Document:

EXHIBIT 4.1
                                                                  EXECUTION COPY

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                      GREENPOINT MORTGAGE SECURITIES INC.,
                                    Sponsor,

                       GREENPOINT MORTGAGE FUNDING, INC.,
                                    Servicer,

                    GREENPOINT HOME EQUITY LOAN TRUST 2003-1,
                                     Issuer,

                                       and

                              THE BANK OF NEW YORK,
                                Indenture Trustee

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

                          SALE AND SERVICING AGREEMENT

                             Dated as of May 1, 2003

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

                        Variable Rate Asset-Backed Notes

                                  Series 2003-1

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                                TABLE OF CONTENTS

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ARTICLE I DEFINITIONS.............................................................................................1
       Section 1.01.      Definitions.............................................................................1
       Section 1.02.      Other Definitional Provisions...........................................................1
       Section 1.03.      Interest Calculations...................................................................2

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF NOTES; TAX TREATMENT................................2
       Section 2.01.      Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances
                          Under Credit Line Agreements............................................................2
       Section 2.02.      Further Encumbrance of Trust Property...................................................6
       Section 2.03.      Acceptance by Indenture Trustee; Certain Substitution of Mortgage Loans.................7
       Section 2.04.      Representations and Warranties Regarding the Servicer and the Sponsor...................8
       Section 2.05.      Representations and Warranties of the Sponsor Regarding the Mortgage
                          Loans; Removal of Certain Mortgage Loans...............................................11
       Section 2.06.      Covenants of the Sponsor...............................................................24
       Section 2.07.      Removal of Mortgage Loans at Election of Issuer........................................25
       Section 2.08.      Execution and Authentication of Notes..................................................26
       Section 2.09.      Tax Treatment..........................................................................26
       Section 2.10.      [Reserved].............................................................................26

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.......................................................26
       Section 3.01.      The Servicer...........................................................................26
       Section 3.02.      Collection of Certain Mortgage Loan Payments...........................................28
       Section 3.03.      Withdrawals from the Collection Account................................................30
       Section 3.04.      Maintenance of Hazard Insurance; Property Protection Expenses..........................30
       Section 3.05.      Assumption and Modification Agreements.................................................31
       Section 3.06.      Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans........31
       Section 3.07.      Indenture Trustee to Cooperate.........................................................32
       Section 3.08.      Servicing Compensation; Payment of Certain Expenses by Servicer........................33
       Section 3.09.      Annual Statement as to Compliance......................................................33
       Section 3.10.      Annual Servicing Report................................................................33
       Section 3.11.      Annual Opinion of Counsel..............................................................34
       Section 3.12.      Access to Certain Documentation and Information Regarding the Mortgage Loans...........34
       Section 3.13.      Maintenance of Certain Servicing Insurance Policies....................................34
       Section 3.14.      Reports to the SEC.....................................................................35
       Section 3.15.      Tax Returns............................................................................35
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       Section 3.16.      Information Required by the Internal Revenue Service Generally and
                          Reports of Foreclosures and Abandonments of Mortgaged Property.........................36
       Section 3.17.      Reporting Requirements.................................................................36
       Section 3.18.      Matters Relating to MERS Loans.........................................................36

ARTICLE IV SERVICING CERTIFICATE.................................................................................37
       Section 4.01.      Servicing Certificate..................................................................37
       Section 4.02.      Reserved...............................................................................38
       Section 4.03.      Reserved...............................................................................38
       Section 4.04.      Loan Data Remittance Report............................................................38
       Section 4.05.      Reserved...............................................................................38

ARTICLE V THE SERVICER AND THE SPONSOR...........................................................................38
       Section 5.01.      Liability of the Servicer and the Sponsor..............................................38
       Section 5.02.      Merger or Consolidation of, or Assumption of the Obligations of, the
                          Servicer or the Sponsor................................................................39
       Section 5.03.      Limitation on Liability of the Servicer and Others.....................................39
       Section 5.04.      Servicer Not to Resign.................................................................39
       Section 5.05.      Delegation of Duties...................................................................40
       Section 5.06.      Indemnification of the Trust by the Servicer...........................................40
       Section 5.07.      Indemnification of the Trust by the Sponsor............................................40
       Section 5.08.      Limitation on Liability of the Sponsor.................................................41

ARTICLE VI SERVICING TERMINATION.................................................................................41
       Section 6.01.      Events of Servicing Termination........................................................41
       Section 6.02.      Indenture Trustee to Act; Appointment of Successor.....................................45
       Section 6.03.      Notification to Noteholders and Residual Certificateholders............................46

ARTICLE VII TERMINATION..........................................................................................46
       Section 7.01.      Termination............................................................................46

ARTICLE VIII ADMINISTRATIVE DUTIES OF THE SERVICER...............................................................47
       Section 8.01.      Administrative Duties..................................................................47
       Section 8.02.      Records................................................................................49
       Section 8.03.      Additional Information to be Furnished to the Issuer...................................49

ARTICLE IX MISCELLANEOUS PROVISIONS..............................................................................49
       Section 9.01.      Amendment..............................................................................49
       Section 9.02.      Recordation of Agreement...............................................................51
       Section 9.03.      Limitation on Rights of Noteholders....................................................51
       Section 9.04.      Governing Law..........................................................................52
       Section 9.05.      Notices................................................................................52
       Section 9.06.      Severability of Provisions.............................................................52
       Section 9.07.      Assignment.............................................................................52
       Section 9.08.      Third-Party Beneficiaries..............................................................52
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       Section 9.09.      Counterparts...........................................................................53
       Section 9.10.      Effect of Headings and Table of Contents...............................................53
       Section 9.11.      Insurance Agreement....................................................................53
       Section 9.12.      Nonpetition Covenant...................................................................53
</TABLE>

EXHIBITS

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

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

EXHIBIT C-1:  FORM OF OFFICER'S CERTIFICATE:  PERMANENT RELEASE..............C-1

EXHIBIT C-2:  FORM OF OFFICER'S CERTIFICATE: TEMPORARY RELEASE...............C-2

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

EXHIBIT E:  FORM OF MORTGAGE NOTE (CLOSED END MORTGAGE LOANS)................E-1

EXHIBIT F:   FORM OF CERTIFICATE: LOAN LEVEL REPORTING.......................F-1

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            SALE  AND  SERVICING  AGREEMENT,  dated  as of  May  1,  2003,  (the
"AGREEMENT")  among  GREENPOINT  HOME  EQUITY  LOAN  TRUST  2003-1,  a  Delaware
statutory trust (the "ISSUER" or "TRUST"),  GREENPOINT MORTGAGE SECURITIES INC.,
a Delaware corporation (the "SPONSOR"), GREENPOINT MORTGAGE FUNDING, INC., a New
York corporation (the "SERVICER"),  and THE BANK OF NEW YORK, a New York banking
corporation, as Indenture Trustee (the "INDENTURE TRUSTEE").

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

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

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

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

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

                                    ARTICLE I

                                   DEFINITIONS

      Section 1.01.  DEFINITIONS.  All capitalized  terms used in this Agreement
and not otherwise  defined herein,  shall have the meanings  assigned thereto in
Annex A to the  Indenture  dated as of May 1, 2003,  between  the Issuer and the
Indenture  Trustee,  as the same may be amended  and  supplemented  from time to
time.

      Section 1.02. OTHER DEFINITIONAL PROVISIONS.

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

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

<PAGE>

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

      Section  1.03.  INTEREST   CALCULATIONS.   All  calculations  of  interest
hereunder  that are made in respect of the Principal  Balance of a Mortgage Loan
shall  be made on a daily  basis  using a  365-day  year.  All  calculations  of
interest on the Notes shall be made on the basis of the actual number of days in
an  Interest  Accrual  Period and a year  assumed  to  consist of 360 days.  The
calculation  of the  Servicing  Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day  months.  All dollar  amounts  calculated  hereunder
shall be rounded to the nearest  penny with  one-half of one penny being rounded
down.

                                   ARTICLE II

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

      Section  2.01.  CONVEYANCE OF MORTGAGE  LOANS;  RETENTION OF OBLIGATION TO
FUND ADVANCES UNDER CREDIT LINE AGREEMENTS.

      (a) In consideration of the Issuer's  delivery to or upon the order of the
Sponsor on the Closing Date of the net  proceeds  from the sale of the Notes and
the Residual  Certificates  and the other amounts to be distributed from time to
time to the Sponsor in accordance with the terms of this Agreement, the Sponsor,
concurrently  with the execution and delivery of this  Agreement,  hereby sells,
transfers,  assigns,  sets over and  otherwise  conveys to the  Issuer,  without
recourse (subject to Sections 2.03, 2.05 and 2.07), all of its right,  title and
interest in and to (i) each  Mortgage  Loan,  including  its  Principal  Balance
(including  any  Additional  Balances  related  thereto) and all  collections in
respect thereof received after the Cut-Off Date (excluding  Interest  Collection
due on or prior to the Cut-Off Date); (ii) property that secured a Mortgage Loan
that is acquired by foreclosure or deed in lieu of foreclosure; (iii) all of the
Sponsor's rights under the Purchase Agreement (including all representations and
warranties of the Seller contained therein); (iv) the Sponsor's rights under the
hazard  insurance  policies;  (v) the  Policy;  (vi)  the  Demand  Note  and the
Collection Account;  and (vii) any proceeds of the foregoing and any other Trust
Property  and all other  assets  included or to be included in the Trust for the
benefit  of  Noteholders,  the  Residual  Certificateholders  and  the  Insurer;
PROVIDED,  HOWEVER, neither the Indenture Trustee nor the Trust assumes or shall
assume the  obligation  under any Credit Line  Agreement  that  provides for the
funding of future  advances to the Mortgagor  thereunder,  and neither the Trust
nor the  Indenture  Trustee  shall be  obligated  or  permitted to fund any such
future advances.  With respect to the HELOC Mortgage Loans,  Additional Balances
shall be part of the related Principal Balance and are hereby transferred to the
Trust on the Closing Date pursuant to this Section 2.01,  and therefore  part of
the Trust Property. On or prior to the Closing Date, the Sponsor shall cause the
Insurer to deliver  the Policy to the  Indenture  Trustee for the benefit of the
Noteholders. It is the intention of the Sponsor that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Mortgage Loans and
other Trust Property from

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the Sponsor to the Issuer and that such sale should  constitute a valid transfer
and  assignment of the Mortgage Loans and other Trust Property to the Issuer and
the  beneficial  interest in and title to the Mortgage Loans and the other Trust
Property shall not be part of the Sponsor's estate in the event of the filing of
a bankruptcy petition by or against the Sponsor under any bankruptcy law. In the
event  that,  notwithstanding  the  intent  of the  Sponsor,  the  transfer  and
assignment  contemplated  hereby is held not to be a sale,  this Agreement shall
constitute a grant of a security  interest in the  property  referred to in this
Section 2.01 for the benefit of the Noteholders, the Residual Certificateholders
and the  Insurer.  To the extent  that the fair market  value of any  Additional
Balance  is  greater  than the cash  consideration  paid by the  Issuer for such
Additional Balance, the difference between such fair market value and the amount
of such cash consideration shall be deemed to be a capital  contribution made to
the  Issuer  by the  Sponsor.  To the  extent  that the  Sponsor  receives  cash
consideration for the entire fair market value of such Additional Balance on any
future date, any  corresponding  capital  contribution  that had previously been
deemed to have been made to the  Issuer by the  Sponsor  shall be deemed to have
been redeemed.

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

      (c) In connection  with such transfer and  assignment,  the Servicer shall
deliver  to the  Custodian  on behalf of the  Indenture  Trustee  the  following
documents  or  instruments  (each a "RELATED  DOCUMENT"  and  together  for each
Mortgage  Loan,  the "MORTGAGE  FILE") with respect to each Mortgage Loan on the
Closing Date:

            (i) with  respect to any  Closed End  Mortgage  Loan,  the  original
      Mortgage  Note   endorsed  in  blank  or  endorsed  with  the   following:
      "GreenPoint  Mortgage  Funding,  Inc. to the  GreenPoint  Home Equity Loan
      Trust  2003-1,  by The Bank of New York,  as trustee,  for the Home Equity
      Loan-Backed Notes,  Series 2003-1 without  recourse",  and with respect to
      any HELOC Mortgage Loan, the original Credit Line Agreement;

            (ii) for each  Mortgage  Loan that is not a MERS  Mortgage  Loan, an
      unsigned and un-notarized but otherwise  complete  original  Assignment of
      Mortgage in blank;

            (iii) (A) for each Mortgage  Loan that is not a MERS Mortgage  Loan,
      the  original  recorded  Mortgage or, if in  connection  with any Mortgage
      Loan, the original

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<PAGE>

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

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

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

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

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

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

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

      (d) Notwithstanding the characterization of the Notes as debt for federal,
state and local income and franchise tax purposes,  the parties hereto intend to
treat the  transfer of the

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<PAGE>

Mortgage Loans to the Trust as provided  herein as a sale,  for certain  non-tax
purposes,  of all the Sponsor's right, title and interest in and to the Mortgage
Loans,  whether  now  existing  or  hereafter  created,  and the other  property
described above and all proceeds  thereof.  In the event such transfer is deemed
not to be a sale for such purposes,  the Sponsor grants to the Trust, a security
interest in all of such party's  right,  title and interest in, to and under the
Mortgage  Loans,  whether  now  existing  or  hereafter  created,  and the other
property  described  above and all proceeds  thereof;  and this Agreement  shall
constitute a security agreement under applicable law.

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

      Neither the Custodian on behalf of the Indenture Trustee nor the Indenture
Trustee shall have any  responsibility for reviewing any Mortgage File except as
expressly provided in this Section 2.01. In reviewing any Mortgage File pursuant
to this  Section,  the  Indenture  Trustee  and the  Custodian  on behalf of the
Indenture  Trustee  shall have no  responsibility  for  determining  whether any
document is valid and binding, whether the text of any assignment or endorsement
is in proper or recordable  form  (except,  if  applicable,  to determine if the
Indenture  Trustee is the assignee or  endorsee),  whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,  or
whether  a blanket  assignment  is  permitted  in any  applicable  jurisdiction,
whether any Person  executing any document is authorized to do so or whether any
signature thereon is genuine,  but shall only be required to determine whether a
document has been  executed,  that it appears to be what it purports to be, and,
where applicable, that it purports to be recorded.

      Upon its receipt of written notice from the Servicer or the Insurer that a
Recordation  Event has occurred the  Indenture  Trustee shall take all necessary
steps to prepare and submit for  recordation  an  Assignment  of Mortgage  (or a
blanket  Assignment of Mortgage  covering multiple Mortgage Loans if the same is
permitted in any applicable  jurisdiction) at the expense of the Servicer or, if
the Servicer fails to pay such amounts or is no longer a party hereto,  pursuant
to Section 8.7(d)(ix) of the Indenture.

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<PAGE>

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

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

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

      Section 2.02. FURTHER ENCUMBRANCE OF TRUST PROPERTY.

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

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

                                       6
<PAGE>

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

      Section 2.03.  ACCEPTANCE BY INDENTURE  TRUSTEE;  CERTAIN  SUBSTITUTION OF
MORTGAGE LOANS.

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

      (b) The Issuer hereby  acknowledges its receipt of the Policy,  the Demand
Note and the Mortgage Loans,  and declares that the Indenture  Trustee holds and
will hold such  instruments,  and to the extent that any documents are delivered
to it  pursuant  to Section  2.01,  will hold such  documents,  and all  amounts
received by it thereunder  and  hereunder,  in trust,  upon the terms herein set
forth,  for the use and benefit of all present and future  Noteholders,  and the
Insurer. If the time to cure any defect in respect of any Mortgage Loan of which
the  Indenture  Trustee or the Insurer has  notified the Sponsor  following  the
review  pursuant  to  Section  2.01  has  expired  or if at any time any loss is
suffered by the Issuer or the Indenture  Trustee on behalf of the Noteholders or
the Insurer,  in respect of any Mortgage Loan as a result of (i) a defect in any
document  constituting  a part of its  Mortgage  File or (ii) an  Assignment  of
Mortgage  to the  Indenture  Trustee  not having  been  recorded  as required by
Section 2.01,  then on the next  succeeding  Business Day, the Sponsor shall (i)
substitute in lieu of such Mortgage Loan Eligible Substitute Mortgage Loans, and
deliver the Substitution  Amount applicable  thereto to the Servicer for deposit
in the  Collection  Account or (ii)  purchase  such  Mortgage Loan at a purchase
price equal to the Loan Purchase  Price  thereof,  which purchase price shall be
delivered to the Servicer for deposit in the Collection Account. Upon receipt of
any Mortgage Loan or of written  notification  signed by a Servicing  Officer to
the effect that the Loan Purchase Price in respect of a Defective  Mortgage Loan
has been deposited into the Collection Account, then as promptly as practicable,
the Indenture  Trustee shall execute such documents and  instruments of transfer
presented  by the  Sponsor,  in each case without  recourse,  representation  or
warranty,  and take such other  actions as shall  reasonably be requested by the
Sponsor to effect such  transfer by the Trust of such  Defective  Mortgage  Loan
pursuant to this Section. It is understood and agreed that the obligation of the
Sponsor to accept a transfer of a Defective  Mortgage  Loan and to either convey
an Eligible  Substitute  Mortgage  Loan or to make a deposit of any related Loan
Purchase

                                       7
<PAGE>

Price into the Collection  Account shall  constitute the sole remedy  respecting
such defect  available to  Noteholders  and the  Indenture  Trustee  against the
Sponsor.

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

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

      Section 2.04.  REPRESENTATIONS  AND WARRANTIES  REGARDING THE SERVICER AND
THE SPONSOR.

      (a) The Servicer  represents and warrants to the Indenture Trustee and the
Insurer that as of the Closing Date.

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

                                       8
<PAGE>

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

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

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

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

            (vi) The  Servicer is solvent and will not be rendered  insolvent by
      the  transactions  described  herein  and,  after  giving  effect  to  the
      transactions described herein, will not be left with an unreasonably small
      amount of  capital  with  which to engage  in the  ordinary  course of its
      business and the Servicer does not intend to incur,  nor does the Servicer
      believe  that it has  incurred,  debts  beyond its  ability to pay as they
      mature.  The Servicer does not contemplate the commencement of insolvency,
      liquidation or consolidation proceedings or the appointment of a receiver,
      liquidator,  conservator, Indenture Trustee or similar official in respect
      of the Servicer or any of its respective assets; and

            (vii) The  Servicer is a member of MERS in good  standing,  and will
      comply in all material  respects with the rules and  procedures of MERS in
      connection  with the servicing of the MERS  Mortgage  Loans for as long as
      such Mortgage Loans are registered with MERS.

The  representations  and  warranties  set forth in this Section  2.04(a)  shall
survive  the sale and  assignment  of the  Mortgage  Loans  to the  Trust.  Upon
discovery of a breach of any representations and warranties which materially and
adversely  affects the interests of the  Noteholders or the Insurer,  the person
discovering such breach shall give written notice within

                                       9
<PAGE>

five (5) days of discovery to the other parties and the Insurer.  Within 30 days
of its discovery or its receipt of notice of breach,  or, with the prior written
consent of a Responsible Officer of the Indenture Trustee and the Insurer,  such
longer period specified in such consent,  the Servicer shall cure such breach if
such  breach is curable  and no  material  adverse  effect  would  result to the
Insurer, the Trust or the Noteholders.

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

            (i) The Sponsor is a Delaware  corporation,  validly existing and in
      good  standing  under  the  laws of the  State  of  Delaware,  and has the
      statutory power to own its assets and to transact the business in which it
      is currently  engaged.  The Sponsor is duly  qualified to do business as a
      foreign  limited  liability  company  and  is in  good  standing  in  each
      jurisdiction  in which the  character of the business  transacted by it or
      any properties  owned or leased by it requires such  qualification  and in
      which the failure so to qualify  would have a material  adverse  effect on
      the business, properties, assets, or condition (financial or other) of the
      Sponsor;

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

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

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

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

            (vi) The Sponsor is solvent and will not be  rendered  insolvent  by
      the  transactions  described  herein  and,  after  giving  effect  to  the
      transactions described herein, will not be left with an unreasonably small
      amount of capital with which to engage in the

                                       10
<PAGE>

      ordinary  course of its business and the Sponsor does not intend to incur,
      nor does the  Sponsor  believe  that it has  incurred,  debts  beyond  its
      ability  to pay as they  mature.  The  Sponsor  does not  contemplate  the
      commencement of insolvency,  liquidation or  consolidation  proceedings or
      the appointment of a receiver, liquidator,  conservator, Indenture Trustee
      or similar  official  in respect of the  Sponsor or any of its  respective
      assets.

The  representations  and  warranties  set forth in this Section  2.04(b)  shall
survive  the sale and  assignment  of the  Mortgage  Loans  to the  Trust.  Upon
discovery of a breach of any representations and warranties which materially and
adversely  affects the interests of the  Noteholders or the Insurer,  the person
discovering  such breach shall give prompt  written notice to the other parties,
and the  Insurer.  Within 30 days of its  discovery  or its receipt of notice of
breach,  or,  with the prior  written  consent of a  Responsible  Officer of the
Indenture Trustee and the Insurer, such longer period specified in such consent,
the  Sponsor  shall cure such  breach if such  breach is curable and no material
adverse effect would result to the Insurer, the Trust or the Noteholders.

      Section 2.05.  REPRESENTATIONS AND WARRANTIES OF THE SPONSOR REGARDING THE
MORTGAGE LOANS; REMOVAL OF CERTAIN MORTGAGE LOANS.

      (a) The Sponsor hereby makes the following  representations and warranties
on which the Issuer is deemed to have relied in acquiring the Mortgage Loans and
upon  which  the  Insurer  is  deemed  to  rely  in  issuing  the  Policy.  Such
representations  and  warranties  speak as of the execution and delivery of this
Agreement,  as of the Closing Date with respect to the Mortgage  Loans and as of
the related  Transfer  Date with  respect to the  Eligible  Substitute  Mortgage
Loans,  but shall  survive the sale,  transfer,  and  assignment of the Mortgage
Loans to the Issuer and the pledge thereof to the Indenture  Trustee pursuant to
the Indenture,

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

            (ii) Each  Mortgage  Loan is being  serviced by the  Servicer and is
      being serviced in compliance with applicable law;

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

                                       11
<PAGE>

            (iv) Except with respect to liens released  immediately prior to the
      transfer herein contemplated, each Credit Line Agreement and each Mortgage
      Note and related Mortgage has not been assigned or pledged and immediately
      prior to the transfer and assignment herein contemplated, the Sponsor held
      good,  marketable  and  indefeasible  title to, and was the sole owner and
      holder of, each  Mortgage  Loan subject to no liens,  charges,  mortgages,
      claims,  participation interests,  equities, pledges or security interests
      of any nature, encumbrances or rights of others (collectively,  a "LIEN");
      the  Sponsor  has full  right and  authority  under all  governmental  and
      regulatory  bodies  having  jurisdiction  over the Sponsor,  subject to no
      interest or  participation  of, or agreement  with, any party, to sell and
      assign the same  pursuant  to this  Agreement;  and  immediately  upon the
      transfers  and  assignments  herein  contemplated,  the Sponsor shall have
      transferred  all of its right,  title and interest in and to each Mortgage
      Loan and the Trust will hold good,  marketable and indefeasible  title to,
      and be the sole owner of, each Mortgage Loan subject to no Liens;

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

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

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

            (viii) As of the Closing Date with respect to the Mortgage Loans and
      the  applicable  Transfer  Date with  respect to any  Eligible  Substitute
      Mortgage Loans, there is no proceeding pending or threatened for the total
      or  partial  condemnation  of  any  Mortgaged  Property,  nor  is  such  a
      proceeding currently occurring, and such property is in good repair and is
      undamaged by waste, fire, earthquake or earth movement,  windstorm, flood,
      other types of water damage,  tornado or other  casualty,  so as to affect
      adversely the

                                       12
<PAGE>

      value of the  Mortgaged  Property as security for the Mortgage Loan or the
      use for which the premises were intended;

            (ix) As of the Closing Date with  respect to the Mortgage  Loans and
      the  applicable  Transfer  Date with  respect to any  Eligible  Substitute
      Mortgage  Loans,  there are no mechanics' or similar liens or claims which
      have  been  filed  for  work,  labor or  material  affecting  the  related
      Mortgaged  Property which are, or may be, liens prior or equal to the lien
      of the related  Mortgage  and no rights are  outstanding  which could give
      rise to such liens,  except liens which are fully  insured  against by the
      title  insurance  policy or other title  protection  referred to in clause
      (xiv);

            (x) No  Minimum  Monthly  Payment  is more  than 59 days  delinquent
      (measured on a contractual basis);

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

            (xii)  The  related  Loan  Agreement  and the  related  Mortgage  at
      origination complied in all material respects with applicable local, state
      and federal  laws and  regulations,  including,  without  limitation,  all
      applicable  predatory and abusive lending laws,  usury,  truth-in-lending,
      real estate  settlement  procedures,  consumer  credit  protection,  equal
      credit  opportunity,  recording  or  disclosure  laws  applicable  to  the
      Mortgage Loans, and consummation of the transactions  contemplated hereby,
      including without limitation the receipt of interest, will not involve the
      violation of such laws;

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

            (xiv) A lender's policy of title insurance,  expressClose.com lender
      master  protection  program (standard  mortgage  guaranty) or a commitment
      (binder)  to issue the same or an  attorney's  certificate  or  opinion of
      title was effective on the date of the  origination  of each mortgage loan
      and each  such  policy or  certificate  or  opinion  of title is valid and
      remains in full force and effect;

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

            (xvi) As of the  Cut-Off  Date for the  Mortgage  Loans no more than
      approximately 0.46% of the Mortgage Loans (by Pool Balance) are secured by
      Mortgaged Properties located in one United States postal zip code;

                                       13
<PAGE>

            (xvii) The Combined  Loan-to-Value  Ratio for each Mortgage Loan was
      not in excess of 100%;

            (xviii) No selection procedure that identified the Mortgage Loans as
      being less  desirable or valuable  than other  comparable  mortgage  loans
      originated  or  acquired by the Sponsor  was  utilized  in  selecting  the
      Mortgage Loans for sale to the Trust; PROVIDED, HOWEVER, that the Mortgage
      Loans  were  selected  from  the  pool of  mortgage  loans  originated  in
      connection with the Sponsor's mortgage loan origination program;

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

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

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

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

            (xxiii) The terms of each  Mortgage  Note and each Mortgage have not
      been  impaired,  altered or modified in any  respect,  except by a written
      instrument which (if such instrument is secured by real property) has been
      recorded, if necessary, to protect the interest of the Noteholders and the
      Insurer  and  which  has been  delivered  to the  Indenture  Trustee.  The
      substance  of any such  alteration  or  modification  is  reflected on the
      related  Mortgage  Loan  Schedule  and has been  approved  by the  primary
      mortgage guaranty insurer, if any;

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

            (xxv)  The  weighted  average  remaining  term  to  maturity  of the
      Mortgage  Loans  on  a  contractual  basis  as  of  the  Cut-Off  Date  is
      approximately  210  months.  On each date that the Loan Rates  relating to
      HELOC Mortgage Loans have been adjusted,  interest rate adjustments on the
      HELOC  Mortgage Loans were made in compliance  with the related  Mortgages
      and Credit Line Agreement and  applicable law and all required  notices of
      interest rate  adjustments  were sent to each Mortgagor on a timely basis.
      Over

                                       14
<PAGE>

      the term of each  HELOC  Mortgage  Loan,  the Loan Rate may not exceed the
      related  Loan  Rate Cap,  if any.  The Loan Rate Cap for each of the HELOC
      Mortgage Loans is 18.000%.  With respect to the HELOC Mortgage Loans,  the
      margins range between 0.000% and 6.500% and the weighted average margin is
      approximately  2.631%  as of the  Cut-Off  Date.  The  Loan  Rates  on the
      Mortgage Loans range between 4.000% and 5.500%,  and the weighted  average
      Loan Rate on the Mortgage Loans is approximately 6.552%;

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

            (xxvii) No more than  approximately  36.36% (by Pool Balance) of the
      Mortgage  Loans  are  secured  by real  property  improved  by  individual
      condominium  units,  planned  development units,  manufactured  housing or
      two-to-four  family residences erected thereon,  and approximately  63.64%
      (by Pool Balance) of the Mortgage  Loans are secured by real property with
      a one-family residence erected thereon;

            (xxviii) Each Mortgage Note evidencing a Closed End Mortgage Loan is
      comprised of one original  promissory  note and each such  promissory note
      constitutes an  "instrument"  for purposes of Section  9-102(A)(47) of the
      UCC.  There is no obligation on the part of the Sponsor or any other party
      to make payments in addition to those made by the  Mortgagor  with respect
      to the Closed End Mortgage Loans;

            (xxix) The Credit Limits on the HELOC  Mortgage  Loans range between
      $5,000 and $500,000 with an average of approximately  $52,622. The average
      Credit Limit  Utilization  Rate  (weighted  by Credit  Limit) of the HELOC
      Mortgage Loans is  approximately  76.616%.  The Principal  Balances on the
      Mortgage  Loans range  between  approximately  $-45 and  $499,948  with an
      average of approximately $39,579.;

            (xxx)  Approximately  99.30% of the Mortgage Loans are second liens,
      and either (A) no  consent  for each  Mortgage  Loan was  required  by the
      holder of the related  senior  lien,  if any,  prior to the making of such
      Mortgage  Loan or (B) such  consent has been  obtained and is contained in
      the related Mortgage File;

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

                                       15
<PAGE>

      all proceeds of such Additional  Balances and all other property specified
      in the definition of "Trust" relating to the Additional Balances;

            (xxxii) As of the Closing  Date no  Mortgage  Loan is the subject of
      foreclosure  proceedings and, to the best of the Sponsor's  knowledge,  no
      obligor of any of the Mortgage Loans has filed for bankruptcy  protection.
      As of the applicable  Transfer Date, no Eligible  Substitute Mortgage Loan
      is  the  subject  of  foreclosure  proceedings  and,  to the  best  of the
      Sponsor's knowledge, no obligor of any of the Eligible Substitute Mortgage
      Loans has filed for bankruptcy protection.

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

            (xxxiv) Each Mortgage contains customary and enforceable  provisions
      which  render the rights and remedies of the holder  thereof  adequate for
      the realization  against the related Mortgaged Property of the benefits of
      the security, including (A) in the case of a Mortgage designated as a deed
      of trust,  by trustee's  sale and (B)  otherwise by judicial  foreclosure.
      Subject to applicable  state law, there is no homestead or other exemption
      available  to the  Mortgagor  which would  materially  interfere  with the
      rights to sell the Mortgaged  Property at a trustee's sale or the right to
      foreclose upon the related Mortgage;

            (xxxv) As of the Closing Date with respect to the Mortgage Loans and
      the  applicable  Transfer  Date with  respect to any  Eligible  Substitute
      Mortgage Loan,  except for events  permissible  under Section 3.05 of this
      Agreement, there is no default, breach, violation or event of acceleration
      existing  under any  Mortgage  or the related  Mortgage  Note and no event
      which,  with the passage of time or with notice and the  expiration of any
      grace or cure period,  would  constitute a default,  breach,  violation or
      event of acceleration; and the Sponsor has not waived any default, breach,
      violation or event of acceleration;

            (xxxvi) To the best  knowledge  of the  Sponsor,  all parties to the
      Mortgage Note and the Mortgage had legal  capacity to execute the Mortgage
      Note and the Mortgage and each  Mortgage  Note and Mortgage have been duly
      and properly executed by such parties;  Each Mortgage and Mortgage Note is
      the legal,  valid and binding  obligation of the related  Mortgagor and is
      enforceable  by the Issuer  against the Mortgagor in  accordance  with its
      terms,  except  only as such  enforcement  may be limited  by  bankruptcy,
      insolvency, reorganization, moratorium or other similar laws affecting the
      enforcement of creditors'  rights  generally and by law; There is only one
      originally  executed Mortgage Note or Credit Line Agreement and promissory
      Note, as applicable, for each Mortgage Loan;

            (xxxvii) As of the Cut-Off Date no more than approximately  2.37% of
      the Principal Balance of the Mortgage Loans represent  Mortgage Loans with
      respect to

                                       16
<PAGE>

      which the related  Mortgagor had a Credit Score of 600 or less at the time
      of origination or whose Credit Score was unavailable.

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

            (xxxix)  At the  time of  origination  of each  Mortgage  Loan,  the
      related prior lien was not more than 30 days delinquent.  Additionally, as
      of the Closing  Date,  no senior  mortgage  loan on the related  Mortgaged
      Property was more than 59 days delinquent;

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

            (xli)  If the  improvements  securing  a  Mortgage  Loan  were  in a
      federally  designated  special  flood  hazard  area  as  of  the  date  of
      origination, flood insurance to the extent required in Section 3.04 covers
      the related Mortgaged Property (either by coverage under the federal flood
      insurance program or by coverage by private insurers);

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

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

            (xliv) All amounts  received  after the Cut-Off Date with respect to
      the Mortgage  Loans to which the Sponsor is not entitled will be deposited
      into the  Collection  Account  within one  Business  Day after the Closing
      Date;

            (xlv)  Each  Mortgage  Loan  is  secured  by a  property  having  an
      appraised value as of origination of $9,300,000 or less;

            (xlvi) Except for events  permissible  under  Section  3.05(a)(x) of
      this  Agreement,  there are no defaults in complying with the terms of the
      Mortgage, and either (1) any taxes,  governmental  assessments,  insurance
      premiums,  water,  sewer  and  municipal  charges  or ground  rents  which
      previously  became due and owing have been paid, or (2) an escrow of funds
      has been  established  in an amount  sufficient to pay for every such item
      which  remains  unpaid and which has been  assessed but is not yet due and
      payable.  There are no defaults in complying  with the terms of any senior
      mortgage on the  related  Mortgaged  Property  that have not been cured by
      anyone other than the  Servicer,  except for any payment  defaults of less
      than 30 days.  Except  for  payments  in the  nature of  escrow  payments,
      including without limitation,  taxes and insurance  payments,  the Sponsor
      has not advanced funds, or induced, solicited or knowingly

                                       17
<PAGE>

      received  any  advance  of funds  by a party  other  than  the  Mortgagor,
      directly  or  indirectly,  for the  payment of any amount  required by the
      Mortgage Note,  except for interest accruing from the date of the Mortgage
      Note  or date of  disbursement  of the  Mortgage  proceeds,  whichever  is
      greater,  to the day which precedes by one month the Due Date of the first
      installment of principal and interest;

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

            (xlviii) No misrepresentation of a material fact or fraud in respect
      of the  origination,  modification  or amendment of any Mortgage  Loan has
      taken place on the part of any person, including,  without limitation, the
      related  Mortgagor,  any appraiser,  any builder or developer or any party
      involved in the origination of such Mortgage Loan;

            (xlix) With respect to the Mortgage Loans, the terms of the Mortgage
      Note and the Mortgage have not been  impaired,  altered or modified in any
      material respect,  except by a written  instrument which has been recorded
      or is in the  process of being  recorded,  if  necessary,  to protect  the
      interests of the Insurer and the Noteholders and which has been or will be
      delivered to the Indenture Trustee on behalf of the Trust, no Mortgage has
      been  satisfied,  cancelled  or  rescinded,  in whole or in part,  and the
      Mortgaged  Property  securing the Mortgage has not been  released from the
      lien of the Mortgage,  in whole or in part,  nor has any  instrument  been
      executed that would effect any such release, cancellation or rescission;

            (l) As of the Cut-Off  Date,  no Mortgage  Loan is more than 59 days
      delinquent in payment of principal and interest;

            (li) Except for Mortgage Loans that are delinquent for a time period
      less  than  that set  forth in (l)  above,  there is no  default,  breach,
      violation  or event of  acceleration  existing  under any  Mortgage or the
      related Mortgage Note and no event which, with the passage of time or with
      notice and the expiration of any grace or cure period,  would constitute a
      default,  breach,  violation  or event of  acceleration;  and  neither the
      Sponsor,  nor any other  entity  involved in  originating  or  servicing a
      Mortgage  Loan,  has waived any  default,  breach,  violation  or event of
      acceleration;

            (lii) None of the Mortgage Loans is a cooperative share mortgage;

            (liii) Each  appraisal of a Mortgage Loan that was used to determine
      the  appraised  value of the  related  Mortgaged  Property  was  conducted
      generally in  accordance  with the  Sponsor's  mortgage  loan  origination
      program(s) and customary  industry standards and included an assessment of
      the fair market value of the related mortgaged property at the time of the
      appraisal.  The Mortgage  File  contains an  appraisal  of the  applicable
      Mortgaged Property;

                                       18
<PAGE>

            (liv) All individual insurance policies contain a standard mortgagee
      clause naming the Servicer, its successors and assigns, as mortgagee.  All
      premiums  thereon have been paid.  Each  Mortgage  obligates the Mortgagor
      thereunder  to maintain  all such  insurance at the  Mortgagor's  cost and
      expense,  and upon the Mortgagor's failure to do so, authorizes the holder
      of the Mortgage to obtain and maintain such  insurance at the  Mortgagor's
      cost and expense and to seek reimbursement therefor from the Mortgagor;

            (lv) Any advances made after the date of  origination  of a Mortgage
      Loan  but  prior to the  Cut-Off  Date  have  been  consolidated  with the
      outstanding  principal  amount  secured by the related  Mortgage,  and the
      secured principal  amount,  as consolidated,  bears a single interest rate
      and single  repayment term  reflected on the Mortgage Loan  Schedule.  The
      consolidated  principal  amount  does not  exceed the  original  principal
      amount of the related Mortgage Loan;

            (lvi)  No  improvement  located  on or being  part of any  Mortgaged
      Property is in violation of any applicable  zoning law or regulation.  All
      inspections,  licenses and certificates required to be made or issued with
      respect to all occupied  portions of each  Mortgaged  Property  and,  with
      respect to the use and occupancy of the same,  including,  but not limited
      to,  certificates of occupancy and fire  underwriting  certificates,  have
      been made or obtained from the appropriate  authorities and such Mortgaged
      Property  is  lawfully   occupied   under  the   applicable  law  and  all
      improvements  which  were  included  for the  purpose of  determining  the
      appraised value of the Mortgaged Property lie wholly within the boundaries
      and building  restriction  lines of such property,  and no improvements on
      adjoining property encroach upon the Mortgage Property;

            (lvii) The  proceeds  of each fixed rate and balloon  Mortgage  Loan
      have been fully  disbursed  and there is no  obligation on the part of the
      mortgagee to make future advances  thereunder and any and all requirements
      as to  completion  of  any  on-site  or  off-site  improvements  and as to
      disbursement  of any escrow funds  therefor have been complied  with.  All
      costs,  fees and expenses  incurred in making,  closing or  recording  the
      Mortgage  Loans were paid and the  Mortgagor is not entitled to any refund
      of amounts paid or due under the Mortgage Note;

            (lviii) No Mortgage Loan has a shared appreciation feature, or other
      contingent interest feature;

            (lix) All parties which have had any interest in the Mortgage  Loan,
      whether as originator, mortgagee, assignee, pledgee or otherwise, are (or,
      during the period in which they held and disposed of such interest, were):
      (A)  organized  under  the  laws of such  state,  or (B)  qualified  to do
      business in such state,  or (C) federal  savings and loan  associations or
      national banks having  principal  offices in such state,  or (D) not doing
      business in such state so as to require qualification or licensing, or (E)
      not otherwise required or licensed in such state. To the best of Sponsor's
      knowledge,  all parties  which have had any interest in the Mortgage  Loan
      were in compliance with any and all applicable  licensing  requirements of
      the laws of the state  wherein the  Mortgaged  Property is located or were
      not required to be licensed in such state;

                                       19
<PAGE>

            (lx) Each document or instrument in the related  Mortgage File is in
      a form  generally  acceptable to prudent  mortgage  lenders that regularly
      originate or purchase  mortgage loans comparable to the Mortgage Loans for
      sale to prudent  investors in the secondary market that invest in mortgage
      loans such as the Mortgage Loans;

            (lxi)  Each  original  Mortgage  was  recorded  and  all  subsequent
      assignments  of the original  Mortgage  (other than the  assignment to the
      Indenture  Trustee)  have been recorded in the  appropriate  jurisdictions
      wherein  such  recordation  is  necessary  to perfect the lien  thereof as
      against creditors of the Sponsor, or is in the process of being recorded;

            (lxii) No Mortgage Loan was originated under a buydown plan;

            (lxiii) No Mortgage Loan is subject to the  requirements of the Home
      Ownership and Equity  Protection  Act of 1994 ("HOEPA") or is in violation
      of any state or municipal law comparable to HOEPA;

            (lxiv) The Servicer for each Mortgage Loan will accurately and fully
      report its borrower  credit files to all three  credit  repositories  in a
      timely manner;

            (lxv) No  proceeds  from any  Mortgage  Loan were  used to  purchase
      single-premium credit insurance policies;

            (lxvi) No Mortgage  Loan has a  prepayment  penalty term longer than
      five years after its origination;

            (lxvii) Each Mortgage Loan  conforms,  and all Mortgage Loans in the
      aggregate conform, in all material respects,  to the descriptions  thereof
      set forth in the Prospectus Supplement;

            (lxviii) Each Mortgage Loan was originated on or after February 10,
      2003;

            (lxix)  The  Sponsor  represents  and  warrants  that  the  Servicer
      currently operates or actively participates in an on-going business (A) to
      originate  single  family  mortgage  loans  ("LOANS"),  and/or (B) to make
      periodic  purchases of Loans from  originators  or sellers,  and/or (C) to
      issue  and/or  purchase  securities  or bonds  supported  by the Loans,  a
      portion of which Loans are made to borrowers who are:

                  (a) low-income  families (families with incomes of 80% or less
                  of area median  income)  living in low-income  areas (a census
                  tract or block  numbering area in which the median income does
                  not exceed 80 percent of the area median income); or

                  (b) very low-income  families (families with incomes of 60% or
                  less of area median income).

            (lxx) Each Mortgage contains a provision for the acceleration of the
      payment of the unpaid  principal  balance of the related  Mortgage Loan in
      the event the

                                       20
<PAGE>

      related  Mortgaged  Property  is sold or  transferred  without  the  prior
      consent of the mortgagee thereunder;

            (lxxi) Each Mortgage Loan was originated substantially in accordance
      with Sponsor's  underwriting  criteria,  which conform to the underwriting
      criteria set forth in the Prospectus Supplement.

            (lxxii)  There exists no  violation  of any local,  state or federal
      environmental law, rule or regulation in respect of any Mortgaged Property
      which violation has or could have a material  adverse effect on the market
      value of such Mortgaged Property.  Sponsor has no knowledge of any pending
      action or proceeding  directly  involving any such  Mortgaged  Property in
      which  compliance  with any  environmental  law,  rule or regulation is in
      issue; and, to the best of Sponsor's knowledge, nothing further remains to
      be done to  satisfy  in full all  requirements  of each such law,  rule or
      regulation  constituting  a  prerequisite  to the use and enjoyment of any
      such Mortgaged Property;

            (lxxiii)  The Sponsor has caused or will cause to be  performed  any
      and all acts  required to be performed to preserve the rights and remedies
      of the  Indenture  Trustee in any  insurance  policies  applicable  to the
      Mortgage Loans including,  without limitation, any necessary notifications
      of   insurers,   assignment   of  policies  or  interests   therein,   and
      establishments  of  co-insured,  joint loss payee and mortgagee  rights in
      favor of the Indenture Trustee;

            (lxxiv) The related Mortgage Note is not and has not been secured by
      any  collateral,  pledged account or other security except the lien of the
      corresponding Mortgage;

            (lxxv)  There is no  obligation  on the part of the  Sponsor  or any
      other party to make payments in addition to those made by the Mortgagor;

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

            (lxxvii) Each  Mortgagor has executed a statement to the effect that
      such Mortgagor has received all disclosure  materials including the notice
      of the right of cancellation or rescission required by applicable law with
      respect to the making of the Mortgage  Loan and any waiver of any right of
      cancellation  or  rescission  exercised by the Mortgagor was in accordance
      with applicable law and is binding on the Mortgagor;

            (lxxviii)  The security  interest  created  pursuant to Section 2.01
      hereof is a valid and continuing security interest (as defined in the UCC)
      in favor of the Issuer in the property sold,  transferred,  assigned,  set
      over and  otherwise  conveyed  from the Sponsor to the Issuer  pursuant to
      this Agreement, which security interest is prior to all other Liens and is
      enforceable as such against creditors of and purchasers from the Sponsor;

                                       21
<PAGE>

            (lxxix)  The  Sponsor  has not  authorized  the filing of and is not
      aware of any  financing  statements  against  the Sponsor  that  include a
      description  of  collateral  covering  the  property  sold,   transferred,
      assigned,  set over and otherwise  conveyed from the Sponsor to the Issuer
      pursuant to this Agreement other than any financing  statement relating to
      the security  interest  granted to the Issuer  hereunder that has not been
      terminated;

            (lxxx) The Sponsor is not aware of any  judgment or tax lien filings
      against it;

            (lxxxi)  None of the  Mortgage  Notes  has any  marks  or  notations
      indicating that they have been pledged,  assigned or otherwise conveyed to
      any Person other than the Issuer;

            (lxxxii)  The pool tape from  which the  selection  of the  Mortgage
      Loans  being  acquired  on the  Closing  Date  was made  available  to the
      accountants  that  are  providing  a  comfort  letter  to the  Insurer  in
      connection with the Prospectus Supplement and with respect to the Mortgage
      Loans  as of the  Closing  Date,  the  information  on the  pool  tape was
      complete  and accurate as of its date and  included a  description  of the
      same Mortgage  Loans that are described on the Schedule of Mortgage  Loans
      and the payments due thereunder as of the Closing Date;

            (lxxxiii) With respect to each Mortgage Loan, the payments  required
      of the related  Mortgagor  will be such that the Mortgage  Loan will fully
      amortize over its amortization term; and

            (lxxxiv)  The  sale,  transfer,  assignment  and  conveyance  of the
      Mortgage  Loans by the  Sponsor  to the  Issuer  pursuant  to the Sale and
      Servicing  Agreement is not subject to and will not result in any tax, fee
      or governmental  charge payable by the Seller, the Sponsor,  the Issuer or
      the  Indenture  Trustee  to  any  federal,   state  or  local  governments
      ("TRANSFER  TAXES") other than Transfer Taxes which have or will have been
      paid by the Sponsor as due; PROVIDED,  that in the event that the Trust or
      the Indenture Trustee receives actual notice of any Transfer Taxes arising
      out of the transfer,  assignment or conveyance of the Mortgage  Loans,  on
      written  demand  by the  Issuer  or the  Indenture  Trustee,  or upon  the
      Sponsor's  otherwise  being  given  notice  thereof  by the  Issuer or the
      Indenture Trustee, the Sponsor shall pay, and otherwise indemnify and hold
      the  Issuer,  the  Indenture  Trustee  and  the  Insurer  harmless,  on an
      after-tax  basis,  from and against any and all Transfer  Taxes,  it being
      understood that the Noteholders, the Issuer, the Indenture Trustee and the
      Insurer shall have no obligation to pay any such Transfer Taxes.

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

                                       22
<PAGE>

deemed a breach of the applicable  representation  or warranty.  Notwithstanding
the foregoing,  a breach of any of the  representations and warranties set forth
in  clauses  (lxiii)  through  (lxvi)  of this  Section  2.05  will be deemed to
materially and adversely affect the value of the related Mortgage Loan.

      (b) It is understood  and agreed that the  representations  and warranties
set forth in this Section 2.05 shall survive delivery of the respective Mortgage
Files to the Indenture  Trustee  pursuant to Section 2.01 and the termination of
the rights and  obligations  of the  Servicer  pursuant to Section 5.04 or 6.02.
Upon  discovery  by the  Sponsor,  the  Servicer,  the Insurer or a  Responsible
Officer  of  the  Indenture  Trustee  of  a  breach  of  any  of  the  foregoing
representations  and  warranties,  without  regard to any  limitation  set forth
therein  concerning the knowledge of the Sponsor as to the facts stated therein,
which  materially  and  adversely  affects  the  interests  of the  Trust or the
Noteholders or the Insurer in the related Mortgage Loans, the party  discovering
such breach  shall give prompt  written  notice to the other  parties and to the
Insurer.  Within  90 days of its  discovery  or its  receipt  of  notice of such
breach,  the  Sponsor  shall use all  reasonable  efforts to cure such breach or
shall,  not later than the Business Day next  preceding  the Payment Date in the
month following the Collection  Period in which any such cure period expired (or
such later date that is acceptable  to the  Indenture  Trustee or the Insurer as
evidenced by their written  consents),  either (a) repurchase such Mortgage Loan
from  the  Trust at the  Loan  Purchase  Price  or (b)  substitute  an  Eligible
Substitute  Mortgage  Loan,  each in the same  manner  and  subject  to the same
conditions as set forth in Section 2.03 and the  representations  and warranties
set forth in Section 2.04; PROVIDED,  HOWEVER, that the cure for any breach of a
representation  and  warranty  relating to the  characteristics  of the Mortgage
Loans in the  aggregate  shall be a repurchase of or  substitution  for only the
Mortgage Loans necessary to cause such  characteristics to be in compliance with
the related representation and warranty. Upon accepting such transfer and making
any required deposit into the Collection  Account or substitution of an Eligible
Substitute  Mortgage Loans, as the case may be, the Sponsor shall be entitled to
receive an instrument  of  assignment or transfer from the Indenture  Trustee to
the same  extent as set forth in Section  2.03 with  respect to the  transfer of
Mortgage  Loans  under  that  Section.  The  Insurer  shall be  notified  of any
substitution of an Eligible Substitute Mortgage Loan.

      It is  understood  and  agreed  that  the  obligation  of the  Sponsor  to
repurchase a Mortgage  Loan as to which a breach has occurred and is  continuing
and deposit in the  Collection  Account the Loan Purchase Price or to substitute
an Eligible  Substitute  Mortgage Loan, as the case may be, shall constitute the
sole remedy against the Sponsor respecting such breach available to Noteholders,
the  Indenture  Trustee  on behalf of  Noteholders  and the  Insurer;  PROVIDED,
HOWEVER,  that the Sponsor shall defend and indemnify the Indenture Trustee, the
Insurer and the Noteholders  against all reasonable costs and expenses,  and all
losses, damages, claims and liabilities,  including reasonable fees and expenses
of counsel and the amount of any settlement entered into with the consent of the
Sponsor (such consent not to be  unreasonably  withheld),  which may be asserted
against or incurred by any of them as a result of any third-party action arising
out of any breach of any such  representation and warranty.  Notwithstanding the
foregoing,  with regard to any breach of the  representation  and  warranty  set
forth in  Section  2.05(a)(xxxi),  the  Sponsor  shall pay to the Trust the Loan
Purchase Price.

      The  Sponsor  does  hereby  assign  to  the  Trust  the  benefits  of  the
representations  and  warranties  made to it with respect to the Mortgage  Loans
under the Mortgage Loan Purchase

                                       23
<PAGE>

Agreement and the Trust may exercise the rights with respect thereto relating to
a Mortgage  Loan,  including  the right to require  repurchase in the event such
Mortgage Loan is not repurchased by the Sponsor

      Section 2.06. COVENANTS OF THE SPONSOR. The Sponsor hereby covenants that:

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

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

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

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

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

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

      (g) NO NOTIFICATION OF MORTGAGORS. The Sponsor hereby agrees not to notify
Mortgagors of the transfer of the Mortgage Loans to the Trust unless required by
the terms of the Mortgage Loans or applicable law.

                                       24
<PAGE>

      Section 2.07. REMOVAL OF MORTGAGE LOANS AT ELECTION OF ISSUER.  Subject to
the conditions set forth below and Section 8.2 of the Indenture, the Issuer may,
but shall not be obligated to, require the removal of Mortgage Loans,  from time
to time, as of the close of business on a Payment Date (each, a "REMOVAL DATE").
On the tenth Business Day (the "REMOVAL  NOTICE DATE") prior to the Removal Date
designated  in such notice,  the Issuer shall give the  Indenture  Trustee,  the
Insurer and the Servicer a notice of the proposed  removal that  contains a list
of the Mortgage Loans in the Pool to be removed.  Such removal of Mortgage Loans
shall be permitted upon satisfaction of the following conditions:

            (i) A Rapid Amortization Event shall not have occurred;

            (ii) On the Removal Date,  the  Overcollateralization  Amount (after
      giving effect to the removal of the Mortgage Loans proposed to be removed)
      equals or exceeds the Specified Overcollateralization Amount;

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

            (iv) On or before the Removal Date,  the Issuer shall have delivered
      to the Indenture Trustee a revised Mortgage Loan Schedule,  reflecting the
      proposed transfer and the Removal Date, and the Servicer shall have marked
      the  Electronic  Ledger to show that the  Mortgage  Loans  removed  are no
      longer included in the Pool;

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

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

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

            (viii) The Insurer  shall have been given an  opportunity  to review
      any Mortgage Loans proposed to be removed by the Trust.

                                       25
<PAGE>

            (ix) The Issuer shall have  delivered a  certificate  in the form of
      Exhibit C-1 hereto to the Indenture Trustee.

      Upon  receiving the requisite  information  from the Issuer,  the Servicer
shall perform in a timely manner those acts required of it, as specified  above.
Upon  satisfaction  of the above  conditions,  on the Removal Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Issuer the Mortgage File
for each Mortgage  Loan being so  transferred,  and the Indenture  Trustee shall
execute and deliver to the Issuer such other documents prepared by the Issuer as
shall be reasonably  necessary to remove such Mortgage  Loans from the Pool. Any
such  removal of Mortgage  Loans shall be without  recourse,  representation  or
warranty by or of the Indenture  Trustee or the Trust to the Issuer.  The review
right given to the Insurer in clause (viii),  above,  must be completed prior to
the Removal Date.

      Section  2.08.  EXECUTION  AND  AUTHENTICATION  OF  NOTES.  The  Indenture
Trustee,  on behalf of the Issuer, has caused to be executed,  authenticated and
delivered  to or upon the order of the  Sponsor,  in  exchange  for the  Issuer,
concurrently  with the sale,  assignment and conveyance to the Indenture Trustee
of the Issuer,  one Class of Notes in authorized  denominations and the Residual
Certificates, evidencing the ownership of the Issuer.

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

      Section 2.10. [RESERVED].

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

      Section 3.01. THE SERVICER.

      (a) The Servicer is hereby authorized to act as agent for the Trust and in
such capacity  shall manage,  service,  administer  and make  collections on the
Mortgage Loans and perform the other actions under this Agreement.  The Servicer
shall service and administer the

                                       26
<PAGE>

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

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

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

PROVIDED,  FURTHER,  that such senior lien does not secure a note that  provides
for negative amortization.

      The Servicer may also,  without prior approval from the Rating Agencies or
the Insurer,  increase the Credit Limits on HELOC  Mortgage  Loans provided that
(i) new  appraisals  are obtained and the Combined  Loan-to-Value  Ratios of the
HELOC Mortgage Loans after giving effect to such increase are less than or equal
to the Combined  Loan-to-Value  Ratios of the  Mortgage  Loans as of the Cut-Off
Date and (ii) such  increases  are  consistent  with the  Servicer's  credit and
collection policies.  No material change or departure from the Servicer's credit
and  collection  policies with respect to any Mortgage  Loans as in effect as of
the Closing Date shall be  permitted  without the prior  written  consent of the
Insurer.

      In addition,  the Servicer may agree to changes in the terms of a Mortgage
Loan at the  request of the  Mortgagor;  PROVIDED  that (i) such  changes do not
materially and adversely affect

                                       27
<PAGE>

the interests of Noteholders,  the Residual  Certificateholders  or the Insurer,
(ii) such changes are consistent with prudent and customary business practice as
evidenced  by a  certificate  signed by a  Servicing  Officer  delivered  to the
Indenture  Trustee and the Insurer and (iii) the Rating Agencies and the Insurer
are promptly notified of the changes.

      In addition to the  foregoing,  the  Servicer  may solicit  Mortgagors  to
change any other terms of the related Mortgage Loans; PROVIDED that such changes
(i) do not  materially  and adversely  affect the interest of Noteholders or the
Insurer,  (ii) are consistent  with prudent and customary  business  practice as
evidenced  by a  certificate  signed by a  Servicing  Officer  delivered  to the
Indenture  Trustee and the Insurer and (iii) do not adjust the maturity  date of
such Mortgage  Loan past the date that is six months before the Final  Scheduled
Payment Date of the Notes.  Nothing herein shall limit the right of the Servicer
to solicit Mortgagors with respect to new loans (including  mortgage loans) that
are not Mortgage Loans.

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

      (b) In the event that the rights,  duties and  obligations of the Servicer
are terminated  hereunder,  any successor to the Servicer in its sole discretion
may,  to  the  extent  permitted  by  applicable  law,  terminate  the  existing
subservicer  arrangements  with any subservicer,  without charge,  or assume the
terminated   Servicer's  rights  under  such  subservicing   arrangements  which
termination or assumption will not violate the terms of such arrangements.

      Section 3.02. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.

      (a) Servicer shall make reasonable  efforts to collect all payments called
for under the terms and  provisions  of the Mortgage  Loans,  and shall,  to the
extent such  procedures  shall be consistent  with this  Agreement,  follow such
collection  procedures  as it follows  with  respect to home equity loans in its
servicing  portfolio  comparable  to the  Mortgage  Loans.  Consistent  with the
foregoing,  and without  limiting the generality of the foregoing,  the Servicer
may in its discretion  (i) waive any late payment charge or any assumption  fees
or other fees which may be collected in the  ordinary  course of servicing  such
Mortgage  Loans and (ii)  arrange with a Mortgagor a schedule for the payment of
interest due and unpaid;  PROVIDED that such  arrangement is consistent with the
Servicer's  policies  with  respect to the  Mortgage  Loans it owns or services;
PROVIDED,  FURTHER,  that  notwithstanding  such arrangement such Mortgage Loans
will be included in the  information  regarding  delinquent  Mortgage  Loans set
forth in the Servicing Certificate and monthly statement to Noteholders pursuant
to Section 4.01.

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

                                       28
<PAGE>

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

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

            (iii) Net Liquidation Proceeds;

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

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

            (vi) any amounts drawn under the Policy  pursuant to Section  8.4(f)
      of the  Indenture,  but  only to be  used  for the  payment  of the  items
      specified  in  Sections   8.7(d)(iii)  and  (vi)  of  the  Indenture,   as
      applicable;

            (vii) the amounts,  if any,  required to be deposited therein by the
      Sponsor pursuant to Section 2.05(b) hereof;

            (viii) any amounts drawn pursuant to the Demand Note;

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

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

      At the written  direction of the  Servicer,  the  Indenture  Trustee shall
invest funds in the Collection Account in Eligible Investments specified in such
written direction.  All income and gain realized from any investment in Eligible
Investments of funds in the  Collection  Account shall be for the benefit of the
Servicer and shall be subject to its withdrawal from time to time. The amount of
any losses incurred in respect of the principal  amount of any such  investments
shall be  deposited  in the  Collection  Account by the  Servicer out of its own
funds immediately as

                                       29
<PAGE>

realized. In the absence of written direction the Indenture Trustee shall invest
funds in the Collection Account as directed by the Sponsor.

      Section 3.03.  WITHDRAWALS FROM THE COLLECTION ACCOUNT. From time to time,
withdrawals  may be made from the  Collection  Account  by the  Servicer  or the
Indenture Trustee for the following purposes:

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

            (ii) To pay to the  Servicer  amounts on  deposit in the  Collection
      Account  that are not to be included  in the  distributions  and  payments
      pursuant to Section  8.7 of the  Indenture  to the extent  provided by the
      second to the last and the last paragraph of Section 3.02(b);

            (iii)  To  make  or  to  permit  the   Indenture   Trustee  to  make
      distributions and payments pursuant to Section 8.7 of the Indenture;

            (iv) Prior to the Collection  Period  preceding the  commencement of
      the Rapid  Amortization  Period,  to pay to the  Sponsor the amount of any
      Additional  Balances  related to HELOC Mortgage Loans included in the Pool
      as and when created during the related Collection Period;  PROVIDED,  that
      the  aggregate  amount so paid to the  Sponsor in  respect  of  Additional
      Balances with respect to the HELOC  Mortgage  Loans at any time during any
      Collection  Period  shall not exceed the amount of  Principal  Collections
      theretofore received for such Collection Period;

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

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

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

      Section  3.04.  MAINTENANCE  OF  HAZARD  INSURANCE;   PROPERTY  PROTECTION
EXPENSES.  The Servicer  shall cause to be  maintained  for each  Mortgage  Loan
hazard  insurance naming the Servicer or its successors or assigns as loss payee
thereunder  providing  extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements  securing such
Mortgage Loan from time to time or (ii) the combined  principal balance owing on
such  Mortgage Loan and any mortgage loan senior to such Mortgage Loan from time
to time. The Servicer shall also maintain on property acquired upon foreclosure,
or by deed in lieu of foreclosure, hazard insurance with extended coverage in an
amount which is at least equal to the lesser of (i) the maximum  insurable value
from time to time of the

                                       30
<PAGE>

improvements  which are a part of such  property or (ii) the combined  principal
balance  owing  on such  Mortgage  Loan and any  mortgage  loan  senior  to such
Mortgage  Loan at the time of such  foreclosure  or deed in lieu of  foreclosure
plus  accrued  interest and the  good-faith  estimate of the Servicer of related
Liquidation Expenses to be incurred in connection  therewith.  Amounts collected
by the Servicer  under any such  policies  shall be deposited in the  Collection
Account  to the  extent  called  for by  Section  3.02.  In cases  in which  any
Mortgaged  Property is located in a federally  designated flood area, the hazard
insurance to be  maintained  for the related  Mortgage  Loan shall include flood
insurance.  All such flood  insurance  shall be in such  amounts as are required
under  applicable  guidelines of the Federal Flood  Emergency  Act. The Servicer
shall be under no obligation to require that any Mortgagor  maintain  earthquake
or other  additional  insurance  and  shall be under  no  obligation  itself  to
maintain  any such  additional  insurance  on property  acquired in respect of a
Mortgage Loan,  other than pursuant to such  applicable  laws and regulations as
shall at any time be in force and as shall require such additional insurance. If
the Servicer shall obtain and maintain a blanket policy  consistent with prudent
industry  standards  insuring against hazard losses on all of the Mortgage Loans
in  an  aggregate  amount  prudent  under  industry  standards,   it  shall  (a)
conclusively  be deemed to have  satisfied its  obligations  as set forth in the
first  sentence  of this  Section  3.04 and (b) if there  shall have been a loss
which would have been covered by such policy,  deposit in the Collection Account
without  right of  reimbursement,  as the case may be, the amount not  otherwise
payable under the blanket policy because of any deductible clause.

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

      Section 3.06.  REALIZATION  UPON DEFAULTED  MORTGAGE LOANS;  REPURCHASE OF
CERTAIN   MORTGAGE  LOANS.  The  Servicer  shall  foreclose  upon  or  otherwise
comparably  convert  to  ownership  Mortgaged  Properties  securing  such of the
Mortgage  Loans as come into and continue

                                       31
<PAGE>

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

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

      Section 3.07.  INDENTURE  TRUSTEE TO COOPERATE.  On or before each Payment
Date,  the Servicer will notify the Indenture  Trustee of the payment in full of
the  Principal  Balance of any  Mortgage  Loan during the  preceding  Collection
Period,  which  notification  shall be by a certification  (which  certification
shall include a statement to the effect that all amounts  received in connection
with such payment which are required to be deposited in the  Collection  Account
pursuant to Section  3.02 have been so  deposited  or  credited)  of a Servicing
Officer.  Upon any such payment in full,  the Servicer is authorized to execute,
pursuant to the  authorization  contained in Section 3.01, if the assignments of
Mortgage have been recorded as required hereunder, an instrument of satisfaction
regarding  the related  Mortgage,  which  instrument  of  satisfaction  shall be
recorded by the Servicer if required by  applicable  law and be delivered to the
Person entitled  thereto.  It is understood and agreed that no expenses incurred
in  connection  with  such  instrument  of  satisfaction  or  transfer  shall be
reimbursed from amounts  deposited in the Collection  Account.  If the Indenture
Trustee is holding the Mortgage Files,  from time to time and as appropriate for
the servicing or  foreclosure  of any Mortgage  Loan, or in connection  with the
payment in full of the  Principal  Balance of any Mortgage  Loan,  the Indenture
Trustee  shall,  upon  request of the  Servicer  and  delivery to the  Indenture
Trustee of a Request for Release  substantially  in the form attached  hereto as
Exhibit C signed by a Servicing  Officer,  release the related  Mortgage File to
the Servicer and the  Indenture  Trustee shall  execute such  documents,  in the
forms provided by the Servicer,  as shall be necessary to the prosecution of any
such  proceedings or the taking of other servicing  actions.  Such trust receipt
shall obligate the Servicer to return the Mortgage File to the Indenture Trustee
when the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer  similar  to that  hereinabove  specified,  the trust  receipt  shall be
released by the Indenture Trustee.

      In order to  facilitate  the  foreclosure  of the  Mortgage  securing  any
Mortgage  Loan that is in default  following  recordation  of the  Assignment of
Mortgage in accordance with the provisions  hereof, the Indenture Trustee shall,
if so requested in writing by the Servicer, execute

                                       32
<PAGE>

an appropriate  assignment in the form provided to the Indenture  Trustee by the
Servicer  to assign such  Mortgage  Loan for the  purpose of  collection  to the
Servicer or to the related  subservicer (any such assignment shall unambiguously
indicate that the assignment is for the purpose of collection  only),  and, upon
such  assignment,  the Servicer will thereupon bring all required actions in its
own name and  otherwise  enforce the terms of the Mortgage  Loan and deposit the
Net  Liquidation  Proceeds,  exclusive of  Foreclosure  Profits,  received  with
respect  thereto in the  Collection  Account.  In the event that all  delinquent
payments  due under any such  Mortgage  Loan are paid by the  Mortgagor  and any
other  defaults are cured,  then the Servicer  shall,  within two Business Days,
reassign  such  Mortgage  Loan to the  Indenture  Trustee and return the related
Mortgage  File  to  the  place  where  it  was  being  maintained.   After  such
reassignment, the Servicer, if requested by such Residual Certificateholders and
if  offered  suitable   indemnification  and  reimbursement  for  expenses,   is
authorized  to seek a  deficiency  judgment  if  permitted  by law  against  the
Mortgagor  under  such  Liquidated  Mortgage  Loan  on  behalf  of the  Residual
Certificateholders  to the extent of any losses on  liquidation  of any Mortgage
Loan.

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

      Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE.

      (a) The Servicer  will deliver to the Indenture  Trustee,  the Insurer and
the Rating Agencies, on or before January 31 of each year, beginning January 31,
2004, an Officer's  Certificate  stating that (i) a review of the  activities of
the Servicer  during the  preceding  fiscal year (or such  shorter  period as is
applicable  in the case of the first report) and of its  performance  under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's  knowledge,  based on such review, the Servicer has fulfilled all
of its material  obligations  under this Agreement  throughout such fiscal year,
or, if there  has been a  default  in the  fulfillment  of any such  obligation,
specifying  each such  default  known to such  officer and the nature and status
thereof.

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

      Section 3.10.  ANNUAL  SERVICING  REPORT.  On or before January 31 of each
year,  beginning January 31, 2004, the Servicer,  at its expense,  shall cause a
firm of nationally

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<PAGE>

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

      Section 3.11.  ANNUAL OPINION OF COUNSEL.  On or before January 31 of each
year, beginning January 31, 2004, the Sponsor, at its expense,  shall deliver to
the  Indenture  Trustee  and the  Insurer  the  applicable  Opinion  of  Counsel
specified in Exhibit B hereto.

      Section 3.12. ACCESS TO CERTAIN  DOCUMENTATION  AND INFORMATION  REGARDING
THE MORTGAGE LOANS.

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

      (b) The Servicer  shall supply  information  in such form as the Indenture
Trustee shall  reasonably  request to the Indenture  Trustee and the Note Paying
Agent,  on or before the start of the  Determination  Date preceding the related
Payment Date, as is required in the Indenture  Trustee's  reasonable judgment to
enable the Note Paying Agent or the  Indenture  Trustee,  as the case may be, to
make  required  distributions  and  to  furnish  the  required  reports  to  the
Noteholders and to make any claim under the Policy.

      Section 3.13.  MAINTENANCE OF CERTAIN SERVICING  INSURANCE  POLICIES.  The
Servicer  shall  maintain,  at its own  expense,  a blanket  fidelity  bond (the
"FIDELITY  BOND")  and an errors  and  omissions  insurance  policy,  with broad
coverage with financially  responsible companies on all officers,  employees, or
other persons acting in any capacity with regard to the Mortgage Loans to handle
funds, money,  documents and papers relating to the Mortgage Loans. The Fidelity
Bond and  errors  and  omissions  insurance  policy  shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement,  fraud, errors and omissions and
negligent acts of such persons. Such Fidelity

                                       34
<PAGE>

Bond shall also protect and insure the  Servicer  against  losses in  connection
with the failure to maintain any insurance  policies  required  pursuant to this
Agreement  and the release or  satisfaction  of a Mortgage  Loan without  having
obtained  payment in full of the indebtedness  secured thereby.  No provision of
this Section 3.13 requiring the Fidelity Bond and errors and omissions insurance
policy shall diminish or relieve the Servicer from its duties and obligations as
set  forth in this  Agreement.  The  minimum  coverage  under  any such bond and
insurance policy shall be at least equal to the  corresponding  amounts required
by the Federal Home Loan Mortgage  Corporation in the Federal Home Loan Mortgage
Corporation's  Seller/Servicer's Guide. Upon request of the Indenture Trustee or
the Insurer,  the Servicer shall cause to be delivered to the Indenture  Trustee
or the  Insurer  a  certified  true copy of the  Fidelity  Bond and  errors  and
omissions  insurance policy and a statement from the surety and the insurer that
such Fidelity Bond and errors and omissions  insurance  policy shall in no event
be terminated or materially  modified  without thirty days' prior written notice
to the Indenture Trustee and the Insurer.

      Section 3.14.  REPORTS TO THE SEC. Within 15 days after each Payment Date,
the  Manager  shall,  on behalf of the Trust  and in  accordance  with  industry
standards,  file with the SEC via the  Electronic  Data  Gathering and Retrieval
System (EDGAR), a Form 8-K with a copy of the report of the Noteholders for such
Payment Date as an exhibit thereto. Prior to March 30, 2004 (and, if applicable,
prior to March 30 of each year),  the Manager shall,  on behalf of the Trust and
in accordance with industry  standards,  file with the SEC via EDGAR a Form 10-K
with  respect to the  Trust.  In  addition,  the  Sponsor  will cause its senior
officer in charge of securitization to execute the certification (the "Form 10-K
Certification")  required  pursuant  to Rile  13a-14  under the  Securities  and
Exchange Act of 1934, as amended,  and file the same with the SEC prior to March
30, 2004 (and if applicable,  prior to March 30 of each year). To the extent any
information  or  exhibits  required  to be  included  in the  Form  10-K are not
available by March 30, the Manager  shall,  on behalf of the Trust,  file one or
more  amended  Form  10-K's to include  such  missing  information  or  exhibits
promptly after receipt thereof by the Manager.  Promptly following the first day
legally permissible under applicable regulations and interpretations of the SEC,
the  Manager  shall,  on  behalf  of the Trust an in  accordance  with  industry
standards,  file with the SEC via EDGAR a Form 15 Suspension  Notification  with
respect to the Trust, if applicable.  Each of the Servicer,  the Sponsor and the
Indenture  Trustee agree to furnish to the Manager  promptly,  from time to time
upon request, such further information,  reports and financial statements within
its control  related to this  Agreement  and the  Mortgage  Loans as the Manager
reasonable deems  appropriate to prepare and file all necessary reports with the
SEC. The Manager shall have no responsibility to file any items other than thise
specified in this section.

      Section 3.15.  TAX RETURNS.  In accordance  with Section 2.09 hereof,  the
Servicer shall prepare and file any federal, state or local income and franchise
tax return for the Trust as well as any other applicable  return and apply for a
taxpayer  identification number on behalf of the Trust as provided in Article VI
of the Trust Agreement,  including, without limitation, forms 1099 and 1065. The
Sponsor shall treat the Mortgage Loans as its property for all federal, state or
local tax purposes and shall report all income earned thereon (including amounts
payable as fees to the Servicer) as its income for income tax  purposes.  In the
event  the  Trust  shall be  required  pursuant  to an  audit or  administrative
proceeding or change in applicable  regulations to file federal,  state or local
tax returns,  the Servicer  shall prepare and file or shall cause to be

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<PAGE>

prepared  and filed  any tax  returns  required  to be filed by the  Trust;  the
Indenture  Trustee  shall  promptly  sign such  returns and deliver such returns
after signature to the Servicer and such returns shall be filed by the Servicer.
The  Indenture  Trustee shall also prepare or shall cause to be prepared all tax
information required by law to be distributed to Noteholders.  In no event shall
the Indenture  Trustee or the Servicer be liable for any  liabilities,  costs or
expenses of the Trust, the Noteholders,  the Residual  Certificateholders or the
Note Owners arising under any tax law, including,  without limitation,  federal,
state or local income and  franchise or excise taxes or any other tax imposed on
or  measured  by income (or any  interest  or penalty  with  respect  thereto or
arising from a failure to comply therewith).

      Section  3.16.  INFORMATION  REQUIRED  BY  THE  INTERNAL  REVENUE  SERVICE
GENERALLY AND REPORTS OF FORECLOSURES  AND  ABANDONMENTS OF MORTGAGED  PROPERTY.
The Servicer shall prepare and deliver all federal and state information reports
when and as required by all  applicable  state and federal  income tax laws.  In
particular,  with respect to the requirement  under Section 6050J of the Code to
the effect that the Servicer shall make reports of foreclosures and abandonments
of any mortgaged  property for each year  beginning in 2003,  the Servicer shall
file reports relating to each instance  occurring  during the previous  calendar
year in which the Servicer (i) on behalf of the  Indenture  Trustee  acquires an
interest in any  Mortgaged  Property  through  foreclosure  or other  comparable
conversion in full or partial  satisfaction of a Mortgage Loan, or (ii) knows or
has reason to know that any Mortgaged  Property has been abandoned.  The reports
from  the  Servicer  shall  be in form  and  substance  sufficient  to meet  the
reporting requirements imposed by Section 6050J.

      Section 3.17. REPORTING REQUIREMENTS. For each Mortgage Loan, the Servicer
will  accurately  and fully report its borrower  credit files to each of Equifax
Credit Information  Services,  Inc.,  TransUnion,  LLC and Experion  Information
Solution, Inc. (or their successors) in a timely manner on a monthly basis.

      Section 3.18. MATTERS RELATING TO MERS LOANS.

      (a) The Servicer  further is  authorized  and  empowered by the  Indenture
Trustee  and the  Insurer,  on behalf of the  Noteholders,  the  Insurer and the
Indenture Trustee,  in its own name or in the name of the subservicer,  when the
Servicer  believes it  appropriate in its best judgment to register any Mortgage
Loan on the MERS  System,  or cause the  removal  from the  registration  of any
Mortgage  Loan on the MERS  System,  to execute  and  deliver,  on behalf of the
Indenture  Trustee,  the Insurer and the Noteholders or any of them, any and all
instruments of assignment and other comparable  instruments with respect to such
assignment or re-recording of a Mortgage in the name of MERS,  solely as nominee
for the Indenture Trustee and its successors and assigns.

      (b) In connection  with the sale and  assignment of any MERS Mortgage Loan
by the Sponsor to the  Issuer,  the  Sponsor  agrees that it will cause,  at the
Sponsor's  expense,  the MERS System to indicate that such  Mortgage  Loans have
been  assigned by the Sponsor to the Indenture  Trustee in  accordance  with the
Indenture  for the  benefit  of the Issuer  Secured  Parties  by  including  (or
deleting, in the case of Mortgage Loans which are repurchased in accordance with
this  Agreement) in such  computer  files the  information  required by the MERS
System  to  identify  the  series of the Notes  issued in  connection  with such
Mortgage Loans. The Sponsor further

                                       36
<PAGE>

agrees that it will not,  and will not permit the Seller or the Servicer to, and
the Seller and the  Servicer  agree  that they will not,  alter the  information
referenced in this  paragraph  with respect to any Mortgage Loan during the term
of this  Agreement  unless  and  until  such  Mortgage  Loan is  repurchased  in
accordance with the terms of this Agreement.  If at any time pursuant to Section
2.03,  2.05 or 2.07 the  Sponsor  repurchases  a  Mortgage  Loan  that is a MERS
Mortgage  Loan,  the Servicer shall either (i) cause MERS to execute and deliver
an assignment  of the Mortgage in recordable  form to transfer the Mortgage from
MERS  to  the  Sponsor  and  shall  cause  such  Mortgage  to  be  removed  from
registration  on the MERS System in accordance  with MERS' rules and regulations
or (ii) cause MERS to  designate  on the MERS  System the  Sponsor (or any party
indicated by the Sponsor) as the beneficial holder of such Mortgage Loan.

      (c) In connection  with the  termination  or  resignation  of the Servicer
hereunder, either (i) the successor Servicer, including the Indenture Trustee if
the  Indenture  Trustee is acting as successor  Servicer,  shall  represent  and
warrant  that it is a member of MERS in good  standing and shall agree to comply
in all material  respects  with the rules and  procedures  of MERS in connection
with the servicing of the Mortgage Loans that are registered  with MERS, or (ii)
the predecessor  Servicer shall cooperate with the successor Servicer either (x)
in causing MERS to execute and deliver an  assignment  of Mortgage in recordable
form to transfer the Mortgage from MERS to the Indenture  Trustee and to execute
and  deliver  such other  notices,  documents  and other  instruments  as may be
necessary or desirable to effect a transfer of such  Mortgage  Loan or servicing
of such  Mortgage  Loan on the MERS System to the  successor  Servicer or (y) in
causing  MERS to  designate  on the MERS  System the  successor  Servicer as the
servicer of such Mortgage Loan.

                                   ARTICLE IV

                              SERVICING CERTIFICATE

      Section  4.01.  SERVICING  CERTIFICATE.  Not later than seven (7) Business
Days prior to the Payment  Date,  the Servicer  shall  deliver to the  Indenture
Trustee,  a  Servicing  Certificate  (in  written  form or the form of  computer
readable  media or such other form as may be agreed to by the Indenture  Trustee
and the  Servicer),  together with an Officer's  Certificate  to the effect that
such Servicing Certificate is true and correct in all material respects, stating
the related Collection Period, Payment Date, the series number of the Notes, the
date of this Agreement, and:

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

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

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

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

                                       37
<PAGE>

            (v)  the  Pool  Balance  as of the end of the  preceding  Collection
      Period and as of the end of the second preceding Collection Period;

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

            (vii) the number and aggregate  Principal Balances of Mortgage Loans
      (A) as to which the Minimum  Monthly Payment is delinquent for 30-59 days,
      60-89 days, 90-119 days,  120-149 days,  150-179 days and 180 or more days
      respectively  and (B) that have  become REO, in each case as of the end of
      the preceding  Collection Period; (C) as to which foreclosure  proceedings
      have been commenced,  and (D) in bankruptcy and delinquent as of the close
      of  business  on the  last  day  of  the  calendar  month  preceding  such
      Distribution Date;

            (viii) the  amount to be paid to the  Servicer  pursuant  to Section
      8.7(c)(xi) of the Indenture;

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

      The  Indenture  Trustee  shall  conclusively  rely  upon  the  information
contained  in a  Servicing  Certificate  for  purposes  of making  distributions
pursuant to Section  8.7 of the  Indenture,  shall have no duty to inquire  into
such  information  and shall have no  liability  in so  relying.  The format and
content of the Servicing  Certificate may be modified by the mutual agreement of
the Servicer,  the Indenture  Trustee and the Insurer.  The Servicer  shall give
notice of any such change to the Rating Agencies.

      Section 4.02. RESERVED.

      Section 4.03. RESERVED.

      Section 4.04. LOAN DATA  REMITTANCE  REPORT.  On the seventh  Business Day
before  each  Payment  Date (the "LOAN DATA  REMITTANCE  DATE") by noon  Eastern
Standard time,  the Servicer  shall furnish a report (the "LOAN DATA  REMITTANCE
REPORT") in the form attached as Exhibit F to this  Agreement to the Insurer and
the  Indenture  Trustee by electronic  medium as agreed to by the Servicer,  the
Indenture Trustee and the Insurer.

      Section 4.05. [RESERVED].

                                    ARTICLE V

                          THE SERVICER AND THE SPONSOR

      Section  5.01.  LIABILITY OF THE  SERVICER  AND THE SPONSOR.  The Servicer
shall be liable in  accordance  herewith  only to the extent of the  obligations
specifically  imposed upon and  undertaken by the Servicer  herein.  The Sponsor
shall be liable in  accordance  herewith  only to the extent of the  obligations
specifically imposed upon and undertaken by the Sponsor.

                                       38
<PAGE>

      Section 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, THE SERVICER OR THE SPONSOR.  Any corporation into which the Servicer or the
Sponsor may be merged or  consolidated,  or any  corporation  resulting from any
merger,  conversion or  consolidation to which the Servicer or the Sponsor shall
be a party, or any corporation succeeding to the business of the Servicer or the
Sponsor,  shall be the successor of the Servicer or the Sponsor, as the case may
be,  hereunder,  without the execution or filing of any paper or any further act
on the  part of any of the  parties  hereto,  anything  herein  to the  contrary
notwithstanding.

      Section 5.03. LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.  Neither
the Servicer nor any of the  directors or officers or employees or agents of the
Servicer  shall be under  any  liability  to the  Trust  or the  Noteholders  or
Residual  Certificateholders  for any action  taken or for  refraining  from the
taking of any action by the Servicer in good faith  pursuant to this  Agreement,
or for errors in judgment;  PROVIDED,  HOWEVER,  that this  provision  shall not
protect the  Servicer or any such Person  against any breach of  representations
and warranties  made herein,  or against any specific  liability  imposed on the
Servicer for a breach of its servicing under this Agreement or against liability
which would otherwise be imposed by reason of willful misfeasance,  bad faith or
negligence in the performance of duties of the Servicer or by reason of reckless
disregard of obligations and duties of the Servicer hereunder.  The Servicer and
any  director or officer or employee or agent of the  Servicer  may rely in good
faith on any document of any kind PRIMA FACIE properly executed and submitted by
any Person  respecting  any matters  arising  hereunder.  The  Servicer  and any
director or officer or employee or agent of the Servicer shall be indemnified by
the Trust,  in accordance with the priorities set forth in Section 8.7(b) of the
Indenture and held harmless  against any loss,  liability or expense incurred in
connection with any legal action relating to this Agreement or the Notes,  other
than any loss,  liability  or expense  related  to any  specific  Mortgage  Loan
(except as any such loss,  liability or expense shall be otherwise  reimbursable
pursuant  to this  Agreement)  and any loss,  liability  or expense  incurred by
reason  of  its  willful  misfeasance,  bad  faith  or  negligence,   breach  of
representations  and warranties made herein,  or against any specific  liability
imposed on the Servicer for a breach of its  servicing  under this  Agreement or
against in the  performance  of duties  hereunder  or by reason of its  reckless
disregard of obligations and duties  hereunder.  The Servicer shall not be under
any  obligation to appear in,  prosecute or defend any legal action which is not
incidental  to duties to service  the  Mortgage  Loans in  accordance  with this
Agreement,  and which in its opinion may involve it in any expense or liability;
PROVIDED,  HOWEVER,  that the Servicer may in its sole discretion  undertake any
such  action  which  it may deem  necessary  or  desirable  in  respect  of this
Agreement,  and the rights and duties of the parties hereto and the interests of
the Noteholders and Residual  Certificateholders  hereunder.  In such event, the
reasonable  legal expenses and costs of such action and any liability  resulting
therefrom shall be expenses, costs and liabilities of the Trust and the Servicer
shall only be entitled to be reimbursed  therefor pursuant to Section 8.7(d)(ix)
of the Indenture. The Servicer's right to indemnity or reimbursement pursuant to
this Section 5.03 shall survive any  resignation  or termination of the Servicer
pursuant to Section 5.04 or 6.01 with respect to any losses,  expenses, costs or
liabilities  arising prior to such  resignation or termination  (or arising from
events that occurred prior to such resignation or termination).

      Section 5.04. SERVICER NOT TO RESIGN. Subject to the provisions of Section
5.02,  the  Servicer  shall not resign from the  obligations  and duties  hereby
imposed  on it  except  (i)  upon  determination  that  the  performance  of its
obligations or duties hereunder are no longer  permissible  under applicable law
or are in material conflict by reason of applicable law with any

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<PAGE>

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

      Section 5.05.  DELEGATION OF DUTIES.  In the ordinary  course of business,
the Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, or any subservicer referred to in Section 3.01,
who agrees to conduct such duties in  accordance  with  standards  comparable to
those with which the Servicer complies pursuant to Section 3.01. Such delegation
shall not relieve the  Servicer of its  liabilities  and  responsibilities  with
respect to such duties and shall not constitute a resignation within the meaning
of Section 5.04. The Servicer's delegation of any of its duties hereunder to any
subservicer shall be subject to the prior approval of the Insurer.  The Servicer
shall terminate its delegation of any of its duties hereunder to any subservicer
at the Insurer's reasonable request.

      Section 5.06.  INDEMNIFICATION OF THE TRUST BY THE SERVICER.  The Servicer
shall indemnify and hold harmless the Trust, the Owner Trustee and the Indenture
Trustee from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of the Servicer's activities or omissions in servicing or
administering  the Mortgage Loans that are not in accordance with this Agreement
or breach of  representations  and warranties  made herein,  including,  but not
limited to, any judgment,  award,  settlement,  reasonable  attorneys'  fees and
expenses and other costs or expenses  incurred in connection with the defense of
any actual or threatened action,  proceeding or claim. Any such indemnification,
including  any amounts the Issuer  shall cause the  Servicer to pay  pursuant to
Section 6.7 of the Indenture, shall not be payable from the assets of the Trust.
The provisions of this indemnity  shall run directly to and be enforceable by an
injured party subject to the limitations  hereof. The provisions of this Section
5.06 shall survive termination of this Agreement.

      Section 5.07. INDEMNIFICATION OF THE TRUST BY THE SPONSOR. Notwithstanding
anything to the contrary  contained herein,  the Sponsor (i) agrees to be liable
directly to the

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<PAGE>

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

      Section  5.08.  LIMITATION  ON  LIABILITY  OF  THE  SPONSOR.  None  of the
directors or officers or  employees or agents of the Sponsor  shall be under any
liability  to the  Trust,  the  Owner  Trustee  or the  Indenture  Trustee,  the
Noteholders or the Residual  Certificateholders,  it being expressly  understood
that all such liability is expressly  waived and released as a condition of, and
as  consideration  for, the execution of this  Agreement and the issuance of the
Notes; PROVIDED,  HOWEVER, that this provision shall not protect any such Person
against  any  liability  which would  otherwise  be imposed by reason of willful
misfeasance,  bad faith,  negligence or breach of representations and warranties
made  herein,  or against any specific  liability  imposed on such Person in the
performance  of the duties  hereunder.  Except as provided in Section 5.07,  the
Sponsor shall not be under any liability to the Trust,  the Owner Trustee or the
Indenture Trustee or the Noteholders or the Residual  Certificateholders for any
action taken or for refraining  from the taking of any action in its capacity as
Sponsor  pursuant to this  Agreement  whether  arising  from  express or implied
duties under this Agreement;  PROVIDED,  HOWEVER,  that this provision shall not
protect the Sponsor  against any liability  which would  otherwise be imposed by
reason of willful misconduct,  bad faith or negligence in the performance of its
duties  or by  reason  of  reckless  disregard  of its  obligations  and  duties
hereunder.  The Sponsor and any  director or officer or employee or agent of the
Sponsor may rely in good faith on any document of any kind PRIMA FACIE  properly
executed and submitted by any Person respecting any matters arising hereunder.

                                   ARTICLE VI

                              SERVICING TERMINATION

      Section 6.01. EVENTS OF SERVICING TERMINATION. If any one of the following
events ("EVENTS OF SERVICING TERMINATION") shall occur and be continuing:

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<PAGE>

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

            (ii)  Failure on the part of the  Servicer  or the  Sponsor  duly to
      observe or perform any  covenants or agreements of the Servicer or Sponsor
      set  forth in the  Notes or in this  Agreement,  which  failure  continues
      unremedied  for a period of 15 days after the date on which written notice
      of such failure,  requiring the same to be remedied, and stating that such
      notice is a "Notice of  Default"  hereunder,  shall have been given to the
      Servicer by the  Indenture  Trustee or to the Servicer  and the  Indenture
      Trustee by the Insurer or the Holders of Notes evidencing more than 25% of
      the Principal Balance of the Notes;  PROVIDED,  that a failure on the part
      of the  Sponsor to perform  its  obligations  under  Section  2.03 or 2.05
      hereof shall not be subject to the 15 day cure period;

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

            (iv) The consent by the  Servicer to the  appointment  of a trustee,
      conservator,  receiver or liquidator in any  insolvency,  conservatorship,
      receivership,  readjustment of debt, marshalling of assets and liabilities
      or similar proceedings of or relating to the Servicer or of or relating to
      substantially all of its property;  or the Servicer shall admit in writing
      its  inability  to pay its debts  generally  as they  become  due,  file a
      petition to take advantage of any applicable  insolvency or reorganization
      statute,  make  an  assignment  for  the  benefit  of  its  creditors,  or
      voluntarily suspend payment of its obligations;

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

            (vi) The  consent by the  Sponsor to the  appointment  of a trustee,
      conservator,  receiver or liquidator in any  insolvency,  conservatorship,
      receivership,  readjustment of debt, marshalling of assets and liabilities
      or similar  proceedings of or relating to the Sponsor or of or relating to
      substantially  all of its property;  or the Sponsor shall admit in writing
      its  inability  to pay its debts  generally  as they  become  due,  file a
      petition to take advantage of any applicable  insolvency or reorganization
      statute, make an

                                       42
<PAGE>

      assignment  for the  benefit  of its  creditors,  or  voluntarily  suspend
      payment of its obligations;

            (vii)  Aggregate  Realized Losses over any one  twelve-month  period
      exceed 1.00% of the Initial Pool Balance;

            (viii) The Three Month Rolling Delinquency Rate exceeds 3.25%;

            (ix) Cumulative  Realized Losses exceed the following  percentage of
      the Initial Pool Balance on any Payment Date as set forth below:

                                                         Cumulative Realized
                   Payment Date                            Loss Percentage
                   ------------                            ---------------

                 1st through 36th                               2.00%
                37th through 48th                               2.50%
                49th through 60th                               3.00%
               61st and thereafter                              3.50%

            (x)  GreenPoint  Bank  fails  to  maintain  the  capital   standards
      established  for  "well   capitalized"   institutions   under  the  prompt
      corrective  action  regulations  issued  pursuant to the  Federal  Deposit
      Insurance Corporation Improvement Act of 1991, as amended;

            (xi) GreenPoint Bank,  GreenPoint  Financial Corp. or its affiliates
      fail to pay any principal  amount of at least $1,000,000 when due, subject
      to the  applicable  grace  period,  if any,  specified in the agreement or
      other  instrument  relating  to such  debt and  shall  continue  after the
      applicable  grace period if the effect of such event is to accelerate  the
      maturity and repayment of such debt before the stated maturity thereof;

            (xii)  GreenPoint  Bank  shall no  longer  own 100% of the  Servicer
      either directly or indirectly;

            (xiii)  GreenPoint  Bank shall sell the  servicing  platform  of the
      Servicer to a Person not affiliated with the Bank who is not acceptable to
      the Insurer;

            (xiv)  A   subservicer   is   contracted   to   service   loans   in
      securitizations  sponsored  by the  Sponsor and insured by the Insurer and
      such subservicer is not acceptable to the Insurer;

            (xv) Any failure by the Servicer to obtain the prior written consent
      of the Insurer prior to the merger or  consolidation of the Servicer with,
      or the  acquisition of the Servicer by, any entity that is not 100% owned,
      directly or indirectly, by GreenPoint Financial Corp.

            (xvi) Any  governmental  authority,  including  the Federal  Deposit
      Insurance Corporation or any other governmental  authority with regulatory
      powers  over  the  GreenPoint  Bank,  GreenPoint  Financial  Corp.  or its
      affiliates,  shall take any mandatory

                                       43
<PAGE>

      or   discretionary   supervisory   action  against  the  GreenPoint  Bank,
      GreenPoint   Financial  Corp.  or  its  affiliates,   including,   without
      limitation,  by cease  and  desist  order,  memorandum  or  understanding,
      capital  directive or directive to take prompt  corrective  action,  which
      action,  in the reasonable  opinion of the Insurer,  would have a material
      adverse impact on (A) the business,  operations or financial  condition of
      the GreenPoint  Bank or the Servicer or (B) the ability of GreenPoint Bank
      or the Servicer to perform its obligations under any transaction  document
      to which it is a party; or

            (xvii)  GreenPoint Bank's credit ratings fall below investment grade
      by Moody's or S&P;

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

      Notwithstanding the foregoing,  a delay in or failure of performance under
Section 6.01(i) for a period of one Business Day or under Section 6.01(ii) for a
period of 15 days,  shall not  constitute an Event of Servicing  Termination  if
such delay or failure  could not be  prevented  by the  exercise  of  reasonable
diligence  by the Servicer and such delay or failure was caused by an act of God
or the public  enemy,  acts of  declared or  undeclared  war,  public  disorder,
rebellion or  sabotage,  epidemics,  landslides,  lightning,  fire,  hurricanes,
earthquakes  or floods.  The preceding  sentence  shall not relieve the Servicer
from using its best efforts to perform its  respective  obligations  in a timely
manner in accordance  with the terms of this  Agreement  and the Servicer  shall
provide the Indenture Trustee,  the Sponsor, the Insurer and the Noteholders and
Residual  Certificateholders  with an Officer's Certificate giving prompt notice
of such failure or delay by it, together with a description of its efforts to so
perform its obligations. The Servicer shall

                                       44
<PAGE>

immediately  notify  the  Indenture  Trustee  and the  Insurer in writing of any
Events of Servicing Termination.

      Section 6.02. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

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

      (b) Any  successor,  including the Indenture  Trustee,  to the Servicer as
servicer  shall  during the term of its  service as  servicer  (i)  continue  to
service and administer  the Mortgage  Loans for the benefit of the  Noteholders,
Residual  Certificateholders and the Insurer and (ii) maintain in force a policy
or policies of insurance covering errors and omissions in the performance of its
obligations  as  Servicer  hereunder  and a  fidelity  bond  in  respect  of its
officers, employees and agents to the same extent as the Servicer is so required
pursuant to Section 3.13.

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<PAGE>

The  appointment  of a successor  Servicer shall not affect any liability of the
predecessor  Servicer  which may have arisen under this  Agreement  prior to its
termination as Servicer (including,  without limitation, any deductible under an
Insurance Policy pursuant to Section 3.04), nor shall any successor  Servicer be
liable for any acts or omissions of the  predecessor  Servicer or for any breach
by such Servicer of any of its representations or warranties contained herein.

      Section 6.03. NOTIFICATION TO NOTEHOLDERS AND RESIDUAL CERTIFICATEHOLDERS.
Upon any  termination or appointment of a successor to the Servicer  pursuant to
this Article VI or Section 5.04, the Indenture Trustee shall give prompt written
notice  thereof  to  the  Noteholders,  Residual  Certificateholders  (at  their
respective  addresses  appearing  in the  Note  Register  and  in  the  Residual
Certificate Register), the Insurer and each Rating Agency.

                                   ARTICLE VII

                                   TERMINATION

      Section 7.01. TERMINATION.

      (a) The respective  obligations and responsibilities of the Servicer,  the
Sponsor and the Indenture  Trustee  created hereby (other than the obligation of
the Indenture  Trustee to make certain  payments to Noteholders  after the final
Payment  Date and the  obligation  of the  Servicer to send  certain  notices as
hereinafter set forth) shall terminate upon the last action required to be taken
by the Indenture  Trustee on the final Payment Date pursuant to this Article VII
following  the later of (A) the Payment  Date  following  payment in full of all
amounts owing to the Insurer under the Insurance  Agreement and (B) the earliest
of (i) the transfer,  under the conditions  specified in Section 7.01(b), to the
Sponsor of the  Noteholders'  interest in each  remaining  Mortgage Loan and all
property  acquired  in respect of any  remaining  Mortgage  Loans,  (ii) the day
following the Payment Date on which the  distribution  made to  Noteholders  has
reduced the Note Principal  Balance to zero and no other amounts are owed to the
Noteholders hereunder,  and no other amounts are owed to the Insurer pursuant to
the  Insurance  Agreement  and  Section  8.7 of the  Indenture,  (iii) the final
payment or other  liquidation  of the last Mortgage Loan  remaining in the Trust
(including,  without limitation,  the disposition of the Mortgage Loans pursuant
to Section 5.4 of the  Indenture) or the  disposition  of all property  acquired
upon  foreclosure  or deed in lieu of  foreclosure of any Mortgage Loan and (iv)
the Payment Date in April 2029;  PROVIDED,  HOWEVER,  that in no event shall the
trust created hereby continue beyond the expiration of 21 years from the date of
death  of the  last  surviving  descendants  of  Joseph  P.  Kennedy,  the  late
ambassador of the United  States to the Court of St.  James,  living on the date
hereof.  Upon  termination in accordance  with clause  (a)(B)(i) of this Section
7.01,  the Indenture  Trustee shall execute such  documents and  instruments  of
transfer presented by the Sponsor, in each case without recourse, representation
or warranty,  and take such other actions as the Sponsor may reasonably  request
to effect the transfer of the Mortgage Loans to the Sponsor.

      (b) Subject to Section 7.01(d), the Sponsor shall have the right to effect
the  transfer to the  Sponsor of each  Mortgage  Loan on any Payment  Date on or
after the Payment Date immediately  prior to which the Pool Balance is less than
or equal to ten percent (10%) of the Initial Pool Balance. If the Sponsor elects
to exercise its right it will notify the Issuer,  the  Servicer,  the  Indenture
Trustee and the Insurer no later than thirty-five (35) days prior to the

                                       46
<PAGE>

Payment Date on which the transfer is to take place. The Indenture  Trustee will
make the transfer on such  Payment Date subject to Section  7.01(d) and provided
that the Redemption Price for the Notes has been deposited with it not less than
five (5) Business Days prior to such Payment Date.

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

      (d) The Sponsor  shall not exercise its right to  repurchase  the Mortgage
Loans pursuant to Section 7.01(b) hereof if (a) such repurchase  would result in
a  draw  on the  Policy,  without  the  consent  of the  Insurer,  and  (b)  any
Reimbursement Amount due to the Insurer would not be fully satisfied pursuant to
the repurchase.

                                  ARTICLE VIII

                      ADMINISTRATIVE DUTIES OF THE SERVICER

      Section 8.01. ADMINISTRATIVE DUTIES.

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

      (b) DUTIES WITH RESPECT TO THE ISSUER.

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

                                       47
<PAGE>

      requested by the Issuer or the Owner Trustee and are reasonably within the
      capability of the Servicer.

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

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

            (iv) The Servicer shall perform the duties of the Sponsor  specified
      in  Section  11.2 of the  Trust  Agreement  required  to be  performed  in
      connection with the  resignation or removal of the Owner Trustee,  and any
      other duties expressly required to be performed by the Servicer under this
      Agreement or any of the Basic Documents.

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

      (c)  NON-MINISTERIAL   MATTERS.  With  respect  to  matters  that  in  the
reasonable judgment of the Servicer are non-ministerial,  the Servicer shall not
take any action  pursuant to this Article VIII unless  within a reasonable  time
before the taking of such  action,  the Servicer  shall have  notified the Owner
Trustee and the  Insurer of the  proposed  action and the Owner  Trustee and the
Insurer shall not have withheld  consent or provided an  alternative  direction.
For the  purpose of the  preceding  sentence,  "non-ministerial  matters"  shall
include:

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

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

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

            (D) the appointment of successor Note  Registrars,  successor Paying
      Agents and successor  Indenture  Trustees pursuant to the Indenture or the
      appointment of

                                       48
<PAGE>

      successor  Servicers  or  the  consent  to  the  assignment  by  the  Note
      Registrar,  Paying Agent or Indenture Trustee of its obligations under the
      Indenture; and

            (E) the removal of the Indenture Trustee.

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

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

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

      Section 8.03.  ADDITIONAL  INFORMATION TO BE FURNISHED TO THE ISSUER.  The
Servicer shall furnish to the Issuer and the Indenture Trustee from time to time
such additional  information  regarding the Mortgage Loans as the Issuer and the
Indenture Trustee shall reasonably request.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

      Section 9.01.  AMENDMENT.  This Agreement may be amended from time to time
by agreement among the Sponsor, the Servicer, and the Indenture Trustee, in each
case  without  notice to or the  consent of any of the  Noteholders  or Residual
Certificateholders,  but only with the  consent of the  Insurer  (which  consent
shall not be unreasonably withheld), (i) to cure any ambiguity,  (ii) to correct
any defective  provisions or to correct or supplement any provisions herein that
may be inconsistent with any other provisions herein, (iii) to add to the duties
of the Sponsor or the Servicer, (iv) to add any other provisions with respect to
matters or questions arising under this Agreement or the Policy, as the case may
be, which shall not be inconsistent  with the provisions of this Agreement,  (v)
to add or amend any  provisions  of this  Agreement  as  required  by any Rating
Agency or any other nationally  recognized  statistical  rating  organization in
order to maintain or improve any rating of the Notes (it being  understood that,
after obtaining the ratings in effect on the Closing Date, neither the Indenture
Trustee,  the  Sponsor  nor the  Servicer is  obligated  to obtain,  maintain or
improve any such rating) or (vi) to comply with any  requirement  imposed by the
Code; PROVIDED,  HOWEVER, that such action shall not, as evidenced by an Opinion
of Counsel, materially and adversely affect the interests of any Noteholder, any
Residual  Certificateholder,  or the Insurer;  and PROVIDED,  FURTHER,  that the
amendment  shall be deemed not to adversely  affect in any material  respect the
interests of the Noteholders and the

                                       49
<PAGE>

Residual  Certificateholders and no opinion referred to in the preceding proviso
shall be required to be delivered if the Person requesting the amendment obtains
a letter from each Rating Agency stating that the amendment  would not result in
the  downgrading  or withdrawal of the  respective  ratings then assigned to the
Notes without regard to the Policy.

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

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

      Prior to the execution of any such amendment,  the party hereto requesting
any such amendment shall furnish  written  notification of the substance of such
amendment to each Rating  Agency.  In addition,  promptly after the execution of
any such  amendment  made with the consent of the  Noteholders  or the  Residual
Certificateholders,  the Indenture Trustee shall furnish written notification of
the   substance   of  such   amendment   to   each   Noteholder   and   Residual
Certificateholder  and fully executed  original  counterparts of the instruments
effecting such amendment to the Insurer.

      It shall not be  necessary  for the  consent of  Noteholders  or  Residual
Certificateholders under this Section 9.01 to approve the particular form of any
proposed amendment or consent,  but it shall be sufficient if such consent shall
approve the  substance  thereof.  The manner of obtaining  such  consents and of
evidencing  the  authorization  of the  execution  thereof  by  Noteholders  and
Residual  Certificateholders shall be subject to such reasonable requirements as
the Indenture Trustee may prescribe.

      In executing any amendment  permitted by this Section 9.01,  the Indenture
Trustee  shall be entitled to receive,  and shall be fully  protected in relying
upon,  an  Opinion of Counsel  stating  that such  amendment  is  authorized  or
permitted hereby and that all conditions precedent to the execution and delivery
of such amendment have been satisfied.  The Indenture Trustee may, but

                                       50
<PAGE>

shall not be  obligated  to,  enter into any such  amendment  which  affects the
Indenture  Trustee's own rights,  duties or immunities  under this  Agreement or
otherwise.

      Section  9.02.  RECORDATION  OF  AGREEMENT.  This  Agreement is subject to
recordation in all appropriate  public offices for real property  records in all
the  counties  or other  comparable  jurisdictions  in  which  any or all of the
properties  subject to the Mortgages are situated,  and in any other appropriate
public  recording  office or elsewhere,  such  recordation to be effected by the
Servicer,  but only upon direction of  Noteholders  accompanied by an Opinion of
Counsel to the effect that such recordation  materially and beneficially affects
the interests of Noteholders.  The Noteholders requesting such recordation shall
bear all costs and expenses of such  recordation.  The  Indenture  Trustee shall
have no  obligation  to  ascertain  whether  such  recordation  so  affects  the
interests of the Noteholders.

      For the purpose of  facilitating  the  recordation  of this  Agreement  as
herein  provided  and  for  other  purposes,  this  Agreement  may  be  executed
simultaneously in any number of counterparts,  each of which  counterparts shall
be deemed to be an original,  and such counterparts shall constitute but one and
the same instrument.

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

      No Noteholder  shall have any right by virtue or by availing itself of any
provisions  of this  Agreement to institute  any suit,  action or  proceeding in
equity or at law upon or under or with  respect to this  Agreement,  unless such
Holder  previously shall have given to the Indenture Trustee a written notice of
default and of the continuance  thereof,  as hereinbefore  PROVIDED,  and unless
also the Holders of Notes evidencing more than 50% of the Outstanding  Amount of
the  Notes  shall  have made  written  request  upon the  Indenture  Trustee  to
institute such action,  suit or proceeding in its own name as Indenture  Trustee
hereunder  and shall  have  offered to the  Indenture  Trustee  such  reasonable
indemnity as it may require  against the costs,  expenses and  liabilities to be
incurred therein or thereby,  and the Indenture  Trustee,  for 60 days after its
receipt of such notice, request and offer of indemnity,  shall have neglected or
refused to institute any such action,  suit or proceeding;  it being  understood
and intended, and being expressly covenanted by each Noteholder with every other
Noteholder and the Indenture Trustee, that no one or more Holders of Notes shall
have any  right in any  manner  whatever  by  virtue  or by  availing  itself or
themselves of any provisions of this  Agreement to affect,  disturb or prejudice
the rights of the  Holders  of any other of the  Notes,  or to obtain or seek to
obtain  priority over or preference to any other such Holder,  or to enforce any
right under this  Agreement,  except in the manner  herein  provided and for the
equal,  ratable and common  benefit of all  Noteholders.  For the protection and
enforcement  of the provisions of this Section 9.03,  each and every  Noteholder
and the  Indenture  Trustee  shall be  entitled  to such  relief as can be given
either at law or in equity.

                                       51
<PAGE>

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

      Section  9.04.  GOVERNING  LAW.  THIS  AGREEMENT  SHALL  BE  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE  STATE OF NEW  YORK  WITHOUT  REFERENCE  TO ITS
CONFLICT OF LAW  PROVISIONS  (OTHER THAN  SECTIONS  5-1401 AND 5-1402 OF THE NEW
YORK GENERAL  OBLIGATIONS LAW), AND THE OBLIGATIONS,  RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

      Section 9.05. NOTICES. All demands,  notices and communications  hereunder
shall be in  writing  and shall be  deemed  to have been duly  given if sent via
facsimile (receipt  confirmed),  personally  delivered at or mailed by certified
mail, return receipt  requested,  to (a) in the case of the Sponsor,  GreenPoint
Mortgage  Securities  Inc.,  100 Wood Hollow  Drive,  Doorstop  #22210,  Novato,
California  94945,  Attention:  S.A.  Ibrahim,  (b) in the case of the Servicer,
GreenPoint  Mortgage  Funding,  Inc.,  100 Wood Hollow Drive,  Doorstop  #32210,
Novato, California 94945, Attention:  Gilbert MacQuarrie, (c) in the case of the
Indenture  Trustee,  at the  Corporate  Trust  Office,  (d) in the  case  of the
Insurer, Ambac Assurance Corporation, One State Street Plaza, New York, New York
10004, Attention: Managing Director (telecopy number (212) 363-1459), (e) in the
case of Moody's, Residential Loan Monitoring Group, 4th Floor, 99 Church Street,
New York,  New York 10007,  and (f) in the case of  Standard & Poor's,  55 Water
Street, New York, New York 10041, or, as to each party, at such other address as
shall be designated by such party in a written  notice to each other party.  Any
notice  required or  permitted  to be mailed to a  Noteholder  shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Note Register. Any notice so mailed within the time prescribed in this Agreement
shall be  conclusively  presumed  to have been duly  given,  whether  or not the
Noteholder or Residual  Certificateholder  receives  such notice.  Any notice or
other  document  required to be delivered or mailed by the Indenture  Trustee to
any Rating Agency shall be given on a best efforts basis and only as a matter of
courtesy and accommodation and the Indenture Trustee shall have no liability for
failure to deliver such notice or document to any Rating Agency.

      Section  9.06.  SEVERABILITY  OF  PROVISIONS.  If any  one or  more of the
covenants,  agreements,  provisions or terms of this Agreement  shall be for any
reason whatsoever held invalid, then such covenants,  agreements,  provisions or
terms  shall be  deemed  severable  from the  remaining  covenants,  agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability  of the other provisions of this Agreement or of the Notes or the
rights of the Holders thereof.

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

      Section 9.08. THIRD-PARTY BENEFICIARIES.  This Agreement will inure to the
benefit   of  and  be   binding   upon  the   parties   hereto,   the   Residual
Certificateholders,  the  Note  Owners  or  the

                                       52
<PAGE>

Insurer  and  their  respective  successors  and  permitted  assigns.  Except as
otherwise  provided in this  Agreement,  no other  Person will have any right or
obligation hereunder.

      Section 9.09. COUNTERPARTS.  This instrument may be executed in any number
of  counterparts,  each of which so executed  shall be deemed to be an original,
but all  such  counterparts  shall  together  constitute  but  one and the  same
instrument.

      Section  9.10.  EFFECT OF HEADINGS AND TABLE OF CONTENTS.  The Article and
Section  headings herein and the Table of Contents are for convenience  only and
shall not affect the construction hereof.

      Section 9.11. INSURANCE AGREEMENT. The Indenture Trustee is authorized and
directed  to execute  and deliver  the  Insurance  Agreement  and to perform the
obligations of the Indenture Trustee thereunder.

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

                                       53
<PAGE>

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

                             GREENPOINT MORTGAGE SECURITIES INC.,
                                as Sponsor

                             By: /s/ Nathan Hieter
                                 -----------------------------------------------
                                 Name: Nathan Hieter
                                 Title: Vice President

                             GREENPOINT MORTGAGE FUNDING, INC.,
                                as Company and Servicer

                             By: /s/ Dave Petrini
                                 -----------------------------------------------
                                 Name: Dave Petrini
                                 Title: Executive Vice President

                             THE BANK OF NEW YORK, not in its individual
                                capacity but solely
                                as Indenture Trustee

                             By: /s/ Patricia O'Neill-Manella
                                 -----------------------------------------------
                                 Name: Patricia O'Neill-Manella
                                 Title: Assistant Vice President

                             GREENPOINT HOME EQUITY LOAN TRUST
                                2003-1, as Issuer
                                By: Wilmington Trust Company, not in its
                                individual capacity but solely as Owner
                                Indenture Trustee

                             By: /s/ Janel R. Havrilla
                                 -----------------------------------------------
                                 Name: Janel R. Havrilla
                                 Title: Financial Services Officer

                         [Sale and Servicing Agreement]

<PAGE>

State of  California  )
                      ) ss.:
County of Marin       )

      On the 15th day of May,  2003  before  me, a notary  public in and for the
State of California,  personally appeared Nathan Hieter,  known to me who, being
by me duly sworn, did depose and say that he resides at Santa Rosa,  California;
that he is the Vice President of GreenPoint Mortgage Securities Inc., a Delaware
corporation, one of the parties that executed the foregoing instrument; and that
he  signed  his  name  thereto  by  order  of the  Board  of  Directors  of said
corporation.

                                                     /s/ Catherine Saint Clair
                                                     ---------------------------
                                                     Notary Public

Catherine Saint Clair
Commission # 1354893
Notary Public - California
Marin County
My Comm. Expires Jun. 8, 2006
---------------------------------

[Notarial Seal]
<PAGE>

State of  Delaware   )
                     ) ss.:
County of New Castle )

      On the 15th day of May,  2003  before  me, a notary  public in and for the
State of Delaware, personally appeared Janel R. Havrilla, known to me who, being
by me duly sworn, did depose and say that he resides at Wilmington,  DE; that he
is the  Financial  Services  Officer of  Wilmington  Trust  Company,  a Delaware
banking corporation,  one of the parties that executed the foregoing instrument;
that he knows  the seal of said  corporation;  that  the  seal  affixed  to said
instrument is such corporate  seal; that it was so affixed by order of the Board
of  Directors of said  corporation;  and that he signed his name thereto by like
order.

                                                     /s/ Joann A. Rozell
                                                     ---------------------------
                                                     Notary Public

Joann A. Rozell
Notary Public-Delaware
My Commission Expires July 24, 2004
-----------------------------------------

[Notarial Seal]
<PAGE>

State of California )
                    ) ss.:
County of Marin     )

      On the 15th day of May,  2003  before  me, a notary  public in and for the
State of California, personally appeared Dave Petrini, known to me who, being by
me duly sworn, did depose and say that he resides at Tiburon,  California;  that
he is the Executive  Vice  President of  GreenPoint  Mortgage  Funding,  Inc., a
closely-held  California  corporation,  one of the  parties  that  executed  the
foregoing instrument; that he knows the seal of said corporation;  that the seal
affixed to said  instrument is such  corporate  seal;  that it was so affixed by
order of the Board of Directors of said corporation; and that he signed his name
thereto by like order.

                                                     /s/ Catherine Saint Clair
                                                     ---------------------------
                                                     Notary Public

Catherine Saint Clair
Commission # 1354893
Notary Public - California
Marin County
My Comm. Expires Jun. 8, 2006
-----------------------------------

[Notarial Seal]
<PAGE>

State of New York  )
                   ) ss.:
County of New York )

      On the 19th day of May,  2003  before  me, a notary  public in and for the
State of New York,  personally  appeared Patricia  O'Neill-Manella,  known to me
who,  being by me duly sworn,  did depose and say that he resides at 18 Chandler
Ave., Keyport, NJ 07735; that she is the Assistant VP of The Bank of New York, a
banking corp.,  one of the parties that executed the foregoing  instrument;  and
that he  signed  his name  thereto  by order of the Board of  Directors  of said
corporation.

                                                     /s/ Robert H. Blackman
                                                     ---------------------------
                                                     Notary Public

Robert H. Blackman
Notary Public, State of New York
No. 01BL6051844
Qualified in Bronx County
Certificate Filed in New York County
Commission Expires December 4, 2006
----------------------------------------

[Notarial Seal]
<PAGE>

                                                                       EXHIBIT A

                             MORTGAGE LOAN SCHEDULE

                        [On file with Indenture Trustee]

                                      A-1
<PAGE>

                                                                       EXHIBIT B

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

The  opinions  set  forth  below  may  be  subject  to all  the  qualifications,
assumptions, limitations and exceptions taken or made in the opinions of counsel
to the Company  delivered on the Closing Date. Unless otherwise  indicated,  all
capitalized  terms used herein shall have the  meanings  ascribed to them in the
Sale and Servicing  Agreement dated as of May 1, 2003 among GreenPoint  Mortgage
Funding, Inc. (the "COMPANY" and the "SERVICER"), GreenPoint Mortgage Securities
Inc. (the "SPONSOR") and The Bank of New York, as Indenture Trustee.  Terms used
but not  defined  herein  shall  have the  meaning  given  to such  terms in the
above-referenced Sale and Servicing Agreement.

The Indenture  Trustee has a valid  perfected first priority  security  interest
with respect to the Sponsor's  right,  title and interest in and to the Mortgage
Loans  (including  all  Eligible  Substitute  Mortgage  Loans),  subject  to the
exceptions and  qualifications  set forth in the Opinion of Counsel  attached to
the Indenture as Exhibit B.

                                      B-1
<PAGE>

                                                                     EXHIBIT C-1

                          FORM OF OFFICER'S CERTIFICATE

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

TO:  The Bank of New York,
       as Indenture Trustee
     101 Barclay Street, 8-West,
     New York, NY 10286
     Attention:  Mortgage-Backed Securities

Gentlemen:

In  connection  with the  payment in full of the  Mortgage  Loans held by you as
Indenture  Trustee,  under the Sale and Servicing  Agreement  dated as of May 1,
2003 among GreenPoint Mortgage Funding,  Inc., as Servicer,  GreenPoint Mortgage
Securities  Inc., as Sponsor,  and you, as Indenture  Trustee,  the  undersigned
requests  the  release  of the  Mortgage  Loans and the  Mortgage  Files for the
Mortgage Loans identified in the schedule attached to this Request.

The undersigned  hereby  certifies that (i) the release of Collateral  requested
will not impair the  security  under the  Indenture,  (ii) any and all  payments
received on the  Mortgage  Loans  identified  in the  schedule  attached to this
Request which are required to be deposited in the Collection Account pursuant to
Section 3.02 of such Sale and Servicing Agreement have been so deposited,  (iii)
the  information  with respect to such factual  matters  necessary  for us to so
certify  is  in  our   possession   and  (iv)  I  am  qualified  to  make  these
certifications.

                                              GREENPOINT MORTGAGE FUNDING, INC.,
                                                  as Servicer

                                              By: ______________________________
                                                  Name:  _______________________
                                                  Title: _______________________
                                                  Date: ________________________

ACKNOWLEDGED BY:

THE BANK OF NEW YORK,
  as Indenture Trustee

By: ______________________________
    Name:  _______________________
    Title: _______________________
    Date: ________________________

                                     C-2-1
<PAGE>

                                                                     EXHIBIT C-2

                          FORM OF OFFICER'S CERTIFICATE

                      REQUEST BY THE SERVICER FOR TEMPORARY
                  RELEASE OF MORTGAGE LOANS AND MORTGAGE FILES

TO: The Bank of New York,
      as Indenture Trustee
    101 Barclay Street, 8-West,
    New York, NY 10286
    Attention:  Mortgage-Backed Securities

Gentlemen:

In  connection  with the  administration  of the  Mortgage  Loans held by you as
Indenture  Trustee,  under the Sale and Servicing  Agreement  dated as of May 1,
2003 among GreenPoint Mortgage Funding,  Inc., as Servicer,  GreenPoint Mortgage
Securities  Inc., as Sponsor,  and you, as Indenture  Trustee,  the  undersigned
requests the temporary  release of the Mortgage  Loans and the related  Mortgage
Files  for the  Mortgage  Loans  identified  in the  schedule  attached  to this
Request.

                                              GREENPOINT MORTGAGE FUNDING, INC.,
                                                  as Servicer

                                              By: ______________________________
                                                  Name:  _______________________
                                                  Title: _______________________
                                                  Date: ________________________

ACKNOWLEDGED BY:

THE BANK OF NEW YORK,
as Indenture Trustee

By: ______________________________
    Name:  _______________________
    Title: _______________________
    Date: ________________________

                                     C-2-1
<PAGE>

                                                                       EXHIBIT D

                          FORM OF CREDIT LINE AGREEMENT

    [On File with GreenPoint Mortgage Funding, Inc. and Dewey Ballantine LLP]

                                      D-1
<PAGE>

                                                                       EXHIBIT E

                            FORM OF MORTGAGE NOTE FOR
                            CLOSED END MORTGAGE LOANS

    [On File with GreenPoint Mortgage Funding, Inc. and Dewey Ballantine LLP]

<PAGE>

                                                                       EXHIBIT F

                              FORM OF CERTIFICATE:
                              LOAN LEVEL REPORTING

DETAIL RECORD FIELDS:                                    FILE NAME: T0##MMYY.LNS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
        DATA:             FIELD         FORMAT       DEFINITION
    T0NNMMYY.LNS           NBR
------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>      <C>               <C>
Servicer Loan No.         1        13(X)             Unique loan number assigned to the mortgage by the Seller/Servicer
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Due Date of Last Paid     2        YYYYMMDD          DUE DATE of last full payment received from the borrower.
Installment (DDLPI)
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Last Payment Received     3        YYYYMMDD          RECEIPT DATE of the last fully paid monthly installment of principal,
Date (LPRD)                                          interest, and escrow  (if any) that was received from the borrower.
                                                     Note:  Dates of partial payments should not be entered here.  {Data is
                                                     when payment was actually received from the borrower)  IF THIS
                                                     INFORMATION IS NOT AVAILABLE, THEN  POPULATE THE FIELD WITH THE DEFAULT
                                                     VALUE OF 19000101.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Unpaid Principal          4        13.2              Unpaid Principal balance as of the end of the current period
Balance (UPB) 100%
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Interest Paid             5        13.2              Gross / Coupon Interest payment amount
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Principal Paid            6        13.2              Total principal paid down on the mortgage balance.

                                                     *  For approved payment reversals or principal applied incorrectly in a
                                                        prior cycle the amount of negative principal to bring the mortgage
                                                        balance in line with the correct UPB reported.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Draw Amount               7        13.2              Total draws made against the line of credit for the current month
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
        DATA:             FIELD         FORMAT       DEFINITION
    T0NNMMYY.LNS           NBR
------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>      <C>               <C>
Exception Code            8        2(x)              This field should contain an exception code only when exception activity
                                                     occurs for that period, otherwise this field should contain a 0.
                                                     DEFAULT VALUE IS 0.
                                                     40  Inactivate loan, deemed the loan non-recoverable
                                                     60  Payoff - mortgage matured
                                                     61  Payoff - mortgage prepaid
                                                     65  Payoff - mortgage repurchased
                                                     69  Payoff - mortgage liquidated
                                                     70  Transfer to REO (status change exception)
                                                     72  Foreclosure (change of status from Active to Foreclosure)
                                                     80  Substituted Loan - Loan is added as a substitute for
                                                         another loan
                                                     81  Reinstated Loan - Loan was previously delinquent, but
                                                         the borrower has brought it current.
                                                     90  Loan Modified - This is an exceptional activity code
                                                         which is reserved for future use.  Modifications
                                                         typically require repurchase from the trust prior to
                                                         modifying the loan.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Exception Date            9        YYYYMMDD          Date the exception occurred.  If an exception has not occurred, this
                                                     field should contain the default value of 19000101.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Mortgage Note Rate        10       6.3               Rate associated with the borrower's scheduled payment
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Mortgage P&I Amount       11       13.2              Principal and interest portion of the borrowers minimum installment.
                                                     Note:  100% of the principal and interest amount should be entered in
                                                     this field, including servicing and guarantee fees.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Realized Losses           12       13.2              Amount of realized losses for that period.  This field will also include
                                                     any supplemental claims or proceeds for loans liquidated in a previous
                                                     cycle.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Cumulative Principal      13       13.2              Total principal payments advanced by the Servicer and not repaid by the
Advances                                             borrower.
                                                     NOT APPLICABLE--DO NOT REPORT
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Interest Advances         14       13.2              Amount of interest payment advanced by the Servicer for that period.
                                                     NOT APPLICABLE--DO NOT REPORT
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Loan Status               15       1(X)              Pertains to activity in the prior reporting cycle.
                                                     0 - Active
                                                     4 - Foreclosure
                                                     5 - REO
                                                     6 - Closed  (PAYOFFS & REPURCHASES)
                                                     9 - Bankruptcy (OVERRIDES ACTIVE STATUS)
                                                     Note: 30,60 & 90 day delinquency status will be derived from the DDLPI
                                                     field.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Subservicer No.           16        6                Subservicer ID# - 6 digits
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Actual Loan Balance       17       13.2              Actual loan balance outstanding from the borrower.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      F-2
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
        DATA:             FIELD         FORMAT       DEFINITION
    T0NNMMYY.LNS           NBR
------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>      <C>               <C>
Next Interest Rate        18       YYYYMMDD          Applies only to ARM loans and reflects the next pending interest rate
Change Date                                          adjustment date. DEFAULT IS 19000101.  SINCE LOANS ADJUST MONTHLY, ONLY
                                                     REPORT THE FIRST ADJUSTMENT DATE FOR LOANS WITH TEASER PERIOD.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Next Interest Payment     19       YYYYMMDD          Applies only to payment capped ARM loans and reflects the next pending
Change Date                                          payment adjustment date. DEFAULT IS 19000101.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Index Value at Reset      20       6.3               The index rate used in determining the ARM coupon.
Date                                                 DEFAULT VALUE IS 0 FOR AN ARM LOAN IF THE INDEX IS NOT CHANGING IN THE
                                                     CURRENT PERIOD.  ALSO POPULATE 0 IF THE LOAN IS A FIXED RATE LOAN.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Next Mortgage Rate        21       6.3               Should be populated in advance of the rate adjustment DEFAULT VALUE IS
expected at reset date                               0 FOR AN ARM LOAN IF THE RATE IS NOT CHANGING.  DEFAULT VALUE IS 0 IF
                                                     THE LOAN IS A FIXED RATE LOAN.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Collateral Group No. #    22       2                 This is a collateral grouping number for whole loan directed collateral
                                                     deals. DEFAULT VALUE IS 0.  REPORT THE HELOCS AND FIXED RATES SEPARATELY.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Current Arrearage Paid    23       13.2              The current amount of cashflow applied to the arrearage balance.
                                                     Applies to loans that have been or are currently in default. DEFAULT
                                                     VALUE IS 0.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Outstanding Arrearage     24       13.2              The total amount of outstanding interest accrued under forbearance
Balance                                              period, after current arrearage payment. DEFAULT VALUE IS 0.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Loan Number               25       13(X)             Loan number assigned to the mortgage by ___.  Used for disclosure.
------------------------------------------------------------------------------------------------------------------------------
Blank                              1(x)
------------------------------------------------------------------------------------------------------------------------------
Prepayment Premium        26       13.2              The borrowers penalty payment for prepaying his mortgage.  This amount
Amount                                               is allocated  in aggregate as a directed collateral amount to a specific
                                                     bond.  DEFAULT VALUE IS 0.
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Notes:
o     File must be a text file (either space or tab delimited).
o     Any dates should be in YYYYMMDD  format.  They should not contain  slashes
      (/) or dashes (-).
o     Number fields should NOT include commas.
o     Any negative number should be denoted by a "-" in front of the number,  do
      not put the "-" after the number or use parentheses.

                                      F-3EXHIBIT 4.2
                                                                  EXECUTION COPY

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

                                 TRUST AGREEMENT

                                     between

                       GREENPOINT MORTGAGE SECURITIES INC.
                                     Sponsor

                                       and

                            WILMINGTON TRUST COMPANY
                                  Owner Trustee

                             Dated as of May 1, 2003

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                              <C>
ARTICLE I Definitions.............................................................................................1

     SECTION 1.1.          Defined Terms..........................................................................1
     SECTION 1.2.          Other Definitional Provisions..........................................................2
     SECTION 1.3.          Action by or Consent of Noteholders and Residual Certificateholders....................3

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

     SECTION 2.1.          Name...................................................................................3
     SECTION 2.2.          Office.................................................................................3
     SECTION 2.3.          Purposes and Powers....................................................................3
     SECTION 2.4.          Appointment of Owner Trustee...........................................................4
     SECTION 2.5.          Initial Capital Contribution of Trust Estate...........................................4
     SECTION 2.6.          Declaration of Trust...................................................................4
     SECTION 2.7.          Liability..............................................................................5
     SECTION 2.8.          Title to Trust Property................................................................5
     SECTION 2.9.          Situs of Trust.........................................................................5
     SECTION 2.10.         Representations and Warranties of the Sponsor..........................................5
     SECTION 2.11.         Federal Income Tax Allocations.........................................................6
     SECTION 2.12.         Covenants of the Sponsor...............................................................7
     SECTION 2.13.         Covenants of the Residual Certificateholders...........................................8

ARTICLE III [Reserved]............................................................................................9

ARTICLE IV Ownership of Trust Property; Residual Certificates and Transfer of Interests...........................9

     SECTION 4.1.          Trust Property Ownership...............................................................9
     SECTION 4.2.          The Residual Certificates..............................................................9
     SECTION 4.3.          Authentication of Residual Certificates................................................9
     SECTION 4.4.          Registration of Transfer and Exchange of Residual Certificates........................10
     SECTION 4.5.          Mutilated, Destroyed, Lost or Stolen Residual Certificates............................10
     SECTION 4.6.          Persons Deemed Residual Certificateholders............................................11
     SECTION 4.7.          Access to List of Residual Certificateholders' Names and Addresses....................11
     SECTION 4.8.          Maintenance of Office or Agency.......................................................11
     SECTION 4.9.          ERISA Restrictions....................................................................11
     SECTION 4.10.         Restrictions on Transfer of Residual Certificates.....................................12
     SECTION 4.11.         Acceptance of Obligations.............................................................13
     SECTION 4.12.         Distributions on Residual Certificates................................................13

ARTICLE V Voting Rights and Other Actions........................................................................13

     SECTION 5.1.          Prior Notice with Respect to Certain Matters..........................................13
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                              <C>
     SECTION 5.2.          Action by Residual Certificateholders with Respect to Certain Matters.................14
     SECTION 5.3.          Action with Respect to Bankruptcy.....................................................15
     SECTION 5.4.          Restrictions on Residual Certificateholders' Power....................................15
     SECTION 5.5.          Majority Control......................................................................16
     SECTION 5.6.          Rights of the Insurer.................................................................16
     SECTION 5.7.          [Reserved]............................................................................16
     SECTION 5.8.          Insurer's Rights Regarding Actions, Proceedings or Investigations.....................16

ARTICLE VI Certain Duties........................................................................................18

     SECTION 6.1.          Accounting and Records to the Noteholders, Residual Certificateholders, the
                           Internal Revenue Service and Others...................................................18
     SECTION 6.2.          Signature on Returns; Tax Matters Partner.............................................18
     SECTION 6.3.          Underwriting Agreement................................................................18

ARTICLE VII Authority and Duties of Owner Trustee................................................................19

     SECTION 7.1.          General Authority.....................................................................19
     SECTION 7.2.          General Duties........................................................................19
     SECTION 7.3.          Action upon Instruction...............................................................19
     SECTION 7.4.          No Duties Except as Specified in this Agreement or in Instructions....................20
     SECTION 7.5.          No Action Except under Specified Documents or Instructions............................21
     SECTION 7.6.          Restrictions..........................................................................21

ARTICLE VIII Concerning the Owner Trustee........................................................................21

     SECTION 8.1.          Acceptance of Trust and Duties........................................................21
     SECTION 8.2.          Furnishing of Documents...............................................................22
     SECTION 8.3.          Representations and Warranties........................................................22
     SECTION 8.4.          Reliance; Advice of Counsel...........................................................23
     SECTION 8.5.          Not Acting in Individual Capacity.....................................................23
     SECTION 8.6.          Owner Trustee Not Liable for Notes, Residual Certificates or Mortgage Loans...........23
     SECTION 8.7.          Owner Trustee May Own Notes and Residual Certificates.................................24
     SECTION 8.8.          Payments from Owner Trust Estate......................................................24
     SECTION 8.9.          Doing Business in Other Jurisdictions.................................................24

ARTICLE IX Compensation of Owner Trustee.........................................................................25

     SECTION 9.1.          Owner Trustee's Fees and Expenses.....................................................25
     SECTION 9.2.          Indemnification.......................................................................25
     SECTION 9.3.          Payments to the Owner Trustee.........................................................25
     SECTION 9.4.          Non-recourse Obligations..............................................................25

ARTICLE X Termination of Trust Agreement.........................................................................25

     SECTION 10.1.         Termination of Trust Agreement........................................................25
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                              <C>
ARTICLE XI Successor Owner Trustees and Additional Owner Trustees................................................27

     SECTION 11.1.         Eligibility Requirements for Owner Trustee............................................27
     SECTION 11.2.         Resignation or Removal of Owner Trustee...............................................27
     SECTION 11.3.         Successor Owner Trustee...............................................................28
     SECTION 11.4.         Merger or Consolidation of Owner Trustee..............................................29
     SECTION 11.5.         Appointment of Co-Owner Trustee or Separate Owner Trustee.............................29

ARTICLE XII Miscellaneous........................................................................................30

     SECTION 12.1.         Supplements and Amendments............................................................30
     SECTION 12.2.         No Legal Title to Owner Trust Estate in Residual Certificateholders...................31
     SECTION 12.3.         Limitations on Rights of Others.......................................................31
     SECTION 12.4.         Notices...............................................................................32
     SECTION 12.5.         Severability..........................................................................32
     SECTION 12.6.         Separate Counterparts.................................................................32
     SECTION 12.7.         Assignments; Insurer..................................................................32
     SECTION 12.8.         No Petition...........................................................................33
     SECTION 12.9.         No Recourse...........................................................................33
     SECTION 12.10.        Headings..............................................................................33
     SECTION 12.11.        GOVERNING LAW.........................................................................33
     SECTION 12.12.        Servicer..............................................................................33
</TABLE>

EXHIBITS

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

                                      iii
<PAGE>

            TRUST  AGREEMENT dated as of May 1, 2003 (the  "AGREEMENT")  between
GREENPOINT MORTGAGE SECURITIES INC., a Delaware corporation (the "SPONSOR"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Owner Trustee.

                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.1. DEFINED TERMS. For the purposes of this Agreement,  the
following terms shall have the meanings set forth below.  All other  capitalized
terms used herein but not defined  shall have the  meanings set forth in Annex A
to the Indenture dated as of May 1, 2003 (the  "INDENTURE"),  between the Issuer
and the Indenture Trustee, as the same may be amended and supplemented from time
to time.

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

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

            "BENEFIT  PLAN"  shall  have the  meaning  assigned  to such term in
Section 4.9.

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

            "CERTIFICATE  REGISTER" and  "CERTIFICATE  REGISTRAR" shall mean the
register maintained and the registrar respectively appointed pursuant to Section
4.4.

            "DEFINITIVE RESIDUAL  CERTIFICATES" shall mean Residual Certificates
issued in certificated, fully registered form.

            "EXPENSES"  shall have the meaning  assigned to such term in Section
9.2.

            "INDEMNIFIED  PARTIES" shall have the meaning  assigned to such term
in Section 9.2.

            "INSTRUCTING  PARTY" shall have the meaning assigned to such term in
Section 7.3.

            "OWNER TRUST ESTATE" shall mean all right, title and interest of the
Trust in and to the  property  and  rights  assigned  to the Trust  pursuant  to
Article II of the Sale and Servicing  Agreement,  all funds on deposit from time
to time in the Collection  Account and all other property of the Trust from time
to time,  including any rights of the Issuer  pursuant to the Sale and Servicing
Agreement and any rights of the Sponsor, in its capacity as Purchaser,  pursuant
to the Mortgage Loan Purchase Agreement.

            "PROPOSER"  shall have the meaning  ascribed to it in Section 5.2(b)
herein.
<PAGE>

            "RESIDUAL CERTIFICATE" shall mean a trust certificate evidencing the
beneficial  ownership  interest  of a Residual  Certificateholder  in the Trust,
substantially in the form of Exhibit B attached hereto.

            "RESIDUAL  CERTIFICATEHOLDER"  shall mean the Person in whose name a
Residual Certificate is registered on the Certificate Register.

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

            "SECURITY MAJORITY" shall mean a majority by principal amount of the
Noteholders  so long as the Notes are  outstanding  and a majority by  principal
amount of the Residual Certificateholders thereafter.

            "STATUTORY  TRUST  STATUTE" shall mean Chapter 38 of Title 12 of the
Delaware  Code,  12 DEL.  CODE ss. 3801 ET SEQ. as the same may be amended  from
time to time.

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

            SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.

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

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

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

                                       2
<PAGE>

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

            SECTION  1.3.  ACTION BY OR  CONSENT  OF  NOTEHOLDERS  AND  RESIDUAL
CERTIFICATEHOLDERS.

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

                                   ARTICLE II

                                  ORGANIZATION

            SECTION  2.1.  NAME.  There is hereby  formed a trust to be known as
"GreenPoint Home Equity Loan Trust 2003-1",  in which name the Owner Trustee may
conduct  the  business  of the  Trust,  make and  execute  contracts  and  other
instruments on behalf of the Trust and sue and be sued.

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

            SECTION 2.3. PURPOSES AND POWERS.

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

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

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

                                       3
<PAGE>

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

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

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

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

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

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

            SECTION 2.6. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will  hold the  Owner  Trust  Estate in trust  upon and  subject  to the
conditions   set  forth   herein  for  the  use  and  benefit  of  the  Residual
Certificateholders,  subject  to the  obligations  of the Trust  under the Basic
Documents. It is the intention of the parties hereto that the Trust constitute a
statutory  trust  under the  Statutory  Trust  Statute  and that this  Agreement
constitute the governing instrument of such statutory trust. It is the intention
of the parties hereto that,  solely for income tax purposes,  the Trust shall be
treated as a branch; PROVIDED,  HOWEVER, that in the event Residual Certificates
are owned by more than one Residual  Certificateholder,  it is the  intention of
the parties hereto that, solely for income and franchise tax purposes, the Trust
shall then be treated as a partnership and that,  unless  otherwise  required by
appropriate tax  authorities,  only after such time the Trust will file or cause
to be  filed  annual  or  other  necessary  returns,  reports  and  other  forms
consistent with the  characterization of the Trust as a partnership for such tax
purposes.  Effective as of the date  hereof,  the Owner  Trustee  shall have all
rights,  powers and duties set

                                       4
<PAGE>

forth herein and to the extent not inconsistent  herewith, in the Stautory Trust
Statute  with  respect to  accomplishing  the  purposes of the Trust.  The Owner
Trustee shall file the Certificate of Trust with the Secretary of State.

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

            SECTION 2.8. TITLE TO TRUST PROPERTY.

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

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

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

            SECTION 2.10.  REPRESENTATIONS  AND  WARRANTIES OF THE SPONSOR.  The
Sponsor makes the following  representations  and  warranties on which the Owner
Trustee  relies in  accepting  the Owner  Trust  Estate in trust and issuing the
Notes and the Residual Certificates and upon which the Insurer relies in issuing
the Policy.

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

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

                                       5
<PAGE>

            (c) The Sponsor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; this Agreement, when executed
and  delivered  by the Sponsor,  will  constitute  the legal,  valid and binding
obligations of the Sponsor,  enforceable in accordance with its terms, except as
such  enforceability may be limited by bankruptcy,  insolvency,  reorganization,
moratorium  or other  similar laws  affecting  creditors'  rights  generally and
general equitable  principles;  the Sponsor has full power and authority to sell
and assign the property to be sold and assigned to and deposited  with the Trust
and the Sponsor has duly  authorized such sale and assignment and deposit to the
Trust  by all  necessary  corporate  action;  and the  execution,  delivery  and
performance  of this  Agreement  has been duly  authorized by the Sponsor by all
necessary corporate action;

            (d) No consent,  license,  approval or authorization or registration
or declaration  with, any Person or with any governmental  authority,  bureau or
agency is required in connection with the execution,  delivery or performance of
this Agreement and the Basic  Documents,  except for such as have been obtained,
effected or made;

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

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

            SECTION 2.11. FEDERAL INCOME TAX ALLOCATIONS(a) . For so long as the
Trust has a single owner for federal income tax purposes,  it will,  pursuant to
Treasury Regulations  promulgated under section 7701 of the Code, be disregarded
as an entity distinct from the Residual Certificateholder for all federal income
tax  purposes.  Accordingly,  for  federal  income tax  purposes,  the  Residual
Certificateholder  will be treated  as (i) owning all assets  owned by the Trust
and  (ii)  having  incurred  all  liabilities  incurred  by the  Trust  and  all
transactions  between  the  Trust  and the  Residual  Certificateholder  will be
disregarded.

                                       6
<PAGE>

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

            (c) In the event  that the Trust is  treated  as a  partnership  for
federal income tax purposes, net income of the Trust for any month as determined
for federal income tax purposes (and each item of income, gain, loss, credit and
deduction entering into the computation thereof) shall be allocated:  (i) to the
extent of available net income,  among the Residual  Certificateholders  and the
Holders of any other  securities  treated as equity in the partnership as of the
first  Record Date  following  the end of such  month,  in  proportion  to their
ownership of principal  amount of Residual  Certificates and any such securities
on such date; (ii) to the Sponsor, to the extent of any remaining net income.

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

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

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

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

                                       7
<PAGE>

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

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

            SECTION  2.13.  COVENANTS OF THE RESIDUAL  CERTIFICATEHOLDERS.  Each
Residual Certificateholder agrees:

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

            (b)   to   hereby    appoint   the   Sponsor   as   such    Residual
Certificateholder's  agent and  attorney-in-fact  to sign any federal income tax
information  return  filed on behalf of the Trust,  if any,  and agree that,  if
requested by the Trust, it will sign such federal income tax information  return
in  its  capacity  as  holder  of  an  interest  in  the  Trust.  Each  Residual
Certificateholder  also  hereby  agrees that in its tax returns it will not take
any position  inconsistent with those taken in any tax returns that may be filed
by the Trust;

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

            (d) until the completion of the events specified in Section 10.1(e),
not to, for any reason, institute proceedings for the Trust or the Sponsor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or  insolvency  proceedings  against  the Trust,  or file a petition  seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee,  trustee,  sequestrator (or other similar  official) of the Sponsor or
the Trust or a substantial part of its property,  or cause or permit the Sponsor
or the Trust to make any assignment  for the benefit

                                       8
<PAGE>

of its creditors,  or admit in writing its inability to pay its debts  generally
as they become due,  or declare or effect a  moratorium  on its debt or take any
action in furtherance of any such action.

            Except as provided in Section 2.13,  and  notwithstanding  any other
provision to the contrary in this Agreement, no Residual Certificateholder other
than the  Sponsor  in its  capacity  as the  "Sponsor"  shall be  deemed to have
adopted, be bound by, or succeed in any way to any representation by, or duty of
indemnification by or any other duty of, the Sponsor,  including those contained
in Sections 2.10, 2.12, 4.6, 9.2 or elsewhere herein.

                                   ARTICLE III

                                   [RESERVED]

                                   ARTICLE IV

  OWNERSHIP OF TRUST PROPERTY; RESIDUAL CERTIFICATES AND TRANSFER OF INTERESTS

            SECTION 4.1.  TRUST  PROPERTY  OWNERSHIP.  Upon the formation of the
Trust by the  contribution  by the Sponsor  pursuant to Section  2.5,  the Owner
Trustee,   contemporaneously   therewith,  having  full  power,  authority,  and
authorization  to  do  so,  has  executed,  authenticated,  dated,  issued,  and
delivered,  in the name and on behalf of the Trust,  to the Sponsor,  one (1) or
more Residual Certificates  representing in the aggregate a 100% interest in the
Trust,  and has  registered  such  Residual  Certificate(s)  on the  Certificate
Register in the name of the Sponsor.  The Sponsor shall be the sole  beneficiary
of the Trust. Such Residual Certificate(s) are duly authorized,  validly issued,
and entitled to the benefits of this Agreement. For so long as the Sponsor shall
own such 100% interest in the Trust,  the Sponsor  shall be the sole  beneficial
owner of the  Trust.  The  Sponsor  shall at all times  keep and own a  Residual
Certificate or Residual Certificates  representing no less than 1% interest, and
at no time  will the  Sponsor  sell or  alienate  its  interest  represented  by
Residual  Certificate(s)  in such a way as to reduce  its  aggregate  beneficial
ownership in the Residual Certificates to less than 1%.

            SECTION  4.2.  THE  RESIDUAL   CERTIFICATES.   Except  for  Residual
Certificates issued to the Sponsor, the Residual Certificates shall be issued in
denominations of $1,000 and integral multiples of $1,000 in excess thereof.  The
Residual  Certificates  shall be  executed  on  behalf of the Trust by manual or
facsimile  signature of an  authorized  officer of the Owner  Trustee.  Residual
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed,  authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefit of this
Agreement,  notwithstanding  that such  individuals  or any of them  shall  have
ceased to be so  authorized  prior to the  authentication  and  delivery of such
Residual Certificates or did not hold such offices at the date of authentication
and  delivery  of  such  Residual  Certificates.  A  transferee  of  a  Residual
Certificate shall become a Residual  Certificateholder  and shall be entitled to
the  rights  and  subject to the  obligations  of a Residual  Certificateholder,
hereunder,   upon  due  registration  of  such  Residual   Certificate  in  such
transferee's name pursuant to Section 4.4.

            SECTION 4.3.  AUTHENTICATION OF RESIDUAL CERTIFICATES.  Concurrently
with the initial  sale of the Mortgage  Loans to the Trust  pursuant to the Sale
and Servicing Agreement, the

                                       9
<PAGE>

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

            SECTION  4.4.  REGISTRATION  OF  TRANSFER  AND  EXCHANGE OF RESIDUAL
CERTIFICATES. The Certificate  Registrar shall keep or cause to be kept, at the
office or agency maintained  pursuant to Section 4.8, a Certificate  Register in
which,  subject to such  reasonable  regulations as it may prescribe,  the Owner
Trustee  shall  provide for the  registration  of Residual  Certificates  and of
transfers and exchanges of Residual  Certificates as herein provided.  The Owner
Trustee shall be the initial Certificate Registrar.

            In  furtherance  of and not in  limitation  of the  foregoing,  each
Residual   Certificateholder,   by  acceptance  of  its  Residual   Certificate,
specifically  acknowledges  that it has no right to or interest in any monies at
any time held in the Trust Estate  prior to the release of such monies  pursuant
to Section 8.7(d)(xiii) of the Indenture, as appropriate, such monies being held
in trust for the benefit of the Noteholders and the Insurer. Notwithstanding the
foregoing,  in the event that it is ever  determined that the monies held in the
Trust Estate constitute a pledge of collateral,  then the provisions of the Sale
and Servicing  Agreement shall be considered to constitute a security  agreement
and  the  Sponsor  and  the  Residual  Certificateholders  hereby  grant  to the
Indenture Trustee and the Insurer a first priority  perfected  security interest
in such amounts. In addition, each Residual Certificateholder,  by acceptance of
its Residual  Certificate  hereby  appoints the Sponsor as its agent to pledge a
first priority  perfected security interest in the Trust Estate, and any amounts
held  therein  from time to time to the  Indenture  Trustee  and the Insurer and
agrees to execute and deliver such instruments of conveyance, assignment, grant,
confirmation,  etc.,  as well as any financing  statements,  in each case as the
Insurer shall  consider  reasonably  necessary in order to perfect the Indenture
Trustee's security interest in the Mortgage Loans.

            SECTION  4.5.   MUTILATED,   DESTROYED,   LOST  OR  STOLEN  RESIDUAL
CERTIFICATES.  If (a) any mutilated Residual Certificate shall be surrendered to
the  Certificate  Registrar,  or if  the  Certificate  Registrar  shall  receive
evidence to its satisfaction of the  destruction,  loss or theft of any Residual
Certificate and (b) there shall be delivered to the Certificate  Registrar,  the
Owner  Trustee and the Insurer such  security or indemnity as may be required by
them to save each of them  harmless,  then in the  absence  of notice  that such
Residual  Certificate  shall have been  acquired by a bona fide  purchaser,  the
Owner  Trustee on behalf of the Trust shall  execute and the Owner Trustee shall
authenticate  and  deliver,  in exchange  for or in lieu of any such  mutilated,
destroyed,  lost or stolen  Residual  Certificate,  a new Residual  Certificate,
respectively,  of like class,  tenor and  denomination.  In connection  with the
issuance of any new Residual  Certificate under this Section,  the Owner Trustee
or the  Certificate  Registrar  may require the payment of a sum  sufficient  to
cover any tax or other  governmental  charge  that may be imposed in  connection

                                       10
<PAGE>

therewith.  Any duplicate  Residual  Certificate issued pursuant to this Section
shall constitute  conclusive  evidence of an ownership interest in the Trust, as
if  originally  issued,  whether or not the lost,  stolen or destroyed  Residual
Certificate shall be found at any time.

            SECTION  4.6.  PERSONS  DEEMED  RESIDUAL  CERTIFICATEHOLDERS.  Every
Person by virtue of becoming a Residual  Certificateholder  in  accordance  with
this Agreement and the rules and regulations of the Certificate  Registrar shall
be deemed to be bound by the terms of this Agreement.  Prior to due presentation
of a Residual  Certificate for registration of transfer,  the Owner Trustee, the
Certificate  Registrar and the Insurer and any agent of the Owner  Trustee,  the
Certificate  Registrar  and the Insurer,  may treat the Person in whose name any
Residual  Certificate  shall be  registered in the  Certificate  Register as the
owner of such Residual  Certificate  for the purpose of receiving  distributions
pursuant to the Sale and Servicing Agreement and the Indenture and for all other
purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar or
the Insurer nor any agent of the Owner Trustee, the Certificate Registrar or the
Insurer shall be bound by any notice to the contrary.

            SECTION 4.7.  ACCESS TO LIST OF RESIDUAL  CERTIFICATEHOLDERS'  NAMES
AND  ADDRESSES.  The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Sponsor or the Insurer,  within 15 days after receipt by the Owner
Trustee of a request therefor from such Person in writing,  a list, of the names
and  addresses of the Residual  Certificateholders  as of the most recent Record
Date. If three or more Holders of Residual  Certificates  or one or more Holders
of Residual  Certificates  evidencing  not less than 25% by Percentage  Interest
apply in writing to the Owner  Trustee,  and such  application  states  that the
applicants  desire to communicate  with other Residual  Certificateholders  with
respect to their rights under this Agreement or under the Residual  Certificates
and such  application is accompanied  by a copy of the  communication  that such
applicants  propose to  transmit,  then the Owner  Trustee  shall,  within  five
Business  Days after the receipt of such  application,  afford  such  applicants
access   during  normal   business   hours  to  the  current  list  of  Residual
Certificateholders.   Each  Holder,   by   receiving   and  holding  a  Residual
Certificate,  shall be deemed to have agreed not to hold any of the Sponsor, the
Servicer,  the Owner Trustee or the Insurer or any agent thereof  accountable by
reason of the disclosure of its name and address,  regardless of the source from
which such information was derived.

            SECTION  4.8.  MAINTENANCE  OF OFFICE OR AGENCY.  The Owner  Trustee
shall  maintain  in  Wilmington,  Delaware  an  office or  offices  or agency or
agencies where Residual  Certificates  may be surrendered  for  registration  of
transfer or exchange and where  notices and demands to or upon the Owner Trustee
in respect of the Residual  Certificates  and the Basic Documents may be served.
The Owner  Trustee  initially  designates  its  Corporate  Trust Office for such
purposes. The Owner Trustee shall give prompt written notice to the Sponsor, the
Residual Certificateholders and the Insurer of any change in the location of the
Certificate Register or any such office or agency.

            SECTION 4.9. ERISA RESTRICTIONS.  The Residual  Certificates may not
be acquired by or for the account of (i) an employee benefit plan (as defined in
Section  3(3) of ERISA) that is subject to the  provisions  of Title I of ERISA,
(ii) a plan  described in Section  4975(e)(1)  of the Code,  or (iii) any entity
whose underlying  assets include plan assets by reason of a plan's investment in
the entity (each, a "BENEFIT PLAN"). By accepting and holding its

                                       11
<PAGE>

beneficial  ownership interest in its Residual  Certificate,  the Holder thereof
shall be deemed to have represented and warranted that it is not a Benefit Plan.

            SECTION 4.10. RESTRICTIONS ON TRANSFER OF RESIDUAL CERTIFICATES.

            (a)  The  Residual  Certificates  shall  be  assigned,  transferred,
exchanged, pledged, financed,  hypothecated or otherwise conveyed (collectively,
for  purposes  of this  Section  4.10 and any  other  Section  referring  to the
Residual  Certificates,  "transferred"  or a "transfer") only in accordance with
this Section 4.10.

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

            (c) The Residual  Certificate and any interests therein shall not be
transferred except upon satisfaction of the following conditions precedent:  (i)
the Person  that  acquires a Residual  Certificate  shall (A) be  organized  and
existing  under the laws of the United States of America or any state thereof or
the District of Columbia;  (B) expressly  assume,  by an agreement  supplemental
hereto,  executed and  delivered to the Indenture  Trustee and the Insurer,  the
performance of every covenant and obligation of the Sponsor hereunder and (C) as
part of its  acquisition  of a Residual  Certificate,  acquire all rights of the
Sponsor or any transferee  under this Section  4.10(c) to amounts payable to the
Residual  Certificateholder or such transferee under Section 8.7(d)(xiii) of the
Indenture;  (ii) the Holder of the Residual  Certificates  shall  deliver to the
Indenture  Trustee and the Insurer an  Officer's  Certificate  stating that such
transfer and such  supplemental  agreement  comply with this Section 4.10(c) and
that all  conditions  precedent  provided  by this  Section  4.10(c)  have  been
complied with and an Opinion of Counsel  stating that all  conditions  precedent
provided by this Section  4.10(c) have been  complied  with,  and the  Indenture
Trustee may conclusively rely on such Officer's Certificate,  shall have no duty
to make  inquiries  with regard to the matters set forth therein and shall incur
no liability in so relying;  (iii) the Holder of the Residual Certificates shall
deliver to the  Indenture  Trustee  and the  Insurer a letter  from each  Rating
Agency  confirming  that its rating of the Notes,  after  giving  effect to such
transfer,  will not be reduced or withdrawn  without regard to the Policy;  (iv)
the  transferee  of the Residual  Certificates  shall  deliver to the  Indenture
Trustee  and the  Insurer an  Opinion  of  Counsel  to the effect  that (a) such
transfer  will not  adversely  affect  the  treatment  of the Notes  after  such
transfer as debt for federal and applicable state income tax purposes,  (b) such
transfer

                                       12
<PAGE>

will not  result in the  Trust  being  subject  to tax at the  entity  level for
federal or applicable  state tax  purposes,  (c) such transfer will not have any
material  adverse impact on the federal or applicable state income taxation of a
Noteholder  or any Residual  Certificateholder  and (d) such  transfer  will not
result in the  arrangement  created by this  Agreement  or any  "portion" of the
Trust, being treated as a taxable mortgage pool as defined in Section 7701(i) of
the Code; (v) all filings and other actions necessary to continue the perfection
of the  interest  of the Trust in the  Mortgage  Loans  and the  other  property
conveyed hereunder shall have been taken or made and (vi) the Insurer shall have
consented to such transfer.  Notwithstanding the foregoing,  the requirement set
forth in subclause  (i)(A) of this Section  4.10(c) shall not apply in the event
the  Indenture  Trustee  shall have  received a letter from each  Rating  Agency
confirming  that its  rating of the  Notes,  after  giving  effect to a proposed
transfer to a Person that does not meet the  requirement  set forth in subclause
(i)(A),  shall  not be  reduced  or  withdrawn  without  regard  to the  Policy.
Notwithstanding the foregoing,  the requirements set forth in this paragraph (c)
shall not apply to the initial  issuance  of the  Residual  Certificates  to the
Sponsor.

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

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

            SECTION  4.11.  ACCEPTANCE  OF  OBLIGATIONS.  The  Sponsor,  by  its
acceptance  of the Residual  Certificates,  agrees to be bound by and to perform
all the duties of the Sponsor set forth in this Agreement.

            SECTION 4.12. DISTRIBUTIONS ON RESIDUAL CERTIFICATES. The Holders of
the  Residual  Certificates  will be entitled to  distributions  on each Payment
Date, as provided in the Sale and Servicing Agreement and the Indenture.

                                    ARTICLE V

                         VOTING RIGHTS AND OTHER ACTIONS

            SECTION  5.1.  PRIOR NOTICE WITH  RESPECT TO CERTAIN  MATTERS.  With
respect to the following matters, the Owner Trustee shall not take action unless
at least 30 days before the taking of such action,  the Owner Trustee shall have
notified  the  Residual  Certificateholders  and the  Insurer  in writing of the
proposed  action and the Residual  Certificateholders  and the Insurer shall not
have  notified  the Owner  Trustee in  writing  prior to the 30th day after such
notice is given  that  such  Residual  Certificateholders  or the  Insurer  have
withheld consent or provided alternative direction:

                                       13
<PAGE>

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

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

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

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

            (e) the consent to the calling or waiver of any default of any Basic
Document;

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

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

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

            (i) do any act that conflicts with any other Basic Document;

            (j) do any act  which  would  make it  impossible  to  carry  on the
ordinary business Trust as described in Section 2.3 hereof;

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

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

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

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

            SECTION 5.2. ACTION BY RESIDUAL  CERTIFICATEHOLDERS  WITH RESPECT TO
CERTAIN MATTERS.

            (a)  Upon  the  written  request  from  time  to  time  of  Residual
Certificateholder(s)  evidencing  not less than 51% by  Percentage  Interest and
subject to the prior

                                       14
<PAGE>

review by the  Insurer,  the Owner  Trustee  shall take  appropriate  actions to
remove  Mortgage  Loans from the Pool  pursuant to Section  2.07 of the Sale and
Servicing  Agreement.  The Owner  Trustee  shall  notify the Insurer of any such
proposed  removal.  The Owner  Trustee  will take such  actions  with respect to
removal of Mortgage  Loans as may from time to time be proposed by the  Residual
Certificateholders pursuant to Sections 5.2(b) and 5.5.

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

            SECTION 5.3.  ACTION WITH RESPECT TO BANKRUPTCY.  Until one year and
one day following  the day on which the Notes have been paid in full,  the Owner
Trustee shall not have the power to, and shall not,  commence any  proceeding or
other actions  contemplated by Section 2.12(b) relating to the Trust without the
prior written  consent of the Insurer.  Until one year and one day following the
day on which the Notes have been paid in full,  all  amounts  due to the Insurer
under the Insurance  Agreement have been paid in full, the Policy has terminated
and the Indenture  Trustee has surrendered the Policy to the Insurer,  the Owner
Trustee shall not have the power to, and shall not,  commence any  proceeding or
other actions  contemplated by Section 2.12(b) relating to the Trust without the
prior written consent of all of the Residual Certificateholders and the Insurer,
and the delivery to the Owner  Trustee by each such  Residual  Certificateholder
and   the   Insurer,   of  a   certificate   certifying   that   such   Residual
Certificateholder  reasonably  believes that the Trust is  insolvent.  The Owner
Trustee in undertaking such proceedings or other actions contemplated by Section
2.12(b)  relating to the Trust shall  consider the interest of the  Noteholders,
the Insurer in addition to the  interests  of the Trust and whether the Trust is
insolvent.  The Owner  Trustee  shall not  commence  such  proceedings  or other
actions contemplated by Section 2.12(b) unless the Owner Trustee shall have been
furnished  (at the  expense  of the  Trust)  with a letter  from an  independent
accounting firm of national  reputation stating that in the opinion of such firm
the Trust is then insolvent. The provisions of this Section do not constitute an
acknowledgement  or  admission  by the Trust,  the Owner  Trustee,  any Residual
Certificateholder  or any creditor of the Trust that the Trust is eligible to be
a debtor under the United States Bankruptcy Code, 11 U.S.C.  ss.ss. 101 ET SEQ.,
as amended.

            SECTION 5.4. RESTRICTIONS ON RESIDUAL CERTIFICATEHOLDERS' POWER.

            (a) Neither the Residual  Certificateholders  nor the Insurer  shall
direct  the Owner  Trustee  to take or  refrain  from  taking any action if such
action or inaction would be contrary to any obligation of the Trust or the Owner
Trustee under this Agreement or any of the Basic  Documents or would be contrary
to  Section  2.3 or  otherwise  contrary  to law nor shall the Owner  Trustee be
obligated to follow any such direction, if given.

            (b) No  Residual  Certificateholder  (other than the Sponsor as sole
Residual Certificateholder) shall have any right by virtue or by availing itself
of any provisions of this

                                       15
<PAGE>

Agreement to institute any suit,  action, or proceeding in equity or at law upon
or under or with respect to this  Agreement or any Basic  Document,  unless such
party is the  Instructing  Party  pursuant  to Section 7.3 and unless such party
previously shall have given to the Owner Trustee a written notice of default and
of the  continuance  thereof,  as  provided in this  Agreement,  and also unless
Residual Certificateholders  evidencing not less than 25% by Percentage Interest
shall have made written request upon the Owner Trustee to institute such action,
suit or proceeding  in its own name as Owner  Trustee  under this  Agreement and
shall have  offered to the Owner  Trustee  such  reasonable  indemnity as it may
require against the costs,  expenses and  liabilities to be incurred  therein or
thereby,  and the Owner  Trustee,  for 30 days after its receipt of such notice,
request,  and offer of indemnity,  shall have  neglected or refused to institute
any such action,  suit, or proceeding,  and during such 30-day period no request
or waiver  inconsistent  with such  written  request has been given to the Owner
Trustee pursuant to and in compliance with this Section or Section 7.3; it being
understood  and  intended,  and  being  expressly  covenanted  by each  Residual
Certificateholder with every other Residual Certificateholder, the Owner Trustee
or the Insurer, that no Holders of Residual Certificates shall have any right in
any  manner  whatever  by virtue or by  availing  itself  or  themselves  of any
provisions of this Agreement to affect,  disturb, or prejudice the rights of the
Holders  of any  other of the  Residual  Certificates,  or to  obtain or seek to
obtain  priority over or preference to any other such Holder,  or to enforce any
right under this Agreement,  except in the manner provided in this Agreement and
for the equal,  ratable,  and common benefit of all Residual  Certificateholders
and the Insurer.  For the protection  and  enforcement of the provisions of this
Section 5.4, each and every  Residual  Certificateholder,  the Owner Trustee and
the Insurer shall be entitled to such relief as can be given either at law or in
equity.

            SECTION 5.5. MAJORITY CONTROL. No Residual  Certificateholder  shall
have any right to vote or in any manner  otherwise  control  the  operation  and
management of the Trust except as expressly  provided in this Agreement.  Except
as  expressly  provided  herein,  any action  that may be taken by the  Residual
Certificateholders  under this Agreement may be taken by the Holders of Residual
Certificates  evidencing  not less  than a 51% by  Percentage  Interest  of such
class.  Except as expressly  provided herein, any written notice of the Residual
Certificateholders  delivered  pursuant to this Agreement  shall be effective if
signed by Residual Certificateholders  evidencing not less than a 51% Percentage
Interest in such Class at the time of the delivery of such notice.

            SECTION 5.6. RIGHTS OF THE INSURER.  Notwithstanding anything to the
contrary  in the Basic  Documents,  without  the prior  written  consent  of the
Insurer, the Owner Trustee shall not (i) remove the Servicer,  (ii) initiate any
claim,  suit or  proceeding  by the  Trust  or  compromise  any  claim,  suit or
proceeding  brought by or  against  the  Trust,  other than with  respect to the
enforcement  of any  Mortgage  Loan or any  rights  of the Trust  thereunder  or
confess  a  judgement   against  the  Trust,   (iii)  authorize  the  merger  or
consolidation  of the  Trust  with or into any  other  statutory  trust or other
entity or convey or transfer all or  substantially  all of the Trust's assets to
any  other  Person,  (iv)  amend  the  Certificate  of Trust or (v)  amend  this
Agreement in accordance with Section 12.1 of this Agreement.

            SECTION 5.7.  INSURER'S  RIGHTS  REGARDING  ACTIONS,  PROCEEDINGS OR
INVESTIGATIONS.  Until all Notes have been paid in full, all amounts owed to the
Insurer have been

                                       16
<PAGE>

paid in full,  the Insurance  Agreement has  terminated  and the Policy has been
returned to the Insurer for cancellation, the following provisions shall apply:

            (a) Notwithstanding  anything contained herein or in the other Basic
Documents to the contrary,  the Insurer shall have the right to participate  in,
to direct the  enforcement or defense of, and, at the Insurer's sole option,  to
institute or assume the defense of, any action, proceeding or investigation that
could adversely  affect the Trust, the Owner Trust Estate,  the Collateral,  the
Trust Property or the rights or  obligations  of the Insurer  hereunder or under
the Policy or the Basic Documents, including (without limitation) any insolvency
or bankruptcy  proceeding in respect of the Servicer,  the Seller,  the Sponsor,
the Trust or any affiliate  thereof.  Following notice to the Indenture Trustee,
the Insurer shall have exclusive right to determine, in its sole discretion, the
actions necessary to preserve and protect the Trust, the Owner Trust Estate, the
Collateral,  and the Trust  Property.  All costs and  expenses of the Insurer in
connection with such action,  proceeding or  investigation,  including  (without
limitation) any judgment or settlement entered into affecting the Insurer or the
Insurer's interests, shall be included in the Reimbursement Amount.

            (b) In connection with any action,  proceeding or investigation that
could adversely  affect the Trust, the Owner Trust Estate,  the Collateral,  the
Trust Property or the rights or  obligations  of the Insurer  hereunder or under
the Policy or the Basic Documents, including (without limitation) any insolvency
or bankruptcy  proceeding in respect of the Servicer,  the Seller,  the Sponsor,
the Trust or any affiliate thereof, the Owner Trustee hereby agrees to cooperate
with,  and to take such action as directed by, the Insurer,  including  (without
limitation)  entering into such  agreements and settlements as the Insurer shall
direct, in its sole discretion, without the consent of any Noteholder.

            (c) The Owner Trustee hereby agrees to provide to the Insurer prompt
written notice of any action,  proceeding or investigation  that names the Trust
or the Indenture  Trustee as a party or that could  adversely  affect the Trust,
the Owner Trust  Estate,  the  Collateral,  the Trust  Property or the rights or
obligations of the Insurer hereunder or under the Policy or the Basic Documents,
including  (without  limitation)  any  insolvency  or  bankruptcy  proceeding in
respect of the  Servicer,  the Seller,  the Sponsor,  the Trust or any affiliate
thereof.

            (d) Notwithstanding anything contained herein or in any of the other
Basic  Documents  to the  contrary,  the Owner  Trustee  shall not,  without the
Insurer's prior written consent or unless directed by the Insurer,  undertake or
join any  litigation  or agree to any  settlement  of any action,  proceeding or
investigation  affecting the Trust, the Owner Trust Estate, the Collateral,  the
Trust Property or the rights or  obligations  of the Insurer  hereunder or under
the Policy or the Basic Documents.

            (e) Each Residual  Certificateholder,  by acceptance of its Residual
Certificate, as appropriate,  and the Owner Trustee agree that the Insurer shall
have such  rights as set forth in this  Section,  which are in  addition  to any
rights of the Insurer  pursuant to the other  provisions of the Basic Documents,
that the rights set forth in this Section may be  exercised  by the Insurer,  in
its sole  discretion,  without  the  need for the  consent  or  approval  of any
Residual  Certificateholder  or the  Owner  Trustee,  notwithstanding  any other
provision  contained  herein or in any of the

                                       17
<PAGE>

other Basic  Documents,  and that nothing  contained  in this  Section  shall be
deemed to be an obligation of the Insurer to exercise any of the rights provided
for herein.

                                   ARTICLE VI

                                 CERTAIN DUTIES

            SECTION 6.1.  ACCOUNTING  AND RECORDS TO THE  NOTEHOLDERS,  RESIDUAL
CERTIFICATEHOLDERS, THE INTERNAL REVENUE SERVICE AND OTHERS. Subject to Sections
8.01(b)(iii) and 8.01(c) of the Sale and Servicing Agreement,  the Sponsor shall
(a)  maintain (or cause to be  maintained)  the books of the Trust on a calendar
year basis on the accrual method of accounting,  including,  without limitation,
the  allocations of net income under Section 2.11 hereof,  (b) deliver (or cause
to be delivered) to each Residual  Certificateholder,  as may be required by the
Code and applicable  Treasury  Regulations,  such information as may be required
(including    Schedule   K-1,   if   applicable)   to   enable   each   Residual
Certificateholder  to prepare its federal and state income tax returns, (c) file
or cause to be filed,  if  necessary,  such tax  returns  relating  to the Trust
(including a partnership  information  return,  Form 1065, if  applicable),  and
direct  the  Owner  Trustee  or the  Servicer,  as the case may be, to make such
elections  as may  from  time to time  be  required  or  appropriate  under  any
applicable  state or federal  statute or rule or regulation  thereunder so as to
maintain  the  Trust's  characterization  as a branch,  or if  applicable,  as a
partnership,  for  federal  income tax  purposes  and (d) collect or cause to be
collected any  withholding  tax as described in and in  accordance  with Section
8.01(b)(ii)  of the Sale and  Servicing  Agreement  with  respect  to  income or
distributions to Residual  Certificateholders and the appropriate forms relating
thereto.  The Owner Trustee or the Servicer,  as the case may be, shall make all
elections  pursuant to this Section as directed in writing by the  Sponsor.  The
Owner Trustee shall sign all tax information  returns, if any, filed pursuant to
this  Section 6.1 and any other  returns as may be required by law, and in doing
so shall  rely  entirely  upon,  and shall  have no  liability  for  information
provided  by, or  calculations  provided  by, the Sponsor or the  Servicer.  The
Sponsor will direct the Owner  Trustee and the Owner  Trustee  shall elect under
Section 1278 of the Code to include in income currently any market discount that
accrues  with respect to the Mortgage  Loans.  The Sponsor  shall not direct the
Owner  Trustee  to make,  and the Owner  Trustee  shall not make,  the  election
provided under Section 754 of the Code.

            SECTION 6.2. SIGNATURE ON RETURNS; TAX MATTERS PARTNER.

            (a)  Notwithstanding  the provisions of Section 6.1 and in the event
that the Trust is characterized  as a partnership,  the Owner Trustee shall sign
on behalf of the Trust the tax  returns  of the  Trust,  unless  applicable  law
requires a Residual Certificateholder to sign such documents, in which case such
documents shall be signed by the Sponsor.

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

            SECTION  6.3.  UNDERWRITING   AGREEMENT.   The  Servicer  is  hereby
authorized to execute and deliver the Underwriting Agreement with respect to the
Notes.

                                       18
<PAGE>

                                   ARTICLE VII

                      AUTHORITY AND DUTIES OF OWNER TRUSTEE

            SECTION 7.1. GENERAL AUTHORITY.  The Owner Trustee is authorized and
directed to execute and deliver the Basic  Documents to which the Trust is named
as a party and each  certificate or other document  attached as an exhibit to or
contemplated  by the Basic  Documents to which the Trust is named as a party and
any amendment  thereto,  in each case, in such form as the Sponsor shall approve
as evidenced  conclusively  by the Owner  Trustee's  execution  thereof,  and on
behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver
Class A Notes in the aggregate principal amount of $290,418,000.  In addition to
the foregoing,  the Owner Trustee is authorized,  but shall not be obligated, to
take all actions  required of the Trust  pursuant  to the Basic  Documents.  The
Owner Trustee is further authorized from time to time to take such action as the
Instructing Party recommends with respect to the Basic Documents so long as such
activities  are  consistent  with the  terms of the Basic  Documents.  The Owner
Trustee may rely on the  Manager to carry out any action that the Owner  Trustee
is authorized or directed to perform  hereunder,  to the extent permitted by the
Management Agreement.

            SECTION  7.2.  GENERAL  DUTIES.  It shall  be the duty of the  Owner
Trustee to discharge  (or cause to be  discharged)  all of its  responsibilities
pursuant  to the  terms of this  Agreement  and to  administer  the Trust in the
interest of the Holders,  subject to the Basic  Documents and in accordance with
the  provisions of this  Agreement.  Notwithstanding  the  foregoing,  the Owner
Trustee  shall be deemed to have  discharged  its  duties  and  responsibilities
hereunder and under the Basic Documents to the extent the Servicer has agreed in
the Sale and Servicing  Agreement to perform any act or to discharge any duty of
the Trust or the Owner Trustee  hereunder or under any Basic  Document,  and the
Owner  Trustee shall not be liable for the default or failure of the Servicer to
carry out its obligations under the Sale and Servicing  Agreement or the failure
of the Manager to carry out its obligations under the Management Agreement.

            SECTION 7.3. ACTION UPON INSTRUCTION.

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

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

                                       19
<PAGE>

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

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

            SECTION 7.4. NO DUTIES  EXCEPT AS SPECIFIED IN THIS  AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any  payment  with  respect  to,  register,  record,  sell,  dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this  Agreement  or in any  document or written  instruction  received by the
Owner  Trustee  pursuant to Section  7.3; and no implied  duties or  obligations
shall be read  into  this  Agreement  or any Basic  Document  against  the Owner
Trustee. The Owner Trustee shall have no responsibility to file any financing or
continuation  statement in any public office at any time or otherwise to perfect
or to maintain the  perfection  of any  security  interest or lien granted to it
hereunder or to prepare or file any Commission filing for the Trust or to record
this Agreement or any Basic Document. The Owner Trustee nevertheless agrees that
it will,  at its own cost  and  expense,  promptly  take  all  action  as may be
necessary  to  discharge  any Liens on any part of the Owner  Trust  Estate that
result from  actions by, or claims  against,  the Owner  Trustee  (solely in its
individual  capacity)  and  that  are  not  related  to  the  ownership  or  the
administration of the Owner Trust Estate.

                                       20
<PAGE>

            SECTION  7.5.  NO  ACTION  EXCEPT  UNDER   SPECIFIED   DOCUMENTS  OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or  otherwise  deal  with any  part of the  Owner  Trust  Estate  except  (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement,  (ii) in accordance with the Basic Documents
and (iii) in accordance with any document or instruction  delivered to the Owner
Trustee pursuant to Section 7.3.

            SECTION  7.6.  RESTRICTIONS.  The Owner  Trustee  shall not take any
action  (a) that is  inconsistent  with the  purposes  of the Trust set forth in
Section 2.3 or (b) that,  to the actual  knowledge of the Owner  Trustee,  would
result in the Trust's  becoming  taxable as a corporation  or a publicly  traded
partnership  for federal  income tax purposes.  The Residual  Certificateholders
shall not  direct the Owner  Trustee  to take  action  that  would  violate  the
provisions of this Section.

                                  ARTICLE VIII

                          CONCERNING THE OWNER TRUSTEE

            SECTION  8.1.  ACCEPTANCE  OF TRUST AND  DUTIES.  The Owner  Trustee
accepts the trust hereby created and agrees to perform its duties hereunder with
respect  to such  trust  but only upon the  terms of this  Agreement.  The Owner
Trustee also agrees to disburse all monies actually  received by it constituting
part of the Owner Trust  Estate upon the terms of the Basic  Documents  and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct,  bad faith or negligence,  (ii) in the case of the inaccuracy of any
representation or warranty  contained in Section 8.3 expressly made by the Owner
Trustee in its  individual  capacity,  (iii) for  liabilities  arising  from the
failure of the Owner Trustee to perform obligations  expressly  undertaken by it
in the last  sentence of Section 7.4  hereof,  or (iv) for taxes,  fees or other
charges  on,  based on or measured  by, any fees,  commissions  or  compensation
received by the Owner Trustee. In particular,  but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):

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

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

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

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

                                       21
<PAGE>

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

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

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

            SECTION  8.2.  FURNISHING  OF  DOCUMENTS.  The Owner  Trustee  shall
furnish to the Residual  Certificateholders  promptly  upon receipt of a written
request  therefor,  duplicates  or copies  of all  reports,  notices,  requests,
demands, certificates,  financial statements and any other instruments furnished
to the Owner Trustee under the Basic Documents.

            SECTION  8.3.  REPRESENTATIONS  AND  WARRANTIES.  The Owner  Trustee
hereby represents and warrants,  in its individual capacity,  to the Sponsor and
the Holders that:

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

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

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

                                       22
<PAGE>

indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.

            (d) The Owner Trustee has duly executed and delivered this Agreement
and each other Basic Document to which it is a party, and each of this Agreement
and each such other  Basic  Document  constitutes  the legal,  valid and binding
obligation  of the Owner  Trustee,  enforceable  against  the Owner  Trustee  in
accordance with its terms,  except as (i) such  enforceability may be limited by
bankruptcy, insolvency, reorganization and similar laws relating to or affecting
the  enforcement of creditors'  rights  generally and (ii) the  availability  of
equitable   remedies  may  be  limited  by  equitable   principles   of  general
applicability.

            SECTION 8.4. RELIANCE; ADVICE OF COUNSEL.

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

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

            SECTION 8.5. NOT ACTING IN INDIVIDUAL  CAPACITY.  Except as provided
in this Article VII, in accepting the trusts  hereby  created  Wilmington  Trust
Company  acts  solely  as  Owner  Trustee  hereunder  and not in its  individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.

            SECTION  8.6.   OWNER   TRUSTEE  NOT  LIABLE  FOR  NOTES,   RESIDUAL
CERTIFICATES OR MORTGAGE LOANS.  The recitals  contained herein and in the Notes
and the Residual  Certificates (other than the signature and countersignature of
the Owner  Trustee on the Notes and the  Residual  Certificates,  respectively),
shall be taken as the statements of the Sponsor and the Owner Trustee assumes no
responsibility  for  the  correctness   thereof.  The  Owner  Trustee  makes  no
representations  as to the validity or  sufficiency  of this  Agreement,  of any
Basic Document,  of the Notes (other than the signature and  countersignature of
the Owner Trustee on the Notes) or of

                                       23
<PAGE>

the Residual Certificates, (other than the signature and countersignature of the
Owner Trustee on the Residual  Certificates)  or of any Mortgage Loan or related
documents.  The  Owner  Trustee  shall  at no time  have any  responsibility  or
liability for or with respect to the legality,  validity and  enforceability  of
any Mortgage  Loan,  or the  perfection  and  priority of any security  interest
created by any  Mortgage  Loan or the  maintenance  of any such  perfection  and
priority, or for or with respect to the sufficiency of the Owner Trust Estate or
its  ability  to  generate   the   payments  to  be   distributed   to  Residual
Certificateholders  under this Agreement or the Noteholders under the Indenture,
including,  without  limitation:  the existence,  condition and ownership of any
Mortgage Loan; the existence and  enforceability of any insurance  thereon;  the
existence  and  contents of any  Mortgage  Loan on any  computer or other record
thereof;  the validity of the assignment of any Mortgage Loan to the Trust or of
any  intervening  assignment;   the  completeness  of  any  Mortgage  Loan;  the
performance  or enforcement of any Mortgage Loan; the compliance by the Sponsor,
the Servicer or any other Person with any warranty or representation  made under
any Basic  Document  or in any  related  document  or the  accuracy  of any such
warranty  or  representation  or any  action  of the  Indenture  Trustee  or the
Servicer or any subservicer taken in the name of the Owner Trustee.

            SECTION 8.7. OWNER TRUSTEE MAY OWN NOTES AND RESIDUAL  CERTIFICATES.
The Owner Trustee in its  individual or any other  capacity may become the owner
or pledgee of Notes or Residual  Certificates and may deal with the Sponsor, the
Indenture Trustee and the Servicer in banking  transactions with the same rights
as it would have if it were not Owner Trustee.

            SECTION 8.8.  PAYMENTS FROM OWNER TRUST  ESTATE.  All payments to be
made by the Owner Trustee under this Agreement or any of the Basic  Documents to
which  the  Trust or the Owner  Trustee  is a party  shall be made only from the
income and  proceeds of the Owner  Trust  Estate and only to the extent that the
Owner Trust shall have  received  income or proceeds from the Owner Trust Estate
to make such payments in  accordance  with the terms  hereof.  Wilmington  Trust
Company,  or any successor  thereto,  in its individual  capacity,  shall not be
liable  for  any  amounts  payable  under  this  Agreement  or any of the  Basic
Documents to which the Trust or the Owner Trustee is a party.

            SECTION 8.9. DOING BUSINESS IN OTHER JURISDICTIONS.  Notwithstanding
anything  contained to the  contrary,  neither  Wilmington  Trust Company or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any  jurisdiction  other  than in the State of  Delaware  if the  taking of such
action will, even after the  appointment of a co-trustee or separate  trustee in
accordance  with  Section  11.5  hereof,  (i) require the consent or approval or
authorization or order of or the giving of notice to, or the  registration  with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction  other than the State of Delaware;  (ii)
result in any fee, tax or other governmental  charge under the laws of the State
of Delaware  becoming  payable by  Wilmington  Trust  Company (or any  successor
thereto);  or (iii) subject  Wilmington Trust Company (or any successor thereto)
to personal  jurisdiction in any  jurisdiction  other than the State of Delaware
for causes of action  arising  from acts  unrelated to the  consummation  of the
transactions by Wilmington Trust Company (or any successor thereto) or the Owner
Trustee, as the case may be, contemplated hereby.

                                       24
<PAGE>

                                   ARTICLE IX

                          COMPENSATION OF OWNER TRUSTEE

            SECTION 9.1. OWNER  TRUSTEE'S  FEES AND EXPENSES.  The Owner Trustee
shall receive as compensation for its services hereunder the Owner Trustee Fees,
and the Owner  Trustee shall be entitled to be reimbursed by the Sponsor for its
other  reasonable  expenses  hereunder,  including the reasonable  compensation,
expenses and disbursements of such agents, representatives,  experts and counsel
as the Owner Trustee may employ in connection  with the exercise and performance
of its rights and its duties hereunder and under the Basic Documents.

            SECTION 9.2. INDEMNIFICATION. The Sponsor shall be liable as primary
obligor for, and shall  indemnify the Owner Trustee (in its individual and trust
capacities)  and  its  officers,  directors,  successors,  assigns,  agents  and
servants (collectively, the "INDEMNIFIED PARTIES") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs,  expenses and disbursements  (including reasonable
legal  fees  and  expenses)  of any kind and  nature  whatsoever  (collectively,
"EXPENSES")  which may (in its trust or  individual  capacities)  at any time be
imposed  on,  incurred  by,  or  asserted  against  the  Owner  Trustee  or  any
Indemnified  Party in any way relating to or arising out of this Agreement,  the
Basic Documents,  the Owner Trust Estate,  the administration of the Owner Trust
Estate or the action or inaction  of the Owner  Trustee  hereunder,  except only
that the  Sponsor  shall not be liable for or required  to  indemnify  the Owner
Trustee from and against  Expenses  arising or resulting from any of the matters
described in the third  sentence of Section 8.1.  The  indemnities  contained in
this Section and the rights under Section 9.1 shall survive the  resignation  or
termination of the Owner Trustee or the  termination of this  Agreement.  In any
event of any claim,  action or  proceeding  for which  indemnity  will be sought
pursuant to this Section,  the Owner Trustee's  choice of legal counsel shall be
subject to the approval of the Sponsor which approval shall not be  unreasonably
withheld.

            SECTION 9.3. PAYMENTS TO THE OWNER TRUSTEE.  Any amounts paid to the
Owner  Trustee  pursuant to this  Article IX shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.

            SECTION 9.4. NON-RECOURSE  OBLIGATIONS.  Notwithstanding anything in
this Agreement or any Basic Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for the Trust that all obligations
of the Trust to the Owner Trustee individually or as Owner Trustee for the Trust
shall be recourse to the Owner Trust Estate only and  specifically  shall not be
recourse to the assets of any Residual Certificateholder.

                                    ARTICLE X

                         TERMINATION OF TRUST AGREEMENT

            SECTION 10.1. TERMINATION OF TRUST AGREEMENT.

            (a)  This  Agreement  and the  Trust  shall  terminate  and be of no
further force or effect upon the later of (i) the maturity or other  liquidation
of the last Mortgage Loan (including

                                       25
<PAGE>

the redemption by the Sponsor at its option of the Notes as described in Section
7.01(b) of the Sale and Servicing Agreement) and the subsequent  distribution of
amounts in respect of such Mortgage Loans as provided in the Basic  Documents or
(ii) the payment to Residual  Certificateholders  of all amounts  required to be
paid to them  pursuant to this  Agreement  and the payment to the Insurer of all
amounts  payable  or  reimbursable  to it  pursuant  to the Sale  and  Servicing
Agreement,  the Indenture and the Insurance Agreement;  PROVIDED,  HOWEVER, that
the rights to indemnification under Section 9.2 and the rights under Section 9.1
shall survive the  termination of the Trust.  The Servicer shall promptly notify
the Owner  Trustee and the Insurer of any  prospective  termination  pursuant to
this Section 10.1. The bankruptcy, liquidation, dissolution, death or incapacity
of any  Residual  Certificateholder  shall not (x)  operate  to  terminate  this
Agreement or the Trust, nor (y) entitle such Residual  Certificateholder's legal
representatives  or  heirs  to claim an  accounting  or to take  any  action  or
proceeding  in any court for a partition or winding up of all or any part of the
Trust or Owner Trust Estate nor (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.

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

            (c) Notice of any  termination of the Trust,  specifying the Payment
Date upon which the Residual  Certificateholders  shall surrender their Residual
Certificates to the Indenture Trustee for payment of the final  distribution and
cancellation,  shall be given by the Owner  Trustee  by  letter to the  Residual
Certificateholders mailed within five Business Days of receipt of notice of such
termination  from the Servicer given pursuant to Section 7.01(c) of the Sale and
Servicing Agreement,  stating (i) the Payment Date upon or with respect to which
final payment of the Residual  Certificates  shall be made upon presentation and
surrender of the Residual  Certificates  at the office of the Indenture  Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record  Date  otherwise  applicable  to such  Payment  Date  is not  applicable,
payments  being  made only  upon  presentation  and  surrender  of the  Residual
Certificates at the office of the Indenture Trustee therein specified. The Owner
Trustee shall give such notice to the  Certificate  Registrar (if other than the
Owner Trustee) and the Indenture Trustee at the time such notice is given to the
Residual  Certificateholders.  Upon  presentation  and surrender of the Residual
Certificates the Indenture Trustee shall cause to be distributed to the Residual
Certificateholders  amounts  distributable  on such  Payment  Date  pursuant  to
Section 8.7(d)(xiii) of the Indenture.

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

                                       26
<PAGE>

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

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

                                   ARTICLE XI

             SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

            SECTION 11.1. ELIGIBILITY  REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation  (i)  satisfying  the  provisions of
Section  3807(a) of the Statutory  Trust  Statute;  (ii)  authorized to exercise
corporate trust powers;  (iii) having a combined capital and surplus of at least
$50,000,000  and  subject  to  supervision  or  examination  by federal or State
authorities;  (iv) having (or having a parent which has) a rating of at least A3
by Moody's or A-1 by Standard & Poor's; and (v) acceptable to the Insurer in its
sole discretion. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority,  then for the purpose of this Section, the combined capital
and surplus of such  corporation  shall be deemed to be its combined capital and
surplus as set forth in its most recent  report of  condition so  published.  In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the  provisions of this Section,  the Owner Trustee shall resign  immediately in
the manner and with the effect specified in Section 11.2.

            SECTION 11.2.  RESIGNATION  OR REMOVAL OF OWNER  TRUSTEE.  The Owner
Trustee may at any time resign and be discharged  from the trusts hereby created
by giving  written  notice  thereof  to the  Sponsor  (or in the event  that the
Sponsor is not the sole  Residual  Certificateholder,  the  Holders of  Residual
Certificates  evidencing not less than a majority in interest in the Trust), the
Insurer and the Servicer. Upon receiving such notice of resignation, the Sponsor
shall promptly appoint a successor Owner Trustee, meeting the qualifications set
forth  in  Section  11.1  herein,  by  written  instrument,  one  copy of  which
instrument shall be delivered to the resigning Owner Trustee and with additional
copies to the successor Owner Trustee and the Insurer  provided that the Sponsor
shall have received written  confirmation  from each of the Rating Agencies that
the proposed  appointment will not result in an increased  capital charge to the
Insurer by either of the Rating  Agencies.  If no successor  Owner Trustee shall
have been so appointed  and have accepted  appointment  within 30 days after the
giving of such notice of resignation, the resigning Owner Trustee or the Insurer
may  petition  any court of  competent  jurisdiction  for the  appointment  of a
successor Owner Trustee.

            If at any time the  Owner  Trustee  shall  cease to be  eligible  in
accordance  with the  provisions  of Section 11.1 and shall fail to resign after
written  request  therefor by the Sponsor,  or if at any time the Owner  Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner  Trustee or of its  property  shall be  appointed,  or any
public  officer  shall take  charge or  control  of the Owner  Trustee or of its
property or affairs for the

                                       27
<PAGE>

purpose  of  rehabilitation,  conservation  or  liquidation,  then the  Residual
Certificateholder  with the consent of the Insurer may remove the Owner Trustee.
If the  Residual  Certificateholder  shall  remove the Owner  Trustee  under the
authority of the  immediately  preceding  sentence,  the Sponsor shall  promptly
appoint a  successor  Owner  Trustee,  meeting the  qualifications  set forth in
Section 11.1 herein,  by written  instrument,  in  duplicate,  one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed, one copy
to the Insurer and one copy to the successor Owner Trustee and the Sponsor shall
pay all fees owed to the outgoing Owner Trustee,  if not previously  paid by the
Trust.

            Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee  pursuant to any of the provisions of this Section shall
not become  effective  until  acceptance of appointment  by the successor  Owner
Trustee  pursuant to Section 11.3 and payment of all fees and  expenses  owed to
the outgoing Owner Trustee. The Sponsor shall provide notice of such resignation
or removal of the Owner Trustee to each of the Rating Agencies.

            Notwithstanding  any  other  provision  of  this  Agreement,  and in
addition to any other method of removal of the Owner Trustee  contained  herein,
upon a proposal made pursuant to Section  5.2(b) and the  subsequent  consent of
Residual  Certificateholders  representing  no less  than a  66-2/3%  Percentage
Interest of the Residual  Certificates  in the Trust,  the Owner  Trustee may be
removed as Owner Trustee,  subject to the consent of the Insurer,  which consent
is not to be  unreasonably  withheld.  In the event the Owner Trustee is removed
pursuant to this paragraph, the provisions of this Agreement,  including Article
X herein, shall apply as if the Owner Trustee had resigned hereunder.

            SECTION 11.3.  SUCCESSOR OWNER TRUSTEE.  Any successor Owner Trustee
appointed pursuant to Section 11.2 shall execute, acknowledge and deliver to the
Sponsor,  the Servicer and the Insurer and to its  predecessor  Owner Trustee an
instrument  accepting such appointment  under this Agreement,  and thereupon the
resignation or removal of the predecessor  Owner Trustee shall become  effective
and such successor  Owner Trustee,  without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee.  The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this  Agreement;  and the  Sponsor  and the  predecessor
Owner  Trustee  shall  execute and deliver  such  instruments  and do such other
things  as may  reasonably  be  required  for fully and  certainly  vesting  and
confirming in the successor  Owner Trustee all such rights,  powers,  duties and
obligations.

            No successor  Owner Trustee shall accept  appointment as provided in
this Section unless at the time of such  acceptance such successor Owner Trustee
shall be eligible pursuant to Section 11.1.

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

                                       28
<PAGE>

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

            SECTION  11.4.  MERGER  OR  CONSOLIDATION  OF  OWNER  TRUSTEE.   Any
corporation  into which the Owner  Trustee  may be merged or  converted  or with
which it may be  consolidated,  or any  corporation  resulting  from any merger,
conversion or  consolidation to which the Owner Trustee shall be a party, or any
corporation  succeeding  to all or  substantially  all  of the  corporate  trust
business  of the Owner  Trustee,  shall be the  successor  of the Owner  Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 11.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto,  anything herein to the contrary  notwithstanding;
PROVIDED,  FURTHER,  that the Owner  Trustee shall mail notice of such merger or
consolidation to the Rating Agencies and the Insurer.

            SECTION  11.5.  APPOINTMENT  OF CO-OWNER  TRUSTEE OR SEPARATE  OWNER
TRUSTEE.  Notwithstanding  any other provisions of this Agreement,  at any time,
for the purpose of meeting any legal  requirements of any  jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged  Property may at the time be
located,  the Servicer and the Owner Trustee acting jointly shall have the power
and shall  execute and deliver all  instruments  to appoint one or more  Persons
approved by the Owner Trustee and the Insurer to act as co-trustee, jointly with
the Owner Trustee, or separate trustee or separate trustees,  of all or any part
of the Owner Trust Estate,  and to vest in such Person,  in such capacity,  such
title to the Trust, or any part thereof, and, subject to the other provisions of
this  Section,  such  powers,  duties,  obligations,  rights  and  trusts as the
Servicer and the Owner  Trustee may  consider  necessary  or  desirable.  If the
Servicer  shall not have  joined in such  appointment  within 15 days  after the
receipt by it of a request so to do, the Owner  Trustee  subject to the approval
of the Insurer (which  approval shall not be  unreasonably  withheld) shall have
the power to make such appointment. No co-trustee or separate trustee under this
Agreement  shall be  required  to meet the terms of  eligibility  as a successor
trustee  pursuant  to  Section  11.1 and no  notice  of the  appointment  of any
co-trustee or separate trustee shall be required pursuant to Section 11.3.

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

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

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

                                       29
<PAGE>

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

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

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

                                   ARTICLE XII

                                  MISCELLANEOUS

            SECTION 12.1. SUPPLEMENTS AND AMENDMENTS.

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

            (b) This  Agreement may also be amended from time to time,  with the
prior written consent of the Insurer, by the Sponsor and the Owner Trustee, with
prior written notice to the Rating  Agencies,  and, to the extent such amendment
materially  and  adversely  affects the interests of the  Noteholders,  with the
consent  of  the  Noteholders  evidencing  not  less  than  a  majority  of  the
Outstanding   Amount  of  the  Notes   and,   the   consent   of  the   Residual
Certificateholders  evidencing  not less than a majority  interest  in the Trust
(which consent of any Holder of a Note or Residual Certificate given pursuant to
this  Section or  pursuant to any other  provision  of this  Agreement  shall be
conclusive  and binding on such Holder and on all future Holders of such Note or
Residual  Certificate  and of any Note or Residual  Certificate  issued upon the
transfer  thereof  or in  exchange  thereof  or in lieu  thereof  whether or not
notation of such consent is made upon the Note or Residual  Certificate) for the
purpose of adding any provisions

                                       30
<PAGE>

to or  changing  in any  manner or  eliminating  any of the  provisions  of this
Agreement  or of modifying  in any manner the rights of the  Noteholders  or the
Residual  Certificateholders;  PROVIDED,  HOWEVER,  that, subject to the express
rights of the Insurer under the Basic  Documents,  no such  amendment  shall (a)
increase  or reduce in any  manner the  amount  of, or  accelerate  or delay the
timing of, collections of payments on Mortgage Loans or distributions that shall
be  required  to be made for the  benefit  of the  Noteholders  or the  Residual
Certificateholders  or (b) reduce the aforesaid  percentage  of the  Outstanding
Amount of the Notes  and the  Residual  Certificate,  the  Holders  of which are
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes and Holders of all outstanding Residual Certificates.

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

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

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

            SECTION  12.2.  NO LEGAL  TITLE TO OWNER  TRUST  ESTATE IN  RESIDUAL
CERTIFICATEHOLDERS.  The Residual  Certificateholders shall not have legal title
to any part of the Owner Trust Estate. The Residual  Certificateholders shall be
entitled to receive  distributions  with  respect to their  undivided  ownership
interest  therein only in accordance with Article IX. No transfer,  by operation
of  law  or  otherwise,  of  any  right,  title  or  interest  of  the  Residual
Certificateholders  to and in their ownership interest in the Owner Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle any
transferee  to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.

            SECTION 12.3.  LIMITATIONS  ON RIGHTS OF OTHERS.  Except for Section
2.7, the  provisions  of this  Agreement are solely for the benefit of the Owner
Trustee, the Sponsor, the Residual Certificateholders,  the Servicer and, to the
extent expressly  provided herein,  the Insurer,  the Indenture  Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or  equitable  right,  remedy or

                                       31
<PAGE>

claim in the Owner Trust Estate or under or in respect of this  Agreement or any
covenants, conditions or provisions contained herein.

            SECTION 12.4. NOTICES.

            (a) Unless otherwise  expressly  specified or permitted by the terms
hereof,  all notices  shall be in writing and shall be deemed given upon receipt
personally delivered,  delivered by overnight courier or mailed first class mail
or certified mail, in each case return receipt requested, and shall be deemed to
have been duly given upon  receipt,  if to the Owner  Trustee,  addressed to the
Corporate  Trust Office;  if to the Sponsor,  addressed to  GreenPoint  Mortgage
Securities  Inc., 100 Wood Hollow Drive,  Doorstop  #22210,  Novato,  California
94945, Attention:  S.A. Ibrahim; if to the Insurer,  addressed to Insurer, Ambac
Assurance  Corporation,  One  State  Street  Plaza,  New York,  New York  10004,
Attention:  Managing  Director,  Telecopy No.:  (212)  363-1459;  or, as to each
party,  at such other  address as shall be designated by such party in a written
notice to each other party.

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

            SECTION 12.5. SEVERABILITY.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

            SECTION 12.6. SEPARATE COUNTERPARTS.  This Agreement may be executed
by the parties hereto in separate  counterparts,  each of which when so executed
and delivered  shall be an original,  but all such  counterparts  shall together
constitute but one and the same instrument.

            SECTION 12.7. ASSIGNMENTS; INSURER.

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

            (b) In accepting instructions from the Insurer pursuant to Article V
or Section 7.3 of this Agreement,  and with respect to any other  obligations of
the Owner  Trustee  to the  Insurer  under  this  Agreement,  the Owner  Trustee
undertakes to perform or observe only its

                                       32
<PAGE>

express  obligations  under  this  Agreement,  and no implied  obligations  with
respect  to the  Insurer  shall be read into this  Agreement  against  the Owner
Trustee.  The Owner Trustee shall not be deemed to owe any fiduciary duty to the
Insurer and it is expressly  understood and agreed by the Insurer that the Owner
Trustee shall not be  personally  liable or  responsible  for the payment of any
amount owing on or with respect to the Basic Documents or for the failure of the
Trust to  perform  its  obligations  under  the  Basic  Documents  or any  other
agreement with respect thereto.

            SECTION 12.8. NO PETITION.  The Owner Trustee (not in its individual
capacity but solely as Owner  Trustee),  by entering into this  Agreement,  each
Residual  Certificateholder,  by  accepting  a  Residual  Certificate,  and  the
Indenture  Trustee  and  each  Noteholder  by  accepting  the  benefits  of this
Agreement,  hereby covenants and agrees that they will not at any time institute
against  the  Sponsor,  or join in any  institution  against the Sponsor of, any
bankruptcy, reorganization,  arrangement, insolvency or liquidation proceedings,
or other  proceedings  under any United  States  federal or state  bankruptcy or
similar  law in  connection  with any  obligations  relating  to the Notes,  the
Residual Certificates, this Agreement or any of the Basic Documents.

            SECTION  12.9.  NO  RECOURSE.  Each  Residual  Certificateholder  by
accepting   a   Residual    Certificate    acknowledges   that   such   Residual
Certificateholder's  Residual Certificates represent beneficial interests in the
Trust only and do not represent interests in or obligations of the Servicer, the
Sponsor,  the Owner Trustee, the Indenture Trustee, the Insurer or any Affiliate
thereof and no recourse may be had against such parties or their assets,  except
as may be expressly set forth or contemplated  in this  Agreement,  the Residual
Certificates or the Basic Documents.

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

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

            SECTION 12.12.  SERVICER.  The Servicer is authorized to prepare, or
cause to be  prepared,  execute  and  deliver  on  behalf  of the Trust all such
documents, reports, filings, instruments,  certificates and opinions as it shall
be the duty of the Trust or Owner Trustee to prepare,  file or deliver  pursuant
to the Basic Documents.  Upon written  request,  the Owner Trustee shall execute
and deliver to the Servicer a limited power of attorney  appointing the Servicer
the Trust's  agent and  attorney-in-fact  to prepare,  or cause to be  prepared,
execute  and  deliver  all  such  documents,   reports,  filings,   instruments,
certificates and opinions.

                                       33
<PAGE>

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

                                          WILMINGTON TRUST COMPANY,
                                            Owner Trustee

                                          By: /s/ Janel R. Havrilla
                                              ----------------------------------
                                              Name: Janel R. Havrilla
                                              Title: Financial Services Officer

                                          GREENPOINT MORTGAGE SECURITIES INC.,
                                            Sponsor

                                          By: /s/ Nathan Hieter
                                              ----------------------------------
                                              Name: Nathan Hieter
                                              Title: Vice President

Acknowledged and Agreed:

GREENPOINT MORTGAGE FUNDING, INC.,
Servicer

By: /s/ Dave Petrini
    -------------------------------
    Name: Dave Petrini
    Title: Executive Vice President

<PAGE>

                                                                       EXHIBIT A

                              RESIDUAL CERTIFICATE

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

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

THIS  RESIDUAL  CERTIFICATE  HAS NOT BEEN  REGISTERED  OR  QUALIFIED  UNDER  THE
SECURITIES  ACT OF 1933, AS AMENDED,  OR THE SECURITIES  LAWS OF ANY STATE.  ANY
RESALE,  TRANSFER OR OTHER DISPOSITION OF THIS RESIDUAL CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION  MAY BE MADE ONLY IN A TRANSACTION  WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.10 OF THE TRUST AGREEMENT REFERRED TO HEREIN.

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

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

<PAGE>

SAID ACT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE,
THE INSURER OR THE  SPONSOR.  THE HOLDER OF A RESIDUAL  CERTIFICATE  DESIRING TO
EFFECT SUCH TRANSFER SHALL,  AND DOES HEREBY AGREE TO, INDEMNIFY THE SPONSOR AND
THE INSURER  AGAINST  ANY  LIABILITY  THAT MAY RESULT IF THE  TRANSFER IS NOT SO
EXEMPT OR IS NOT MADE IN ACCORDANCE WITH SUCH FEDERAL AND STATE LAWS.

THE RESIDUAL  CERTIFICATES  AND ANY INTEREST  THEREIN  SHALL NOT BE  TRANSFERRED
EXCEPT UPON SATISFACTION OF THE FOLLOWING CONDITIONS  PRECEDENT:  (I) THE PERSON
THAT ACQUIRES A RESIDUAL  CERTIFICATE  SHALL (A) BE ORGANIZED AND EXISTING UNDER
THE LAWS OF THE  UNITED  STATES  OF  AMERICA  OR ANY  STATE OR THE  DISTRICT  OF
COLUMBIA THEREOF,  (B) EXPRESSLY ASSUME,  BY AN AGREEMENT  SUPPLEMENTAL  HERETO,
EXECUTED AND DELIVERED TO THE OWNER TRUSTEE AND THE INSURER,  THE PERFORMANCE OF
EVERY COVENANT AND  OBLIGATION OF THE SPONSOR UNDER THE TRUST  AGREEMENT AND (C)
AS PART OF ITS ACQUISITION OF A RESIDUAL CERTIFICATE,  ACQUIRE ALL RIGHTS OF THE
RESIDUAL  CERTIFICATEHOLDER UNDER SECTION 4.10 OF THE TRUST AGREEMENT TO AMOUNTS
PAYABLE  TO  THE  RESIDUAL   CERTIFICATE  OR  SUCH   TRANSFEREE   UNDER  SECTION
8.7(D)(XIII)  OF THE  INDENTURE;  (II) THE HOLDER OF THE  RESIDUAL  CERTIFICATES
SHALL  DELIVER TO THE OWNER  TRUSTEE  AND THE INSURER AN  OFFICER'S  CERTIFICATE
STATING THAT SUCH TRANSFER AND SUCH  SUPPLEMENTAL  AGREEMENT COMPLY WITH SECTION
4.10(C) OF THE TRUST  AGREEMENT AND THAT ALL  CONDITIONS  PRECEDENT  PROVIDED BY
SECTION 4.10(C) OF THE TRUST AGREEMENT HAVE BEEN COMPLIED WITH AND AN OPINION OF
COUNSEL STATING THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION 4.10(C) OF THE
TRUST AGREEMENT HAVE BEEN COMPLIED WITH, AND THE OWNER TRUSTEE MAY  CONCLUSIVELY
RELY ON SUCH  OFFICER'S  CERTIFICATE,  SHALL HAVE NO DUTY TO MAKE INQUIRIES WITH
REGARD TO THE MATTERS  SET FORTH  THEREIN  AND SHALL  INCUR NO  LIABILITY  IN SO
RELYING;  (III) THE HOLDER OF THE  RESIDUAL  CERTIFICATES  SHALL  DELIVER TO THE
OWNER TRUSTEE AND THE INSURER A LETTER FROM EACH RATING AGENCY  CONFIRMING  THAT
ITS RATING OF THE  NOTES,  AFTER  GIVING  EFFECT TO SUCH  TRANSFER,  WILL NOT BE
REDUCED OR WITHDRAWN  WITHOUT  REGARD TO THE POLICY;  (IV) THE TRANSFEREE OF THE
RESIDUAL  CERTIFICATES  SHALL DELIVER TO THE OWNER  TRUSTEE,  AND THE INSURER AN
OPINION  OF  COUNSEL TO THE EFFECT  THAT (A) SUCH  TRANSFER  WILL NOT  ADVERSELY
AFFECT THE  TREATMENT  OF THE NOTES AFTER SUCH  TRANSFER AS DEBT FOR FEDERAL AND
APPLICABLE  STATE INCOME TAX PURPOSES,  (B) SUCH TRANSFER WILL NOT RESULT IN THE
TRUST BEING SUBJECT TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR  APPLICABLE  STATE
TAX PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE
FEDERAL OR  APPLICABLE  STATE INCOME  TAXATION OF A  NOTEHOLDER  OR ANY RESIDUAL
CERTIFICATEHOLDER  AND (D) SUCH  TRANSFER  WILL NOT  RESULT  IN THE  ARRANGEMENT
CREATED BY THE TRUST AGREEMENT OR ANY "PORTION" OF THE TRUST, BEING TREATED AS A
TAXABLE MORTGAGE POOL AS DEFINED IN SECTION 7701(I) OF THE CODE; (V) ALL FILINGS
AND OTHER  ACTIONS

<PAGE>

NECESSARY  TO  CONTINUE  THE  PERFECTION  OF THE  INTEREST  OF THE  TRUST IN THE
MORTGAGE LOANS AND THE OTHER PROPERTY  CONVEYED UNDER THE TRUST  AGREEMENT SHALL
HAVE  BEEN  TAKEN OR MADE AND (VI) THE  INSURER  SHALL  HAVE  CONSENTED  TO SUCH
TRANSFER.

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

          GREENPOINT HOME EQUITY LOAN TRUST 2003-1 RESIDUAL CERTIFICATE

Percentage Interest: 100%                           Cut-Off Date: April 24, 2003
First Payment Date: June 15, 2003                       Issue Date: May 19, 2003

No. 1

                       GreenPoint Mortgage Securities Inc.
                           Residual Certificateholder

                  OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

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

                           By: ___________________________________________
                                         Authenticating Agent
<PAGE>

            The Trust was created  pursuant to a Trust Agreement dated as of May
1, 2003 (the  "TRUST  AGREEMENT"),  between the  Sponsor  and  Wilmington  Trust
Company,  as owner  trustee (the "OWNER  TRUSTEE"),  a summary of certain of the
pertinent  provisions  of which is set forth below.  To the extent not otherwise
defined herein,  the capitalized terms used herein have the meanings assigned to
them in the Trust Agreement.

            This Residual  Certificate  is one of the duly  authorized  Residual
Certificates   designated   as   GreenPoint   Home  Equity  Loan  "Asset  Backed
Certificates"  (herein called the "RESIDUAL  CERTIFICATES").  Also issued by the
Trust under the Indenture is one class of Notes designated as Class A Notes (the
"NOTES").  These Residual  Certificates  are issued under and are subject to the
terms,  provisions  and  conditions  of the  Trust  Agreement,  to  which  Trust
Agreement the holder of this Residual  Certificate  by virtue of the  acceptance
hereof  assents  and by which such  holder is bound.  The  property of the Trust
includes a pool of certain  adjustable  rate home equity  revolving  credit line
loans (the "HELOC MORTGAGE  LOANS")  (including any Additional  Balances related
thereto)  and certain  second lien  closed-end  mortgage  loans (the "Closed End
Mortgage Loans").

            Under the Trust Agreement, there will be distributed on the 15th day
of each month or, if such 15th day is not a Business  Day, the next Business Day
(the "PAYMENT  DATE"),  commencing on June 15, 2003, to the Person in whose name
this Residual Certificate is registered at the close of business on the Business
Day   preceding   such   Payment  Date  (the   "RECORD   DATE")  such   Residual
Certificateholder's  Percentage  Interest  in the  amount to be  distributed  to
Residual Certificateholders on such Payment Date.

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

            The  holder of this  Residual  Certificate,  by  acceptance  of this
Residual  Certificate,  specifically  acknowledges  that it has no  right  to or
interest in any monies at any time held in the Trust Estate prior to the release
of such monies  pursuant to Sections  8.7(d)(xiii)  and 8.6(c) of the Indenture,
such  monies  being  held in trust for the  benefit of the  Noteholders  and the
Insurer.  Notwithstanding the foregoing, in the event that it is ever determined
that the monies held in the Trust Estate constitute a pledge of collateral, then
the  provisions  of the Sale and  Servicing  Agreement  shall be  considered  to
constitute  a security  agreement  and the holder of this  Residual  Certificate
hereby  grants  to the  Indenture  Trustee  and the  Insurer  a  first  priority
perfected  security  interest  in  such  amounts.  In  addition,  each  Residual
Certificateholder,  by acceptance of its Residual  Certificate,  hereby appoints
the Sponsor as its agent to pledge a first priority  perfected security interest
in the  Reserve  Fund and agrees to execute  and  deliver  such  instruments  of
conveyance,  assignment,  grant,  confirmation,  etc.,  as well as any financing
statements,  in each case as the Insurer shall consider reasonably  necessary in
order  to  perfect  the  Indenture  Trustee's  security  interest  in the  Trust
Property.

            It is the intent of the  Sponsor,  the  Servicer,  and the  Residual
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a branch.  In the event that the  Residual  Certificates  are held by
more than one Holder, it is the intent of the Sponsor, the
<PAGE>

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

            Distributions on this Residual  Certificate will be made as provided
in the Sale and Servicing  Agreement and the Indenture by the Indenture  Trustee
by wire transfer or check mailed to the Residual  Certificateholder of record in
the Certificate  Register without the presentation or surrender of this Residual
Certificate or the making of any notation hereon.  Except as otherwise  provided
in the Trust Agreement and  notwithstanding the above, the final distribution on
this Residual  Certificate will be made after due notice by the Owner Trustee of
the pendency of such  distribution  and only upon  presentation and surrender of
this Residual  Certificate at the office or agency maintained for the purpose by
the Owner Trustee in the Corporate Trust Office.

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

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

            The  Trust  Agreement  permits,   with  certain  exceptions  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the  Sponsor and the rights of the  Residual  Certificateholders
under the Trust  Agreement at any time by the Sponsor and the Owner Trustee with
the prior written  consent of the Insurer and with the consent of the holders of
the Notes and the Residual  Certificates  evidencing not less than a majority of
the outstanding Notes and the Residual Certificates. Any such amendment shall be
conclusive and binding upon the holder of this Residual  Certificate  and on all
future holders of this Residual

<PAGE>

Certificate and of any Residual  Certificate  issued upon the transfer hereof or
in exchange  hereof or in lieu hereof whether or not notation of such consent is
made upon this  Residual  Certificate.  The Trust  Agreement  also  permits  the
amendment thereof, in certain limited circumstances,  without the consent of the
holders of any of the  Residual  Certificates  (other than the  Sponsor,  or the
Insurer).

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

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

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

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

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

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

<PAGE>

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

                             GREENPOINT HOME EQUITY LOAN TRUST 2003-1

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

                             By: _______________________________________________
                                 Name:
                                 Title:

Dated: May 19, 2003
<PAGE>

                                   ASSIGNMENT

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

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

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

________________________________________________________________________________
the within Residual Certificate,  and all rights thereunder,  hereby irrevocably
constituting and appointing

____________________________________________  Attorney to transfer said Residual
Certificate  on the  books of the  Certificate  Registrar,  with  full  power of
substitution in the premises.

Dated:

                                                _______________________________*
                                                Signature Guaranteed:

                                                _______________________________*

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

<PAGE>

                                                                       EXHIBIT B

                             CERTIFICATE OF TRUST OF
                    GREENPOINT HOME EQUITY LOAN TRUST 2003-1

            This  Certificate  of Trust of  GreenPoint  Home  Equity  Loan Trust
2003-1 (the "TRUST"), dated as of ___________,  2003, is being duly executed and
filed by Wilmington Trust Company, a Delaware banking  corporation,  as trustee,
to form a statutory trust under the Delaware  Statutory Trust Act (12 DEL. CODE,
ss. 3801 ET SEQ.).

            1. NAME. The name of the statutory trust formed hereby is GreenPoint
Home Equity Loan Trust 2003-1.

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

            3. This Certificate of Trust will be effective ________, 2003.

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

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

                              By: ______________________________________________
                                  Name:
                                  Title:

                                      B-1

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