certifies that it either: (i) is not acquiring
the Private Certificate directly or indirectly by, or on behalf of, an employee
benefit plan or other retirement arrangement which is subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended, and/or section 4975
of the Internal Revenue Code of 1986, as amended, or (ii) the proposed transfer
and/or holding of a Private Certificate and the servicing, management and/or
operation of the Trust and its assets: (I) will not result in any prohibited
transaction which is not covered under a prohibited transaction exemption,
including, but not limited to, Prohibited Transaction Exemption ("PTE") 84-14,
PTE 91-38, PTE 90-1, PTE 95-60, PTE 96-23 and (II) will not give rise to any
additional fiduciary duties on the part of the Seller, the Master Servicer, any
Servicer, the Securities Administrator or the Trustee.

                If the Purchaser proposes that its Certificates be registered
in the name of a nominee on its behalf, the Purchaser has identified such
nominee below, and has caused such nominee to complete the Nominee
Acknowledgment at the end of this letter.

Name of Nominee (if any):

                                      F-2-3

<PAGE>

                IN WITNESS WHEREOF, this document has been executed by the
undersigned who is duly authorized to do so on behalf of the undersigned
Eligible Purchaser on the ____ day of ___________, 20___.

                                                Very truly yours,

                                                [PURCHASER]

                                                By:
                                                    -------------------------
                                                    (Authorized Officer)

                                                [By:
                                                    -------------------------
                                                    Attorney-in-fact]

                                      F-2-4

<PAGE>

                             Nominee Acknowledgment

                The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.

                                                [NAME OF NOMINEE]

                                                By:
                                                    -------------------------
                                                    (Authorized Officer)

                                                [By:
                                                    -------------------------
                                                    Attorney-in-fact]

                                      F-2-5

<PAGE>

                                                                       EXHIBIT G

                           FORM OF CUSTODIAL AGREEMENT

                THIS CUSTODIAL AGREEMENT (as amended and supplemented from time
to time, the "Agreement'), dated as of _______ __, 20__, by and among DEUTSCHE
BANK NATIONAL TRUST COMPANY, as trustee (including its successors under the
Trust, Pooling and Servicing Agreement defined below, the "Trustee"), STRUCTURED
ASSET MORTGAGE INVESTMENTS INC., as company (together with any successor in
interest, the "Company"), WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as
master servicer and securities administrator (together with any successor in
interest or successor under the Trust, Pooling and Servicing Agreement referred
to below, the "Master Servicer"), THORNBURG MORTGAGE HOME LOANS, INC.
("Thornburg") or (the "Mortgage Loan Seller") and _____________________________,
as custodian (together with any successor in interest or any successor appointed
hereunder, the "Custodian").

                                WITNESSETH THAT:

                WHEREAS, pursuant to the Trust, Pooling and Servicing Agreement,
dated as of March 1, 2003 (the "Trust, Pooling and Servicing Agreement'), among
Structured Asset Mortgage Investments Inc., Wells Fargo Bank Minnesota, National
Association, Thornburg Mortgage Home Loans, Inc., Deutsche Bank National Trust
Company, as Trustee and Deutsche Bank Trust Company Delaware, Thornburg Mortgage
Securities Trust 2003-2 was formed (the "Trust"), the Trust issued Thornburg
Mortgage Securities Trust, Mortgage Pass-Through Certificates, Series 2003-2,
and the Trust purchased those certain one- to four-family, first lien, hybrid
and adjustable interest rate mortgage loans (the "Mortgage Loans"); and

                WHEREAS, the Custodian has agreed to act as agent for the
Trustee for the purposes of receiving and holding certain documents and other
instruments delivered by the Company or the Master Servicer under the Trust,
Pooling and Servicing Agreement and the Servicers under their respective
Servicing Agreements, all upon the terms and conditions and subject to the
limitations hereinafter set forth;

                NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Trustee, the Company, the
Master Servicer and the Custodian hereby agree as follows:

                                   ARTICLE I.
                                   DEFINITIONS

                Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned in the Trust, Pooling and Servicing Agreement,
unless otherwise required by the context herein.

                                       G-1

<PAGE>

                                   ARTICLE II.
                          CUSTODY OF MORTGAGE DOCUMENTS

                Section 2.1. Custodian to Act as Agent: Acceptance of Mortgage
Files. The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges (subject to any exceptions noted [in the Certification
referred to in Section 2.3] [in the report attached hereto] receipt of the
Mortgage Files relating to the Mortgage Loans identified on the schedule
attached hereto (the "Mortgage Files") and declares that it holds and will hold
such Mortgage Files as agent for the Trustee, in trust, for the use and benefit
of the Trust and all present and future Certificateholders.

                Section 2.2. Recordation of Assignments. If at any time required
pursuant to the provisions of Section 2.01 of the Trust, Pooling and Servicing
Agreement, the Custodian shall deliver all applicable assignments to the Company
for the purpose of recording it in the appropriate public office for real
property records, and the Company, at no expense to the Custodian, shall
promptly cause to be recorded in the appropriate public office for real property
records each such assignment of Mortgage and, upon receipt thereof from such
public office, shall return each such assignment of Mortgage to the Custodian.

                Section 2.3. Review of Mortgage Files.

                (a)     [If not previously delivered by the Trustee] On
or prior to the Closing Date, in accordance with Section 2.02 of the Trust,
Pooling and Servicing Agreement, the Custodian shall deliver to the Trustee an
Initial Certification in the form of Exhibit C-1 to the Trust, Pooling and
Servicing Agreement evidencing receipt (subject to any exceptions noted therein)
of a Mortgage File for each of the Mortgage Loans listed on the Schedule
attached hereto (the "Mortgage Loan Schedule").

                (b)     [If not previously delivered by the Trustee] Within 90
days of the Closing Date, the Custodian agrees, for the benefit of
Certificateholders, to review, in accordance with the provisions of Section 2.02
of the Trust, Pooling and Servicing Agreement, each such document, and shall
deliver to the Trustee an Interim Certification in the form of Exhibit C-2 to
the Trust, Pooling and Servicing Agreement to the effect that all such documents
have been executed and received and that such documents relate to the Mortgage
Loans identified on the Mortgage Loan Schedule, except for any exceptions listed
on Schedule A attached to such Interim Certification. The Custodian shall be
under no duty or obligation to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face.

                (c)     [If not previously delivered by the Trustee] Not later
than 180 days after the Closing Date, the Custodian shall determine whether all
the documents required to be in the Mortgage Files when delivered to it as
provided in Section 2.02 of the Trust, Pooling and Servicing Agreement and
deliver to the Trustee, the Mortgage Loan Seller, the Seller and the Master
Servicer a Final Certification substantially in the form of Exhibit C-3 to the
Trust, Pooling and Servicing Agreement.

                                       G-2

<PAGE>

                (d)     [If applicable] In reviewing the Mortgage Files as
provided herein and in the Trust, Pooling and Servicing Agreement, the Custodian
shall make no representation as to and shall not be responsible to verify (i)
the validity, legality, enforceability, due authorization, recordability,
sufficiency or genuineness of any of the documents included in any Mortgage File
or (ii) the collectibility, insurability, effectiveness or suitability of any of
the documents in any Mortgage File.

                Upon receipt of written request from the Trustee, the Custodian
shall as soon as practicable supply the Trustee with a list of all of the
documents relating to the Mortgage Loans then contained in the Mortgage Files.

                Section 2.4. Notification of Breaches of Representations and
Warranties. Upon discovery by the Custodian of a breach of any representation or
warranty made by the Company or the Mortgage Loan Seller as set forth in the
Trust, Pooling and Servicing Agreement with respect to a Mortgage Loan relating
to a Mortgage File, the Custodian shall give prompt written notice to the
Company, the Mortgage Loan Seller, the related Servicer and the Trustee.

                Section 2.5. Custodian to Cooperate: Release of Mortgage Files.
Upon receipt of written notice from the Trustee that the Mortgage Loan Seller
has repurchased a Mortgage Loan pursuant to the Trust, Pooling and Servicing
Agreement, and that the purchase price therefore has been deposited in the
Master Servicer Collection Account or the Distribution Account, then the
Custodian agrees to promptly release to the Mortgage Loan Seller the related
Mortgage File.

                Upon the Custodian's receipt of a request for release (a
"Request for Release") substantially in the form of Exhibit D to the Trust,
Pooling and Servicing Agreement signed by a Servicing Officer of the related
Servicer stating that it has received payment in full of a Mortgage Loan or that
payment in full will be escrowed in a manner customary for such purposes, the
Custodian agrees promptly to release to the related Servicer the related
Mortgage File. The Mortgage Loan Seller shall deliver to the Custodian and the
Custodian agrees to accept the Mortgage Note and other documents constituting
the Mortgage File with respect to any Substitute Mortgage Loan.

                From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Insurance Policy, the Master Servicer shall cause to the extent
required in the related Servicing Agreement, the related Servicer to deliver to
the Custodian a Request for Release signed by a Servicing Officer requesting
that possession of all of a Mortgage File be released to the related Servicer
and certifying as to the reason for such release and that such release will not
invalidate any insurance coverage provided in respect of the Mortgage Loan under
any of the Insurance Policies. Upon receipt of the foregoing, the Custodian
shall deliver the Mortgage File to the related Servicer. As required by the
related Servicing Agreement, the Master Servicer shall cause the related
Servicer to return each released Mortgage File or any document therein to the
Custodian when the need therefor by the related Servicer no longer exists,
unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Master Servicer
Collection Account or the Distribution Account or (ii) the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as

                                       G-3

<PAGE>

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 related Servicer has delivered to the Custodian a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery.

                At any time that a Servicer is required to deliver to the
Custodian a Request for Release, the Master Servicer shall cause the Servicer to
deliver two copies of the Request for Release if delivered in hard copy or the
Servicer may furnish such Request for Release electronically to the Custodian,
in which event the Servicing Officer transmitting the same shall be deemed to
have signed the Request for Release. In connection with any Request for Release
of a Mortgage File because of a repurchase of a Mortgage Loan, such Request for
Release shall be accompanied by an assignment of mortgage, without recourse,
from the Trustee to the Mortgage Loan Seller and the related Mortgage Note shall
be endorsed without recourse by the Trustee and be returned to the Mortgage Loan
Seller. In connection with any Request for Release of a Mortgage File because of
the payment in full of a Mortgage Loan, such Request for Release shall be
accompanied by a certificate of satisfaction or other similar instrument to be
executed by or on behalf of the Trustee and returned to the related Servicer.

                Section 2.6. Assumption Agreements. In the event that any
assumption agreement or substitution of liability agreement is entered into with
respect to any Mortgage Loan subject to this Agreement in accordance with the
terms and provisions of the Trust, Pooling and Servicing Agreement, the Master
Servicer, to the extent provided in the related Servicing Agreement, shall cause
the related Servicer to notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which shall be added to
the related Mortgage File and, for all purposes, shall be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting parts thereof.

                                  ARTICLE III.
                            CONCERNING THE CUSTODIAN

                Section 3.1. Custodian a Bailee and Agent of the Trustee. With
respect to each Mortgage Note, Mortgage and other documents constituting each
Mortgage File which are delivered to the Custodian, the Custodian is exclusively
the bailee and agent of the Trustee and the Trust and has no instructions to
hold any Mortgage Note or Mortgage for the benefit of any person other than the
Trustee, the Trust and the Certificateholders and undertakes to perform such
duties and only such duties as are specifically set forth in this Agreement.
Except upon compliance with the provisions of Section 2.5 of this Agreement, no
Mortgage Note, Mortgage or Mortgage File shall be delivered by the Custodian to
the Company, the Servicers or the Master Servicer or otherwise released from the
possession of the Custodian.

                Section 3.2. [Reserved.]

                Section 3.3. Custodian May Own Certificates. The Custodian in
its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Custodian.

                                       G-4

<PAGE>

                Section 3.4. Thornburg to Pay Custodian's Fees and Expenses.
Thornburg, in its capacity as Servicer of a substantial portion of the Mortgage
Loans, and pursuant to a letter agreement between Thornburg and the Custodian
dated the date hereof, covenants and agrees to pay to the Custodian from time to
time, and the Custodian shall be entitled to, reasonable compensation for all
services rendered by it in the exercise and performance of any of the powers and
duties hereunder of the Custodian, and Thornburg will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement or advance as may arise from
its negligence or bad faith or to the extent that such cost or expense is
indemnified by the Trust pursuant to the Trust, Pooling and Servicing Agreement.
In the event that Thornburg fails to pay the Custodian as provided in such
letter agreement, the Custodian shall be entitled to reimbursement from the
Trust as provided in Section 9.05 of the Trust, Pooling and Servicing Agreement.

                Section 3.5. Custodian May Resign; Trustee May Remove Custodian.
The Custodian may resign from the obligations and duties hereby imposed upon it
as such obligations and duties relate to its acting as Custodian of the Mortgage
Loans. Upon receiving such notice of resignation, the Trustee shall either take
custody of the Mortgage Files itself and give prompt notice thereof to the
Company, the Master Servicer, Thornburg and the Custodian, or promptly appoint a
successor Custodian, reasonably acceptable to Thornburg and the Master Servicer,
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Custodian and one copy to the successor Custodian. If
the Trustee shall not have taken custody of the Mortgage Files and no successor
Custodian shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Custodian may
petition any court of competent jurisdiction for the appointment of a successor
Custodian.

                The Trustee may remove the Custodian at any time with the
consent of the Master Servicer and Thornburg. In such event, the Trustee shall
appoint, or petition a court of competent jurisdiction to appoint, a successor
Custodian hereunder. Any successor Custodian shall be a depository institution
subject to supervision or examination by federal or state authority, shall be
able to satisfy the other requirements contained in Section 3.7 and shall be
unaffiliated with any Servicer, Thornburg or the Company.

                Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5 shall
become effective upon acceptance of appointment by the successor Custodian. The
Trustee shall give prompt notice to the Company, Thornburg and the Master
Servicer of the appointment of any successor Custodian. No successor Custodian
shall be appointed by the Trustee without the prior written approval of
Thornburg and the Master Servicer.

                Section 3.6. Merger or Consolidation of Custodian. Any Person
into which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party,

                                       G-5

<PAGE>

or any Person succeeding to the business of the Custodian, shall be the
successor of the Custodian hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.

                Section 3.7. Representations of the Custodian. The Custodian
hereby represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.

                                   ARTICLE IV.
                            MISCELLANEOUS PROVISIONS

                Section 4.1. Notices. All notices, requests, consents and
demands and other communications required under this Agreement or pursuant to
any other instrument or document delivered hereunder shall be in writing and,
unless otherwise specifically provided, may be delivered personally, by telegram
or telex, or by registered or certified mail, postage prepaid, return receipt
requested, at the addresses specified on the signature page hereof (unless
changed by the particular party whose address is stated herein by similar notice
in writing), in which case the notice will be deemed delivered when received.

                Section 4.2. Amendments. No modification or amendment of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by all parties hereto, and none of the Company, Thornburg the
Master Servicer nor the Trustee shall enter into any amendment hereof except as
permitted by the Trust, Pooling and Servicing Agreement. The Trustee shall give
prompt notice to the Custodian of any amendment or supplement to the Trust,
Pooling and Servicing Agreement and furnish the Custodian with written copies
thereof.

                Section 4.3. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

                Section 4.4. Recordation of Agreement. 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 public recording office or elsewhere,
such recordation to be effected by the Company and at the Trust's expense on
direction by the Trustee, but only upon direction accompanied by an Opinion of
Counsel reasonably satisfactory to the Company to the effect that the failure to
effect such recordation is likely to materially and adversely affect the
interests of the Certificateholders.

                For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.

                                       G-6

<PAGE>

                Section 4.5. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.

                                       G-7

<PAGE>

                IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.

Address:                                        DEUTSCHE BANK NATIONAL TRUST
                                                COMPANY, as Trustee
1761 East St. Andrew Place
Santa Ana, California 92705
                                                By:
                                                   -----------------------------
Attention:                                         Name:
Telecopy:                                          Title:
Confirmation:

Address:                                        STRUCTURED ASSET MORTGAGE
                                                INVESTMENTS, INC.
383 Madison Avenue
New York, New York 10179
                                                By:
                                                   -----------------------------
                                                   Name:
                                                   Title:

Address:                                        WELLS FARGO BANK MINNESOTA,
                                                NATIONAL ASSOCIATION, as
9062 Old Annapolis Road                         Master Servicer
Columbia, Maryland 21045

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

Address:
                                                _________________________,
                                                as Custodian
9062 Old Annapolis Road
Columbia, Maryland 21045

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

                                                THORNBURG MORTGAGE HOME
                                                LOANS, INC.
Address:
                                                By:
                                                   -----------------------------
150 Washington Avenue; Suite 302                   Name:
Santa Fe, New Mexico 87501                         Title:

                                       G-8

<PAGE>

STATE OF                    )
                            ) ss:
COUNTY OF                   )

                On the__ day of _______ 20__ before me, a notary public in and
for said State, personally appeared _______________, known to me to be a
_________________of Deutsche Bank National Trust Company, 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 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

[SEAL]

                                       G-9

<PAGE>

STATE OF                    )
                            ) ss:
COUNTY OF                   )

                On the __ day of ______ 20__ before me, a notary public in and
for said State, personally appeared _________________, known to me to be an
_______ of Wells Fargo Bank Minnesota, National Association, 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 national banking association, and
acknowledged to me that such national banking association 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

[SEAL]

                                      G-10

<PAGE>

STATE OF                    )
                            ) ss:
COUNTY OF                   )

                On the __ day of _______ 20__ before me, a notary public in and
for said State, personally appeared _________________, known to me to be a
_________________ of Structured Asset Mortgage Investments Inc., one of the
corporations 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

[SEAL]

                                      G-11

<PAGE>

STATE OF                    )
                            ) ss:
COUNTY OF                   )

                On the __ day of _______ 20__ before me, a notary public in and
for said State, personally appeared ____________________, known to me to be a
__________________ of Wells Fargo Bank Minnesota, National Association, one of
the corporations 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

[SEAL]

                                      G-12

<PAGE>

STATE OF                    )
                            ) ss:
COUNTY OF                   )

                On the __ day of _______ 20__ before me, a notary public in and
for said State, personally appeared ____________, known to me to be a
_____________________ of Thornburg Mortgage Home Loans, Inc., one of the
corporations 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

[SEAL]

                                      G-13

<PAGE>

STATE OF                    )
                            ) ss:
COUNTY OF                   )

                On the __ day of _______ 20__ before me, a notary public in and
for said State, personally appeared ____________________, known to me to be a
____________________ of ___________________________, as Custodian, one of the
corporations 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

[SEAL]

                                      G-14

<PAGE>

                                                                       EXHIBIT H

                   LIST OF SERVICERS AND SERVICING AGREEMENTS

                                Primary Servicers

                1.      Amended and Restated Correspondent Loan Purchase
Agreement, dated as of March 25, 2002, between Thornburg Mortgage Home Loans,
Inc. ("Thornburg") and First Republic Bank ("First Republic"), including the
related Transfer Notice, dated as of March 26, from Thornburg to First Republic.

                2.      Amended and Restated Correspondent Loan Purchase
Agreement, dated as of March 25, 2002, between Thornburg and Lighthouse
Community Bank ("Lighthouse"), including the related Transfer Notice, dated as
of March 26, 2003, from Thornburg to Lighthouse.

                3.      Amended and Restated Correspondent Loan Purchase
Agreement, dated as of March 21, 2002, between Thornburg and Colonial Savings,
F.A. ("Colonial"), including the related Transfer Notice, dated as of March 26,
2003, from Thornburg to Colonial.

                4.      (a) Servicing Agreement, dated as of March 1, 2002,
between Thornburg Mortgage Home Loans, Inc. ("Thornburg"), as seller and
servicer, and Wells Fargo Bank Minnesota, National Association, as master
servicer ("Wells Fargo"), (b) Amendment to Servicing Agreement, dated as of
December 1, 2002, between Thornburg, as seller and servicer, and Wells Fargo, as
master servicer, (c) the Subservicing Acknowledgement Agreement, dated as of
March 1, 2002, between Thornburg, as servicer, and Cenlar FSB, as sub-servicer
("Cenlar"), and (d) the Amendment to Sub-Servicing Acknowledgment Agreement,
dated as of December 1, 2002, between Thornburg, as servicer, and Cenlar FSB, as
sub-servicer, including the related Transfer Notice, dated as of March 26, 2003,
from Thornburg, as seller, to Thornburg, as servicer, and Cenlar FSB, as
sub-servicer.

                5.      (a) Mortgage Flow Purchase, Sale & Servicing Agreement,
dated as of December 23, 2002, by and among Thornburg Mortgage Home Loans, Inc.,
Bishop's Gate Residential Mortgage Trust (formerly known as Cendant Residential
Mortgage Trust) and Cendant Mortgage Corporation and (b) Assignment, Assumption
and Recognition Agreement, dated of March 1, 2003, by and among Thornburg
Mortgage Securities Trust 2003-2, as assignee, Thornburg Mortgage Home Loans,
Inc., as assignor, Bishop's Gate Residential Mortgage Trust (formerly known as
Cendant Residential Mortgage Trust), as a seller, and Cendant Mortgage
Corporation, as servicer and a seller, and acknowledged by Wells Fargo Bank
Minnesota, National Association, as master servicer, and Deutsche Bank National
Trust Company, as trustee.

                6.      (a) Master Servicing Agreement, dated as of May 1, 2001,
between Thornburg Mortgage Home Loans, Inc. and Morgan Stanley Dean Witter
Credit Corporation and (b) Amendment to Master Servicing Agreement, dated
January 22, 2003, between Thornburg Mortgage Home Loans, Inc. and Morgan Stanley
Dean Witter Credit Corporation, as reconstituted pursuant to a Reconstituted
Servicing Agreement, dated as of April 3, 2003, by and

                                       H-1

<PAGE>

among Thornburg Mortgage Home Loans, Inc., as seller, and Morgan Stanley Dean
Witter Credit Corporation, as servicer, and acknowledged by Wells Fargo Bank
Minnesota, National Association, as master servicer, and Deutsche Bank National
Trust Company, as trustee.

                7.      Master Servicing Agreement, dated as of February 1,
2003, between Thornburg Mortgage Home Loans, Inc. and as reconstituted pursuant
to a Reconstituted Servicing Agreement, dated as of April 3, 2003, by and among
Thornburg Mortgage Home Loans, Inc., as seller, and Wells Fargo Home Mortgage,
Inc., as servicer, and acknowledged by Wells Fargo Bank Minnesota, National
Association, as master servicer, and Deutsche Bank National Trust Company, as
trustee.

                   Primary Servicers under Sub-Master Servicer

                1.      Amended and Restated Master Mortgage Loan Purchase
Agreement, dated as of June 1, 1997, by and between Thornburg Mortgage Asset
Corporation and Merrill Lynch Credit Corporation, including the related Transfer
Notice, dated as of March 27, 2003, from Thornburg Mortgage Home Loans, Inc. to
Cendant Mortgage Corporation.

                2.      (a) Seller's Warranties and Servicing Agreement, dated
as of October 28, 1996 between Goldman Sachs Mortgage Company, predecessor in
interest to Thornburg Mortgage Asset Corporation, and First Nationwide Mortgage
Corporation ("First Nationwide") and (b) Amendment to Seller's Warranties and
Servicing Agreement between First Nationwide and Thornburg Mortgage Asset
Corporation, dated as of December 1, 1998, including the related Transfer
Notice, dated as of March 27, 2003, from Thornburg Mortgage Home Loans, Inc. to
First Nationwide.

                3.      (a) Asset Purchase Agreement, dated March 24, 1998, by
and between NationsBank N.A., as successor to NationsBank of Virginia, N.A., not
in its individual capacity but solely as Trustee for Ryland Mortgage Securities
Corporation, Mortgage Participation Securities 1993-8, and Fleet Mortgage Group,
Inc., and Thornburg Mortgage Asset Corporation and (b) Amendment to Asset
Purchase Agreement and Servicing Agreement between Fleet Mortgage Group, Inc.
and Thornburg Mortgage Asset Corporation, dated as of December 1, 1998,
including the related Transfer Notice, dated as of March 27, 2003, from
Thornburg Mortgage Home Loans, Inc. to Washington Mutual Home Loans.

                4.      (a) Flow Warranties and Servicing Agreement, dated as of
January 2, 1998, by and between Republic Bank and Thornburg Mortgage Asset
Corporation and (b) Amendment to Flow Warranties and Servicing Agreement between
Republic Bank and Thornburg Mortgage Asset Corporation, dated as of December 1,
1998, including the related Transfer Notice, dated as of March 27, 2003, from
Thornburg Mortgage Home Loans, Inc. to Republic Bank.

                5.      (a) Mortgage Loan Sale, Warranties and Servicing
Agreement, dated as of February 1, 1998, by and between Boston Safe Deposit and
Trust Company and Thornburg Mortgage Asset Corporation and (b) Amendment to
Mortgage Loan Sale, Warranties and Servicing Agreement, between Boston Safe
Deposit and Trust Company and Thornburg

                                       H-2

<PAGE>

Mortgage Asset Corporation, dated December 18, 1998, including the related
Transfer Notice, dated as of March 27, 2003, from Thornburg Mortgage Home Loans,
Inc. to Dovenmuehle.

                6.      (a) Seller's Warranties and Servicing Agreement, dated
as of November 1, 1997, by and between Morgan Stanley Mortgage Capital, Inc.,
predecessor in interest to Thornburg Mortgage Asset Corporation, and BankUnited,
FSB and (b) Amendment to Seller's Warranties and Servicing Agreement between
BankUnited FSB and Thornburg Mortgage Asset Corporation, dated as of December 1,
1998, including the related Transfer Notice, dated as of March 27, 2003, from
Thornburg Mortgage Home Loans, Inc. to BankUnited, FSB.

                               Sub-Master Servicer

                1.      Submaster Servicing Agreement, dated as of March 1,
2003, by and between Wells Fargo Bank Minnesota, National Association, not in
its individual capacity but solely as master servicer, and Washington Mutual
Mortgage Securities Corp., and acknowledged by Thornburg Mortgage Securities
Trust 2003-2, Deutsche Bank National Trust Company, as trustee, and Thornburg
Mortgage Home Loans, Inc. ("Thornburg").

                                       H-3

<PAGE>

                                                                       EXHIBIT I

                        MORTGAGE LOAN PURCHASE AGREEMENT

                                       I-1

<PAGE>

                                                                       EXHIBIT J

                              CERTIFICATE OF TRUST

                                       OF

                   THORNBURG MORTGAGE SECURITIES TRUST 2003-2

                This Certificate of Trust of Thornburg Mortgage Securities Trust
2003-2 (the "Trust"), dated March 1, 2003 is being duly executed and filed by
the undersigned, as trustees to form a statutory trust under the Delaware
Statutory Trust Act, 12 Del. C. Sections 3801 et seq.

     1.   Name. The name of the statutory trust formed hereby is Thornburg
          Mortgage Securities Trust 2003-2.

     2.   Delaware Trustee. The name and the business address of the trustee of
          the Trust with a principal place of business in the State of Delaware
          and County of New Castle is Deutsche Bank Company Delaware, 1011
          Center Road, Suite 200, Wilmington, Delaware 19805.

                IN WITNESS WHEREOF, the undersigned being the only trustees of
the Trust, have executed this Certificate of Trust as of the date first-above
written.

                                           Deutsche Bank Trust Company Delaware,
                                           as Delaware Trustee

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

                                           Deutsche Bank National Trust Company,
                                           as Trustee

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

                                       J-1

<PAGE>

                                                                       EXHIBIT K

                       1998-1 MORTGAGE LOANS MORTGAGE FILE

        (a) the original Mortgage Note, endorsed to the order of Deutsche Bank
    National Trust Company, as trustee of Thornburg Mortgage Securities Trust
    2003-2, without recourse, or in blank and showing an unbroken chain of
    endorsements from the original payee thereof to the person endorsing it to
    the 2003-2 Trustee; or Lost Note Affidavits in lieu thereof;

        (b) either (1) the original Mortgage with evidence of recording thereon,
    (2) a copy of the Mortgage certified as a true copy by the related
    originator, a third party seller, a title closer or a settlement agent or an
    attorney where the original Mortgage has been transmitted for recording
    until such time as the original or certified copy is returned by the public
    recording office or (3) a copy of the Mortgage certified by the public
    recording office in those instances where the original recorded Mortgage has
    been retained by the public recording office or has been lost;

        (c) a copy of an assignment of the Mortgage to the Trustee or in blank,
    in a form for recording or filing, as may be appropriate in the state where
    the property is located;

        (d) a copy of each title insurance policy or, if such policy has not yet
    been issued, a commitment or binder therefor;

        (e) originals of each intervening assignment with evidence of recording
    thereon showing a complete chain of title from the originator to the
    indenture trustee of the 1998-1 Trust (the "Indenture Trustee"), or if the
    original of any such intervening assignment is unavailable, a copy certified
    as a true copy by the related originator, a third party seller, a title
    closer or a settlement agent or an attorney until such time as the original
    or a copy certified by the public recording office is returned;

        (f) originals of all assumptions and modification agreements, if any;

        (g) with respect to each Mortgage Loan secured by Additional Collateral,
    the original assignment of the related pledge agreement concerning such
    Additional Collateral, together with a copy of such related pledge
    agreement; a copy of each related UCC-1 filing statement, and an original
    UCC-3 filing statement, where applicable, together with a copy of all
    applicable and executed notices of assignment; and an original assignment of
    all related servicing agreements, mortgages, guarantees and other documents
    executed and delivered to the Indenture Trustee in connection with such
    Additional Collateral; and

        (h) with respect to each Cooperative Loan, the related Cooperative Note,
    the original security agreement, the proprietary lease or occupancy
    agreement, the related stock certificate and blank stock power and a copy of
    the original filed financing statement together with assignments to the
    Trustee in a form sufficient for filing;

                                       K-1

<PAGE>

        (i) Notwithstanding anything to the contrary contained in this Schedule
    K, in those instances where the public recording office retains the original
    Mortgage, the assignment of a Mortgage or the intervening assignments of the
    Mortgage after it has been recorded, the Indenture Trustee shall be deemed
    to have satisfied its obligations upon delivery to the Trustee of a true and
    correct copy of such Mortgage, such assignment or assignments of Mortgage,
    duly certified by the applicable recorder's office.

        (j) Notwithstanding anything to the contrary contained in this Schedule
    K, the Indenture Trustee shall retain possession, in its capacity as
    custodian under the Biparty Custodial Agreement dated June 26, 1997 between
    Deutsche Bank National Trust Company (formerly known as Bankers Trust
    Company of California N.A.) and Thornburg Mortgage, Inc. (formerly known as
    Thornburg Mortgage Asset Corporation), of the following Mortgage Loans:

                Loan ID                 Borrower Name
                ---------               ----------------
                600176445               Jorge Rodriguez
                600176617               John Tripp
                600187987               Lee McPeak
                600189588               Susan Jensen
                600189632               Steven Rogers
                600193817               Adolf Ebenstein
                600193951               Ian Gardner

                                       K-2

<PAGE>

                                                                       EXHIBIT L

                          FORM OF NOTICE OF EXERCISE OF
                       OPTIONAL SECURITIES PURCHASE RIGHT

                                                          Date__________________

[TRUSTEE]

[SECURITIES ADMINISTRATOR]

[RATING AGENCIES]

[MASTER SERVICER]

     Re: Thornburg Mortgage Securities Trust 2003-2

Ladies and Gentlemen:

        Pursuant to the terms of the Trust, Pooling and Servicing Agreement (the
"Agreement"), dated as of March 1, 2003, among Structured Asset Mortgage
Investments Inc., as seller, Wells Fargo Bank Minnesota, National Association,
as master servicer and securities administrator, Deutsche Bank National Trust
Company, as trustee, and Deutsche Bank Trust Company Delaware, as Delaware
trustee, we hereby give notice of our exercise of the Optional Securities
Purchase Right. We intend to purchase the outstanding Certificates (other than
the Class B-IO Certificates) on the Distribution Date in ______ 20__.
[We appoint __________________ as designee to purchase the Class [R-1][R-2]
Certificates.]

                                           Very truly yours,

                                           THORNBURG MORTGAGE HOME LOANS, INC.

                                           By:
                                              ---------------------------------
                                              Authorized Officer

                                       L-1

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