Document:

EXHIBIT 4.4

                RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.

                                  as Depositor

                                       and

                            WILMINGTON TRUST COMPANY

                                as Owner Trustee

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

                      AMENDED AND RESTATED TRUST AGREEMENT

                         Dated as of September 27, 2001

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

                      Home Equity Loan-Backed Certificates,
                                 Series 2001-HS3

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                                Table of Contents

Section                                                                                 Page
                                       ARTICLE 1
                                      Definitions

<S>     <C>                                                                                <C>
Section 1.01.     Definitions...............................................................1
Section 1.02.     Other Definitional Provisions.............................................1

                                      ARTICLE II
                                     Organization

Section 2.01.     Name......................................................................2
Section 2.02.     Office....................................................................2
Section 2.03.     Purposes and Powers.......................................................2
Section 2.04.     Appointment of Owner Trustee..............................................3
Section 2.05.     Initial Capital Contribution of Owner Trust Estate........................3
Section 2.06.     Declaration of Trust......................................................3
Section 2.07.     Liability of the Holders of the Certificates..............................4
Section 2.08.     Title to Trust Property...................................................4
Section 2.09.     Situs of Trust............................................................4
Section 2.10.     Representations and Warranties of the Depositor...........................5
Section 2.11.     Payment of Trust Fees.....................................................5

                                      ARTICLE III
                   Conveyance Of The Home Equity Loans; Certificates

Section 3.01.     Conveyance of The Home Equity Loans.......................................5
Section 3.02.     Initial Ownership.........................................................6
Section 3.03.     The Certificates..........................................................6
Section 3.04.     Authentication of Certificates............................................6
Section 3.05.     Registration of and Limitations on Transfer And Exchange of
                  Certificates..............................................................7
Section 3.06.     Mutilated, Destroyed, Lost or Stolen Certificates........................12
Section 3.07.     Persons Deemed Certificateholders........................................13
Section 3.08.     Access to List of Certificateholders' Names And Addresses................13
Section 3.09.     Maintenance of Office or Agency..........................................13
Section 3.10.     Certificate Paying Agent.................................................13
Section 3.11.     Cooperation..............................................................14
Section 3.12.     Additional Certificate Security Balances Upon Issuance of Capped
                  Funding Notes............................................................15
Section 3.13.     Subordination............................................................16
Section 3.14.     No Priority Among Certificates...........................................16

                                      ARTICLE IV
                         Authority And Duties Of Owner Trustee

Section 4.01.     General Authority........................................................16
Section 4.02.     General Duties...........................................................16
Section 4.03.     Action Upon Instruction..................................................16
Section 4.04.     No Duties Except as Specified Under Specified Documents or In
                  Instructions.............................................................17
Section 4.05.     Restrictions.............................................................17
Section 4.06.     Prior Notice To Certificateholders and The Credit Enhancer With
                  Respect To Certain Matters...............................................18
Section 4.07.     Action by Certificateholders with Respect to Certain Matters.............18
Section 4.08.     Action By Certificateholders with Respect to Bankruptcy..................19
Section 4.09.     Restrictions on Certificateholders' Power................................19
Section 4.10.     Majority Control.........................................................19
Section 4.11.     Doing Business In Other Jurisdictions....................................19
Section 4.11.     Removal of Home Equity Loans.............................................19

                                       ARTICLE V
                              Application Of Trust Funds

Section 5.01.     Distributions............................................................20
Section 5.02.     Method Of Payment........................................................21
Section 5.03.     Signature On Returns.....................................................22
Section 5.04.     Statements To Certificateholders.........................................22
Section 5.05.     Tax Reporting............................................................22

                                      ARTICLE VI
                             Concerning The Owner Trustee

Section 6.01.     Acceptance of Trusts And Duties..........................................22
Section 6.02.     Furnishing of Documents..................................................23
Section 6.03.     Representations and Warranties...........................................24
Section 6.04.     Reliance; Advice of Counsel..............................................24
Section 6.05.     Not Acting in Individual Capacity........................................25
Section 6.06.     Owner Trustee Not Liable for Certificates or Related Documents...........25
Section 6.07.     Owner Trustee May Own Certificates and Notes.............................25

                                      ARTICLE VII
                             Compensation Of Owner Trustee

Section 7.01.     Owner Trustee's Fees And Expenses........................................26
Section 7.02.     Indemnification..........................................................26

                                     ARTICLE VIII
                            Termination of Trust Agreement

Section 8.01.     Termination of Trust Agreement...........................................27
Section 8.02.     Additional Termination Requirements......................................28

                                      ARTICLE IX
                Successor Owner Trustees and Additional Owner Trustees

Section 9.01.     Eligibility Requirements for Owner Trustee...............................29
Section 9.02.     Replacement of Owner Trustee.............................................29
Section 9.03.     Successor Owner Trustee..................................................29
Section 9.04.     Merger or Consolidation of Owner Trustee.................................30
Section 9.05.     Appointment of Co-Trustee or Separate Trustee............................30

                                       ARTICLE X
                                     Miscellaneous

Section 10.01.    Amendments...............................................................31
Section 10.02.    No Legal Title to Owner Trust Estate.....................................33
Section 10.03.    Limitations on Rights of Others..........................................33
Section 10.04.    Notices..................................................................33
Section 10.05.    Severability.............................................................34
Section 10.06.    Separate Counterparts....................................................34
Section 10.07.    Successors and Assigns...................................................34
Section 10.08.    No Petition..............................................................34
Section 10.09.    No Recourse..............................................................34
Section 10.10.    Headings.................................................................34
Section 10.11.    Governing Law............................................................35
Section 10.12.    Integration..............................................................35
Section 10.13.    Rights of Credit Enhancer to Exercise Rights of Certificateholders.......35

Signatures

EXHIBIT

Exhibit A - ...Form of Class SB Certificate                               A-1
Exhibit B - ...Certificate of Trust of Home Equity Loan Trust 2001-HS3    B-1
Exhibit C - ...Form of 144A Investment Representation                     C-1
Exhibit D - ...Form of Investor Representation Letter                     D-1
Exhibit E -  ..Form of Transferor Representation Letter                   E-1
Exhibit F - ...Form of Certificate of Non-Foreign Status                  F-1
Exhibit G - ...Form of ERISA Representation Letter                        G-1
Exhibit H - Form of Representation Letter                                 H-1
Exhibit I  -  .Form of Class R Certificates                               I-1
Exhibit J-1  - Form of Transfer Affidavit and Agreement                 J-1-1
Exhibit J-2  - Form of Transferor Certificate                           J-2-1

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        This Amended and Restated  Trust  Agreement,  dated as of September  27,
2001 (as amended from time to time, this "Trust Agreement"), between RESIDENTIAL
FUNDING MORTGAGE SECURITIES II, INC., a Delaware corporation,  as depositor (the
"Depositor") and WILMINGTON TRUST COMPANY,  a Delaware banking  corporation,  as
owner trustee (the "Owner Trustee"),

                                WITNESSETH THAT:

        WHEREAS,  the  Depositor  and the  Owner  Trustee  entered  into a trust
agreement  dated as of September 25, 2001, in connection with the formation of a
Delaware business trust (the "Original Trust Agreement");

     WHEREAS,  the Depositor and the Owner Trustee wish to amend and restate the
Original Trust Agreement;

        NOW,  THEREFORE,  in  consideration  of  the  mutual  agreements  herein
contained, the Depositor and the Owner Trustee agree as follows:

                                    ARTICLE I

                                   Definitions

        Section  1.01.  Definitions.  For all purposes of this Trust  Agreement,
except as otherwise  expressly  provided herein or unless the context  otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in Appendix A to the Indenture  dated  September 27, 2001
(the "Indenture"),  between Home Equity Loan Trust 2001-HS3,  as issuer, and The
Chase Manhattan Bank, as indenture  trustee.  All other  capitalized  terms used
herein shall have the meanings specified herein.

        Section 1.02. Other Definitional Provisions.

        (a) All terms  defined in this Trust  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  Trust  Agreement  and in any  certificate  or other
document  made or delivered  pursuant  hereto or thereto,  accounting  terms not
defined in this Trust  Agreement or in any such  certificate or other  document,
and  accounting  terms  partly  defined in this Trust  Agreement  or in any such
certificate  or  other  document  to the  extent  not  defined,  shall  have the
respective   meanings  given  to  them  under  generally   accepted   accounting
principles. To the extent that the definitions of accounting terms in this Trust
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 Trust  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 Trust  Agreement shall refer to this Trust Agreement as
a whole and not to any particular  provision of this Trust  Agreement;  Article,

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Section and Exhibit references  contained in this Trust Agreement are references
to  Articles,  Sections  and  Exhibits  in or to  this  Trust  Agreement  unless
otherwise  specified;   the  term  "including"  shall  mean  "including  without
limitation";  and the term "proceeds" shall have the meaning ascribed thereto in
the UCC.

        (d) The definitions  contained in this Trust 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.

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

                                   ARTICLE II

                                  Organization

        Section  2.01.  Name.  The trust created  hereby (the "Trust")  shall be
known as "Home Equity Loan Trust  2001-HS3," 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  2.02.  Office.  The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written  notice to the  Certificateholders
and the Depositor.

     Section 2.03. Purposes and Powers. The purpose of the Trust is to engage in
the following activities:

     (a) to issue the  Notes  pursuant  to the  Indenture  and the  Certificates
pursuant to this Trust Agreement and to sell the Notes and the Certificates;

     (b) to  purchase  the  Home  Equity  Loans  and to pay the  organizational,
start-up and transactional expenses of the Trust;

        (c) to assign, grant, transfer,  pledge and convey the Home Equity Loans
pursuant  to  the  Indenture  and  to  hold,   manage  and   distribute  to  the
Certificateholders pursuant to Section 5.01 any portion of the Home Equity Loans
released from the Lien of, and remitted to the Trust pursuant to the Indenture;

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

        (e) 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,  including,  without limitation,  to
accept  additional  contributions  of equity that are not subject to the Lien of
the Indenture; and

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

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 Trust Agreement or the
Basic  Documents  while  any Note is  outstanding  without  the  consent  of the
Certificateholders  of  Certificates  evidencing  a  majority  of the  aggregate
Certificate  Percentage Interest of each Class of Certificates,  the Noteholders
of Notes representing a majority of the aggregate Security Balances of the Notes
and the Indenture Trustee.

        Section  2.04.  Appointment  of  Owner  Trustee.  The  Depositor  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 2.05.  Initial Capital  Contribution of Owner Trust Estate.  The
Depositor hereby sells, assigns, transfers,  conveys and sets over to the Trust,
as of the date hereof,  the sum of $1. In  consideration  of the delivery by the
Owner Trustee, on behalf of the Trust, of the Securities to the Depositor or its
designee, upon the order of the Depositor, the Owner Trustee hereby acknowledges
receipt in trust from the Depositor,  as of the Closing Date,  and  concurrently
with the execution and delivery  hereof,  the  Depositor  does hereby  transfer,
assign,  set over and  otherwise  convey to the  Trust,  without  recourse,  but
subject to the other terms and  provisions of this Trust  Agreement,  all of the
right, title and interest of the Depositor in and to the Owner Trust Estate. The
foregoing  transfer,  assignment,  set over and conveyance  does not, and is not
intended  to,  result  in a  creation  or an  assumption  by  the  Trust  of any
obligation  of the  Depositor or any other Person in  connection  with the Trust
Estate  or under  any  agreement  or  instrument  relating  thereto,  except  as
specifically set forth herein.

        The Owner Trustee,  on behalf of the Trust,  acknowledges the conveyance
to the Trust by the  Depositor,  as of the  Closing  Date,  of the  Owner  Trust
Estate,  including all right,  title and interest of the Depositor in and to the
Owner Trust Estate.  Concurrently with such conveyance and in exchange therefor,
the Trust has pledged the Trust Estate to the Indenture Trustee and has executed
the  Certificates  and the Notes and caused  them to be duly  authenticated  and
delivered.

        Section 2.06.  Declaration of Trust.  The Owner Trustee hereby  declares
that it shall  hold the Owner  Trust  Estate in trust  upon and  subject  to the
conditions  set forth herein for the use and benefit of the  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 business trust under
the  Business  Trust  Statute  and that  this  Trust  Agreement  constitute  the
governing  instrument of such business  trust.  Effective as of the date hereof,
the Owner Trustee shall have all rights,  powers and duties set forth herein and
in the Business Trust Statute with respect to accomplishing  the purposes of the
Trust. It is the intention of the parties hereto that, solely for federal, state

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and local income and franchise  tax  purposes,  the Trust shall be treated as an
entity wholly owned by the Depositor or an affiliate thereof, with the assets of
the entity  being the Trust  Estate,  and the Notes being debt of the entity and
the  provisions of this Trust  Agreement  shall be  interpreted  to further this
intention.  It is the  intention of the parties  hereto that solely for federal,
state and local income and franchise  tax  purposes,  for so long as 100% of the
Class SB-II Certificates are held by a single person or entity, the Trust (other
than the portion of the Trust  constituting  the REMICs)  shall be treated as an
entity  wholly  owned by such  person or  entity,  with the assets of the entity
being  the  Trust  Estate,  and the  Notes  being  debt of the  entity,  and the
provisions  of this  Trust  Agreement  shall  be  interpreted  to  further  this
intention.  It is the  intention of the parties  hereto that,  an election to be
treated as a REMIC  ("REMIC  I") for  federal  income tax  purposes be made with
respect to the Home Equity  Loans in Loan Group I together  with the proceeds of
the Home Equity  Loans in Loan Group I and the proceeds of the Group I Policy on
deposit  in  the  Certificate   Distribution   Account,  the  Custodial  Account
(excluding the Initial Monthly  Payment Fund and the Delinquent  Reserve Amount)
and the Payment Account,  for purposes of the REMIC  Provisions.  It is also the
intention of the parties hereto that a second  election to be treated as a REMIC
be made with respect to the REMIC I Regular  Interests  ("REMIC II"). The Issuer
will provide for the  administration of REMIC I and REMIC II pursuant to Article
XI of the Indenture. If more than one person owns the Group I Certificates, then
it is the intention of the parties  hereto,  that solely for federal,  state and
local  income and  franchise  tax  purposes  the Owner  Trust,  exclusive of the
portion  of the  Owner  Trust  constituting  REMIC  I,  shall  be  treated  as a
partnership,  with  the  assets  of the  partnership  being  the  Trust  Estate,
exclusive  of the assets of REMIC I, the partners of the  partnership  being the
Group II Certificateholders and the Class II Notes being debt of the partnership
and the provisions of this Trust  Agreement shall be interpreted to further this
intention.  The parties agree that, unless otherwise required by appropriate tax
authorities,  the Owner  Trustee  will file or cause to be filed annual or other
necessary  returns,  reports  and  other  forms  as  provided  by  the  original
Certificateholder consistent with the characterization of the Trust as an entity
wholly owned by the Depositor or an affiliate thereof, or if two or more persons
own the Certificates,  as a partnership for such tax purposes and as provided by
such holders of Certificates.

        Section 2.07. Liability of the Holders of the Certificates.  The Holders
of the  Certificates  shall be liable for any entity level taxes  imposed on the
Trust.

        Section 2.08.  Title to Trust  Property.  Legal title to 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.

        Section 2.09. 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.  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 from having  employees  within or without the State of Delaware or
taking  actions  outside the State of  Delaware in order to comply with  Section
2.03.  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 only
office of the Trust will be at the Corporate Trust Office in Delaware.

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        Section  2.10.  Representations  and  Warranties of the  Depositor.  The
Depositor hereby represents and warrants to the Owner Trustee that:

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

               (b) The  Depositor 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   or  the  conduct  of  its   business   shall   require   such
        qualifications  and in which the  failure  to so  qualify  would  have a
        material adverse effect on the business, properties, assets or condition
        (financial  or other) of the  Depositor and the ability of the Depositor
        to perform under this Trust Agreement.

               (c) The  Depositor  has the power and  authority  to execute  and
        deliver this Trust  Agreement and to carry out its terms;  the Depositor
        has full power and  authority to sell and assign the property to be sold
        and  assigned to and  deposited  with the Trust as part of the Trust and
        the Depositor 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  Trust  Agreement  have  been  duly
        authorized by the Depositor by all necessary corporate action.

               (d) The  consummation  of the  transactions  contemplated by this
        Trust  Agreement and the fulfillment of the terms hereof do not conflict
        with,  result in any material  breach of any of the terms and provisions
        of, or constitute  (with or without  notice or lapse of time) a material
        default under, the articles of incorporation or bylaws of the Depositor,
        or any material  indenture,  agreement or other  instrument to which the
        Depositor 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 Depositor's  knowledge,  any order, rule or regulation applicable to
        the Depositor of any court or of any federal or state  regulatory  body,
        administrative  agency  or  other  governmental  instrumentality  having
        jurisdiction over the Depositor or its properties.

        Section  2.11.  Payment of Trust Fees.  The Owner  Trustee shall pay the
Trust's  fees and  expenses  incurred  with  respect to the  performance  of the
Trust's duties under the Indenture.

                                   ARTICLE III

                      Conveyance of the Home Equity Loans; Certificates

        Section  3.01.  Conveyance  of the Home  Equity  Loans.  The  Depositor,
concurrently  with the  execution  and delivery  hereof,  does hereby  transfer,
convey,  sell and assign to the Trust, on behalf of the Holders of the Notes and
the Certificates and the Credit Enhancer, without recourse, all its right, title
and interest in and to the Home Equity Loans.  The  Depositor  will also provide
the Trust with the Credit Enhancement Instrument.

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<PAGE>

        The parties hereto intend that, for non-tax  purposes,  the  transaction
set forth  herein be a sale by the  Depositor  to the Trust of all of its right,
title and  interest in and to the Home  Equity  Loans.  In the event  that,  for
non-tax  purposes,  the transaction set forth herein is not deemed to be a sale,
the  Depositor  hereby  grants to the Trust a  security  interest  in all of its
right,  title  and  interest  in,  to and under  the  Owner  Trust  Estate,  all
distributions  thereon and all proceeds thereof;  and this Trust Agreement shall
constitute a security agreement under applicable law.

        Section 3.02. Initial Ownership.  Upon the formation of the Trust by the
contribution by the Depositor  pursuant to Section 2.05 and until the conveyance
of the Home  Equity  Loans  pursuant  to Section  3.01 and the  issuance  of the
Certificates, the Depositor shall be the sole Certificateholder.

        Section 3.03.  The  Certificates.  The  Certificates  shall be issued in
minimum  denominations  of a  Certificate  Percentage  Interest of 10.0000%  and
integral  multiples  of  0.0001%  in excess  thereof;  provided,  however,  that
Certificates  may be issued in minimum  denominations  of less than  10.0000% in
accordance with the provisions of Section 3.12. The Class SB-I  Certificates and
Class SB-II  Certificates  shall be issued in  substantially  the form  attached
hereto as Exhibit A. The Class R-I Certificates and the Class R-II  Certificates
shall be issued in substantially the form attached hereto as Exhibit I.

        The  Certificates  shall be executed on behalf of the Trust by manual or
facsimile   signature  of  an  authorized  officer  of  the  Owner  Trustee  and
authenticated in the manner provided in Section 3.04.  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 Trust  Agreement,
notwithstanding  that such individuals or any of them shall have ceased to be so
authorized prior to the  authentication and delivery of such Certificates or did
not  hold  such  offices  at the date of  authentication  and  delivery  of such
Certificates. A Person shall become a Certificateholder and shall be entitled to
the rights and subject to the obligations of a Certificateholder  hereunder upon
such Person's acceptance of a Certificate duly registered in such Person's name,
pursuant to Section 3.05.

        A transferee of a Certificate shall become a Certificateholder and shall
be entitled to the rights and subject to the obligations of a  Certificateholder
hereunder upon such transferee's  acceptance of a Certificate duly registered in
such  transferee's  name pursuant to and upon satisfaction of the conditions set
forth in Section 3.05.

        Section 3.04.  Authentication  of  Certificates.  Concurrently  with the
acquisition  of the Home  Equity  Loans by the Trust,  the Owner  Trustee or the
Certificate  Paying  Agent  shall  cause  each Class of the  Certificates  in an
initial  Certificate  Percentage Interest of 100.00% to be executed on behalf of
the Trust,  authenticated  and  delivered  to or upon the  written  order of the
Depositor,  signed by its  chairman  of the  board,  its  president  or any vice
president,  without  further  corporate  action by the Depositor,  in authorized
denominations. No Certificate shall entitle its holder to any benefit under this
Trust  Agreement  or be valid for any purpose  unless there shall appear on such
Certificate a certificate of authentication  substantially in the form set forth

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in  Exhibit  A or  Exhibit  I  hereto,  executed  by the  Owner  Trustee  or the
Certificate  Paying  Agent,  by  manual  signature;  such  authentication  shall
constitute  conclusive  evidence  that  such  Certificate  shall  have been duly
authenticated and delivered hereunder.  All Certificates shall be dated the date
of their authentication.

        Section 3.05.  Registration  of and Limitations on Transfer and Exchange
of Certificates.  (a) The Certificate  Registrar shall keep or cause to be kept,
at the office or agency  maintained  pursuant  to Section  3.09,  a  Certificate
Register in which,  subject to such reasonable  regulations as it may prescribe,
the Certificate Registrar shall provide for the registration of Certificates and
of transfers and exchanges of  Certificates  as herein  provided.  The Indenture
Trustee shall be the initial Certificate Registrar. If the Certificate Registrar
resigns or is removed,  the Owner Trustee shall appoint a successor  Certificate
Registrar.

        Subject  to  satisfaction  of  the  conditions  set  forth  below,  upon
surrender  for  registration  of  transfer of any  Certificate  at the office or
agency  maintained  pursuant to Section 3.09,  the Owner Trustee shall  execute,
authenticate  and  deliver  (or shall  cause the  Certificate  Registrar  as its
authenticating agent to authenticate and deliver), in the name of the designated
transferee or  transferees,  one or more new  Certificates  of the same Class in
authorized   denominations  of  a  like  aggregate  amount  dated  the  date  of
authentication by the Owner Trustee or any  authenticating  agent. At the option
of a Certificateholder,  Certificates may be exchanged for other Certificates of
the same Class of  authorized  denominations  of a like  aggregate  amount  upon
surrender of the Certificates to be exchanged at the office or agency maintained
pursuant to Section 3.09.

        Every Certificate  presented or surrendered for registration of transfer
or exchange  shall be  accompanied  by a written  instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Certificateholder
or  such   Certificateholder's   attorney  duly  authorized  in  writing.   Each
Certificate  surrendered  for  registration  of transfer  or  exchange  shall be
cancelled  and  subsequently   disposed  of  by  the  Certificate  Registrar  in
accordance with its customary practice.

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

        Except as described below, each holder of a Class SB-II Certificate or a
Class R Certificate shall establish its non-foreign  status by submitting to the
Certificate  Paying  Agent an IRS Form W-9 and the  Certificate  of  Non-Foreign
Status (in substantially the form attached hereto as Exhibit F).

        A Class SB-II Certificate or Class R Certificate may be transferred to a
Certificateholder unable to establish its non-foreign status as described in the
preceding  paragraph  only if such  Certificateholder  provides  an  Opinion  of
Counsel,  which  Opinion  of Counsel  shall not be an expense of the Trust,  the
Owner Trustee, the Certificate  Registrar or the Depositor,  satisfactory to the
Depositor  and the Credit  Enhancer,  that such transfer (1) will not affect the
tax status of the Trust and (2) will not  adversely  affect the interests of any
Certificateholder,   Noteholder  or  the  Credit  Enhancer,  including,  without
limitation,  as a  result  of  the  imposition  of  any  United  States  federal
withholding taxes on the Trust (except to the extent that such withholding taxes

                                       7
<PAGE>

would be payable solely from amounts otherwise  distributable to the Certificate
of the  prospective  transferee).  If such  transfer  occurs  and  such  foreign
Certificateholder  becomes  subject to such United  States  federal  withholding
taxes, any such taxes will be withheld by the Indenture Trustee.  Each holder of
a Class SB-II  Certificate  or a Class R  Certificate  unable to  establish  its
non-foreign  status shall submit to the  Certificate  Paying Agent a copy of its
Form W-8 and shall resubmit such Form W-8-BEN or such successor form as required
by then-applicable regulations and shall resubmit such form every three years or
with such frequency as required by then-applicable regulations.

        (b)(i) No transfer,  sale,  pledge or other disposition of a Certificate
shall be made unless such transfer,  sale, pledge or other disposition is exempt
from the  registration  requirements  of the  Securities  Act and any applicable
state  securities  laws or is made in accordance  with said Act and laws. In the
event of any such transfer,  the  Certificate  Registrar or the Depositor  shall
prior to such  transfer  require  the  transferee  (A) to either (i)  execute an
investment  letter in substantially the form attached hereto as Exhibit C (or in
such form and substance reasonably satisfactory to the Certificate Registrar and
the Depositor)  which  investment  letters shall not be an expense of the Trust,
the Owner  Trustee,  the  Certificate  Registrar,  the  Master  Servicer  or the
Depositor  and which  investment  letter states that,  among other things,  such
transferee (a) is a "qualified  institutional buyer" as defined under Rule 144A,
acting for its own  account or the  accounts of other  "qualified  institutional
buyers"  as  defined  under  Rule  144A,  and (b) is  aware  that  the  proposed
transferor intends to rely on the exemption from registration requirements under
the Securities Act, provided by Rule 144A or (ii) (a) deliver to the Certificate
Registrar  and the Depositor a written  Opinion of Counsel  acceptable to and in
form and substance  satisfactory to the Certificate  Registrar and the Depositor
that  such  transfer  may be  made  pursuant  to an  exemption,  describing  the
applicable exemption and the basis therefor,  from said Act and laws or is being
made  pursuant to said Act and laws,  which  Opinion of Counsel  shall not be an
expense of the Trust, the Owner Trustee, the Certificate  Registrar,  the Master
Servicer or the Depositor and (b) execute a representation letter, substantially
in the form of  Exhibit  D  hereto,  and to cause the  transferor  to  execute a
representation  letter,  substantially  in the form of  Exhibit E  hereto,  each
acceptable  to  and in  form  and  substance  satisfactory  to  the  Certificate
Registrar and the Depositor  certifying  the facts  surrounding  such  transfer,
which  representation  letters  shall not be an expense of the Trust,  the Owner
Trustee, the Certificate Registrar, the Master Servicer or the Depositor and (B)
in the case of a Class SB-II  Certificate  or Class R Certificate to execute the
Certificate of Non-Foreign  Status (in substantially the form attached hereto as
Exhibit F) acceptable to and in form and substance  reasonably  satisfactory  to
the Certificate  Registrar and the Depositor,  which certificate shall not be an
expense  of the Trust,  the Owner  Trustee,  the  Certificate  Registrar  or the
Depositor.  If the  Certificateholder  is unable to  provide  a  Certificate  of
Non-Foreign Status, the Certificateholder  must provide an Opinion of Counsel as
described in the preceding paragraph.  The Certificateholder  desiring to effect
such transfer shall,  and does hereby agree to,  indemnify the Trust,  the Owner
Trustee,  the  Certificate  Registrar,  the Master  Servicer  and the  Depositor
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

        (ii) No transfer of Certificates  or any interest  therein shall be made
to any employee benefit plan or certain other retirement plans and arrangements,
including  individual  retirement  accounts and annuities,  Keogh plans and bank
collective  investment funds and insurance  company general or separate accounts

                                       8
<PAGE>

in which such plans, accounts or arrangements are invested,  that are subject to
ERISA, or Section 4975 of the Code  (collectively,  "Plan"),  any Person acting,
directly or indirectly,  on behalf of any such Plan or any Person acquiring such
Certificates  with "plan assets" of a Plan within the meaning of the  Department
of Labor  regulation  promulgated  at 29 C.F.R.  ss.2510.3-101  ("Plan  Assets")
unless the  Depositor,  the Owner  Trustee,  the  Certificate  Registrar and the
Master Servicer are provided with an Opinion of Counsel which establishes to the
satisfaction of the Depositor,  the Owner Trustee, the Certificate Registrar and
the Master  Servicer  that the purchase of  Certificates  is  permissible  under
applicable  law,  will not  constitute or result in any  prohibited  transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor,  the
Owner  Trustee,  the  Certificate  Registrar  or  the  Master  Servicer  to  any
obligation or liability  (including  obligations or  liabilities  under ERISA or
Section  4975 of the  Code)  in  addition  to  those  undertaken  in this  Trust
Agreement,  which Opinion of Counsel  shall not be an expense of the  Depositor,
the Owner Trustee, the Certificate  Registrar or the Master Servicer. In lieu of
such Opinion of Counsel, a Plan, any Person acting,  directly or indirectly,  on
behalf of any such Plan or any  Person  acquiring  such  Certificates  with Plan
Assets of a Plan may  provide a  certification  in the form of Exhibit G to this
Trust  Agreement,  which the  Depositor,  the  Owner  Trustee,  the  Certificate
Registrar  and the Master  Servicer  may rely upon  without  further  inquiry or
investigation.  Neither  an  Opinion  of  Counsel  nor a  certification  will be
required in connection with the initial  transfer of any such Certificate by the
Depositor to an affiliate of the Depositor (in which case,  the Depositor or any
affiliate thereof shall be deemed to have represented that such affiliate is not
a Plan or a Person  investing  Plan  Assets of any  Plan) and the Owner  Trustee
shall be entitled to conclusively  rely upon a representation  (which,  upon the
request  of the  Owner  Trustee,  shall be a  written  representation)  from the
Depositor of the status of such transferee as an affiliate of the Depositor.

        (iii) In  addition,  no transfer of a Class SB-II  Certificate  shall be
permitted, and no such transfer shall be registered by the Certificate Registrar
or be effective  hereunder,  unless  evidenced  by an Opinion of Counsel,  which
establishes  that such transfer or the  registration  of such transfer would not
cause the Trust to be classified  as a publicly  traded  partnership,  by having
more than 100  Certificateholders  at any time  during the  taxable  year of the
Trust,  an  association  taxable as a  corporation,  a corporation  or a taxable
mortgage pool for federal and relevant state income tax purposes,  which Opinion
of Counsel shall not be an expense of the Certificate  Registrar and shall be an
expense of the  proposed  transferee.  No Opinion of Counsel will be required if
such  transfer  is made to a  nominee  of an  existing  beneficial  holder  of a
Certificate.

        (iv) In  addition,  no  transfer,  sale,  assignment,  pledge  or  other
disposition  of a  Certificate  shall be made  unless  the  proposed  transferee
executes  a  representation  letter  substantially  in the form of Exhibit D, or
substantially  in the form of  Exhibit  H  hereto,  that (1) the  transferee  is
acquiring  the  Certificate  for its own  behalf  and is not  acting as agent or
custodian for any other Person or entity in connection with such acquisition and
(2) if the  transferee is a  partnership,  grantor  trust or S  corporation  for
federal income tax purposes,  the Certificates acquired are not more than 50% of
the assets of the partnership, grantor trust or S corporation.

        (v) In  addition,  with  respect to each Class R  Certificate,  (i) Each
Person who has or who acquires any  Ownership  Interest in a Class R Certificate
shall be deemed by the acceptance or  acquisition of such Ownership  Interest to

                                       9
<PAGE>

have  agreed to be bound by the  following  provisions  and to have  irrevocably
authorized the  Certificate  Paying Agent or its designee under clause  (vii)(A)
below to deliver  payments to a Person  other than such Person and to  negotiate
the terms of any mandatory  sale under clause  (vii)(B) below and to execute all
instruments of transfer and to do all other things  necessary in connection with
any such sale. The rights of each Person  acquiring any Ownership  Interest in a
Class R Certificate are expressly subject to the following provisions:

(A)  Each  Person  holding or  acquiring  any  Ownership  Interest  in a Class R
     Certificate  shall be a Permitted  Transferee and shall promptly notify the
     Owner  Trustee  of any  change  or  impending  change  in its  status  as a
     Permitted Transferee.

(B)  In connection  with any proposed  Transfer of any  Ownership  Interest in a
     Class R Certificate,  the Certificate  Registrar shall require  delivery to
     it, and shall not register the  Transfer of any Class R  Certificate  until
     its receipt of, (I) an affidavit and  agreement (a "Transfer  Affidavit and
     Agreement,"  in the form attached  hereto as Exhibit J-1) from the proposed
     Transferee,  in form and  substance  satisfactory  to the Master  Servicer,
     representing  and  warranting,  among other things,  that it is a Permitted
     Transferee,  that it is not acquiring its Ownership Interest in the Class R
     Certificate  that is the  subject of the  proposed  Transfer  as a nominee,
     trustee or agent for any Person who is not a Permitted Transferee, that for
     so long as it retains its Ownership  Interest in a Class R Certificate,  it
     will  endeavor to remain a Permitted  Transferee,  and that it has reviewed
     the  provisions  of this Section  3.05 and agrees to be bound by them,  and
     (II) a  certificate,  in the form attached  hereto as Exhibit J-2, from the
     Certificateholder  of a Class R Certificate wishing to transfer the Class R
     Certificate,  in form and substance  satisfactory  to the Master  Servicer,
     representing  and  warranting,  among other things,  that no purpose of the
     proposed Transfer is to impede the assessment or collection of tax.

(C)  Notwithstanding  the delivery of a Transfer  Affidavit  and  Agreement by a
     proposed Transferee under clause (B) above, if a Responsible Officer of the
     Certificate  Registrar  who  is  assigned  to  this  Agreement  has  actual
     knowledge that the proposed  Transferee is not a Permitted  Transferee,  no
     Transfer of an Ownership Interest in a Class R Certificate to such proposed
     Transferee shall be effected.

(D)  Each  Person  holding or  acquiring  any  Ownership  Interest  in a Class R
     Certificate  shall agree (x) to require a Transfer  Affidavit and Agreement
     from any  other  Person  to whom  such  Person  attempts  to  transfer  its
     Ownership  Interest in a Class R  Certificate  and (y) not to transfer  its
     Ownership  Interest  unless it provides a  certificate  to the  Certificate
     Registrar in the form attached hereto as Exhibit J-2.

(E)  Each  Person  holding  or  acquiring  an  Ownership  Interest  in a Class R
     Certificate,  by  purchasing  an  Ownership  Interest in such  Certificate,

                                       10
<PAGE>

     agrees  to give  the  Certificate  Registrar  written  notice  that it is a
     "pass-through  interest  holder"  within the meaning of Temporary  Treasury
     Regulations  Section  1.67-3T(a)(2)(i)(A)  immediately  upon  acquiring  an
     Ownership  Interest  in a Class R  Certificate,  if it is, or is holding an
     Ownership  Interest in a Class R Certificate on behalf of, a  "pass-through
     interest holder."

        (vi) The Certificate Registrar will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and Agreement,
a certificate of the Certificateholder of a Class R Certificate  requesting such
transfer  in the  form  attached  hereto  as  Exhibit  G and all of  such  other
documents as shall have been reasonably required by the Certificate Registrar as
a condition  to such  registration.  Transfers  of the Class R  Certificates  to
Non-United States Persons and Disqualified  Organizations (as defined in Section
860E(e)(5) of the Code) are prohibited.

        (vii) (A) If any  Disqualified  Organization  shall become a holder of a
Class R  Certificate,  then the last  preceding  Permitted  Transferee  shall be
restored,  to the extent  permitted  by law,  to all rights and  obligations  as
Certificateholder  of a Class R Certificate  thereof  retroactive to the date of
registration  of such  Transfer  of such Class R  Certificate.  If a  Non-United
States  Person  shall  become a holder of a Class R  Certificate,  then the last
preceding  United  States Person shall be restored,  to the extent  permitted by
law, to all rights and obligations as Certificateholder of a Class R Certificate
thereof retroactive to the date of registration of such Transfer of such Class R
Certificate.  If a transfer of a Class R Certificate is disregarded  pursuant to
the provisions of Treasury  Regulations  Section  1.860E-1 or Section  1.860G-3,
then the last preceding  Permitted  Transferee shall be restored,  to the extent
permitted by law, to all rights and obligations as  Certificateholder of a Class
R Certificate  thereof  retroactive to the date of registration of such Transfer
of such  Class R  Certificate.  The  Certificate  Registrar  shall  be  under no
liability  to  any  Person  for  any  registration  of  Transfer  of a  Class  R
Certificate that is in fact not permitted by this Section 3.05 or for making any
payments due on such  Certificate  to the holder thereof or for taking any other
action with respect to such holder under the provisions of this Agreement.

               (B) If any purported  Transferee shall become a Certificateholder
        of a  Class R  Certificate  in  violation  of the  restrictions  in this
        Section 3.05 and to the extent that the  retroactive  restoration of the
        rights of the Certificateholder of such Class R Certificate as described
        in clause  (vii)(A)  above shall be invalid,  illegal or  unenforceable,
        then the Master  Servicer  shall have the right,  without  notice to the
        holder or any prior  holder of such  Class R  Certificate,  to sell such
        Class R Certificate  to a purchaser  selected by the Master  Servicer on
        such terms as the Master Servicer may choose. Such purported  Transferee
        shall  promptly   endorse  and  deliver  each  Class  R  Certificate  in
        accordance with the instructions of the Master Servicer.  Such purchaser
        may  be the  Master  Servicer  itself  or any  Affiliate  of the  Master
        Servicer.  The proceeds of such sale, net of the commissions  (which may
        include  commissions  payable to the Master Servicer or its Affiliates),
        expenses and taxes due, if any, will be remitted by the Master  Servicer
        to such purported Transferee. The terms and conditions of any sale under
        this clause  (vii)(B) shall be determined in the sole  discretion of the
        Master  Servicer,  and the  Master  Servicer  shall not be liable to any
        Person having an Ownership Interest in a Class R Certificate as a result
        of its exercise of such discretion.

                                       11
<PAGE>

               (viii) The REMIC Administrator shall make available, upon written
        request from the Internal  Revenue Service and any potentially  affected
        Person,  all  information  necessary to compute any tax imposed (A) as a
        result of the Transfer of an Ownership Interest in a Class R Certificate
        to  any  Person  who  is  a  Disqualified  Organization,  including  the
        information  regarding "excess  inclusions" of such Class R Certificates
        required  to be  provided to the  Internal  Revenue  Service and certain
        Persons as described in Treasury Regulations Sections 1.860D-1(b)(5) and
        1.860E-2(a)(5), and (B) as a result of any regulated investment company,
        real estate investment  trust,  common trust fund,  partnership,  trust,
        estate or organization  described in Section 1381 of the Code that holds
        an  Ownership  Interest  in a Class R  Certificate  having  as among its
        record   holders  at  any  time  any   Person  who  is  a   Disqualified
        Organization. Reasonable compensation for providing such information may
        be  required  by the REMIC  Administrator  before it will  provide  such
        information to any such potentially affected Person.

               (ix) The  provisions of this Section 3.05 set forth prior to this
        clause (ix) may be modified, added to or eliminated, provided that there
        shall have been delivered to the Owner Trustee the following:

                      (A) written  notification  from each Rating  Agency to the
               effect that the modification,  addition to or elimination of such
               provisions  will not cause such Rating  Agency to  downgrade  its
               then-current ratings, if any, if determined without regard to the
               Group II Policy, of any Class of the Notes below the lower of the
               then-current  rating or the rating  assigned  to such Notes as of
               the Closing Date by such Rating  Agency,  if  determined  without
               regard to the Group II Policy; and

                      (B)  subject  to Section  11.01(f)  of the  Indenture,  an
               Officers'  Certificate  of the Master  Servicer  stating that the
               Master  Servicer has received an Opinion of Counsel,  in form and
               substance  satisfactory  to the  Master  Servicer  and the Credit
               Enhancer,  to the effect that such  modification,  addition to or
               absence of such  provisions  will not cause any portion of either
               of the  REMICs to cease to  qualify as a REMIC and will not cause
               (x) any  portion  of either of the  REMICs  to be  subject  to an
               entity-level   tax  caused  by  the   Transfer  of  any  Class  R
               Certificate  to a Person that is a Disqualified  Organization  or
               (y) a  Certificateholder  or  another  Person to be  subject to a
               REMIC-related tax caused by the Transfer of a Class R Certificate
               to a Person that is not a Permitted Transferee.

        Section 3.06. Mutilated,  Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate shall be surrendered to the Certificate Registrar,  or
if the Certificate  Registrar shall receive  evidence to its satisfaction of the
destruction,  loss or theft of any Certificate and (ii) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required  by them to save each of them and the Issuer from harm,  then in
the absence of notice to the  Certificate  Registrar  or the Owner  Trustee that
such  Certificate has been acquired by a bona fide purchaser,  the Owner Trustee
shall  execute on behalf of the Trust and the Owner  Trustee or the  Certificate
Paying  Agent,  as the Trust's  authenticating  agent,  shall  authenticate  and

                                       12
<PAGE>

deliver,  in exchange for or in lieu of any such mutilated,  destroyed,  lost or
stolen  Certificate,  a new  Certificate  of like  tenor  and  denomination.  In
connection with the issuance of any new Certificate under this Section 3.06, the
Owner  Trustee or the  Certificate  Registrar  may  require the payment of a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
connection therewith.  Any duplicate Certificate issued pursuant to this Section
3.06 shall  constitute  conclusive  evidence of  ownership  in the Trust,  as if
originally  issued,  whether or not the lost,  stolen or  destroyed  Certificate
shall be found at any time.

        Section  3.07.   Persons   Deemed   Certificateholders.   Prior  to  due
presentation of a Certificate for  registration of transfer,  the Owner Trustee,
the Certificate  Registrar or any Certificate  Paying Agent may treat the Person
in whose name any Certificate is registered in the  Certificate  Register as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 5.02 and for all other purposes  whatsoever,  and none of the Trust, the
Owner Trustee,  the Certificate  Registrar or any Paying Agent shall be bound by
any notice to the contrary.

        Section 3.08. Access to List of Certificateholders' Names and Addresses.
The  Certificate  Registrar  shall  furnish  or  cause  to be  furnished  to the
Depositor or the Owner Trustee,  within 15 days after receipt by the Certificate
Registrar of a written request therefor from the Depositor or the Owner Trustee,
a list, in such form as the Depositor or the Owner Trustee,  as the case may be,
may reasonably require, of the names and addresses of the  Certificateholders as
of the most  recent  Record  Date.  Each  Holder,  by  receiving  and  holding a
Certificate,  shall be deemed to have  agreed not to hold any of the Trust,  the
Depositor,  the Certificate Registrar or the Owner Trustee accountable by reason
of the  disclosure of its name and address,  regardless of the source from which
such information was derived.

        Section 3.09.  Maintenance of Office or Agency.  The Owner  Trustee,  on
behalf of the Trust, shall maintain in the City of New York an office or offices
or agency or agencies where  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 Certificates and the Basic Documents may be served.  The Owner
Trustee initially designates the Corporate Trust Office of the Indenture Trustee
as its office for such  purposes.  The Owner Trustee  shall give prompt  written
notice to the Depositor and the Certificateholders of any change in the location
of the Certificate Register or any such office or agency.

        Section 3.10. Certificate Paying Agent. (a) The Certificate Paying Agent
shall make distributions to Certificateholders from the Certificate Distribution
Account  on  behalf  of the  Trust  in  accordance  with the  provisions  of the
Certificates  and Section 5.01 hereof from payments  remitted to the Certificate
Paying Agent by the Indenture Trustee pursuant to Section 3.05 of the Indenture.
The Trust hereby appoints the Indenture Trustee as Certificate  Paying Agent and
the Indenture Trustee hereby accepts such appointment and further agrees that it
will  be  bound  by the  provisions  of this  Trust  Agreement  relating  to the
Certificate Paying Agent and shall:

               (i) hold all sums held by it for the  payment of amounts due with
respect to the  Certificates  in trust for the benefit of the  Persons  entitled
thereto  until such sums shall be paid to such Persons or otherwise  disposed of
as herein provided;

                                       13
<PAGE>

               (ii) give the Owner Trustee notice of any default by the Trust of
which it has actual  knowledge in the making of any payment  required to be made
with respect to the Certificates;

               (iii) at any time  during the  continuance  of any such  default,
upon the  written  request  of the  Owner  Trustee,  forthwith  pay to the Owner
Trustee  on behalf  of the  Trust all sums so held in Trust by such  Certificate
Paying Agent;

               (iv) immediately resign as Certificate Paying Agent and forthwith
pay to the Owner Trustee on behalf of the Trust all sums held by it in trust for
the  payment  of  Certificates  if at any time it ceases  to meet the  standards
required  to be  met  by  the  Certificate  Paying  Agent  at  the  time  of its
appointment;

               (v) comply with all  requirements of the Code with respect to the
withholding  from any payments made by it on any  Certificates of any applicable
withholding  taxes imposed thereon and with respect to any applicable  reporting
requirements in connection therewith; and

               (vi)  deliver  to the  Owner  Trustee  a copy  of the  report  to
Certificateholders  prepared  with  respect to each  Payment  Date by the Master
Servicer pursuant to Section 4.01 of the Servicing Agreement.

        (b) The Trust may revoke  such power and remove the  Certificate  Paying
Agent  if  the  Owner  Trustee  determines  in  its  sole  discretion  that  the
Certificate Paying Agent shall have failed to perform its obligations under this
Trust  Agreement  in any  material  respect.  The  Indenture  Trustee  shall  be
permitted to resign as Certificate  Paying Agent upon 30 days' written notice to
the Owner  Trustee;  provided the Indenture  Trustee is also resigning as Paying
Agent under the Indenture at such time. In the event that the Indenture  Trustee
shall no longer be the  Certificate  Paying Agent under this Trust Agreement and
Paying Agent under the Indenture, the Owner Trustee shall appoint a successor to
act as  Certificate  Paying Agent  (which shall be a bank or trust  company) and
which shall also be the successor  Paying Agent under the  Indenture.  The Owner
Trustee shall cause such  successor  Certificate  Paying Agent or any additional
Certificate  Paying Agent  appointed by the Owner Trustee to execute and deliver
to the Owner  Trustee an instrument to the effect set forth in this Section 3.10
as it relates to the  Certificate  Paying Agent.  The  Certificate  Paying Agent
shall return all unclaimed  funds to the Trust and upon removal of a Certificate
Paying  Agent such  Certificate  Paying Agent shall also return all funds in its
possession to the Trust. The provisions of Sections 6.01, 6.04, 6.05, 6.06, 7.01
and 7.02 shall apply to the Certificate  Paying Agent to the extent  applicable.
Any  reference  in this Trust  Agreement to the  Certificate  Paying Agent shall
include any co-paying agent unless the context requires otherwise.

        (c) The  Certificate  Paying Agent shall  establish  and  maintain  with
itself the  Certificate  Distribution  Account in which the  Certificate  Paying
Agent  shall  deposit,  on the same  day as it is  received  from the  Indenture
Trustee,  each remittance  received by the Certificate Paying Agent with respect
to payments made pursuant to the Indenture.  The Certificate  Paying Agent shall
make all distributions of Certificate  Distribution Amounts on the Certificates,
from moneys on deposit in the Certificate Distribution Account.

        Section 3.11.  Cooperation.  The Owner  Trustee  shall  cooperate in all
respects  with any  reasonable  request  by the  Credit  Enhancer  for action to
preserve or enforce the Credit  Enhancer's  rights or interest  under this Trust
Agreement or the Insurance  Agreement,  consistent with this Trust Agreement and
without limiting the rights of the Certificateholders as otherwise expressly set
forth in this Trust Agreement.

                                       14
<PAGE>

        Section 3.12. Additional  Certificate Security Balances Upon Issuance of
Capped  Funding  Notes.  (a) On any date on which  Variable  Funding  Notes  are
exchanged for Capped Funding Notes pursuant to Section 4.01(d) of the Indenture,
the Security Balance of one or more Class SB-II  Certificates shall be increased
in an amount equal to the Additional  Certificate  Security  Balance as required
pursuant to the Opinion of Counsel required to be delivered  pursuant to Section
4.01(d) of the Indenture in connection  with the issuance of the Capped  Funding
Notes.  In  addition,  on any  Payment  Date on  which  the  Additional  Balance
Differential for such Payment Date if added to the aggregate Security Balance of
the Variable  Funding Notes (after  application of any principal  payments to be
made thereon on such Payment  Date) would cause the aggregate  Security  Balance
thereof  to exceed the  Maximum  Variable  Funding  Balance,  then the  Security
Balance of one or more  Certificates  shall be  increased  by the amount of such
excess.

        (b) 100.00% of the value of the Additional  Certificate Security Balance
shall be added to any Class SB-II Certificate held by the Seller or an Affiliate
thereof without the consent of the other Certificateholders; or if no such Class
SB-II  Certificate  exists,  a  new  Class  SB-II  Certificate  or  Class  SB-II
Certificates  shall be issued at the  direction  of the  Seller or an  Affiliate
thereof having in the aggregate a Security Balance equal to such 100.00% of such
value. Alternatively,  the Depositor may allocate any portion of such value to a
Class SB-II  Certificateholder other than the Depositor or an Affiliate thereof,
provided  that  such  Certificateholder  provides  its  written  consent  to the
Depositor and the Owner Trustee.

        (c) Following such increase, the Certificate Percentage Interest of each
Class SB-II Certificate  shall be recalculated,  the numerator of which shall be
the  value  thereof  including  the  respective  value  of  the  portion  of the
Additional  Certificate  Security Balance added thereto pursuant to this Section
3.12,  and the  denominator  of which  shall be the value of all the Class SB-II
Certificates  following such  increase.  The Owner Trustee shall issue new Class
SB-II Certificates with new Certificate  Percentage  Interests to each Holder of
the  Class  SB-II  Certificates,  with  such  Certificate  Percentage  Interests
calculated to four decimal places. In addition, the new Class SB-II Certificates
may be issued in minimum  denominations  of 0.0001% and  integral  multiples  of
0.0001% in excess thereof.  This subsection,  and subsections (d) and (e) below,
shall not apply in the event that any Additional Certificate Security Balance is
allocated in accordance with subsection (b) either (i) at any time when there is
only one Class SB-II  Certificateholder,  or (ii) at any time when there is more
than one Class SB-II  Certificateholder if such Additional  Certificate Security
Balance is allocated on a pro rata basis among all Class SB-II Certificates.

        (d) For  purposes  of the  foregoing,  the  "value"  of any Class  SB-II
Certificate or any Additional  Certificate  Security Balance added thereto shall
be determined by the Seller in its sole discretion based on reasonable cash flow
assumptions and valuation methods,  and any such determination  shall be binding
on the Certificateholders. If the Seller is unable to determine the "value," the
Owner  Trustee  shall  determine  the  "value"  using the same  assumptions  and
methods.

                                       15
<PAGE>

        (e) The Owner  Trustee,  the  Indenture  Trustee and the Issuer agree to
cooperate  with each  other and the  Depositor  and the  Seller  and to cause no
unreasonable  delay in adjusting  the  Certificate  Percentage  Interests of the
Class SB-II Certificates pursuant to this Section 3.12 and the issuing of Capped
Funding Notes in connection with Section 4.01(d) of the Indenture.

        Section 3.13.  Subordination.  Except as otherwise provided in the Basic
Documents,   for  so  long  as  any  Notes  are   outstanding  or  unpaid,   the
Certificateholders will generally be subordinated in right of payment, under the
Certificates or otherwise,  to payments to the  Noteholders  under, or otherwise
related to, the Indenture. If an Event of Default has occurred and is continuing
under the Indenture,  the Certificates will be fully subordinated to obligations
owing  by the  Trust  to the  Noteholders  and the  Credit  Enhancer  under,  or
otherwise  related to, the Indenture,  and no distributions  will be made on the
Certificates  until the  Noteholders  and the  Indenture  Trustee and the Credit
Enhancer have been irrevocably paid in full.

        Section 3.14. No Priority  Among  Certificates.  All  Certificateholders
shall rank equally as to amounts distributable upon the liquidation, dissolution
or winding up of the Trust, with no preference or priority being afforded to any
Certificateholders  over  any  other  Certificateholders,  except  that  amounts
distributable to the Group I Certificates will be distributed first to the Class
SB-I Certificates,  in an amount equal to the Class SB-I Distribution Amount for
such  Payment  Date and the Class  SB-I  Distribution  Amount  for any  previous
Payment Date to the extent not previously paid,  before being distributed to the
Class  R-I   Certificates,   and  amounts   distributable  to  the  Class  SB-II
Certificates will be distributed to the Class SB-II Certificates.

                                   ARTICLE IV

                      Authority and Duties of Owner Trustee

        Section 4.01.  General  Authority.  The Owner Trustee is authorized  and
directed to execute and deliver the Basic  Documents to which the Trust is to be
a party and each  certificate  or other  document  attached  as an exhibit to or
contemplated  by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement or instrument  described  herein,  in each case, in
such form as the Owner Trustee shall approve,  as evidenced  conclusively by the
Owner  Trustee's  execution  thereof.  In addition to the  foregoing,  the Owner
Trustee is obligated to take all actions  required of the Trust  pursuant to the
Basic Documents.

        Section 4.02.  General Duties. The Owner Trustee shall be responsible to
administer the Trust pursuant to the terms of this Trust Agreement and the Basic
Documents   to  which  the  Trust  is  a  party  and  in  the  interest  of  the
Certificateholders,  subject to the Basic  Documents and in accordance  with the
provisions of this Trust Agreement.

        Section 4.03.  Action upon  Instruction.  (a) Subject to this Article IV
and in accordance with the terms of the Basic Documents,  the Certificateholders
may by written  instruction  direct the Owner  Trustee in the  management of the
Trust. Such direction may be exercised at any time by written instruction of the
Certificateholders pursuant to this Article IV.

        (b)  Notwithstanding  the  foregoing,  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.

                                       16
<PAGE>

        (c) Whenever the Owner Trustee is unable to decide  between  alternative
courses of action  permitted or required by the terms of this Trust Agreement or
under any Basic Document, or in the event that the Owner Trustee is unsure as to
the  application of any provision of this Trust  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
Trust 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 shall promptly
give notice (in such form as shall be appropriate  under the  circumstances)  to
the  Certificateholders   (with  a  copy  to  the  Credit  Enhancer)  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 written  instructions
received from Holders of  Certificates  representing  a majority of the Security
Balance of each Class of Certificates,  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 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 Trust Agreement or
the  Basic  Documents,  as it  shall  deem to be in the  best  interests  of the
Certificateholders,  and the Owner Trustee shall have no liability to any Person
for such action or inaction.

        Section 4.04. No Duties Except as Specified under Specified Documents 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  (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee  pursuant to this Trust  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 4.03; and no implied duties or obligations
shall be read into this Trust Agreement or any Basic Document  against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or  continuation  statement  in any  public  office at any time or to  otherwise
perfect or maintain the  perfection of any security  interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Trust 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 that are not related to the ownership or the administration of the Owner
Trust Estate.

        Section  4.05.  Restrictions.  (a) The Owner  Trustee shall not take any
action  (x) that is  inconsistent  with the  purposes  of the Trust set forth in
Section 2.03 or (y) that, to the actual  knowledge of the Owner  Trustee,  would
result in the Trust becoming taxable as a corporation or a taxable mortgage pool
for  federal  income tax  purposes or would cause REMIC I or REMIC II to fail to
qualify  as a REMIC  at any  time  that  any of the  Class I  Notes  or  Group I
Certificates  are outstanding or any obligations are due and owing to the Credit
Enhancer under the Insurance Agreement.  The Certificateholders shall not direct
the Owner  Trustee to take action  that would  violate  the  provisions  of this
Section 4.05.

                                       17
<PAGE>

        (b) The Owner  Trustee  shall not convey or transfer  any of the Trust's
properties  or assets,  including  those  included in the Trust  Estate,  to any
person  unless  (a) it shall have  received  an Opinion of Counsel to the effect
that such  transaction will not have any material adverse tax consequence to the
Trust or any  Certificateholder  and (b) such  conveyance or transfer  shall not
violate the provisions of Section 3.16(b) of the Indenture.

        Section 4.06. Prior Notice to Certificateholders and the Credit Enhancer
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 Certificateholders and
the  Credit   Enhancer  in  writing  of  the  proposed  action  and  Holders  of
Certificates  representing  a majority of the Security  Balance  thereof and the
Credit  Enhancer  shall not have  notified the Owner Trustee in writing prior to
the 30th day after  such  notice is given that such  Certificateholders  and the
Credit Enhancer have withheld consent or provided alternative direction:

        (a) the  initiation of any claim or lawsuit by the Trust (except  claims
or lawsuits brought in connection with the collection of cash  distributions due
and owing under the Home Equity Loans) and the  compromise of any action,  claim
or  lawsuit  brought  by or  against  the  Trust  (except  with  respect  to the
aforementioned  claims or lawsuits for collection of cash  distributions due and
owing under the Home Equity Loans);

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

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

        (d) 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  Certificateholders;
and

        (e) the  appointment  pursuant  to the  Indenture  of a  successor  Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Trust Agreement
of a successor  Certificate Registrar or Certificate Paying Agent or the consent
to the  assignment  by the Note  Registrar,  Paying  Agent,  Indenture  Trustee,
Certificate  Registrar or Certificate  Paying Agent of its obligations under the
Indenture or this Trust Agreement, as applicable.

        Section  4.07.  Action by  Certificateholders  with  Respect  to Certain
Matters.  The Owner Trustee shall not have the power,  except upon the direction
of  Certificateholders  evidencing  not less than a majority of the  outstanding
Security  Balance  of the  Certificates,  and with  the  consent  of the  Credit
Enhancer,  to (a) remove  the  Master  Servicer  under the  Servicing  Agreement
pursuant  to Section  7.01  thereof or (b) except as  expressly  provided in the
Basic  Documents,  sell the Home  Equity  Loans  after  the  termination  of the
Indenture. The Owner Trustee shall take the actions referred to in the preceding
sentence only upon written instructions signed by Certificateholders  evidencing
not less than a majority of the outstanding Security Balance of the Certificates
and with the consent of the Credit Enhancer.

                                       18
<PAGE>

        Section 4.08. Action by  Certificateholders  with Respect to Bankruptcy.
The Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy  relating to the Trust  without the unanimous  prior  approval of all
Certificateholders  and with the consent of the Credit Enhancer and the delivery
to the Owner Trustee by each such  Certificateholder of a certificate certifying
that such Certificateholder reasonably believes that the Trust is insolvent.

        Section   4.09.   Restrictions   on   Certificateholders'   Power.   The
Certificateholders shall not direct the Owner Trustee to take or to 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 Trust Agreement or any of the Basic
Documents or would be contrary to Section  2.03,  nor shall the Owner Trustee be
obligated to follow any such direction, if given.

        Section 4.10. Majority Control. Except as expressly provided herein, any
action that may be taken by the  Certificateholders  under this Trust  Agreement
may be taken by the  Certificateholders  evidencing  not less than a majority of
the  outstanding  Security  Balance  of the  Certificates.  Except as  expressly
provided herein, any written notice of the Certificateholders delivered pursuant
to this  Trust  Agreement  shall be  effective  if signed by  Certificateholders
evidencing not less than a majority of the outstanding  Security  Balance of the
Certificates at the time of the delivery of such notice.

        Section 4.11.  Doing  Business in Other  Jurisdictions.  Notwithstanding
anything contained herein to the contrary,  neither Wilmington Trust Company 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 9.05
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 (iii) subject  Wilmington Trust Company
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 the Owner Trustee,  as the case may
be, contemplated hereby.

        Section 4.12. Removal of Home Equity Loans.  Certificateholders  holding
100% of the  Certificate  Percentage  Interests of the Class SB-II  Certificates
may, by delivering a written request to the Owner Trustee to such effect,  cause
the  removal  of Home  Equity  Loans in Loan  Group II from the Trust  Estate in
accordance  with  and  subject  to the  provisions  of  Section  3.15(b)  of the
Servicing  Agreement.  Promptly following receipt of any such request, the Owner
Trustee  shall  deliver to the Master  Servicer  the written  notice and request
required to be delivered to the Master  Servicer  pursuant to Section 3.15(b) of
the  Servicing  Agreement.  Any Group II Loans  removed  from the  Trust  Estate
pursuant to Section 3.15(b) of the Servicing  Agreement shall be property of the
Issuer  and,  upon the  written  request of the Class  SB-II  Certificateholders
holding  100%  of  the  Certificate  Percentage  Interests  of the  Class  SB-II
Certificates,  be released to the Class SB-II  Certificateholders  as a dividend
and in accordance with the written instructions of such Certificateholders.

                                       19
<PAGE>

                                    ARTICLE V

                           Application of Trust Funds

        Section 5.01.  Distributions.  (a) On each Payment Date, the Certificate
Paying Agent shall distribute to the  Certificateholders all funds on deposit in
the  Certificate  Distribution  Account and  available  therefor (as provided in
Section 3.05 of the Indenture),  as the Certificate Distribution Amount for such
Payment  Date.  Any  such  amounts  payable  to  the  holders  of  the  Group  I
Certificates shall be distributed, first, to the Certificateholders of the Class
SB-I Certificates,  in an amount equal to the Class SB-I Distribution Amount for
such  Payment  Date and the Class  SB-I  Distribution  Amount  for any  previous
Payment  Date  to  the  extent  not  previously   paid,   and  second,   to  the
Certificateholders  of the Class R-I Certificates,  any amounts  remaining.  All
distributions  made pursuant to this Section to any Class of Certificates  shall
be  distributed  to the  Certificateholders  of such Class pro rata based on the
respective Percentage Interests thereof.

        (b)  In  the  event  that  any   withholding   tax  is  imposed  on  the
distributions (or allocations of income) to a Certificateholder,  such tax shall
reduce the amount otherwise distributable to the Certificateholder in accordance
with this Section 5.01. The  Certificate  Paying Agent is hereby  authorized and
directed to retain or cause to be retained from amounts otherwise  distributable
to the  Certificateholders  sufficient  funds for the payment of any tax that is
legally  owed by the Trust (but such  authorization  shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings, and withholding
payment  of  such  tax,  if  permitted  by  law,  pending  the  outcome  of such
proceedings).  The  amount of any  withholding  tax  imposed  with  respect to a
Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the  Certificate  Paying Agent and remitted to the
appropriate taxing authority.  If there is a possibility that withholding tax is
payable with respect to a  distribution  (such as a  distribution  to a non-U.S.
Certificateholder),  the  Certificate  Paying  Agent may in its sole  discretion
withhold such amounts in accordance with this paragraph (b).

     (c)  Distributions  to  Certificateholders  shall  be  subordinated  to the
creditors of the Trust, including the Noteholders.

        (d) Allocations of profits and losses,  as determined for federal income
tax  purposes,  , shall be made  among the  Classes of Group I  Certificates  in
accordance  with the REMIC  provisions and within each Class of  Certificates to
the  Certificateholders on a pro rata basis based on the Certificate  Percentage
Interests thereof.

        (e) On each Payment Date, the following  amounts in the following  order
of priority,  from the amounts  allocable to the Class I Noteholders and Group I
Certificateholders pursuant to Section 3.05 of the Indenture, shall be deemed to
have been  distributed  by REMIC I to REMIC II on account of the REMIC I Regular
Interests or shall be withdrawn from the Distribution Account and distributed to
the holders of the Class R-I Certificates, as the case may be:

                                       20
<PAGE>

                (i) to the Holders of the LT1,  LT2, LT3, LT4, LT5 and LT6 REMIC
        I Regular Interests,  in an amount equal to (A) the Accrued  Certificate
        Interest on such REMIC I Regular  Interests for such Payment Date,  plus
        (B) any  amounts in  respect  thereof  remaining  unpaid  from  previous
        Payment Dates; and

               (ii) on each Payment  Date,  to the Holders of the LT1, LT2, LT3,
        LT4,  LT5 and LT6 REMIC I Regular  Interests,  in an amount equal to the
        remainder of such amount after the distributions made pursuant to clause
        (i) above, allocated as follows (except as provided below):

                      (A) first,  to the Holders of the Class LT2, LT3, LT4, LT5
               and LT6 REMIC I Regular  Interests,  respectively,  the Class LT2
               Principal   Distribution   Amount,   the  Class   LT3   Principal
               Distribution  Amount,  Class LT4 Principal  Distribution  Amount,
               Class  LT5  Principal  Distribution  Amount  and  the  Class  LT6
               Principal Distribution Amount from such remainder;

                      (B)  second,  to the  Holders  of the  Class  LT1  REMIC I
               Regular Interest, any remaining portion of such remainder,  until
               the principal  balance of such LT1 REMIC I Regular Interest shall
               have been reduced to zero;

                      (C)  third,  any  remaining  portion  of  such  remainder,
               pro-rata to the Holders of the Class LT2,  LT3,  LT4, LT5 and LT6
               REMIC I Regular  Interests,  until the principal balances of such
               REMIC I Regular Interests shall have been reduced to zero; and

                      (D) fourth,  any remaining  portion of such remainder,  to
               the Holders of the Class R-I Certificates.

        (f) On each Payment Date,  following the distributions  made pursuant to
clauses (i), (ii), (iii),  (iv) and (v) of Section  3.05(a)(I) of the Indenture,
the remaining  amount shall be deemed  distributed by REMIC II first to REMIC II
Regular Interest SB-IO until its accrued and unpaid interest for the current and
all prior Payment Dates shall have been reduced to zero,  second to the REMIC II
Regular Interest SB-PO until the Uncertificated  Principal Balance thereof shall
have been reduced to zero and third to the Class R-II Certificates any remaining
amount.  From the  amounts  deemed  distributed  from REMIC II  pursuant  to the
preceding sentence,  first the Class R-II  Certificateholder  and then the Class
SB-I (as the  owner of REMIC II  Regular  Interests  SB-IO and  SB-PO)  shall be
deemed to have paid the amounts  required to be paid  pursuant to clauses  (vi),
(vii), (viii) and (ix) of Section 3.05(a)(I).

        Section   5.02.   Method  of  Payment.   Subject  to  Section   8.01(c),
distributions  required to be made to  Certificateholders on any Payment Date as
provided in Section  5.01 shall be made to each  Certificateholder  of record on
the preceding  Record Date either by wire  transfer,  in  immediately  available
funds,  to  the  account  of  such  Holder  at a bank  or  other  entity  having
appropriate facilities therefor, if such  Certificateholder  shall have provided
to the  Certificate  Registrar  appropriate  written  instructions at least five
Business  Days prior to such  Payment  Date or, if not, by check  mailed to such
Certificateholder  at the address of such Holder  appearing  in the  Certificate
Register.

                                       21
<PAGE>

        Section  5.03.  Signature on Returns.  The Owner  Trustee  shall sign on
behalf of the Trust the tax returns of the Trust.  The REMIC  Administrator,  as
agent for the Owner  Trustee,  shall sign on behalf of the Trust the tax returns
of REMIC I and REMIC II. The Owner  Trustee  shall give the REMIC  Administrator
all such powers of attorney as are needed to enable the REMIC  Administrator  to
prepare  and  sign  such  tax  returns.  In the  event  that  approval  from the
applicable  District  Director  of the  Internal  Revenue  Service for the REMIC
Administrator  or the Master Servicer to sign the tax returns is not forthcoming
following  application,  the REMIC  Administrator  shall  prepare  and the Owner
Trustee  shall  sign the tax  returns  for  REMIC I and  REMIC II or the  Master
Servicer  shall prepare and the Owner Trustee shall sign the tax returns for the
Trust, as applicable.

        Section 5.04.  Statements to  Certificateholders.  On each Payment Date,
the Certificate Paying Agent shall send to each  Certificateholder the statement
or statements  provided to the Owner Trustee and the Certificate Paying Agent by
the Master  Servicer  pursuant to Section 4.01 of the Servicing  Agreement  with
respect to such Payment Date.

        Section 5.05. Tax  Reporting.  So long as the Depositor or any Affiliate
of   the   Depositor   owns   100%   of   the   Certificates    (the   "Original
Certificateholder"),  then no separate  federal and state income tax returns and
information returns or statements will be filed with respect to the Trust, other
than  the  portion  of the  Trust  constituting  the  REMICs.  If  the  Original
Certificateholder  is no longer  the sole  Class  SB-II  Certificateholder,  the
subsequent  holders of the Class SB-II  Certificates by their acceptance hereof,
agree to  appoint  the  Original  Certificateholder  as their  agent for the tax
matters partner and the Original  Certificateholder,  as agent for such holders,
agrees to perform all duties  necessary  to comply with federal and state income
tax laws.

        Any Class  SB-II  Certificateholder  that holds 100% of the Class  SB-II
Certificates  agrees by its purchase of 100% of the Class SB-II  Certificates to
treat the Trust, other than the portion of the Trust constituting the REMICs, as
an entity  wholly  owned by such Class SB-II  Certificateholder  for purposes of
federal and state income tax,  franchise tax and any other tax measured in whole
or in part by income, with the assets of the entity being the assets held by the
Trust, and the Notes being debt of the Trust.

                                   ARTICLE VI

                          Concerning the Owner Trustee

        Section 6.01. Acceptance of Trusts and Duties. The Owner Trustee accepts
the  trusts  hereby  created  and agrees to perform  its duties  hereunder  with
respect  to such  trusts but only upon the terms of this  Trust  Agreement.  The
Owner Trustee and the Certificate Paying Agent also agree to disburse all moneys
actually  received by it  constituting  part of the Owner Trust  Estate upon the
terms of the Basic Documents and this Trust  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,  negligence  or bad
faith or negligent  failure to act or (ii) in the case of the  inaccuracy of any
representation or warranty contained in Section 6.03 expressly made by the Owner
Trustee.  In  particular,  but  not by way of  limitation  (and  subject  to the
exceptions set forth in the preceding sentence):

                                       22
<PAGE>

        (a) No provision of this Trust  Agreement  or any Basic  Document  shall
require  the  Owner  Trustee  to  expend or risk  funds or  otherwise  incur any
financial  liability in the  performance of any of its rights,  duties 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;

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

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

        (d) The execution,  delivery,  authentication  and  performance by it of
this Trust Agreement will not require the authorization, consent or approval of,
the giving of notice to, the filing or  registration  with, or the taking of any
other action with respect to, any governmental authority or agency;

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

        (f) The Owner  Trustee  shall be under no  obligation to exercise any of
the rights or powers vested in it or duties imposed by this Trust Agreement,  or
to institute,  conduct or defend any  litigation  under this Trust  Agreement or
otherwise or in relation to this Trust Agreement or any Basic  Document,  at the
request,  order  or  direction  of any of the  Certificateholders,  unless  such
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 Trust  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 negligence,  bad faith or willful misconduct in
the performance of any such act.

        Section 6.02.  Furnishing of Documents.  The Owner Trustee shall furnish
to the  Securityholders  promptly upon receipt of a written  reasonable  request
therefor,  duplicates  or copies of all  reports,  notices,  requests,  demands,
certificates,  financial  statements and any other instruments  furnished to the
Trust under the Basic Documents.

                                       23
<PAGE>

     Section 6.03.  Representations  and  Warranties.  The Owner Trustee  hereby
represents   and   warrants   to  the   Depositor,   for  the   benefit  of  the
Certificateholders, that:

        (a) It is a 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 Trust Agreement;

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

        (c)  Neither  the  execution  nor  the  delivery  by  it of  this  Trust
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  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 bylaws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound;

        (d) This Trust  Agreement,  assuming due  authorization,  execution  and
delivery by the Owner Trustee and the Depositor,  constitutes a valid, legal and
binding  obligation of the Owner Trustee,  enforceable  against it in accordance
with  the  terms   hereof   subject  to   applicable   bankruptcy,   insolvency,
reorganization,   moratorium  and  other  laws  affecting  the   enforcement  of
creditors' rights generally and to general  principles of equity,  regardless of
whether such enforcement is considered in a proceeding in equity or at law;

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

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

        Section 6.04.  Reliance;  Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature,  instrument,  notice,
resolution,  request,  consent,  order,  certificate,  report, opinion, 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  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
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.

                                       24
<PAGE>

        (b) In the exercise or  administration of the Trust hereunder and in the
performance  of its duties and  obligations  under this Trust  Agreement  or the
Basic  Documents,  the Owner Trustee (i) may act directly or through its agents,
attorneys,  custodians or nominees  (including  persons  acting under a power of
attorney)  pursuant to agreements  entered into with any of them,  and the Owner
Trustee  shall not be liable  for the  conduct  or  misconduct  of such  agents,
attorneys,  custodians or nominees  (including  persons  acting under a power of
attorney)  if  such  persons  have  been  selected  by the  Owner  Trustee  with
reasonable  care,  and (ii) may  consult  with  counsel,  accountants  and other
skilled  persons to be selected with  reasonable  care and employed by it at the
expense of the Trust.  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 not contrary to this
Trust Agreement or any Basic Document.

        Section 6.05. Not Acting in Individual  Capacity.  Except as provided in
this Article VI, 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 Trust  Agreement or any Basic Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.

        Section  6.06.  Owner  Trustee  Not Liable for  Certificates  or Related
Documents. The recitals contained herein and in the Certificates (other than the
signatures  of the  Owner  Trustee  on the  Certificates)  shall be taken as the
statements of the Depositor, 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 Trust Agreement, of any Basic Document or of the
Certificates   (other  than  the   signatures   of  the  Owner  Trustee  on  the
Certificates) or the Notes, or of any Related Documents. The Owner Trustee shall
at no time have any  responsibility or liability with respect to the sufficiency
of the  Owner  Trust  Estate or its  ability  to  generate  the  payments  to be
distributed to Certificateholders  under this Trust Agreement or the Noteholders
under the  Indenture,  including,  the compliance by the Depositor or the Seller
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  Certificate  Paying  Agent,  the  Certificate  Registrar  or the
Indenture Trustee taken in the name of the Owner Trustee.

        Section 6.07.  Owner Trustee May Own  Certificates  and Notes. The Owner
Trustee in its  individual or any other capacity may become the owner or pledgee
of  Certificates  or Notes  and may deal with the  Depositor,  the  Seller,  the
Certificate Paying Agent, the Certificate Registrar and the Indenture Trustee in
transactions with the same rights as it would have if it were not Owner Trustee.

                                       25
<PAGE>

                                   ARTICLE VII

                          Compensation of Owner Trustee

        Section 7.01. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive  as  compensation  for its  services  hereunder  such  fees as have been
separately  agreed upon before the date hereof,  and the Owner  Trustee shall be
reimbursed for its reasonable  expenses hereunder and under the Basic Documents,
including  the  reasonable  compensation,  expenses  and  disbursements  of such
agents, representatives, experts and counsel as the Owner Trustee may reasonably
employ in  connection  with the exercise and  performance  of its rights and its
duties  hereunder  and under the Basic  Documents  which shall be payable by the
Master Servicer pursuant to Section 3.09 of the Servicing Agreement.

        Section  7.02.  Indemnification.  The  holder  of  the  majority  of the
Certificate  Percentage  Interest of the Class SB  Certificates in the aggregate
shall indemnify,  defend and hold harmless the Owner Trustee and its successors,
assigns, agents and servants (collectively,  the "Indemnified Parties") from and
against, any and all liabilities,  obligations,  losses, damages, taxes, claims,
actions and suits, and any and all reasonable costs,  expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively,  "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified  Party in any way relating
to or arising out of this Trust 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, provided, that:

               (a) the  holder of the  majority  of the  Certificate  Percentage
Interest of the Certificates shall not be liable for or required to indemnify an
Indemnified  Party from and against Expenses arising or resulting from the Owner
Trustee's  willful  misconduct,  negligence  or bad  faith or as a result of any
inaccuracy of a representation  or warranty  contained in Section 6.03 expressly
made by the Owner Trustee;

               (b) with respect to any such claim,  the Indemnified  Party shall
have given the holder of the majority of the Certificate  Percentage Interest of
the  Certificates  written notice thereof  promptly after the Indemnified  Party
shall have actual knowledge thereof;

               (c) while maintaining control over its own defense, the holder of
the majority of the Certificate  Percentage  Interest of the Certificates  shall
consult with the Indemnified Party in preparing such defense; and

               (d)  notwithstanding  anything  in this  Trust  Agreement  to the
contrary,  the holder of the majority of the Certificate  Percentage Interest of
the  Certificates  shall  not  be  liable  for  settlement  of any  claim  by an
Indemnified  Party  entered into without the prior  consent of the holder of the
majority  of the  Certificate  Percentage  Interest  of the  Certificates  which
consent shall not be unreasonably withheld.

        The indemnities  contained in this Section shall survive the resignation
or termination of the Owner Trustee or the termination of this Trust  Agreement.
In the event of any claim,  action or  proceeding  for which  indemnity  will be
sought  pursuant  to this  Section  7.02,  the Owner  Trustee's  choice of legal
counsel,  if other  than the legal  counsel  retained  by the Owner  Trustee  in
connection  with the  execution and delivery of this Trust  Agreement,  shall be
subject  to the  approval  of the  holder  of the  majority  of the  Certificate
Percentage  Interest  of the  Class  SB  Certificates  in the  aggregate,  which
approval shall not be unreasonably withheld. In addition, upon written notice to
the Owner  Trustee and with the consent of the Owner Trustee which consent shall
not be  unreasonably  withheld,  the holder of the  majority of the  Certificate
Percentage  Interest of the Class SB Certificates in the aggregate has the right
to assume the  defense  of any claim,  action or  proceeding  against  the Owner
Trustee.

                                       26
<PAGE>

                                  ARTICLE VIII

                         Termination of Trust Agreement

        Section 8.01.  Termination of Trust Agreement.  (a) This Trust Agreement
(other  than  this  Article  VIII) and the Trust  shall  terminate  and be of no
further force or effect upon the earliest of (i) the final  distribution  of all
moneys or other  property or proceeds  of the Owner Trust  Estate in  accordance
with the terms of the Indenture and this Trust Agreement or (ii) the purchase by
the Master  Servicer of all Home Equity  Loans  pursuant to Section  8.08 of the
Servicing Agreement; provided, however, that in no event shall the trust created
hereby  continue  beyond the  expiration  of 21 years from the death of the last
survivor of the  descendants  of Joseph P. Kennedy,  the late  ambassador of the
United  States  to the  Court  of St.  James,  living  on the date  hereof.  The
bankruptcy,    liquidation,    dissolution,   death   or   incapacity   of   any
Certificateholder shall not (x) operate to terminate this Trust Agreement or the
Trust or (y) entitle such Certificateholder's  legal representatives or heirs to
claim an  accounting  or to take any  action  or  proceeding  in any court for a
partition  or  winding  up of all or any part of the  Trust or the  Owner  Trust
Estate or (z) otherwise  affect the rights,  obligations  and liabilities of the
parties hereto.

        (b) Except as provided in Section 8.01(a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.

        (c) Notice of any termination of the Trust,  specifying the Payment Date
upon  which   Certificateholders  shall  surrender  their  Certificates  to  the
Certificate Paying Agent for payment of the final distribution and cancellation,
shall be given by the Certificate  Paying Agent by letter to  Certificateholders
and the Credit Enhancer mailed within five Business Days of receipt of notice of
such  termination  from the Owner Trustee,  stating (i) the Payment Date upon or
with  respect  to which  final  payment of the  Certificates  shall be made upon
presentation  and surrender of the Certificates at the office of the Certificate
Paying Agent therein  designated,  (ii) the amount of any such final payment and
(iii) that the Record Date  otherwise  applicable  to such  Payment  Date is not
applicable,  payments  being made only upon  presentation  and  surrender of the
Certificates  at the office of the Certificate  Paying Agent therein  specified.
The Certificate Paying Agent shall give such notice to the Owner Trustee and the
Certificate  Registrar  at the time such notice is given to  Certificateholders.
Upon  presentation  and surrender of the  Certificates,  the Certificate  Paying
Agent shall cause to be distributed to Certificateholders  amounts distributable
on such Payment Date pursuant to Section 5.01.

        In the event  that all of the  Certificateholders  shall  not  surrender
their  Certificates for cancellation  within six months after the date specified
in the above mentioned written notice, the Certificate Paying Agent shall give a
second written  notice to the remaining  Certificateholders  to surrender  their
Certificates for cancellation  and receive the final  distribution  with respect
thereto.  Subject to applicable laws with respect to escheat of funds, if within
one year  following the Payment Date on which final payment of the  Certificates
was to have been made pursuant to Section 3.10, all the  Certificates  shall not

                                       27
<PAGE>

have been surrendered for  cancellation,  the Certificate  Paying Agent may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost  thereof  shall be paid out of the funds and other  assets  that  shall
remain subject to this Trust  Agreement.  Any funds remaining in the Certificate
Distribution  Account after  exhaustion of such remedies shall be distributed by
the  Certificate  Paying Agent to the holder of the majority of the  Certificate
Percentage Interest of the Certificates.

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

        Section 8.02. Additional Termination Requirements.

(a) REMIC I shall be  terminated in  accordance  with the  following  additional
requirements  including upon the exercise by the Master  Servicer of an optional
redemption  of the Notes  pursuant to Section 8.08 of the  Servicing  Agreement,
unless the Owner  Trustee and the Master  Servicer  have  received an Opinion of
Counsel  (which Opinion of Counsel shall not be an expense of the Owner Trustee)
to the effect that the failure of any REMIC to comply with the  requirements  of
this Section 8.02 will not (i) result in the  imposition  on the Trust Estate of
taxes on "prohibited transactions," as described in Section 860F of the Code, or
(ii)  cause  either  REMIC to fail to  qualify  as a REMIC at any time  that any
Certificate is outstanding:

(i) The Master  Servicer shall  establish a 90-day  liquidation  period for such
REMIC  and  specify  the  first day of such  period  in a  statement,  which the
Indenture  Trustee  shall  attach  to REMIC I's final  Tax  Return  pursuant  to
Treasury  regulations  Section 1.860F-1.  The Master Servicer also shall satisfy
all of the  requirements  of a qualified  liquidation  for a REMIC under Section
860F of the Code and regulations thereunder;

(ii) The Master  Servicer  shall  notify  the Owner  Trustee  and the  Indenture
Trustee at the commencement of such 90-day  liquidation  period and, at or prior
to the time of  making  of the  final  payment  on the  Certificates,  the Owner
Trustee shall sell or otherwise  dispose of all of the  remaining  assets of the
Trust Estate that are included in REMIC I in  accordance  with the terms hereof;
and

(iii) If the Master  Servicer is exercising  its right to purchase the assets of
the Trust  Estate,  the Master  Servicer  shall,  during the 90-day  liquidation
period and at or prior to the Final Payment Date,  purchase all of the assets of
the Trust Estate for cash.

        Each  Holder of a  Security  and the Owner  Trustee  hereby  irrevocably
approves  and appoints the Master  Servicer as its  attorney-in-fact  to adopt a
plan of complete  liquidation  for such REMIC at the expense of the Trust Estate
in accordance with the terms and conditions of this Agreement.

                                       28
<PAGE>

                                   ARTICLE IX

                    Successor Owner Trustees and Additional Owner Trustees

        Section 9.01.  Eligibility  Requirements  for Owner  Trustee.  The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute;  authorized to exercise  corporate  trust
powers;  having a  combined  capital  and  surplus of at least  $50,000,000  and
subject to  supervision  or  examination  by federal or state  authorities;  and
having (or having a parent that has) long-term debt obligations with a rating of
at least A by Standard & Poor's, Moody's and/or Fitch. 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
9.01,  the Owner  Trustee  shall resign  immediately  in the manner and with the
effect specified in Section 9.02.

        Section 9.02. Replacement of Owner Trustee. The Owner Trustee may at any
time resign and be discharged  from the trusts hereby created by giving 30 days'
prior written notice thereof to the Credit Enhancer,  the Indenture  Trustee and
the Depositor. Upon receiving such notice of resignation,  the Indenture Trustee
shall promptly  appoint a successor Owner Trustee with the consent of the Credit
Enhancer which will not be  unreasonably  withheld,  by written  instrument,  in
duplicate,  one copy of which  instrument  shall be delivered  to the  resigning
Owner Trustee and one copy to the successor Owner Trustee. If no successor Owner
Trustee  shall have been so appointed and have  accepted  appointment  within 30
days after the giving of such notice of resignation, the resigning Owner Trustee
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 9.01 and shall fail to resign after
written request therefor by the Indenture  Trustee,  or if at any time the Owner
Trustee  shall be  legally  unable  to act,  or shall be  adjudged  bankrupt  or
insolvent,  or a  receiver  of the Owner  Trustee  or of its  property  shall be
appointed,  or any  public  officer  shall  take  charge or control of the Owner
Trustee  or of its  property  or  affairs  for the  purpose  of  rehabilitation,
conservation  or  liquidation,  then the Indenture  Trustee may and shall at the
direction of the Credit  Enhancer  remove the Owner  Trustee.  If the  Indenture
Trustee shall remove the Owner  Trustee  under the authority of the  immediately
preceding  sentence,  the Indenture  Trustee shall promptly  appoint a successor
Owner  Trustee  acceptable  to the Credit  Enhancer  by written  instrument,  in
duplicate, one copy of which instrument shall be delivered to the outgoing Owner
Trustee so removed and one copy to the successor  Owner  Trustee,  and shall pay
all fees owed to the outgoing Owner Trustee.

        Any  resignation  or removal of the Owner Trustee and  appointment  of a
successor Owner Trustee  pursuant to any of the provisions of this Section shall
not become  effective  until  acceptance of appointment  by the successor  Owner
Trustee  pursuant to Section 9.03 and payment of all fees and  expenses  owed to
the outgoing Owner Trustee.

        Section 9.03.  Successor  Owner  Trustee.  Any  successor  Owner Trustee
appointed pursuant to Section 9.02 shall execute, acknowledge and deliver to the
Indenture Trustee and to its predecessor  Owner Trustee an instrument  accepting
such appointment  under this Trust  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

                                       29
<PAGE>

become fully vested with all the rights,  powers,  duties and obligations of its
predecessor under this Trust 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 Trust  Agreement;  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 9.03 unless at the time of such  acceptance such successor Owner Trustee
shall be eligible pursuant to Section 9.01.

        Upon acceptance of appointment by a successor Owner Trustee  pursuant to
this  Section  9.03,  the  Indenture  Trustee  shall mail notice  thereof to all
Certificateholders,   the  Credit  Enhancer,  the  Noteholders  and  the  Rating
Agencies. If the Indenture Trustee shall fail to mail such notice within 10 days
after  acceptance  of such  appointment  by the  successor  Owner  Trustee,  the
successor  Owner  Trustee shall cause such notice to be mailed at the expense of
the Indenture Trustee.

        Section 9.04. Merger or Consolidation of Owner Trustee.  Any Person into
which the Owner  Trustee  may be merged  or  converted  or with  which it may be
consolidated,   or  any  Person   resulting  from  any  merger,   conversion  or
consolidation  to which  the  Owner  Trustee  shall be a  party,  or any  Person
succeeding to all or  substantially  all of the corporate  trust business of the
Owner Trustee,  shall be the successor of the Owner Trustee  hereunder,  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,  that such  Person  shall be eligible  pursuant  to Section  9.01 and,
provided,  further,  that the Owner  Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.

        Section  9.05.   Appointment   of   Co-Trustee   or  Separate   Trustee.
Notwithstanding  any other provisions of this Trust Agreement,  at any time, for
the purpose of meeting any legal  requirements of any  jurisdiction in which any
part of the Owner  Trust  Estate may at the time be located,  the Owner  Trustee
shall have the power and shall  execute and deliver all  instruments  to appoint
one or more Persons to act as co-trustee,  jointly with the Owner Trustee, or as
separate trustee or 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  Owner  Trustee  may  consider
necessary or  desirable.  No  co-trustee  or separate  trustee  under this Trust
Agreement shall be required to meet the terms of eligibility pursuant to Section
9.01 and no notice of the  appointment  of any  co-trustee  or separate  trustee
shall be required pursuant to Section 9.03.

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

                                       30
<PAGE>

        (a) 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 Owner  Trust  Estate 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;

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

        (c) The Owner  Trustee  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 Trust  Agreement  and the
conditions of this Article IX. Each separate  trustee and  co-trustee,  upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified  in its  instrument  of  appointment,  either  jointly  with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Trust  Agreement,  specifically  including every provision of this Trust
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.

        Any  separate  trustee or  co-trustee  may at any time appoint the Owner
Trustee as its agent or attorney-in-fact  with full power and authority,  to the
extent not  prohibited  by law, to do any lawful act under or in respect of this
Trust  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 co-trustee or separate trustee.

                                    ARTICLE X

                                  Miscellaneous

        Section  10.01.Amendments.  (a) This Trust Agreement may be amended from
time to time by the parties hereto as specified in this Section 10.01,  provided
that any amendment, except as provided in subparagraph (e) below, be accompanied
by an Opinion of Counsel, to the Owner Trustee to the effect that such amendment
(i)  complies  with the  provisions  of this Section and (ii) will not cause the
Trust to be subject  to an entity  level tax or cause any of REMIC I or REMIC II
to fail to qualify as a REMIC for federal income tax purposes.

                                       31
<PAGE>

        (b) If the purpose of the amendment (as detailed  therein) is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not covered in this Trust  Agreement  (i.e., to give effect to the intent
of the parties), it shall not be necessary to obtain the consent of any Holders,
but the Owner  Trustee  shall be  furnished  with (A) a letter  from the  Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Credit  Enhancement  Instrument and (B) an Opinion of Counsel to the effect that
such action will not adversely  affect in any material  respect the interests of
any Holders, and the consent of the Credit Enhancer shall be obtained.

        (c) If the purpose of the amendment is to prevent the  imposition of any
federal  or state  taxes at any time that any  Security  is  outstanding  (i.e.,
technical  in nature),  it shall not be  necessary  to obtain the consent of any
Holder, but the Owner Trustee shall be furnished with an Opinion of Counsel that
such  amendment is necessary or helpful to prevent the  imposition of such taxes
and is not  materially  adverse  to any  Holder  and the  consent  of the Credit
Enhancer shall be obtained.

        (d) If the purpose of the amendment is to add or eliminate or change any
provision  of the Trust  Agreement  other  than as  contemplated  in (b) and (c)
above, the amendment shall require (A) the consent of the Credit Enhancer and an
Opinion of Counsel to the effect that such action will not  adversely  affect in
any  material  respect the  interests of any Holders and (B) either (a) a letter
from the Rating Agency that the amendment will not result in the  downgrading or
withdrawal  of the rating then  assigned to any Security if  determined  without
regard to the Credit  Enhancement  Instrument  or (b) the  consent of Holders of
Certificates evidencing a majority of the Certificate Percentage Interest of the
Certificates  and  the  Indenture  Trustee;  provided,  however,  that  no  such
amendment  shall (i) reduce in any manner the amount of, or delay the timing of,
payments received that are required to be distributed on any Certificate without
the consent of the related  Certificateholder  and the Credit Enhancer,  or (ii)
reduce  the  aforesaid  percentage  of  Certificates  the  Holders  of which are
required to consent to any such amendment, without the consent of the Holders of
all such Certificates then outstanding.

        (e) If the purpose of the amendment is to provide for the holding of any
of the  Certificates in book-entry form, it shall require the consent of Holders
of all such Certificates then outstanding; provided, that the Opinion of Counsel
specified in subparagraph (a) above shall not be required.

        (f) If the purpose of the  amendment  is to provide for the  issuance of
additional  certificates  representing an interest in the Trust, it shall not be
necessary to obtain the consent of any Holder,  but the Owner  Trustee  shall be
furnished with (A) an Opinion of Counsel to the effect that such action will not
adversely  affect in any material respect the interests of any Holders and (B) a
letter  from the  Rating  Agencies  that the  amendment  will not  result in the
downgrading  or  withdrawal  of the rating  then  assigned to any  Security,  if
determined without regard to the Credit  Enhancement  Instrument and the consent
of the Credit Enhancer shall be obtained.

        (g) 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  Certificateholder,  the  Indenture  Trustee,  the
Credit Enhancer and each of the Rating  Agencies.  It shall not be necessary for

                                       32
<PAGE>

the consent of  Certificateholders  or the  Indenture  Trustee  pursuant to this
Section  10.01 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 any other  consents  of
Certificateholders  provided  for in this Trust  Agreement or in any other Basic
Document)  and of  evidencing  the  authorization  of the  execution  thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.

        (h) In  connection  with the execution of any amendment to any agreement
to which  the  Trust is a party,  other  than this  Trust  Agreement,  the Owner
Trustee  shall be entitled to receive and  conclusively  rely upon an Opinion of
Counsel to the effect that such  amendment  is  authorized  or  permitted by the
documents  subject to such  amendment and that all  conditions  precedent in the
Basic Documents for the execution and delivery thereof by the Trust or the Owner
Trustee, as the case may be, have been satisfied.

        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 of the State of Delaware.
        Section   10.02.No   Legal   Title   to   Owner   Trust   Estate.    The
Certificateholders  shall not have  legal  title to any part of the Owner  Trust
Estate. The  Certificateholders  shall be entitled to receive distributions with
respect to their undivided  beneficial  interest therein only in accordance with
Articles V and VIII.  No  transfer,  by operation  of law or  otherwise,  of any
right,  title or interest of the  Certificateholders  to and in their  ownership
interest  in the Owner  Trust  Estate  shall  operate  to  terminate  this Trust
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  10.03.Limitations on Rights of Others. Except for Section 2.07,
the  provisions of this Trust  Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Certificateholders,  the Credit Enhancer and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Trust  Agreement  (other than Section 2.07),  whether express or
implied,  shall be  construed to give to any other Person any legal or equitable
right,  remedy or claim in the Owner Trust Estate or under or in respect of this
Trust Agreement or any covenants, conditions or provisions contained herein.

        Section  10.04.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,  if to the Owner  Trustee,  addressed to  Wilmington
Trust Company,  Corporate Trust Administration,  Rodney Square North, 1100 North
Market  Street,   Wilmington,   Delaware  19890,   Attention:   Corporate  Trust
Administration;  if to the Depositor,  addressed to Residential Funding Mortgage
Securities II, Inc., 8400 Normandale  Lake  Boulevard,  Suite 250,  Minneapolis,
Minnesota  55437;  if to the  Credit  Enhancer,  addressed  to  Ambac  Assurance
Corporation,  One State  Street  Plaza,  19th Floor,  New York,  New York 10004,
Attention:  Consumer  Asset-Backed  Securities Group; if to the Rating Agencies,
addressed to Fitch,  Inc.,  One State Street  Plaza,  New York,  New York 10004,
Attention:  Residential Mortgage Group and Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., 55 Water Street, New York, New York
10041 Attention:  Structured  Finance  Department - MBS or, as to each party, at
such other address as shall be  designated by such party in a written  notice to
each other party.

                                       33
<PAGE>

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

        (c) A copy of any  notice  delivered  to the Owner  Trustee or the Trust
shall also be delivered to the Depositor.

        Section  10.05.Severability.  Any provision of this Trust 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  10.06.Separate  Counterparts.   This  Trust  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  10.07.Successors and Assigns. All representations,  warranties,
covenants and  agreements  contained  herein shall be binding upon, and inure to
the benefit of, each of the Depositor,  the Owner Trustee and its successors and
each  Certificateholder  and its successors and permitted assigns, all as herein
provided and the Credit  Enhancer.  Any  request,  notice,  direction,  consent,
waiver  or other  instrument  or action by a  Certificateholder  shall  bind the
successors and assigns of such Certificateholder.

        Section  10.08.No  Petition.  The Owner  Trustee,  by entering into this
Trust Agreement and each Certificateholder,  by accepting a Certificate,  hereby
covenant  and  agree  that  they  will not at any  time  institute  against  the
Depositor or the Trust, or join in any institution  against the Depositor or the
Trust of, any  bankruptcy  proceedings  under any United States federal or state
bankruptcy  or  similar  law  in  connection   with  any   obligations   to  the
Certificates, the Notes, this Trust Agreement or any of the Basic Documents.

        Section  10.09.No  Recourse.   Each  Certificateholder  by  accepting  a
Certificate  acknowledges that such  Certificateholder's  Certificates represent
beneficial  interests  in the Trust only and do not  represent  interests  in or
obligations  of the  Depositor,  the Seller,  the Owner  Trustee,  the Indenture
Trustee or any Affiliate thereof and no recourse may be had against such parties
or their assets,  except as may be expressly set forth or  contemplated  in this
Trust Agreement, the Certificates or the Basic Documents.

        Section  10.10.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.

                                       34
<PAGE>

        Section  10.11.GOVERNING LAW. THIS TRUST 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  10.12.Integration.  This Trust Agreement constitutes the entire
agreement  among the parties hereto  pertaining to the subject matter hereof and
supersedes all prior agreements and understanding pertaining thereto.

        Section   10.13.Rights   of  Credit   Enhancer  to  Exercise  Rights  of
Certificateholders.  By accepting its Class SB-II Certificate,  each Class SB-II
Certificateholder  agrees  that unless a Credit  Enhancer  Default  exists,  the
Credit  Enhancer  shall have the right to exercise all rights of the Class SB-II
Certificateholders under this Agreement without any further consent of the Class
SB-II  Certificateholders.  Nothing in this  Section,  however,  shall  alter or
modify in any way, the fiduciary  obligations  of the Owner Trustee to the Class
SB-II  Certificateholders  pursuant to this  Agreement,  or create any fiduciary
obligation of the Owner Trustee to the Credit Enhancer.

                                       35
<PAGE>

        IN WITNESS  WHEREOF,  the  Depositor  and the Owner  Trustee have caused
their names to be signed  hereto by their  respective  officers  thereunto  duly
authorized, all as of the day and year first above written.

                                 RESIDENTIAL FUNDING MORTGAGE
                                 SECURITIES II, INC.

                                 By:    /s/ Lisa R. Lundsten
                                        Name:  Lisa R. Lundsten
                                        Title: Vice President

                                 WILMINGTON TRUST COMPANY, not in its
                                 individual  capacity  but  solely as
                                 Owner  Trustee,  except with respect
                                 to    the     representations    and
                                 warranties contained in Section 6.03
                                 hereof,

                                 By:    /s/ Anita Dallago
                                        Name: Anita Dallago
                                        Title: Financial Services Officer

Acknowledged and Agreed:

THE CHASE MANHATTAN BANK,
Indenture Trustee, as Certificate
Registrar and Certificate
Paying Agent

By:     /s/ Mark McDermott
     ----------------------------------------------
       Name: Mark McDermott
       Title: Assistant Vice President

                                       36
<PAGE>

                                    EXHIBIT A

                         FORM OF CLASS SB-I CERTIFICATE

               THIS CLASS SB-I  CERTIFICATE IS  SUBORDINATED IN RIGHT OF PAYMENT
TO THE TERM NOTES AND THE VARIABLE  FUNDING  NOTES AS DESCRIBED IN THE AGREEMENT
(AS DEFINED HEREIN).

               THIS  CLASS  SB-I   CERTIFICATE  IS  ISSUED  IN  THE  CERTIFICATE
PERCENTAGE  INTEREST  SET  FORTH  BELOW;  HOWEVER,  THE  CERTIFICATE  PERCENTAGE
INTEREST OF THIS  CERTIFICATE  MAY CHANGE IN ACCORDANCE WITH SECTION 3.12 OF THE
AGREEMENT.  THE HOLDER OF THIS CLASS SB-I  CERTIFICATE  HEREBY  CONSENTS  TO ANY
CHANGE IN ITS CERTIFICATE PERCENTAGE INTEREST IN ACCORDANCE WITH SUCH SECTION.

               SOLELY  FOR U.S.  FEDERAL  INCOME TAX  PURPOSES,  THIS CLASS SB-I
CERTIFICATE  IS A  "REGULAR  INTEREST"  IN A "REAL  ESTATE  MORTGAGE  INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

               THIS  CLASS  SB-I  CERTIFICATE  HAS  NOT  BEEN  AND  WILL  NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR THE SECURITIES LAWS
OF ANY  STATE  AND MAY NOT BE RESOLD  OR  TRANSFERRED  UNLESS  IT IS  REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR  TRANSFERRED IN  TRANSACTIONS  WHICH
ARE EXEMPT FROM  REGISTRATION  UNDER SUCH ACT AND UNDER  APPLICABLE  LAWS AND IS
TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3.05 OF THE AMENDED AND
RESTATED TRUST AGREEMENT ("THE AGREEMENT").

               NO TRANSFER OF THIS CLASS SB-I  CERTIFICATE  SHALL BE MADE UNLESS
THE CERTIFICATE REGISTRAR SHALL HAVE RECEIVED EITHER (I) A REPRESENTATION LETTER
FROM THE  TRANSFEREE  OF THIS CLASS  SB-I  CERTIFICATE  TO THE EFFECT  THAT SUCH
TRANSFEREE  IS NOT AN EMPLOYEE  BENEFIT OR OTHER PLAN SUBJECT TO THE  PROHIBITED
TRANSACTION  RESTRICTIONS AND THE FIDUCIARY  RESPONSIBILITY  REQUIREMENTS OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),  ANY
PERSON ACTING, DIRECTLY OR INDIRECTLY,  ON BEHALF OF ANY SUCH PLAN OR ANY PERSON
USING "PLAN ASSETS,"  WITHIN THE MEANING OF THE DEPARTMENT OF LABOR  REGULATIONS
SECTION  2510.3-101,  TO  ACQUIRE  THIS CLASS SB-I  CERTIFICATE  (EACH,  A "PLAN
INVESTOR"), OR (II) IF THIS CLASS SB-I CERTIFICATE IS PRESENTED FOR REGISTRATION
IN THE NAME OF A PLAN INVESTOR, AN OPINION OF COUNSEL, OR A CERTIFICATION IN THE

                                        A-1
<PAGE>

FORM OF EXHIBIT G TO THE  AGREEMENT IN LIEU OF SUCH  OPINION OF COUNSEL,  TO THE
EFFECT  THAT  THE  PURCHASE  OR  HOLDING  OF  THIS  CLASS  SB-I  CERTIFICATE  IS
PERMISSIBLE  UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED
TRANSACTION  UNDER  SECTION  406 OF  ERISA  OR  SECTION  4975  OF THE  CODE  (OR
COMPARABLE  PROVISIONS OF ANY  SUBSEQUENT  ENACTMENTS)  AND WILL NOT SUBJECT THE
DEPOSITOR,  THE OWNER TRUSTEE, THE SERVICER OR THE CERTIFICATE  REGISTRAR TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.

               THE TRANSFEREE OF THIS CLASS SB-I CERTIFICATE SHALL BE SUBJECT TO
UNITED STATES FEDERAL  WITHHOLDING  TAX UNLESS THE  CERTIFICATE  REGISTRAR SHALL
HAVE  RECEIVED  A  CERTIFICATE  OF  NON-FOREIGN  STATUS  CERTIFYING  AS  TO  THE
TRANSFEREE'S  STATUS AS A U.S.  PERSON OR CORPORATION OR PARTNERSHIP  UNDER U.S.
LAW.

               THIS CLASS SB-I  CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF THE SELLER,  THE  DEPOSITOR,  THE MASTER  SERVICER,  THE INDENTURE
TRUSTEE,  THE OWNER  TRUSTEE OR ANY OF THEIR  RESPECTIVE  AFFILIATES,  EXCEPT AS
EXPRESSLY PROVIDED IN THE AGREEMENT OR THE OTHER BASIC DOCUMENTS.

                                        A-2

<PAGE>

Certificate No. 1

Cut-off Date:
September 1, 2001

Date of Trust Agreement:
September 27, 2001

First Payment Date:                         Certificate Percentage Interest of
October 25, 2001                                   this Certificate:  100%

Assumed Final Payment Date:
June 2031

                       HOME EQUITY LOAN-BACKED CERTIFICATE
                                 SERIES 2001-HS3

               evidencing  a  fractional  undivided  interest in the Owner Trust
Estate,  the  property of which  consists  primarily  of the Home Equity  Loans,
created by RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.  (hereinafter called
the  "Depositor,"  which term includes any successor  entity under the Agreement
referred to below).

               This Class SB-I  Certificate is payable solely from the assets of
the Owner Trust  Estate,  and does not represent an obligation of or interest in
the Depositor, the Seller, the Master Servicer, the Indenture Trustee, the Owner
Trustee or GMAC Mortgage Group, Inc. or any of their affiliates. This Class SB-I
Certificate  is  not  guaranteed  or  insured  by  any  governmental  agency  or
instrumentality  or by the  Depositor,  the  Seller,  the Master  Servicer,  the
Indenture  Trustee,  the Owner  Trustee or GMAC Mortgage  Group,  Inc. or any of
their affiliates.  None of the Depositor,  the Seller, the Master Servicer,  the
Indenture Trustee, the Owner Trustee,  GMAC Mortgage Group, Inc. or any of their
affiliates  will have any  obligation  with respect to any  certificate or other
obligation secured by or payable from payments on the Certificates.

               This  certifies  that Auer & Co. is the  registered  owner of the
Certificate Percentage Interest evidenced by this Class SB-I Certificate (as set
forth on the face  hereof) in certain  distributions  with  respect to the Owner
Trust  Estate,  consisting  primarily  of the  Home  Equity  Loans,  created  by
Residential  Funding Mortgage  Securities II, Inc. The Trust (as defined herein)
was created  pursuant to a Trust  Agreement dated as specified above (as amended
and supplemented  from time to time, the "Agreement")  between the Depositor and
Wilmington  Trust  Company,  as owner trustee (the "Owner  Trustee,"  which term
includes any successor entity under the Agreement),  a summary of certain of the
pertinent provisions of which is set forth hereafter.  To the extent not defined
herein,  the  capitalized  terms used herein have the  meanings  assigned in the
Agreement.  This Class SB-I  Certificate  is issued  under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class SB-I Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

                                        A-3
<PAGE>

               Pursuant to the terms of the Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately  following (the "Payment Date"),  commencing on the
first Payment Date specified  above, to the Person in whose name this Class SB-I
Certificate  is  registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such last
day) of the month  immediately  preceding  the month of such  distribution  (the
"Record  Date"),  in an amount equal to the pro rata  portion  evidenced by this
Class SB-I Certificate (based on the Certificate  Percentage  Interest stated on
the face hereon) of the Certificate  Distribution Amount, if any, required to be
distributed to Holders of  Certificates on such Payment Date.  Distributions  on
this Class SB-I  Certificate  will be made as provided in the  Agreement  by the
Certificate   Paying   Agent  by  wire   transfer   or  check   mailed   to  the
Certificateholder of record in the Certificate Register without the presentation
or  surrender  of this Class  SB-I  Certificate  or the  making of any  notation
hereon.  Pursuant  to the  Agreement,  the  Trust has  issued  four  Classes  of
Certificates,  designated  as the  Class  SB-I  Certificates,  the  Class  SB-II
Certificates, the Class R-I Certificates and the Class R-II Certificates.

               Except as otherwise provided in the Agreement and notwithstanding
the above,  the final  distribution on this Class SB-I  Certificate will be made
after  due  notice  by the  Certificate  Paying  Agent of the  pendency  of such
distribution  and only  upon  presentation  and  surrender  of this  Class  SB-I
Certificate at the office or agency maintained by the Certificate  Registrar for
that purpose in the City and State of New York. The initial  Security Balance of
this Class SB-I Certificate is set forth above. The Security Balance hereof will
be reduced to the extent of the distributions allocable to principal.

               No  transfer of this Class SB-I  Certificate  will 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.  In the event that such a transfer  is to be
made, (i) the  Certificate  Registrar or the Depositor may require an opinion of
counsel acceptable to and in form and substance  satisfactory to the Certificate
Registrar  and the  Depositor  that  such  transfer  is exempt  (describing  the
applicable  exemption and the basis  therefor) from or is being made pursuant to
the registration  requirements of the Securities Act of 1933, as amended, and of
any  applicable  statute of any state and (ii) the  transferee  shall execute an
investment  letter  in  the  form  described  in the  Agreement  and  (iii)  the
Certificate  Registrar  shall  require the  transferee  to execute an investment
letter and a  Certificate  of  Non-Foreign  Status in the form  described by the
Agreement (or if a Certificate of Non-Foreign Status is not provided, an Opinion
of  Counsel  as  described  in  the  Agreement),  which  investment  letter  and
certificate or Opinion of Counsel shall not be at the expense of the Trust,  the
Owner Trustee,  the  Certificate  Registrar or the Depositor.  The Holder hereof
desiring to effect such transfer shall,  and does hereby agree to, indemnify the
Trust, the Owner Trustee, the Depositor, the Master Servicer and the Certificate
Registrar 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.  In  connection
with any such transfer,  the Certificate Registrar (unless otherwise directed by
the Depositor) will also require either (i) a representation letter, in the form
as described by the  Agreement,  stating that the  transferee is not an employee
benefit or other plan subject to the prohibited transaction  restrictions or the
fiduciary  responsibility  requirements  of ERISA or Section 4975 of the Code (a
"Plan"), any person acting,  directly or indirectly,  on behalf of any such Plan
or any Person using the "plan  assets,"  within the meaning of the Department of

                                        A-4

<PAGE>

Labor  regulations  at 29  C.F.R.  ss.2510.3-101,  to  effect  such  acquisition
(collectively, a "Plan Investor") or (ii) if such transferee is a Plan Investor,
an opinion of counsel  acceptable to and in form and substance  satisfactory  to
the  Depositor,  the Owner  Trustee,  the Master  Servicer  and the  Certificate
Registrar,  or a certification in the form of Exhibit G to the Agreement, to the
effect that the  purchase or holding of the  Certificate  is  permissible  under
applicable law, will not constitute or result in a prohibited  transaction under
Section 406 of ERISA or Section 4975 of the Code (or  comparable  provisions  of
any  subsequent  enactments)  and will not  subject  the  Depositor,  the  Owner
Trustee,  the Master Servicer or the Certificate  Registrar to any obligation or
liability in addition to those undertaken in the Agreement.

               This Class SB-I  Certificate is one of a duly authorized issue of
Certificates  designated as Home Equity  Loan-Backed  Certificates of the Series
specified hereon (herein collectively called the "Certificates"). All terms used
in this Class SB-I Certificate which are defined in the Agreement shall have the
meanings assigned to them in the Agreement.

               The  Certificateholder,  by its  acceptance  of this  Class  SB-I
Certificate,  agrees  that it will look  solely to the funds on  deposit  in the
Certificate  Distribution  Account that have been  released from the Lien of the
Indenture  for  payment  hereunder  and that  neither  the Owner  Trustee in its
individual   capacity   nor  the   Depositor   is   personally   liable  to  the
Certificateholders  for any amount payable under this Class SB-I  Certificate or
the Agreement or, except as expressly provided in the Agreement,  subject to any
liability under the Agreement.

               The Holder of this Class SB-I Certificate acknowledges and agrees
that  its  rights  to  receive  distributions  in  respect  of this  Class  SB-I
Certificate  are  subordinated  to the rights of the Noteholders as described in
the Indenture.,  dated as of September 27, 2001,  between Home Equity Loan Trust
2001-HS3 (the "Trust") and The Chase Manhattan  Bank, as Indenture  Trustee (the
"Indenture").

               Each  Certificateholder,  by  its  acceptance  of a  Certificate,
covenants and agrees that such  Certificateholder will not at any time institute
against  the  Depositor  or the Trust,  or join in any  institution  against the
Depositor  or  the  Trust  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 Certificates, the Notes, the Agreement or any of the
Basic Documents.

               The Agreement  permits the amendment  thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit Enhancer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Agreement and will not cause the Trust to be
subject to an entity  level tax. If the purpose of the  amendment  is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not  covered,  it shall not be  necessary  to obtain  the  consent of any
Holder,  but the Owner Trustee shall be furnished  with a letter from the Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Credit  Enhancement  Instrument and the consent of the Credit  Enhancer shall be
obtained.  If the purpose of the  amendment is to prevent the  imposition of any
federal or state taxes at any time that any  Security is  outstanding,  it shall
not be  necessary  to obtain the  consent of any Holder,  but the Owner  Trustee
shall be furnished  with an Opinion of Counsel that such  amendment is necessary
or helpful to prevent the imposition of such taxes and is not materially adverse
to any Holder and the consent of the Credit  Enhancer shall be obtained.  If the

                                        A-5

<PAGE>

purpose of the  amendment is to add or eliminate or change any  provision of the
Agreement, other than as specified in the preceding two sentences, the amendment
shall  require  either (a) a letter from the Rating  Agencies that the amendment
will not result in the  downgrading or withdrawal of the rating then assigned to
any Security, if determined without regard to the Credit Enhancement  Instrument
or (b) the  consent  of  Holders of a  majority  of the  Certificate  Percentage
Interests of the Certificates and the Indenture Trustee; provided, however, that
no such  amendment  shall (i)  reduce in any  manner the amount of, or delay the
time  of,  payments  received  that  are  required  to  be  distributed  on  any
Certificate without the consent of the related  Certificateholder and the Credit
Enhancer, or (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such  amendment  without the consent of the
Holders of all such Certificates then outstanding.

               As provided in the Agreement  and subject to certain  limitations
therein set forth,  the transfer of this Class SB-I  Certificate is registerable
in the  Certificate  Register upon surrender of this Class SB-I  Certificate for
registration of transfer at the offices or agencies of the Certificate Registrar
maintained  in  the  City  and  State  of New  York,  accompanied  by a  written
instrument of transfer in form  satisfactory to the  Certificate  Registrar duly
executed by the Holder  hereof or such  Holder's  attorney  duly  authorized  in
writing, and thereupon one or more new Certificates of authorized  denominations
evidencing the same aggregate Certificate  Percentage Interest will be issued to
the designated transferee. The initial Certificate Registrar appointed under the
Agreement is the Indenture Trustee.

               Except  as  provided  in  the  Agreement,  the  Certificates  are
issuable  only in minimum  denominations  of a 10.0000%  Certificate  Percentage
Interest and in integral multiples of a 0.0001% Certificate  Percentage Interest
in  excess  thereof.  As  provided  in the  Agreement  and  subject  to  certain
limitations  therein  set  forth,  the  Certificates  are  exchangeable  for new
Certificates   of   authorized   denominations,   as  requested  by  the  Holder
surrendering  the same. This Class SB-I Certificate is issued in the Certificate
Percentage Interest above; however, the Certificate  Percentage Interest of this
Class  SB-I  Certificate  may  change in  accordance  with  Section  3.12 of the
Agreement.  The Holder of this Class SB-I  Certificate  hereby  consents  to any
change in its Certificate Percentage Interest in accordance with such Section.

               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 Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee,  the Certificate  Paying Agent, or
the  Certificate  Registrar  may treat the  Person in whose name this Class SB-I
Certificate is registered as the owner hereof for all purposes,  and none of the
Owner Trustee,  the Certificate  Paying Agent, the Certificate  Registrar or any
such agent shall be affected by any notice to the contrary.

               This Class SB-I Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.

                                        A-6

               The  obligations  created  by the  Agreement  in  respect  of the
Certificates  and the Trust created thereby shall terminate upon the earliest of
(i) the final  distribution  of all moneys or other  property or proceeds of the
Owner  Trust  Estate  in  accordance  with the  terms of the  Indenture  and the
Agreement,  (ii) the  Payment  Date in June 2031,  or (iii) the  purchase by the
Master  Servicer  of all Home  Equity  Loans  pursuant  to  Section  8.08 of the
Servicing Agreement.

               Unless the certificate of  authentication  hereon shall have been
executed by an authorized  officer of the Owner  Trustee,  or an  authenticating
agent by manual signature,  this Class SB-I Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.

                                        A-7
<PAGE>

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

                              HOME EQUITY LOAN TRUST 2001-HS3

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

Dated:  September 27, 2001    By:
                                  ---------------------------------------
                                  Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

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

                                            By: ______________________________
                                                 Authorized Signatory

                                    or THE CHASE MANHATTAN BANK,
                                    not in its individual capacity but solely,
                                    as Authenticating Agent of the Trust

Dated: September 27, 2001

                                            By: ______________________________
                                                Authorized Signatory

                                        A-8

<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   Certificate,   and  all  rights  thereunder,   hereby  irrevocably
constituting and appointing

______________________________________________________________________________

to transfer said  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 as it
appears upon the face of the within  Certificate  in every  particular,  without
alteration,   enlargement  or  any  change  whatever.  Such  signature  must  be
guaranteed by a member firm of the New York Stock Exchange or a commercial  bank
or trust company.

                                        A-9
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

     The  assignee  should  include the  following  for the  information  of the
Certificate Paying Agent:

     Distribution shall be made by wire transfer in immediately  available funds
to  ______________________  for the  account  of  ____________________,  account
number ______________, or, if mailed by check, to ______________.

     Applicable statements should be mailed to __________________.

                                   _________________________________
                                   Signature of assignee or agent
                                   (for authorization of wire transfer only)

                                        A-10
<PAGE>

                         FORM OF CLASS SB-II CERTIFICATE

               THIS CLASS SB-II  CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE TERM NOTES AND THE VARIABLE  FUNDING  NOTES AS DESCRIBED IN THE AGREEMENT
(AS DEFINED HEREIN).

               THIS CLASS SB-II CERTIFICATE IS ISSUED IN THE PERCENTAGE INTEREST
SET FORTH BELOW; HOWEVER, THE PERCENTAGE INTEREST OF THIS CERTIFICATE MAY CHANGE
IN ACCORDANCE WITH SECTION 3.12 OF THE AGREEMENT.  THE HOLDER OF THIS CLASS SB-I
CERTIFICATE HEREBY CONSENTS TO ANY CHANGE IN ITS CERTIFICATE PERCENTAGE INTEREST
IN ACCORDANCE WITH SUCH SECTION.

               THIS  CLASS  SB-II  CERTIFICATE  HAS NOT  BEEN  AND  WILL  NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR THE SECURITIES LAWS
OF ANY  STATE  AND MAY NOT BE RESOLD  OR  TRANSFERRED  UNLESS  IT IS  REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR  TRANSFERRED IN  TRANSACTIONS  WHICH
ARE EXEMPT FROM  REGISTRATION  UNDER SUCH ACT AND UNDER  APPLICABLE  LAWS AND IS
TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3.05 OF THE AMENDED AND
RESTATED TRUST AGREEMENT ("THE AGREEMENT").

               NO TRANSFER OF THIS CLASS SB-II  CERTIFICATE SHALL BE MADE UNLESS
THE CERTIFICATE REGISTRAR SHALL HAVE RECEIVED EITHER (I) A REPRESENTATION LETTER
FROM THE  TRANSFEREE  OF THIS CLASS  SB-II  CERTIFICATE  TO THE EFFECT THAT SUCH
TRANSFEREE  IS NOT AN EMPLOYEE  BENEFIT OR OTHER PLAN SUBJECT TO THE  PROHIBITED
TRANSACTION  RESTRICTIONS AND THE FIDUCIARY  RESPONSIBILITY  REQUIREMENTS OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),  ANY
PERSON ACTING, DIRECTLY OR INDIRECTLY,  ON BEHALF OF ANY SUCH PLAN OR ANY PERSON
USING "PLAN ASSETS,"  WITHIN THE MEANING OF THE DEPARTMENT OF LABOR  REGULATIONS
SECTION  2510.3-101,  TO ACQUIRE  THIS CLASS SB-II  CERTIFICATE  (EACH,  A "PLAN
INVESTOR"),   OR  (II)  IF  THIS  CLASS  SB-II   CERTIFICATE  IS  PRESENTED  FOR
REGISTRATION  IN THE  NAME OF A PLAN  INVESTOR,  AN  OPINION  OF  COUNSEL,  OR A
CERTIFICATION  IN THE FORM OF EXHIBIT G TO THE AGREEMENT IN LIEU OF SUCH OPINION
OF  COUNSEL,  TO THE EFFECT  THAT THE  PURCHASE  OR HOLDING OF THIS CLASS  SB-II
CERTIFICATE IS PERMISSIBLE  UNDER  APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT
IN A PROHIBITED  TRANSACTION  UNDER  SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE  (OR  COMPARABLE  PROVISIONS  OF ANY  SUBSEQUENT  ENACTMENTS)  AND WILL NOT
SUBJECT THE  DEPOSITOR,  THE OWNER  TRUSTEE,  THE  SERVICER  OR THE  CERTIFICATE
REGISTRAR TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE  UNDERTAKEN IN THE
AGREEMENT.

                                        A-11
<PAGE>

               THE TRANSFEREE OF THIS CLASS SB-II  CERTIFICATE  SHALL BE SUBJECT
TO UNITED STATES FEDERAL WITHHOLDING TAX UNLESS THE CERTIFICATE  REGISTRAR SHALL
HAVE  RECEIVED  A  CERTIFICATE  OF  NON-FOREIGN  STATUS  CERTIFYING  AS  TO  THE
TRANSFEREE'S  STATUS AS A U.S.  PERSON OR CORPORATION OR PARTNERSHIP  UNDER U.S.
LAW.

               THIS CLASS SB-II CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF THE SELLER,  THE  DEPOSITOR,  THE MASTER  SERVICER,  THE INDENTURE
TRUSTEE,  THE OWNER  TRUSTEE OR ANY OF THEIR  RESPECTIVE  AFFILIATES,  EXCEPT AS
EXPRESSLY PROVIDED IN THE AGREEMENT OR THE OTHER BASIC DOCUMENTS.

                                        A-12

<PAGE>

Certificate No. 1

Cut-off Date:
September 1, 2001

Date of Trust Agreement:
September 27, 2001

First Payment Date:                         Certificate Percentage Interest of
October 25, 2001                                   this Certificate:  100%

Assumed Final Payment Date:
June 2031

                       HOME EQUITY LOAN-BACKED CERTIFICATE
                                 SERIES 2001-HS3

               evidencing  a  fractional  undivided  interest in the Owner Trust
Estate,  the  property of which  consists  primarily  of the Home Equity  Loans,
created by RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.  (hereinafter called
the  "Depositor,"  which term includes any successor  entity under the Agreement
referred to below).

               This Class SB-II Certificate is payable solely from the assets of
the Owner Trust  Estate,  and does not represent an obligation of or interest in
the Depositor, the Seller, the Master Servicer, the Indenture Trustee, the Owner
Trustee or GMAC  Mortgage  Group,  Inc. or any of their  affiliates.  This Class
SB-II  Certificate  is not guaranteed or insured by any  governmental  agency or
instrumentality  or by the  Depositor,  the  Seller,  the Master  Servicer,  the
Indenture  Trustee,  the Owner  Trustee or GMAC Mortgage  Group,  Inc. or any of
their affiliates.  None of the Depositor,  the Seller, the Master Servicer,  the
Indenture Trustee, the Owner Trustee,  GMAC Mortgage Group, Inc. or any of their
affiliates  will have any  obligation  with respect to any  certificate or other
obligation secured by or payable from payments on the Certificates.

               This  certifies  that Auer & Co. is the  registered  owner of the
Certificate  Percentage  Interest  evidenced by this Class SB-II Certificate (as
set forth on the face hereof) in certain distributions with respect to the Owner
Trust  Estate,  consisting  primarily  of the  Home  Equity  Loans,  created  by
Residential  Funding Mortgage  Securities II, Inc. The Trust (as defined herein)
was created  pursuant to a Trust  Agreement dated as specified above (as amended
and supplemented  from time to time, the "Agreement")  between the Depositor and
Wilmington  Trust  Company,  as owner trustee (the "Owner  Trustee,"  which term
includes any successor entity under the Agreement),  a summary of certain of the
pertinent provisions of which is set forth hereafter.  To the extent not defined
herein,  the  capitalized  terms used herein have the  meanings  assigned in the
Agreement.  This Class SB-II  Certificate  is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class SB-II  Certificate by virtue of the acceptance  hereof assents and
by which such Holder is bound.

                                        A-13
<PAGE>

               Pursuant to the terms of the Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately  following (the "Payment Date"),  commencing on the
first Payment Date specified above, to the Person in whose name this Class SB-II
Certificate  is  registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such last
day) of the month  immediately  preceding  the month of such  distribution  (the
"Record  Date"),  in an amount equal to the pro rata  portion  evidenced by this
Class SB-II Certificate (based on the Certificate  Percentage Interest stated on
the face hereon) of the Certificate  Distribution Amount, if any, required to be
distributed to Holders of  Certificates on such Payment Date.  Distributions  on
this Class SB-II  Certificate  will be made as provided in the  Agreement by the
Certificate   Paying   Agent  by  wire   transfer   or  check   mailed   to  the
Certificateholder of record in the Certificate Register without the presentation
or  surrender  of this Class  SB-II  Certificate  or the making of any  notation
hereon.  Pursuant  to the  Agreement,  the  Trust has  issued  four  Classes  of
Certificates,  designated  as the  Class  SB-I  Certificates,  the  Class  SB-II
Certificates, the Class R-I Certificates and the Class R-II Certificates.

               Except as otherwise provided in the Agreement and notwithstanding
the above, the final  distribution on this Class SB-II  Certificate will be made
after  due  notice  by the  Certificate  Paying  Agent of the  pendency  of such
distribution  and only upon  presentation  and  surrender  of this  Class  SB-II
Certificate at the office or agency maintained by the Certificate  Registrar for
that purpose in the City and State of New York. The initial  Security Balance of
this Class SB-II  Certificate  is set forth above.  The Security  Balance hereof
will be reduced to the extent of the distributions allocable to principal.

               No transfer of this Class SB-II  Certificate  will 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.  In the event that such a transfer  is to be
made, (i) the  Certificate  Registrar or the Depositor may require an opinion of
counsel acceptable to and in form and substance  satisfactory to the Certificate
Registrar  and the  Depositor  that  such  transfer  is exempt  (describing  the
applicable  exemption and the basis  therefor) from or is being made pursuant to
the registration  requirements of the Securities Act of 1933, as amended, and of
any  applicable  statute of any state and (ii) the  transferee  shall execute an
investment  letter  in  the  form  described  in the  Agreement  and  (iii)  the
Certificate  Registrar  shall  require the  transferee  to execute an investment
letter and a  Certificate  of  Non-Foreign  Status in the form  described by the
Agreement (or if a Certificate of Non-Foreign Status is not provided, an Opinion
of  Counsel  as  described  in  the  Agreement),  which  investment  letter  and
certificate or Opinion of Counsel shall not be at the expense of the Trust,  the
Owner Trustee,  the  Certificate  Registrar or the Depositor.  The Holder hereof
desiring to effect such transfer shall,  and does hereby agree to, indemnify the
Trust, the Owner Trustee, the Depositor, the Master Servicer and the Certificate
Registrar 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.  In  connection
with any such transfer,  the Certificate Registrar (unless otherwise directed by
the Depositor) will also require either (i) a representation letter, in the form
as described by the  Agreement,  stating that the  transferee is not an employee
benefit or other plan subject to the prohibited transaction  restrictions or the
fiduciary  responsibility  requirements  of ERISA or Section 4975 of the Code (a
"Plan"), any person acting,  directly or indirectly,  on behalf of any such Plan

                                        A-14
<PAGE>

or any Person using the "plan  assets,"  within the meaning of the Department of
Labor  regulations  at 29  C.F.R.  ss.2510.3-101,  to  effect  such  acquisition
(collectively, a "Plan Investor") or (ii) if such transferee is a Plan Investor,
an opinion of counsel  acceptable to and in form and substance  satisfactory  to
the  Depositor,  the Owner  Trustee,  the Master  Servicer  and the  Certificate
Registrar,  or a certification in the form of Exhibit G to the Agreement, to the
effect that the  purchase or holding of the  Certificate  is  permissible  under
applicable law, will not constitute or result in a prohibited  transaction under
Section 406 of ERISA or Section 4975 of the Code (or  comparable  provisions  of
any  subsequent  enactments)  and will not  subject  the  Depositor,  the  Owner
Trustee,  the Master Servicer or the Certificate  Registrar to any obligation or
liability in addition to those undertaken in the Agreement.

               This Class SB-II Certificate is one of a duly authorized issue of
Certificates  designated as Home Equity  Loan-Backed  Certificates of the Series
specified hereon (herein collectively called the "Certificates"). All terms used
in this Class SB-II  Certificate  which are defined in the Agreement  shall have
the meanings assigned to them in the Agreement.

               The  Certificateholder,  by its  acceptance  of this Class  SB-II
Certificate,  agrees  that it will look  solely to the funds on  deposit  in the
Certificate  Distribution  Account that have been  released from the Lien of the
Indenture  for  payment  hereunder  and that  neither  the Owner  Trustee in its
individual   capacity   nor  the   Depositor   is   personally   liable  to  the
Certificateholders  for any amount payable under this Class SB-II Certificate or
the Agreement or, except as expressly provided in the Agreement,  subject to any
liability under the Agreement.

               The  Holder of this  Class  SB-II  Certificate  acknowledges  and
agrees that its rights to receive  distributions  in respect of this Class SB-II
Certificate  are  subordinated  to the rights of the Noteholders as described in
the Indenture.,  dated as of September 27, 2001,  between Home Equity Loan Trust
2001-HS3 (the "Trust") and The Chase Manhattan  Bank, as Indenture  Trustee (the
"Indenture").

               Each  Certificateholder,  by  its  acceptance  of a  Certificate,
covenants and agrees that such  Certificateholder will not at any time institute
against  the  Depositor  or the Trust,  or join in any  institution  against the
Depositor  or  the  Trust  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 Certificates, the Notes, the Agreement or any of the
Basic Documents.

               The Agreement  permits the amendment  thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit Enhancer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Agreement and will not cause the Trust to be
subject to an entity  level tax. If the purpose of the  amendment  is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not  covered,  it shall not be  necessary  to obtain  the  consent of any
Holder,  but the Owner Trustee shall be furnished  with a letter from the Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Credit  Enhancement  Instrument and the consent of the Credit  Enhancer shall be
obtained.  If the purpose of the  amendment is to prevent the  imposition of any
federal or state taxes at any time that any  Security is  outstanding,  it shall
not be  necessary  to obtain the  consent of any Holder,  but the Owner  Trustee
shall be furnished  with an Opinion of Counsel that such  amendment is necessary
or helpful to prevent the imposition of such taxes and is not materially adverse

                                        A-15
<PAGE>

to any Holder and the consent of the Credit  Enhancer shall be obtained.  If the
purpose of the  amendment is to add or eliminate or change any  provision of the
Agreement, other than as specified in the preceding two sentences, the amendment
shall  require  either (a) a letter from the Rating  Agencies that the amendment
will not result in the  downgrading or withdrawal of the rating then assigned to
any Security, if determined without regard to the Credit Enhancement  Instrument
or (b) the  consent  of  Holders of a  majority  of the  Certificate  Percentage
Interests of the Certificates and the Indenture Trustee; provided, however, that
no such  amendment  shall (i)  reduce in any  manner the amount of, or delay the
time  of,  payments  received  that  are  required  to  be  distributed  on  any
Certificate without the consent of the related  Certificateholder and the Credit
Enhancer, or (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such  amendment  without the consent of the
Holders of all such Certificates then outstanding.

               As provided in the Agreement  and subject to certain  limitations
therein set forth, the transfer of this Class SB-II  Certificate is registerable
in the Certificate  Register upon surrender of this Class SB-II  Certificate for
registration of transfer at the offices or agencies of the Certificate Registrar
maintained  in  the  City  and  State  of New  York,  accompanied  by a  written
instrument of transfer in form  satisfactory to the  Certificate  Registrar duly
executed by the Holder  hereof or such  Holder's  attorney  duly  authorized  in
writing, and thereupon one or more new Certificates of authorized  denominations
evidencing the same aggregate Certificate  Percentage Interest will be issued to
the designated transferee. The initial Certificate Registrar appointed under the
Agreement is the Indenture Trustee.

               Except  as  provided  in  the  Agreement,  the  Certificates  are
issuable  only in minimum  denominations  of a 10.0000%  Certificate  Percentage
Interest and in integral multiples of a 0.0001% Certificate  Percentage Interest
in  excess  thereof.  As  provided  in the  Agreement  and  subject  to  certain
limitations  therein  set  forth,  the  Certificates  are  exchangeable  for new
Certificates   of   authorized   denominations,   as  requested  by  the  Holder
surrendering the same. This Class SB-II Certificate is issued in the Certificate
Percentage Interest above; however, the Certificate  Percentage Interest of this
Class  SB-II  Certificate  may change in  accordance  with  Section  3.12 of the
Agreement.  The Holder of this Class SB-II  Certificate  hereby  consents to any
change in its Certificate Percentage Interest in accordance with such Section.

               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 Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee,  the Certificate  Paying Agent, or
the  Certificate  Registrar  may treat the Person in whose name this Class SB-II
Certificate is registered as the owner hereof for all purposes,  and none of the
Owner Trustee,  the Certificate  Paying Agent, the Certificate  Registrar or any
such agent shall be affected by any notice to the contrary.

               This Class SB-II  Certificate  shall be governed by and construed
in accordance with the laws of the State of Delaware.

                                        A-16
<PAGE>

               The  obligations  created  by the  Agreement  in  respect  of the
Certificates  and the Trust created thereby shall terminate upon the earliest of
(i) the final  distribution  of all moneys or other  property or proceeds of the
Owner  Trust  Estate  in  accordance  with the  terms of the  Indenture  and the
Agreement,  (ii) the  Payment  Date in June 2031,  or (iii) the  purchase by the
Master  Servicer  of all Home  Equity  Loans  pursuant  to  Section  8.08 of the
Servicing Agreement.

               Unless the certificate of  authentication  hereon shall have been
executed by an authorized  officer of the Owner  Trustee,  or an  authenticating
agent by manual signature, this Class SB-II Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.

                                        A-17

<PAGE>

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

                               HOME EQUITY LOAN TRUST 2001-HS3

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

Dated:  September 27, 2001     By:
                                   ---------------------------------------
                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

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

                                            By: ______________________________
                                                 Authorized Signatory

                                      or THE CHASE MANHATTAN BANK,
                                      not in its individual capacity but solely,
                                      as Authenticating Agent of the Trust

Dated: September 27, 2001

                                            By: ______________________________
                                                Authorized Signatory

                                        A-18

<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   Certificate,   and  all  rights  thereunder,   hereby  irrevocably
constituting and appointing

______________________________________________________________________________

to transfer said  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 as it
appears upon the face of the within  Certificate  in every  particular,  without
alteration,   enlargement  or  any  change  whatever.  Such  signature  must  be
guaranteed by a member firm of the New York Stock Exchange or a commercial  bank
or trust company.

                                        A-19

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

     The  assignee  should  include the  following  for the  information  of the
Certificate Paying Agent:

     Distribution shall be made by wire transfer in immediately  available funds
to  ______________________  for the  account  of  ____________________,  account
number ______________, or, if mailed by check, to ______________.

     Applicable statements should be mailed to __________________.

                                   _________________________________
                                   Signature of assignee or agent
                                   (for authorization of wire transfer only)

                                        A-20

<PAGE>

                                    EXHIBIT B
                             TO THE TRUST AGREEMENT

                              CERTIFICATE OF TRUST

                                       OF

                               HOME EQUITY LOAN TRUST 2001-HS3

        THIS  Certificate  of Trust of Home  Equity  Loan  Trust  2001-HS3  (the
"Trust")  is being  duly  executed  and filed by  Wilmington  Trust  company,  a
Delaware banking  corporation,  as owner trustee, to form a business trust under
the Delaware Business Trust Act (12 Del. C ss.3801 et seq.).

     1. Name:  The name of the business  trust formed hereby is Home Equity Loan
Trust 2001-HS3.

     2. Delaware Trustee:  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,  Attention:
Corporate Trust Administration.

     3. Effective Date: This Certificate of Trust shall be effective upon filing
with the Secretary of State.

               IN WITNESS WHEREOF, the undersigned, being the sole owner trustee
of the Trust, has executed this Certificate of Trust.

                                            WILMINGTON TRUST COMPANY,
                                            as owner trustee

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

<PAGE>

                                    EXHIBIT C

                  [FORM OF RULE 144A INVESTMENT REPRESENTATION]

             Description of Rule 144A Securities, including numbers:
                 ===============================================
                 ===============================================

               The  undersigned  seller,  as registered  holder (the  "Seller"),
intends to transfer the Rule 144A Securities  described above to the undersigned
buyer (the "Buyer").

               1. In connection  with such  transfer and in accordance  with the
agreements  pursuant to which the Rule 144A Securities  were issued,  the Seller
hereby  certifies the following  facts:  Neither the Seller nor anyone acting on
its behalf has offered, transferred,  pledged, sold or otherwise disposed of the
Rule 144A  Securities,  any  interest in the Rule 144A  Securities  or any other
similar security to, or solicited any offer to buy or accept a transfer,  pledge
or other disposition of the Rule 144A Securities,  any interest in the Rule 144A
Securities  or any other  similar  security  from,  or otherwise  approached  or
negotiated  with respect to the Rule 144A  Securities,  any interest in the Rule
144A Securities or any other similar security with, any person in any manner, or
made any general  solicitation  by means of general  advertising or in any other
manner,  or taken any other action,  that would constitute a distribution of the
Rule 144A  Securities  under the  Securities  Act of 1933, as amended (the "1933
Act"),  or that  would  render the  disposition  of the Rule 144A  Securities  a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or  another  "qualified  institutional  buyer" as defined in Rule
144A under the 1933 Act.

               2. The Buyer warrants and represents to, and covenants  with, the
Owner Trustee and the  Depositor  (as defined in the Amended and Restated  Trust
Agreement (the "Agreement"),  dated as of September 27, 2001 between Residential
Funding Mortgage Securities II, Inc., as Depositor and Wilmington Trust Company,
as Owner  Trustee  pursuant  to  Section  3.05 of the  Agreement,  and The Chase
Manhattan Bank, as indenture trustee, as follows:

               a. The Buyer  understands  that the Rule 144A Securities have not
been registered under the 1933 Act or the securities laws of any state.

               b.  The  Buyer  considers  itself  a  substantial,  sophisticated
institutional  investor  having such  knowledge and  experience in financial and
business  matters  that it is  capable  of  evaluating  the  merits and risks of
investment in the Rule 144A Securities.

<PAGE>

               c. The Buyer has been  furnished with all  information  regarding
the Rule 144A  Securities  that it has requested from the Seller,  the Indenture
Trustee, the Owner Trustee or the Master Servicer.

               d. Neither the Buyer nor anyone acting on its behalf has offered,
transferred,  pledged,  sold or otherwise  disposed of the Rule 144A Securities,
any interest in the Rule 144A  Securities or any other  similar  security to, or
solicited any offer to buy or accept a transfer,  pledge or other disposition of
the Rule 144A Securities,  any interest in the Rule 144A Securities or any other
similar security from, or otherwise approached or negotiated with respect to the
Rule 144A  Securities,  any  interest in the Rule 144A  Securities  or any other
similar  security  with,  any  person  in  any  manner,   or  made  any  general
solicitation  by means of general  advertising or in any other manner,  or taken
any  other  action,  that  would  constitute  a  distribution  of the Rule  144A
Securities  under the 1933 Act or that would render the  disposition of the Rule
144A Securities a violation of Section 5 of the 1933 Act or require registration
pursuant  thereto,  nor will it act, nor has it  authorized or will it authorize
any person to act, in such manner with respect to the Rule 144A Securities.

               e. The Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the 1933 Act and has completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. The Buyer is
aware that the sale to it is being made in reliance  on Rule 144A.  The Buyer is
acquiring the Rule 144A  Securities for its own account or the accounts of other
qualified  institutional buyers,  understands that such Rule 144A Securities may
be resold, pledged or transferred only (i) to a person reasonably believed to be
a qualified  institutional  buyer that  purchases for its own account or for the
account  of a  qualified  institutional  buyer to whom  notice is given that the
resale,  pledge or  transfer  is being made in  reliance  on Rule 144A,  or (ii)
pursuant to another exemption from registration under the 1933 Act.

               3.  The Buyer represents that:

               (i)    either (a) or (b) is satisfied, as marked below:

     a. The Buyer is not any  employee  benefit  plan  subject  to the  Employee
Retirement  Income Security Act of 1974, as amended  ("ERISA"),  or the Internal
Revenue Code of 1986,  as amended (the  "Code"),  a Person  acting,  directly or
indirectly, on behalf of any such plan or any Person acquiring such Certificates
with "plan  assets"  of a Plan  within the  meaning of the  Department  of Labor
regulation promulgated at 29 C.F.R. ss.2510.3-101; or

     b. The Buyer will provide the Depositor, the Owner Trustee, the Certificate
Registrar  and the Master  Servicer  with  either:  (x) an  opinion of  counsel,
satisfactory to the Depositor,  the Owner Trustee, the Certificate Registrar and
the  Master  Servicer,  to  the  effect  that  the  purchase  and  holding  of a
Certificate by or on behalf of the Buyer is permissible  under  applicable  law,
will not constitute or result in a prohibited  transaction  under Section 406 of
ERISA or Section 4975 of the Code (or  comparable  provisions of any  subsequent
enactments)  and  will  not  subject  the  Depositor,  the  Owner  Trustee,  the
Certificate  Registrar  or the Master  Servicer to any  obligation  or liability

                                        C-2
<PAGE>

(including  liabilities  under ERISA or Section 4975 of the Code) in addition to
those undertaken in the Trust  Agreement,  which opinion of counsel shall not be
an expense of the Depositor, the Owner Trustee, the Certificate Registrar or the
Master Servicer;  or (y) in lieu of such opinion of counsel,  a certification in
the form of Exhibit G to the Trust Agreement; and

               (ii)  the  Buyer is  familiar  with  the  prohibited  transaction
restrictions and fiduciary  responsibility  requirements of Sections 406 and 407
of ERISA and Section 4975 of the Code and  understands  that each of the parties
to which this  certification is made is relying and will continue to rely on the
statements made in this paragraph 3.

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

               Capitalized  terms used  herein  that are not  otherwise  defined
shall have the meanings ascribed thereto in Appendix A to the indenture dated as
of September 27, 2001, between the Trust and the Indenture Trustee.

               IN  WITNESS  WHEREOF,  each  of the  parties  has  executed  this
document as of the date set forth below.

Print Name of Seller                              Print Name of Buyer

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

Taxpayer Identification:                          Taxpayer Identification:

No.                                               No.
    ----------------------------------------

Date:                                             Date:
      --------------------------------------

                                        C-3

<PAGE>

                              ANNEX 1 TO EXHIBIT C

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

             [For Buyers Other Than Registered Investment Companies]

        The undersigned  hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:

               1. As indicated  below,  the undersigned is the President,  Chief
Financial  Officer,  Senior Vice  President  or other  executive  officer of the
Buyer.

               2. In  connection  with  purchases  by the Buyer,  the Buyer is a
"qualified  institutional  buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis  $______________________1 in securities (except for the
excluded  securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.

_________

1    Buyer must own and/or invest on a discretionary basis at least $100,000,000
     in securities  unless Buyer is a dealer,  and, in that case, Buyer must own
     and/or invest on a discretionary basis at least $100,000,000

                                        C-4

<PAGE>

Corporation,  etc. The Buyer is a  corporation  (other than a bank,  savings and
loan  association or similar  institution),  Massachusetts  or similar  business
trust, partnership, or charitable organization described in Section 501(c)(3) of
the Internal Revenue Code.

Bank. The Buyer (a) is a national bank or banking  institution  organized  under
the laws of any State,  territory or the  District of Columbia,  the business of
which is  substantially  confined to banking and is  supervised  by the State or
territorial  banking  commission  or similar  official  or is a foreign  bank or
equivalent institution, and (b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual  financial  statements,  a copy of which is
attached hereto.

Savings and Loan. The Buyer (a) is a savings and loan association,  building and
loan   association,   cooperative   bank,   homestead   association  or  similar
institution,  which is supervised  and examined by a State or Federal  authority
having  supervision over any such  institutions or is a foreign savings and loan
association  or  equivalent  institution  and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial statements.

Broker-Dealer.  The Buyer is a dealer  registered  pursuant to Section 15 of the
Securities Exchange Act of 1934.

Insurance  Company.  The  Buyer  is  an  insurance  company  whose  primary  and
predominant  business  activity is the writing of insurance or the reinsuring of
risks underwritten by insurance companies and which is subject to supervision by
the  insurance  commissioner  or a  similar  official  or  agency  of a State or
territory or the District of Columbia.

State or Local Plan. The Buyer is a plan  established and maintained by a State,
its political subdivisions, or any agency or instrumentality of the State or its
political subdivisions, for the benefit of its employees.

ERISA Plan. The Buyer is an employee  benefit plan within the meaning of Title I
of the Employee Retirement Income Security Act of 1974.

Investment  Adviser.  The Buyer is an investment  adviser  registered  under the
Investment Advisers Act of 1940.

SBIC.  The Buyer is a Small  Business  Investment  Company  licensed by the U.S.
Small Business  Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.

Business  Development  Company.  The Buyer is a business  development company as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

Trust Fund.  The Buyer is a trust fund whose  trustee is a bank or trust company
and whose participants are exclusively (a) plans established and maintained by a
State, its political subdivisions, or any agency or instrumentality of the State
or its political subdivisions, for the benefit of its employees, or (b) employee
benefit  plans within the meaning of Title I of the Employee  Retirement  Income
Security  Act of 1974,  but is not a trust fund that  includes  as  participants
individual retirement accounts or H.R. 10 plans.

                                        C-5
<PAGE>

               3. The term  "securities"  as used  herein  does not  include (i)
securities of issuers that are affiliated  with the Buyer,  (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer,  (iii) bank  deposit  notes and  certificates  of  deposit,  (iv) loan
participations,  (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.

               4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary  basis by the Buyer, the Buyer used the
cost of such  securities to the Buyer and did not include any of the  securities
referred to in the preceding  paragraph.  Further, in determining such aggregate
amount,  the Buyer may have included  securities  owned by  subsidiaries  of the
Buyer,  but only if such  subsidiaries  are  consolidated  with the Buyer in its
financial  statements  prepared in accordance with generally accepted accounting
principles  and if the  investments of such  subsidiaries  are managed under the
Buyer's direction.  However, such securities were not included if the Buyer is a
majority-owned,  consolidated  subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934.

               5. The Buyer  acknowledges that it is familiar with Rule 144A and
understands  that the  seller to it and other  parties  related to the Rule 144A
Securities are relying and will continue to rely on the  statements  made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.

___ ___ Will the Buyer be purchasing  the Rule 144A Yes No  Securities  only for
the Buyer's own account?

               6. If the answer to the  foregoing  question  is "no",  the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party  (including  any  separate  account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified  institutional  buyer" within the meaning of Rule 144A.
In addition,  the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current  representation  letter from
such third party or taken other appropriate  steps  contemplated by Rule 144A to
conclude that such third party  independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.

               7. The  Buyer  will  notify  each of the  parties  to which  this
certification is made of any changes in the information and conclusions  herein.
Until such notice is given,  the Buyer's  purchase of Rule 144A  Securities will
constitute  a  reaffirmation  of  this  certification  as of the  date  of  such
purchase.

                                        C-6
<PAGE>

                                            Print Name of Buyer

                                            By: ______________________________
                                                 Name:
                                                 Title:

                                            Date:
                                                   ---------------------------

                                        C-7

<PAGE>

                              ANNEX 2 TO EXHIBIT C

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

              [For Buyers That Are Registered Investment Companies]

               The  undersigned  hereby  certifies as follows in connection with
the Rule 144A Investment Representation to which this Certification is attached:

               1. As indicated  below,  the undersigned is the President,  Chief
Financial  Officer or Senior Vice  President  of the Buyer or, if the Buyer is a
"qualified  institutional  buyer" as that term is defined in Rule 144A under the
Securities  Act of 1933  ("Rule  144A")  because  Buyer is part of a  Family  of
Investment Companies (as defined below), is such an officer of the Adviser.

               2.  In  connection  with  purchases  by  Buyer,  the  Buyer  is a
"qualified  institutional  buyer" as  defined in SEC Rule 144A  because  (i) the
Buyer is an investment  company  registered under the Investment  Company Act of
1940,  and (ii) as marked  below,  the Buyer  alone,  or the  Buyer's  Family of
Investment Companies,  owned at least $100,000,000 in securities (other than the
excluded  securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining  the amount of securities  owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used.

____ The Buyer owned $___________________ in securities (other than the excluded
securities  referred to below) as of the end of the Buyer's  most recent  fiscal
year (such amount being calculated in accordance with Rule 144A).

____ The Buyer is part of a Family of  Investment  Companies  which owned in the
aggregate  $______________  in  securities  (other than the excluded  securities
referred  to below) as of the end of the Buyer's  most recent  fiscal year (such
amount being calculated in accordance with Rule 144A).

               3. The term "Family of Investment Companies" as used herein means
two or more  registered  investment  companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned  subsidiaries  of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

               4. The term  "securities"  as used  herein  does not  include (i)
securities  of  issuers  that are  affiliated  with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of  deposit,  (iii)  loan  participations,   (iv)  repurchase  agreements,   (v)
securities  owned but  subject  to a  repurchase  agreement  and (vi)  currency,
interest rate and commodity swaps.

               5. The Buyer is familiar with Rule 144A and understands that each
of the parties to which this certification is made are relying and will continue
to rely on the  statements  made  herein  because one or more sales to the Buyer
will be in reliance on Rule 144A. In addition,  the Buyer will only purchase for
the Buyer's own account.

                                        C-8
<PAGE>

               6. The undersigned  will notify each of the parties to which this
certification is made of any changes in the information and conclusions  herein.
Until such notice,  the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this  certification by the undersigned as of the date of such
purchase.

                                            -----------------------------------
                                               Print Name of Buyer

                                            By:______________________________
                                                Name:
                                                Title:

                                            IF AN ADVISER:

                                            -----------------------------------
                                            Print Name of Buyer

                                            Date:
                                                   ----------------------------

                                        C-9

<PAGE>

                                    EXHIBIT D

                     FORM OF INVESTOR REPRESENTATION LETTER

                                    ______________, 20__

Residential Funding Mortgage Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota 55437

The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY  10001
Attention:  Corporate Trust Administration

               Re:    Home Equity Loan-Backed Certificates
                      Series 2001-HS3

     Ladies and Gentlemen:

     ______________    (the    "Purchaser")    intends    to    purchase    from
__________________  (the  "Seller") a ___%  Certificate  Percentage  Interest of
Certificates  of Series  2001-HS3 (the  "Certificates"),  issued pursuant to the
Amended  and  Restated  Trust  Agreement  (the "Trust  Agreement"),  dated as of
September 27, 2001, between  Residential Funding Mortgage Securities II, Inc. as
depositor (the "Depositor") and Wilmington Trust Company,  as owner trustee (the
"Owner  Trustee"),  as  acknowledged  and agreed by The Chase Manhattan Bank, as
Certificate  Registrar.  All terms used herein and not  otherwise  defined shall
have the  meanings  set  forth in the  Trust  Agreement.  The  Purchaser  hereby
certifies, represents and warrants to, and covenants with, the Depositor and the
Certificate Registrar that:

               1. The Purchaser  understands that (a) the Certificates  have not
been and will not be registered or qualified  under the  Securities Act of 1933,
as amended (the "Act") or any state  securities  law,  (b) the  Depositor is not
required to so register or qualify the Certificates, (c) the Certificates may be
resold only if registered and qualified pursuant to the provisions of the Act or
any  state  securities  law,  or if an  exemption  from  such  registration  and
qualification  is  available,  (d) the  Trust  Agreement  contains  restrictions
regarding the transfer of the Certificates and (e) the Certificates  will bear a
legend to the foregoing effect.

               2.  The  Purchaser  is  acquiring  the  Certificates  for its own
account  for  investment  only and not with a view to or for sale in  connection
with any  distribution  thereof in any manner that would  violate the Act or any
applicable state securities laws.

     3. The Purchaser is (a) a substantial, sophisticated institutional investor
having such knowledge and experience in financial and business matters,  and, in

                                        D-1
<PAGE>

particular,  in such matters related to securities  similar to the Certificates,
such that it is capable of evaluating  the merits and risks of investment in the
Certificates,  (b) able to bear the economic risks of such an investment and (c)
an "accredited  investor" within the meaning of Rule 501(a) promulgated pursuant
to the Act.

     4. The Purchaser has been  furnished  with,  and has had an  opportunity to
review (a) [a copy of the Private  Placement  Memorandum,  dated _______,  20__,
relating to the Certificates (b)] a copy of the Trust Agreement and [b] [c] such
other  information  concerning the  Certificates,  the Home Equity Loans and the
Depositor  as has been  requested  by the  Purchaser  from the  Depositor or the
Seller and is relevant to the Purchaser's decision to purchase the Certificates.
The  Purchaser has had any  questions  arising from such review  answered by the
Depositor or the Seller to the satisfaction of the Purchaser.  [If the Purchaser
did not purchase the Certificates from the Seller in connection with the initial
distribution  of the  Certificates  and was provided  with a copy of the Private
Placement  Memorandum  (the  "Memorandum")  relating to the  original  sale (the
"Original   Sale")  of  the   Certificates  by  the  Depositor,   the  Purchaser
acknowledges  that such  Memorandum  was provided to it by the Seller,  that the
Memorandum was prepared by the Depositor  solely for use in connection  with the
Original Sale and the Depositor did not  participate in or facilitate in any way
the  purchase of the  Certificates  by the  Purchaser  from the Seller,  and the
Purchaser agrees that it will look solely to the Seller and not to the Depositor
with  respect  to any  damage,  liability,  claim  or  expense  arising  out of,
resulting from or in connection with (a) error or omission,  or alleged error or
omission,  contained in the Memorandum,  or (b) any information,  development or
event arising after the date of the Memorandum.]

               5. The  Purchaser  has not and will not nor has it  authorized or
will it authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any  Certificate,  any interest in any Certificate or any other similar
security to any person in any manner,  (b) solicit any offer to buy or to accept
a pledge, disposition of other transfer of any Certificate,  any interest in any
Certificate  or any other similar  security  from any person in any manner,  (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general  solicitation  by means of general  advertising or in any other
manner or (e) take any other  action,  that (as to any of (a) through (e) above)
would  constitute a distribution  of any  Certificate  under the Act, that would
render the disposition of any Certificate a violation of Section 5 of the Act or
any state  securities law, or that would require  registration or  qualification
pursuant thereto.  The Purchaser will not sell or otherwise  transfer any of the
Certificates, except in compliance with the provisions of the Trust Agreement.

               6.  The Purchaser represents:

                  (i) that either (a) or (b) is satisfied, as marked below:

     ____ a. The  Purchaser  is not any  employee  benefit  plan  subject to the
Employee  Retirement Income Security Act of 1974, as amended  ("ERISA"),  or the
Internal  Revenue  Code of 1986,  as  amended  (the  "Code"),  a Person  acting,
directly or indirectly,  on behalf of any such plan or any Person acquiring such
Certificates  with "plan assets" of a Plan within the meaning of the  Department
of Labor regulation promulgated at 29 C.F.R. ss.2510.3-101; or

                                        D-2
<PAGE>

     ____ b. The Purchaser  will provide the Depositor,  the Owner Trustee,  the
Certificate  Registrar and the Master  Servicer  with either:  (x) an opinion of
counsel,  satisfactory  to the  Depositor,  the Owner Trustee,  the  Certificate
Registrar and the Master  Servicer,  to the effect that the purchase and holding
of a  Certificate  by or  on  behalf  of  the  Purchaser  is  permissible  under
applicable law, will not constitute or result in a prohibited  transaction under
Section 406 of ERISA or Section 4975 of the Code (or  comparable  provisions  of
any  subsequent  enactments)  and will not  subject  the  Depositor,  the  Owner
Trustee,  the Certificate  Registrar or the Master Servicer to any obligation or
liability  (including  liabilities  under ERISA or Section  4975 of the Code) in
addition to those  undertaken in the Trust  Agreement,  which opinion of counsel
shall not be an expense of the  Depositor,  the Owner Trustee,  the  Certificate
Registrar or the Master Servicer;  or (y) in lieu of such opinion of counsel,  a
certification in the form of Exhibit G to the Trust Agreement; and

               (ii) the  Purchaser is familiar with the  prohibited  transaction
restrictions and fiduciary  responsibility  requirements of Sections 406 and 407
of ERISA and Section 4975 of the Code and  understands  that each of the parties
to which this  certification is made is relying and will continue to rely on the
statements made in this paragraph 6.

     7. The Purchaser is acquiring the Certificate for its own behalf and is not
acting as agent or custodian for any other person or entity in  connection  with
such acquisition;

               8.  The  Purchaser  is  not a  partnership,  grantor  trust  or S
corporation  for  federal  income  tax  purposes,  or,  if  the  Purchaser  is a
partnership, grantor trust or S corporation for federal income tax purposes, the
Certificates  are not more than 50% of the  assets of the  partnership,  grantor
trust or S corporation.

               9.  The Purchaser is not a non-United States person.

                                            Very truly yours,

                                            By:  _______________________________
                                                 Name:
                                                 Title:

                                        D-3
<PAGE>

<PAGE>

                                    EXHIBIT E

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                   __________ , 20___

Residential Funding Mortgage Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota 55437

The Chase Manhattan Bank
450 West 33rd Street, 14th Floor
New York, NY  10001
Attention:  Corporate Trust Administration

               Re:    Home Equity  Loan-Backed Certificates
                      Series 2001-HS3

Ladies and Gentlemen:

     ____________   (the    "Purchaser")    intends   to   purchase   from   the
________________  (the  "Seller")  a ___%  Certificate  Percentage  Interest  of
[Certificates] of Series 2001-HS3 (the  "Certificates"),  issued pursuant to the
Amended  and  Restated  Trust  Agreement  (the "Trust  Agreement"),  dated as of
September 27, 2001, between  Residential Funding Mortgage Securities II, Inc. as
depositor (the "Depositor") and Wilmington Trust Company,  as owner trustee (the
"Owner  Trustee"),  as  acknowledged  and agreed by The Chase Manhattan Bank, as
Certificate  Registrar.  All terms used herein and not  otherwise  defined shall
have the meanings set forth in the Trust Agreement. The Seller hereby certifies,
represents  and  warrants  to,  and  covenants   with,  the  Depositor  and  the
Certificate Registrar that:

        Neither  the  Seller nor  anyone  acting on its behalf has (a)  offered,
pledged,  sold,  disposed  of or  otherwise  transferred  any  Certificate,  any
interest in any  Certificate or any other similar  security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate,  any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise  approached or
negotiated with respect to any  Certificate,  any interest in any Certificate or
any other  similar  security  with any  person in any  manner,  (d) has made any
general  solicitation by means of general advertising or in any other manner, or
(e) has taken any other action,  that (as to any of (a) through (e) above) would
constitute a distribution of the  Certificates  under the Securities Act of 1933

                                        E-1
<PAGE>

(the "Act"), that would render the disposition of any Certificate a violation of
Section  5 of the  Act or any  state  securities  law,  or  that  would  require
registration or qualification  pursuant thereto. The Seller will not act, in any
manner set forth in the foregoing sentence with respect to any Certificate.  The
Seller has not and will not sell or otherwise  transfer any of the Certificates,
except in compliance with the provisions of the Trust Agreement.

                                            Very truly yours,

                                            By:______________________________
                                                Name:
                                                Title

                                        E-2

<PAGE>

                                    EXHIBIT F

                        CERTIFICATE OF NON-FOREIGN STATUS

        This  Certificate of  Non-Foreign  Status  ("certificate")  is delivered
pursuant to Section 3.05 of the Amended and Restated Trust  Agreement,  dated as
of  September  27, 2001 (the "Trust  Agreement"),  between  Residential  Funding
Mortgage  Securities  II, Inc., as depositor and Wilmington  Trust  Company,  as
Owner Trustee,  in connection with the acquisition of, transfer to or possession
by the undersigned,  whether as beneficial owner (the  "Beneficial  Owner"),  or
nominee  on  behalf  of the  Beneficial  Owner  of the Home  Equity  Loan-Backed
Certificates,  Series 2001-HS3 (the "Certificates").  Capitalized terms used but
not defined in this certificate  have the respective  meanings given them in the
Trust Agreement.

        Each holder must  complete Part I, Part II (if the holder is a nominee),
and in all cases sign and otherwise complete Part III.

        In addition,  each holder shall submit with the Certificates an IRS Form
W-9 relating to such holder.

        To confirm to the Trust that the provisions of Sections 871, 881 or 1446
of the Internal  Revenue Code (relating to withholding tax on foreign  partners)
do not  apply  in  respect  of the  Certificate  held  by the  undersigned,  the
undersigned hereby certifies:

Part I - Complete Either A or B

        A.     Individual as Beneficial Owner

     1. I am (The Beneficial Owner is ) not a non-resident alien for purposes of
U.S. income taxation;

     2.   My   (The   Beneficial   Owner's)   name   and   home   address   are:
__________________________________; and

     3. My (The Beneficial Owner's) U.S. taxpayer  identification number (Social
Security Number) is _____________________________.

        B.     Corporate, Partnership or Other Entity as Beneficial - Owner

     1.  ___________________  (Name of the  Beneficial  Owner)  is not a foreign
corporation,  foreign  partnership,  foreign  trust or foreign  estate (as those
terms are defined in the Code and Treasury Regulations;

     2. The Beneficial  Owner's office  address and place of  incorporation  (if
applicable) is _____________________________________; and

                                        F-1
<PAGE>

     3.  The  Beneficial   Owner's  U.S.  employer   identification   number  is
______________________________.

Part II - Nominees

        If  the  undersigned  is the  nominee  for  the  Beneficial  Owner,  the
undersigned  certifies  that this  certificate  has been made in  reliance  upon
information contained in:

                       an IRS Form W-9
        --------------

                       a form such as this or substantially similar
        --------------

provided to the  undersigned  by an appropriate  person and (i) the  undersigned
agrees to notify the Trust at least  thirty (30) days prior to the date that the
form  relied  upon  becomes  obsolete,  and (ii) in  connection  with  change in
Beneficial  Owners,  the  undersigned  agrees  to  submit a new  Certificate  of
Non-Foreign Status to the Trust promptly after such change.

Part III -     Declaration

        The undersigned, as the Beneficial Owner or a nominee thereof, agrees to
notify the Trust  within sixty (60) days of the date that the  Beneficial  Owner
becomes a foreign person. The undersigned  understands that this certificate may
be  disclosed  to the  Internal  Revenue  Service  by the  Trust  and any  false
statement contained therein could be punishable by fines, imprisonment or both.

        Under  penalties  of  perjury,  I  declare  that  I have  examined  this
certificate  and to the best of my knowledge and belief it is true,  correct and
complete and will further  declare that I will inform the Trust of any change in
the  information  provided above,  and, if applicable,  I further declare that I
have the authority* to sign this document.

Name:______________________________

Title (if applicable):____________________

Signature and Date:_____________________

*NOTE:  If signed  pursuant to a power of attorney,  the power of attorney  must
accompany this certificate.

                                        F-2
<PAGE>

<PAGE>

                                    EXHIBIT G

                       FORM OF ERISA REPRESENTATION LETTER

                                                   _____________, 200__

Residential Funding Mortgage
 Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota  55437

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890

Residential Funding Corporation
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota  55437

[CERTIFICATE REGISTRAR]

               Re:    Residential Funding Mortgage Securities II, Inc.
                      Home Equity Loan-Backed Certificates, Series 2001-HS3

Dear Sirs:

        __________________________________ (the "Transferee") intends to acquire
from  _____________________  (the  "Transferor") a ___%  Certificate  Percentage
Interest  of  Residential  Funding  Mortgage  Securities  II,  Inc.  Home Equity
Loan-Backed Certificates, Series 2001-HS3 (the "Certificates"),  issued pursuant
to an Amended  and  Restated  Trust  Agreement  (the  "Trust  Agreement")  dated
September 27, 2001 among  Residential  Funding Mortgage  Securities II, Inc., as
depositor (the "Depositor") and Wilmington Trust Company, as trustee (the "Owner
Trustee").  Capitalized  terms used herein and not otherwise  defined shall have
the meanings assigned thereto in the Trust Agreement.

        The  Transferee  hereby  certifies,  represents  and  warrants  to,  and
covenants with, the Depositor,  the Owner Trustee, the Certificate Registrar and
the Master Servicer that either:

        (1) The  Certificates  (i) are not being  acquired  by,  and will not be
transferred to, any employee  benefit plan within the meaning of Section 3(3) of
the Employee  Retirement Income Security Act of 1974, as amended  ("ERISA"),  or
other  retirement  arrangement,  including  individual  retirement  accounts and
annuities,  Keogh  plans and bank  collective  investment  funds  and  insurance
company  general  or  separate  accounts  in  which  such  plans,   accounts  or
arrangements  are  invested,  that is subject to Section 406 of ERISA or Section

                                        G-1
<PAGE>

4975 of the Internal  Revenue Code of 1986,  as amended (the "Code") (any of the
foregoing,  a "Plan"),  (ii) are not being acquired with "plan assets" of a Plan
within the  meaning  of the  Department  of Labor  ("DOL")  Regulations  Section
2510.3-101, and (iii) will not be transferred to any entity that is deemed to be
investing  in plan  assets  within the  meaning of the DOL  Regulations  Section
2510.3-101; or

        (2) The purchase of the  Certificates  is permissible  under  applicable
law, will not constitute or result in any prohibited  transaction under ERISA or
Section 4975 of the Code, will not subject the Depositor or the Owner Trustee to
any obligation in addition to those  undertaken in the Trust Agreement and, with
respect to each  source of funds  being used by the  Transferee  to acquire  the
Certificates  (each  being  referred to as a  "Source"),  the  Transferee  is an
insurance  company and (i) the Source is assets of its "general  account,"  (ii)
the conditions set forth in PTCE 95-60 issued by the DOL have been satisfied and
the purchase and holding of  Certificates  by or on behalf of the Transferee are
exempt under PTCE 95-60, (iii) less than 25% of the Transferee's general account
constitute  "plan assets" of "benefit plan investors"  within the meaning of DOL
Regulations  Section  2510.3-101(f)(2),  and (iv) the  amount  of  reserves  and
liabilities for such general account  contracts held by or on behalf of any Plan
do not exceed 10% of the total reserves and  liabilities of such general account
plus  surplus as of the date hereof  (for  purposes  of this  clause,  all Plans
maintained by the same employer (or affiliate thereof) or employee  organization
are deemed to be a single Plan) in  connection  with its purchase and holding of
such Certificates.

        (3)  The  Transferee  is  familiar  with  the   prohibited   transaction
restrictions and fiduciary  responsibility  requirements of Sections 406 and 407
of ERISA and Section 4975 of the Code and  understands  that each of the parties
to which this  certification is made is relying and will continue to rely on the
statements made herein.

                                            Very truly yours,

                                            By:  _____________________________
                                                  Name:
                                                  Title

                                        G-2

<PAGE>

                                    EXHIBIT H

                          FORM OF REPRESENTATION LETTER

                                                   _____________, 200__

Residential Funding Mortgage
 Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota  55437

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890

Residential Funding Corporation
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota  55437

[CERTIFICATE REGISTRAR]

               Re:  Residential Funding Mortgage Securities II, Inc. Home Equity
                    Loan-Backed Certificates, Series 2001-HS3

Dear Sirs:

        __________________________________ (the "Transferee") intends to acquire
from  _____________________  (the  "Transferor") a ___%  Certificate  Percentage
Interest of Residential  Mortgage  Securities  II, Inc. Home Equity  Loan-Backed
Certificates, Series 2001-HS3 (the "Certificates"), issued pursuant to a Amended
and Restated Trust  Agreement (the "Trust  Agreement")  dated September 27, 2001
among  Residential  Funding  Mortgage  Securities  II, Inc.,  as depositor  (the
"Depositor")  and Wilmington  Trust Company,  as trustee (the "Owner  Trustee").
Capitalized  terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Trust Agreement.

        The  Transferee  hereby  certifies,  represents  and  warrants  to,  and
covenants with, the Depositor,  the Owner Trustee, the Certificate Registrar and
the Master Servicer that:

        (1) the Transferee is acquiring the  Certificate  for its own behalf and
is not acting as agent or custodian for any other person or entity in connection
with such acquisition; and

                                        I-1
<PAGE>

        (2) the Transferee is not a partnership,  grantor trust or S corporation
for federal income tax purposes, or, if the Transferee is a partnership, grantor
trust or S corporation for federal income tax purposes, the Certificates are not
more than 50% of the assets of the partnership, grantor trust or S corporation.

                                            Very truly yours,

                                            By:_________________________________
                                                Name:
                                                Title:

                                        I-2
<PAGE>

                                    EXHIBIT I

                         FORM OF CLASS R-I CERTIFICATES

THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES PERSON
OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).

SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE IS A "RESIDUAL
INTEREST"  IN A "REAL  ESTATE  MORTGAGE  INVESTMENT  CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").

NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES EITHER A CERTIFICATION  PURSUANT TO SECTION 3.05 OF THE AGREEMENT OR AN
OPINION OF COUNSEL  SATISFACTORY  TO THE  SERVICER,  THE COMPANY AND THE TRUSTEE
THAT THE  PURCHASE  OF THIS  CERTIFICATE  WILL NOT  CONSTITUTE  OR  RESULT  IN A
NON-EXEMPT  PROHIBITED  TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED  ("ERISA"),  OR SECTION 4975 OF THE CODE
AND WILL NOT SUBJECT THE SERVICER,  THE COMPANY OR THE TRUSTEE TO ANY OBLIGATION
OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.

ANY RESALE,  TRANSFER OR OTHER  DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE SERVICER AND THE
TRUSTEE  THAT (1) SUCH  TRANSFEREE  IS NOT (A) THE UNITED  STATES,  ANY STATE OR
POLITICAL  SUBDIVISION  THEREOF,  ANY  POSSESSION OF THE UNITED  STATES,  OR ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN INSTRUMENTALITY
WHICH IS A CORPORATION  IF ALL OF ITS  ACTIVITIES  ARE SUBJECT TO TAX AND EXCEPT
FOR THE FHLMC,  A MAJORITY  OF ITS BOARD OF  DIRECTORS  IS NOT  SELECTED BY SUCH
GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY  OF EITHER OF THE FOREGOING,  (C) ANY ORGANIZATION
(OTHER THAN CERTAIN FARMERS' COOPERATIVES  DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS  EXEMPT  FROM THE TAX  IMPOSED  BY  CHAPTER 1 OF THE CODE  UNLESS  SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE (INCLUDING
THE TAX  IMPOSED  BY  SECTION  511 OF THE  CODE ON  UNRELATED  BUSINESS  TAXABLE
INCOME),  (D) RURAL  ELECTRIC AND  TELEPHONE  COOPERATIVES  DESCRIBED IN SECTION
1381(a)(2)(C)  OF THE CODE,  (E) AN ELECTING  LARGE  PARTNERSHIP  UNDER  SECTION
775(a) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B),
(C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED  ORGANIZATION"),  OR
(F) AN AGENT OF A DISQUALIFIED ORGANIZATION,  (2) NO PURPOSE OF SUCH TRANSFER IS

                                        I-1
<PAGE>

TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE  SATISFIES
CERTAIN  ADDITIONAL  CONDITIONS  RELATING  TO  THE  FINANCIAL  CONDITION  OF THE
PROPOSED  TRANSFEREE.   NOTWITHSTANDING  THE  REGISTRATION  IN  THE  CERTIFICATE
REGISTER OR ANY TRANSFER,  SALE OR OTHER  DISPOSITION  OF THIS  CERTIFICATE TO A
DISQUALIFIED  ORGANIZATION  OR AN AGENT  OF A  DISQUALIFIED  ORGANIZATION,  SUCH
REGISTRATION  SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT  WHATSOEVER  AND
SUCH  PERSON  SHALL  NOT BE  DEEMED TO BE A  CERTIFICATEHOLDER  FOR ANY  PURPOSE
HEREUNDER,  INCLUDING,  BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE.  EACH HOLDER OF THIS  CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.

                                        I-2

<PAGE>

Certificate No. 1

Cut-off Date:
September 1, 2001

Date of Trust Agreement:
September 27, 2001

First Payment Date:                         Certificate Percentage Interest of
October 25, 2001                                   this Certificate:  100%

Assumed Final Payment Date:
[June 2031]

                       HOME EQUITY LOAN-BACKED CERTIFICATE
                                 SERIES 2001-HS3

               evidencing  a  fractional  undivided  interest in the Owner Trust
Estate,  the  property of which  consists  primarily  of the Home Equity  Loans,
created by RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.  (hereinafter called
the  "Depositor,"  which term includes any successor  entity under the Agreement
referred to below).

               This  Certificate  is payable solely from the assets of the Owner
Trust  Estate,  and does not  represent  an  obligation  of or  interest  in the
Depositor,  the Seller, the Master Servicer,  the Indenture  Trustee,  the Owner
Trustee  or  GMAC  Mortgage  Group,  Inc.  or  any  of  their  affiliates.  This
Certificate  is  not  guaranteed  or  insured  by  any  governmental  agency  or
instrumentality  or by the  Depositor,  the  Seller,  the Master  Servicer,  the
Indenture  Trustee,  the Owner  Trustee or GMAC Mortgage  Group,  Inc. or any of
their affiliates.  None of the Depositor,  the Seller, the Master Servicer,  the
Indenture Trustee, the Owner Trustee,  GMAC Mortgage Group, Inc. or any of their
affiliates  will have any  obligation  with respect to any  certificate or other
obligation secured by or payable from payments on the Certificates.

               This  certifies  that Auer & Co. is the  registered  owner of the
Certificate  Percentage  Interest evidenced by this Certificate (as set forth on
the face  hereof)  in certain  distributions  with  respect  to the Owner  Trust
Estate,  consisting  primarily of the Home Equity Loans,  created by Residential
Funding  Mortgage  Securities II, Inc. The Trust (as defined herein) was created
pursuant  to a  Trust  Agreement  dated  as  specified  above  (as  amended  and
supplemented  from time to time,  the  "Agreement")  between the  Depositor  and
Wilmington  Trust  Company,  as owner trustee (the "Owner  Trustee,"  which term
includes any successor entity under the Agreement),  a summary of certain of the
pertinent provisions of which is set forth hereafter.  To the extent not defined
herein,  the  capitalized  terms used herein have the  meanings  assigned in the
Agreement.  This  Certificate  is issued  under  and is  subject  to the  terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of the  acceptance  hereof assents and by which such
Holder is bound.

                                        I-3
<PAGE>

               Pursuant to the terms of the Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately  following (the "Payment Date"),  commencing on the
first Payment Date specified above, to the Person in whose name this Certificate
is  registered  at the close of business on the last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
month immediately  preceding the month of such distribution (the "Record Date"),
in an amount equal to the pro rata portion evidenced by this Certificate  (based
on the  Certificate  Percentage  Interest  stated  on the  face  hereon)  of the
Certificate  Distribution  Amount, if any, required to be distributed to Holders
of Certificates on such Payment Date.  Distributions on this Certificate will be
made as  provided  in the  Agreement  by the  Certificate  Paying  Agent by wire
transfer or check mailed to the  Certificateholder  of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon.

               Except as otherwise provided in the Agreement and notwithstanding
the above,  the final  distribution on this  Certificate  will be made after due
notice by the Certificate  Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained by the  Certificate  Registrar for that purpose in the City and State
of New York.  [The initial  Security  Balance of this  Certificate  is set forth
above.  The  Security  Balance  hereof  will be  reduced  to the  extent  of the
distributions allocable to principal.]

               Each Certificateholder of this Certificate will be deemed to have
agreed to be bound by the  restrictions set forth in the Agreement to the effect
that (i) each  person  holding  or  acquiring  any  Ownership  Interest  in this
Certificate must be a United States Person and a Permitted Transferee,  (ii) the
transfer of any Ownership  Interest in this Certificate will be conditioned upon
the delivery to the Indenture  Trustee of, among other  things,  an affidavit to
the effect that it is a United States Person and Permitted Transferee, (iii) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported  transferee,  and (iv) if any person other than a United
States Person and a Permitted Transferee acquires any Ownership Interest in this
Certificate in violation of such restrictions,  then the Depositor will have the
right,  in its sole  discretion and without notice to the  Certificateholder  of
this  Certificate,  to sell this  Certificate  to a  purchaser  selected  by the
Depositor,  which  purchaser  may be the  Depositor,  or  any  affiliate  of the
Depositor, on such terms and conditions as the Depositor may choose.

               No transfer of this Class R-I Certificate will be made unless the
Certificate  Registrar (unless otherwise directed by the Depositor) has received
(i) a representation letter, in the form as described by the Agreement,  stating
that the  transferee  is not an  employee  benefit or other plan  subject to the
prohibited   transaction   restrictions   [or   the   fiduciary   responsibility
requirements of ERISA] or Section 4975 of the Code ("Plan"),  any person acting,
directly or indirectly, on behalf of any such plan or any person using the "plan
assets," within the meaning of the Department of Labor  regulations at 29 C.F.R.
ss.2510.3-101,  to effect such acquisition (collectively,  a "Plan Investor") or
(ii) if such transferee is a Plan Investor,  an opinion of counsel acceptable to
and in form and substance satisfactory to the Depositor,  the Owner Trustee, the
Master Servicer and the Certificate Registrar, or a certification in the form of
Exhibit G to the  Agreement,  to the effect  that the  purchase  or holding of a
Class R Certificate is permissible  under applicable law, will not constitute or
result in a [non-exempt]  prohibited  transaction  under Section 406 of ERISA or
Section 4975 of the Code (or comparable provisions of any subsequent enactments)
[and will not subject the Depositor,  the Owner Trustee,  the Master Servicer or
the  Certificate  Registrar to any  obligation or liability in addition to those
undertaken in the Agreement.]

                                        I-4
<PAGE>

               This   Certificate  is  one  of  a  duly   authorized   issue  of
Certificates  designated as Home Equity  Loan-Backed  Certificates of the Series
specified hereon (herein collectively called the "Certificates"). All terms used
in this  Certificate  which are defined in the Agreement shall have the meanings
assigned to them in the Agreement.

               The  Certificateholder,  by its  acceptance of this  Certificate,
agrees  that it will  look  solely to the funds on  deposit  in the  Certificate
Distribution  Account that have been released from the Lien of the Indenture for
payment hereunder and that neither the Owner Trustee in its individual  capacity
nor the Depositor is personally liable to the  Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly provided
in the Agreement, subject to any liability under the Agreement.

               The Holder of this  Certificate  acknowledges and agrees that its
rights to receive  distributions in respect of this Certificate are subordinated
to the rights of the  Noteholders  as  described in the  Indenture,  dated as of
September  27, 2001,  between Home Equity Loan Trust  2000-HS3 (the "Trust") and
The Chase Manhattan Bank, as Indenture Trustee (the "Indenture").

               Each  Certificateholder,  by  its  acceptance  of a  Certificate,
covenants and agrees that such  Certificateholder will not at any time institute
against  the  Depositor  or the Trust,  or join in any  institution  against the
Depositor  or  the  Trust  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 Certificates, the Notes, the Agreement or any of the
Basic Documents.

               The Agreement  permits the amendment  thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit Enhancer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Agreement and will not cause the Trust to be
subject to an entity  level tax. If the purpose of the  amendment  is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not  covered,  it shall not be  necessary  to obtain  the  consent of any
Holder,  but the Owner Trustee shall be furnished  with a letter from the Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Credit  Enhancement  Instrument and the consent of the Credit  Enhancer shall be
obtained.  If the purpose of the  amendment is to prevent the  imposition of any
federal or state taxes at any time that any  Security is  outstanding,  it shall
not be  necessary  to obtain the  consent of any Holder,  but the Owner  Trustee
shall be furnished  with an Opinion of Counsel that such  amendment is necessary
or helpful to prevent the imposition of such taxes and is not materially adverse
to any Holder and the consent of the Credit  Enhancer shall be obtained.  If the
purpose of the  amendment is to add or eliminate or change any  provision of the
Agreement, other than as specified in the preceding two sentences, the amendment
shall  require  either (a) a letter from the Rating  Agencies that the amendment
will not result in the  downgrading or withdrawal of the rating then assigned to
any Security, if determined without regard to the Credit Enhancement  Instrument
or (b) the  consent  of  Holders of a  majority  of the  Certificate  Percentage
Interests of the Certificates and the Indenture Trustee; provided, however, that
no such  amendment  shall (i)  reduce in any  manner the amount of, or delay the
time  of,  payments  received  that  are  required  to  be  distributed  on  any
Certificate without the consent of the related  Certificateholder and the Credit
Enhancer, or (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such  amendment  without the consent of the
Holders of all such Certificates then outstanding.

                                        I-5
<PAGE>

               As provided in the Agreement  and subject to certain  limitations
therein set forth,  the  transfer of this  Certificate  is  registerable  in the
Certificate  Register upon surrender of this  Certificate  for  registration  of
transfer at the offices or agencies of the Certificate  Registrar  maintained in
the City and State of New York,  accompanied by a written instrument of transfer
in form  satisfactory to the  Certificate  Registrar duly executed by the Holder
hereof or such Holder's  attorney duly authorized in writing,  and thereupon one
or more  new  Certificates  of  authorized  denominations  evidencing  the  same
aggregate  Certificate  Percentage  Interest  will be issued  to the  designated
transferee.  The initial Certificate  Registrar appointed under the Agreement is
the Indenture Trustee.

               Except  as  provided  in  the  Agreement,  the  Certificates  are
issuable  only in minimum  denominations  of a 10.0000%  Certificate  Percentage
Interest and in integral multiples of a 0.0001% Certificate  Percentage Interest
in  excess  thereof.  As  provided  in the  Agreement  and  subject  to  certain
limitations  therein  set  forth,  the  Certificates  are  exchangeable  for new
Certificates   of   authorized   denominations,   as  requested  by  the  Holder
surrendering the same. This Certificate is issued in the Certificate  Percentage
Interest above; however, the Certificate Percentage Interest of this Certificate
may change in accordance with Section 3.12 of the Agreement.  The Holder of this
Certificate hereby consents to any change in its Certificate Percentage Interest
in accordance with such Section.

               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 Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee,  the Certificate  Paying Agent, or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes,  and none of the Owner Trustee,
the Certificate Paying Agent, the Certificate  Registrar or any such agent shall
be affected by any notice to the contrary.

               This Certificate shall be governed by and construed in accordance
with the laws of the State of Delaware.

               The  obligations  created  by the  Agreement  in  respect  of the
Certificates  and the Trust created thereby shall terminate upon the earliest of
(i) the final  distribution  of all moneys or other  property or proceeds of the
Owner  Trust  Estate  in  accordance  with the  terms of the  Indenture  and the
Agreement, (ii) the Payment Date in September 2030, or (iii) the purchase by the
Master  Servicer of all Revolving  Credit Loans  pursuant to Section 8.08 of the
Servicing Agreement.

                                        I-6
<PAGE>

               Unless the certificate of  authentication  hereon shall have been
executed by an authorized  officer of the Owner  Trustee,  or an  authenticating
agent by manual signature, this Certificate shall not be entitled to any benefit
under the Agreement or be valid for any purpose.

                                        I-7
<PAGE>

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

                               HOME EQUITY LOAN TRUST 2000-HS3

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

Dated:  September 27, 2001     By:
                                   ---------------------------------------
                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

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

                                            By: ______________________________
                                                 Authorized Signatory

                                     or THE CHASE MANHATTAN BANK,
                                     not in its individual capacity but solely,
                                     as Authenticating Agent of the Trust

Dated: September 27, 2001

                                            By: ______________________________
                                                Authorized Signatory

                                        I-8
<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   Certificate,   and  all  rights  thereunder,   hereby  irrevocably
constituting and appointing

______________________________________________________________________________

to transfer said  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 as it
appears upon the face of the within  Certificate  in every  particular,  without
alteration,   enlargement  or  any  change  whatever.  Such  signature  must  be
guaranteed by a member firm of the New York Stock Exchange or a commercial  bank
or trust company.

                                        I-9
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

     The  assignee  should  include the  following  for the  information  of the
Certificate Paying Agent:

     Distribution shall be made by wire transfer in immediately  available funds
to  ______________________  for the  account  of  ____________________,  account
number ______________, or, if mailed by check, to ______________.

     Applicable statements should be mailed to __________________.

                                   _________________________________
                                   Signature of assignee or agent
                                   (for authorization of wire transfer only)

                                        I-10
<PAGE>

                         FORM OF CLASS R-II CERTIFICATES

THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES PERSON
OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).

SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE IS A "RESIDUAL
INTEREST"  IN A "REAL  ESTATE  MORTGAGE  INVESTMENT  CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").

NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES EITHER A CERTIFICATION  PURSUANT TO SECTION 3.05 OF THE AGREEMENT OR AN
OPINION OF COUNSEL  SATISFACTORY  TO THE  SERVICER,  THE COMPANY AND THE TRUSTEE
THAT THE  PURCHASE  OF THIS  CERTIFICATE  WILL NOT  CONSTITUTE  OR  RESULT  IN A
NON-EXEMPT  PROHIBITED  TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED  ("ERISA"),  OR SECTION 4975 OF THE CODE
AND WILL NOT SUBJECT THE SERVICER,  THE COMPANY OR THE TRUSTEE TO ANY OBLIGATION
OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.

ANY RESALE,  TRANSFER OR OTHER  DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE SERVICER AND THE
TRUSTEE  THAT (1) SUCH  TRANSFEREE  IS NOT (A) THE UNITED  STATES,  ANY STATE OR
POLITICAL  SUBDIVISION  THEREOF,  ANY  POSSESSION OF THE UNITED  STATES,  OR ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN INSTRUMENTALITY
WHICH IS A CORPORATION  IF ALL OF ITS  ACTIVITIES  ARE SUBJECT TO TAX AND EXCEPT
FOR THE FHLMC,  A MAJORITY  OF ITS BOARD OF  DIRECTORS  IS NOT  SELECTED BY SUCH
GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY  OF EITHER OF THE FOREGOING,  (C) ANY ORGANIZATION
(OTHER THAN CERTAIN FARMERS' COOPERATIVES  DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS  EXEMPT  FROM THE TAX  IMPOSED  BY  CHAPTER 1 OF THE CODE  UNLESS  SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE (INCLUDING
THE TAX  IMPOSED  BY  SECTION  511 OF THE  CODE ON  UNRELATED  BUSINESS  TAXABLE
INCOME),  (D) RURAL  ELECTRIC AND  TELEPHONE  COOPERATIVES  DESCRIBED IN SECTION
1381(a)(2)(C)  OF THE CODE,  (E) AN ELECTING  LARGE  PARTNERSHIP  UNDER  SECTION
775(a) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B),
(C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED  ORGANIZATION"),  OR
(F) AN AGENT OF A DISQUALIFIED ORGANIZATION,  (2) NO PURPOSE OF SUCH TRANSFER IS
TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE  SATISFIES
CERTAIN  ADDITIONAL  CONDITIONS  RELATING  TO  THE  FINANCIAL  CONDITION  OF THE
PROPOSED  TRANSFEREE.   NOTWITHSTANDING  THE  REGISTRATION  IN  THE  CERTIFICATE
REGISTER OR ANY TRANSFER,  SALE OR OTHER  DISPOSITION  OF THIS  CERTIFICATE TO A

                                        J-1-11
<PAGE>

DISQUALIFIED  ORGANIZATION  OR AN AGENT  OF A  DISQUALIFIED  ORGANIZATION,  SUCH
REGISTRATION  SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT  WHATSOEVER  AND
SUCH  PERSON  SHALL  NOT BE  DEEMED TO BE A  CERTIFICATEHOLDER  FOR ANY  PURPOSE
HEREUNDER,  INCLUDING,  BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE.  EACH HOLDER OF THIS  CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.

                                        J-1-12
<PAGE>

Certificate No. 1

Cut-off Date:
September 1, 2001

Date of Trust Agreement:
September 27, 2001

First Payment Date:                         Certificate Percentage Interest of
October 25, 2001                                   this Certificate:  100%

Assumed Final Payment Date:
[June 2031]

                       HOME EQUITY LOAN-BACKED CERTIFICATE
                                 SERIES 2001-HS3

               evidencing  a  fractional  undivided  interest in the Owner Trust
Estate,  the  property of which  consists  primarily  of the Home Equity  Loans,
created by RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.  (hereinafter called
the  "Depositor,"  which term includes any successor  entity under the Agreement
referred to below).

               This  Certificate  is payable solely from the assets of the Owner
Trust  Estate,  and does not  represent  an  obligation  of or  interest  in the
Depositor,  the Seller, the Master Servicer,  the Indenture  Trustee,  the Owner
Trustee  or  GMAC  Mortgage  Group,  Inc.  or  any  of  their  affiliates.  This
Certificate  is  not  guaranteed  or  insured  by  any  governmental  agency  or
instrumentality  or by the  Depositor,  the  Seller,  the Master  Servicer,  the
Indenture  Trustee,  the Owner  Trustee or GMAC Mortgage  Group,  Inc. or any of
their affiliates.  None of the Depositor,  the Seller, the Master Servicer,  the
Indenture Trustee, the Owner Trustee,  GMAC Mortgage Group, Inc. or any of their
affiliates  will have any  obligation  with respect to any  certificate or other
obligation secured by or payable from payments on the Certificates.

               This  certifies  that Auer & Co. is the  registered  owner of the
Certificate  Percentage  Interest evidenced by this Certificate (as set forth on
the face  hereof)  in certain  distributions  with  respect  to the Owner  Trust
Estate,  consisting  primarily of the Home Equity Loans,  created by Residential
Funding  Mortgage  Securities II, Inc. The Trust (as defined herein) was created
pursuant  to a  Trust  Agreement  dated  as  specified  above  (as  amended  and
supplemented  from time to time,  the  "Agreement")  between the  Depositor  and
Wilmington  Trust  Company,  as owner trustee (the "Owner  Trustee,"  which term
includes any successor entity under the Agreement),  a summary of certain of the
pertinent provisions of which is set forth hereafter.  To the extent not defined
herein,  the  capitalized  terms used herein have the  meanings  assigned in the
Agreement.  This  Certificate  is issued  under  and is  subject  to the  terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of the  acceptance  hereof assents and by which such
Holder is bound.

               Pursuant to the terms of the Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately  following (the "Payment Date"),  commencing on the
first Payment Date specified above, to the Person in whose name this Certificate

                                        J-1-13

<PAGE>

is  registered  at the close of business on the last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
month immediately  preceding the month of such distribution (the "Record Date"),
in an amount equal to the pro rata portion evidenced by this Certificate  (based
on the  Certificate  Percentage  Interest  stated  on the  face  hereon)  of the
Certificate  Distribution  Amount, if any, required to be distributed to Holders
of Certificates on such Payment Date.  Distributions on this Certificate will be
made as  provided  in the  Agreement  by the  Certificate  Paying  Agent by wire
transfer or check mailed to the  Certificateholder  of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon.

               Except as otherwise provided in the Agreement and notwithstanding
the above,  the final  distribution on this  Certificate  will be made after due
notice by the Certificate  Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained by the  Certificate  Registrar for that purpose in the City and State
of New York.  [The initial  Security  Balance of this  Certificate  is set forth
above.  The  Security  Balance  hereof  will be  reduced  to the  extent  of the
distributions allocable to principal.]

               Each Certificateholder of this Certificate will be deemed to have
agreed to be bound by the  restrictions set forth in the Agreement to the effect
that (i) each  person  holding  or  acquiring  any  Ownership  Interest  in this
Certificate must be a United States Person and a Permitted Transferee,  (ii) the
transfer of any Ownership  Interest in this Certificate will be conditioned upon
the delivery to the Indenture  Trustee of, among other  things,  an affidavit to
the effect that it is a United States Person and Permitted Transferee, (iii) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported  transferee,  and (iv) if any person other than a United
States Person and a Permitted Transferee acquires any Ownership Interest in this
Certificate in violation of such restrictions,  then the Depositor will have the
right,  in its sole  discretion and without notice to the  Certificateholder  of
this  Certificate,  to sell this  Certificate  to a  purchaser  selected  by the
Depositor,  which  purchaser  may be the  Depositor,  or  any  affiliate  of the
Depositor, on such terms and conditions as the Depositor may choose.

               No  transfer of this Class R-II  Certificate  will be made unless
the  Certificate  Registrar  (unless  otherwise  directed by the  Depositor) has
received (i) a representation letter, in the form as described by the Agreement,
stating that the transferee is not an employee  benefit or other plan subject to
the  prohibited  transaction   restrictions  [or  the  fiduciary  responsibility
requirements of ERISA] or Section 4975 of the Code ("Plan"),  any person acting,
directly or indirectly, on behalf of any such plan or any person using the "plan
assets," within the meaning of the Department of Labor  regulations at 29 C.F.R.
ss.2510.3-101,  to effect such acquisition (collectively,  a "Plan Investor") or
(ii) if such transferee is a Plan Investor,  an opinion of counsel acceptable to
and in form and substance satisfactory to the Depositor,  the Owner Trustee, the
Master Servicer and the Certificate Registrar, or a certification in the form of
Exhibit G to the  Agreement,  to the effect  that the  purchase  or holding of a
Class R Certificate is permissible  under applicable law, will not constitute or
result in a [non-exempt]  prohibited  transaction  under Section 406 of ERISA or
Section 4975 of the Code (or comparable provisions of any subsequent enactments)
[and will not subject the Depositor,  the Owner Trustee,  the Master Servicer or
the  Certificate  Registrar to any  obligation or liability in addition to those
undertaken in the Agreement.]

                                        J-1-14

<PAGE>

               This   Certificate  is  one  of  a  duly   authorized   issue  of
Certificates  designated as Home Equity  Loan-Backed  Certificates of the Series
specified hereon (herein collectively called the "Certificates"). All terms used
in this  Certificate  which are defined in the Agreement shall have the meanings
assigned to them in the Agreement.

               The  Certificateholder,  by its  acceptance of this  Certificate,
agrees  that it will  look  solely to the funds on  deposit  in the  Certificate
Distribution  Account that have been released from the Lien of the Indenture for
payment hereunder and that neither the Owner Trustee in its individual  capacity
nor the Depositor is personally liable to the  Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly provided
in the Agreement, subject to any liability under the Agreement.

               The Holder of this  Certificate  acknowledges and agrees that its
rights to receive  distributions in respect of this Certificate are subordinated
to the rights of the  Noteholders  as  described in the  Indenture,  dated as of
September  27, 2001,  between Home Equity Loan Trust  2000-HS3 (the "Trust") and
The Chase Manhattan Bank, as Indenture Trustee (the "Indenture").

               Each  Certificateholder,  by  its  acceptance  of a  Certificate,
covenants and agrees that such  Certificateholder will not at any time institute
against  the  Depositor  or the Trust,  or join in any  institution  against the
Depositor  or  the  Trust  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 Certificates, the Notes, the Agreement or any of the
Basic Documents.

               The Agreement  permits the amendment  thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit Enhancer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Agreement and will not cause the Trust to be
subject to an entity  level tax. If the purpose of the  amendment  is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not  covered,  it shall not be  necessary  to obtain  the  consent of any
Holder,  but the Owner Trustee shall be furnished  with a letter from the Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Credit  Enhancement  Instrument and the consent of the Credit  Enhancer shall be
obtained.  If the purpose of the  amendment is to prevent the  imposition of any
federal or state taxes at any time that any  Security is  outstanding,  it shall
not be  necessary  to obtain the  consent of any Holder,  but the Owner  Trustee
shall be furnished  with an Opinion of Counsel that such  amendment is necessary
or helpful to prevent the imposition of such taxes and is not materially adverse
to any Holder and the consent of the Credit  Enhancer shall be obtained.  If the
purpose of the  amendment is to add or eliminate or change any  provision of the
Agreement, other than as specified in the preceding two sentences, the amendment
shall  require  either (a) a letter from the Rating  Agencies that the amendment
will not result in the  downgrading or withdrawal of the rating then assigned to
any Security, if determined without regard to the Credit Enhancement  Instrument
or (b) the  consent  of  Holders of a  majority  of the  Certificate  Percentage
Interests of the Certificates and the Indenture Trustee; provided, however, that
no such  amendment  shall (i)  reduce in any  manner the amount of, or delay the
time  of,  payments  received  that  are  required  to  be  distributed  on  any
Certificate without the consent of the related  Certificateholder and the Credit
Enhancer, or (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such  amendment  without the consent of the
Holders of all such Certificates then outstanding.

                                        J-1-15
<PAGE>

               As provided in the Agreement  and subject to certain  limitations
therein set forth,  the  transfer of this  Certificate  is  registerable  in the
Certificate  Register upon surrender of this  Certificate  for  registration  of
transfer at the offices or agencies of the Certificate  Registrar  maintained in
the City and State of New York,  accompanied by a written instrument of transfer
in form  satisfactory to the  Certificate  Registrar duly executed by the Holder
hereof or such Holder's  attorney duly authorized in writing,  and thereupon one
or more  new  Certificates  of  authorized  denominations  evidencing  the  same
aggregate  Certificate  Percentage  Interest  will be issued  to the  designated
transferee.  The initial Certificate  Registrar appointed under the Agreement is
the Indenture Trustee.

               Except  as  provided  in  the  Agreement,  the  Certificates  are
issuable  only in minimum  denominations  of a 10.0000%  Certificate  Percentage
Interest and in integral multiples of a 0.0001% Certificate  Percentage Interest
in  excess  thereof.  As  provided  in the  Agreement  and  subject  to  certain
limitations  therein  set  forth,  the  Certificates  are  exchangeable  for new
Certificates   of   authorized   denominations,   as  requested  by  the  Holder
surrendering the same. This Certificate is issued in the Certificate  Percentage
Interest above; however, the Certificate Percentage Interest of this Certificate
may change in accordance with Section 3.12 of the Agreement.  The Holder of this
Certificate hereby consents to any change in its Certificate Percentage Interest
in accordance with such Section.

               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 Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee,  the Certificate  Paying Agent, or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes,  and none of the Owner Trustee,
the Certificate Paying Agent, the Certificate  Registrar or any such agent shall
be affected by any notice to the contrary.

               This Certificate shall be governed by and construed in accordance
with the laws of the State of Delaware.

               The  obligations  created  by the  Agreement  in  respect  of the
Certificates  and the Trust created thereby shall terminate upon the earliest of
(i) the final  distribution  of all moneys or other  property or proceeds of the
Owner  Trust  Estate  in  accordance  with the  terms of the  Indenture  and the
Agreement, (ii) the Payment Date in September 2030, or (iii) the purchase by the
Master  Servicer of all Revolving  Credit Loans  pursuant to Section 8.08 of the
Servicing Agreement.

               Unless the certificate of  authentication  hereon shall have been
executed by an authorized  officer of the Owner  Trustee,  or an  authenticating
agent by manual signature, this Certificate shall not be entitled to any benefit
under the Agreement or be valid for any purpose.

                                        J-1-16

<PAGE>

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

                               HOME EQUITY LOAN TRUST 2000-HS3

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

Dated:  September 27, 2001     By:
                                   ---------------------------------------
                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

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

                                By: ______________________________
                                     Authorized Signatory

                                or THE CHASE MANHATTAN BANK,
                                not in its individual capacity but solely,
                                as Authenticating Agent of the Trust

Dated: September 27, 2001

                                            By: ______________________________
                                                Authorized Signatory

                                        J-1-17
<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   Certificate,   and  all  rights  thereunder,   hereby  irrevocably
constituting and appointing

______________________________________________________________________________to
transfer said 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 as it
appears upon the face of the within  Certificate  in every  particular,  without
alteration,   enlargement  or  any  change  whatever.  Such  signature  must  be
guaranteed by a member firm of the New York Stock Exchange or a commercial  bank
or trust company.

                                        J-1-18

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

     The  assignee  should  include the  following  for the  information  of the
Certificate Paying Agent:

     Distribution shall be made by wire transfer in immediately  available funds
to  ______________________  for the  account  of  ____________________,  account
number ______________, or, if mailed by check, to ______________.

     Applicable statements should be mailed to __________________.

                                   _________________________________
                                   Signature of assignee or agent
                                   (for authorization of wire transfer only)

                                        J-1-19
<PAGE>

                                   EXHIBIT J-1

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF                         )

                                 )    ss.:

COUNTY OF                        )
               [NAME OF OFFICER], being first duly sworn, deposes and says:

1. That he is [Title of Officer] of [Name of Owner] (record or beneficial  owner
of the Home Equity Loan-Backed  Certificates,  Series 2001-HS3, Class R-[ ] (the
"Owner")),  a [savings  institution]  [corporation]  duly organized and existing
under the laws of [the  State of ] [the  United  States],  on behalf of which he
makes this affidavit and agreement.

2. That the Owner (i) is not and will not be a "disqualified organization" or an
electing  large  partnership  as of [date of  transfer]  within  the  meaning of
Sections 860E(e)(5) and 775, respectively, of the Internal Revenue Code of 1986,
as amended (the "Code") or an electing large partnership under Section 775(a) of
the Code,  (ii) will endeavor to remain other than a  disqualified  organization
for  so  long  as  it  retains  its  ownership  interest  in  the  Class  R-[  ]
Certificates,  and (iii) is acquiring the Class R-[ ]  Certificates  for its own
account  or for the  account of another  Owner  from  which it has  received  an
affidavit and  agreement in  substantially  the same form as this  affidavit and
agreement.  (For this purpose, a "disqualified  organization"  means an electing
large partnership under Section 775 of the Code, the United States, any state or
political  subdivision  thereof,  any  agency or  instrumentality  of any of the
foregoing  (other than an  instrumentality  all of the  activities  of which are
subject to tax and,  except for the Federal Home Loan  Mortgage  Corporation,  a
majority of whose board of directors  is not  selected by any such  governmental
entity) or any foreign government,  international  organization or any agency or
instrumentality of such foreign  government or organization,  any rural electric
or telephone  cooperative,  or any  organization  (other than  certain  farmers'
cooperatives)  that is  generally  exempt  from  federal  income tax unless such
organization is subject to the tax on unrelated business taxable income).

3. That the Owner is aware (i) of the tax that would be imposed on  transfers of
Class  R  Certificates   to   disqualified   organizations   or  electing  large
partnerships,  under  the  Code,  that  applies  to all  transfers  of  Class  R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
(or,  with  respect to transfers to electing  large  partnerships,  on each such
partnership),  or, if such transfer is through an agent (which person includes a
broker,  nominee or middleman)  for a disqualified  organization,  on the agent;
(iii) that the person  (other than with respect to  transfers to electing  large
partnerships)  otherwise  liable for the tax shall be relieved of liability  for
the tax if the  transferee  furnishes  to such  person  an  affidavit  that  the
transferee is not a disqualified organization and, at the time of transfer, such
person does not have actual knowledge that the affidavit is false; and (iv) that
the Class R-[ ] Certificates may be "noneconomic  residual interests" within the
meaning of Treasury  regulations  promulgated  pursuant to the Code and that the
transferor of a noneconomic  residual  interest will remain liable for any taxes
due with respect to the income on such residual interest,  unless no significant
purpose of the transfer was to impede the assessment or collection of tax.

                                        J-2-1

<PAGE>

4. That the Owner is aware of the tax imposed on a "pass-through entity" holding
Class R  Certificates  if either the  pass-through  entity is an electing  large
partnership  under  Section 775 of the if at any time during the taxable year of
the pass-through  entity a disqualified  organization is the record holder of an
interest in such entity.  (For this purpose,  a "pass through entity" includes a
regulated  investment  company,  a real estate  investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

5. The Owner is a citizen or  resident  of the  United  States,  a  corporation,
partnership  or other entity  created or organized in, or under the laws of, the
United  States or any  political  subdivision  thereof  (except in the case of a
partnership, to the extent provided in Treasury regulations),  or an estate that
is described in Section 7701(a)(30)(D) of the Code, or a trust that is described
in Section 7701(a)(30)(E) of the Code.

6. That the Owner is aware that the Certificate  Registrar will not register the
transfer of any Class R Certificates unless the transferee,  or the transferee's
agent,  delivers  to it an  affidavit  and  agreement,  among other  things,  in
substantially the same form as this affidavit and agreement. The Owner expressly
agrees  that it will not  consummate  any such  transfer if it knows or believes
that any of the  representations  contained in such  affidavit and agreement are
false.

7. That the Owner has  reviewed  the  restrictions  set forth on the face of the
Class R Certificates  and the provisions of Section 3.05 of the Trust  Agreement
under  which the Class R-[ ]  Certificates  were issued (in  particular,  clause
(i)(A) and (i)(B) of Section 3.05 which authorize the  Certificate  Registrar to
deliver payments to a person other than the Owner and negotiate a mandatory sale
by the  Servicer  Trustee  in the event the Owner  holds  such  Certificates  in
violation of Section  3.05).  The Owner  expressly  agrees to be bound by and to
comply with such restrictions and provisions.

8. That the Owner consents to any additional  restrictions or arrangements  that
shall be deemed  necessary  upon advice of counsel to  constitute  a  reasonable
arrangement  to ensure  that the Class  R-[ ]  Certificates  will only be owned,
directly or indirectly, by an Owner that is not a disqualified organization.

9.      The Owner's Taxpayer Identification Number is _____________________.

10. This  affidavit and agreement  relates only to the Class R-[ ]  Certificates
held by the Owner and not to any  other  holder of the Class R-[  ]Certificates.
The Owner  understands that the liabilities  described herein relate only to the
Class R-[ ] Certificates.

11. That no purpose of the Owner  relating  to the  transfer of any of the Class
R-[ ]  Certificates  by the  Owner is or will be to  impede  the  assessment  or
collection of any tax.

12.  That the Owner has no  present  knowledge  or  expectation  that it will be
unable  to  pay  any  United  States  taxes  owed  by it so  long  as any of the
Certificates remain outstanding.  In this regard, the Owner hereby represents to
and for the  benefit  of the  person  from  whom it  acquired  the  Class  R-[ ]
Certificate  that the Owner  intends to pay taxes  associated  with holding such
Class R-[ ]  Certificate  as they become due,  fully  understanding  that it may
incur tax  liabilities in excess of any cash flows  generated by the Class R-[ ]
Certificate.

                                        J-2-2

<PAGE>

13. That the Owner has no present  knowledge or expectation  that it will become
insolvent or subject to a bankruptcy  proceeding for so long as any of the Class
R-[ ] Certificates remain outstanding.

14. The  Purchaser is not an employee  benefit plan or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security Act
of 1974, as amended  ("ERISA"),  or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"),  or an investment  manager,  named fiduciary or a
trustee of any such plan, or any other Person acting, directly or indirectly, on
behalf of or purchasing any Certificate with "plan assets" of any such plan.

                                        J-2-3

<PAGE>

               IN WITNESS  WHEREOF,  the Owner has caused this  instrument to be
        executed  on its  behalf,  pursuant  to the  authority  of its  Board of
        Directors,  by its  [Title  of  Officer]  and its  corporate  seal to be
        hereunto attached,  attested by its [Assistant] Secretary, this ____ day
        of __________, ____________.

                                            [NAME OF OWNER]

                                            By:
                                               --------------------------------
                                                 [Name of Officer]
                                                 [Title of Officer]
[Corporate Seal]

ATTEST:

[Assistant] Secretary

     Personally  appeared before me the above-named [Name of Officer],  known or
proved to me to be the same person who executed the foregoing  instrument and to
be the [Title of Officer] of the Owner,  and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Owner.

     Subscribed and sworn before me this ____ day of __________, ____________.

                                   NOTARY PUBLIC

                              COUNTY OF
                                       ----------------------------------
                              STATE OF
                                      -----------------------------------
                               My Commission  expires the ____ day of ____,20 .

                                        J-2-4

<PAGE>

                                   EXHIBIT J-2

                         FORM OF TRANSFEROR CERTIFICATE

                                                                  ____, 20__

Residential Funding Mortgage
  Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, MN 55437

The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10001

Attention:  Corporate Trust Administration

               Re:    Home Equity Loan-Backed Certificates,
                      Series 2001-HS3, Class R

Ladies and Gentlemen:

        This letter is delivered to you in connection  with the transfer by (the
"Seller") to (the "Purchaser") of a [__]% Percentage Interest in the Home Equity
Loan-Backed  Certificates,  Series 2001-HS3,  Class R-[ ] (the  "Certificates"),
pursuant to Section 3.05 of the Trust Agreement (the "Trust  Agreement"),  dated
as of September 27, 2001 among  Residential  Asset Mortgage  Products,  Inc., as
seller (the  "Company"),  and Wilmington  Trust  Company,  as owner trustee (the
"Trustee").  All terms used  herein  and not  otherwise  defined  shall have the
meanings  set  forth  in the  Trust  Agreement.  The  Seller  hereby  certifies,
represents  and warrants  to, and  covenants  with,  the Company and the Trustee
that:

     1. No purpose of the Seller  relating to the transfer of the Certificate by
the Seller to the Purchaser is or will be to impede the assessment or collection
of any tax.

        2. The  Seller  understands  that the  Purchaser  has  delivered  to the
Trustee and the Master  Servicer a transfer  affidavit and agreement in the form
attached  to the Trust  Agreement  as Exhibit  J-1.  The Seller does not know or
believe that any representation contained therein is false.

        3. The Seller has at the time of the  transfer  conducted  a  reasonable
investigation  of the financial  condition of the Purchaser as  contemplated  by
Treasury  Regulations  Section  1.860E-1(c)(4)(i)  and,  as  a  result  of  that
investigation,  the Seller has  determined  that the Purchaser has  historically
paid its debts as they  become  due and has  found no  significant  evidence  to
indicate  that the  Purchaser  will not continue to pay its debts as they become
due in the future.  The Seller  understands  that the  transfer of a Class R-[ ]
Certificate  may not be respected for United States income tax purposes (and the
Seller may  continue  to be liable for United  States  income  taxes  associated
therewith) unless the Seller has conducted such an investigation.

     4. The Seller has no actual  knowledge that the proposed  Transferee is not
both a United States Person and a Permitted Transferee.

                                            Very truly yours,

                                    (Seller)

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

<PAGE>EXHIBIT 4.5

                         HOME EQUITY LOAN TRUST 2001-HS3

                                     Issuer

                                       AND

                            THE CHASE MANHATTAN BANK

                                Indenture Trustee

                                    INDENTURE

                         Dated as of September 27, 2001

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

                       HOME EQUITY LOAN-BACKED TERM NOTES

                 HOME EQUITY LOAN-BACKED VARIABLE FUNDING NOTES

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

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

                                                                                            PAGE

                                       -i-

<S>                                                                                        <C>
ARTICLE I         Definitions...............................................................2

        Section 1.01.    Definitions........................................................2

        Section 1.02.    Incorporation by Reference of Trust Indenture Act..................2

        Section 1.03.    Rules of Construction..............................................2

ARTICLE II        Original Issuance of Notes................................................3

        Section 2.01.    Form...............................................................3

        Section 2.02.    Execution, Authentication and Delivery.............................3

ARTICLE III       Covenants.................................................................4

        Section 3.01.    Collection of Payments with respect to the Home Equity Loans.......4

        Section 3.02.    Maintenance of Office or Agency....................................4

        Section 3.03.    Money for Payments to Be Held in Trust; Paying Agent...............4

        Section 3.04.    Existence..........................................................6

        Section 3.05.    Payment of Principal and Interest; Defaulted Interest..............6

        Section 3.06.    Protection of Trust Estate........................................11

        Section 3.07.    Opinions as to Trust Estate.......................................12

        Section 3.08.    Performance of Obligations; Servicing Agreement...................12

        Section 3.09.    Negative Covenants................................................13

        Section 3.10.    Annual Statement as to Compliance.................................13

        Section 3.11.    Recording of Assignments..........................................13

        Section 3.12.    Representations and Warranties Concerning the Home Equity
                         Loans.............................................................14

        Section 3.13.    Assignee of Record of the Home Equity Loans.......................14

        Section 3.14.    Master Servicer as Agent and Bailee of the Indenture Trustee......14

        Section 3.15.    Investment Company Act............................................14

        Section 3.16.    Issuer May Consolidate, etc.......................................14

        Section 3.17.    Successor or Transferee...........................................16

        Section 3.18.    No Other Business.................................................16

        Section 3.19.    No Borrowing......................................................16

        Section 3.20.    Guarantees, Loans, Advances and Other Liabilities.................16

        Section 3.21.    Capital Expenditures..............................................17

        Section 3.22.    Owner Trustee Not Liable for Certificates or Related
                         Documents.........................................................17

        Section 3.23.    Restricted Payments...............................................17

        Section 3.24.    Notice of Events of Default.......................................17

        Section 3.25.    Further Instruments and Act.......................................17

        Section 3.26.    Statements to Noteholders.........................................17

        Section 3.27.    Determination of Note Rates.......................................18

        Section 3.28.    Payments under the Credit Enhancement Instrument..................18

        Section 3.29.    Additional Representations of the Issuer..........................18

ARTICLE IV        The Notes; Satisfaction and Discharge of Indenture.......................20

        Section 4.01.    The Notes; Increase of Maximum Variable Funding Balance;
                         Variable Funding Notes............................................20

        Section 4.02.    Registration of and Limitations on Transfer and Exchange of
                         Notes; Appointment of Certificate Registrar.......................21

        Section 4.03.    Mutilated, Destroyed, Lost or Stolen Notes........................25

        Section 4.04.    Persons Deemed Owners.............................................26

        Section 4.05.    Cancellation......................................................26

        Section 4.06.    Book-Entry Notes..................................................26

        Section 4.07.    Notices to Depository.............................................27

        Section 4.08.    Definitive Notes..................................................27

        Section 4.09.    Tax Treatment.....................................................28

        Section 4.10.    Satisfaction and Discharge of Indenture...........................28

        Section 4.11.    Application of Trust Money........................................29

        Section 4.12.    Subrogation and Cooperation.......................................29

        Section 4.13.    Repayment of Monies Held by Paying Agent..........................30

        Section 4.14.    Temporary Notes...................................................30

        Section 4.15.    Maintence and Office or Agency....................................31

ARTICLE V         Default and Remedies.....................................................31

        Section 5.01.    Events of Default.................................................31

        Section 5.02.    Acceleration of Maturity; Rescission and Annulment................31

        Section 5.03.    Collection of Indebtedness and Suits for Enforcement by
                         Indenture Trustee.................................................32

        Section 5.04.    Remedies; Priorities..............................................34

        Section 5.05.    Optional Preservation of the Trust Estate.........................36

        Section 5.06.    Limitation of Suits...............................................36

        Section 5.07.    Unconditional Rights of Noteholders to Receive Principal and
                         Interest..........................................................37

        Section 5.08.    Restoration of Rights and Remedies................................37

        Section 5.09.    Rights and Remedies Cumulative....................................37

        Section 5.10.    Delay or Omission Not a Waiver....................................37

        Section 5.11.    Control by Noteholders............................................37

        Section 5.12.    Waiver of Past Default............................................38

        Section 5.13.    Undertaking for Costs.............................................38

        Section 5.14.    Waiver of Stay or Extension Laws..................................39

        Section 5.15.    Sale of Trust Estate..............................................39

        Section 5.16.    Action on Notes...................................................40

        Section 5.17.    Performance and Enforcement of Certain Obligations................41

ARTICLE VI        The Indenture Trustee....................................................41

        Section 6.01.    Duties of Indenture Trustee.......................................41

        Section 6.02.    Rights of Indenture Trustee.......................................42

        Section 6.03.    Individual Rights of Indenture Trustee............................43

        Section 6.04.    Indenture Trustee's Disclaimer....................................43

        Section 6.05.    Notice of Event of Default........................................43

        Section 6.06.    Reports by Indenture Trustee to Holders...........................43

        Section 6.07.    Compensation and Indemnity........................................44

        Section 6.08.    Replacement of Indenture Trustee..................................44

        Section 6.09.    Successor Indenture Trustee by Merger.............................45

        Section 6.10.    Appointment of Co-Indenture Trustee or Separate Indenture
                         Trustee...........................................................46

        Section 6.11.    Eligibility; Disqualification.....................................47

        Section 6.12.    Preferential Collection of Claims Against Issuer..................47

        Section 6.13.    Representations and Warranties....................................48

        Section 6.14.    Directions to Indenture Trustee...................................48

        Section 6.15.    Indenture Trustee May Own Securities..............................48

ARTICLE VII       Noteholders' Lists and Reports...........................................49

        Section 7.01.    Issuer to Furnish Indenture Trustee Names and Addresses of
                         Noteholders.......................................................49

        Section 7.02.    Preservation of Information; Communications to Noteholders........49

        Section 7.03.    Reports by Issuer.................................................49

        Section 7.04.    Reports by Indenture Trustee......................................50

ARTICLE VIII      Accounts, Disbursements and Releases.....................................50

        Section 8.01.    Collection of Money...............................................50

        Section 8.02.    Trust Accounts....................................................50

        Section 8.03.    Officer's Certificate.............................................51
        Section 8.04.    Termination Upon Distribution to Noteholders......................51

        Section 8.05.    Release of Trust Estate...........................................51

        Section 8.06.    Surrender of Notes Upon Final Payment.............................51

ARTICLE IX        SUPPLEMENTAL INDENTURES..................................................52

        Section 9.01.    Supplemental Indentures Without Consent of Noteholders............52

        Section 9.02.    Supplemental Indentures With Consent of Noteholders...............53

        Section 9.03.    Execution of Supplemental Indentures..............................54

        Section 9.04.    Effect of Supplemental Indenture..................................55

        Section 9.05.    Conformity with Trust Indenture Act...............................55

        Section 9.06.    Reference in Notes to Supplemental Indentures.....................55

ARTICLE X         MISCELLANEOUS............................................................55

        Section 10.01.   Compliance Certificates and Opinions, etc.........................55

        Section 10.02.   Form of Documents Delivered to Indenture Trustee..................57

        Section 10.03.   Acts of Noteholders...............................................57

        Section 10.04.   Notices, etc., to Indenture Trustee, Issuer, Credit Enhancer
                         and Rating Agencies...............................................58

        Section 10.05.   Notices to Noteholders; Waiver....................................59

        Section 10.06.   Alternate Payment and Notice Provisions...........................59

        Section 10.07.   Conflict with Trust Indenture Act.................................59

        Section 10.08.   Effect of Headings................................................60

        Section 10.09.   Successors and Assigns............................................60

        Section 10.10.   Separability......................................................60

        Section 10.11.   Benefits of Indenture.............................................60

        Section 10.12.   Legal Holidays....................................................60

        Section 10.13.   GOVERNING LAW.....................................................60

        Section 10.14.   Counterparts......................................................60

        Section 10.15.   Recording of Indenture............................................60

        Section 10.16.   Issuer Obligation.................................................60

        Section 10.17.   No Petition.......................................................61

        Section 10.18.   Inspection........................................................61

ARTICLE XI     REMIC Provisions............................................................61

            Section 11.01.      REMIC Administration.......................................61

            Section 11.02.      Servicer, REMIC Administrator and Indenture Trustee
                                         Indemnification...................................65

            Section 11.03.      Designation of REMIC(s)....................................65

</TABLE>

<PAGE>

               This  Indenture,  dated as of September  27,  2001,  between HOME
EQUITY LOAN TRUST 2001-HS3, a Delaware business trust, as Issuer (the "Issuer"),
and THE CHASE MANHATTAN BANK, as Indenture Trustee (the "Indenture Trustee"),

                                       WITNESSETH THAT:

               Each party hereto  agrees as follows for the benefit of the other
party and for the equal and  ratable  benefit  of the  Holders  of the  Issuer's
Series 2001-HS3 Home Equity  Loan-Backed Term Notes and Home Equity  Loan-Backed
Variable Funding Notes (together, the "Notes").

                                 GRANTING CLAUSE

               The Issuer hereby Grants to the Indenture  Trustee at the Closing
Date,  as  trustee  for the  benefit of the  Holders  of the  Notes,  all of the
Issuer's  right,  title and  interest in and to the Home Equity Loans and to all
accounts,  chattel paper,  general intangibles,  payment  intangibles,  contract
rights,  certificates  of deposit,  deposit  accounts,  instruments,  documents,
letters of credit,  money,  advices of credit,  investment  property,  goods and
other  property  consisting of, arising under or related to whether now existing
or hereafter created in (a) the Home Equity Loans, (b) the Payment Account,  all
funds on deposit or credited thereto from time to time and all proceeds thereof;
(c) the Credit  Enhancement  Instrument  and (d) all present and future  claims,
demands,  causes and choses in action in respect of any or all of the  foregoing
and all  payments  on or  under,  and all  proceeds  of every  kind  and  nature
whatsoever  in respect of, any or all of the  foregoing  and all  payments on or
under,  and all proceeds of every kind and nature  whatsoever in the  conversion
thereof, voluntary or involuntary,  into cash or other liquid property, all cash
proceeds,  accounts, accounts receivable,  notes, drafts,  acceptances,  checks,
deposit  accounts,  rights to payment of any and every kind,  and other forms of
obligations  and  receivables,  instruments and other property which at any time
constitute  all  or  part  of or are  included  in  the  proceeds  of any of the
foregoing (collectively, the "Trust Estate" or the "Collateral").

               The  foregoing  Grant is made in trust to secure  the  payment of
principal  of and interest  on, and any other  amounts  owing in respect of, the
Notes,  equally and ratably without prejudice,  priority or distinction,  and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.

               The  foregoing  Grant  shall  inure to the  benefit of the Credit
Enhancer  in  respect of draws made on the  Credit  Enhancement  Instrument  and
amounts owing to the Credit Enhancer from time to time pursuant to the Insurance
Agreement  (regardless  of whether such amounts  relate to the Class II Notes or
the Class SB-II  Certificates)  and payable to the Credit  Enhancer  pursuant to
this  Indenture,  and such Grant shall continue in full force and effect for the
benefit  of the Credit  Enhancer  until all such  amounts  owing to it have been
repaid in full.

               The Indenture Trustee, as trustee on behalf of the Holders of the
Notes, (i) acknowledges  such Grant, (ii) accepts the trust under this Indenture
in accordance with the provisions hereof,  (iii) agrees to perform its duties as
Indenture Trustee as required herein and (iv) acknowledges  receipt of the Group
I Policy and promises to hold such Group I Policy in  accordance  with the terms
of this Agreement for the benefit of the Holders of the Class I Notes.

                                       1
<PAGE>

                                   ARTICLE I

                                   Definitions

Section  1.01.  Definitions.  For all  purposes  of this  Indenture,  except  as
otherwise  expressly  provided herein or unless the context otherwise  requires,
capitalized  terms not otherwise defined herein shall have the meanings assigned
to such  terms  in the  Definitions  attached  hereto  as  Appendix  A which  is
incorporated by reference herein.  All other capitalized terms used herein shall
have the meanings specified herein.

Section 1.02.  Incorporation by Reference of Trust Indenture Act.  Whenever this
Indenture  refers to a provision of the Trust  Indenture  Act (the  "TIA"),  the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

               "Commission" means the Securities and Exchange Commission.

               "indenture securities" means the Notes.

               "indenture security holder" means a Noteholder.

               "indenture to be qualified" means this Indenture.

     "indenture trustee" or "institutional trustee" means the Indenture Trustee.

     "obligor"  on the  indenture  securities  means  the  Issuer  and any other
obligor on the indenture securities.

               All other TIA terms used in this  Indenture  that are  defined by
        the TIA,  defined  by TIA  reference  to  another  statute or defined by
        Commission rule have the meaning assigned to them by such definitions.

Section 1.03.  Rules of Construction.  Unless the context otherwise requires:

(i)     a term has the meaning assigned to it;

(ii) an accounting term not otherwise  defined has the meaning assigned to it in
accordance with generally accepted accounting  principles as in effect from time
to time;

(iii)   "or" is not exclusive;

(iv)    "including" means including without limitation;

(v) words in the singular include the plural and words in the plural include the
singular; and

(vi) 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.

                                       2
<PAGE>

                                   ARTICLE II

                           Original Issuance of Notes

Section 2.01.  Form. The Term Notes and the Variable Funding Notes, in each case
together with the Indenture Trustee's certificate of authentication, shall be in
substantially  the forms set forth in Exhibits A-1 and A-2,  respectively,  with
such appropriate  insertions,  omissions,  substitutions and other variations as
are required or permitted by this  Indenture and may have such letters,  numbers
or other marks of identification and such legends or endorsements placed thereon
as may,  consistently  herewith,  be determined by the officers  executing  such
Notes, as evidenced by their execution of the Notes.  Any portion of the text of
any Note may be set forth on the reverse thereof,  with an appropriate reference
thereto on the face of the Note.

        The Notes shall be  typewritten,  printed,  lithographed  or engraved or
produced by any  combination  of these methods  (with or without steel  engraved
borders),  all as determined by the Authorized Officers executing such Notes, as
evidenced by their execution of such Notes.

        The terms of the Notes set forth in Exhibits A-1 and A-2 are part of the
terms of this Indenture.

Section  2.02.  Execution,  Authentication  and  Delivery.  The  Notes  shall be
executed  on  behalf  of the  Issuer  by any of  its  Authorized  Officers.  The
signature  of any  such  Authorized  Officer  on the  Notes  may  be  manual  or
facsimile.

        Notes bearing the manual or facsimile  signature of individuals who were
at  any  time  Authorized   Officers  of  the  Issuer  shall  bind  the  Issuer,
notwithstanding  that such  individuals  or any of them have ceased to hold such
offices prior to the  authentication  and delivery of such Notes or did not hold
such offices at the date of such Notes.

        The Indenture Trustee shall upon Issuer Request authenticate and deliver
Term  Notes for  original  issue in an  aggregate  initial  principal  amount of
$458,755,000  and  Variable  Funding  Notes for  original  issue in an aggregate
initial  principal  amount of $0. The Security  Balance of the Variable  Funding
Notes in the aggregate may not exceed the Maximum Variable Funding Balance.

        Each Note shall be dated the date of its authentication. The Notes shall
be  issuable  as  registered  Notes and the Class A Notes  (other than the Class
A-I-IO Notes) and the Class M-I-1 Notes shall be issuable in the minimum initial
Security Balances of $25,000 and in integral  multiples of $1 in excess thereof,
the Class M-I-2 Notes and the Class M-I-3 Notes shall be issuable in the minimum
initial Security Balances of $250,000 and in integral  multiples of $1 in excess
thereof and the Class  A-I-IO  Notes  shall be  issuable in the minimum  initial
Security  Balances  of  $1,000,000  and in  integral  multiples  of $1 in excess
thereof.

                                       3
<PAGE>

        Each  Variable  Funding Note shall be  initially  issued with a Security
Balance of $0 or, if applicable,  with a Security Balance in the amount equal to
the Additional  Balance  Differential  for the Collection  Period related to the
Payment  Date  following  the date of issuance  of such  Variable  Funding  Note
pursuant to Section 4.01(b).

        No Note shall be  entitled  to any benefit  under this  Indenture  or be
valid or  obligatory  for any  purpose,  unless  there  appears  on such  Note a
certificate  of  authentication  substantially  in the form  provided for herein
executed  by  the  Indenture  Trustee  by  the  manual  signature  of one of its
authorized  signatories,  and such certificate upon any Note shall be conclusive
evidence, and the only evidence,  that such Note has been duly authenticated and
delivered hereunder.

                                  ARTICLE III

                                    Covenants

Section 3.01.  Collection of Payments with Respect to the Home Equity Loans. The
Indenture  Trustee shall  establish and maintain with itself the Payment Account
in which the Indenture  Trustee shall,  subject to the terms of this  paragraph,
deposit,  on the  same day as it is  received  from the  Master  Servicer,  each
remittance  received by the  Indenture  Trustee  with respect to the Home Equity
Loans.  The  Indenture  Trustee  shall make all  payments  of  principal  of and
interest on the Notes,  subject to Section  3.03,  as  provided in Section  3.05
herein from monies on deposit in the Payment Account.

Section 3.02.  Maintenance of Office or Agency.  The Issuer will maintain in the
City of New York,  an  office  or  agency  where,  subject  to  satisfaction  of
conditions  set forth  herein,  Notes may be  surrendered  for  registration  of
transfer  or  exchange,  and where  notices and demands to or upon the Issuer in
respect  of the  Notes and this  Indenture  may be  served.  The  Issuer  hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes.  If at any time the Issuer  shall fail to maintain  any such office or
agency or shall fail to furnish the Indenture  Trustee with the address thereof,
such  surrenders,  notices and  demands  may be made or served at the  Corporate
Trust Office,  and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.

Section  3.03.  Money for  Payments to Be Held in Trust;  Paying  Agent.  (a) As
provided in Section  3.01,  all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Payment Account
pursuant to Section 3.01 shall be made on behalf of the Issuer by the  Indenture
Trustee or by the Paying  Agent,  and no amounts so  withdrawn  from the Payment
Account  for  payments  of Notes  shall be paid  over to the  Issuer  except  as
provided in this Section 3.03.

        The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute  and deliver to the  Indenture  Trustee an  instrument  in which such
Paying  Agent  shall  agree with the  Indenture  Trustee  (and if the  Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:

(i) hold all sums held by it for the payment of amounts due with  respect to the
Notes in trust for the benefit of the Persons  entitled  thereto until such sums
shall be paid to such  Persons or otherwise  disposed of as herein  provided and
pay such sums to such Persons as herein provided;

                                       4
<PAGE>

(ii) give the Indenture  Trustee and the Credit  Enhancer  written notice of any
default  by the  Issuer of which it has  actual  knowledge  in the making of any
payment required to be made with respect to the Notes;

(iii) at any time during the  continuance of any such default,  upon the written
request of the Indenture  Trustee,  forthwith  pay to the Indenture  Trustee all
sums so held in trust by such Paying Agent;

(iv)  immediately  resign as Paying  Agent and  forthwith  pay to the  Indenture
Trustee all sums held by it in trust for the payment of Notes, if at any time it
ceases to meet the standards required to be met by a Paying Agent at the time of
its appointment;

(v) comply with all  requirements  of the Code with  respect to the  withholding
from any payments made by it on any Notes of any  applicable  withholding  taxes
imposed  thereon and with respect to any applicable  reporting  requirements  in
connection therewith; and

(vi)  deliver  to the  Indenture  Trustee a copy of the  report  to  Noteholders
prepared  with respect to each Payment Date by the Master  Servicer  pursuant to
Section 4.01 of the Servicing Agreement.

        The  Issuer  may  at  any  time,   for  the  purpose  of  obtaining  the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Request direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent,  such sums to be held by the Indenture  Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such  payment by any Paying  Agent to the  Indenture  Trustee,  such Paying
Agent shall be released from all further liability with respect to such money.

        Subject to applicable  laws with respect to escheat of funds,  any money
held by the  Indenture  Trustee or any Paying  Agent in trust for the payment of
any amount due with  respect to any Note and  remaining  unclaimed  for one year
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer  Request;  and the Holder of such Note shall
thereafter,  as an  unsecured  general  creditor,  look only to the  Issuer  for
payment  thereof  (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture  Trustee or such Paying Agent with respect to
such trust money shall thereupon cease;  provided,  however,  that the Indenture
Trustee or such Paying Agent,  before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published  once, in
an  Authorized  Newspaper,  notice that such money  remains  unclaimed and that,
after a date  specified  therein,  which shall not be less than 30 days from the
date of such  publication,  any unclaimed  balance of such money then  remaining
will be repaid to the Issuer.  The Indenture  Trustee may also adopt and employ,
at the  expense  and  direction  of the Issuer,  any other  reasonable  means of
notification of such repayment (including, but not limited to, mailing notice of
such  repayment  to  Holders  whose  Notes  have been  called  but have not been
surrendered  for  redemption  or whose  right to or  interest  in monies due and

                                       5
<PAGE>

payable  but not  claimed is  determinable  from the  records  of the  Indenture
Trustee  or of any  Paying  Agent,  at the last  address of record for each such
Holder).

Section  3.04.  Existence.  The Issuer will keep in full  effect its  existence,
rights  and  franchises  as a  business  trust  under  the laws of the  State of
Delaware  (unless it becomes,  or any successor  Issuer hereunder is or becomes,
organized  under the laws of any other state or of the United States of America,
in which case the Issuer  will keep in full  effect  its  existence,  rights and
franchises  under  the laws of such  other  jurisdiction)  and will  obtain  and
preserve its  qualification  to do business in each  jurisdiction  in which such
qualification   is  or  shall  be   necessary   to  protect  the   validity  and
enforceability  of this  Indenture,  the Notes,  the Home Equity  Loans and each
other instrument or agreement included in the Trust Estate.

Section 3.05. Payment of Principal and Interest;  Defaulted Interest.  (a)(I) On
each Payment Date from amounts on deposit in the Payment Account with respect to
the Home Equity Loans in Loan Group I, the Paying Agent shall pay to the Class I
Noteholders  (and when  specified,  the Class II  Noteholders),  the Certificate
Paying  Agent,  on behalf of the  Certificateholders,  and to other  Persons the
amounts to which they are entitled,  as set forth in the statements delivered to
the Indenture  Trustee pursuant to Section 4.01 of the Servicing  Agreement,  as
set forth below in accordance with the following order of priority:

(i) first,  to the  Indenture  Trustee's  agent  specified in the  definition of
Corporate Trust Office, for further payment to Radian, the amount of the premium
for the  Group I  Policy  due on that  Payment  Date and any  previously  unpaid
premiums  for the Group I Policy,  with  interest  thereon,  as specified in the
Group I Policy,  notwithstanding that coverage under the Group I Policy may have
been exhausted;

(ii) second,  to the Class A-I  Noteholders,  pro rata in accordance  with their
respective Interest  Distribution  Amounts, the Interest Distribution Amount for
each Class of the Class A-I Notes for such Payment Date, and then to the Class M
Noteholders,  the related Interest Distribution Amount for such Payment Date, to
the holders of the Class M-I-1 Notes,  the Class M-I-2 Notes and the Class M-I-3
Notes, sequentially, in that order;

(iii) third, to the Class I Noteholders,  as principal on the Class I Notes, the
Principal  Collection  Distribution Amount for such Payment Date to be allocated
to the  Class I Notes as  described  in  Section  3.05(b)(i)  below,  until  the
Security Balances thereof have been reduced to zero;

(iv) fourth, to the Class I Noteholders,  as principal on the Class I Notes, any
Uninsured  Loss for such Payment  Date,  to be allocated to the Class I Notes as
described in Section  3.05(b)(i) below, until the Security Balances thereof have
been reduced to zero;

(v) fifth, to the Class I Noteholders, without reduction of the Security Balance
of any Class of the Class I Notes,  the Uninsured  Loss Carry Forward Amount for
such  Payment  Date to be allocated to the Class I Notes as described in Section
3.05(b)(ii) below;

(vi)  sixth,  to the Class II  Noteholders,  pro rata in  accordance  with their
respective  Security  Balances,   as  principal  on  the  Class  II  Notes,  the
Liquidation  Loss  Distribution  Amount for such Payment Date, to the extent not
paid from collections on the Group II Loans pursuant to Section 3.05(a)(II)(iii)
or covered by a reduction of the Outstanding  Overcollateralization  Amount or a
draw on the Group II Policy;

                                       6
<PAGE>

(vii)  seventh,  to the Class I  Noteholders,  pro rata in  accordance  with the
respective  amounts of  Prepayment  Interest  Shortfalls  allocated  thereto and
remaining unpaid,  any Prepayment  Interest  Shortfalls on the Group I Loans for
such Payment Date and any Prepayment Interest Shortfalls  allocated to the Class
I Notes on any previous  Payment Date and not  previously  paid plus interest on
any  previously  unpaid  amount from the date the shortfall was allocated at the
Note Rate (as adjusted from time to time) on the related Class of Notes;

(viii)  eighth,  to the Class II  Noteholders,  any Basis  Risk  Shortfalls  not
previously  paid (together  with interest  thereon at the Note Rate (as adjusted
from time to time) on the related  class of Notes),  to the extent not paid from
collections on the Group II Loans pursuant to Section  3.05(a)(II)(x),  on a pro
rata basis in accordance  with the respective  amounts of Basis Risk  Shortfalls
allocated to each such Class and not previously paid;

(ix) ninth, to the Indenture Trustee, any amounts owing to the Indenture Trustee
pursuant to Section 6.07 remaining unpaid; and

(x) tenth, any remaining amount,  to the Certificate  Paying Agent, on behalf of
the holders of the Group I Certificates.

               On the Final  Scheduled  Payment Date or other final Payment Date
for the Class I Notes,  the amount to be paid  pursuant  to clause  (iii)  above
shall be equal to the Security  Balances of the Class I Notes  immediately prior
to such Payment Date.  Notwithstanding  anything herein to the contrary,  if the
final  Payment  Date is a date on which the Master  Servicer has  exercised  its
right to  purchase  all of the Group I Loans  pursuant  to  Section  8.08 of the
Servicing Agreement,  the priorities set forth in clauses (ii) through (v) above
shall be disregarded, and amounts on deposit in the Payment Account with respect
to the Group I Loans will be applied  first,  to pay the  Interest  Distribution
Amount for the Class A-I Notes,  on a pro rata  basis in  accordance  with their
respective Interest Distribution Amounts;  second, to pay principal on the Class
A-I Notes on a pro rata  basis in  accordance  with  their  respective  Security
Balances,  until the Security Balances thereof have been reduced to zero; third,
to pay the Interest Distribution Amount on the Class M-I-1 Notes; fourth, to pay
principal on the Class M-I-1 Notes,  until the Security Balance thereof has been
reduced to zero;  fifth,  to pay the Interest  Distribution  Amount on the Class
M-I-2  Notes;  sixth,  to pay  principal  on the Class  M-I-2  Notes,  until the
Security Balance thereof has been reduced to zero;  seventh, to pay the Interest
Distribution  Amount on the Class M-I-3 Notes;  and eighth,  to pay principal on
the Class M-I-3 Notes,  until the Security  Balance  thereof has been reduced to
zero.

        (a)(II) On each  Payment  Date from  amounts  on deposit in the  Payment
Account with respect to the Home Equity Loans in Loan Group II, the Paying Agent
shall  pay to the  Class  II  Noteholders  (and  when  specified,  the  Class  I
Noteholders), the Certificate Paying Agent, on behalf of the Certificateholders,
and to other Persons the amounts to which they are entitled, as set forth in the
statements  delivered to the Indenture  Trustee  pursuant to Section 4.01 of the
Servicing  Agreement,  as set forth below in accordance with the following order
of priority:

                                       7
<PAGE>

(i) first, to the Class II Noteholders, the Interest Distribution Amount for the
Class II Notes  for such  Payment  Date,  , pro rata in  accordance  with  their
respective Interest Distribution Amounts;

(ii) second,  to the Class II  Noteholders,  as principal on the Class II Notes,
the Principal  Collection  Distribution  Amount for such Payment Date,  pro rata
based on the Security Balances thereof;

(iii) third,  to the Class II  Noteholders,  as principal on the Class II Notes,
pro  rata  based  on  the  Security  Balances  thereof,   the  Liquidation  Loss
Distribution Amount for such Payment Date and any Excess Loss Amount included in
the Credit Enhancement Draw Amount on such Payment Date;

(iv) fourth, to Ambac, the amount of the premium for the Group II Policy and any
previously  unpaid  premiums for the Group II Policy,  with interest  thereon as
provided in the Insurance Agreement;

(v) fifth, to Ambac, to reimburse it for prior draws made on the Group II Policy
with interest thereon as provided in the Insurance  Agreement  (except for draws
attributable to Excess Loss Amounts);

(vi) sixth, to the Class II Noteholders, as principal on the Class II Notes, pro
rata based on the Security Balances thereof, the Overcollateralization  Increase
Amount, if any, for such Payment Date;

(vii)  seventh,  to  Ambac,  any other  amounts  owed to Ambac  pursuant  to the
Insurance Agreement;

(viii) eighth,  to the Class I  Noteholders,  as principal on the Class I Notes,
any  Uninsured  Loss for  such  Payment  Date,  to the  extent  not  covered  by
collections  on the Group I Loans  pursuant  to  Section  3.05(a)(I)(iv),  to be
allocated to the Class I Notes as described in Section  3.05(b)(i) below,  until
the Security Balances thereof have been reduced to zero;

(ix) ninth, to the Class I Noteholders,  as principal on the Class I Notes,  the
Uninsured  Loss Carry  Forward  Amount for such Payment  Date, to the extent not
covered by collections  on the Group I Loans pursuant to Section  3.05(a)(I)(v),
to be allocated to the Class I Notes as described in Section 3.05(b)(ii) below;

(x) tenth,  to pay the Class II Notes,  any Basis Risk Shortfalls not previously
paid (together  with interest  thereon at the Note Rate for the related Class of
Notes (as adjusted  from time to time)),on a pro rata basis in  accordance  with
the respective amounts of Basis Risk Shortfalls allocated to each such Class and
not previously paid;

(xi)  eleventh,  to the Class I  Noteholders,  pro rata in  accordance  with the
respective  amounts of  Prepayment  Interest  Shortfalls  allocated  thereto and
remaining unpaid,  any Prepayment  Interest  Shortfalls on the Group I Loans for
such Payment Date and any Prepayment Interest Shortfalls  allocated to the Class
I Notes on any previous  Payment Date and not previously  paid, plus interest on

                                       8
<PAGE>

any previously unpaid amount at the Note Rate for the related Class of Notes (as
adjusted  from  time  to  time),  in each  case to the  extent  not  covered  by
collections  on the  Group I Loans on such  Payment  Date  pursuant  to  Section
3.05(a)(I)(vii);

(xii)  twelfth,  to the  Indenture  Trustee,  any amounts owing to the Indenture
Trustee pursuant to Section 6.07 remaining unpaid; and

(xiii)  thirteenth,  any remaining amount,  to the Certificate  Paying Agent, on
behalf of the holders of the Group II Certificates;

provided, however, in the event that on a Payment Date a Credit Enhancer Default
shall have occurred and be  continuing,  then the  priorities  of  distributions
described above will be adjusted such that payments of any amounts to be paid to
the Credit  Enhancer  will not be paid  until the full  amount of  interest  and
principal in accordance with clauses 3.05(a)(II) (i) through (iii), (vi), (viii)
through (xi) above that are due and required to be paid on the Class II Notes on
such  Payment  Date  have  been paid and  provided,  further,  that on the Final
Scheduled  Payment Date or other final Payment Date for the Class II Notes,  the
amount to be paid  pursuant to clause (ii) above shall be equal to the  Security
Balances  of the Class II Notes  immediately  prior to such  Payment  Date.  For
purposes of the foregoing,  required payments of principal on the Class II Notes
on each Payment Date will include the pro rata portion allocable to the Class II
Notes of all Liquidation Loss Amounts for such Payment Date and for all previous
Collection  Periods  until paid or covered in full,  to the extent not otherwise
covered  by  a  Liquidation  Loss  Distribution   Amount,  a  reduction  of  the
Outstanding Overcollateralization Amount or a Draw on the Group II Policy (up to
the outstanding Security Balance thereof).

        In addition  to the  foregoing,  on the  Insured  Undercollateralization
Payment  Date,  if there is any  Undercollateralization  Amount  remaining,  the
Noteholders  shall  be  entitled  to an  additional  principal  payment  (to  be
allocated   to  the  Class  II  Notes  on  a  pro  rata  basis)   equal  to  the
Undercollateralization  Amount,  if any,  which shall be payable from the Credit
Enhancement Draw Amount pursuant to Section 3.28.

               (III) On any Payment  Date,  any  Uninsured  Loss not paid to the
Class  I   Noteholders   pursuant   to   Section   3.05(a)(I)(iv)   or   Section
3.05(a)(II)(viii)  will be allocated  to the Class M-I-3 Notes,  the Class M-I-2
Notes,  the Class  M-I-1 Notes and the Class A-I Notes,  in that order,  in each
case until the Security  Balance  thereof is reduced to zero.  Uninsured  Losses
allocated  to the Class A-I Notes will be  allocated  to each Class of Class A-I
Notes on a pro rata basis in accordance with their respective Security Balances.

(b) (i) With  respect  to the Class I Notes and each  Payment  Date prior to the
Group I Stepdown  Date,  or on or after the Group I  Stepdown  Date if a Trigger
Event is in  effect,  distributions  of  principal  to the  Class I  Noteholders
pursuant  to  clauses  (iii)  and  (iv)  of  Section   3.05(a)(I)   and  Section
3.05(a)(II)(viii)  shall be made in the following order,  first to the Class A-I
Notes  (other  than the Class  A-I-IO  Notes),  sequentially  to the Class A-I-1
Notes,  the Class A-I-2 Notes,  the Class A-I-3 Notes, the Class A-I-4 Notes and
the  Class  A-I-5  Notes,  in that  order,  in each case  until the  outstanding
Security  Balance  of each Class has been  reduced to zero,  second to the Class
M-I-1 Notes, until the outstanding  Security Balance thereof has been reduced to
zero,  third to the Class M-I-2 Notes,  until the outstanding  Security  Balance
thereof has been reduced to zero, and fourth to the Class M-I-3 Notes, until the
outstanding Security Balance thereof has been reduced to zero.

                                       9
<PAGE>

              On each  Payment  Date after the Group I Stepdown  Date,  unless a
Trigger  Event  is  in  effect,  distributions  of  principal  to  the  Class  I
Noteholders pursuant to clauses (iii) and (iv) of Section 3.05(a)(I) and Section
3.05(a)(II)(viii)  shall be made in the following order,  first to the Class A-I
Notes  (other  than the Class  A-I-IO  Notes),  sequentially  to the Class A-I-1
Notes,  the Class A-I-2 Notes,  the Class A-I-3 Notes, the Class A-I-4 Notes and
the Class A-I-5 Notes, in that order,  until the aggregate  Security  Balance of
the Class A-I Notes  equals 77.5% of the  aggregate  Loan Balance of the Group I
Loans after applying payments received in the related Collection Period,  second
to the Class M-I-1 Notes,  until the aggregate Security Balance of the Class A-I
Notes and the Class M-I-1 Notes  equals 88.0% of the  aggregate  Loan Balance of
the Group I Loans after  applying  payments  received in the related  Collection
Period,  third to the Class M-I-2 Notes, until the aggregate Security Balance of
the Class A-I Notes,  the Class M-I-1  Notes and the Class  M-I-2  Notes  equals
95.0% of the aggregate Loan Balance of the Group I Loans after applying payments
received in the related  Collection Period, and fourth to the Class M-I-3 Notes,
until the outstanding Security Balance thereof has been reduced to zero.

               (ii) Any Uninsured Loss Carry Forward Amount payable  pursuant to
Section 3.05(a)(I)(v) or Section  3.05(a)(II)(ix) will be paid to the holders of
the  Class  of the  Class I Notes  to  which  the  related  Uninsured  Loss  was
allocated.  If on any Payment Date the amount available to be paid in respect of
Uninsured  Loss  Carry  Forward  Amounts  is less than the  aggregate  amount of
Uninsured Loss Carry Forward Amounts as of such Payment Date, such amounts shall
be paid to the Class A-I Notes, the Class M-I-1 Notes, the Class M-I-2 Notes and
the Class M-I-3  Notes,  in that order,  in each case until the  Uninsured  Loss
Carry Forward  Amounts for each such Class have been paid in full. Any Uninsured
Loss  Carry  Forward  Amounts  paid to any  Class of  Class I Notes  will not be
applied to reduce the Security Balance of such Class of Class I Notes.

               (iii) Relief Act Shortfalls and Prepayment Interest Shortfalls on
the Group I Notes will be allocated to each Class of Class I Notes on a pro rata
basis in accordance  with the amount of accrued  interest  payable on that Class
for such Payment  Date,  absent such  reductions.  Relief Act  Shortfalls on the
Class II Notes  will be  allocated  to the Class II Notes on a pro rata basis in
accordance  with the amount of accrued  interest  payable on that Class for such
Payment Date, absent such reductions.

(c) On each Payment  Date,  the  Certificate  Paying Agent shall  deposit in the
Certificate  Distribution  Account  all  amounts it  received  pursuant  to this
Section   3.05   for  the   purpose   of   distributing   such   funds   to  the
Certificateholders.

               The amounts paid to  Noteholders  shall be paid in respect of the
related  Class or Classes of Term Notes or the Variable  Funding  Notes,  as the
case may be,  in  accordance  with the  applicable  percentage  as set  forth in
paragraph  (d)  below.  Interest  will  accrue on the Notes  during an  Interest
Period,  on the basis of the actual number of days in such Interest Period and a
year  assumed to consist of 360 days,  in the case of the Class  A-I-1 Notes and
the Class II Notes,  and on the basis of a  360-day  year  consisting  of twelve
30-day months, in the case of the remaining Classes of Notes.

                                       10
<PAGE>

               Any installment of interest or principal,  if any, payable on any
Note  that  is  punctually  paid  or  duly  provided  for by the  Issuer  on the
applicable  Payment  Date  shall,  if such Holder  holds  Notes of an  aggregate
initial  Security  Balance  of at least  $1,000,000,  be paid to each  Holder of
record on the preceding Record Date, by wire transfer to an account specified in
writing by such Holder  reasonably  satisfactory to the Indenture  Trustee as of
the preceding Record Date or in all other cases or if no such  instructions have
been delivered to the Indenture  Trustee,  by check to such Noteholder mailed to
such Holder's  address as it appears in the Note Register the amount required to
be  distributed  to such Holder on such Payment Date  pursuant to such  Holder's
Securities;  provided, however, that the Indenture Trustee shall not pay to such
Holders any amount  required to be withheld from a payment to such Holder by the
Code.

(d)  Principal  of each  Note  shall  be due and  payable  in full on the  Final
Scheduled Payment Date for such Note as provided in the related form of Note set
forth in Exhibits A-1 and A-2. All principal  payments on each of the Term Notes
and the Variable  Funding Notes shall be made in accordance  with the priorities
set forth in paragraphs (a) and (b) above to the Noteholders entitled thereto in
accordance  with the related  Percentage  Interests  represented  thereby.  Upon
written  notice to the Indenture  Trustee by the Issuer,  the Indenture  Trustee
shall  notify  the  Person in whose  name a Note is  registered  at the close of
business on the Record Date preceding the Final Scheduled  Payment Date or other
final Payment Date. Such notice shall be mailed no later than five Business Days
prior to such Final Scheduled Payment Date or other final Payment Date and shall
specify that payment of the  principal  amount and any interest due with respect
to such Note at the Final  Scheduled  Payment  Date or other final  Payment Date
will be payable  only upon  presentation  and  surrender  of such Note and shall
specify  the place where such Note may be  presented  and  surrendered  for such
final payment.

Section 3.06.  Protection of Trust Estate. (a) The Issuer will from time to time
execute and  deliver all such  supplements  and  amendments  hereto and all such
financing statements,  continuation statements, instruments of further assurance
and other  instruments,  and will take such other action  necessary or advisable
to:

(i)  maintain or  preserve  the lien and  security  interest  (and the  priority
thereof) of this Indenture or carry out more effectively the purposes hereof;

(ii) perfect,  publish notice of or protect the validity of any Grant made or to
be made by this Indenture;

(iii)   cause the Trust to enforce any of the Home Equity Loans; or

(iv)  preserve  and  defend  title to the  Trust  Estate  and the  rights of the
Indenture Trustee and the Noteholders in such Trust Estate against the claims of
all persons and parties.

(b) Except as otherwise provided in this Indenture,  the Indenture Trustee shall
not  remove  any  portion  of the  Trust  Estate  that  consists  of money or is
evidenced by an instrument,  certificate or other writing from the  jurisdiction
in which it was held at the date of the most recent Opinion of Counsel delivered
pursuant  to  Section  3.07 (or from  the  jurisdiction  in which it was held as
described in the Opinion of Counsel  delivered  at the Closing Date  pursuant to
Section  3.07(a),  if no Opinion of Counsel has yet been  delivered  pursuant to
Section  3.07(b))  unless the Owner Trustee shall have first received an Opinion

                                       11
<PAGE>

of Counsel to the effect  that the lien and  security  interest  created by this
Indenture  with respect to such property  will  continue to be maintained  after
giving effect to such action or actions.

        The  Issuer  hereby  designates  the  Indenture  Trustee  its  agent and
attorney-in-fact to execute any financing statement,  continuation  statement or
other instrument required to be executed pursuant to this Section 3.06.

Section 3.07.  Opinions as to Trust Estate.  (a) On the Closing Date, the Issuer
shall  furnish  to the  Indenture  Trustee  and the Owner  Trustee an Opinion of
Counsel at the expense of the Issuer  stating  that,  upon  delivery of the Loan
Agreements relating to the Initial Home Equity Loans to the Indenture Trustee or
the  Custodian,  the  Indenture  Trustee will have a perfected,  first  priority
security interest in the Home Equity Loans.

(b) On or before  December 31st in each calendar  year,  beginning in 2001,  the
Issuer  shall  furnish  to the  Indenture  Trustee  an Opinion of Counsel at the
expense of the Issuer either stating that, in the opinion of such counsel,  such
action has been taken with respect to the recording,  filing,  re-recording  and
refiling of this  Indenture,  any indentures  supplemental  hereto and any other
requisite  documents  and  with  respect  to the  execution  and  filing  of any
financing statements and continuation statements as is necessary to maintain the
lien and security  interest in the Home Equity Loans and reciting the details of
such  action or stating  that in the  opinion of such  counsel no such action is
necessary to maintain such lien and security  interest.  Such Opinion of Counsel
shall also describe the  recording,  filing,  re-recording  and refiling of this
Indenture,  any indentures supplemental hereto and any other requisite documents
and the  execution  and  filing of any  financing  statements  and  continuation
statements  that will, in the opinion of such  counsel,  be required to maintain
the lien and security interest in the Home Equity Loans until December 31 in the
following calendar year.

Section 3.08.  Performance of Obligations;  Servicing Agreement.  (a) The Issuer
will  punctually  perform  and  observe all of its  obligations  and  agreements
contained in this  Indenture,  the Basic  Documents and in the  instruments  and
agreements included in the Trust Estate.

(b) The Issuer may contract with other  Persons to assist it in  performing  its
duties  under this  Indenture,  and any  performance  of such duties by a Person
identified to the Indenture  Trustee in an Officer's  Certificate  of the Issuer
shall be deemed to be action taken by the Issuer.

(c) The  Issuer  will not take any  action or permit  any  action to be taken by
others  which would  release any Person from any of such  Person's  covenants or
obligations  under any of the  documents  relating to the Home  Equity  Loans or
under any instrument  included in the Trust Estate, or which would result in the
amendment, hypothecation,  subordination, termination or discharge of, or impair
the  validity or  effectiveness  of, any of the  documents  relating to the Home
Equity Loans or any such instrument,  except such actions as the Master Servicer
is expressly permitted to take in the Servicing Agreement.

                                       12
<PAGE>

(d) The Issuer may retain an  administrator  and may enter into  contracts  with
other Persons for the  performance of the Issuer's  obligations  hereunder,  and
performance  of  such  obligations  by  such  Persons  shall  be  deemed  to  be
performance of such obligations by the Issuer.

Section 3.09.  Negative  Covenants.  So long as any Notes are  Outstanding,  the
Issuer shall not:

(a) except as expressly permitted by this Indenture, sell, transfer, exchange or
otherwise dispose of the Trust Estate, unless directed to do so by the Indenture
Trustee;  (b) claim any credit on, or make any  deduction  from the principal or
interest payable in respect of, the Notes (other than amounts properly  withheld
from such  payments  under the Code) or assert any claim  against any present or
former  Noteholder by reason of the payment of the taxes levied or assessed upon
any part of the Trust Estate;

(c) (i) permit the validity or  effectiveness  of this Indenture to be impaired,
or permit the lien of this Indenture to be amended, hypothecated,  subordinated,
terminated or discharged, or permit any Person to be released from any covenants
or obligations  with respect to the Notes under this Indenture  except as may be
expressly  permitted  hereby,  (ii)  permit  any lien,  charge,  excise,  claim,
security  interest,  mortgage or other encumbrance  (other than the lien of this
Indenture)  to be created on or extend to or otherwise  arise upon or burden the
Trust Estate or any part thereof or any interest therein or the proceeds thereof
or (iii)  permit the lien of this  Indenture  not to  constitute  a valid  first
priority security interest in the Trust Estate; or

(d) impair or cause to be  impaired  the  Issuer's  interest  in the Home Equity
Loans, the Purchase Agreement or in any Basic Document, if any such action would
materially and adversely affect the interests of the Noteholders.

Section 3.10. Annual Statement as to Compliance.  The Issuer will deliver to the
Indenture  Trustee,  within  120 days after the end of each  fiscal  year of the
Issuer (commencing with the fiscal year 2001), an Officer's Certificate stating,
as to the Authorized Officer signing such Officer's Certificate, that:

(a) a  review  of the  activities  of the  Issuer  during  such  year and of its
performance  under this  Indenture  and the Trust  Agreement has been made under
such Authorized Officer's supervision; and

(b) to the best of such Authorized  Officer's  knowledge,  based on such review,
the Issuer has complied with all conditions  and covenants  under this Indenture
and the provisions of the Trust Agreement throughout such year, or, if there has
been a default in its compliance with any such condition or covenant, specifying
each such  default  known to such  Authorized  Officer and the nature and status
thereof.

Section 3.11. Recording of Assignments.  The Issuer shall enforce the obligation
of the Seller  under the  Purchase  Agreement to submit or cause to be submitted
for  recordation  all  Assignments  of  Mortgages  within 60 days of  receipt of
recording information by the Master Servicer.

                                       13
<PAGE>

Section 3.12.  Representations and Warranties  Concerning the Home Equity Loans.
The Indenture  Trustee,  as pledgee of the Home Equity Loans, has the benefit of
the representations and warranties made by the Seller in Section 3.1(a), Section
3.1(b) and 3.1(c) of the Purchase Agreement concerning the Home Equity Loans and
the right to enforce the  remedies  against the Seller  provided in such Section
3.1(a),   Section   3.1(b)  and  3.1(c)  to  the  same  extent  as  though  such
representations and warranties were made directly to the Indenture Trustee.

Section  3.13.  Assignee of Record of the Home Equity  Loans.  As pledgee of the
Home Equity  Loans,  the  Indenture  Trustee shall hold record title to the Home
Equity Loans by being named as payee in the  endorsements  or assignments of the
Loan Agreements and assignee in the Assignments of Mortgage to be recorded under
Section  2.1 of the  Purchase  Agreement.  Except as  expressly  provided in the
Purchase  Agreement or in the Servicing  Agreement  with respect to any specific
Home Equity Loan,  the Indenture  Trustee shall not execute any  endorsement  or
assignment or otherwise release or transfer such record title to any of the Home
Equity  Loans  until such time as the  remaining  Trust  Estate may be  released
pursuant to Section 8.05(b).

Section  3.14.  Master  Servicer as Agent and Bailee of the  Indenture  Trustee.
Solely for purposes of perfection under Section 9-305 of the Uniform  Commercial
Code or other similar  applicable  law, rule or regulation of the state in which
such  property  is held by the Master  Servicer,  the  Issuer and the  Indenture
Trustee  hereby  acknowledge  that the  Master  Servicer  is acting as agent and
bailee of the Indenture  Trustee in holding  amounts on deposit in the Custodial
Account  pursuant to Section 3.02 of the Servicing  Agreement that are allocable
to the Home  Equity  Loans,  as well as the  agent and  bailee of the  Indenture
Trustee  in holding  any  Related  Documents  released  to the  Master  Servicer
pursuant  to Section  3.06(c) of the  Servicing  Agreement,  and any other items
constituting  a part of the Trust  Estate  which from time to time come into the
possession of the Master Servicer. It is intended that, by the Master Servicer's
acceptance of such agency  pursuant to Section 3.02 of the Servicing  Agreement,
the Indenture Trustee,  as a pledgee of the Home Equity Loans, will be deemed to
have possession of such Related Documents,  such monies and such other items for
purposes of Section 9-305 of the Uniform  Commercial  Code of the state in which
such property is held by the Master Servicer.

Section 3.15. Investment Company Act. The Issuer shall not become an "investment
company" or under the  "control"  of an  "investment  company" as such terms are
defined in the  Investment  Company Act of 1940, as amended (or any successor or
amendatory  statute),  and the rules and  regulations  thereunder  (taking  into
account not only the general  definition  of the term  "investment  company" but
also any available  exceptions to such general definition);  provided,  however,
that the Issuer shall be in  compliance  with this Section 3.15 if it shall have
obtained an order  exempting it from  regulation as an  "investment  company" so
long as it is in compliance with the conditions imposed in such order.

Section 3.16. Issuer May Consolidate,  etc. (a) The Issuer shall not consolidate
or merge with or into any other Person, unless:

(i)  the  Person  (if  other  than  the  Issuer)  formed  by or  surviving  such
consolidation  or merger shall be a Person organized and existing under the laws
of the United  States of America or any state or the  District of  Columbia  and
shall  expressly  assume,  by an  indenture  supplemental  hereto,  executed and

                                       14
<PAGE>

delivered to the  Indenture  Trustee,  in form  reasonably  satisfactory  to the
Indenture Trustee, the due and punctual payment of the principal of and interest
on  all  Notes  and  to  the   Certificate   Paying  Agent,  on  behalf  of  the
Certificateholders  and the  performance  or observance  of every  agreement and
covenant  of  this  Indenture  on the  part of the  Issuer  to be  performed  or
observed, all as provided herein;

(ii) immediately  after giving effect to such  transaction,  no Event of Default
shall have occurred and be continuing;

(iii) the Issuer receives consent of the Credit Enhancer and the Rating Agencies
shall have notified the Issuer that such transaction  shall not cause the rating
of the Notes to be reduced, suspended or withdrawn or to be considered by either
Rating  Agency to be below  investment  grade  without  taking into  account the
Credit Enhancement Instrument;

(iv) the Issuer  shall  have  received  an  Opinion  of Counsel  (and shall have
delivered  copies thereof to the Indenture  Trustee and the Credit  Enhancer) to
the  effect  that  such  transaction  will  not have any  material  adverse  tax
consequence to the Issuer, any Noteholder or any Certificateholder;

(v) any action that is  necessary  to maintain  the lien and  security  interest
created by this Indenture shall have been taken; and

(vi) the Issuer  shall have  delivered  to the  Indenture  Trustee an  Officer's
Certificate  and an Opinion of Counsel each stating that such  consolidation  or
merger and such supplemental indenture comply with this Article III and that all
conditions  precedent herein provided for relating to such transaction have been
complied with (including any filing required by the Exchange Act).

(b) The Issuer  shall not convey or transfer  any of its  properties  or assets,
including those included in the Trust Estate, to any Person, unless:

(i) the Person that acquires by conveyance or transfer the properties and assets
of the Issuer the conveyance or transfer of which is hereby restricted shall (i)
be a United States citizen or a Person  organized and existing under the laws of
the  United  States of  America  or any state,  (ii)  expressly  assumes,  by an
indenture supplemental hereto,  executed and delivered to the Indenture Trustee,
in form satisfactory to the Indenture  Trustee,  the due and punctual payment of
the principal of and interest on all Notes and the  performance or observance of
every  agreement and covenant of this  Indenture on the part of the Issuer to be
performed or observed,  all as provided herein,  (iii) expressly agrees by means
of such supplemental indenture that all right, title and interest so conveyed or
transferred  shall be subject  and  subordinate  to the rights of Holders of the
Notes, (iv) unless otherwise provided in such supplemental indenture,  expressly
agrees to indemnify,  defend and hold  harmless the Issuer  against and from any
loss,  liability or expense  arising under or related to this  Indenture and the
Notes and (v) expressly agrees by means of such supplemental indenture that such
Person (or if a group of  Persons,  then one  specified  Person)  shall make all
filings with the Commission (and any other  appropriate  Person) required by the
Exchange Act in connection with the Notes;

                                       15
<PAGE>

(ii) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing;

(iii) the Issuer receives consent of the Credit Enhancer and the Rating Agencies
shall have notified the Issuer that such transaction  shall not cause the rating
of the Notes to be reduced, suspended or withdrawn, if determined without regard
to the Credit Enhancement Instrument;

(iv) the Issuer  shall  have  received  an  Opinion  of Counsel  (and shall have
delivered  copies  thereof to the  Indenture  Trustee)  to the effect  that such
transaction  will not have any material adverse tax consequence to the Issuer or
any Noteholder;

(v) any action that is  necessary  to maintain  the lien and  security  interest
created by this Indenture shall have been taken; and

(vi) the Issuer  shall have  delivered  to the  Indenture  Trustee an  Officer's
Certificate  and an Opinion of Counsel  each  stating  that such  conveyance  or
transfer and such  supplemental  indenture comply with this Article III and that
all conditions  precedent  herein provided for relating to such transaction have
been complied with (including any filing required by the Exchange Act).

Section 3.17.  Successor or Transferee.  (a) Upon any consolidation or merger of
the Issuer in accordance with Section 3.16(a), the Person formed by or surviving
such consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted  for,  and may  exercise  every right and power of, the Issuer under
this  Indenture  with the same  effect as if such  Person  had been named as the
Issuer herein.

(b) Upon a conveyance or transfer of all the assets and properties of the Issuer
pursuant to Section 3.16(b), the Issuer will be released from every covenant and
agreement  of this  Indenture  to be  observed or  performed  on the part of the
Issuer with respect to the Notes immediately upon the delivery of written notice
to the Indenture Trustee of such conveyance or transfer.

Section  3.18.  No Other  Business.  The Issuer shall not engage in any business
other than  financing,  purchasing,  owning and  selling and  managing  the Home
Equity  Loans  and the  issuance  of the Notes and  Certificates  in the  manner
contemplated  by this  Indenture  and the  Basic  Documents  and all  activities
incidental thereto.

Section 3.19. No Borrowing. The Issuer shall not issue, incur, assume, guarantee
or otherwise become liable, directly or indirectly,  for any indebtedness except
for the Notes.

Section  3.20.  Guarantees,  Loans,  Advances and Other  Liabilities.  Except as
contemplated  by this Indenture or the other Basic  Documents,  the Issuer shall
not make any loan or advance or credit to, or guarantee  (directly or indirectly
or by  an  instrument  having  the  effect  of  assuring  another's  payment  or
performance on any  obligation or capability of so doing or otherwise),  endorse
or otherwise become contingently liable,  directly or indirectly,  in connection
with the obligations,  stocks or dividends of, or own,  purchase,  repurchase or

                                       16
<PAGE>

acquire  (or agree  contingently  to do so) any  stock,  obligations,  assets or
securities  of, or any other interest in, or make any capital  contribution  to,
any other Person.

Section 3.21.  Capital  Expenditures.  The Issuer shall not make any expenditure
(by long- term or  operating  lease or  otherwise)  for capital  assets  (either
realty or personalty).

Section 3.22.  Owner Trustee Not Liable for  Certificates or Related  Documents.
The recitals contained herein shall be taken as the statements of the Depositor,
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
Indenture,  of  any  Basic  Document  or of the  Certificates  (other  than  the
signatures of the Owner  Trustee on the  Certificates)  or the Notes,  or of any
Related Documents. The Owner Trustee shall at no time have any responsibility or
liability with respect to the  sufficiency of the Trust Estate or its ability to
generate the payments to be  distributed to  Certificateholders  under the Trust
Agreement or the Noteholders under this Indenture,  including, the compliance by
the Depositor or the Seller 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  Certificate  Paying  Agent,  the
Certificate  Registrar or the  Indenture  Trustee taken in the name of the Owner
Trustee.

Section 3.23. Restricted Payments. The Issuer shall not, directly or indirectly,
(i) pay any  dividend  or make any  distribution  (by  reduction  of  capital or
otherwise),  whether in cash, property,  securities or a combination thereof, to
the  Owner  Trustee  or any  owner of a  beneficial  interest  in the  Issuer or
otherwise with respect to any ownership or equity  interest or security in or of
the Issuer,  (ii) redeem,  purchase,  retire or otherwise  acquire for value any
such  ownership  or equity  interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose;  provided,  however, that the Issuer
may make, or cause to be made,  (x)  distributions  to the Owner Trustee and the
Certificateholders as contemplated by, and to the extent funds are available for
such purpose under the Trust  Agreement and (y) payments to the Master  Servicer
pursuant to the terms of the Servicing Agreement.  The Issuer will not, directly
or  indirectly,  make payments to or  distributions  from the Custodial  Account
except in accordance with this Indenture and the other Basic Documents.

Section 3.24.  Notice of Events of Default.  The Issuer shall give the Indenture
Trustee,  the Credit  Enhancer and the Rating  Agencies prompt written notice of
each Event of Default hereunder and under the Trust Agreement.

Section  3.25.  Further  Instruments  and Acts.  Upon  request of the  Indenture
Trustee,  the Issuer will execute and deliver such  further  instruments  and do
such  further  acts as may be  reasonably  necessary or proper to carry out more
effectively the purpose of this Indenture.

Section 3.26.  Statements to  Noteholders.  On each Payment Date,  the Indenture
Trustee and the  Certificate  Registrar shall forward by mail to each Noteholder
and  Certificateholder,  respectively,  the  statement  delivered  to it, on the
Business Day following the related  Determination  Date pursuant to Section 4.01
of the Servicing Agreement.

                                       17
<PAGE>

Section  3.27.  Determination  of Note Rates.  On the second LIBOR  Business Day
immediately  preceding  (i) the Closing  Date in the case of the first  Interest
Period and (ii) the first day of each succeeding  Interest Period, the Indenture
Trustee shall  determine  LIBOR and the Note Rates for the Class A-I-1 Notes and
the Class II Notes for such  Interest  Period and shall  inform the Issuer,  the
Master Servicer and the Depositor at their respective facsimile numbers given to
the Indenture Trustee in writing.

Section  3.28.  Payments  under the Credit  Enhancement  Instrument.  (a) On any
Payment Date, the Indenture Trustee shall make a draw on the Credit  Enhancement
Instrument in an amount,  if any, equal to the Credit  Enhancement  Draw Amount.
For purposes of the  foregoing,  amounts in the Payment  Account  available  for
interest distributions on the Class II Notes on any Payment Date shall be deemed
to include all amounts  distributed on the Group II Loans for such Payment Date,
other than the Principal Collection Distribution Amount and the Liquidation Loss
Distribution   Amount   (if   any)   distributed   thereon.   On   the   Insured
Undercollateralization  Payment Date, the Indenture Trustee shall make a draw on
the   Credit    Enhancement    Instrument    in   an   amount   equal   to   the
Undercollateralization  Amount,  if any,  remaining  after  payment of all other
amounts to be paid pursuant to Section 3.05(a) on such Payment Date. Such amount
shall be paid to the Class II  Noteholders  on such Payment  Date in  accordance
with clause (ii) of Section  3.05(a)(II).  On any Dissolution  Payment Date, the
Indenture Trustee shall make a draw on the Credit  Enhancement  Instrument in an
amount,  if any,  equal to the  Dissolution  Draw.  In  addition,  on the  Final
Scheduled  Payment Date for the Class II Notes, the Indenture Trustee shall make
a draw on the Credit Enhancement  Instrument in the amount by which the Security
Balances on the Class II Notes  exceeds the payments  otherwise  available to be
made to the Holders thereof on the Final Scheduled Payment Date.

(b) The Indenture Trustee shall submit,  if a Credit  Enhancement Draw Amount or
Dissolution  Draw is specified in any statement to Holders of the Class II Notes
prepared  by the  Master  Servicer  pursuant  to Section  4.01 of the  Servicing
Agreement,  the Notice of Nonpayment  and Demand for Payment of Insured  Amounts
(in the form attached as Exhibit A to the Credit Enhancement  Instrument) in the
amount of the Credit  Enhancement  Draw Amount or Dissolution Draw to the Credit
Enhancer no later than 2:00 P.M., New York City time, on the second Business Day
prior to the applicable  Payment Date.  Upon receipt of such Credit  Enhancement
Draw  Amount or  Dissolution  Draw in  accordance  with the terms of the  Credit
Enhancement  Instrument,   the  Indenture  Trustee  shall  deposit  such  Credit
Enhancement  Draw  Amount  or  Dissolution  Draw  in  the  Payment  Account  for
distribution to the Class II Noteholders pursuant to Section 3.05.

Section 3.29.  Additional Representations of the Issuer.

(a) This Indenture creates a valid and continuing  security interest (as defined
    in the New  York  UCC) in the  Mortgage  Notes  in  favor  of the  Indenture
    Trustee,  which  security  interest is prior to all other  Liens  (except as
    expressly permitted otherwise in this Indenture), and is enforceable as such
    as against creditors of and purchasers from the Issuer.

(b)  The Mortgage Notes constitute  "instruments"  within the meaning of the New
     York UCC and the Delaware UCC.

                                       18
<PAGE>

(c)  The Issuer owns and has good and  marketable  title to the  Mortgage  Notes
     free and clear of any Lien of any Person.

(d) The original  executed  copy of each  mortgage Note (except for any Mortgage
    Note with respect to which a Lost Note  Affidavit has been  delivered to the
    Custodian) has been delivered to the Custodian.

(e) The Issuer has received a written acknowledgment from the Custodian that the
    Custodian is acting solely as agent of the Indenture Trustee for the benefit
    of the Noteholders.

(f) Other than the security  interest granted to the Indenture  Trustee pursuant
    to this Indenture,  the Issuer has not pledged,  assigned,  sold,  granted a
    security  interest in, or otherwise  conveyed any of the Mortgage Notes. The
    Issuer has not  authorized  the filing of and is not aware of any  financing
    statements  against  the Issuer that  include a  description  of  collateral
    covering the Mortgage Notes other than any financing  statement  relating to
    the security  interest  granted to the  Indenture  Trustee  hereunder or any
    security  interest that has been terminated.  The Issuer is not aware of any
    judgment or tax lien filings against the Issuer.

(g) 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 Indenture  Trustee,  except for (i) any endorsements  that are part of a
    complete chain of  endorsements  from the originator of the Mortgage Note to
    the Indenture Trustee,  and (ii) any marks or notations  pertaining to Liens
    that have been terminated or released.

                                       19
<PAGE>

                                   ARTICLE IV

               The Notes; Satisfaction and Discharge of Indenture.

Section 4.01. The Notes; Increase of Maximum Variable Funding Balance;  Variable
Funding  Notes.  (a) The Term Notes shall be registered in the name of a nominee
designated by the Depository. Beneficial Owners will hold interests in the Class
A Notes (other than the Class A-I-IO Notes) and the Class M-I-1, as set forth in
Section 4.06 herein in minimum initial Security Balances of $25,000 and integral
multiples of $1 in excess thereof.  Beneficial Owners will hold interests in the
Class M-I-2 Notes and the M-I-3  Notes,  as set forth in Section  4.06 herein in
minimum initial  Security  Balances of $250,000 and integral  multiples of $1 in
excess thereof. Beneficial Owners will hold interests in the Class A-I-IO Notes,
as set forth in  Section  4.06  herein in  minimum  initial  notional  amount of
$1,000,000 and integral  multiples of $1 in excess  thereof.  The Capped Funding
Notes will be issued as  definitive  notes in fully  registered  form in minimum
initial  Security  Balances of $10,000 and  integral  multiples  of $1 in excess
thereof,  together  with  any  additional  amount  necessary  to  cover  (i) the
aggregate  initial Security  Balance of the Capped Funding Notes  surrendered at
the time of the  initial  denominational  exchange  thereof  (with such  initial
Security  Balance in each case being  deemed to be the  Security  Balance of the
Capped  Funding  Notes  at the  time of  such  initial  denominational  exchange
thereof) or (ii) the aggregate  initial  Security  Balance of any Capped Funding
Notes issued in an exchange described in subsection (d) below.

        The  Indenture  Trustee may for all  purposes  (including  the making of
payments  due  on  the  Notes)  deal  with  the  Depository  as  the  authorized
representative  of the Beneficial  Owners with respect to the Term Notes for the
purposes of exercising the rights of Holders of Term Notes hereunder.  Except as
provided in the next  succeeding  paragraph of this Section 4.01,  the rights of
Beneficial  Owners  with  respect  to the Term  Notes  shall be limited to those
established  by law  and  agreements  between  such  Beneficial  Owners  and the
Depository  and  Depository  Participants.  Except as provided in Section  4.08,
Beneficial Owners shall not be entitled to definitive  certificates for the Term
Notes as to which they are the Beneficial Owners.  Requests and directions from,
and votes of, the  Depository  as Holder of the Term  Notes  shall not be deemed
inconsistent if they are made with respect to different  Beneficial  Owners. The
Indenture  Trustee may  establish a reasonable  record date in  connection  with
solicitations  of consents from or voting by Noteholders  and give notice to the
Depository  of such  record  date.  Without  the  consent  of the Issuer and the
Indenture Trustee, no Term Note may be transferred by the Depository except to a
successor  Depository  that  agrees  to hold such  Note for the  account  of the
Beneficial Owners.

        In the event the  Depository  Trust  Company  resigns  or is  removed as
Depository,  the Indenture Trustee with the approval of the Issuer may appoint a
successor  Depository.  If no successor  Depository has been appointed within 30
days of the effective  date of the  Depository's  resignation  or removal,  each
Beneficial  Owner shall be entitled to  certificates  representing  the Notes it
beneficially owns in the manner prescribed in Section 4.08.

        The Notes shall,  on original issue, be executed on behalf of the Issuer
by the  Owner  Trustee,  not in its  individual  capacity  but  solely  as Owner
Trustee,  authenticated  by the Note  Registrar  and  delivered by the Indenture
Trustee to or upon the order of the Issuer.

                                       20
<PAGE>

(b) On each Payment Date, the aggregate Security Balance of the Variable Funding
Notes  shall  be  increased  by  an  amount  equal  to  the  Additional  Balance
Differential  for such Payment  Date,  subject to the Maximum  Variable  Funding
Balance and the terms and  conditions  set forth  below.  The  Maximum  Variable
Funding Balance may be increased as provided in Section 9.01(a)(viii).

(c) The  Variable  Funding  Note  issued  on the  Closing  Date  shall  bear the
Designation  "VFN-1" and each new  Variable  Funding  Note will bear  sequential
numerical designations in the order of their issuance.

(d) Subject to the  following  conditions,  the  Variable  Funding  Notes may be
exchanged  pursuant to Section 4.02 for one or more Capped Funding Notes.  Prior
to any such exchange,  the party requesting the exchange must provide an Opinion
of  Counsel,  addressed  to the Credit  Enhancer,  the Issuer and the  Indenture
Trustee,  to the effect that the Capped  Funding Notes shall qualify for federal
income tax  purposes  as  indebtedness  of the Issuer and the Issuer will not be
characterized as an association (or a publicly traded partnership)  taxable as a
corporation or a taxable  mortgage pool within the meaning of Section 7701(i) of
the Code. If required by the Opinion of Counsel, the Capped Funding Notes may be
issued  concurrently  with a reduction in the  Security  Balance of the Variable
Funding  Notes  and an  equivalent  increase  in  the  Security  Balance  of the
Certificates,  pursuant to Section 3.12 of the Trust Agreement.  Upon receipt of
the Opinion of Counsel,  the Indenture  Trustee shall issue Capped Funding Notes
with a Security  Balance  equal to the  Security  Balance  permitted  under such
Opinion of Counsel,  in minimum  denominations  as set forth in  subsection  (a)
above. The Capped Funding Notes shall bear the designation  "Capped" in addition
to any other  applicable  designation.  In connection  with such  exchange,  any
Security  Balance not represented by either a Capped Funding Note or an increase
in the Security  Balance of the  Certificates  referred to above shall result in
the issuance of a new Variable  Funding Note having an initial  Security Balance
equal to the excess of the outstanding  Security Balance of the Variable Funding
Note so  surrendered  over the initial  Security  Balances of the Capped Funding
Notes and an increase in the Security  Balance of the  Certificates  referred to
above.  The Indenture  Trustee and the Issuer agree to cooperate with each other
and the party  requesting  the  exchange  of Variable  Funding  Notes for Capped
Funding Notes,  the Credit  Enhancer,  the  Depositor,  the Seller and the Owner
Trustee and to cause no  unreasonable  delay in issuing  Capped Funding Notes in
connection with this Section and Section 3.12 of the Trust Agreement.

Section 4.02. Registration of and Limitations on Transfer and Exchange of Notes;
Appointment of Certificate  Registrar.  (a) The Issuer shall cause to be kept at
the Indenture Trustee's Corporate Trust Office a Note Register in which, subject
to such  reasonable  regulations as it may prescribe,  the Note Registrar  shall
provide for the registration of Notes and of transfers and exchanges of Notes as
herein provided.

        (b) Subject to the  restrictions  and limitations set forth below,  upon
surrender  for  registration  of  transfer  of any Note at the  Corporate  Trust
Office,  the Issuer shall execute and the Note Registrar shall  authenticate and
deliver,  in the name of the designated  transferee or transferees,  one or more
new Notes in authorized initial Security Balances  evidencing the same aggregate
Percentage Interests.

                                       21
<PAGE>

        (c) No Variable  Funding Note,  other than any Capped Funding Notes, may
be transferred.  Subject to the provisions set forth below, Capped Funding Notes
may be transferred,  provided that with respect to the initial  transfer thereof
by the Seller, prior written notification of such transfer shall have been given
to the Rating Agencies and to the Credit Enhancer by the Seller.

        (d) No transfer,  sale,  pledge or other disposition of a Capped Funding
Note shall be made unless such transfer,  sale,  pledge or other  disposition 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. In the event of any such transfer,  the Indenture  Trustee or
the Issuer shall require the  transferee to execute  either (i)(a) an investment
letter in  substantially  the form attached hereto as Exhibit B (or in such form
and substance  reasonably  satisfactory to the Indenture Trustee and the Issuer)
which  investment  letters  shall  not be an  expense  of the  Trust,  the Owner
Trustee, the Indenture Trustee, the Master Servicer, the Depositor or the Issuer
and which investment letter states that, among other things, such transferee (a)
is a "qualified  institutional buyer" as defined under Rule 144A, acting for its
own account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A, and (b) is aware that the proposed  transferor  intends to rely
on the exemption  from  registration  requirements  under the  Securities Act of
1933, as amended,  provided by Rule 144A or (ii)(a) a written Opinion of Counsel
(which  may  be  in-house  counsel)  acceptable  to and in  form  and  substance
reasonably  satisfactory  to the  Indenture  Trustee  and the  Issuer  that such
transfer  may be  made  pursuant  to an  exemption,  describing  the  applicable
exemption  and the  basis  therefor,  from  said Act and  laws or is being  made
pursuant to said Act and laws,  which Opinion of Counsel shall not be an expense
of the  Indenture  Trustee  or the Issuer and (b) the  Indenture  Trustee  shall
require the transferee  executes an investment  letter in substantially the form
of  Exhibit  C hereto  and the  transferor  executes  a  representation  letter,
substantially  in the form of  Exhibit  D hereto  acceptable  to and in form and
substance  reasonably  satisfactory  to the  Issuer  and the  Indenture  Trustee
certifying to the Issuer and the Indenture  Trustee the facts  surrounding  such
transfer,  which  investment  letter  shall not be an expense  of the  Indenture
Trustee or the Issuer.  The Holder of a Capped  Funding Note  desiring to effect
such transfer shall, and does hereby agree to,  indemnify the Indenture  Trustee
the Credit  Enhancer and the Issuer 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. In addition,  any  Noteholder  of a Capped  Funding Note desiring to
effect any such transfer shall deliver,  if any private placement  memorandum or
other offering  document prepared in connection with the offering of such Capped
Funding Notes  specifies  that such delivery will be required,  to the Indenture
Trustee and the Master Servicer,  either (i) a certificate  substantially to the
effect of the  certification  set forth in Exhibit G to the Trust  Agreement  or
(ii) an Opinion of Counsel that establishes to the satisfaction of the Indenture
Trustee and the Master Servicer that the purchase of Certificates is permissible
under applicable law, will not constitute or result in any non-exempt prohibited
transaction  under  ERISA or Section  4975 of the Code and will not  subject the
Indenture  Trustee  or the  Master  Servicer  to  any  obligation  or  liability
(including  obligations or liabilities  under ERISA or Section 4975 of the Code)
in addition to those  undertaken  in this  Indenture,  which  Opinion of Counsel
shall  not be an  expense  of the  Indenture  Trustee  or the  Master  Servicer.
Notwithstanding  the foregoing,  the restrictions on transfer  specified in this
paragraph  are not  applicable  to any  Capped  Funding  Notes  that  have  been
registered  under the  Securities  Act of 1933  pursuant  to Section  2.4 of the
Purchase Agreement.

                                       22
<PAGE>

        (e) (i) In the  case  of any  Class  A-I-IO  Note or  Class  M-I-3  Note
presented for  registration in the name of any Person,  either (A) the Indenture
Trustee  shall  require  an Opinion  of  Counsel  acceptable  to and in form and
substance  satisfactory to the Indenture  Trustee,  the Depositor and the Master
Servicer to the effect that the purchase or holding of such Class A-I-IO Note or
Class M-I-3 Note is  permissible  under  applicable  law, will not constitute or
result  in  any  non-exempt  prohibited  transaction  under  Section  406 of the
Employee  Retirement  Income  Security  Act of 1974,  as amended  ("ERISA"),  or
Section  4975  of  the  Code  (or   comparable   provisions  of  any  subsequent
enactments),  and will not subject the Indenture  Trustee,  the Depositor or the
Master  Servicer  to any  obligation  or  liability  (including  obligations  or
liabilities  under  ERISA or  Section  4975 of the  Code) in  addition  to those
undertaken in this  Agreement,  which Opinion of Counsel shall not be an expense
of the  Indenture  Trustee,  the  Depositor  or the Master  Servicer  or (B) the
prospective  Transferee shall be required to provide the Indenture Trustee,  the
Depositor and the Master Servicer with a  certification  to the effect set forth
in Exhibit G to the Trust  Agreement  (with  respect to any Class A-I-IO Note or
Class M-I-3 Note),  which the  Indenture  Trustee may rely upon without  further
inquiry or investigation,  or such other certifications as the Indenture Trustee
may deem  desirable or necessary in order to establish  that such  Transferee or
the Person in whose  name such  registration  is  requested  is not an  employee
benefit plan or other plan subject to the prohibited  transaction  provisions of
ERISA or  Section  4975 of the Code,  or any  Person  (including  an  investment
manager,  a named  fiduciary  or a trustee of any such plan) who is using  "plan
assets" of any such plan to effect such acquisition (each, a "Plan Investor").

        (ii)   Notwithstanding   the   foregoing,   an  Opinion  of  Counsel  or
certification  will not be required  with  respect to the  transfer of any Class
A-I-IO Note or Class M-I-3 Note to a Depository,  or for any subsequent transfer
of any  interest in a Class  A-I-IO Note or Class M-I-3 Note for so long as such
Note is a  Book-Entry  Note (each such Class  A-I-IO Note or Class M-I-3 Note, a
"Book-Entry Mezzanine Note"). Any Transferee of a Book-Entry Mezzanine Note will
be deemed to have  represented by virtue of its purchase or holding of such Note
(or interest therein) that such Transferee is not a Plan Investor.

        (iii) (A) If any Class  A-I-IO Note or Class M-I-3 Note (or any interest
therein) is acquired or held in  violation  of the  provisions  of Section  (ii)
above,  then the last preceding  Transferee that is not a Plan Investor shall be
restored,  to the extent permitted by law, to all rights and obligations as Note
Owner thereof retroactive to the date of such Transfer of such Class A-I-IO Note
or Class M-I-3 Note.  The  Indenture  Trustee shall be under no liability to any
Person for making any payments due on such Note to such preceding Transferee.

        (iv) Any purported  Beneficial Owner whose acquisition or holding of any
Book-Entry Mezzanine Note (or interest therein) was effected in violation of the
restrictions  in this Section  4.02(e)  shall  indemnify  and hold  harmless the
Depositor,  the Indenture  Trustee,  the Underwriter,  the Master Servicer,  any
Subservicer,  and the Trust from and  against any and all  liabilities,  claims,
costs or expenses  incurred by such parties as a result of such  acquisition  or
holding.

        (f) (i) In the case of any Class  A-I Note  (other  than a Class  A-I-IO
Note),  Class A-II Note or Class M-I Note  (other than a Class M-I-3 Note) (each
such Note, a "Book-Entry Non-Restricted Note") presented for registration in the
name of any  Person,  such  Person  shall be deemed to have  represented  to the
Indenture Trustee,  the Depositor and the Master Servicer that (A) the Person is

                                       23
<PAGE>

not a Plan Investor, or (B) a class or individual exemption under Section 406 of
ERISA or Section 4975 of the Code is applicable to the  acquisition  of the term
note by that Person or (C) the  acquisition  of the Note by that Person does not
constitute or give rise to a prohibited  transaction  under Section 406 of ERISA
or Section 4975 of the Code for which no statutory, regulatory or administrative
exemption is available.

        (ii) (A) If any Class A-I Note (other than a Class A-I-IO  Note),  Class
A-II Note or Class M-I Note (other  than a Class  M-I-3  Note) (or any  interest
therein) is  acquired  or held in  violation  of the  provisions  of clause f(i)
above,  then the  last  preceding  Transferee  that is not in  violation  of the
provisions  of clause f(i) above shall be restored,  to the extent  permitted by
law, to all rights and obligations as Note Owner thereof retroactive to the date
of such Transfer of such Book-Entry  Non-Restricted  Note. The Indenture Trustee
shall be under no  liability  to any Person for making any  payments due on such
Note to such preceding Transferee.

        (iii) Any Person  investing  assets of an employee benefit or other plan
subject to the prohibited transaction provisions of ERISA or Section 4975 of the
Code (a  "Plan")  may  not  acquire  any  Note or any  interest  therein  if the
Depositor,  the Master Servicer, the Indenture Trustee, the Owner Trustee or any
affiliates of any such person (i) has  investment or  administrative  discretion
with  respect  to  those  plan  assets  of such  Plan;  (ii)  has  authority  or
responsibility  to give or  regularly  gives  investment  advice with respect to
those plan assets for a fee and pursuant to an agreement or  understanding  that
such advice will serve as a primary basis for investment  decisions with respect
to those plan assets and will be based on the  particular  investment  needs for
the Plan; or (iii) is an employer maintaining or contributing to the Plan.

        (iv) Any purported  Beneficial Owner whose acquisition or holding of any
Book-Entry  Non-Restricted  Note (or interest therein) was effected in violation
of the  restrictions  in this Section  4.02(f) shall indemnify and hold harmless
the Depositor, the Indenture Trustee, the Underwriter,  the Master Servicer, any
Subservicer,  and the Trust from and  against any and all  liabilities,  claims,
costs or expenses  incurred by such parties as a result of such  acquisition  or
holding.

        (g) Subject to the foregoing,  at the option of the  Noteholders,  Notes
may be  exchanged  for other  Notes of like  tenor,  in each case in  authorized
initial Security  Balances  evidencing the same aggregate  Percentage  Interests
upon surrender of the Notes to be exchanged at the Corporate Trust Office of the
Note  Registrar.  With  respect to any  surrender  of Capped  Funding  Notes for
exchange the new Notes delivered in exchange  therefor will bear the designation
"Capped" in addition to any other  applicable  designations.  Whenever any Notes
are so  surrendered  for exchange,  the Indenture  Trustee shall execute and the
Note  Registrar  shall  authenticate  and deliver the Notes which the Noteholder
making the exchange is entitled to receive.  Each Note  presented or surrendered
for  registration  of  transfer  or  exchange  shall (if so required by the Note
Registrar) be duly  endorsed by, or be  accompanied  by a written  instrument of
transfer in form reasonably satisfactory to the Note Registrar duly executed by,
the  Holder  thereof  or his  attorney  duly  authorized  in  writing  with such
signature  guaranteed by a commercial  bank or trust company located or having a
correspondent  located in the city of New York.  Notes  delivered  upon any such
transfer or exchange will evidence the same obligations, and will be entitled to
the same rights and privileges, as the Notes surrendered.

                                       24
<PAGE>

        (h) No service charge shall be imposed for any  registration of transfer
or exchange of Notes,  but the Note  Registrar  shall  require  payment of a sum
sufficient  to cover  any tax or  governmental  charge  that may be  imposed  in
connection with any registration of transfer or exchange of Notes.

        (i) All Notes  surrendered  for  registration  of transfer  and exchange
shall be cancelled by the Note Registrar and delivered to the Indenture  Trustee
for subsequent destruction without liability on the part of either.

        (j) The Issuer  hereby  appoints the  Indenture  Trustee as  Certificate
Registrar to keep at its Corporate Trust Office a Certificate  Register pursuant
to Section  3.09 of the Trust  Agreement  in which,  subject to such  reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges  thereof pursuant to
Section 3.05 of the Trust Agreement.  The Indenture  Trustee hereby accepts such
appointment.

Section 4.03. Mutilated,  Destroyed,  Lost or Stolen Notes. If (i) any mutilated
Note is surrendered to the Indenture Trustee,  or the Indenture Trustee receives
evidence to its satisfaction of the destruction,  loss or theft of any Note, and
(ii) there is delivered to the  Indenture  Trustee such security or indemnity as
may be required  by it to hold the Issuer and the  Indenture  Trustee  harmless,
then,  in the  absence  of  notice  to the  Issuer,  the Note  Registrar  or the
Indenture Trustee that such Note has been acquired by a bona fide purchaser, and
provided that the  requirements  of Section 8-405 of the UCC are met, the Issuer
shall execute, and upon its request the Indenture Trustee shall authenticate and
deliver,  in exchange for or in lieu of any such mutilated,  destroyed,  lost or
stolen Note, a replacement Note of the same class;  provided,  however,  that if
any such destroyed,  lost or stolen Note, but not a mutilated  Note,  shall have
become or within  seven  days  shall be due and  payable,  instead  of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or  payable  without  surrender  thereof.  If,  after the  delivery  of such
replacement Note or payment of a destroyed,  lost or stolen Note pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Note in
lieu of which  such  replacement  Note was  issued  presents  for  payment  such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any  Person  taking  such  replacement  Note  from  such  Person to whom such
replacement  Note was  delivered or any  assignee of such Person,  except a bona
fide purchaser,  and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Indenture Trustee in connection therewith.

        Upon the issuance of any  replacement  Note under this Section 4.03, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other  governmental  charge  that may be  imposed  in  relation
thereto and any other  reasonable  expenses  (including the fees and expenses of
the Indenture Trustee) connected therewith.

        Every   replacement  Note  issued  pursuant  to  this  Section  4.03  in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original  additional  contractual  obligation of the Issuer,  whether or not the
mutilated,  destroyed,  lost or stolen Note shall be at any time  enforceable by
anyone,  and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.

                                       25
<PAGE>

        The provisions of this Section 4.03 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.

Section 4.04.  Persons Deemed Owners.  Prior to due presentment for registration
of transfer of any Note, the Issuer,  the Indenture Trustee and any agent of the
Issuer or the  Indenture  Trustee may treat the Person in whose name any Note is
registered  (as of the day of  determination)  as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever,  whether or not such Note be overdue, and
none of the  Issuer,  the  Indenture  Trustee  or any agent of the Issuer or the
Indenture Trustee shall be affected by notice to the contrary.

Section 4.05. Cancellation.  All Notes surrendered for payment,  registration of
transfer,  exchange or redemption shall, if surrendered to any Person other than
the  Indenture  Trustee,  be  delivered  to the  Indenture  Trustee and shall be
promptly cancelled by the Indenture Trustee.  The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.
No  Notes  shall  be  authenticated  in lieu  of or in  exchange  for any  Notes
cancelled as provided in this  Section  4.05,  except as expressly  permitted by
this Indenture.  All cancelled Notes may be held or disposed of by the Indenture
Trustee in  accordance  with its  standard  retention  or disposal  policy as in
effect at the time unless the Issuer shall direct by an Issuer Request that they
be destroyed or returned to it;  provided  however,  that such Issuer Request is
timely  and the Notes  have not been  previously  disposed  of by the  Indenture
Trustee.

Section 4.06.  Book-Entry Notes. The Term Notes shall initially be issued as one
or more Term Notes held by the  Book-Entry  Custodian  or, if  appointed to hold
such Term Notes as provided  below,  the Depository  Trust Company,  the initial
Depository,  and  registered  in the name of its  nominee  Cede & Co.  Except as
provided  below,  registration  of such Term Notes may not be transferred by the
Indenture  Trustee  except to another  Depository  that agrees to hold such Term
Notes for the  respective  Beneficial  Owners.  The Indenture  Trustee is hereby
initially appointed as the Book-Entry Custodian and hereby agrees to act as such
in accordance herewith and in accordance with the agreement that it has with the
Depository  authorizing it to act as such. The Book-Entry Custodian may, and, if
it is no  longer  qualified  to act as such,  the  Book-Entry  Custodian  shall,
appoint, by a written instrument delivered to the Depositor, the Master Servicer
and, if the Indenture  Trustee is not the  Book-Entry  Custodian,  the Indenture
Trustee,  any other  transfer  agent  (including the Depository or any successor
Depository)  to  act  as  Book-Entry  Custodian  under  such  conditions  as the
predecessor  Book-Entry Custodian and the Depository or any successor Depository
may prescribe,  provided that the predecessor  Book-Entry Custodian shall not be
relieved  of any  of  its  duties  or  responsibilities  by  reason  of any  new
appointment,  except  if the  Depository  is  the  successor  to the  Book-Entry
Custodian. If the Indenture Trustee resigns or is removed in accordance with the
terms hereof,  the successor  trustee or, if it so elects,  the Depository shall
immediately  succeed to its predecessor's  duties as Book-Entry  Custodian.  The
Depositor  shall have the right to  inspect,  and to obtain  copies of, any Term

                                       26
<PAGE>

Notes held as Book-Entry Notes by the Book-Entry Custodian.  No Beneficial Owner
will receive a Definitive Note representing such Beneficial  Owner's interest in
such Note,  except as provided  in Section  4.08.  Unless and until  definitive,
fully registered  Notes (the "Definitive  Notes") have been issued to Beneficial
Owners pursuant to Section 4.08:

(i)     the provisions of this Section 4.06 shall be in full force and effect;

(ii) the Note Registrar and the Indenture Trustee shall be entitled to deal with
the  Depository  for all purposes of this  Indenture  (including  the payment of
principal  of and  interest  on the Notes  and the  giving  of  instructions  or
directions  hereunder)  as the sole holder of the Term Notes,  and shall have no
obligation to the Owners of Term Notes;

(iii) to the extent that the  provisions  of this Section 4.06 conflict with any
other  provisions of this  Indenture,  the provisions of this Section 4.06 shall
control;

(iv) the  rights of  Beneficial  Owners  shall be  exercised  only  through  the
Depository  and shall be  limited  to those  established  by law and  agreements
between  such  Owners of Term Notes and the  Depository  and/or  the  Depository
Participants.  Unless and until  Definitive  Term Notes are issued  pursuant  to
Section 4.08, the initial  Depository will make  book-entry  transfers among the
Depository  Participants  and receive and transmit  payments of principal of and
interest on the Notes to such Depository Participants; and

(v) whenever this Indenture  requires or permits  actions to be taken based upon
instructions  or  directions  of Holders of Term Notes  evidencing  a  specified
percentage of the Security  Balances of the Term Notes,  the Depository shall be
deemed to  represent  such  percentage  only to the extent that it has  received
instructions   to  such  effect  from   Beneficial   Owners  and/or   Depository
Participants owning or representing,  respectively,  such required percentage of
the beneficial interest in the Term Notes and has delivered such instructions to
the Indenture Trustee.

Section 4.07. Notices to Depository. Whenever a notice or other communication to
the Term Note  Holders  is  required  under  this  Indenture,  unless  and until
Definitive  Term Notes shall have been issued to Beneficial  Owners  pursuant to
Section  4.08,   the   Indenture   Trustee  shall  give  all  such  notices  and
communications  specified herein to be given to Holders of the Term Notes to the
Depository, and shall have no obligation to the Beneficial Owners.

Section 4.08. Definitive Notes. If (i) the Indenture Trustee determines that the
Depository   is  no  longer   willing  or  able  to   properly   discharge   its
responsibilities  with  respect to the Term Notes and the  Indenture  Trustee is
unable to locate a qualified  successor,  (ii) the Indenture  Trustee  elects to
terminate  the  book-entry  system  through  the  Depository  or (iii) after the
occurrence of an Event of Default,  Owners of Term Notes representing beneficial
interests  aggregating at least a majority of the Security  Balances of the Term
Notes advise the  Depository  in writing that the  continuation  of a book-entry
system  through  the  Depository  is no  longer  in the  best  interests  of the
Beneficial  Owners,  then the Depository shall notify all Beneficial  Owners and
the  Indenture  Trustee  of  the  occurrence  of  any  such  event  and  of  the
availability of Definitive Term Notes to Beneficial  Owners requesting the same.
Upon  surrender  to  the  Indenture   Trustee  of  the  typewritten  Term  Notes
representing the Book-Entry Notes by the Book-Entry Custodian or the Depository,
as  applicable,  accompanied  by  registration  instructions,  the Issuer  shall
execute and the Indenture  Trustee shall  authenticate the Definitive Term Notes

                                       27
<PAGE>

in accordance with the instructions of the Depository.  None of the Issuer,  the
Note  Registrar  or the  Indenture  Trustee  shall be  liable  for any  delay in
delivery  of such  instructions  and may  conclusively  rely  on,  and  shall be
protected  in relying on, such  instructions.  Upon the  issuance of  Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes
as Noteholders.

Section 4.09. Tax Treatment. The Issuer has entered into this Indenture, and the
Notes will be issued,  with the  intention  that,  for federal,  state and local
income, single business and franchise tax purposes, the Notes will be treated as
indebtedness  for  purposes  of such  taxes and in  addition,  for  federal  tax
purposes,  the Class I Notes will  qualify as  regular  interests  in a REMIC as
defined in the Code.  The Issuer,  by  entering  into this  Indenture,  and each
Noteholder,  by its  acceptance  of its Note (and each  Beneficial  Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat the
Notes for federal,  state and local  income,  single  business and franchise tax
purposes as  indebtedness  for purposes of such taxes and in  addition,  for the
Class I Notes, as regular interests in a REMIC as defined in the Code.

Section 4.10.  Satisfaction  and Discharge of Indenture.  This  Indenture  shall
cease to be of further  effect with respect to the Notes except as to (i) rights
of  registration  of transfer and  exchange,  (ii)  substitution  of  mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09,
3.16, 3.18 and 3.19, (v) the rights, obligations and immunities of the Indenture
Trustee  hereunder  (including the rights of the Indenture Trustee under Section
6.07 and the  obligations of the Indenture  Trustee under Section 4.11) and (vi)
the rights of Noteholders as  beneficiaries  hereof with respect to the property
so deposited with the Indenture  Trustee  payable to all or any of them, and the
Indenture Trustee, on demand of and at the expense of the Issuer,  shall execute
proper  instruments  acknowledging  satisfaction and discharge of this Indenture
with respect to the Notes, when

               (A)    either

               (1) all Notes theretofore authenticated and delivered (other than
        (i) Notes  that have been  destroyed,  lost or stolen and that have been
        replaced or paid as  provided  in Section  4.03 and (ii) Notes for whose
        payment money has theretofore  been deposited in trust or segregated and
        held in trust by the  Issuer  and  thereafter  repaid  to the  Issuer or
        discharged  from such  trust,  as  provided  in Section  3.03) have been
        delivered to the Indenture Trustee for cancellation; or

               (2) all Notes not theretofore  delivered to the Indenture Trustee
          for cancellation

                      a.     have become due and payable,

                    b.  will  become  due and  payable  at the  Final  Scheduled
               Payment Date within one year, or

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<PAGE>

                    c. have been declared  immediately due and payable  pursuant
               to Section 5.02.

and the Issuer,  in the case of a. or b. above,  has  irrevocably  deposited  or
caused to be  irrevocably  deposited  with the Indenture  Trustee cash or direct
obligations of or obligations  guaranteed by the United States of America (which
will  mature  prior to the date such  amounts  are  payable),  in trust for such
purpose, in an amount sufficient to pay and discharge the entire indebtedness on
such Notes and Certificates  then  outstanding not theretofore  delivered to the
Indenture Trustee for cancellation when due on the Final Scheduled Payment Date;

               (B) the  Issuer  has paid or  caused  to be paid all  other  sums
        payable hereunder and under the Insurance Agreement by the Issuer; and

               (C) the Issuer has  delivered  to the  Indenture  Trustee and the
        Credit Enhancer an Officer's Certificate and an Opinion of Counsel, each
        meeting the  applicable  requirements  of Section 10.01 and each stating
        that all  conditions  precedent  herein  provided  for  relating  to the
        satisfaction  and  discharge of this  Indenture  have been complied with
        and, if the Opinion of Counsel  relates to a deposit made in  connection
        with Section  4.10(A)(2)b.  above,  such opinion shall further be to the
        effect  that  such  deposit  will  not  have any  material  adverse  tax
        consequences to the Issuer, any Noteholders or any Certificateholders.

               Upon  satisfaction and discharge of the Indenture,  the Indenture
Trustee shall return the Group I Policy to Radian.

Section  4.11.  Application  of  Trust  Money.  All  monies  deposited  with the
Indenture  Trustee  pursuant to Section  4.10 hereof  shall be held in trust and
applied  by it,  in  accordance  with  the  provisions  of the  Notes  and  this
Indenture,  to the  payment,  either  directly  or through  any Paying  Agent or
Certificate Paying Agent, as the Indenture Trustee may determine, to the Holders
of  Securities,  of all sums due and to become due  thereon  for  principal  and
interest;  but such monies need not be segregated from other funds except to the
extent required herein or required by law.

Section  4.12.  Subrogation  and  Cooperation.  (a) The Issuer and the Indenture
Trustee  acknowledge  that (i) to the extent the Credit  Enhancer makes payments
under the Credit  Enhancement  Instrument on account of principal of or interest
on the Group II Loans,  the  Credit  Enhancer  will be fully  subrogated  to the
rights of the Class II  Noteholders  to receive such principal and interest from
the Group II Loans,  and (ii) the Credit  Enhancer  shall be paid such principal
and interest but only from the sources and in the manner  provided herein and in
the Insurance Agreement for the payment of such principal and interest.

        The  Indenture   Trustee  shall  cooperate  in  all  respects  with  any
reasonable  request by the Credit Enhancer for action to preserve or enforce the
Credit  Enhancer's  rights or interest  under this  Indenture  or the  Insurance
Agreement, consistent with this Indenture and without limiting the rights of the
Noteholders  as  otherwise  set  forth  in  the  Indenture,  including,  without
limitation, upon the occurrence and continuance of a default under the Insurance
Agreement, a request to take any one or more of the following actions:

                                       29
<PAGE>

(i) institute  Proceedings for the collection of all amounts then payable on the
Notes or under this  Indenture  in respect to the Notes and all amounts  payable
under the Insurance  Agreement and to enforce any judgment  obtained and collect
from the Issuer monies adjudged due;

(ii) sell the Trust Estate or any portion thereof or rights or interest therein,
at one or more  public or private  Sales (as  defined in  Section  5.15  hereof)
called and conducted in any manner permitted by law;

(iii)   file or record all assignments that have not previously been recorded;

(iv)  institute  Proceedings  from  time to time  for the  complete  or  partial
foreclosure of this Indenture; and

(v) exercise any remedies of a secured party under the Uniform  Commercial  Code
and take any other  appropriate  action to protect  and  enforce  the rights and
remedies of the Credit Enhancer hereunder.

        Following the payment in full of the Notes,  the Credit  Enhancer  shall
continue to have all rights and privileges provided to it under this Section and
in all other provisions of this Indenture, until all amounts owing to the Credit
Enhancer have been paid in full.

Section 4.13.  Repayment of Monies Held by Paying Agent.  In connection with the
satisfaction  and  discharge of this  Indenture  with respect to the Notes,  all
monies  then held by any  Person  other  than the  Indenture  Trustee  under the
provisions of this  Indenture  with respect to such Notes shall,  upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.05 and thereupon  such Paying Agent shall be released from all further
liability with respect to such monies.

Section 4.14.  Temporary Notes. Pending the preparation of any Definitive Notes,
the Issuer may execute and upon its written direction, the Indenture Trustee may
authenticate and make available for delivery,  temporary Notes that are printed,
lithographed,   typewritten,   photocopied   or  otherwise   produced,   in  any
denomination,  substantially  of the  tenor of the  Definitive  Notes in lieu of
which  they  are  issued  and  with  such  appropriate  insertions,   omissions,
substitutions  and other  variations  as the officers  executing  such Notes may
determine, as evidenced by their execution of such Notes.

        If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without  unreasonable delay. After the preparation of the Definitive
Notes,  the temporary  Notes shall be  exchangeable  for  Definitive  Notes upon
surrender  of the  temporary  Notes at the  office or  agency  of the  Indenture
Trustee,  without charge to the Holder.  Upon surrender for  cancellation of any
one or more temporary Notes, the Issuer shall execute and the Indenture  Trustee
shall  authenticate  and make  available  for  delivery,  in exchange  therefor,
Definitive  Notes of  authorized  denominations  and of like tenor and aggregate
principal amount. Until so exchanged, such temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as Definitive Notes.

                                       30
<PAGE>

Section  4.15.  Maintenance  of Office or Agency.  The  Indenture  Trustee  will
maintain or cause to be maintained at its expense an office or offices or agency
or agencies in  Pennsylvania  where the Group I Policy shall be  delivered.  The
Indenture  Trustee  initially  designates  its  Corporate  Trust Office for such
purposes.  The  Indenture  Trustee  will  give  prompt  written  notice  to  the
Noteholders of any change in such location of any such office or agency.

                                   ARTICLE V

                              Default and Remedies

Section  5.01.  Events of Default.  The Issuer  shall  deliver to the  Indenture
Trustee  and the  Credit  Enhancer,  within  five  days  after  learning  of the
occurrence any event which with the giving of notice and the lapse of time would
become an Event of Default  under  clause (iii) of the  definition  of "Event of
Default"  written  notice in the form of an Officer's  Certificate of its status
and what action the Issuer is taking or proposes to take with respect thereto.

Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an Event of
Default should occur and be continuing or if the Master  Servicer shall purchase
all of  the  Home  Equity  Loans  pursuant  to  Section  8.08  of the  Servicing
Agreement,  then and in every such case the Indenture  Trustee or the Holders of
Notes  representing  not less than a majority  of the  Security  Balances of all
Notes with the written  consent of the Credit  Enhancer,  or the Credit Enhancer
may declare the Notes to be immediately due and payable,  by a notice in writing
to the Issuer (and to the Indenture  Trustee if given by Noteholders),  and upon
any such  declaration  the  unpaid  principal  amount  of such  class of  Notes,
together  with  accrued  and  unpaid  interest   thereon  through  the  date  of
acceleration, shall become immediately due and payable.

        At any time after such  declaration  of  acceleration  of maturity  with
respect to an Event of Default has been made and before a judgment or decree for
payment  of the  money  due  has  been  obtained  by the  Indenture  Trustee  as
hereinafter  provided  in this  Article V, the Holders of Notes  representing  a
majority of the Security  Balances of all Notes, by written notice to the Issuer
and the Indenture  Trustee with the written consent of the Credit  Enhancer,  or
the Credit  Enhancer,  may in writing  waive the  related  Event of Default  and
rescind and annul such declaration and its consequences if:

(i)  the  Issuer  has  paid  or  deposited  with  the  Indenture  Trustee  a sum
     sufficient to pay:

                      (A) all payments of principal of and interest on the Notes
               and all other  amounts  that would then be due  hereunder or upon
               the  Notes  if  the  Event  of  Default   giving   rise  to  such
               acceleration had not occurred; and

                      (B) all sums paid or  advanced  by the  Indenture  Trustee
               hereunder   and   the    reasonable    compensation,    expenses,
               disbursements  and  advances  of the  Indenture  Trustee  and its
               agents and counsel; and

(ii) all Events of Default,  other than the  nonpayment  of the principal of the
Notes that has become due solely by such acceleration, have been cured or waived
as provided in Section 5.12.

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<PAGE>

        No such  rescission  shall affect any  subsequent  default or impair any
right consequent thereto.

Section 5.03.  Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee.  (a) The Issuer  covenants  that if  default in the  payment of (i) any
interest on any Note when the same  becomes due and  payable,  and such  default
continues for a period of five days, or (ii) the principal of or any installment
of the  principal of any Note when the same becomes due and payable,  the Issuer
shall, upon demand of the Indenture  Trustee,  pay to it, for the benefit of the
Holders  of  Notes,  the  whole  amount  then due and  payable  on the Notes for
principal  and  interest,  with  interest  upon the  overdue  principal,  and in
addition  thereto such further  amount as shall be sufficient to cover the costs
and expenses of  collection,  including the reasonable  compensation,  expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.

(b) In case the  Issuer  shall  fail  forthwith  to pay such  amounts  upon such
demand,  the  Indenture  Trustee,  in its own name and as  trustee of an express
trust,  subject to the  provisions  of Section  10.17  hereof  may  institute  a
Proceeding for the  collection of the sums so due and unpaid,  and may prosecute
such  Proceeding to judgment or final  decree,  and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor upon the Notes,  wherever
situated, the monies adjudged or decreed to be payable.

(c) If an Event of Default shall occur and be continuing,  the Indenture Trustee
subject to the  provisions  of Section  10.17  hereof may, as more  particularly
provided in Section 5.04, in its discretion,  proceed to protect and enforce its
rights and the rights of the Noteholders, by such appropriate Proceedings as the
Indenture  Trustee  shall deem most  effective  to protect  and enforce any such
rights,  whether for the  specific  enforcement  of any covenant or agreement in
this  Indenture or in aid of the  exercise of any power  granted  herein,  or to
enforce  any other  proper  remedy  or legal or  equitable  right  vested in the
Indenture Trustee by this Indenture or by law.

(d) In case there shall be pending,  relative to the Issuer or any other obligor
upon the Notes or any Person  having or  claiming an  ownership  interest in the
Trust Estate,  Proceedings under Title 11 of the United States Code or any other
applicable  federal or state bankruptcy,  insolvency or other similar law, or in
case  a  receiver,   assignee  or  trustee  in  bankruptcy  or   reorganization,
liquidator,  sequestrator  or similar  official shall have been appointed for or
taken  possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial  Proceedings  relative to the Issuer
or other  obligor upon the Notes,  or to the creditors or property of the Issuer
or such other  obligor,  the  Indenture  Trustee,  irrespective  of whether  the
principal of any Notes shall then be due and payable as therein  expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any  demand  pursuant  to the  provisions  of this  Section,  shall be
entitled and empowered, by intervention in such Proceedings or otherwise:

(i) to file and prove a claim or claims for the entire  amount of principal  and
interest  owing and unpaid in respect of the Notes and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Indenture  Trustee  (including  any claim  for  reasonable  compensation  to the

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<PAGE>

Indenture Trustee and each predecessor  Indenture Trustee,  and their respective
agents,  attorneys  and  counsel,  and for  reimbursement  of all  expenses  and
liabilities  incurred,  and all advances made, by the Indenture Trustee and each
predecessor  Indenture  Trustee,  except  as a  result  of  negligence,  willful
misconduct or bad faith) and of the Noteholders allowed in such Proceedings;

(ii) unless  prohibited by applicable law and regulations,  to vote on behalf of
the Holders of Notes in any election of a trustee,  a standby  trustee or Person
performing similar functions in any such Proceedings;

(iii) to collect and receive any monies or other property payable or deliverable
on any such claims and to  distribute  all amounts  received with respect to the
claims of the Noteholders and of the Indenture Trustee on their behalf; and

(iv) to file  such  proofs of claim and  other  papers  or  documents  as may be
necessary or advisable in order to have the claims of the  Indenture  Trustee or
the Holders of Notes allowed in any judicial proceedings relative to the Issuer,
its creditors and its property;

and any trustee,  receiver,  liquidator,  custodian or other similar official in
any such  Proceeding is hereby  authorized by each of such  Noteholders  to make
payments to the Indenture Trustee,  and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders,  to pay to
the Indenture  Trustee such amounts as shall be  sufficient to cover  reasonable
compensation to the Indenture  Trustee,  each predecessor  Indenture Trustee and
their  respective  agents,  attorneys  and counsel,  and all other  expenses and
liabilities  incurred,  and all advances made, by the Indenture Trustee and each
predecessor  Indenture  Trustee  except  as  a  result  of  negligence,  willful
misconduct or bad faith.

(e) Nothing herein contained shall be deemed to authorize the Indenture  Trustee
to  authorize  or  consent  to or vote for or  accept  or adopt on behalf of any
Noteholder any plan of  reorganization,  arrangement,  adjustment or composition
affecting  the Notes or the rights of any Holder  thereof  or to  authorize  the
Indenture  Trustee to vote in respect of the claim of any Noteholder in any such
proceeding  except,  as  aforesaid,  to vote for the  election  of a trustee  in
bankruptcy or similar Person.

(f) All rights of action and of asserting claims under this Indenture,  or under
any  of the  Notes,  may  be  enforced  by the  Indenture  Trustee  without  the
possession of any of the Notes or the  production  thereof in any trial or other
Proceedings relative thereto,  and any such action or proceedings  instituted by
the Indenture  Trustee shall be brought in its own name as trustee of an express
trust,  and any  recovery of judgment,  subject to the payment of the  expenses,
disbursements  and  compensation  of the  Indenture  Trustee,  each  predecessor
Indenture  Trustee and their respective  agents and attorneys,  shall be for the
ratable benefit of the Holders of the Term Notes or the Variable  Funding Notes,
as applicable.

(g)  In  any  Proceedings  brought  by  the  Indenture  Trustee  (and  also  any
Proceedings  involving the  interpretation of any provision of this Indenture to
which the Indenture  Trustee shall be a party),  the Indenture  Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.

                                       33
<PAGE>

Section  5.04.  Remedies;  Priorities.  (a) If an Event of  Default  shall  have
occurred and be continuing,  the Indenture  Trustee subject to the provisions of
Section  10.17 hereof may with the written  consent of the Credit  Enhancer,  or
shall at the  written  direction  of the Credit  Enhancer  do one or more of the
following (subject to Section 5.05):

(i) institute Proceedings in its own name and as trustee of an express trust for
the  collection of all amounts then payable on the Notes or under this Indenture
with respect  thereto,  whether by  declaration  or  otherwise,  and all amounts
payable  under the  Insurance  Agreement,  enforce any  judgment  obtained,  and
collect from the Issuer and any other  obligor  upon such Notes monies  adjudged
due;

(ii)  institute  Proceedings  from  time to time  for the  complete  or  partial
foreclosure of this Indenture with respect to the Trust Estate;

(iii)  exercise any remedies of a secured party under the UCC and take any other
appropriate  action to  protect  and  enforce  the rights  and  remedies  of the
Indenture Trustee and the Holders of the Notes; and

(iv) sell the Trust Estate or any portion thereof or rights or interest therein,
at one or more  public or  private  sales  called  and  conducted  in any manner
permitted by law;

provided,  however,  that  the  Indenture  Trustee  may not  sell  or  otherwise
liquidate  the  Trust  Estate  following  an Event of  Default,  unless  (A) the
Indenture  Trustee  obtains the consent of the Holders of 100% of the  aggregate
Security  Balances of the Notes and the Credit Enhancer,  which consent will not
be  unreasonably  withheld,  (B)  the  proceeds  of  such  sale  or  liquidation
distributable  to Holders are  sufficient  to discharge in full all amounts then
due and unpaid upon the Notes for  principal  and interest and to reimburse  the
Credit  Enhancer for any amounts drawn under the Credit  Enhancement  Instrument
and any other amounts due the Credit  Enhancer under the Insurance  Agreement or
(C) the  Indenture  Trustee  determines  that the  Home  Equity  Loans  will not
continue  to  provide  sufficient  funds for the  payment  of  principal  of and
interest  on the Notes as they would  have  become due if the Notes had not been
declared due and payable,  and the Indenture  Trustee obtains the consent of the
Credit  Enhancer,  which consent will not be unreasonably  withheld,  and of the
Holders  of 66  2/3%  of  the  aggregate  Security  Balances  of the  Notes.  In
determining  such  sufficiency or  insufficiency  with respect to clause (B) and
(C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of
an Independent  investment banking or accounting firm of national  reputation as
to the  feasibility  of such proposed  action and as to the  sufficiency  of the
Trust  Estate for such  purpose.  Notwithstanding  the  foregoing,  so long as a
Servicing  Default has not occurred,  any Sale of the Trust Estate shall be made
subject  to the  continued  servicing  of the Home  Equity  Loans by the  Master
Servicer as provided in the Servicing Agreement.

(b) If the  Indenture  Trustee  collects any money or property  pursuant to this
Article V, it shall pay out the money or property in the following order:

        FIRST: to the Indenture Trustee for amounts due under Section 6.07;

                                       34
<PAGE>

        SECOND:to  Holders of the Class A-I Notes and Class II Notes for amounts
        due and  unpaid on the  related  Notes for  interest,  ratably,  without
        preference  or  priority of any kind,  according  to the amounts due and
        payable on such Notes for interest  from amounts  available in the Trust
        Estate for such Noteholders;

        THIRD:  to Holders of the Class A-I Notes  (other than the Class  A-I-IO
        Notes)  and Class II Notes for  amounts  due and  unpaid on the  related
        Notes for  principal,  ratably,  without  preference  or priority of any
        kind,  according  to the  amounts  due and  payable  on such  Notes  for
        principal,   from  amounts  available  in  the  Trust  Estate  for  such
        Noteholders, until the Security Balances of such Notes have been reduced
        to zero;

        FOURTH:to Holders of the Class M-I-1 Notes for amounts due and unpaid on
        the related Notes for interest,  ratably, without preference or priority
        of any kind,  according to the amounts due and payable on such Notes for
        interest   from   amounts   available  in  the  Trust  Estate  for  such
        Noteholders;

        FIFTH: to Holders of the Class M-I-1 Notes for amounts due and unpaid on
        the related Notes for principal, ratably, without preference or priority
        of any kind,  according to the amounts due and payable on such Notes for
        principal,   from  amounts  available  in  the  Trust  Estate  for  such
        Noteholders, until the Security Balances of such Notes have been reduced
        to zero;

        SIXTH: to Holders of the Class M-I-2 Notes for amounts due and unpaid on
        the related Notes for interest,  ratably, without preference or priority
        of any kind,  according to the amounts due and payable on such Notes for
        interest   from   amounts   available  in  the  Trust  Estate  for  such
        Noteholders;

        SEVENTH:  to Holders of the Class M-I-2 Notes for amounts due and unpaid
        on the related  Notes for  principal,  ratably,  without  preference  or
        priority of any kind,  according  to the amounts due and payable on such
        Notes for principal, from amounts available in the Trust Estate for such
        Noteholders, until the Security Balances of such Notes have been reduced
        to zero;

        EIGHTH:to Holders of the Class M-I-3 Notes for amounts due and unpaid on
        the related Notes for interest,  ratably, without preference or priority
        of any kind,  according to the amounts due and payable on such Notes for
        interest   from   amounts   available  in  the  Trust  Estate  for  such
        Noteholders;

        NINTH: to Holders of the Class M-I-3 Notes for amounts due and unpaid on
        the related Notes for principal, ratably, without preference or priority
        of any kind,  according to the amounts due and payable on such Notes for
        principal,   from  amounts  available  in  the  Trust  Estate  for  such
        Noteholders, until the Security Balances of such Notes have been reduced
        to zero;

          TENTH:  to the  payment  of all  amounts  due and owing to the  Credit
          Enhancer under the Insurance Agreement;

                                       35
<PAGE>

          ELEVENTH:  to the  Certificate  Paying  Agent  for  amounts  due under
          Article VIII of the Trust Agreement; and

          TWELFTH: to the payment of the remainder, if any, to the Issuer or any
          other person legally entitled thereto.

        The  Indenture  Trustee may fix a record  date and payment  date for any
payment to  Noteholders  pursuant to this Section  5.04. At least 15 days before
such record date, the Indenture  Trustee shall mail to each  Noteholder a notice
that states the record date, the payment date and the amount to be paid.

Section 5.05. Optional  Preservation of the Trust Estate. If the Notes have been
declared to be due and payable under Section 5.02  following an Event of Default
and such declaration and its consequences  have not been rescinded and annulled,
the Indenture  Trustee may, but need not, (but shall at the written direction of
the Credit Enhancer) elect to take and maintain  possession of the Trust Estate.
It is the desire of the parties hereto and the Noteholders  that there be at all
times sufficient funds for the payment of principal of and interest on the Notes
and other  obligations of the Issuer  including  payment to the Credit Enhancer,
and the Indenture  Trustee shall take such desire into account when  determining
whether  or not  to  take  and  maintain  possession  of the  Trust  Estate.  In
determining  whether to take and maintain  possession of the Trust  Estate,  the
Indenture  Trustee  may,  but need not,  obtain  and rely upon an  opinion of an
Independent  investment banking or accounting firm of national  reputation as to
the  feasibility of such proposed  action and as to the sufficiency of the Trust
Estate for such purpose.

Section 5.06. Limitation of Suits. No Holder of any Note shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this Indenture,
or for the  appointment  of a  receiver  or  trustee,  or for any  other  remedy
hereunder, unless and subject to the provisions of Section 10.17 hereof:

(i) such Holder has previously given written notice to the Indenture  Trustee of
a continuing Event of Default;

(ii) the Holders of not less than 25% of the Security Balances of the Notes have
made written  request to the Indenture  Trustee to institute such  Proceeding in
respect of such Event of Default in its own name as Indenture Trustee hereunder;

(iii) such Holder or Holders have offered to the  Indenture  Trustee  reasonable
indemnity  against  the  costs,  expenses  and  liabilities  to be  incurred  in
complying with such request;

(iv) the Indenture Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such Proceedings; and

(v) no direction  inconsistent  with such written  request has been given to the
Indenture  Trustee during such 60-day period by the Holders of a majority of the
Security Balances of the Notes or by the Credit Enhancer.

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<PAGE>

It is  understood  and intended  that no one or more Holders of Notes shall have
any right in any manner  whatever by virtue of, or by availing of, any provision
of this  Indenture  to  affect,  disturb  or  prejudice  the rights of any other
Holders of Notes or to obtain or to seek to obtain  priority or preference  over
any other  Holders or to enforce any right under this  Indenture,  except in the
manner herein provided.

        In  the  event  the  Indenture  Trustee  shall  receive  conflicting  or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each  representing  less than a majority of the Security  Balances of the Notes,
the Indenture  Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.

Section  5.07.  Unconditional  Rights of  Noteholders  to Receive  Principal and
Interest.  Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and  unconditional,  to receive
payment of the principal of and  interest,  if any, on such Note on or after the
respective due dates thereof  expressed in such Note or in this Indenture and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.

Section 5.08.  Restoration of Rights and Remedies.  If the Indenture  Trustee or
any  Noteholder  has  instituted  any  Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been  discontinued or abandoned for
any reason or has been determined  adversely to the Indenture Trustee or to such
Noteholder,  then and in every such case the Issuer,  the Indenture  Trustee and
the Noteholders  shall,  subject to any  determination  in such  Proceeding,  be
restored  severally and  respectively to their former positions  hereunder,  and
thereafter all rights and remedies of the Indenture  Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.

Section  5.09.  Rights  and  Remedies  Cumulative.  No  right or  remedy  herein
conferred upon or reserved to the Indenture  Trustee,  the Credit Enhancer or to
the  Noteholders  is intended to be exclusive of any other right or remedy,  and
every right and remedy shall, to the extent  permitted by law, be cumulative and
in addition to every other right and remedy given  hereunder or now or hereafter
existing at law or in equity or  otherwise.  The  assertion or employment of any
right or remedy  hereunder,  or  otherwise,  shall not  prevent  the  concurrent
assertion or employment of any other appropriate right or remedy.

Section  5.10.  Delay or  Omission  Not a Waiver.  No delay or  omission  of the
Indenture Trustee, the Credit Enhancer or any Holder of any Note to exercise any
right or remedy  accruing  upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein.  Every  right  and  remedy  given  by this  Article  V or by law to the
Indenture  Trustee or to the Noteholders may be exercised from time to time, and
as  often  as may  be  deemed  expedient,  by the  Indenture  Trustee  or by the
Noteholders, as the case may be.

Section 5.11. Control by Noteholders.  The Holders of a majority of the Security
Balances  of Notes  with the  consent  of the  Credit  Enhancer,  or the  Credit
Enhancer (so long as no Credit Enhancer  Default exists) shall have the right to
direct the time,  method and place of conducting  any  Proceeding for any remedy
available to the Indenture  Trustee with respect to the Notes or exercising  any
trust or power conferred on the Indenture Trustee; provided that:

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<PAGE>

(i) such  direction  shall not be in conflict  with any rule of law or with this
Indenture;

(ii)  subject  to the  express  terms of  Section  5.04,  any  direction  to the
Indenture  Trustee to sell or liquidate  the Trust Estate shall be by Holders of
Notes representing not less than 100% of the Security Balances of Notes with the
consent of the Credit  Enhancer,  or the Credit  Enhancer  (so long as no Credit
Enhancer Default exists);

(iii) if the  conditions  set forth in Section 5.05 have been  satisfied and the
Indenture  Trustee  elects to retain the Trust Estate  pursuant to such Section,
then any  direction to the  Indenture  Trustee by Holders of Notes  representing
less than 100% of the Security  Balances of Notes to sell or liquidate the Trust
Estate shall be of no force and effect; and

(iv) the  Indenture  Trustee  may take any  other  action  deemed  proper by the
Indenture Trustee that is not inconsistent with such direction.

Notwithstanding the rights of Noteholders set forth in this Section,  subject to
Section 6.01, the Indenture  Trustee need not take any action that it determines
might involve it in liability or might materially adversely affect the rights of
any Noteholders not consenting to such action.

Section  5.12.  Waiver  of  Past  Default.  Prior  to  the  declaration  of  the
acceleration  of the  maturity  of the Notes as provided  in Section  5.02,  the
Holders of Notes of not less than a majority  of the  Security  Balances  of the
Notes with the consent of the Credit  Enhancer,  or the Credit Enhancer (so long
as no Credit  Enhancer  Default  exists) may waive any past Event of Default and
its  consequences  except an Event of  Default  (i) with  respect  to payment of
principal of or interest on any of the Notes or (ii) in respect of a covenant or
provision  hereof which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver,  the Issuer,  the Indenture
Trustee  and the  Holders of the Notes  shall be  restored  to their  respective
former  positions and rights  hereunder;  but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereto.

        Upon any such waiver,  any Event of Default  arising  therefrom shall be
deemed to have been cured and not to have  occurred,  for every  purpose of this
Indenture;  but no such waiver shall extend to any  subsequent or other Event of
Default or impair any right consequent thereto.

Section 5.13.  Undertaking for Costs.  All parties to this Indenture  agree, and
each Holder of any Note by such Holder's  acceptance  thereof shall be deemed to
have agreed,  that any court may in its discretion  require, in any suit for the
enforcement of any right or remedy under this Indenture,  or in any suit against
the  Indenture  Trustee  for any  action  taken,  suffered  or  omitted by it as
Indenture  Trustee,  the  filing  by any  party  litigant  in  such  suit  of an
undertaking  to pay the  costs of such  suit,  and that  such  court  may in its
discretion  assess  reasonable  costs,  including  reasonable  attorneys'  fees,
against  any party  litigant  in such suit,  having due regard to the merits and
good  faith of the  claims or  defenses  made by such  party  litigant;  but the
provisions  of this Section 5.13 shall not apply to (a) any suit  instituted  by
the Indenture  Trustee,  (b) any suit instituted by any Noteholder,  or group of
Noteholders, in each case holding in the aggregate more than 10% of the Security

                                       38
<PAGE>

Balances  of the  Notes or (c) any suit  instituted  by any  Noteholder  for the
enforcement  of the payment of  principal of or interest on any Note on or after
the respective due dates expressed in such Note and in this Indenture.

Section 5.14.  Waiver of Stay or Extension  Laws.  The Issuer  covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,  or
plead or in any manner  whatsoever,  claim or take the benefit or advantage  of,
any stay or extension  law  wherever  enacted,  now or at any time  hereafter in
force,  that may affect the covenants or the performance of this Indenture;  and
the Issuer (to the extent that it may  lawfully do so) hereby  expressly  waives
all  benefit  or  advantage  of any such law,  and  covenants  that it shall not
hinder,  delay or impede  the  execution  of any  power  herein  granted  to the
Indenture Trustee,  but will suffer and permit the execution of every such power
as though no such law had been enacted.

Section 5.15.  Sale of Trust  Estate.  (a) The power to effect any sale or other
disposition  (a "Sale") of any portion of the Trust  Estate  pursuant to Section
5.04 is  expressly  subject to the  provisions  of Section 5.05 and this Section
5.15.  The power to effect  any such Sale shall not be  exhausted  by any one or
more Sales as to any portion of the Trust  Estate  remaining  unsold,  but shall
continue  unimpaired  until the entire  Trust Estate shall have been sold or all
amounts  payable on the Notes and under this  Indenture  and under the Insurance
Agreement  shall have been paid.  The  Indenture  Trustee  may from time to time
postpone  any public Sale by public  announcement  made at the time and place of
such Sale. The Indenture Trustee hereby expressly waives its right to any amount
fixed by law as compensation for any Sale.

(b) The  Indenture  Trustee shall not in any private Sale sell the Trust Estate,
or any portion thereof, unless:

               (1) the Holders of all Notes and the Credit Enhancer  consent to,
          or direct the Indenture Trustee to make, such Sale, or

               (2) the  proceeds  of such Sale would be not less than the entire
        amount which would be payable to the  Noteholders  under the Notes,  the
        Certificateholders  under the  Certificates  and the Credit  Enhancer in
        respect of amounts drawn under the Credit Enhancement Instrument and any
        other amounts due the Credit Enhancer under the Insurance Agreement,  in
        full payment  thereof in  accordance  with Section  5.02, on the Payment
        Date next succeeding the date of such Sale, or

               (3) the Indenture  Trustee  determines,  in its sole  discretion,
        that the  conditions  for  retention  of the Trust  Estate  set forth in
        Section 5.05 cannot be satisfied (in making any such determination,  the
        Indenture Trustee may rely upon an opinion of an Independent  investment
        banking firm  obtained and delivered as provided in Section  5.05),  and
        the Credit  Enhancer  consents to such Sale,  which  consent will not be
        unreasonably  withheld and the Holders  representing at least 66-2/3% of
        the Security Balances of the Notes consent to such Sale.

The purchase by the Indenture  Trustee of all or any portion of the Trust Estate
at a private  Sale shall not be deemed a Sale or other  disposition  thereof for
purposes of this Section 5.15(b).

                                       39
<PAGE>

(c) Unless the Holders  and the Credit  Enhancer  have  otherwise  consented  or
directed the Indenture Trustee,  at any public Sale of all or any portion of the
Trust  Estate  at which a  minimum  bid  equal  to or  greater  than the  amount
described in paragraph (2) of  subsection  (b) of this Section 5.15 has not been
established  by the  Indenture  Trustee and no Person bids an amount equal to or
greater than such amount,  the  Indenture  Trustee  shall bid an amount at least
$1.00 more than the highest other bid.

(d)     In connection with a Sale of all or any portion of the Trust Estate:

               (1) any  Holder  or  Holders  of  Notes  may bid for and with the
        consent of the Credit Enhancer  purchase the property  offered for sale,
        and upon compliance with the terms of sale may hold,  retain and possess
        and dispose of such property,  without further accountability,  and may,
        in paying the purchase money  therefor,  deliver any Notes or claims for
        interest  thereon in lieu of cash up to the  amount  which  shall,  upon
        distribution of the net proceeds of such sale, be payable  thereon,  and
        such Notes,  in case the amounts so payable  thereon  shall be less than
        the amount due thereon,  shall be returned to the Holders  thereof after
        being appropriately stamped to show such partial payment;

               (2) the  Indenture  Trustee may bid for and acquire the  property
        offered for Sale in connection  with any Sale thereof,  and,  subject to
        any requirements  of, and to the extent permitted by,  applicable law in
        connection  therewith,  may  purchase  all or any  portion  of the Trust
        Estate in a private sale, and, in lieu of paying cash therefor, may make
        settlement  for the  purchase  price by  crediting  the gross Sale price
        against the sum of (A) the amount  which would be  distributable  to the
        Holders of the Notes and Holders of  Certificates  and amounts  owing to
        the Credit  Enhancer as a result of such Sale in accordance with Section
        5.04(b) on the Payment  Date next  succeeding  the date of such Sale and
        (B) the  expenses  of the  Sale  and of any  Proceedings  in  connection
        therewith  which are  reimbursable  to it,  without  being  required  to
        produce the Notes in order to complete any such Sale or in order for the
        net Sale price to be credited  against  such Notes,  and any property so
        acquired by the Indenture  Trustee shall be held and dealt with by it in
        accordance with the provisions of this Indenture;

               (3)  the   Indenture   Trustee   shall  execute  and  deliver  an
        appropriate  instrument of conveyance  transferring  its interest in any
        portion of the Trust Estate in connection with a Sale thereof;

               (4) the  Indenture  Trustee is hereby  irrevocably  appointed the
        agent and  attorney-  in-fact of the Issuer to  transfer  and convey its
        interest in any portion of the Trust  Estate in  connection  with a Sale
        thereof, and to take all action necessary to effect such Sale; and

               (5) no purchaser or  transferee  at such a Sale shall be bound to
        ascertain  the   Indenture   Trustee's   authority,   inquire  into  the
        satisfaction  of any conditions  precedent or see to the  application of
        any monies.

Section 5.16. Action on Notes. The Indenture Trustee's right to seek and recover
judgment  on the Notes or under  this  Indenture  shall not be  affected  by the
seeking,  obtaining or  application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of

                                       40
<PAGE>

the Indenture  Trustee or the  Noteholders  shall be impaired by the recovery of
any judgment by the Indenture  Trustee  against the Issuer or by the levy of any
execution  under such  judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer.  Any money or property  collected by the  Indenture
Trustee shall be applied in accordance with Section 5.04(b).

Section 5.17.  Performance and Enforcement of Certain Obligations.  (a) Promptly
following a written  request from the Credit  Enhancer or the Indenture  Trustee
with the written  consent of the Credit  Enhancer  to do so, the Issuer,  in its
capacity as holder of the Home Equity Loans,  shall, with the written consent of
the Credit  Enhancer,  take all such lawful action as the Indenture  Trustee may
request to cause the Issuer to compel or secure the  performance  and observance
by the  Seller  and the  Master  Servicer,  as  applicable,  of  each  of  their
obligations to the Issuer under or in connection with the Purchase Agreement and
the Servicing Agreement,  and to exercise any and all rights,  remedies,  powers
and privileges  lawfully available to the Issuer under or in connection with the
Purchase  Agreement and the Servicing  Agreement to the extent and in the manner
directed  by the  Indenture  Trustee,  as  pledgee  of the  Home  Equity  Loans,
including  the  transmission  of notices of default on the part of the Seller or
the Master Servicer  thereunder and the  institution of legal or  administrative
actions  or  proceedings  to compel or secure  performance  by the Seller or the
Master Servicer of each of their  obligations  under the Purchase  Agreement and
the Servicing Agreement.

(b) If an Event  of  Default  has  occurred  and is  continuing,  the  Indenture
Trustee,  as  pledgee  of the Home  Equity  Loans,  subject to the rights of the
Credit Enhancer under the Servicing  Agreement may, and at the direction  (which
direction  shall be in writing or by telephone  (confirmed  in writing  promptly
thereafter))  of the  Holders of 66-2/3% of the  Security  Balances of the Notes
shall,  exercise  all rights,  remedies,  powers,  privileges  and claims of the
Issuer against the Seller or the Master Servicer under or in connection with the
Purchase Agreement and the Servicing Agreement,  including the right or power to
take any action to compel or secure  performance  or observance by the Seller or
the Master  Servicer,  as the case may be, of each of their  obligations  to the
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Purchase Agreement and the Servicing Agreement, as
the case may be,  and any right of the Issuer to take such  action  shall not be
suspended.  In connection therewith, as determined by the Indenture Trustee, the
Issuer  shall take all  actions  necessary  to effect the  transfer  of the Home
Equity Loans to the Indenture Trustee.
<PAGE>

                                   ARTICLE VI

                              The Indenture Trustee

Section  6.01.  Duties of  Indenture  Trustee.  (a) If an Event of  Default  has
occurred and is continuing,  the Indenture Trustee shall exercise the rights and
powers vested in it by this  Indenture and use the same degree of care and skill
in  their  exercise  as a  prudent  person  would  exercise  or  use  under  the
circumstances in the conduct of such person's own affairs.

(b)     Except during the continuance of an Event of Default:

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<PAGE>

(i) the Indenture Trustee undertakes to perform such duties and only such duties
as are  specifically  set forth in this  Indenture  and no implied  covenants or
obligations shall be read into this Indenture against the Indenture Trustee; and

(ii) in the  absence  of bad  faith  on its  part,  the  Indenture  Trustee  may
conclusively  rely, as to the truth of the statements and the correctness of the
opinions  expressed  therein,  upon  certificates  or opinions  furnished to the
Indenture  Trustee  and  conforming  to  the  requirements  of  this  Indenture;
provided,  however,  the Indenture  Trustee shall examine the  certificates  and
opinions to determine  whether or not they conform to the  requirements  of this
Indenture.

(c)  The  Indenture  Trustee  may not be  relieved  from  liability  for its own
negligent  action,  its  own  negligent  failure  to  act  or  its  own  willful
misconduct, except that:

(i) this  paragraph  does not limit the effect of paragraph  (b) of this Section
6.01;

(ii) the Indenture Trustee shall not be liable for any error of judgment made in
good  faith by a  Responsible  Officer  unless it is proved  that the  Indenture
Trustee was negligent in ascertaining the pertinent facts; and

(iii) the  Indenture  Trustee  shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction  received by
it (A)  pursuant to Section  5.11 or (B) from the Credit  Enhancer,  which it is
entitled to give under any of the Basic Documents.

(d) The Indenture Trustee shall not be liable for interest on any money received
by it except as the Indenture Trustee may agree in writing with the Issuer.

(e) Money held in trust by the  Indenture  Trustee need not be  segregated  from
other funds except to the extent  required by law or the terms of this Indenture
or the Trust Agreement.

(f) No provision of this Indenture shall require the Indenture Trustee to expend
or risk its own funds or otherwise incur financial  liability in the performance
of any of its  duties  hereunder  or in the  exercise  of any of its  rights  or
powers,  if it shall have  reasonable  grounds to believe that repayment of such
funds or adequate  indemnity  against such risk or  liability is not  reasonably
assured to it.

(g) Every  provision of this Indenture  relating to the conduct or affecting the
liability of or affording  protection to the Indenture  Trustee shall be subject
to the provisions of this Section and to the provisions of the TIA.

Section 6.02. Rights of Indenture Trustee. (a) The Indenture Trustee may rely on
any  document  believed by it to be genuine and to have been signed or presented
by the proper person.  The Indenture  Trustee need not  investigate  any fact or
matter stated in the document.

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<PAGE>

(b) Before the Indenture Trustee acts or refrains from acting, it may require an
Officer's  Certificate or an Opinion of Counsel. The Indenture Trustee shall not
be liable for any action it takes or omits to take in good faith in  reliance on
an Officer's Certificate or Opinion of Counsel.

(c) The Indenture  Trustee may execute any of the trusts or powers  hereunder or
perform  any  duties  hereunder  either  directly  or by or  through  agents  or
attorneys  or a custodian or nominee,  and the  Indenture  Trustee  shall not be
responsible  for  any  misconduct  or  negligence  on the  part  of,  or for the
supervision of, any such agent,  attorney,  custodian or nominee  appointed with
due care by it hereunder.

(d) The  Indenture  Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers;  provided,  however,  that  the  Indenture  Trustee's  conduct  does not
constitute willful misconduct, negligence or bad faith.

(e) The Indenture Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters  relating to this  Indenture and the Notes
shall be full and  complete  authorization  and  protection  from  liability  in
respect to any action  taken,  omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.

Section 6.03.  Individual Rights of Indenture Trustee.  The Indenture Trustee in
its  individual  or any other  capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Note Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Indenture Trustee
must comply with Sections 6.11 and 6.12.

Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall not be
(i) responsible for and makes no  representation  as to the validity or adequacy
of this  Indenture or the Notes,  (ii)  accountable  for the Issuer's use of the
proceeds from the Notes or (iii)  responsible for any statement of the Issuer in
this  Indenture or in any  document  issued in  connection  with the sale of the
Notes  or in the  Notes  other  than  the  Indenture  Trustee's  certificate  of
authentication.

Section 6.05.  Notice of Event of Default.  If an Event of Default occurs and is
continuing and if it is known to a Responsible Officer of the Indenture Trustee,
the Indenture  Trustee  shall give notice  thereof to the Credit  Enhancer.  The
Indenture  Trustee shall mail to each Noteholder  notice of the Event of Default
within 90 days  after it  occurs.  Except in the case of an Event of  Default in
payment of  principal  of or interest  on any Note,  the  Indenture  Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good  faith  determines  that  withholding  the  notice is in the  interests  of
Noteholders.

Section 6.06.  Reports by Indenture  Trustee to Holders.  The Indenture  Trustee
shall deliver to each Noteholder  such  information as may be required to enable
such holder to prepare its federal and state  income tax  returns.  In addition,
upon the Issuer's written request,  the Indenture Trustee shall promptly furnish
information  reasonably  requested by the Issuer that is reasonably available to
the  Indenture  Trustee to enable the Issuer to perform  its  federal  and state
income tax reporting obligations.

                                       43
<PAGE>

Section 6.07. Compensation and Indemnity.  The Issuer shall pay to the Indenture
Trustee on each Payment  Date  reasonable  compensation  for its  services.  The
Indenture Trustee shall be compensated and indemnified by the Master Servicer in
accordance with Section 6.06 of the Servicing  Agreement,  and all amounts owing
to the Indenture Trustee hereunder in excess of such amount shall be paid solely
as  provided  in  Section  3.05  hereof  (subject  to the  priorities  set forth
therein).  The Indenture Trustee's  compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuer shall reimburse the
Indenture Trustee for all reasonable  out-of-pocket expenses incurred or made by
it,  including  costs of  collection,  in addition to the  compensation  for its
services.  Such expenses shall include the reasonable compensation and expenses,
disbursements  and  advances  of  the  Indenture   Trustee's  agents,   counsel,
accountants  and  experts.  The Issuer shall  indemnify  the  Indenture  Trustee
against  any and all loss,  liability  or expense  (including  attorneys'  fees)
incurred  by it in  connection  with the  administration  of this  trust and the
performance  of its duties  hereunder.  The  Indenture  Trustee shall notify the
Issuer  promptly  of any claim for which it may seek  indemnity.  Failure by the
Indenture  Trustee to so notify the Issuer  shall not  relieve the Issuer of its
obligations hereunder. The Issuer shall defend any such claim, and the Indenture
Trustee may have separate counsel and the Issuer shall pay the fees and expenses
of such  counsel.  The  Issuer is not  obligated  to  reimburse  any  expense or
indemnify  against any loss,  liability  or expense  incurred  by the  Indenture
Trustee through the Indenture  Trustee's own willful  misconduct,  negligence or
bad faith.

        The Issuer's  payment  obligations to the Indenture  Trustee pursuant to
this  Section  6.07 shall  survive the  discharge  of this  Indenture.  When the
Indenture  Trustee  incurs  expenses after the occurrence of an Event of Default
specified  in clause (iv) or (v) of the  definition  thereof with respect to the
Issuer, the expenses are intended to constitute expenses of administration under
Title 11 of the  United  States  Code or any other  applicable  federal or state
bankruptcy, insolvency or similar law.

Section 6.08. Replacement of Indenture Trustee. No resignation or removal of the
Indenture  Trustee and no  appointment  of a successor  Indenture  Trustee shall
become effective until the acceptance of appointment by the successor  Indenture
Trustee  pursuant to this Section 6.08. The Indenture  Trustee may resign at any
time by so  notifying  the  Issuer  and the Credit  Enhancer.  The  Holders of a
majority of Security Balances of the Notes or the Credit Enhancer may remove the
Indenture  Trustee by so notifying the Indenture Trustee and the Credit Enhancer
and may appoint a  successor  Indenture  Trustee.  The Issuer  shall  remove the
Indenture Trustee if:

(i)     the Indenture Trustee fails to comply with Section 6.11;

(ii)    the Indenture Trustee is adjudged a bankrupt or insolvent;

(iii) a receiver or other public  officer takes charge of the Indenture  Trustee
or its property; or

                                       44
<PAGE>

(iv)    the Indenture Trustee otherwise becomes incapable of acting.

        If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the  Indenture  Trustee for any reason (the  Indenture  Trustee in
such event being  referred to herein as the  retiring  Indenture  Trustee),  the
Issuer shall promptly appoint a successor  Indenture Trustee with the consent of
the  Credit  Enhancer  which  consent  will  not be  unreasonably  withheld.  In
addition,  the  Indenture  Trustee  will  resign  to  avoid  being  directly  or
indirectly controlled by the Issuer.

        A successor  Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer.  Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture.  The successor  Indenture Trustee
shall mail a notice of its  succession to  Noteholders.  The retiring  Indenture
Trustee shall promptly  transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.

        If a successor  Indenture  Trustee  does not take office  within 60 days
after the  retiring  Indenture  Trustee  resigns  or is  removed,  the  retiring
Indenture Trustee,  the Issuer or the Holders of a majority of Security Balances
of  the  Notes  may  petition  any  court  of  competent  jurisdiction  for  the
appointment of a successor Indenture Trustee.

        If the  Indenture  Trustee  fails  to  comply  with  Section  6.11,  any
Noteholder may petition any court of competent  jurisdiction  for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.

        Notwithstanding  the  replacement of the Indenture  Trustee  pursuant to
this Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.

Section 6.09.  Successor  Indenture  Trustee by Merger. If the Indenture Trustee
consolidates  with,  merges or converts into, or transfers all or  substantially
all its corporate  trust business or assets to,  another  corporation or banking
association,  the  resulting,  surviving or transferee  corporation  without any
further  act  shall be the  successor  Indenture  Trustee;  provided,  that such
corporation  or banking  association  shall be otherwise  qualified and eligible
under Section  6.11.  The  Indenture  Trustee shall provide the Rating  Agencies
written notice of any such transaction occurring after the Closing Date.

        In case at the time such  successor or successors by merger,  conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such  successor  to the  Indenture  Trustee  may  adopt the  certificate  of
authentication   of  any  predecessor   trustee,   and  deliver  such  Notes  so
authenticated;  and in case at that  time any of the  Notes  shall not have been
authenticated,  any successor to the  Indenture  Trustee may  authenticate  such
Notes  either  in the name of any  predecessor  hereunder  or in the name of the
successor  to the  Indenture  Trustee;  and in all such cases such  certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.

                                       45
<PAGE>

     Section 6.10.  Appointment of  Co-Indenture  Trustee or Separate  Indenture
Trustee.  (a)  Notwithstanding  any other  provisions of this Indenture,  at any
time, for the purpose of meeting any legal  requirement of any  jurisdiction  in
which any part of the Trust  Estate may at the time be  located,  the  Indenture
Trustee  shall have the power and may execute and  deliver  all  instruments  to
appoint one or more Persons to act as a co-trustee or  co-trustees,  or separate
trustee or separate  trustees,  of all or any part of the Trust  Estate,  and to
vest in such  Person or  Persons,  in such  capacity  and for the benefit of the
Noteholders,  such title to the Trust Estate, or any part thereof,  and, subject
to the other  provisions  of this  Section,  such powers,  duties,  obligations,
rights and trusts as the Indenture Trustee may consider  necessary or desirable.
No co-trustee or separate trustee  hereunder shall be required to meet the terms
of  eligibility  as a  successor  trustee  under  Section  6.11 and no notice to
Noteholders of the  appointment  of any co-trustee or separate  trustee shall be
required under Section 6.08 hereof.

(b) Every 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
Indenture  Trustee shall be conferred or imposed upon and exercised or performed
by the  Indenture  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 Indenture 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  Indenture  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 Estate 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 Indenture Trustee;

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

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

(c) Any notice, request or other writing given to the Indenture 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 VI. 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 Indenture  Trustee or
separately,  as may be provided  therein,  subject to all the provisions of this
Indenture,  specifically including every provision of this Indenture relating to
the conduct of,  affecting  the liability  of, or affording  protection  to, the
Indenture  Trustee.  Every such  instrument  shall be filed  with the  Indenture
Trustee.

(d) Any separate  trustee or co-trustee may at any time constitute the Indenture
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
Indenture on its behalf and in its name.  If any separate  trustee or co-trustee

                                       46
<PAGE>

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
Indenture Trustee,  to the extent permitted by law, without the appointment of a
new or successor trustee.

Section 6.11. Eligibility;  Disqualification. The Indenture Trustee shall at all
times satisfy the  requirements of TIA ss. 310(a).  The Indenture  Trustee shall
have a combined capital and surplus of at least  $50,000,000 as set forth in its
most recent published annual report of condition and it or its parent shall have
a long-term debt rating of A or better by Moody's.  The Indenture  Trustee shall
comply with TIA ss. 310(b),  including the optional  provision  permitted by the
second sentence of TIA ss.  310(b)(9);  provided,  however,  that there shall be
excluded  from the  operation of TIA ss.  310(b)(1)  any indenture or indentures
under which other  securities of the Issuer are outstanding if the  requirements
for such exclusion set forth in TIA ss. 310(b)(1) are met.

               Within 90 days after  ascertaining  the occurrence of an Event of
Default  which  shall not have been cured or waived,  unless  authorized  by the
Securities  and Exchange  Commission,  the  Indenture  Trustee shall resign with
respect to the Class A Notes,  the Class  M-I-1  Notes,  the Class  M-I-2  Notes
and/or the Class M-I-3 Notes in accordance  with Section 6.08 of this Indenture,
and the Issuer shall appoint a successor  Indenture  Trustee for one, two, three
or all of such Classes, as applicable,  so that there will be separate Indenture
Trustees  for the Class A Notes,  the Class M-I-1  Notes,  the Class M-I-2 Notes
and/or the Class M-I-3 Notes. In the event the Indenture Trustee fails to comply
with the terms of the preceding  sentence,  the  Indenture  Trustee shall comply
with clause (ii) of TIA ss. 310(b).

               In the case of the appointment hereunder of a successor Indenture
Trustee with respect to any Class of Notes  pursuant to this Section  6.11,  the
Issuer, the retiring Indenture Trustee and the successor  Indenture Trustee with
respect  to  such  Class  of  Notes  shall  execute  and  deliver  an  indenture
supplemental  hereto wherein each successor  Indenture Trustee shall accept such
appointment and which (i) shall contain such provisions as shall be necessary or
desirable  to transfer and confirm to, and to vest in, the  successor  Indenture
Trustee  all the rights,  powers,  trusts and duties of the  retiring  Indenture
Trustee with respect to the Notes of the Class to which the  appointment of such
successor  Indenture Trustee relates,  (ii) if the retiring Indenture Trustee is
not retiring with respect to all Classes of Notes, shall contain such provisions
as shall be deemed  necessary  or  desirable  to  confirm  that all the  rights,
powers,  trusts and duties of the retiring Indenture Trustee with respect to the
Notes of each Class as to which the retiring  Indenture  Trustee is not retiring
shall continue to be vested in the Indenture Trustee,  and (iii) shall add to or
change any of the  provisions of this Indenture as shall be necessary to provide
for or facilitate the  administration  of the trusts  hereunder by more than one
Indenture  Trustee,   it  being  understood  that  nothing  herein  or  in  such
supplemental  indenture shall constitute such Indenture Trustees  co-trustees of
the same trust and that each such Indenture  Trustee shall be trustee of a trust
or  trusts  hereunder  separate  and apart  from any  trust or trusts  hereunder
administered  by any other such Indenture  Trustee;  and upon the removal of the
retiring  Indenture  Trustee  shall  become  effective  to the  extent  provided
therein.

Section 6.12.  Preferential  Collection of Claims Against Issuer.  The Indenture
Trustee shall comply with TIA ss.  311(a),  excluding any creditor  relationship

                                       47
<PAGE>

listed in TIA ss. 311(b).  An Indenture Trustee who has resigned or been removed
shall be subject to TIA ss. 311(a) to the extent indicated.

Section 6.13.  Representations  and  Warranties.  The Indenture  Trustee  hereby
represents that:

(i) The  Indenture  Trustee  is duly  organized,  validly  existing  and in good
standing under the laws of the State of New York 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.

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

(iii) The  consummation of the  transactions  contemplated by this Indenture and
the  fulfillment of the terms hereof do not conflict with,  result in any breach
of any of the terms and provisions of, or constitute  (with or without notice or
lapse of time) a default under,  the articles of  organization  or bylaws of the
Indenture  Trustee or any  agreement or other  instrument to which the Indenture
Trustee is a party or by which it is bound.

(iv) To the Indenture  Trustee's  best  knowledge,  there are no  proceedings or
investigations  pending  or  threatened  before  any  court,   regulatory  body,
administrative agency or other governmental  instrumentality having jurisdiction
over the Indenture  Trustee or its  properties:  (A) asserting the invalidity of
this  Indenture  (B)  seeking  to  prevent  the   consummation  of  any  of  the
transactions  contemplated by this Indenture or (C) seeking any determination or
ruling  that  might  materially  and  adversely  affect the  performance  by the
Indenture  Trustee of its obligations  under, or the validity or  enforceability
of, this Indenture.

(v) The  Indenture  Trustee  does not have notice of any adverse  claim (as such
terms are used in Delaware  UCC Section  8-302) with  respect to the Home Equity
Loans.

Section 6.14.  Directions to Indenture Trustee.  The Indenture Trustee is hereby
     directed:

(a) to accept  the  pledge of the Home  Equity  Loans and hold the assets of the
Trust in trust for the Noteholders and the Credit Enhancer;

(b) to authenticate  and deliver the Notes  substantially in the form prescribed
by Exhibit A in accordance with the terms of this Indenture; and

(c) to take all other  actions as shall be  required to be taken by the terms of
this Indenture.

Section 6.15.  Indenture Trustee May Own Securities.  The Indenture Trustee,  in
its  individual  or any  other  capacity  may  become  the owner or  pledgee  of
Securities with the same rights it would have if it were not Indenture Trustee.

                                       48
<PAGE>

                                  ARTICLE VII

                         Noteholders' Lists and Reports

Section  7.01.  Issuer to  Furnish  Indenture  Trustee  Names and  Addresses  of
Noteholders.  The Issuer will furnish or cause to be furnished to the  Indenture
Trustee (a) not more than five days after each Record Date, a list, in such form
as the Indenture Trustee may reasonably  require,  of the names and addresses of
the Holders of Notes as of such Record Date and,  (b) at such other times as the
Indenture Trustee and the Credit Enhancer may request in writing, within 30 days
after  receipt by the  Issuer of any such  request,  a list of similar  form and
content  as of a date not more  than 10 days  prior  to the  time  such  list is
furnished;  provided, however, that so long as the Indenture Trustee is the Note
Registrar, no such list shall be required to be furnished.

Section 7.02.  Preservation of Information;  Communications to Noteholders.  (a)
The  Indenture  Trustee  shall  preserve,  in as current a form as is reasonably
practicable,  the names and  addresses of the Holders of Notes  contained in the
most recent list furnished to the Indenture  Trustee as provided in Section 7.01
and the names and  addresses  of  Holders  of Notes  received  by the  Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.01 upon receipt of a new list
so furnished.

(b)  Noteholders  may  communicate   pursuant  to  TIA  ss.  312(b)  with  other
Noteholders  with  respect to their  rights  under this  Indenture  or under the
Notes.

(c) The Issuer,  the  Indenture  Trustee and the Note  Registrar  shall have the
protection of TIAss.312(c).

Section 7.03.  Reports by Issuer.  (a)  The Issuer shall:

(i) file with the Indenture Trustee, within 15 days after the Issuer is required
to file the same with the  Commission,  copies  of the  annual  reports  and the
information,  documents  and other reports (or copies of such portions of any of
the foregoing as the Commission  may from time to time by rules and  regulations
prescribe) that the Issuer may be required to file with the Commission  pursuant
to Section 13 or 15(d) of the Exchange Act;

(ii) file with the Indenture  Trustee,  and the  Commission  in accordance  with
rules  and  regulations  prescribed  from  time to time by the  Commission  such
additional information,  documents and reports with respect to compliance by the
Issuer with the  conditions  and covenants of this  Indenture as may be required
from time to time by such rules and regulations; and

(iii) supply to the Indenture  Trustee (and the Indenture Trustee shall transmit
by mail to all  Noteholders  described in TIA ss.  313(c)) such summaries of any
information,  documents and reports  required to be filed by the Issuer pursuant
to clauses (i) and (ii) of this  Section  7.03(a)  and by rules and  regulations
prescribed from time to time by the Commission.

(b) Unless the Issuer otherwise determines,  the fiscal year of the Issuer shall
end on December 31 of each year.

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<PAGE>

Section  7.04.  Reports by  Indenture  Trustee.  If required by TIA ss.  313(a),
within 60 days  after each  January  1,  beginning  with  January  1, 2002,  the
Indenture  Trustee  shall mail to each  Noteholder as required by TIA ss. 313(c)
and to the Credit  Enhancer a brief report  dated as of such date that  complies
with TIA ss.  313(a).  The  Indenture  Trustee  also shall  comply  with TIA ss.
313(b).

        A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission,  if required, and each stock
exchange,  if any, on which the Term Notes are listed.  The Issuer  shall notify
the  Indenture  Trustee  if and when the Term  Notes  are  listed  on any  stock
exchange.
<PAGE>

                                  ARTICLE VIII

                      Accounts, Disbursements and Releases

Section  8.01.  Collection  of Money.  Except as  otherwise  expressly  provided
herein,  the  Indenture  Trustee may demand  payment or  delivery  of, and shall
receive and collect,  directly and without  intervention  or  assistance  of any
fiscal agent or other  intermediary,  all money and other property payable to or
receivable by the Indenture  Trustee  pursuant to this Indenture.  The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture,  if any default occurs
in the making of any payment or  performance  under any  agreement or instrument
that is part of the Trust Estate,  the Indenture Trustee may take such action as
may be  appropriate  to enforce  such  payment  or  performance,  including  the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.

Section 8.02.  Trust  Accounts.  (a) On or prior to the Closing Date, the Issuer
shall cause the Indenture Trustee to establish and maintain,  in the name of the
Indenture Trustee, for the benefit of the Noteholders and the Certificate Paying
Agent, on behalf of the  Certificateholders and the Credit Enhancer, the Payment
Account as provided in Section 3.01 of this Indenture.

(b) All monies  deposited from time to time in the Payment  Account  pursuant to
the Servicing  Agreement and all deposits therein pursuant to this Indenture are
for the benefit of the Noteholders  and the Certificate  Paying Agent, on behalf
of the  Certificateholders  and all investments  made with such monies including
all income or other gain from such investments are for the benefit of the Master
Servicer as provided in Section 5.01 of the Servicing Agreement.

        On each Payment Date, the Indenture Trustee shall distribute all amounts
on deposit in the Payment  Account to Noteholders in respect of the Notes and in
its capacity as Certificate Paying Agent to  Certificateholders  in the order of
priority  set forth in Section  3.05  (except as  otherwise  provided in Section
5.04(b).

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<PAGE>

        The Master  Servicer  shall direct the  Indenture  Trustee in writing to
invest any funds in the Payment  Account in  Permitted  Investments  maturing no
later than the Business Day preceding each Payment Date and shall not be sold or
disposed of prior to the maturity.

Section 8.03.  Officer's  Certificate.  The  Indenture  Trustee shall receive at
least seven days notice when requested by the Issuer to take any action pursuant
to Section 8.05(a), accompanied by copies of any instruments to be executed, and
the  Indenture  Trustee shall also  require,  as a condition to such action,  an
Officer's  Certificate,  in form and  substance  satisfactory  to the  Indenture
Trustee,  stating  the legal  effect  of any such  action,  outlining  the steps
required to complete the same, and concluding  that all conditions  precedent to
the taking of such action have been complied with.

Section 8.04.  Termination Upon Distribution to Noteholders.  This Indenture and
the respective  obligations and responsibilities of the Issuer and the Indenture
Trustee created hereby shall terminate upon the distribution to the Noteholders,
the  Certificate  Paying  Agent (on  behalf of the  Certificateholders)  and the
Indenture Trustee of all amounts required to be distributed  pursuant to Article
III; provided, however, that in no event shall the trust created hereby continue
beyond  the  expiration  of 21 years  from  the  death  of the  survivor  of the
descendants  of Joseph P. Kennedy,  the late  ambassador of the United States to
the Court of St. James's, living on the date hereof.

Section 8.05.  Release of Trust  Estate.  (a) Subject to the payment of its fees
and expenses,  the Indenture Trustee may, and when required by the provisions of
this Indenture or the Servicing Agreement shall,  execute instruments to release
property  from the lien of this  Indenture,  or convey the  Indenture  Trustee's
interest  in the  same,  in a  manner  and  under  circumstances  that  are  not
inconsistent  with the  provisions of this  Indenture.  No party relying upon an
instrument  executed  by the  Indenture  Trustee as  provided  in  Article  VIII
hereunder shall be bound to ascertain the Indenture Trustee's authority, inquire
into the satisfaction of any conditions precedent,  or see to the application of
any monies.

(b) The  Indenture  Trustee  shall,  at  such  time as (i)  there  are no  Notes
Outstanding,  (ii) all sums due the Indenture Trustee pursuant to this Indenture
have been  paid,  and (iii) all sums due the  Credit  Enhancer  have been  paid,
release any  remaining  portion of the Trust  Estate that secured the Notes from
the lien of this Indenture.

(c) The Indenture Trustee shall release property from the lien of this Indenture
pursuant to this  Section  8.05 only upon  receipt of a request  from the Issuer
accompanied by an Officers'  Certificate and a letter from the Credit  Enhancer,
stating  that the Credit  Enhancer  has no  objection  to such  request from the
Issuer.

(d) The Indenture  Trustee shall, at the request of the Issuer or the Depositor,
surrender  the  Credit  Enhancement   Instrument  to  the  Credit  Enhancer  for
cancellation, upon final payment of principal of and interest on the Notes.

Section 8.06.  Surrender of Notes Upon Final Payment. By acceptance of any Note,
the  Holder  thereof  agrees to  surrender  such Note to the  Indenture  Trustee
promptly, prior to such Noteholder's receipt of the final payment thereon.

                                       51
<PAGE>

                                   ARTICLE IX

                             Supplemental Indentures

Section  9.01.  Supplemental  Indentures  Without  Consent of  Noteholders.  (a)
Without  the  consent of the  Holders of any Notes but with prior  notice to the
Rating  Agencies and the written  consent of the Credit  Enhancer (which consent
shall not be  unreasonably  withheld),  unless an  Enhancer  Default  shall have
occurred,  the Issuer and the Indenture  Trustee,  when  authorized by an Issuer
Request,  at any  time  and  from  time to  time,  may  enter  into  one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of the execution  thereof),  in form satisfactory to the
Indenture Trustee, for any of the following purposes:

(i) to correct or amplify the description of any property at any time subject to
the lien of this  Indenture,  or better to assure,  convey and confirm  unto the
Indenture  Trustee any property  subject or required to be subjected to the lien
of this  Indenture,  or to  subject  to the  lien of this  Indenture  additional
property;

(ii) to evidence the succession,  in compliance  with the applicable  provisions
hereof,  of  another  person  to the  Issuer,  and the  assumption  by any  such
successor of the covenants of the Issuer herein and in the Notes contained;

(iii) to add to the  covenants of the Issuer,  for the benefit of the Holders of
the Notes or the Credit  Enhancer,  or to  surrender  any right or power  herein
conferred upon the Issuer;

(iv) to convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee;

(v) to cure any ambiguity,  to correct any error or to correct or supplement any
provision herein or in any supplemental  indenture that may be inconsistent with
any other provision herein or in any supplemental indenture;

(vi) to make any other  provisions with respect to matters or questions  arising
under this  Indenture  or in any  supplemental  indenture;  provided,  that such
action shall not materially and adversely affect the interests of the Holders of
the Notes or the Credit Enhancer;

(vii) to evidence and provide for the acceptance of the appointment hereunder by
a successor trustee with respect to the Notes and to add to or change any of the
provisions  of  this   Indenture  as  shall  be  necessary  to  facilitate   the
administration of the trusts hereunder by more than one trustee, pursuant to the
requirements of Article VI;

(viii) to  increase  the  Maximum  Variable  Funding  Balance,  with the written
consent of the Credit Enhancer: or

(ix) to modify,  eliminate or add to the  provisions  of this  Indenture to such
extent as shall be necessary to effect the qualification of this Indenture under
the TIA or under any similar  federal  statute  hereafter  enacted and to add to
this Indenture such other provisions as may be expressly required by the TIA;

                                       52
<PAGE>

provided,  however,  that no such  supplemental  indenture shall be entered into
unless the  Indenture  Trustee  shall have received an Opinion of Counsel to the
effect that the execution of such  supplemental  indenture will not give rise to
any material adverse tax consequence to the  Noteholders,  including any Adverse
REMIC Event.

        The Indenture  Trustee is hereby  authorized to join in the execution of
any such supplemental  indenture and to make any further appropriate  agreements
and stipulations that may be therein contained.

(b) The Issuer and the Indenture Trustee,  when authorized by an Issuer Request,
may,  also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies and the Credit  Enhancer,  enter into an indenture
or indentures  supplemental  hereto for the purpose of adding any provisions to,
or  changing  in any  manner  or  eliminating  any of the  provisions  of,  this
Indenture  or of  modifying in any manner the rights of the Holders of the Notes
under  this  Indenture;  provided,  however,  that such  action  shall  not,  as
evidenced by an Opinion of Counsel, (i) adversely affect in any material respect
the interests of any Noteholder or the Credit  Enhancer or (ii) cause the Issuer
to be subject to an entity level tax.

Section 9.02.  Supplemental  Indentures With Consent of Noteholders.  The Issuer
and the Indenture Trustee,  when authorized by an Issuer Request, also may, with
prior  notice to the Rating  Agencies and with the consent of the Holders of not
less than a majority of the Security  Balances of the Notes affected thereby and
the Credit Enhancer, by Act (as defined in Section 10.03 hereof) of such Holders
delivered to the Issuer and the  Indenture  Trustee,  enter into an indenture or
indentures  supplemental  hereto for the purpose of adding any provisions to, or
changing in any manner or  eliminating  any of the provisions of, this Indenture
or of  modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Note affected thereby:

(i) change the date of payment of any installment of principal of or interest on
any Note,  or reduce the  principal  amount  thereof  or the Note Rate  thereon,
change  the  provisions  of  this  Indenture  relating  to  the  application  of
collections  on, or the  proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes,  or change any place of payment where, or
the coin or currency in which, any Note or the interest  thereon is payable,  or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor,  as provided in
Article V, to the  payment  of any such  amount due on the Notes on or after the
respective due dates thereof;

(ii) reduce the percentage of the Security  Balances of any Class of Notes,  the
consent of the Holders of which is required for any such supplemental indenture,
or the consent of the Holders of which is required for any waiver of  compliance
with certain  provisions  of this  Indenture or certain  defaults  hereunder and
their consequences provided for in this Indenture;

                                       53
<PAGE>

(iii) modify or alter the  provisions  of the proviso to the  definition  of the
term  "Outstanding"  or modify or alter the  exception in the  definition of the
term "Noteholder";

(iv) reduce the  percentage  of the Security  Balances of the Notes  required to
direct the Indenture Trustee to direct the Issuer to sell or liquidate the Trust
Estate pursuant to Section 5.04;

(v) modify any provision of this Section 9.02 except to increase any  percentage
specified  herein or to  provide  that  certain  additional  provisions  of this
Indenture or the other Basic Documents  cannot be modified or waived without the
consent of the Holder of each Note affected thereby;

(vi) modify any of the  provisions of this Indenture in such manner as to affect
the calculation of the amount of any payment of interest or principal due on any
Note on any Payment Date  (including  the  calculation  of any of the individual
components of such calculation); or

(vii) permit the  creation of any lien ranking  prior to or on a parity with the
lien of this  Indenture  with respect to any part of the Trust Estate or, except
as  otherwise  permitted  or  contemplated  herein,  terminate  the lien of this
Indenture on any  property at any time  subject  hereto or deprive the Holder of
any Note of the security  provided by the lien of this Indenture;  and provided,
further,  that such  action  shall not, as  evidenced  by an Opinion of Counsel,
cause the Issuer to be subject to an entity level tax or cause an Adverse  REMIC
Event.

        The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be  conclusive  upon the  Holders of all  Notes,  whether  theretofore  or
thereafter  authenticated and delivered  hereunder.  The Indenture Trustee shall
not be liable for any such determination made in good faith.

        It shall not be  necessary  for any Act (as  defined  in  Section  10.03
hereof) of Noteholders under this Section 9.02 to approve the particular form of
any proposed  supplemental  indenture,  but it shall be  sufficient  if such Act
shall approve the substance thereof.

        Promptly after the execution by the Issuer and the Indenture  Trustee of
any supplemental  indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes to which such  amendment or  supplemental
indenture  relates a notice setting forth in general terms the substance of such
supplemental  indenture.  Any  failure  of the  Indenture  Trustee  to mail such
notice, or any defect therein,  shall not, however,  in any way impair or affect
the validity of any such supplemental indenture.

Section 9.03. Execution of Supplemental Indentures.  In executing, or permitting
the additional trusts created by, any supplemental  indenture  permitted by this
Article IX or the modification  thereby of the trusts created by this Indenture,
the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01
and 6.02,  shall be fully  protected  in  relying  upon,  an  Opinion of Counsel
stating that the  execution of such  supplemental  indenture  is  authorized  or
permitted  by this  Indenture.  The  Indenture  Trustee  may,  but  shall not be
obligated  to,  enter into any such  supplemental  indenture  that  affects  the
Indenture  Trustee's own rights,  duties,  liabilities or immunities  under this
Indenture or otherwise.

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<PAGE>

Section  9.04.  Effect of  Supplemental  Indenture.  Upon the  execution  of any
supplemental  indenture pursuant to the provisions hereof,  this Indenture shall
be and shall be deemed to be modified and amended in accordance  therewith  with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations,  duties, liabilities and immunities under this Indenture of
the Indenture Trustee,  the Issuer and the Holders of the Notes shall thereafter
be determined,  exercised and enforced hereunder subject in all respects to such
modifications  and  amendments,  and all the  terms and  conditions  of any such
supplemental  indenture  shall  be and be  deemed  to be part of the  terms  and
conditions of this Indenture for any and all purposes.

Section 9.05.  Conformity  with Trust  Indenture  Act.  Every  amendment of this
Indenture and every supplemental  indenture executed pursuant to this Article IX
shall conform to the  requirements  of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.

Section 9.06. Reference in Notes to Supplemental Indentures. Notes authenticated
and delivered after the execution of any supplemental indenture pursuant to this
Article IX may, and if required by the Indenture  Trustee shall, bear a notation
in form approved by the Indenture  Trustee as to any matter provided for in such
supplemental  indenture.  If  the  Issuer  or the  Indenture  Trustee  shall  so
determine,  new Notes so modified as to conform, in the opinion of the Indenture
Trustee and the Issuer, to any such  supplemental  indenture may be prepared and
executed by the Issuer and  authenticated and delivered by the Indenture Trustee
in exchange for Outstanding Notes.

                                   ARTICLE X

                                  Miscellaneous

Section  10.01.   Compliance  Certificates  and  Opinions,  etc.  (a)  Upon  any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Credit Enhancer (i) an Officer's Certificate stating that all
conditions  precedent,  if any,  provided for in this Indenture  relating to the
proposed  action have been complied with and (ii) an Opinion of Counsel  stating
that in the opinion of such counsel all such conditions precedent,  if any, have
been complied with,  except that, in the case of any such application or request
as to which the  furnishing of such  documents is  specifically  required by any
provision  of this  Indenture,  no  additional  certificate  or opinion  need be
furnished.

        Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:

(i) a statement that each  signatory of such  certificate or opinion has read or
has caused to be read such  covenant or  condition  and the  definitions  herein
relating thereto;

(ii) a  brief  statement  as to the  nature  and  scope  of the  examination  or
investigation   upon  which  the  statements  or  opinions   contained  in  such
certificate or opinion are based;

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<PAGE>

(iii) a statement  that, in the opinion of each such  signatory,  such signatory
has made such  examination  or  investigation  as is  necessary  to enable  such
signatory to express an informed  opinion as to whether or not such  covenant or
condition has been complied with;

(iv) a statement  as to whether,  in the  opinion of each such  signatory,  such
condition or covenant has been complied with; and

(v) if the signer of such  certificate or Opinion is required to be Independent,
the statement required by the definition of the term "Independent".

(b) (i) Prior to the deposit of any  Collateral or other  property or securities
with the  Indenture  Trustee that is to be made the basis for the release of any
property or securities subject to the lien of this Indenture,  the Issuer shall,
in addition to any obligation  imposed in Section  10.01(a) or elsewhere in this
Indenture,  furnish to the Indenture Trustee an Officer's Certificate certifying
or stating the opinion of each person  signing such  certificate  as to the fair
value (within 90 days of such deposit) to the Issuer of the  Collateral or other
property or securities to be so deposited.

(ii)  Whenever  the Issuer is  required to furnish to the  Indenture  Trustee an
Officer's Certificate certifying or stating the opinion of any signer thereof as
to the matters  described in clause (i) above,  the Issuer shall also deliver to
the Indenture Trustee an Independent  Certificate as to the same matters, if the
fair value to the Issuer of the  securities  to be so deposited and of all other
such  securities  made the basis of any such  withdrawal  or  release  since the
commencement of the then-current  fiscal year of the Issuer, as set forth in the
certificates delivered pursuant to clause (i) above and this clause (ii), is 10%
or more of the Security  Balances of the Notes,  but such a certificate need not
be furnished  with respect to any  securities  so  deposited,  if the fair value
thereof to the Issuer as set forth in the related Officer's  Certificate is less
than $25,000 or less than one percent of the Security Balances of the Notes.

(iii)  Whenever any property or  securities  are to be released from the lien of
this  Indenture,  the Issuer  shall also  furnish  to the  Indenture  Trustee an
Officer's  Certificate  certifying or stating the opinion of each person signing
such  certificate  as to the fair value  (within 90 days of such release) of the
property or  securities  proposed to be released and stating that in the opinion
of such person the  proposed  release  will not impair the  security  under this
Indenture in contravention of the provisions hereof.

(iv)  Whenever  the Issuer is  required to furnish to the  Indenture  Trustee an
Officer's Certificate certifying or stating the opinion of any signer thereof as
to the matters described in clause (iii) above, the Issuer shall also furnish to
the Indenture  Trustee an Independent  Certificate as to the same matters if the
fair value of the property or securities and of all other  property,  other than
property as  contemplated  by clause (v) below or  securities  released from the
lien of this Indenture since the commencement of the then-current calendar year,
as set forth in the certificates  required by clause (iii) above and this clause
(iv),  equals  10% or more of the  Security  Balances  of the  Notes,  but  such
certificate  need not be  furnished  in the case of any  release of  property or
securities  if the fair  value  thereof  as set forth in the  related  Officer's
Certificate  is less than $25,000 or less than one percent of the then  Security
Balances of the Notes.

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<PAGE>

(v)  Notwithstanding  any provision of this Indenture,  the Issuer may,  without
compliance with the  requirements of the other provisions of this Section 10.01,
(A) collect upon,  sell or otherwise  dispose of the Home Equity Loans as and to
the  extent  permitted  or  required  by the  Basic  Documents  or (B) make cash
payments out of the Payment  Account as and to the extent  permitted or required
by the Basic  Documents,  so long as the Issuer shall  deliver to the  Indenture
Trustee every six months, commencing December 31, 2001, an Officer's Certificate
of the Issuer  stating  that all the  dispositions  of  Collateral  described in
clauses (A) or (B) above that occurred  during the preceding six calendar months
were in the  ordinary  course of the  Issuer's  business  and that the  proceeds
thereof were applied in accordance with the Basic Documents.

Section 10.02.  Form of Documents  Delivered to Indenture  Trustee.  In any case
where several  matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered  by the  opinion  of,  only one such  Person,  or that they be so
certified  or covered by only one  document,  but one such Person may certify or
give an opinion  with respect to some matters and one or more other such Persons
as to other  matters,  and any such  Person may certify or give an opinion as to
such matters in one or several documents.

        Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or  representations
with respect to the matters upon which his  certificate  or opinion is based are
erroneous.  Any such certificate of an Authorized  Officer or Opinion of Counsel
may be based,  insofar as it relates to factual  matters,  upon a certificate or
opinion of, or  representations  by, an officer or officers of the Seller or the
Issuer,  stating that the information with respect to such factual matters is in
the possession of the Seller or the Issuer, unless such counsel knows, or in the
exercise of  reasonable  care should know,  that the  certificate  or opinion or
representations with respect to such matters are erroneous.

        Where any  Person  is  required  to make,  give or  execute  two or more
applications,  requests, consents,  certificates,  statements, opinions or other
instruments  under this Indenture,  they may, but need not, be consolidated  and
form one instrument.

Whenever in this Indenture, in connection with any application or certificate or
report to the  Indenture  Trustee,  it is provided that the Issuer shall deliver
any document as a condition of the granting of such application,  or as evidence
of the Issuer's  compliance with any term hereof,  it is intended that the truth
and  accuracy,  at the  time  of the  granting  of  such  application  or at the
effective date of such  certificate or report (as the case may be), of the facts
and opinions stated in such document shall in such case be conditions  precedent
to  the  right  of  the  Issuer  to  have  such  application  granted  or to the
sufficiency of such certificate or report. The foregoing shall not, however,  be
construed  to affect the  Indenture  Trustee's  right to rely upon the truth and
accuracy of any statement or opinion  contained in any such document as provided
in Article VI.

Section 10.03.  Acts of  Noteholders.  (a) Any request,  demand,  authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially  similar tenor signed by such Noteholders in person
or by agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become  effective when such instrument or instruments
are  delivered  to the  Indenture  Trustee,  and,  where it is hereby  expressly

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<PAGE>

required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced  thereby) are herein sometimes referred to as the "Act" of
the Noteholders  signing such  instrument or instruments.  Proof of execution of
any  such  instrument  or of a  writing  appointing  any  such  agent  shall  be
sufficient  for any purpose of this  Indenture  and  (subject  to Section  6.01)
conclusive  in favor of the  Indenture  Trustee and the  Issuer,  if made in the
manner provided in this Section 10.03.

(b) The fact and date of the  execution by any person of any such  instrument or
writing may be proved in any manner that the Indenture Trustee deems sufficient.

(c)     The ownership of Notes shall be proved by the Note Registrar.

(d) Any request, demand,  authorization,  direction,  notice, consent, waiver or
other  action by the  Holder of any Note  shall  bind the  Holder of every  Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything  done,  omitted or  suffered to be done by the  Indenture
Trustee or the Issuer in  reliance  thereon,  whether  or not  notation  of such
action is made upon such Note.

Section 10.04. Notices, etc., to Indenture Trustee,  Issuer, Credit Enhancer and
Rating Agencies. Any request, demand, authorization, direction, notice, consent,
waiver or Act of  Noteholders or other  documents  provided or permitted by this
Indenture  shall  be in  writing  and if such  request,  demand,  authorization,
direction,  notice,  consent,  waiver or Act of  Noteholders is to be made upon,
given or furnished to or filed with:

(i) the Indenture Trustee by any Noteholder or by the Issuer shall be sufficient
for every purpose hereunder if made, given,  furnished or filed in writing to or
with the Indenture Trustee at the Corporate Trust Office.  The Indenture Trustee
shall promptly  transmit any notice  received by it from the  Noteholders to the
Issuer, or

(ii)  the  Issuer  by the  Indenture  Trustee  or by  any  Noteholder  shall  be
sufficient  for every  purpose  hereunder if in writing and mailed  first-class,
postage prepaid to the Issuer addressed to: Home Equity Loan Trust 2001-HS3,  in
care of Wilmington Trust Company,  or at any other address previously  furnished
in writing to the  Indenture  Trustee by the Issuer.  The Issuer shall  promptly
transmit  any  notice  received  by it from  the  Noteholders  to the  Indenture
Trustee, or

(iii) the  Credit  Enhancer  by the  Issuer,  the  Indenture  Trustee  or by any
Noteholders  shall be sufficient  for every purpose  hereunder to in writing and
mailed,  first-class postage pre-paid, or personally delivered or telecopied to:
Ambac Assurance  Corporation,  One State Street Plaza, 19th Floor, New York, New
York 10004, Attention: Consumer Asset-Backed Securities Group, telecopier number
(212) 363-1459.  The Credit Enhancer shall promptly transmit any notice received
by it from the Issuer, the Indenture Trustee or the Noteholders to the Issuer or
Indenture Trustee, as the case may be.

        Notices  required to be given to the Rating Agencies by the Issuer,  the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified  mail,  return receipt  requested,  to (i) in the case of
Fitch, at the following address:  Fitch, Inc., One State Street Plaza, New York,
New York 10004,  Attention:  Residential  Mortgage Group and (ii) in the case of

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<PAGE>

Standard & Poor's, at the following address: Standard & Poor's Ratings Services,
55  Water  Street,  New  York,  New  York  10041,   Attention  of  Asset  Backed
Surveillance  Department;  or as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.

Section 10.05. Notices to Noteholders; Waiver. Where this Indenture provides for
notice to  Noteholders  of any event,  such notice shall be  sufficiently  given
(unless  otherwise  herein  expressly   provided)  if  in  writing  and  mailed,
first-class,  postage prepaid to each Noteholder affected by such event, at such
Person's  address as it appears on the Note Register,  not later than the latest
date, and not earlier than the earliest date,  prescribed for the giving of such
notice.  In any case where notice to Noteholders  is given by mail,  neither the
failure  to mail  such  notice  nor any  defect  in any  notice so mailed to any
particular  Noteholder  shall affect the sufficiency of such notice with respect
to other  Noteholders,  and any  notice  that is  mailed  in the  manner  herein
provided shall  conclusively  be presumed to have been duly given  regardless of
whether such notice is in fact actually received.

        Where this Indenture provides for notice in any manner,  such notice may
be waived in writing by any Person  entitled  to  receive  such  notice,  either
before or after the  event,  and such  waiver  shall be the  equivalent  of such
notice.  Waivers  of notice by  Noteholders  shall be filed  with the  Indenture
Trustee but such filing  shall not be a condition  precedent  to the validity of
any action taken in reliance upon such a waiver.

        In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity,  it shall be impractical to mail
notice of any event to  Noteholders  when such  notice is  required  to be given
pursuant  to any  provision  of this  Indenture,  then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.

        Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice  shall not affect any other  rights or  obligations  created
hereunder, and shall not under any circumstance constitute an Event of Default.

Section 10.06.  Alternate  Payment and Notice  Provisions.  Notwithstanding  any
provision of this Indenture or any of the Notes to the contrary,  the Issuer may
enter into any  agreement  with any Holder of a Note  providing  for a method of
payment,  or notice by the Indenture  Trustee to such Holder,  that is different
from the methods  provided for in this  Indenture  for such payments or notices.
The Issuer shall furnish to the Indenture  Trustee a copy of each such agreement
and the  Indenture  Trustee  shall  cause  payments to be made and notices to be
given in accordance with such agreements.

Section  10.07.  Conflict  with Trust  Indenture  Act. If any  provision  hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the TIA, such required
provision shall control.

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<PAGE>

        The  provisions of TIA ss.ss.  310 through 317 that impose duties on any
Person  (including the provisions  automatically  deemed  included herein unless
expressly  excluded by this  Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.

Section 10.08.  Effect of Headings.  The Article and Section headings herein are
for convenience only and shall not affect the construction hereof.

Section  10.09.  Successors  and Assigns.  All covenants and  agreements in this
Indenture  and the Notes by the Issuer  shall bind its  successors  and assigns,
whether so expressed or not. All  agreements  of the  Indenture  Trustee in this
Indenture shall bind its successors, co-trustees and agents.

Section 10.10.  Separability.  In case any provision in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable,  the validity,  legality,
and  enforceability  of the remaining  provisions hereof shall not in any way be
affected or impaired thereby.

Section 10.11. Benefits of Indenture. Nothing in this Indenture or in the Notes,
express or implied,  shall give to any Person, other than the parties hereto and
their successors hereunder,  and the Noteholders,  the Credit Enhancer,  and any
other party secured  hereunder,  and any other Person with an ownership interest
in any part of the Trust  Estate,  any benefit or any legal or equitable  right,
remedy or claim under this Indenture.

Section 10.12.  Legal Holidays.  In any case where the date on which any payment
is due shall not be a Business Day, then (notwithstanding any other provision of
the Notes or this  Indenture)  payment need not be made on such date, but may be
made on the next  succeeding  Business  Day with the same force and effect as if
made on the date on which  nominally  due, and no interest  shall accrue for the
period from and after any such nominal date.

Section 10.13.  GOVERNING  LAW. THIS INDENTURE  SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK,  WITHOUT  REFERENCE TO ITS  CONFLICTS OF
LAW  PROVISIONS,  AND  THE  OBLIGATIONS,  RIGHTS  AND  REMEDIES  OF THE  PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

Section  10.14.  Counterparts.  This  Indenture 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 10.15. Recording of Indenture. If this Indenture is subject to recording
in any appropriate public recording offices, such recording is to be effected by
the Issuer and at its expense accompanied by an Opinion of Counsel (which may be
counsel to the Indenture Trustee or any other counsel  reasonably  acceptable to
the Indenture Trustee) to the effect that such recording is necessary either for
the protection of the  Noteholders or any other Person secured  hereunder or for
the  enforcement of any right or remedy  granted to the Indenture  Trustee under
this Indenture.

Section  10.16.  Issuer  Obligation.  No  recourse  may be  taken,  directly  or
indirectly,  with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other  writing  delivered in connection  herewith or therewith,  against (i) the
Indenture  Trustee or the Owner  Trustee in its  individual  capacity,  (ii) any

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owner of a  beneficial  interest  in the  Issuer  or (iii) any  partner,  owner,
beneficiary,  agent,  officer,  director,  employee  or agent  of the  Indenture
Trustee  or the  Owner  Trustee  in its  individual  capacity,  any  holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture  Trustee or the Owner Trustee in its
individual  capacity,  except as any such Person may have  expressly  agreed (it
being  understood that the Indenture  Trustee and the Owner Trustee have no such
obligations in their respective individual  capacities) and except that any such
partner,  owner or beneficiary  shall be fully liable, to the extent provided by
applicable  law,  for  any  unpaid   consideration  for  stock,  unpaid  capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture,  in the performance of any duties or obligations
of the Issuer hereunder,  the Owner Trustee shall be subject to, and entitled to
the  benefits of, the terms and  provisions  of Articles VI, VII and VIII of the
Trust Agreement.

Section  10.17.  No  Petition.  The  Indenture  Trustee,  by entering  into this
Indenture, and each Noteholder, by its acceptance of a Note, hereby covenant and
agree that they will not at any time  institute  against  the  Depositor  or the
Issuer,  or join in any institution  against the Depositor or the Issuer 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,  this
Indenture or any of other the Basic Documents.

Section 10.18.  Inspection.  The Issuer agrees that, on reasonable prior notice,
it shall permit any representative of the Indenture Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports and
other papers of the Issuer, to make copies and extracts therefrom, to cause such
books to be audited by Independent certified public accountants,  and to discuss
the  Issuer's  affairs,  finances  and  accounts  with  the  Issuer's  officers,
employees, and Independent certified public accountants,  all at such reasonable
times and as often as may be reasonably  requested.  The Indenture Trustee shall
and shall cause its  representatives  to hold in confidence all such information
except to the  extent  disclosure  may be  required  by law (and all  reasonable
applications for confidential treatment are unavailing) and except to the extent
that the Indenture  Trustee may  reasonably  determine  that such  disclosure is
consistent with its obligations hereunder.

                                   ARTICLE XI

                                REMIC PROVISIONS

        Section 11.01 REMIC Administration.

               (a)The  REMIC  Administrator  shall make an election to treat the
HELs  in  Loan  Group I and the  proceeds  of the  HELs in Loan  Group I and the
proceeds  of the Group I Policy on  deposit  in the  Distribution  Account,  the
Custodial  Account and the Payment  Account as two REMICs under the Code and, if
necessary,  under  applicable  state law, in accordance with Section 2.06 of the
Trust  Agreement.  Such election will be made on Form 1066 or other  appropriate
federal tax or information return (including Form 8811) or any appropriate state
return for the taxable year ending on the last day of the calendar year in which
the Securities are issued. For the purposes of the REMIC elections in respect of

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<PAGE>

that portion of the Trust Estate,  Securities  and interests to be designated as
the "regular interests" and the sole class of "residual interests" in each REMIC
will be set  forth in  Section  11.03.  The  REMIC  Administrator  and the Owner
Trustee shall not permit the creation of any "interests"  (within the meaning of
Section  860G of the Code) in each  REMIC  elected  in respect of the Trust Fund
other than the "regular interests" and "residual interests" so designated.

               (b)The Closing Date is hereby  designated as the "Startup Day" of
each of REMIC I and REMIC II, as designated  in Section 11.03 below,  within the
meaning of Section 860G(a)(9) of the Code.

               (c)The  REMIC  Administrator  shall  hold a Class  R  Certificate
representing at least a 0.01%  Percentage  Interest in each Class of the Class R
Certificates and shall be designated as "the tax matters person" with respect to
each REMIC in the manner provided under Treasury regulations section 1.860F-4(d)
and Treasury regulations section 301.6231(a)(7)-1.  The REMIC Administrator,  as
tax matters person, shall (i) act on behalf of each REMIC in relation to any tax
matter or  controversy  involving the Trust Estate and (ii)  represent the Trust
Estate in any administrative or judicial  proceeding  relating to an examination
or audit by any governmental  taxing  authority with respect thereto.  The legal
expenses,  including  without  limitation  attorneys' or accountants'  fees, and
costs of any such  proceeding  and any liability  resulting  therefrom  shall be
expenses of the Trust  Estate and the REMIC  Administrator  shall be entitled to
reimbursement therefor out of amounts attributable to the HELs on deposit in the
Custodial Account unless such legal expenses and costs are incurred by reason of
the REMIC Administrator's willful misfeasance, bad faith or gross negligence. If
the REMIC  Administrator  is no longer the  Master  Servicer  hereunder,  at its
option the REMIC  Administrator  may continue its duties as REMIC  Administrator
and shall be paid reasonable  compensation  not to exceed $3,000 per year by any
successor Master Servicer hereunder for so acting as the REMIC Administrator.

               (d)The REMIC  Administrator shall prepare or cause to be prepared
all of the Tax Returns  that it  determines  are  required  with respect to each
REMIC  created  hereunder  and,  if  approval  therefore  is  received  from the
applicable  District  Director of the Internal Revenue  Service,  shall sign and
file such  returns in a timely  manner and,  otherwise,  shall  deliver such Tax
Returns  in a timely  manner  to the Owner  Trustee,  if the  Owner  Trustee  is
required  to sign such  returns in  accordance  with  Section  5.03 of the Trust
Agreement,  and shall sign (if the Owner  Trustee is not so  required)  and file
such Tax Returns in a timely  manner.  The  expenses of  preparing  such returns
shall be borne by the REMIC  Administrator  without  any right of  reimbursement
therefor.  The REMIC  Administrator  agrees to indemnify  and hold  harmless the
Owner  Trustee  with  respect  to any tax or  liability  arising  from the Owner
Trustee's signing of Tax Returns that contain errors or omissions. The Indenture
Trustee and Master Servicer shall promptly provide the REMIC  Administrator with
such information in their possession as the REMIC Administrator may from time to
time request for the purpose of enabling the REMIC  Administrator to prepare Tax
Returns.

               (e)The REMIC Administrator shall provide (i) to any Transferor of
a Class R Certificate  such  information as is necessary for the  application of
any tax relating to the transfer of a Class R  Certificate  to any Person who is

                                       62
<PAGE>

not a Permitted  Transferee,  (ii) to the Indenture  Trustee,  and the Indenture
Trustee  shall  forward  to the  Noteholders  and the  Certificateholders,  such
information  or  reports  as are  required  by the Code or the REMIC  Provisions
including  reports  relating to  interest,  original  issue  discount and market
discount or premium (using the Prepayment  Assumption) and (iii) to the Internal
Revenue Service the name, title,  address and telephone number of the person who
will serve as the representative of each REMIC.

               (f)The  Master  Servicer and the REMIC  Administrator  shall take
such actions and shall cause each REMIC  created  hereunder to take such actions
as are  reasonably  within the Master  Servicer's  or the REMIC  Administrator's
control and the scope of its duties more  specifically set forth herein as shall
be  necessary or desirable to maintain the status of each REMIC as a REMIC under
the REMIC Provisions (and the Indenture Trustee shall assist the Master Servicer
and the REMIC  Administrator,  to the extent reasonably  requested by the Master
Servicer  and the REMIC  Administrator  to do so).  The Master  Servicer and the
REMIC Administrator shall not knowingly or intentionally take any action,  cause
the  Trust  Estate  to take any  action  or fail to take (or fail to cause to be
taken) any action  reasonably  within their  respective  control that, under the
REMIC Provisions,  if taken or not taken, as the case may be, could (i) endanger
the status of any  portion of any of the REMICs as a REMIC or (ii) result in the
imposition of a tax upon any of the REMICs (including but not limited to the tax
on prohibited  transactions as defined in Section 860F(a)(2) of the Code and the
tax on  contributions  to a REMIC  set  forth in  Section  860G(d)  of the Code)
(either   such  event,   in  the  absence  of  an  Opinion  of  Counsel  or  the
indemnification  referred to in this sentence,  an "Adverse REMIC Event") unless
the Master Servicer or the REMIC Administrator,  as applicable,  has received an
Opinion of Counsel (at the expense of the party  seeking to take such action or,
if such party fails to pay such  expense,  and the Master  Servicer or the REMIC
Administrator, as applicable,  determines that taking such action is in the best
interest of the Trust Estate and the Noteholders and the Certificateholders,  at
the  expense of the Trust  Estate,  but in no event at the expense of the Master
Servicer,  the REMIC Administrator,  the Owner Trustee or the Indenture Trustee)
to the effect that the contemplated  action will not, with respect to each REMIC
created  hereunder,  endanger  such status or, unless the Master  Servicer,  the
REMIC  Administrator  or both,  as  applicable,  determine  in its or their sole
discretion to indemnify the Trust Estate  against the  imposition of such a tax,
result  in  the  imposition  of  such  a  tax.  Wherever  in  this  Agreement  a
contemplated  action may not be taken  because the timing of such  action  might
result  in the  imposition  of a tax on the Trust  Estate,  or may only be taken
pursuant to an Opinion of Counsel that such action would not impose a tax on the
Trust Estate,  such action may  nonetheless be taken provided that the indemnity
given in the preceding  sentence with respect to any taxes that might be imposed
on the Trust  Estate  has been  given and that all  other  preconditions  to the
taking of such action have been satisfied.  The Indenture Trustee shall not take
or fail to take any action (whether or not authorized hereunder) as to which the
Master  Servicer or the REMIC  Administrator,  as applicable,  has advised it in
writing that it has received an Opinion of Counsel to the effect that an Adverse
REMIC Event could occur with  respect to such action or  inaction.  In addition,
prior to taking any action with respect to any of the REMICs  created  hereunder
or any related assets thereof,  or causing any of the REMICs to take any action,
which  is not  expressly  permitted  under  the  terms  of this  Agreement,  the
Indenture   Trustee  will  consult  with  the  Master   Servicer  or  the  REMIC
Administrator,  as  applicable,  or its  designee,  in writing,  with respect to

                                       63
<PAGE>

whether such action could cause an Adverse  REMIC Event to occur with respect to
any of the REMICs,  and the Indenture  Trustee shall not take any such action or
cause  either  REMIC to take any such action as to which the Master  Servicer or
the REMIC  Administrator,  as  applicable,  has  advised it in  writing  that an
Adverse REMIC Event could occur. The Master Servicer or the REMIC Administrator,
as  applicable,  may consult with counsel to make such written  advice,  and the
cost of same  shall  be borne  by the  party  seeking  to take  the  action  not
expressly  permitted  by this  Agreement,  but in no event at the expense of the
Master Servicer or the REMIC  Administrator.  At all times as may be required by
the Code,  the Master  Servicer  will to the extent  within its  control and the
scope of its duties more specifically set forth herein,  maintain  substantially
all of the assets of each REMIC created  hereunder as  "qualified  mortgages" as
defined in Section 860G(a)(3) of the Code and "permitted investments" as defined
in Section 860G(a)(5) of the Code.

               (g)In  the  event  that  any  tax  is   imposed  on   "prohibited
transactions"  of any of the  REMICs  created  hereunder  as  defined in Section
860F(a)(2) of the Code, on "net income from foreclosure  property" of any of the
REMICs as defined in Section 860G(c) of the Code, on any contributions to any of
the REMICs  after the Startup Day  therefor  pursuant to Section  860G(d) of the
Code,  or any other tax is imposed by the Code or any  applicable  provisions of
state or local tax laws,  such tax shall be charged (i) to the Master  Servicer,
if such tax arises out of or results from a breach by the Master Servicer of any
of its  obligations  under this Agreement or the Master Servicer has in its sole
discretion  determined to indemnify  the Trust Estate  against such tax, (ii) to
the Indenture Trustee, if such tax arises out of or results from a breach by the
Indenture  Trustee of any of its  obligations  under this  Article  XI, or (iii)
otherwise against amounts on deposit in the Custodial Account and on the Payment
Date(s)  following  such  reimbursement  the  aggregate  of such taxes  shall be
allocated  in  reduction  of the  accrued  interest  due on each Class  entitled
thereto on a pro rata basis.

               (h)The  Indenture  Trustee  and the Master  Servicer  shall,  for
federal  income tax  purposes,  maintain  books and records with respect to each
REMIC  created  hereunder  on a  calendar  year  and on an  accrual  basis or as
otherwise may be required by the REMIC Provisions.

               (i)Following the Startup Day, neither the Master Servicer nor the
Indenture  Trustee shall accept any contributions of assets to any of the REMICs
created  hereunder unless (subject to Section  11.01(f)) the Master Servicer and
the Indenture  Trustee shall have received an Opinion of Counsel (at the expense
of the party seeking to make such contribution) to the effect that the inclusion
of such  assets in such  REMIC  will not cause  either of the  REMICs to fail to
qualify  as a REMIC at any time that any  Class I Notes or Group I  Certificates
are  outstanding  or  subject  either  of the  REMICs to any tax under the REMIC
Provisions or other  applicable  provisions  of federal,  state and local law or
ordinances.

               (j)Neither the Master  Servicer nor the Trustee shall (subject to
Section  11.01(f))  enter  into any  arrangement  by which  either of the REMICs
created  hereunder  will  receive a fee or other  compensation  for services nor
permit  either of the  REMICs to  receive  any  income  from  assets  other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.

               (k)Solely for the purposes of Section  1.860G-1(a)(4)(iii) of the
Treasury  Regulations,   the  "latest  possible  maturity  date"  by  which  the
Certificate  Principal  Balance  of each Class of Class I Notes  representing  a
regular  interest in the applicable  REMIC is the Final  Scheduled  Payment Date
with respect to the Class I Notes.

                                       64
<PAGE>

               (l)Within 30 days after the Closing Date, the REMIC Administrator
shall prepare and file with the Internal Revenue Service Form 8811, "Information
Return for Real  Estate  Mortgage  Investment  Conduits  (REMIC)  and Issuers of
Collateralized Debt Obligations" for each REMIC created hereunder.

               (m)Neither  the Indenture  Trustee nor the Master  Servicer shall
sell,  dispose  of or  substitute  for  any of the  Group  I  Loans  (except  in
connection with (i) the default,  imminent default or foreclosure of the Group I
Loans,  including  but not  limited to, the  acquisition  or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure,  (ii) the bankruptcy of either
of the REMICs created  hereunder,  (iii) the termination of the applicable REMIC
pursuant to Section 8.02 of the Trust  Agreement or (iv) a purchase of the Group
I Loans pursuant to the Purchase Agreement) nor acquire any assets for either of
the REMICs,  nor sell or dispose of any investments in the Custodial  Account or
the  Payment  Account  for gain nor  accept any  contributions  to either of the
REMICs  after the Closing Date unless it has received an Opinion of Counsel that
such  sale,  disposition,  substitution  or  acquisition  will  not  (a)  affect
adversely the status of either of the REMICs as a REMIC or (b) unless the Master
Servicer has  determined  in its sole  discretion  to indemnify the Trust Estate
(and the Indenture  Trustee for any cost,  expense or liability  incurred by the
Indenture Trustee in connection  therewith) against such tax, cause either REMIC
to be subject to a tax on "prohibited  transactions" or "contributions" pursuant
to the REMIC Provisions.

               (n)The Trustee will apply for an employer  identification  number
from the Internal Revenue Service on a Form SS-4 or any other acceptable  method
for all tax entities.

Section   11.02   Servicer,    REMIC   Administrator   and   Indenture   Trustee
Indemnification.

               (a)The  Indenture  Trustee  agrees to indemnify the Trust Estate,
the  Depositor,  the REMIC  Administrator  and the Master  Servicer for any tax,
cost,  expense or  liability,  including,  without  limitation,  any  reasonable
attorneys fees imposed on or incurred by the Trust Estate,  the Depositor or the
Master Servicer,  as a result of a breach of the Indenture  Trustee's  covenants
set forth in Article VIII or this Article XI.

               (b)The REMIC Administrator  agrees to indemnify the Trust Estate,
the Depositor,  the Master Servicer, the Owner Trustee and the Indenture Trustee
for any tax, cost, expense and liability  (including,  without  limitation,  any
reasonable  attorneys'  fees)  imposed on or incurred by the Trust  Estate,  the
Depositor, the Master Servicer, the Owner Trustee or the Indenture Trustee, as a
result  of a breach  of the REMIC  Administrator's  covenants  set forth in this
Article  XI with  respect to  compliance  with the REMIC  Provisions,  including
without limitation,  any penalties arising from the Owner Trustee's execution of
Tax  Returns  prepared  by  the  REMIC  Administrator  that  contain  errors  or
omissions;  provided,  however,  that such  liability will not be imposed to the
extent such breach is a result of an error or omission in  information  provided
to the REMIC Administrator by the Master Servicer in which case Section 11.02(c)
will apply.

                                       65
<PAGE>

               (c)The Master Servicer agrees to indemnify the Trust Estate,  the
Depositor, the REMIC Administrator,  the Owner Trustee and the Indenture Trustee
for any tax, cost, expense and liability  (including,  without  limitation,  any
reasonable  attorneys'  fees)  imposed on or incurred by the Trust  Estate,  the
Depositor, the REMIC Administrator,  the Owner Trustee or the Indenture Trustee,
as a result of a breach of the  Master  Servicer's  covenants  set forth in this
Article XI or in the Servicing  Agreement  with respect to  compliance  with the
REMIC Provisions,  including without limitation,  any penalties arising from the
Owner  Trustee's  execution of Tax Returns  prepared by the Master Servicer that
contain errors or omissions.

        Section 11.03 Designation of REMIC(s).

        The REMIC Administrator shall make an election to treat the HELs in Loan
Group I and the  proceeds  of the HELs in Loan Group I and the  proceeds  of the
Group I Policy on deposit in the Distribution Account, the Custodial Account and
the  Payment  Account as a REMIC  ("REMIC I") and will make an election to treat
the pool of assets comprised of the REMIC I Regular Interests as a REMIC ("REMIC
II") for federal income tax purposes.

        The REMIC I Regular Interests will be "regular interests" in REMIC I and
the Class R-I  Certificates  will be the sole class of "residual  interests"  in
REMIC I for purposes of the REMIC Provisions under the federal income tax law.

        The REMIC II Regular  Interests will be "regular  interests" in REMIC II
and the Class R-II Certificates  will be the sole class of "residual  interests"
in REMIC II for purposes of the REMIC  Provisions  under the federal  income tax
law.

                                       66
<PAGE>

        IN WITNESS  WHEREOF,  the Issuer and the  Indenture  Trustee have caused
their names to be signed  hereto by their  respective  officers  thereunto  duly
authorized, all as of the day and year first above written.

                                            HOME EQUITY LOAN TRUST 2001-HS3,
                                    as Issuer

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

                                            By:     /s/ Anita Dallago
                                               --------------------------------
                                               Name: Anita Dallago
                                               Title: Financial Services Officer

                                            THE CHASE MANHATTAN BANK,
                                            as Indenture Trustee

                                            By: /s/ Mark McDermott
                                               --------------------------------
                                               Name: Mark McDermott
                                               Title: Assistant Vice President

THE CHASE MANHATTAN BANK hereby accepts the appointment as Paying Agent pursuant
to Section 3.03 hereof and as Note Registrar pursuant to Section 4.02 hereof.

By:  /s/ Mark McDermott
   -------------------------------------
    Name: Mark McDermott
    Title: Assistant Vice President

<PAGE>

STATE OF DELAWARE            )
                             ) ss.:
COUNTY OF NEWCASTLE          )

        On this  25th day of  September,  2001,  before me  personally  appeared
________Anita Dallago ______________________,  to me known, who being by me duly
sworn, did depose and say, that s/he resides at in  ___Delaware_________  , that
s/he is the  _FSO_____________  of the Owner  Trustee,  one of the  corporations
described in and which executed the above  instrument;  that s/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 s/he signed her/his name thereto by like order.

                                              /s/ Leigh Emmi
                                            ----------------------------------
                                            Notary Public

<PAGE>

STATE OF DELAWARE            )
                             ) ss.:
COUNTY OF NEWCASTLE          )

        On this  27th day of  September,  2001,  before me  personally  appeared
__Mark  McDermott____________,  to me  known,  who being by me duly  sworn,  did
depose  and  say,  that  s/he  resides  at  _________________  that  s/he is the
___AVP________  of The Chase  Manhattan Bank, as Indenture  Trustee,  one of the
corporations  described in and which  executed the above  instrument;  that s/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 s/he signed her/his name thereto by like order.

                                              /s/ Margaret M. Price
                                            ---------------------------------
                                            Notary Public

NOTORIAL SEAL

<PAGE>

                                   EXHIBIT A-1

                          FORM OF CLASS A-I-[__] NOTES

               UNLESS   THIS   TERM   NOTE  IS   PRESENTED   BY  AN   AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION  ("DTC"),
TO THE ISSUER OR ITS AGENT FOR  REGISTRATION  OF TRANSFER,  EXCHANGE OR PAYMENT,
AND ANY TERM  NOTE  ISSUED  IS  REGISTERED  IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER  NAME AS IS  REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY
PAYMENT  IS MADE TO CEDE & CO. OR TO SUCH  OTHER  ENTITY AS IS  REQUESTED  BY AN
AUTHORIZED  REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR  OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  INASMUCH AS THE  REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

               [SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS TERM NOTE IS A
"REGULAR  INTEREST" IN A "REAL  ESTATE  MORTGAGE  INVESTMENT  CONDUIT," AS THOSE
TERMS ARE  DEFINED,  RESPECTIVELY,  IN  SECTIONS  860G AND 860D OF THE  INTERNAL
REVENUE CODE OF 1986 (THE "CODE").]

               THE PRINCIPAL OF THIS TERM NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TERM NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

               THIS TERM NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
THE SELLER,  THE DEPOSITOR,  THE MASTER  SERVICER,  THE INDENTURE  TRUSTEE,  THE
TRUSTEE OR GMAC  MORTGAGE  GROUP,  INC. OR ANY OF THEIR  RESPECTIVE  AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.

                     HOME  EQUITY  LOAN  TRUST  2001-HS3  Home  Equity
                      Loan-Backed Term Note, Class A-I-[__]

Registered                                 Principal Amount:  $[_______]

No. 1                                     Note Rate:  [Floating]/[Fixed]

CUSIP NO.

               Home Equity Loan Trust 2001-HS3,  a business trust duly organized
and existing under the laws of the State of Delaware  (herein referred to as the
"Issuer"),  for  value  received,  hereby  promises  to  pay to  Cede  & Co.  or
registered  assigns,  the principal sum of  $[_______],  payable on each Payment
Date in an amount equal to the Percentage  Interest  evidenced by this Term Note
of the aggregate  amount, if any, payable from the Payment Account in respect of
principal on the Term Notes  pursuant to Section 3.05 of the Indenture  dated as
                                        A-1-1

<PAGE>

of September 27, 2001 (the "Indenture")  between the Issuer, as Issuer,  and The
Chase Manhattan Bank, as Indenture Trustee (the "Indenture Trustee");  provided,
however,  that the entire unpaid principal amount of this Term Note shall be due
and payable on the Payment Date in [_______],  to the extent not previously paid
on a prior  Payment  Date.  Capitalized  terms used but not  defined  herein are
defined in Appendix A of the Indenture.

               [Interest  on the Class  A-I-[__]  Notes will be paid  monthly on
each Payment Date at the Note Rate for the related  Interest  Period  subject to
limitations  which may result in Basis Risk Shortfalls (as further  described in
the Indenture).  The Note Rate for each Interest Period will be a [floating rate
equal to the least of (i) LIBOR plus [__]% per annum, (ii) [8.00]% per annum and
(iii) the Group I Net WAC Rate] [fixed rate equal to the lesser of (i) [__]% per
annum or (ii) the  Group I Net WAC  Rate].  LIBOR for each  applicable  Interest
Period will be determined on the second LIBOR Business Day immediately preceding
(i) the Closing Date in the case of the first Interest Period and (ii) the first
day of each succeeding  Interest Period by the Indenture Trustee as set forth in
the Indenture.  All  determinations  of LIBOR by the Indenture Trustee shall, in
the absence of manifest error,  be conclusive for all purposes,  and each holder
of this Term  Note,  by  accepting  this Term  Note,  agrees to be bound by such
determination. Interest on this Term Note will accrue for each Payment Date from
the most recent Payment Date on which interest has been paid (in the case of the
first Payment Date,  from the Closing Date) to but excluding  such Payment Date.
Interest  will be computed  on the basis of [the  actual  number of days in each
Interest  Period and a year  assumed  to  consist  of 360 days][ a 360-day  year
consisting of twelve 30 day months]. Principal of and interest on this Term Note
shall be paid in the manner specified on the reverse hereof.]

               Principal  of and  interest on this Term Note are payable in such
coin or  currency  of the United  States of America as at the time of payment is
legal tender for payment of public and private  debts.  All payments made by the
Issuer with respect to this Term Note shall be applied first to interest due and
payable on this Term Note as provided above and then to the unpaid  principal of
this Term Note.

               Reference is made to the further provisions of this Term Note set
forth on the reverse  hereof,  which shall have the same effect as though  fully
set forth on the face of this Term Note.

               Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this Term
Note shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.

               This Term Note is one of a duly authorized issue of Term Notes of
the Issuer,  designated as its Home Equity  Loan-Backed  Term Notes,  all issued
under the Indenture,  to which Indenture and all indentures supplemental thereto
reference  is  hereby  made  for  a  statement  of  the  respective  rights  and
obligations  thereunder of the Issuer,  the Indenture Trustee and the holders of
the Term Notes. The Term Notes are subject to all terms of the Indenture.

               The Term Notes and the Variable Funding Notes (collectively,  the
"Notes") are and will be equally and ratably  secured by the collateral  pledged
as security therefor as provided in the Indenture.

                                        A-1-2
<PAGE>

               This Term Note is entitled to, to a limited extent,  the benefits
of the Group I Policy.

               Principal  of and  interest  on this Term Note will be payable on
each Payment Date,  commencing  October 25, 2001, as described in the Indenture.
"Payment Date" means the twenty-fifth day of each month, or, if any such date is
not a Business Day, then the next Business Day.

               The entire unpaid principal amount of this Term Note shall be due
and payable in full on the Payment Date in [_______]  pursuant to the Indenture,
to the extent not previously paid on a prior Payment Date.  Notwithstanding  the
foregoing,  if an Event of Default shall have occurred and be  continuing,  then
the  Indenture  Trustee  or the  holders of Notes  representing  not less than a
majority  of the  Security  Balances of all Notes with the consent of the Credit
Enhancer, or the Credit Enhancer may declare the Notes to be immediately due and
payable in the manner  provided in Section 5.02 of the Indenture.  All principal
payments  on the Term Notes  shall be made pro rata to the holders of Term Notes
entitled thereto.

               Payments  of  interest  on this Term Note due and payable on each
Payment Date, together with the installment of principal,  if any, to the extent
not in full  payment  of this Term  Note,  shall be made by check  mailed to the
Person whose name appears as the Registered  Holder of this Term Note (or one or
more Predecessor Term Notes) on the Note Register as of the close of business on
each Record  Date,  except  that with  respect to Term Notes  registered  on the
Record Date in the name of the nominee of the Depository Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee.  Such checks shall be
mailed to the  Person  entitled  thereto  at the  address  of such  Person as it
appears on the Note Register as of the applicable  Record Date without requiring
that this Term Note be submitted  for notation of payment.  Any reduction in the
principal  amount of this Term Note (or any one or more  Predecessor Term Notes)
effected  by any  payments  made on any Payment  Date shall be binding  upon all
future  holders  of  this  Term  Note  and of any  Term  Note  issued  upon  the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon.  If funds are expected to be available,  as provided in the
Indenture,  for payment in full of the then remaining unpaid principal amount of
this Term Note on a Payment Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer,  will notify the Person who was the  Registered  Holder
hereof as of the Record Date  preceding  such Payment  Date by notice  mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and
payable shall be payable only upon  presentation and surrender of this Term Note
at the address specified in such notice of final payment.

               As provided in the Indenture  and subject to certain  limitations
set forth therein,  the transfer of this Term Note may be registered on the Note
Register upon  surrender of this Term Note for  registration  of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written instrument
of transfer in form  satisfactory to the Indenture Trustee duly executed by, the
holder hereof or such holder's  attorney duly  authorized in writing,  with such
signature  guaranteed  by  an  "eligible  guarantor   institution"  meeting  the
requirements of the Note Registrar,  which  requirements  include  membership or
participation in the Securities  Transfer Agent's Medallion Program ("STAMP") or
such  other  "signature  guarantee  program"  as may be  determined  by the Note
Registrar in addition to, or in substitution  for, STAMP, all in accordance with

                                        A-1-3
<PAGE>

the Securities  Exchange Act of 1934, as amended,  and thereupon one or more new
Term  Notes in  authorized  denominations  and in the same  aggregate  principal
amount will be issued to the designated  transferee or  transferees.  No service
charge will be charged for any registration of transfer or exchange of this Term
Note, but the Note Registrar  shall require payment of a sum sufficient to cover
any tax or  governmental  charge  that may be  imposed  in  connection  with any
registration of transfer or exchange of this Term Note.

               Each holder or Beneficial  Owner of a Term Note, by acceptance of
a Term Note, or, in the case of a Beneficial  Owner of a Term Note, a beneficial
interest in a Term Note,  covenants  and agrees  that no recourse  may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee, the Seller, the Master Servicer, the Depositor or the Indenture Trustee
on the Term Notes or under the  Indenture or any  certificate  or other  writing
delivered in  connection  therewith,  against (i) the  Indenture  Trustee or the
Owner  Trustee  in its  individual  capacity,  (ii) any  owner  of a  beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director  or  employee  of the  Indenture  Trustee  or the Owner  Trustee in its
individual  capacity,  any holder of a  beneficial  interest in the Issuer,  the
Owner  Trustee or the  Indenture  Trustee or of any  successor  or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary  shall be fully liable, to the extent provided by applicable law for
any unpaid  consideration for stock,  unpaid capital  contribution or failure to
pay any installment or call owing to such entity.

               Each holder or Beneficial  Owner of a Term Note, by acceptance of
a Term Note or, in the case of a  Beneficial  Owner of a Term Note, a beneficial
interest in a Term Note,  covenants  and agrees by accepting the benefits of the
Indenture  that such holder or  Beneficial  Owner of a Term Note will not at any
time institute  against the Depositor,  the Seller,  the Master  Servicer,  GMAC
Mortgage  Group,  Inc. or the  Issuer,  or join in any  institution  against the
Depositor,  the Seller,  the Master Servicer,  GMAC Mortgage Group,  Inc. or the
Issuer  of,  any   bankruptcy,   reorganization,   arrangement,   insolvency  or
liquidation  proceedings  under any United States federal or state bankruptcy or
similar law in connection with any obligations  relating to the Term Notes,  the
Indenture or the Basic Documents.

               Prior to the due presentment for registration of transfer of this
Term Note, the Issuer,  the Indenture Trustee and any agent of the Issuer or the
Indenture  Trustee  may  treat  the  Person  in whose  name  this  Term  Note is
registered  (as of the day of  determination  or as of such other date as may be
specified in the Indenture) as the owner hereof for all purposes, whether or not
this Term Note be overdue,  and none of the Issuer, the Indenture Trustee or any
such agent shall be affected by notice to the contrary.

               The  Indenture  permits,   with  certain  exceptions  as  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the  Issuer  and the  Indenture  Trustee  and the  rights of the
holders of the Term Notes under the  Indenture at any time by the Issuer and the
Indenture  Trustee  with the  consent  of the  holders of Notes  representing  a
majority of the Security  Balances of all Notes at the time  Outstanding and the
Credit Enhancer and with prior notice to the Rating Agencies. The Indenture also
contains  provisions  permitting  the  holders of Notes  representing  specified
percentages of the Security  Balances of all Notes,  on behalf of the holders of
all the Notes, to waive compliance by the Issuer with certain  provisions of the
Indenture and certain past defaults under the Indenture and their  consequences.

                                        A-1-4
<PAGE>

Any such  consent  or waiver by the holder of this Term Note (or any one of more
Predecessor  Term Notes)  shall be  conclusive  and binding upon such holder and
upon all future  holders of this Term Note and of any Term Note  issued upon the
registration  of transfer hereof or in exchange hereof or in lieu hereof whether
or not  notation  of such  consent  or waiver is made upon this Term  Note.  The
Indenture  also permits the Issuer and the  Indenture  Trustee to amend or waive
certain terms and conditions  set forth in the Indenture  without the consent of
holders of the Term Notes issued  thereunder but with prior notice to the Rating
Agencies and the Credit Enhancer.

               The  term  "Issuer"  as used  in  this  Term  Note  includes  any
successor or the Issuer under the Indenture.

               The  Issuer  is  permitted  by  the   Indenture,   under  certain
circumstances,  to merge or consolidate,  subject to the rights of the Indenture
Trustee and the holders of Term Notes under the Indenture.

               The  Term  Notes  are  issuable  only  in   registered   form  in
denominations  as  provided  in the  Indenture,  subject to certain  limitations
therein set forth.

               This Term Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.

               No  reference  herein to the  Indenture  and no provision of this
Term Note or of the  Indenture  shall  alter or impair,  the  obligation  of the
Issuer,  which  is  absolute  and  unconditional,  to pay the  principal  of and
interest  on this Term  Note at the  times,  place and rate,  and in the coin or
currency herein prescribed.

               Anything  herein  to  the  contrary  notwithstanding,  except  as
expressly  provided in the Basic Documents,  none of Wilmington Trust Company in
its individual  capacity,  The Chase Manhattan Bank, in its individual capacity,
any owner of a  beneficial  interest in the Issuer,  or any of their  respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of  principal  of or interest on this Term Note or  performance
of,  or  omission   to   perform,   any  of  the   covenants,   obligations   or
indemnifications contained in the Indenture. The holder of this Term Note by its
acceptance  hereof  agrees  that,  except  as  expressly  provided  in the Basic
Documents,  in the case of an Event of Default under the  Indenture,  the holder
shall have no claim  against any of the foregoing  for any  deficiency,  loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent  recourse to, and enforcement  against,  the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Term Note.

                                        A-1-5

<PAGE>

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

                                 HOME EQUITY LOAN TRUST 2001-HS3,

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

Dated:  September 27, 2001

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

                          CERTIFICATE OF AUTHENTICATION

This is one of the Term Notes referred to in the within mentioned Indenture.

                              THE CHASE MANHATTAN BANK, not in
                              its individual capacity but solely as Indenture
                              Trustee

Dated:  September 27, 2001

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

                                        A-1-6

<PAGE>

                                   ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:

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

                                (name and address of assignee)

the  within  Term  Note  and  all  rights  thereunder,  and  hereby  irrevocably
constitutes                             and                             appoints
_____________________________________________________________,    attorney,   to
transfer said Term Note on the books kept for  registration  thereof,  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  Term Note 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 Note Registrar,  which  requirements  include  membership or
participation  in STAMP or such other  "signature  guarantee  program" as may be
determined by the Note Registrar in addition to, or in substitution  for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

                                        A-1-7

<PAGE>

                            FORM OF CLASS A-II NOTES

               UNLESS   THIS   TERM   NOTE  IS   PRESENTED   BY  AN   AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION  ("DTC"),
TO THE ISSUER OR ITS AGENT FOR  REGISTRATION  OF TRANSFER,  EXCHANGE OR PAYMENT,
AND ANY TERM  NOTE  ISSUED  IS  REGISTERED  IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER  NAME AS IS  REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY
PAYMENT  IS MADE TO CEDE & CO. OR TO SUCH  OTHER  ENTITY AS IS  REQUESTED  BY AN
AUTHORIZED  REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR  OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  INASMUCH AS THE  REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

               THE PRINCIPAL OF THIS TERM NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TERM NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

               THIS TERM NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
THE SELLER,  THE DEPOSITOR,  THE MASTER  SERVICER,  THE INDENTURE  TRUSTEE,  THE
TRUSTEE OR GMAC  MORTGAGE  GROUP,  INC. OR ANY OF THEIR  RESPECTIVE  AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.

                         HOME EQUITY LOAN TRUST 2001-HS3
                  Home Equity Loan-Backed Term Note, Class A-II

Registered                                  Principal Amount:  $118,755,000

No. 1                                                  Note Rate:  Floating

CUSIP NO.

               Home Equity Loan Trust 2001-HS3,  a business trust duly organized
and existing under the laws of the State of Delaware  (herein referred to as the
"Issuer"),  for  value  received,  hereby  promises  to  pay to  Cede  & Co.  or
registered assigns,  the principal sum of $118,755,000,  payable on each Payment
Date in an amount equal to the Percentage  Interest  evidenced by this Term Note
of the aggregate  amount, if any, payable from the Payment Account in respect of
principal on the Term Notes  pursuant to Section 3.05 of the Indenture  dated as
of September 27, 2001 (the "Indenture")  between the Issuer, as Issuer,  and The
Chase Manhattan Bank, as Indenture Trustee (the "Indenture Trustee");  provided,
however,  that the entire unpaid principal amount of this Term Note shall be due
and payable on the Payment Date in February  2027, to the extent not  previously
paid on a prior Payment Date.  Capitalized terms used but not defined herein are
defined in Appendix A of the Indenture.

               Interest  on the Class A-II  Notes  will be paid  monthly on each
Payment  Date at the Note  Rate  for the  related  Interest  Period  subject  to
limitations  which may result in Basis Risk Shortfalls (as further  described in
the  Indenture).  The Note Rate for each Interest Period will be a floating rate

                                        A-2-1
<PAGE>

equal to the least of (i) LIBOR plus 0.23% per annum,  (ii) 17.25% per annum and
(iii) the Group II Net WAC Rate. LIBOR for each applicable  Interest Period will
be determined  on the second LIBOR  Business Day  immediately  preceding (i) the
Closing Date in the case of the first Interest  Period and (ii) the first day of
each  succeeding  Interest  Period by the Indenture  Trustee as set forth in the
Indenture.  All  determinations  of LIBOR by the Indenture Trustee shall, in the
absence of manifest  error,  be conclusive for all purposes,  and each holder of
this  Term  Note,  by  accepting  this  Term  Note,  agrees  to be bound by such
determination. Interest on this Term Note will accrue for each Payment Date from
the most recent Payment Date on which interest has been paid (in the case of the
first Payment Date,  from the Closing Date) to but excluding  such Payment Date.
Interest  will be  computed  on the basis of the  actual  number of days in each
Interest  Period and a year  assumed to  consist of 360 days.  Principal  of and
interest on this Term Note shall be paid in the manner  specified on the reverse
hereof.

               Principal  of and  interest on this Term Note are payable in such
coin or  currency  of the United  States of America as at the time of payment is
legal tender for payment of public and private  debts.  All payments made by the
Issuer with respect to this Term Note shall be applied first to interest due and
payable on this Term Note as provided above and then to the unpaid  principal of
this Term Note.

               Reference is made to the further provisions of this Term Note set
forth on the reverse  hereof,  which shall have the same effect as though  fully
set forth on the face of this Term Note.

               Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this Term
Note shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.

               This Term Note is one of a duly authorized issue of Term Notes of
the Issuer,  designated as its Home Equity  Loan-Backed  Term Notes,  all issued
under the Indenture,  to which Indenture and all indentures supplemental thereto
reference  is  hereby  made  for  a  statement  of  the  respective  rights  and
obligations  thereunder of the Issuer,  the Indenture Trustee and the holders of
the Term Notes. The Term Notes are subject to all terms of the Indenture.

               The Term Notes and the Variable Funding Notes (collectively,  the
"Notes") are and will be equally and ratably  secured by the collateral  pledged
as security therefor as provided in the Indenture.

               This Term Note is entitled to the benefits of an irrevocable  and
unconditional  financial  guaranty  insurance  policy issued by Ambac  Assurance
Corporation.

               Principal  of and  interest  on this Term Note will be payable on
each Payment Date,  commencing  October 25, 2001, as described in the Indenture.
"Payment Date" means the twenty-fifth day of each month, or, if any such date is
not a Business Day, then the next Business Day.

                                        A-2-2

<PAGE>

               The entire unpaid principal amount of this Term Note shall be due
and  payable  in full on the  Payment  Date in  February  2027  pursuant  to the
Indenture,  to  the  extent  not  previously  paid  on  a  prior  Payment  Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing,  then the Indenture Trustee or the holders of Notes representing not
less than a majority of the  Security  Balances of all Notes with the consent of
the  Credit  Enhancer,  or the  Credit  Enhancer  may  declare  the  Notes to be
immediately  due and  payable in the  manner  provided  in  Section  5.02 of the
Indenture.  All  principal  payments on the Term Notes shall be made pro rata to
the holders of Term Notes entitled thereto.

               Payments  of  interest  on this Term Note due and payable on each
Payment Date, together with the installment of principal,  if any, to the extent
not in full  payment  of this Term  Note,  shall be made by check  mailed to the
Person whose name appears as the Registered  Holder of this Term Note (or one or
more Predecessor Term Notes) on the Note Register as of the close of business on
each Record  Date,  except  that with  respect to Term Notes  registered  on the
Record Date in the name of the nominee of the Depository Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee.  Such checks shall be
mailed to the  Person  entitled  thereto  at the  address  of such  Person as it
appears on the Note Register as of the applicable  Record Date without requiring
that this Term Note be submitted  for notation of payment.  Any reduction in the
principal  amount of this Term Note (or any one or more  Predecessor Term Notes)
effected  by any  payments  made on any Payment  Date shall be binding  upon all
future  holders  of  this  Term  Note  and of any  Term  Note  issued  upon  the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon.  If funds are expected to be available,  as provided in the
Indenture,  for payment in full of the then remaining unpaid principal amount of
this Term Note on a Payment Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer,  will notify the Person who was the  Registered  Holder
hereof as of the Record Date  preceding  such Payment  Date by notice  mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and
payable shall be payable only upon  presentation and surrender of this Term Note
at the address specified in such notice of final payment.

               As provided in the Indenture  and subject to certain  limitations
set forth therein,  the transfer of this Term Note may be registered on the Note
Register upon  surrender of this Term Note for  registration  of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written instrument
of transfer in form  satisfactory to the Indenture Trustee duly executed by, the
holder hereof or such holder's  attorney duly  authorized in writing,  with such
signature  guaranteed  by  an  "eligible  guarantor   institution"  meeting  the
requirements of the Note Registrar,  which  requirements  include  membership or
participation in the Securities  Transfer Agent's Medallion Program ("STAMP") or
such  other  "signature  guarantee  program"  as may be  determined  by the Note
Registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities  Exchange Act of 1934, as amended,  and thereupon one or more new
Term  Notes in  authorized  denominations  and in the same  aggregate  principal
amount will be issued to the designated  transferee or  transferees.  No service
charge will be charged for any registration of transfer or exchange of this Term
Note, but the Note Registrar  shall require payment of a sum sufficient to cover
any tax or  governmental  charge  that may be  imposed  in  connection  with any
registration of transfer or exchange of this Term Note.

                                        A-2-3
<PAGE>

               Each holder or Beneficial  Owner of a Term Note, by acceptance of
a Term Note, or, in the case of a Beneficial  Owner of a Term Note, a beneficial
interest in a Term Note,  covenants  and agrees  that no recourse  may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee, the Seller, the Master Servicer, the Depositor or the Indenture Trustee
on the Term Notes or under the  Indenture or any  certificate  or other  writing
delivered in  connection  therewith,  against (i) the  Indenture  Trustee or the
Owner  Trustee  in its  individual  capacity,  (ii) any  owner  of a  beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director  or  employee  of the  Indenture  Trustee  or the Owner  Trustee in its
individual  capacity,  any holder of a  beneficial  interest in the Issuer,  the
Owner  Trustee or the  Indenture  Trustee or of any  successor  or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary  shall be fully liable, to the extent provided by applicable law for
any unpaid  consideration for stock,  unpaid capital  contribution or failure to
pay any installment or call owing to such entity.

               Each holder or Beneficial  Owner of a Term Note, by acceptance of
a Term Note or, in the case of a  Beneficial  Owner of a Term Note, a beneficial
interest in a Term Note,  covenants  and agrees by accepting the benefits of the
Indenture  that such holder or  Beneficial  Owner of a Term Note will not at any
time institute  against the Depositor,  the Seller,  the Master  Servicer,  GMAC
Mortgage  Group,  Inc. or the  Issuer,  or join in any  institution  against the
Depositor,  the Seller,  the Master Servicer,  GMAC Mortgage Group,  Inc. or the
Issuer  of,  any   bankruptcy,   reorganization,   arrangement,   insolvency  or
liquidation  proceedings  under any United States federal or state bankruptcy or
similar law in connection with any obligations  relating to the Term Notes,  the
Indenture or the Basic Documents.

               The Issuer has entered into the  Indenture  and this Term Note is
issued with the intention  that,  for federal,  state and local  income,  single
business and franchise tax purposes, the Term Notes will qualify as indebtedness
of the Issuer.  Each holder of a Term Note,  by  acceptance  of a Term Note (and
each Beneficial Owner of a Term Note by acceptance of a beneficial interest in a
Term Note), agrees to treat the Term Notes for federal,  state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.

               Prior to the due presentment for registration of transfer of this
Term Note, the Issuer,  the Indenture Trustee and any agent of the Issuer or the
Indenture  Trustee  may  treat  the  Person  in whose  name  this  Term  Note is
registered  (as of the day of  determination  or as of such other date as may be
specified in the Indenture) as the owner hereof for all purposes, whether or not
this Term Note be overdue,  and none of the Issuer, the Indenture Trustee or any
such agent shall be affected by notice to the contrary.

               The  Indenture  permits,   with  certain  exceptions  as  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the  Issuer  and the  Indenture  Trustee  and the  rights of the
holders of the Term Notes under the  Indenture at any time by the Issuer and the
Indenture  Trustee  with the  consent  of the  holders of Notes  representing  a
majority of the Security  Balances of all Notes at the time  Outstanding and the
Credit Enhancer and with prior notice to the Rating Agencies. The Indenture also
contains  provisions  permitting  the  holders of Notes  representing  specified
percentages of the Security  Balances of all Notes,  on behalf of the holders of
all the Notes, to waive compliance by the Issuer with certain  provisions of the
Indenture and certain past defaults under the Indenture and their  consequences.

                                        A-2-4
<PAGE>

Any such  consent  or waiver by the holder of this Term Note (or any one of more
Predecessor  Term Notes)  shall be  conclusive  and binding upon such holder and
upon all future  holders of this Term Note and of any Term Note  issued upon the
registration  of transfer hereof or in exchange hereof or in lieu hereof whether
or not  notation  of such  consent  or waiver is made upon this Term  Note.  The
Indenture  also permits the Issuer and the  Indenture  Trustee to amend or waive
certain terms and conditions  set forth in the Indenture  without the consent of
holders of the Term Notes issued  thereunder but with prior notice to the Rating
Agencies and the Credit Enhancer.

               The  term  "Issuer"  as used  in  this  Term  Note  includes  any
successor or the Issuer under the Indenture.

               The  Issuer  is  permitted  by  the   Indenture,   under  certain
circumstances,  to merge or consolidate,  subject to the rights of the Indenture
Trustee and the holders of Term Notes under the Indenture.

               The  Term  Notes  are  issuable  only  in   registered   form  in
denominations  as  provided  in the  Indenture,  subject to certain  limitations
therein set forth.

               This Term Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.

               No  reference  herein to the  Indenture  and no provision of this
Term Note or of the  Indenture  shall  alter or impair,  the  obligation  of the
Issuer,  which  is  absolute  and  unconditional,  to pay the  principal  of and
interest  on this Term  Note at the  times,  place and rate,  and in the coin or
currency herein prescribed.

               Anything  herein  to  the  contrary  notwithstanding,  except  as
expressly  provided in the Basic Documents,  none of Wilmington Trust Company in
its individual  capacity,  The Chase Manhattan Bank, in its individual capacity,
any owner of a  beneficial  interest in the Issuer,  or any of their  respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of  principal  of or interest on this Term Note or  performance
of,  or  omission   to   perform,   any  of  the   covenants,   obligations   or
indemnifications contained in the Indenture. The holder of this Term Note by its
acceptance  hereof  agrees  that,  except  as  expressly  provided  in the Basic
Documents,  in the case of an Event of Default under the  Indenture,  the holder
shall have no claim  against any of the foregoing  for any  deficiency,  loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent  recourse to, and enforcement  against,  the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Term Note.

                                        A-2-5

<PAGE>

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

                             HOME EQUITY LOAN TRUST 2001-HS3,

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

Dated:  September 27, 2001

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

                          CERTIFICATE OF AUTHENTICATION

This is one of the Term Notes referred to in the within mentioned Indenture.

                               THE CHASE MANHATTAN BANK, not in
                               its individual capacity but solely as Indenture
                               Trustee

Dated:  September 27, 2001

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

<PAGE>

                                   ASSIGNMENT

     Social Security or taxpayer I.D. or other identifying number of assignee:

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

                                (name and address of assignee)

the  within  Term  Note  and  all  rights  thereunder,  and  hereby  irrevocably
constitutes                             and                             appoints
_____________________________________________________________,    attorney,   to
transfer said Term Note on the books kept for  registration  thereof,  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  Term Note 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 Note Registrar,  which  requirements  include  membership or
participation  in STAMP or such other  "signature  guarantee  program" as may be
determined by the Note Registrar in addition to, or in substitution  for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

                                        A-2-7
<PAGE>

                             FORM OF CLASS M-I NOTES

               THIS TERM NOTE IS  SUBORDINATED  IN RIGHT OF PAYMENT TO THE CLASS
A-I NOTES AS DESCRIBED IN THE AGREEMENT (AS DEFINED BELOW).

               SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS TERM NOTE IS A
"REGULAR  INTEREST" IN A "REAL  ESTATE  MORTGAGE  INVESTMENT  CONDUIT," AS THOSE
TERMS ARE  DEFINED,  RESPECTIVELY,  IN  SECTIONS  860G AND 860D OF THE  INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

               UNLESS   THIS   TERM   NOTE  IS   PRESENTED   BY  AN   AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION  ("DTC"),
TO THE ISSUER OR ITS AGENT FOR  REGISTRATION  OF TRANSFER,  EXCHANGE OR PAYMENT,
AND ANY TERM  NOTE  ISSUED  IS  REGISTERED  IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER  NAME AS IS  REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY
PAYMENT  IS MADE TO CEDE & CO. OR TO SUCH  OTHER  ENTITY AS IS  REQUESTED  BY AN
AUTHORIZED  REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR  OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  INASMUCH AS THE  REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

               THE PRINCIPAL OF THIS TERM NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TERM NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

               THIS TERM NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
THE SELLER,  THE DEPOSITOR,  THE MASTER  SERVICER,  THE INDENTURE  TRUSTEE,  THE
TRUSTEE OR GMAC  MORTGAGE  GROUP,  INC. OR ANY OF THEIR  RESPECTIVE  AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.

                               HOME  EQUITY  LOAN  TRUST  2001-HS3  Home  Equity
                      Loan-Backed Term Note, Class M-I-[__]

Registered                                   Principal Amount:  $[_______]

No. 1                                                     Note Rate: Fixed

CUSIP NO.

               Home Equity Loan Trust 2001-HS3,  a business trust duly organized
and existing under the laws of the State of Delaware  (herein referred to as the
"Issuer"),  for  value  received,  hereby  promises  to  pay to  Cede  & Co.  or
registered  assigns,  the principal sum of  $[_______],  payable on each Payment
Date in an amount equal to the Percentage  Interest  evidenced by this Term Note
of the aggregate  amount, if any, payable from the Payment Account in respect of
principal on the Term Notes  pursuant to Section 3.05 of the Indenture  dated as

                                        A-2-8
<PAGE>

of September 27, 2001 (the "Indenture")  between the Issuer, as Issuer,  and The
Chase Manhattan Bank, as Indenture Trustee (the "Indenture Trustee");  provided,
however,  that the entire unpaid principal amount of this Term Note shall be due
and payable on the Payment Date in June 2031, to the extent not previously  paid
on a prior  Payment  Date.  Capitalized  terms used but not  defined  herein are
defined in Appendix A of the Indenture.

               Interest on the Class M-I-[__] Notes will be paid monthly on each
Payment  Date at the Note  Rate  for the  related  Interest  Period  subject  to
limitations  which may result in Basis Risk Shortfalls (as further  described in
the  Indenture).  The Note Rate for each  Interest  Period  will be a fixed rate
equal to the  lesser  of (i)  [__]%  per  annum  (or,  for any  Interest  Period
commencing  after the Group I Step-Up Date, [__]% per annum) or (ii) the Group I
Net WAC Rate.  LIBOR for each  applicable  Interest Period will be determined on
the second LIBOR Business Day immediately  preceding (i) the Closing Date in the
case of the first  Interest  Period  and (ii) the  first day of each  succeeding
Interest  Period by the  Indenture  Trustee as set forth in the  Indenture.  All
determinations  of LIBOR by the  Indenture  Trustee  shall,  in the  absence  of
manifest  error,  be conclusive  for all purposes,  and each holder of this Term
Note,  by accepting  this Term Note,  agrees to be bound by such  determination.
Interest  on this Term  Note will  accrue  for each  Payment  Date from the most
recent  Payment  Date on which  interest has been paid (in the case of the first
Payment  Date,  from the  Closing  Date) to but  excluding  such  Payment  Date.
Interest will be computed on the basis of a 360-day year consisting of twelve 30
day  months.  Principal  of and  interest on this Term Note shall be paid in the
manner specified on the reverse hereof.

               Principal  of and  interest on this Term Note are payable in such
coin or  currency  of the United  States of America as at the time of payment is
legal tender for payment of public and private  debts.  All payments made by the
Issuer with respect to this Term Note shall be applied first to interest due and
payable on this Term Note as provided above and then to the unpaid  principal of
this Term Note.

               Reference is made to the further provisions of this Term Note set
forth on the reverse  hereof,  which shall have the same effect as though  fully
set forth on the face of this Term Note.

               Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this Term
Note shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.

               This Term Note is one of a duly authorized issue of Term Notes of
the Issuer,  designated as its Home Equity  Loan-Backed  Term Notes,  all issued
under the Indenture,  to which Indenture and all indentures supplemental thereto
reference  is  hereby  made  for  a  statement  of  the  respective  rights  and
obligations  thereunder of the Issuer,  the Indenture Trustee and the holders of
the Term Notes. The Term Notes are subject to all terms of the Indenture.

               The Term Notes and the Variable Funding Notes (collectively,  the
"Notes") are and will be equally and ratably  secured by the collateral  pledged
as security therefor as provided in the Indenture.

                                        A-2-9
<PAGE>

               This Term Note is entitled to, to a limited extent,  the benefits
of the Group I Policy.

               Principal  of and  interest  on this Term Note will be payable on
each Payment Date,  commencing  October 25, 2001, as described in the Indenture.
"Payment Date" means the twenty-fifth day of each month, or, if any such date is
not a Business Day, then the next Business Day.

               The entire unpaid principal amount of this Term Note shall be due
and  payable  in full on the  Payment  Date in June  25,  2031  pursuant  to the
Indenture,  to  the  extent  not  previously  paid  on  a  prior  Payment  Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing,  then the Indenture Trustee or the holders of Notes representing not
less than a majority of the  Security  Balances of all Notes with the consent of
the  Credit  Enhancer,  or the  Credit  Enhancer  may  declare  the  Notes to be
immediately  due and  payable in the  manner  provided  in  Section  5.02 of the
Indenture.  All  principal  payments on the Term Notes shall be made pro rata to
the holders of Term Notes entitled thereto.

               Payments  of  interest  on this Term Note due and payable on each
Payment Date, together with the installment of principal,  if any, to the extent
not in full  payment  of this Term  Note,  shall be made by check  mailed to the
Person whose name appears as the Registered  Holder of this Term Note (or one or
more Predecessor Term Notes) on the Note Register as of the close of business on
each Record  Date,  except  that with  respect to Term Notes  registered  on the
Record Date in the name of the nominee of the Depository Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee.  Such checks shall be
mailed to the  Person  entitled  thereto  at the  address  of such  Person as it
appears on the Note Register as of the applicable  Record Date without requiring
that this Term Note be submitted  for notation of payment.  Any reduction in the
principal  amount of this Term Note (or any one or more  Predecessor Term Notes)
effected  by any  payments  made on any Payment  Date shall be binding  upon all
future  holders  of  this  Term  Note  and of any  Term  Note  issued  upon  the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon.  If funds are expected to be available,  as provided in the
Indenture,  for payment in full of the then remaining unpaid principal amount of
this Term Note on a Payment Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer,  will notify the Person who was the  Registered  Holder
hereof as of the Record Date  preceding  such Payment  Date by notice  mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and
payable shall be payable only upon  presentation and surrender of this Term Note
at the address specified in such notice of final payment.

               As provided in the Indenture  and subject to certain  limitations
set forth therein,  the transfer of this Term Note may be registered on the Note
Register upon  surrender of this Term Note for  registration  of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written instrument
of transfer in form  satisfactory to the Indenture Trustee duly executed by, the
holder hereof or such holder's  attorney duly  authorized in writing,  with such
signature  guaranteed  by  an  "eligible  guarantor   institution"  meeting  the
requirements of the Note Registrar,  which  requirements  include  membership or
participation in the Securities  Transfer Agent's Medallion Program ("STAMP") or

                                        A-2-10
<PAGE>

such  other  "signature  guarantee  program"  as may be  determined  by the Note
Registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities  Exchange Act of 1934, as amended,  and thereupon one or more new
Term  Notes in  authorized  denominations  and in the same  aggregate  principal
amount will be issued to the designated  transferee or  transferees.  No service
charge will be charged for any registration of transfer or exchange of this Term
Note, but the Note Registrar  shall require payment of a sum sufficient to cover
any tax or  governmental  charge  that may be  imposed  in  connection  with any
registration of transfer or exchange of this Term Note.

               Each holder or Beneficial  Owner of a Term Note, by acceptance of
a Term Note, or, in the case of a Beneficial  Owner of a Term Note, a beneficial
interest in a Term Note,  covenants  and agrees  that no recourse  may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee, the Seller, the Master Servicer, the Depositor or the Indenture Trustee
on the Term Notes or under the  Indenture or any  certificate  or other  writing
delivered in  connection  therewith,  against (i) the  Indenture  Trustee or the
Owner  Trustee  in its  individual  capacity,  (ii) any  owner  of a  beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director  or  employee  of the  Indenture  Trustee  or the Owner  Trustee in its
individual  capacity,  any holder of a  beneficial  interest in the Issuer,  the
Owner  Trustee or the  Indenture  Trustee or of any  successor  or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary  shall be fully liable, to the extent provided by applicable law for
any unpaid  consideration for stock,  unpaid capital  contribution or failure to
pay any installment or call owing to such entity.

               Each holder or Beneficial  Owner of a Term Note, by acceptance of
a Term Note or, in the case of a  Beneficial  Owner of a Term Note, a beneficial
interest in a Term Note,  covenants  and agrees by accepting the benefits of the
Indenture  that such holder or  Beneficial  Owner of a Term Note will not at any
time institute  against the Depositor,  the Seller,  the Master  Servicer,  GMAC
Mortgage  Group,  Inc. or the  Issuer,  or join in any  institution  against the
Depositor,  the Seller,  the Master Servicer,  GMAC Mortgage Group,  Inc. or the
Issuer  of,  any   bankruptcy,   reorganization,   arrangement,   insolvency  or
liquidation  proceedings  under any United States federal or state bankruptcy or
similar law in connection with any obligations  relating to the Term Notes,  the
Indenture or the Basic Documents.

               Prior to the due presentment for registration of transfer of this
Term Note, the Issuer,  the Indenture Trustee and any agent of the Issuer or the
Indenture  Trustee  may  treat  the  Person  in whose  name  this  Term  Note is
registered  (as of the day of  determination  or as of such other date as may be
specified in the Indenture) as the owner hereof for all purposes, whether or not
this Term Note be overdue,  and none of the Issuer, the Indenture Trustee or any
such agent shall be affected by notice to the contrary.

               The  Indenture  permits,   with  certain  exceptions  as  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the  Issuer  and the  Indenture  Trustee  and the  rights of the
holders of the Term Notes under the  Indenture at any time by the Issuer and the
Indenture  Trustee  with the  consent  of the  holders of Notes  representing  a
majority of the Security  Balances of all Notes at the time  Outstanding and the
Credit Enhancer and with prior notice to the Rating Agencies. The Indenture also
contains  provisions  permitting  the  holders of Notes  representing  specified
percentages of the Security  Balances of all Notes,  on behalf of the holders of
all the Notes, to waive compliance by the Issuer with certain  provisions of the
Indenture and certain past defaults under the Indenture and their  consequences.

                                        A-2-11
<PAGE>

Any such  consent  or waiver by the holder of this Term Note (or any one of more
Predecessor  Term Notes)  shall be  conclusive  and binding upon such holder and
upon all future  holders of this Term Note and of any Term Note  issued upon the
registration  of transfer hereof or in exchange hereof or in lieu hereof whether
or not  notation  of such  consent  or waiver is made upon this Term  Note.  The
Indenture  also permits the Issuer and the  Indenture  Trustee to amend or waive
certain terms and conditions  set forth in the Indenture  without the consent of
holders of the Term Notes issued  thereunder but with prior notice to the Rating
Agencies and the Credit Enhancer.

               The  term  "Issuer"  as used  in  this  Term  Note  includes  any
successor or the Issuer under the Indenture.

               The  Issuer  is  permitted  by  the   Indenture,   under  certain
circumstances,  to merge or consolidate,  subject to the rights of the Indenture
Trustee and the holders of Term Notes under the Indenture.

               The  Term  Notes  are  issuable  only  in   registered   form  in
denominations  as  provided  in the  Indenture,  subject to certain  limitations
therein set forth.

               This Term Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.

               No  reference  herein to the  Indenture  and no provision of this
Term Note or of the  Indenture  shall  alter or impair,  the  obligation  of the
Issuer,  which  is  absolute  and  unconditional,  to pay the  principal  of and
interest  on this Term  Note at the  times,  place and rate,  and in the coin or
currency herein prescribed.

               Anything  herein  to  the  contrary  notwithstanding,  except  as
expressly  provided in the Basic Documents,  none of Wilmington Trust Company in
its individual  capacity,  The Chase Manhattan Bank, in its individual capacity,
any owner of a  beneficial  interest in the Issuer,  or any of their  respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of  principal  of or interest on this Term Note or  performance
of,  or  omission   to   perform,   any  of  the   covenants,   obligations   or
indemnifications contained in the Indenture. The holder of this Term Note by its
acceptance  hereof  agrees  that,  except  as  expressly  provided  in the Basic
Documents,  in the case of an Event of Default under the  Indenture,  the holder
shall have no claim  against any of the foregoing  for any  deficiency,  loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent  recourse to, and enforcement  against,  the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Term Note.
                                        A-2-12

<PAGE>

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

                             HOME EQUITY LOAN TRUST 2001-HS3,

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

Dated:  September 27, 2001

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

                          CERTIFICATE OF AUTHENTICATION

This is one of the Term Notes referred to in the within mentioned Indenture.

                               THE CHASE MANHATTAN BANK, not in
                               its individual capacity but solely as Indenture
                               Trustee

Dated:  September 27, 2001

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

                                        A-2-13

<PAGE>

                                   ASSIGNMENT

     Social Security or taxpayer I.D. or other identifying number of assignee:

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

                                (name and address of assignee)

the  within  Term  Note  and  all  rights  thereunder,  and  hereby  irrevocably
constitutes                             and                             appoints
_____________________________________________________________,    attorney,   to
transfer said Term Note on the books kept for  registration  thereof,  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  Term Note 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 Note Registrar,  which  requirements  include  membership or
participation  in STAMP or such other  "signature  guarantee  program" as may be
determined by the Note Registrar in addition to, or in substitution  for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

                                        A-2-14

<PAGE>

                           FORM OF CLASS A-I-IO NOTES

               UNLESS   THIS   TERM   NOTE  IS   PRESENTED   BY  AN   AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION  ("DTC"),
TO THE ISSUER OR ITS AGENT FOR  REGISTRATION  OF TRANSFER,  EXCHANGE OR PAYMENT,
AND ANY TERM  NOTE  ISSUED  IS  REGISTERED  IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER  NAME AS IS  REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY
PAYMENT  IS MADE TO CEDE & CO. OR TO SUCH  OTHER  ENTITY AS IS  REQUESTED  BY AN
AUTHORIZED  REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR  OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  INASMUCH AS THE  REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

               INTEREST  ON THIS TERM NOTE IS  PAYABLE  IN  INSTALLMENTS  AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TERM NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

               THIS TERM NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
THE SELLER,  THE DEPOSITOR,  THE MASTER  SERVICER,  THE INDENTURE  TRUSTEE,  THE
TRUSTEE OR GMAC  MORTGAGE  GROUP,  INC. OR ANY OF THEIR  RESPECTIVE  AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.

                               HOME  EQUITY  LOAN  TRUST  2001-HS3  Home  Equity
                       Loan-Backed Term Note, Class A-I-IO

Registered                          Initial Notional Amount:  $194,689,268

No. 1                                                     Note Rate: Fixed

CUSIP NO.

               Home Equity Loan Trust 2001-HS3,  a business trust duly organized
and existing under the laws of the State of Delaware  (herein referred to as the
"Issuer"),  for  value  received,  hereby  promises  to  pay to  Cede  & Co.  or
registered  assigns,  interest on this Term Note at the Note Rate (as  described
below),  payable on each Payment Date in an amount equal to the pro rata portion
allocable  hereto (based on the Initial  Notional Amount specified above and the
Initial  Notional  Amount of all Class A-I-IO  Notes),  payable from the Payment
Account in respect of interest  on the Class  A-I-IO  Notes  pursuant to Section
3.05 of the Indenture dated as of September 27, 2001 (the  "Indenture")  between
the Issuer,  as Issuer,  and The Chase Manhattan Bank, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Term Note shall be due and payable on the Payment Date in [May 2004], to
the extent not previously paid on a prior Payment Date.  Capitalized  terms used
but not defined herein are defined in Appendix A of the Indenture.

                                        A-2-15
<PAGE>

               Interest on the Class  A-I-IO  Notes will be paid monthly on each
Payment  Date at the Note  Rate  for the  related  Interest  Period  subject  to
limitations  which may result in Basis Risk Shortfalls (as further  described in
the  Indenture).  The Note Rate for each Interest  Period prior to and including
the May 2004 Payment Date, will be a fixed rate equal to the lesser of (i) 7.25%
per  annum  and (ii) the  Class  A-I-IO  Net WAC  Rate.  The Note  Rate for each
Interest  Period after the May 2004 Payment Date will be 0.00% per annum.  LIBOR
for each  applicable  Interest  Period will be  determined  on the second  LIBOR
Business Day immediately preceding (i) the Closing Date in the case of the first
Interest Period and (ii) the first day of each succeeding Interest Period by the
Indenture Trustee as set forth in the Indenture.  All determinations of LIBOR by
the Indenture Trustee shall, in the absence of manifest error, be conclusive for
all purposes,  and each holder of this Term Note,  by accepting  this Term Note,
agrees to be bound by such determination. Interest on this Term Note will accrue
for each  Payment Date from the most recent  Payment Date on which  interest has
been paid (in the case of the first Payment Date,  from the Closing Date) to but
excluding such Payment Date. Interest will be computed on the basis of a 360-day
year consisting of twelve 30 day months.  Principal of and interest on this Term
Note shall be paid in the manner specified on the reverse hereof.

               Interest  on this Term Note are  payable in such coin or currency
of the United  States of  America as at the time of payment is legal  tender for
payment of public and private debts.

               Reference is made to the further provisions of this Term Note set
forth on the reverse  hereof,  which shall have the same effect as though  fully
set forth on the face of this Term Note.

               Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this Term
Note shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.

               This Term Note is one of a duly authorized issue of Term Notes of
the Issuer,  designated as its Home Equity  Loan-Backed  Term Notes,  all issued
under the Indenture,  to which Indenture and all indentures supplemental thereto
reference  is  hereby  made  for  a  statement  of  the  respective  rights  and
obligations  thereunder of the Issuer,  the Indenture Trustee and the holders of
the Term Notes. The Term Notes are subject to all terms of the Indenture.

               The Term Notes and the Variable Funding Notes (collectively,  the
"Notes") are and will be equally and ratably  secured by the collateral  pledged
as security therefor as provided in the Indenture.

               This Term Note is entitled to, to a limited extent,  the benefits
of the Group I Policy.

               Interest on this Term Note will be payable on each Payment  Date,
commencing October 25, 2001, as described in the Indenture. "Payment Date" means
the  twenty-fifth day of each month, or, if any such date is not a Business Day,
then the next Business Day.

                                        A-2-16
<PAGE>

               Notwithstanding the foregoing,  if an Event of Default shall have
occurred and be continuing,  then the Indenture  Trustee or the holders of Notes
representing not less than a majority of the Security Balances of all Notes with
the consent of the Credit Enhancer, or the Credit Enhancer may declare the Notes
to be immediately  due and payable in the manner provided in Section 5.02 of the
Indenture.  All  principal  payments on the Term Notes shall be made pro rata to
the holders of Term Notes entitled thereto.

               Payments  of  interest  on this Term Note due and payable on each
Payment Date, together with the installment of principal,  if any, to the extent
not in full  payment  of this Term  Note,  shall be made by check  mailed to the
Person whose name appears as the Registered  Holder of this Term Note (or one or
more Predecessor Term Notes) on the Note Register as of the close of business on
each Record  Date,  except  that with  respect to Term Notes  registered  on the
Record Date in the name of the nominee of the Depository Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee.  Such checks shall be
mailed to the  Person  entitled  thereto  at the  address  of such  Person as it
appears on the Note Register as of the applicable  Record Date without requiring
that this Term Note be submitted  for notation of payment.  Any reduction in the
principal  amount of this Term Note (or any one or more  Predecessor Term Notes)
effected  by any  payments  made on any Payment  Date shall be binding  upon all
future  holders  of  this  Term  Note  and of any  Term  Note  issued  upon  the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon.  If funds are expected to be available,  as provided in the
Indenture,  for payment in full of the then remaining unpaid principal amount of
this Term Note on a Payment Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer,  will notify the Person who was the  Registered  Holder
hereof as of the Record Date  preceding  such Payment  Date by notice  mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and
payable shall be payable only upon  presentation and surrender of this Term Note
at the address specified in such notice of final payment.

               As provided in the Indenture  and subject to certain  limitations
set forth therein,  the transfer of this Term Note may be registered on the Note
Register upon  surrender of this Term Note for  registration  of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written instrument
of transfer in form  satisfactory to the Indenture Trustee duly executed by, the
holder hereof or such holder's  attorney duly  authorized in writing,  with such
signature  guaranteed  by  an  "eligible  guarantor   institution"  meeting  the
requirements of the Note Registrar,  which  requirements  include  membership or
participation in the Securities  Transfer Agent's Medallion Program ("STAMP") or
such  other  "signature  guarantee  program"  as may be  determined  by the Note
Registrar in addition to, or in substitution  for, STAMP, all in accordance with
the Securities  Exchange Act of 1934, as amended,  and thereupon one or more new
Term  Notes in  authorized  denominations  and in the same  aggregate  principal
amount will be issued to the designated  transferee or  transferees.  No service
charge will be charged for any registration of transfer or exchange of this Term
Note, but the Note Registrar  shall require payment of a sum sufficient to cover
any tax or  governmental  charge  that may be  imposed  in  connection  with any
registration of transfer or exchange of this Term Note.

               Each holder or Beneficial  Owner of a Term Note, by acceptance of
a Term Note, or, in the case of a Beneficial  Owner of a Term Note, a beneficial
interest in a Term Note,  covenants  and agrees  that no recourse  may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee, the Seller, the Master Servicer, the Depositor or the Indenture Trustee
on the Term Notes or under the  Indenture or any  certificate  or other  writing

                                        A-2-17
<PAGE>

delivered in  connection  therewith,  against (i) the  Indenture  Trustee or the
Owner  Trustee  in its  individual  capacity,  (ii) any  owner  of a  beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director  or  employee  of the  Indenture  Trustee  or the Owner  Trustee in its
individual  capacity,  any holder of a  beneficial  interest in the Issuer,  the
Owner  Trustee or the  Indenture  Trustee or of any  successor  or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary  shall be fully liable, to the extent provided by applicable law for
any unpaid  consideration for stock,  unpaid capital  contribution or failure to
pay any installment or call owing to such entity.

               Each holder or Beneficial  Owner of a Term Note, by acceptance of
a Term Note or, in the case of a  Beneficial  Owner of a Term Note, a beneficial
interest in a Term Note,  covenants  and agrees by accepting the benefits of the
Indenture  that such holder or  Beneficial  Owner of a Term Note will not at any
time institute  against the Depositor,  the Seller,  the Master  Servicer,  GMAC
Mortgage  Group,  Inc. or the  Issuer,  or join in any  institution  against the
Depositor,  the Seller,  the Master Servicer,  GMAC Mortgage Group,  Inc. or the
Issuer  of,  any   bankruptcy,   reorganization,   arrangement,   insolvency  or
liquidation  proceedings  under any United States federal or state bankruptcy or
similar law in connection with any obligations  relating to the Term Notes,  the
Indenture or the Basic Documents.

               Prior to the due presentment for registration of transfer of this
Term Note, the Issuer,  the Indenture Trustee and any agent of the Issuer or the
Indenture  Trustee  may  treat  the  Person  in whose  name  this  Term  Note is
registered  (as of the day of  determination  or as of such other date as may be
specified in the Indenture) as the owner hereof for all purposes, whether or not
this Term Note be overdue,  and none of the Issuer, the Indenture Trustee or any
such agent shall be affected by notice to the contrary.

               The  Indenture  permits,   with  certain  exceptions  as  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the  Issuer  and the  Indenture  Trustee  and the  rights of the
holders of the Term Notes under the  Indenture at any time by the Issuer and the
Indenture  Trustee  with the  consent  of the  holders of Notes  representing  a
majority of the Security  Balances of all Notes at the time  Outstanding and the
Credit Enhancer and with prior notice to the Rating Agencies. The Indenture also
contains  provisions  permitting  the  holders of Notes  representing  specified
percentages of the Security  Balances of all Notes,  on behalf of the holders of
all the Notes, to waive compliance by the Issuer with certain  provisions of the
Indenture and certain past defaults under the Indenture and their  consequences.
Any such  consent  or waiver by the holder of this Term Note (or any one of more
Predecessor  Term Notes)  shall be  conclusive  and binding upon such holder and
upon all future  holders of this Term Note and of any Term Note  issued upon the
registration  of transfer hereof or in exchange hereof or in lieu hereof whether
or not  notation  of such  consent  or waiver is made upon this Term  Note.  The
Indenture  also permits the Issuer and the  Indenture  Trustee to amend or waive
certain terms and conditions  set forth in the Indenture  without the consent of
holders of the Term Notes issued  thereunder but with prior notice to the Rating
Agencies and the Credit Enhancer.

                                        A-2-18
<PAGE>

               The  term  "Issuer"  as used  in  this  Term  Note  includes  any
successor or the Issuer under the Indenture.

               The  Issuer  is  permitted  by  the   Indenture,   under  certain
circumstances,  to merge or consolidate,  subject to the rights of the Indenture
Trustee and the holders of Term Notes under the Indenture.

               The  Term  Notes  are  issuable  only  in   registered   form  in
denominations  as  provided  in the  Indenture,  subject to certain  limitations
therein set forth.

               This Term Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.

               No  reference  herein to the  Indenture  and no provision of this
Term Note or of the  Indenture  shall  alter or impair,  the  obligation  of the
Issuer,  which  is  absolute  and  unconditional,  to pay the  principal  of and
interest  on this Term  Note at the  times,  place and rate,  and in the coin or
currency herein prescribed.

               Anything  herein  to  the  contrary  notwithstanding,  except  as
expressly  provided in the Basic Documents,  none of Wilmington Trust Company in
its individual  capacity,  The Chase Manhattan Bank, in its individual capacity,
any owner of a  beneficial  interest in the Issuer,  or any of their  respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of  principal  of or interest on this Term Note or  performance
of,  or  omission   to   perform,   any  of  the   covenants,   obligations   or
indemnifications contained in the Indenture. The holder of this Term Note by its
acceptance  hereof  agrees  that,  except  as  expressly  provided  in the Basic
Documents,  in the case of an Event of Default under the  Indenture,  the holder
shall have no claim  against any of the foregoing  for any  deficiency,  loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent  recourse to, and enforcement  against,  the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Term Note.

                                        A-2-19

<PAGE>

                                   EXHIBIT A-2

                         FORM OF VARIABLE FUNDING NOTES

               THIS  VARIABLE  FUNDING  NOTE  HAS  NOT  BEEN  AND  WILL  NOT  BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR THE SECURITIES LAWS
OF ANY  STATE  AND MAY NOT BE RESOLD  OR  TRANSFERRED  UNLESS  IT IS  REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR  TRANSFERRED IN  TRANSACTIONS  WHICH
ARE EXEMPT FROM  REGISTRATION  UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND
IS  TRANSFERRED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  4.02 OF THE
INDENTURE REFERRED TO HEREIN.

               THE  PRINCIPAL  OF  THIS  VARIABLE  FUNDING  NOTE IS  PAYABLE  IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY,  THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS  VARIABLE  FUNDING NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON
THE FACE HEREOF.

               THIS  VARIABLE  FUNDING NOTE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF THE SELLER,  THE  DEPOSITOR,  THE MASTER  SERVICER,  THE INDENTURE
TRUSTEE,  THE TRUSTEE OR GMAC MORTGAGE  GROUP,  INC. OR ANY OF THEIR  RESPECTIVE
AFFILIATES,  EXCEPT  AS  EXPRESSLY  PROVIDED  IN  THE  INDENTURE  OR  THE  BASIC
DOCUMENTS.

                         HOME EQUITY LOAN TRUST 2001-HS3
                  Home Equity Loan-Backed Variable Funding Note

Registered                       Initial Maximum Variable
                                 Funding Note Balance:  $[________]

No.VFN-1                                                  Note Rate:  Floating

               Home Equity Loan Trust 2001-HS3,  a business trust duly organized
and existing under the laws of the State of Delaware  (herein referred to as the
"Issuer"),  for value received,  hereby  promises to pay to Residential  Funding
Corporation or registered assigns,  the principal amount set forth on Schedule A
attached  hereto (or otherwise  owing  hereunder as  determined  pursuant to the
Indenture as defined below),  payable on each Payment Date in an amount equal to
the pro rata portion  allocable  hereto  (based on the Security  Balances of all
Variable Funding Notes  immediately prior to such Payment Date) of the aggregate
amount,  if any, payable from the Payment Account in respect of principal on the
Variable  Funding Notes  pursuant to Section 3.05 of the  Indenture  dated as of
September  27, 2001 (the  "Indenture")  between the Issuer,  as Issuer,  and The
Chase Manhattan Bank, as Indenture Trustee (the "Indenture Trustee");  provided,
however,  that the entire unpaid  principal amount of this Variable Funding Note
shall be due and payable on the Payment Date in February  2027 to the extent not
previously paid on a prior Payment Date.  Capitalized terms used but not defined
herein are defined in Appendix A of the Indenture.

                                        A-2-1
<PAGE>

               Interest on the  Variable  Funding  Notes will be paid monthly on
each Payment Date at the Note Rate for the related  Interest  Period  subject to
limitations  which may result in Basis Risk Shortfalls (as further  described in
the  Indenture).  The Note Rate for each Interest Period will be a floating rate
equal to the least of (i) LIBOR plus 0.23% per annum,  (ii) 17.25% per annum and
(iii) the Group II Net WAC Rate. LIBOR for each applicable  Interest Period will
be determined  on the second LIBOR  Business Day  immediately  preceding (i) the
Closing Date in the case of the first Interest  Period and (ii) the first day of
each  succeeding  Interest  Period by the Indenture  Trustee as set forth in the
Indenture.  All  determinations  of LIBOR by the Indenture Trustee shall, in the
absence of manifest  error,  be conclusive for all purposes,  and each holder of
this Variable Funding Note, by accepting this Variable  Funding Note,  agrees to
be bound by such  determination.  Interest on this  Variable  Funding  Note will
accrue for each Payment Date from the most recent Payment Date on which interest
has been paid (in the case of the First Payment Date,  from the Closing Date) to
but excluding  such Payment Date.  Interest will be computed on the basis of the
actual number of days in each  Interest  Period and a year assumed to consist of
360 days.  Principal of and interest on this Variable Funding Note shall be paid
in the manner specified on the reverse hereof.

               Principal  of and  interest  on this  Variable  Funding  Note are
payable in such coin or currency of the United  States of America as at the time
of payment is legal tender for payment of public and private debts. All payments
made by the Issuer with respect to this  Variable  Funding Note shall be applied
first to interest  due and  payable on this  Variable  Funding  Note as provided
above and then to the unpaid principal of this Variable Funding Note.

               Reference  is made to the  further  provisions  of this  Variable
Funding Note set forth on the reverse  hereof,  which shall have the same effect
as though fully set forth on the face of this Variable Funding Note.

               Unless the certificate of authentication hereon has been executed
by the  Indenture  Trustee whose name appears  below by manual  signature,  this
Variable  Funding Note shall not be entitled to any benefit  under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.

               This Variable  Funding Note is one of a duly authorized  issue of
Variable Funding Notes of the Issuer,  designated as its Home Equity Loan-Backed
Variable Funding Notes (herein called the "Variable Funding Notes"),  all issued
under the Indenture,  to which Indenture and all indentures supplemental thereto
reference  is  hereby  made  for  a  statement  of  the  respective  rights  and
obligations  thereunder of the Issuer,  the Indenture Trustee and the holders of
the Variable  Funding Notes. The Variable Funding Notes are subject to all terms
of the Indenture.

               The Variable Funding Notes and the Term Notes (collectively,  the
"Notes") are and will be equally and ratably  secured by the collateral  pledged
as security therefor as provided in the Indenture.

               This  Variable  Funding  Note is entitled  to the  benefits of an
irrevocable and  unconditional  financial  guaranty  insurance  policy issued by
Ambac Assurance Corporation.

                                        A-2-2
<PAGE>

               Principal of and interest on this  Variable  Funding Note will be
payable on each Payment Date,  commencing  October 25, 2001, as described in the
Indenture.  "Payment Date" means the  twenty-fifth day of each month, or, if any
such day is not a Business Day, then the next Business Day.

               The entire unpaid  principal amount of this Variable Funding Note
shall be due and payable in full on the Payment Date in February  2027  pursuant
to the  Indenture,  to the extent not  previously  paid on a prior Payment Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing,  then the Indenture Trustee or the holders of Notes representing not
less than a majority of the  Security  Balances of all Notes with the consent of
the  Credit  Enhancer,  or the  Credit  Enhancer  may  declare  the  Notes to be
immediately  due and  payable in the  manner  provided  in  Section  5.02 of the
Indenture.  All principal  payments on the Variable  Funding Notes shall be made
pro rata to the holders of Variable Funding Notes entitle thereto.

               Payments  of  interest  on this  Variable  Funding  Note  due and
payable on each Payment Date,  together with the  installment  of principal,  if
any, to the extent not in full payment of this Variable  Funding Note,  shall be
made by check mailed to the Person whose name appears as the  Registered  Holder
of this  Variable  Funding Note (or one or more  Predecessor  Notes) on the Note
Register  as of the close of  business  on each  Record  Date,  except that with
respect to Variable  Funding Notes  registered on the Record Date in the name of
the nominee of the Depository Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire  transfer in  immediately  available  funds to the
account  designated by such  nominee.  Such checks shall be mailed to the Person
entitled  thereto  at the  address  of such  Person  as it  appears  on the Note
Register as of the applicable  Record Date without  requiring that this Variable
Funding  Note be  submitted  for  notation  of  payment.  Any  reduction  in the
principal  amount of this Variable  Funding Note (or any one or more Predecessor
Variable  Funding Notes) effected by any payments made on any Payment Date shall
be binding  upon all future  holders of this  Variable  Funding  Note and of any
Variable  Funding  Note issued upon the  registration  of transfer  hereof or in
exchange  hereof or in lieu hereof,  whether or not noted  hereon.  If funds are
expected to be available,  as provided in the Indenture,  for payment in full of
the then remaining  unpaid  principal  amount of this Variable Funding Note on a
Payment Date,  then the Indenture  Trustee,  in the name of and on behalf of the
Issuer,  will notify the Person who was the  Registered  Holder hereof as of the
Record Date  preceding  such Payment  Date by notice  mailed or  transmitted  by
facsimile  prior to such Payment Date and the amount then due and payable  shall
be payable only upon presentation and surrender of this Variable Funding Note at
the address specified in such notice of final payment.

               As provided in the Indenture  and subject to certain  limitations
set forth therein,  the transfer of this Variable Funding Note may be registered
on  the  Note  Register  upon  surrender  of  this  Variable  Funding  Note  for
registration  of transfer at the Corporate  Trust Office,  duly endorsed by, and
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Indenture  Trustee duly executed by, the holder hereof or such holder's attorney
duly  authorized  in writing,  with such  signature  guaranteed  by an "eligible
guarantor  institution"  meeting the  requirements of the Note Registrar,  which
requirements  include  membership or  participation  in the Securities  Transfer
Agent's Medallion Program ("STAMP") or such other "signature  guarantee program"
as may be  determined  by the Note  Registrar in addition to or in  substitution
for,  STAMP,  all in  accordance  with the  Securities  Exchange Act of 1934, as

                                        A-2-3
<PAGE>

amended,  and  thereupon  one or more new Variable  Funding  Notes in authorized
denominations  and in the same aggregate  principal amount will be issued to the
designated transferee or transferees.  No service charge will be charged for any
registration of transfer or exchange of this Variable Funding Note, but the Note
Registrar  shall  require  payment  of a sum  sufficient  to  cover  any  tax or
governmental  charge that may be imposed in connection with any  registration of
transfer or exchange of this Variable Funding Note.

               Each holder or  Beneficial  Owner of a Variable  Funding Note, by
acceptance of a Variable Funding Note or, in the case of a Beneficial Owner of a
Variable  Funding  Note,  a  beneficial  interest  in a Variable  Funding  Note,
covenants and agrees that no recourse may be taken, directly or indirectly, with
respect to the  obligations of the Issuer,  the Owner Trustee,  the Seller,  the
Master Servicer,  the Depositor or the Indenture Trustee on the Variable Funding
Notes or under the Indenture or any  certificate  or other writing  delivered in
connection therewith,  against (i) the Indenture Trustee or the Owner Trustee in
its individual  capacity,  (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner,  beneficiary,  agent, officer, director or employee
of the Indenture  Trustee or the Owner Trustee in its individual  capacity,  any
holder  of a  beneficial  interest  in the  Issuer,  the  Owner  Trustee  or the
Indenture  Trustee or of any successor or assign of the Indenture Trustee or the
Owner  Trustee in its  individual  capacity,  except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully  liable,  to the  extent  provided  by  applicable  law,  for  any  unpaid
consideration  for  stock,  unpaid  capital  contribution  or failure to pay any
installment or call owing to such entity.

               Each holder or  Beneficial  Owner of a Variable  Funding Note, by
acceptance of a Variable Funding Note or, in the case of a Beneficial Owner of a
Variable  Funding  Note,  a  beneficial  interest  in a Variable  Funding  Note,
covenants and agrees by accepting the benefits of the Indenture that such holder
or Beneficial  Owner of a Variable  Funding Note will not at any time  institute
against the Depositor,  the Seller,  the Master  Servicer,  GMAC Mortgage Group,
Inc. or the  Issuer,  or join in any  institution  against  the  Depositor,  the
Seller,  the Master  Servicer,  GMAC Mortgage Group,  Inc. or the Issuer of, any
bankruptcy,  reorganization,  arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations  relating to the Variable  Funding Notes,  the Indenture or
the Basic Documents.

               The Issuer  has  entered  into the  Indenture  and this  Variable
Funding Note is issued with the  intention  that,  for federal,  state and local
income,  single business and franchise tax purposes,  the Variable Funding Notes
will qualify as  indebtedness of the Issuer.  Each holder of a Variable  Funding
Note, by acceptance of a Variable  Funding Note (and each Beneficial  Owner of a
Variable  Funding Note,  by  acceptance  of a beneficial  interest in a Variable
Funding Note), agrees to treat the Variable Funding Notes for federal, state and
local income,  single business and franchise tax purposes as indebtedness of the
Issuer.

               Prior to the due presentment for registration of transfer of this
Variable  Funding Note, the Issuer,  the Indenture  Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name this Variable
Funding Note (as of the day of  determination or as of such other date as may be
specified in the  Indenture) is registered as the owner hereof for all purposes,
whether or not this  Variable  Funding Note be overdue,  and none of the Issuer,
the  Indenture  Trustee or any such  agent  shall be  affected  by notice to the
contrary.

                                        A-2-4
<PAGE>

               The  Indenture  permits,   with  certain  exceptions  as  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the  Issuer  and the  Indenture  Trustee  and the  rights of the
holders of the  Variable  Funding  Notes under the  Indenture at any time by the
Issuer  and the  Indenture  Trustee  with the  consent  of the  holders of Notes
representing  a  majority  of the  Security  Balances  of all  Notes at the time
Outstanding  and the  Credit  Enhancer  and  with  prior  notice  to the  Rating
Agencies. The Indenture also contains provisions permitting the holders of Notes
representing  specified  percentages of the Security  Balances of all Notes,  on
behalf of the holders of all the Notes,  to waive  compliance by the Issuer with
certain  provisions  of the  Indenture  and  certain  past  defaults  under  the
Indenture  and their  consequences.  Any such consent or waiver by the holder of
this  Variable  Funding Note (or any one of more  Predecessor  Variable  Funding
Notes)  shall be  conclusive  and  binding  upon such holder and upon all future
holders of this  Variable  Funding Note and of any Variable  Funding Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not  notation  of such  consent or waiver is made upon this  Variable
Funding Note. The Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions  set forth in the Indenture  without the consent of
holders of the Variable Funding Notes issued thereunder but with prior notice to
the Rating Agencies and the Credit Enhancer.

               The term "Issuer" as used in this Variable  Funding Note includes
any successor to the Issuer under the Indenture.

               The  Issuer  is  permitted  by  the   Indenture,   under  certain
circumstances,  to merge or consolidate,  subject to the rights of the Indenture
Trustee and the holders of Variable Funding Notes under the Indenture.

               The Variable  Funding Notes are issuable only in registered  form
in  denominations as provided in the Indenture,  subject to certain  limitations
therein set forth.

               This Variable  Funding Note and the Indenture  shall be construed
in accordance with the laws of the State of New York,  without  reference to its
conflict of law  provisions,  and the  obligations,  rights and  remedies of the
parties  hereunder and  thereunder  shall be determined in accordance  with such
laws.

               No  reference  herein to the  Indenture  and no provision of this
Variable  Funding Note or of the Indenture  shall alter or impair the obligation
of the Issuer, which is absolute and unconditional,  to pay the principal of and
interest on this Variable Funding Note at the times,  place and rate, and in the
coin or currency herein prescribed.

               Anything  herein  to  the  contrary  notwithstanding,  except  as
expressly  provided in the Basic Documents,  none of Wilmington Trust Company in
its individual  capacity,  The Chase Manhattan Bank, in its individual capacity,
any owner of a  beneficial  interest in the Issuer,  or any of their  respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal  of or interest on this  Variable  Funding Note or
performance  of, or omission to perform,  any of the  covenants,  obligations or
indemnifications contained in the Indenture. The holder of this Variable Funding
Note by its acceptance hereof agrees that,  except as expressly  provided in the
Basic  Documents,  in the case of an Event of Default under the  Indenture,  the
holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom;  provided,  however,  that nothing contained herein shall be
taken to prevent recourse to, and enforcement  against, the assets of the Issuer
for any and all  liabilities,  obligations  and  undertakings  contained  in the
Indenture or in this Variable Funding Note.

                                        A-2-5

<PAGE>

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

                              HOME EQUITY LOAN TRUST 2001-HS3,

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

Dated:  September 27, 2001

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

                          CERTIFICATE OF AUTHENTICATION

This is one of the  Variable  Funding Note  referred to in the within  mentioned
Indenture.

                               THE CHASE MANHATTAN BANK, not in
                               its individual capacity but solely as Indenture
                               Trustee

Dated:  September 27, 2001

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

<PAGE>

                                   ASSIGNMENT

     Social Security or taxpayer I.D. or other identifying number of assignee:

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

                                (name and address of assignee)

the  within  Variable  Funding  Note  and  all  rights  thereunder,  and  hereby
irrevocably                constitutes                and               appoints
_____________________________________________________________,    attorney,   to
transfer said Variable Funding Note on the books kept for registration  thereof,
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  Term Note 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 Note Registrar,  which  requirements  include  membership or
participation  in STAMP or such other  "signature  guarantee  program" as may be
determined by the Note Registrar in addition to, or in substitution  for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

<PAGE>

                                   SCHEDULE A
                                       to
                         HOME EQUITY LOAN TRUST 2001-HS3
                  Home Equity Loan-Backed Variable Funding Note
<TABLE>
<CAPTION>

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

   DATE       PERCENTAGE INTEREST      PRINCIPAL      SECURITY BALANCE    AUTHORIZED SIGNATURE
                                       PAYMENTS         OUTSTANDING       OF INDENTURE TRUSTEE
<S>     <C>    <C>                      <C>                     <C>     <C>    <C>
------------ ---------------------- ---------------- ------------------- ------------------------
------------ ---------------------- ---------------- ------------------- ------------------------

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

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------------ ---------------------- ---------------- ------------------- ------------------------
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------------ ---------------------- ---------------- ------------------- ------------------------
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------------ ---------------------- ---------------- ------------------- ------------------------
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------------ ---------------------- ---------------- ------------------- ------------------------
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------------ ---------------------- ---------------- ------------------- ------------------------
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============ ====================== ================ =================== ========================
</TABLE>

<PAGE>
                                   EXHIBIT B

                        [FORM OF RULE 144A INVESTMENT REPRESENTATION]

                   Description of Rule 144A Securities, including numbers:
                        ==============================================
                        ==============================================

               The  undersigned  seller,  as registered  holder (the  "Seller"),
intends to transfer the Rule 144A Securities  described above to the undersigned
buyer (the "Buyer").

               1. In connection  with such  transfer and in accordance  with the
agreements  pursuant to which the Rule 144A Securities  were issued,  the Seller
hereby  certifies the following  facts:  Neither the Seller nor anyone acting on
its behalf has offered, transferred,  pledged, sold or otherwise disposed of the
Rule 144A  Securities,  any  interest in the Rule 144A  Securities  or any other
similar security to, or solicited any offer to buy or accept a transfer,  pledge
or other disposition of the Rule 144A Securities,  any interest in the Rule 144A
Securities  or any other  similar  security  from,  or otherwise  approached  or
negotiated  with respect to the Rule 144A  Securities,  any interest in the Rule
144A Securities or any other similar security with, any person in any manner, or
made any general  solicitation  by means of general  advertising or in any other
manner,  or taken any other action,  that would constitute a distribution of the
Rule 144A  Securities  under the  Securities  Act of 1933, as amended (the "1933
Act"),  or that  would  render the  disposition  of the Rule 144A  Securities  a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or  another  "qualified  institutional  buyer" as defined in Rule
144A under the 1933 Act.

               2. The Buyer warrants and represents to, and covenants  with, the
Indenture Trustee and the Issuer (as defined in the Indenture (the "Indenture"),
dated as of September  27, 2001,  between  Home Equity Loan Trust  2001-HS3,  as
Issuer, and The Chase Manhattan Bank, as Indenture Trustee,  pursuant to Section
4.02 of the Indenture, as follows:

               a. The Buyer  understands  that the Rule 144A Securities have not
          been  registered  under  the  1933 Act or the  securities  laws of any
          state.

                      b. The Buyer considers itself a substantial, sophisticated
        institutional investor having such knowledge and experience in financial
        and  business  matters that it is capable of  evaluating  the merits and
        risks of investment in the Rule 144A Securities.

                      c. The  Buyer  has  been  furnished  with all  information
        regarding  the  Rule  144A  Securities  that it has  requested  from the
        Seller, the Indenture Trustee, the Owner Trustee or the Master Servicer.

                      d.  Neither the Buyer nor anyone  acting on its behalf has
        offered,  transferred,  pledged,  sold or otherwise disposed of the Rule
        144A  Securities,  any interest in the Rule 144A Securities or any other
        similar security to, or solicited any offer to buy or accept a transfer,
        pledge or other disposition of the Rule 144A Securities, any interest in
        the  Rule  144A  Securities  or any  other  similar  security  from,  or
        otherwise  approached  or  negotiated  with  respect  to the  Rule  144A

                                        B-1
<PAGE>

        Securities,  any  interest  in the Rule  144A  Securities  or any  other
        similar  security  with,  any person in any manner,  or made any general
        solicitation by means of general  advertising or in any other manner, or
        taken any other action, that would constitute a distribution of the Rule
        144A Securities  under the 1933 Act or that would render the disposition
        of the Rule 144A  Securities a violation of Section 5 of the 1933 Act or
        require  registration  pursuant  thereto,  nor  will it act,  nor has it
        authorized  or will it authorize  any person to act, in such manner with
        respect to the Rule 144A Securities.

                      e. The Buyer is a "qualified  institutional buyer" as that
        term is defined in Rule 144A under the 1933 Act and has completed either
        of the forms of  certification to that effect attached hereto as Annex 1
        or  Annex 2. The  Buyer  is aware  that the sale to it is being  made in
        reliance on Rule 144A.  The Buyer is acquiring the Rule 144A  Securities
        for its own  account or the  accounts of other  qualified  institutional
        buyers,  understands  that  such  Rule 144A  Securities  may be  resold,
        pledged or transferred only (i) to a person reasonably  believed to be a
        qualified  institutional buyer that purchases for its own account or for
        the account of a qualified  institutional  buyer to whom notice is given
        that the  resale,  pledge or  transfer is being made in reliance on Rule
        144A, or (ii) pursuant to another exemption from registration  under the
        1933 Act.

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

                                        B-2

<PAGE>

               IN  WITNESS  WHEREOF,  each  of the  parties  has  executed  this
document as of the date set forth below.

Print Name of Seller                              Print Name of Buyer

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

Tax Payer Identification:                         Tax Payer Identification:

No.                                               No.
    --------------------------------

Date:                                             Date:
     -------------------------------

                                        B-3

<PAGE>

                              ANNEX 1 TO EXHIBIT B

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

             [For Buyers Other Than Registered Investment Companies]

        The undersigned  hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:

     1. As indicated  below,  the undersigned is the President,  Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.

     2. In  connection  with  purchases by the Buyer,  the Buyer is a "qualified
institutional  buyer" as that term is defined in Rule 144A under the  Securities
Act of 1933  ("Rule  144A")  because (i) the Buyer  owned  and/or  invested on a
discretionary  basis  $_________  ** in  securities  (except  for  the  excluded
securities  referred to below) as of the end of the Buyer's  most recent  fiscal
year (such amount being  calculated in  accordance  with Rule 144A) and (ii) the
Buyer satisfies the criteria in the category marked below.

___  Corporation,  etc. The Buyer is a corporation  (other than a bank,  savings
     and loan  association  or similar  institution),  Massachusetts  or similar
     business  trust,  partnership,  or  charitable  organization  described  in
     Section 501(c)(3) of the Internal Revenue Code.

___  Bank.  The Buyer (a) is a national  bank or banking  institution  organized
     under the laws of any State,  territory or the  District of  Columbia,  the
     business of which is substantially confined to banking and is supervised by
     the State or  territorial  banking  commission or similar  official or is a
     foreign bank or equivalent institution, and (b) has an audited net worth of
     at  least  $25,000,000  as  demonstrated  in its  latest  annual  financial
     statements, a copy of which is attached hereto.

___  Savings and Loan. The Buyer (a) is a savings and loan association, building
     and loan association,  cooperative bank,  homestead  association or similar
     institution,  which  is  supervised  and  examined  by a State  or  Federal
     authority  having  supervision  over any such  institutions or is a foreign
     savings  and loan  association  or  equivalent  institution  and (b) has an
     audited net worth of at least  $25,000,000  as  demonstrated  in its latest
     annual financial statements.

___  Broker-Dealer.  The Buyer is a dealer registered  pursuant to Section 15 of
     the Securities Exchange Act of 1934.

___  Insurance  Company.  The Buyer is an insurance  company  whose  primary and
     predominant business activity is the writing of insurance or the reinsuring
     of risks  underwritten  by  insurance  companies  and which is  subject  to
     supervision by the insurance  commissioner or a similar  official or agency
     of a State or territory or the District of Columbia.

_______
**Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unles Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.

                                        B-4
<PAGE>

___  State or Local Plan.  The Buyer is a plan  established  and maintained by a
     State, its political subdivisions,  or any agency or instrumentality of the
     State or its political subdivisions, for the benefit of its employees.

___  ERISA  Plan.  The Buyer is an employee  benefit  plan within the meaning of
     Title I of the Employee Retirement Income Security Act of 1974.

___  Investment Adviser. The Buyer is an investment adviser registered under the
     Investment Advisers Act of 1940.

___  SBIC. The Buyer is a Small Business Investment Company licensed by the U.S.
     Small  Business  Administration  under  Section  301(c) or (d) of the Small
     Business Investment Act of 1958.

___  Business  Development  Company. The Buyer is a business development company
     as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

___  Trust  Fund.  The Buyer is a trust  fund  whose  trustee is a bank or trust
     company and whose  participants  are exclusively (a) plans  established and
     maintained  by a  State,  its  political  subdivisions,  or any  agency  or
     instrumentality of the State or its political subdivisions, for the benefit
     of its employees, or (b) employee benefit plans within the meaning of Title
     I of the Employee  Retirement  Income  Security  Act of 1974,  but is not a
     trust fund that includes as participants  individual retirement accounts or
     H.R. 10 plans.

               3. The term  "securities"  as used  herein  does not  include (i)
securities of issuers that are affiliated  with the Buyer,  (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer,  (iii) bank  deposit  notes and  certificates  of  deposit,  (iv) loan
participations,  (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.

               4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary  basis by the Buyer, the Buyer used the
cost of such  securities to the Buyer and did not include any of the  securities
referred to in the preceding  paragraph.  Further, in determining such aggregate
amount,  the Buyer may have included  securities  owned by  subsidiaries  of the
Buyer,  but only if such  subsidiaries  are  consolidated  with the Buyer in its
financial  statements  prepared in accordance with generally accepted accounting
principles  and if the  investments of such  subsidiaries  are managed under the
Buyer's direction.  However, such securities were not included if the Buyer is a
majority-owned,  consolidated  subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934.

                                        B-5
<PAGE>

               5. The Buyer  acknowledges that it is familiar with Rule 144A and
understands  that the  seller to it and other  parties  related to the Rule 144A
Securities are relying and will continue to rely on the  statements  made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.

        Will the Buyer be purchasing  the Rule 144A Yes No  Securities  only for
        the Buyer's own account?

               6. If the answer to the  foregoing  question  is "no",  the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party  (including  any  separate  account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified  institutional  buyer" within the meaning of Rule 144A.
In addition,  the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current  representation  letter from
such third party or taken other appropriate  steps  contemplated by Rule 144A to
conclude that such third party  independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.

               7. The  Buyer  will  notify  each of the  parties  to which  this
certification is made of any changes in the information and conclusions  herein.
Until such notice is given,  the Buyer's  purchase of Rule 144A  Securities will
constitute  a  reaffirmation  of  this  certification  as of the  date  of  such
purchase.

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

                                            Date:
                                                 ------------------------------

                                        B-6

<PAGE>

                              ANNEX 2 TO EXHIBIT B

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

                    [For Buyers That Are Registered Investment Companies]

               The  undersigned  hereby  certifies as follows in connection with
the Rule 144A Investment Representation to which this certification is attached:

               1. As indicated  below,  the undersigned is the President,  Chief
Financial  Officer or Senior Vice  President  of the Buyer or, if the Buyer is a
"qualified  institutional  buyer" as that term is defined in Rule 144A under the
Securities  Act of 1933  ("Rule  144A")  because  Buyer is part of a  Family  of
Investment Companies (as defined below), is such an officer of the Adviser.

               2.  In  connection  with  purchases  by  Buyer,  the  Buyer  is a
"qualified  institutional  buyer" as  defined in SEC Rule 144A  because  (i) the
Buyer is an investment  company  registered under the Investment  Company Act of
1940,  and (ii) as marked  below,  the Buyer  alone,  or the  Buyer's  Family of
Investment Companies,  owned at least $100,000,000 in securities (other than the
excluded  securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining  the amount of securities  owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used.

____ The  Buyer  owned $ in  securities  (other  than  the  excluded  securities
     referred  to below) as of the end of the Buyer's  most  recent  fiscal year
     (such amount being calculated in accordance with Rule 144A).

____ The Buyer is part of a Family of  Investment  Companies  which owned in the
     aggregate $ in securities (other than the excluded  securities  referred to
     below) as of the end of the Buyer's  most recent  fiscal year (such  amount
     being calculated in accordance with Rule 144A).

               3. The term "Family of Investment Companies" as used herein means
two or more  registered  investment  companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned  subsidiaries  of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

               4. The term  "securities"  as used  herein  does not  include (i)
securities  of  issuers  that are  affiliated  with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of  deposit,  (iii)  loan  participations,   (iv)  repurchase  agreements,   (v)
securities  owned but  subject  to a  repurchase  agreement  and (vi)  currency,
interest rate and commodity swaps.

               5. The Buyer is familiar with Rule 144A and understands that each
of the parties to which this certification is made are relying and will continue
to rely on the  statements  made  herein  because one or more sales to the Buyer
will be in reliance on Rule 144A. In addition,  the Buyer will only purchase for
the Buyer's own account.

                                        B-7
<PAGE>

               6. The undersigned  will notify each of the parties to which this
certification is made of any changes in the information and conclusions  herein.
Until such notice,  the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this  certification by the undersigned as of the date of such
purchase.

                                            Print Name of Buyer

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

                                            IF AN ADVISER:

                                            Print Name of Buyer

                                            Date:
                                                 -----------------------------

                                        B-8

<PAGE>

                                 EXHIBIT C

                     FORM OF INVESTOR REPRESENTATION LETTER

                             _______________ , 20__

Residential Funding Mortgage Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 600
Minneapolis, MN 55437

The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY  10001
Attention:  Corporate Trust Administration

               Re:    Home Equity Loan-Backed Capped Funding Notes
                      Series 2001-HS3

Ladies and Gentlemen:

               __________________(the  "Purchaser")  intends  to  purchase  from
_________ (the "Seller")  $_______  Capped Funding Notes of Series 2001-HS3 (the
"Notes"),  issued  pursuant  to the  Indenture  (the  "Indenture"),  dated as of
September 27, 2001 between Home Equity Loan Trust, as issuer (the "Issuer"), and
The Chase Manhattan Bank, as indenture  trustee (the "Indenture  Trustee").  All
terms used herein and not otherwise defined shall have the meanings set forth in
the Indenture.  The Purchaser hereby certifies,  represents and warrants to, and
covenants with, the Issuer and the Indenture Trustee that:

               1. The Purchaser understands that (a) the Notes have not been and
        will not be registered or qualified under the Securities Act of 1933, as
        amended (the "Act") or any state  securities  law, (b) the  Depositor is
        not  required to so register or qualify the Notes,  (c) the Notes may be
        resold only if registered  and qualified  pursuant to the  provisions of
        the Act or any  state  securities  law,  or if an  exemption  from  such
        registration and qualification is available,  (d) the Indenture contains
        restrictions  regarding the transfer of the Notes and (e) the Notes will
        bear a legend to the foregoing effect.

               2. The  Purchaser is acquiring  the Notes for its own account for
        investment  only and not with a view to or for sale in  connection  with
        any distribution thereof in any manner that would violate the Act or any
        applicable state securities laws.

               3.   The   Purchaser   is   (a)  a   substantial,   sophisticated
        institutional investor having such knowledge and experience in financial
        and business  matters,  and, in particular,  in such matters  related to
        securities  similar to the Notes,  such that it is capable of evaluating
        the merits and risks of  investment  in the Notes,  (b) able to bear the
        economic risks of such an investment  and (c) an  "accredited  investor"
        within the meaning of Rule 501(a) promulgated pursuant to the Act.

                                        C-1
<PAGE>

               4.  The  Purchaser  has  been  furnished  with,  and  has  had an
        opportunity to review (a) [a copy of the Private  Placement  Memorandum,
        dated  relating  to the Notes (b)] a copy of the  Indenture  and [b] [c]
        such other  information  concerning the Notes, the Home Equity Loans and
        the Depositor as has been  requested by the Purchaser from the Depositor
        or the Seller and is  relevant to the  Purchaser's  decision to purchase
        the Notes. The Purchaser has had any questions  arising from such review
        answered  by the  Depositor  or the  Seller to the  satisfaction  of the
        Purchaser.  [If the Purchaser did not purchase the Notes from the Seller
        in  connection  with  the  initial  distribution  of the  Notes  and was
        provided  with  a  copy  of  the  Private   Placement   Memorandum  (the
        "Memorandum") relating to the original sale (the "Original Sale") of the
        Notes by the Depositor,  the Purchaser acknowledges that such Memorandum
        was provided to it by the Seller,  that the  Memorandum  was prepared by
        the Depositor  solely for use in  connection  with the Original Sale and
        the  Depositor  did  not  participate  in or  facilitate  in any way the
        purchase  of the  Notes  by the  Purchaser  from  the  Seller,  and  the
        Purchaser  agrees  that it will look solely to the Seller and not to the
        Depositor  with  respect  to any  damage,  liability,  claim or  expense
        arising  out of,  resulting  from or in  connection  with  (a)  error or
        omission, or alleged error or omission,  contained in the Memorandum, or
        (b) any information,  development or event arising after the date of the
        Memorandum.]

               5. The  Purchaser  has not and will not nor has it  authorized or
        will it authorize any person to (a) offer,  pledge,  sell, dispose of or
        otherwise  transfer  any  Note,  any  interest  in any Note or any other
        similar  security to any person in any manner,  (b) solicit any offer to
        buy or to accept a pledge,  disposition  of other  transfer of any Note,
        any interest in any Note or any other  similar  security from any person
        in any manner,  (c) otherwise  approach or negotiate with respect to any
        Note,  any interest in any Note or any other  similar  security with any
        person in any  manner,  (d) make any  general  solicitation  by means of
        general advertising or in any other manner or (e) take any other action,
        that  (as  to  any  of  (a)  through  (e)  above)  would   constitute  a
        distribution   of  any  Note  under  the  Act,  that  would  render  the
        disposition of any Note a violation of Section 5 of the Act or any state
        securities  law, or that would  require  registration  or  qualification
        pursuant thereto.  The Purchaser will not sell or otherwise transfer any
        of the Notes, except in compliance with the provisions of the Indenture.

               6.     The Purchaser is not a non-United States person.

                                            Very truly yours,

                                            By:
                                               --------------------------------
                                               Name:
                                               Title:
                                        C-2

<PAGE>

                                   EXHIBIT D

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                            __________________, 20___

Residential Funding Mortgage Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 600
Minneapolis, MN 55437

The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY  10001

Attention:  Corporate Trust Administration

               Re:    Home Equity Loan-Backed Capped Funding Notes
                      Series 2001-HS3
                      -------------------------------------------------

Ladies and Gentlemen:

               ___________________(the  "Purchaser")  intends to  purchase  from
______ (the  "Seller")  $_______Capped  Funding  Notes of Series  2001-HS3  (the
"Notes"),  issued pursuant to the (the  "Indenture"),  dated as of September 27,
2001 between  Home Equity Loan Trust,  as issuer (the  "Issuer"),  and The Chase
Manhattan Bank, as indenture trustee (the "Indenture  Trustee").  All terms used
herein  and not  otherwise  defined  shall  have the  meanings  set forth in the
Indenture.  The  Seller  hereby  certifies,  represents  and  warrants  to,  and
covenants with, the Issuer and the Indenture Trustee that:

               Neither  the  Seller  nor  anyone  acting on its  behalf  has (a)
offered,  pledged,  sold,  disposed of or otherwise  transferred  any Note,  any
interest in any Note or any other similar  security to any person in any manner,
(b) has solicited any offer to buy or to accept a pledge,  disposition  or other
transfer of any Note,  any  interest in any Note or any other  similar  security
from any person in any manner,  (c) has otherwise  approached or negotiated with
respect to any Note, any interest in any Note or any other similar security with
any person in any  manner,  (d) has made any  general  solicitation  by means of
general  advertising or in any other manner,  or (e) has taken any other action,
that (as to any of (a) through (e) above) would constitute a distribution of the
Notes  under the  Securities  Act of 1933 (the  "Act"),  that  would  render the
disposition  of any  Note a  violation  of  Section  5 of the  Act or any  state
securities  law, or that would require  registration or  qualification  pursuant
thereto.  The Seller  will not act,  in any  manner  set forth in the  foregoing
sentence  with  respect  to any Note.  The  Seller  has not and will not sell or
otherwise transfer any of the Notes, except in compliance with the provisions of
the Indenture.

                                        D-1

<PAGE>

                                            Very truly yours,

                                    (Seller)

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

                                        D-2

<PAGE>

                                   SCHEDULE I

                     CLASS A-I-IO SCHEDULED NOTIONAL BALANCE

                   Payment Date         Class A-I-IO Scheduled Notional Balance

                   October 2001                                 $194,689,267.80
                   November 2001                                $171,367,986.94
                   December 2001                                $155,149,618.90
                   January 2002                                 $138,167,283.63
                   February 2002                                $123,314,779.77
                   March 2002                                   $110,234,551.61
                   April 2002                                   $96,702,195.72
                   May 2002                                     $87,476,032.74
                   June 2002                                    $79,213,894.78
                   July 2002                                    $71,539,565.70
                   August 2002                                  $64,491,926.58
                   September 2002                               $58,653,859.34
                   October 2002                                 $53,231,411.76
                   November 2002                                $48,195,072.72
                   December 2002                                $43,517,421.84
                   January 2003                                 $39,424,291.11
                   February 2003                                $36,217,700.86
                   March 2003                                   $33,239,661.17
                   April 2003                                   $30,473,927.44
                   May 2003                                     $27,905,406.90
                   June 2003                                    $25,520,077.15
                   July 2003                                    $23,304,910.39
                   August 2003                                  $21,247,803.00
                   September 2003                               $19,679,843.06
                   October 2003                                 $18,236,002.81
                   November 2003                                $16,895,275.38
                   December 2003                                $15,650,319.57
                   January 2004                                 $14,494,315.45
                   February 2004                                $13,420,927.44
                   March 2004                                   $12,424,270.01
                   April 2004                                   $11,454,511.61
                   May 2004                                     $10,515,230.02

<PAGE>

                                 EXECUTION COPY

                                   APPENDIX A

                                   DEFINITIONS

               Accrued Certificate  Interest:  With respect to each Payment Date
and the REMIC I Regular  Interests or the REMIC II Regular  Interest SB-IO,  the
Uncertificated Accrued Interest for such Regular Interests.  With respect to the
Class SB-I Certificates,  interest accrued during the related Interest Period at
the  Certificate  Rate for such  Certificate on the related  Notional Amount for
such Payment Date.

               Additional  Balance:  With respect to any HELOC,  any future Draw
made by the related  Mortgagor  pursuant to the related Loan Agreement after the
Cut-off Date; provided,  however, that if an Amortization Event occurs, then any
Draw after such Amortization  Event shall not be acquired by the Trust and shall
not be an Additional Balance.

               Additional  Balance  Differential:  With  respect to any  Payment
Date, unless and until an Amortization Event occurs, (x) up to and including the
Payment Date occurring in the calendar  month during which the Revolving  Period
ends,  the amount,  if any, by which  Additional  Balances  resulting from Draws
under  the  HELOCs  during  the  related   Collection  Period  exceed  Principal
Collections  during  such  Collection  Period  and (y)  after the  Payment  Date
occurring in the calendar  month during  which the  Revolving  Period ends,  the
aggregate amount of Additional Balances conveyed to the Trust during the related
Collection Period.

               Additional  Certificate  Security  Balance:  With  respect to the
issuance of Capped Funding Notes  pursuant to Section  4.01(d) of the Indenture,
the  amount,  if any,  required  in  accordance  with the  Opinion of Counsel in
connection therewith to be added to the Security Balances of the Certificates in
accordance with Section 3.12 of the Trust Agreement.  In addition,  with respect
to any Payment Date described in the second  sentence of Section  3.12(a) of the
Trust Agreement, the "Additional Certificate Security Balance" shall include the
amount of the excess described in such sentence.

               Adjusted  Mortgage Rate: With respect to any Home Equity Loan and
any date of determination,  the Loan Rate borne by the related Home Equity Loan,
less the rate at which the related Subservicing Fee accrues.

     Adverse REMIC Event: As defined in Section 11.01(f) of the Indenture.

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

               Aggregate  Additional Balance  Differential:  With respect to any
Payment  Date and any  Variable  Funding  Note,  the sum of  Additional  Balance
Differentials  that have been added to the  Security  Balance  of such  Variable
Funding Note prior to such Payment Date.

                                       1
<PAGE>

     Aggregate Security Balance: With respect to any Payment Date, the aggregate
of the Security Balances of all Securities or specified Classes of Securities as
of such date.

     Ambac: Ambac Assurance Corporation,  a Wisconsin-domiciled  stock insurance
corporation.

               Amortization Event:  Any one of the following events:

               (a) the failure on the part of the Seller (i) to make any payment
        or deposit required to be made under the Purchase  Agreement within five
        Business  Days after the date such  payment or deposit is required to be
        made;  or (ii) to observe or perform in any  material  respect any other
        covenants  or  agreements  of the  Seller  set  forth  in  the  Purchase
        Agreement,  which failure  continues  unremedied for a period of 60 days
        after written notice and such failure  materially and adversely  affects
        the interests of the Securityholders or the Credit Enhancer;

               (b) if any  representation  or warranty made by the Seller in the
        Purchase Agreement proves to have been incorrect in any material respect
        when made and which  continues to be  incorrect in any material  respect
        for a period of 45 days with respect to any  representation  or warranty
        of the Seller made in Section  3.1(a) of the  Purchase  Agreement  or 90
        days with  respect to any  representation  or  warranty  made in Section
        3.1(b) or 3.1(c) of the Purchase Agreement after written notice and as a
        result of which  the  interests  of the  Securityholders  or the  Credit
        Enhancer are materially and adversely affected;  provided, however, that
        an  Amortization  Event  shall not be deemed to occur if the  Seller has
        repurchased or caused to be  repurchased or substituted  for the related
        Home Equity Loan or all Home Equity Loans,  if  applicable,  during such
        period  (or  within  an  additional  60 days  with  the  consent  of the
        Indenture  Trustee  and the  Credit  Enhancer)  in  accordance  with the
        provisions of the Indenture;

               (c) the entry  against  the  Seller or the  Issuer 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;

               (d)  the  Seller  or  the  Issuer  shall   voluntarily   go  into
        liquidation,  consent to the  appointment  of a  conservator,  receiver,
        liquidator or similar person in any  insolvency,  readjustment  of debt,
        marshalling  of assets  and  liabilities  or similar  proceedings  of or
        relating  to  the  Seller  or the  Issuer  or of or  relating  to all or
        substantially  all of its  property,  or a  decree  or order of a court,
        agency or supervisory  authority having jurisdiction in the premises for
        the appointment of a conservator, receiver, liquidator or similar person
        in any  insolvency,  readjustment  of debt,  marshalling  of assets  and
        liabilities or similar proceedings, or for the winding-up or liquidation
        of its affairs, shall have been entered against the Seller or the Issuer
        and such  decree or order  shall have  remained  in force  undischarged,
        unbonded  or  unstayed  for a period  of 60 days;  or the  Seller or the
        Issuer 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;

                                       2
<PAGE>

               (e) the Issuer becomes subject to regulation by the Commission as
        an investment  company within the meaning of the Investment  Company Act
        of 1940, as amended;

               (f) a Servicing  Default  relating to the Master  Servicer occurs
          under the Servicing Agreement and the Master Servicer is the Seller;

               (g) the  aggregate  of all  draws  under the  Credit  Enhancement
        Instrument (other than draws with respect to the  Undercollateralization
        Amount)  exceeds  1% of the  Cut-off  Date Loan  Balance of the Group II
        Loans; or

               (h) the Issuer is  determined to be an  association  taxable as a
          corporation for federal income tax purposes.

               In the case of any event  described  in (a),  (b), (f) or (g), an
Amortization Event will be deemed to have occurred only if, after any applicable
grace period described in such clauses, any of the Indenture Trustee, the Credit
Enhancer or, with the consent of the Credit Enhancer, Securityholders evidencing
not less  than 51% of the  Security  Balance  of each of the Term  Notes and the
Certificates,  by  written  notice  to the  Seller,  the  Master  Servicer,  the
Depositor and the Owner Trustee (and to the Indenture  Trustee,  if given by the
Credit Enhancer or the Securityholders),  declare that an Amortization Event has
occurred as of the date of such  notice.  In the case of any event  described in
clauses  (c),  (d),  (e) or (h),  an  Amortization  Event will be deemed to have
occurred  without  any  notice  or other  action  on the  part of the  Indenture
Trustee,  the Noteholders or the Credit Enhancer immediately upon the occurrence
of such event; provided, that any Amortization Event may be waived and deemed of
no effect  with the  written  consent of the  Credit  Enhancer  and each  Rating
Agency, subject to the satisfaction of any conditions to such waiver.

               Appraised Value: As to any Mortgaged  Property,  the value of the
related  Mortgaged  Property  determined by the appraisal,  sales price for such
Mortgaged  Property or  alternative  valuation  method,  including a statistical
valuation or the Stated Value, used in the origination of such Home Equity Loan,
which  may have been  obtained  at an  earlier  time but in no case more than 24
months  prior  to  origination;  provided  that if such  Home  Equity  Loan  was
originated  simultaneously with or not more than 12 months after the origination
of a mortgage  loan secured by a senior lien on the related  Mortgaged  Property
which  senior  lien  was   originated  in  a  purchase  or  cash-out   refinance
transaction,  the Appraised Value shall be the lesser of (i) the appraised value
of such  Mortgaged  Property  based upon the  appraisal  made at the time of the
origination of such senior  mortgage,  and (ii) the sales price of the Mortgaged
Property at such time of origination.

               Assignment  of  Mortgage:   With  respect  to  any  Mortgage,  an
assignment,  notice of transfer or equivalent  instrument,  in recordable  form,
sufficient  under the laws of the  jurisdiction  in which the related  Mortgaged
Property is located to reflect the conveyance of the Mortgage, which assignment,

                                       3
<PAGE>

notice of transfer or  equivalent  instrument  may be in the form of one or more
blanket assignments  covering Mortgages secured by Mortgaged  Properties located
in the same jurisdiction.

               Authorized  Newspaper:  A newspaper of general circulation in the
Borough of Manhattan,  The City of New York, printed in the English language and
customarily  published  on  each  Business  Day,  whether  or not  published  on
Saturdays, Sundays or holidays.

               Authorized  Officer:  With respect to the Issuer,  any officer of
the Owner  Trustee  who is  authorized  to act for the Owner  Trustee in matters
relating to the Issuer and who is identified on the list of Authorized  Officers
delivered by the Owner Trustee to the Indenture  Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter).

               Bankruptcy Code:  The Bankruptcy Code of 1978, as amended.

               Bankruptcy  Loss:  With  respect  to  any  Home  Equity  Loan,  a
Deficient Valuation or a Debt Service Reduction; provided, however, that neither
a Deficient  Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy
Loss hereunder so long as the Master Servicer has notified the Indenture Trustee
in writing that the Master Servicer is diligently pursuing any remedies that may
exist in connection with the  representations  and warranties made regarding the
related  Home Equity Loan and either (A) the related  Home Equity Loan is not in
default with regard to payments due  thereunder  or (B)  delinquent  payments of
principal  and  interest  under the related Home Equity Loan and any premiums on
any applicable  primary hazard  insurance policy and any related escrow payments
in respect of such Home Equity Loan are being advanced on a current basis by the
Master  Servicer or a  Subservicer,  in either case without giving effect to any
Debt Service Reduction.

               Bankruptcy Loss Amount:  With respect to the Group I Loans, as of
any date of determination,  the Bankruptcy Loss Amount shall equal $125,000 less
the sum of any  Liquidation  Loss  Amounts  on the Group I Loans  covered by the
Group I Policy due to Bankruptcy Losses up to such date of  determination.  With
respect to the Group II Loans, as of any date of  determination,  the Bankruptcy
Loss Amount shall equal $100,000 less the sum of any Liquidation Loss Amounts on
the Group II Loans due to Bankruptcy Losses up to such date of determination.

               Basic Documents: The Trust Agreement, the Indenture, the Purchase
Agreement,  the Insurance  Agreement,  the Credit  Enhancement  Instrument,  the
Servicing  Agreement,  the  Custodial  Agreement  and the  other  documents  and
certificates delivered in connection with any of the above.

               Basis Risk Shortfall: With respect to either the Class A-II Notes
or the Variable  Funding Notes,  on any Payment Date an amount by which interest
accrued on such Notes at the  applicable  Note Rate during the related  Interest
Period  (without  application  of the  Group II Net WAC Rate)  exceeds  interest
accrued thereon at the Group II Net WAC Rate.  Basis Risk Shortfalls will not be
included in the  Interest  Distribution  Amount for such Notes for such  Payment

                                       4
<PAGE>

Date and such  amount  will  accrue  interest  at the  applicable  Note Rate (as
adjusted from time to time) and will be paid on future Payment Dates only to the
extent  funds are  available  therefor  as set forth in  Section  3.05(a) of the
Indenture.

               Beneficial  Owner:  With respect to any Term Note, the Person who
is the beneficial owner of such Note as reflected on the books of the Depository
or on the  books  of a  Person  maintaining  an  account  with  such  Depository
(directly  as a  Depository  Participant  or  indirectly  through  a  Depository
Participant, in accordance with the rules of such Depository).

     Billing  Cycle:  With  respect to any Home  Equity  Loan and Due Date,  the
calendar month preceding such Due Date.

               Book-Entry Custodian: The custodian appointed pursuant to Section
4.06 of the Indenture.

               Book-Entry Notes:  Beneficial  interests in the Notes,  ownership
and  transfers of which shall be made through book entries by the  Depository as
described in Section 4.06 of the Indenture.

               Business  Day:  Any day other than (i) a Saturday  or a Sunday or
(ii) a day on which banking institutions in the States of New York,  California,
Minnesota, Illinois or Delaware are required or authorized by law to be closed.

     Business  Trust  Statute:  Chapter 38 of Title 12 of the Delaware  Code, 12
Del. Codess.ss.3801 et seq., as the same may be amended from time to time.

               Calendar Quarter:  A Calendar Quarter shall consist of one of the
following  time periods in any given year:  January 1 through  March 31, April 1
through June 30, July 1 through September 30, and October 1 through December 31.

     Capped Funding Note:  Any Capped Funding Note issued in connection  with an
exchange pursuant to Section 4.01(c) or 4.01(d) of the Indenture.

               Cash Liquidation: As to any defaulted Home Equity Loan other than
a Home Equity Loan as to which an REO Acquisition  occurred,  a determination by
the Master  Servicer  that it has received all Insurance  Proceeds,  Liquidation
Proceeds  and  other  payments  or cash  recoveries  which the  Master  Servicer
reasonably and in good faith expects to be finally  recoverable  with respect to
such Home Equity Loan.

               Certificate Distribution Account: The account or accounts created
and maintained by the  Certificate  Paying Agent pursuant to Section  3.10(c) of
the Trust Agreement. The Certificate Paying Agent will make all distributions on
the Certificates from money on deposit in the Certificate Distribution Account.

               Certificate Distribution Amount: For any Payment Date, the amount
remaining in the Payment Account following distributions pursuant to clauses (i)
through (ix) of Section 3.05(a)(I) of the Indenture and following  distributions
pursuant to clauses (i) through (xii) of Section 3.05(a)(II) of the Indenture.

                                       5
<PAGE>

     Certificate of Trust: The Certificate of Trust filed for the Trust pursuant
to Section 3810(a) of the Business Trust Statute.

     Certificate  Paying  Agent:  The meaning  specified  in Section 3.10 of the
Trust Agreement.

               Certificate  Percentage  Interest:  With  respect to any  Payment
Date,  the  Certificate  Percentage  Interest  as  stated  on the  face  of such
Certificate,  which  percentage may be  recalculated  in accordance with Section
3.12 of the Trust Agreement.

               Certificate  Principal  Balance:  As of any  Payment  Date,  with
respect  to any Group II  Certificate,  an amount  equal to the then  applicable
Certificate   Percentage   Interest  of  such  Certificate   multiplied  by  the
Outstanding Overcollateralization Amount. As of any Payment Date with respect to
any Class SB-I Certificate, $0. As of any Payment Date with respect to any Class
R Certificate, $0.

               Certificate  Rate: With respect to the Class SB-I Certificates or
the REMIC I Regular  Interest SB-IO and any Payment Date, a rate per annum equal
to the percentage equivalent of a fraction, the numerator of which is the sum of
the amounts  calculated  pursuant to clauses  (i)  through  (iv) below,  and the
denominator of which is the aggregate  principal  balance of the REMIC I Regular
Interests  relating to Loan Group I. For purposes of calculating the Certificate
Rate for the Class SB-I  Certificates,  the numerator is equal to the sum of the
following components:

               (i) the  REMIC I  Remittance  Rate for  Class LT1 REMIC I Regular
               Interest  minus the Loan Group I SB-IO Marker Rate,  applied to a
               notional amount equal to the Class Principal Balance of the Class
               LT1 REMIC II Regular Interest;

               (ii) the  REMIC I  Remittance  Rate  for the  Class  LT2  REMIC I
               Regular  Interest  minus  the  Loan  Group I SB-IO  Marker  Rate,
               applied to a notional amount equal to the Class Principal Balance
               of Class LT2 REMIC I Regular Interest;

               (iii)  the  REMIC I  Remittance  Rate for the  Class  LT4 REMIC I
               Regular  Interest minus twice the Loan Group I SB-IO Marker Rate,
               applied to a notional amount equal to the Class Principal Balance
               of Class LT4 REMIC I Regular Interest; and

               (iv) the  REMIC I  Remittance  Rate  for the  Class  LT5  REMIC I
               Regular  Interest  minus  the  Loan  Group I SB-IO  Marker  Rate,
               applied to a notional amount equal to the Class Principal Balance
               of Class LT5 REMIC I Regular Interest.

               With respect to the Class  A-I-IO  Notes and any Payment  Date, a
rate per annum equal to the percentage  equivalent of a fraction,  the numerator
of which is the sum of the  amounts  calculated  pursuant to clauses (i) through
(iv) below, and the denominator of which is the Class A-I-IO Notional Amount for
such Payment Date.  For purposes of  calculating  the  Certificate  Rate for the
Class  A-I-IO  Notes,  the  numerator  is  equal  to the  sum  of the  following
components:

                                       6
<PAGE>

               (i) the  REMIC I  Remittance  Rate for  Class LT1 REMIC I Regular
               Interest minus the Loan Group I A-I-IO Marker Rate,  applied to a
               notional amount equal to the Class Principal Balance of the Class
               LT1 REMIC I Regular Interest;

               (ii) the  REMIC I  Remittance  Rate  for the  Class  LT2  REMIC I
               Regular  Interest  minus  the Loan  Group I A-I-IO  Marker  Rate,
               applied to a notional amount equal to the Class Principal Balance
               of Class LT2 REMIC I Regular Interest;

               (iii)  the  REMIC I  Remittance  Rate for the  Class  LT4 REMIC I
               Regular Interest minus twice the Loan Group I A-I-IO Marker Rate,
               applied to a notional amount equal to the Class Principal Balance
               of Class LT4 REMIC I Regular Interest; and

               (iv) the  REMIC I  Remittance  Rate  for the  Class  LT5  REMIC I
               Regular  Interest  minus  the Loan  Group I A-I-IO  Marker  Rate,
               applied to a notional amount equal to the Class Principal Balance
               of Class LT5 REMIC I Regular Interest.

               The  Certificate  Rate for the Class A-I-IO Notes is equal to the
Note Rate for the Class A-I-IO Notes.

     Certificate Register:  The register maintained by the Certificate Registrar
in which  the  Certificate  Registrar  shall  provide  for the  registration  of
Certificates and of transfers and exchanges of Certificates.

     Certificate Registrar: Initially, the Indenture Trustee, in its capacity as
Certificate Registrar.

               Certificateholder:  The  Person in whose  name a  Certificate  is
registered in the Certificate  Register except that, any Certificate  registered
in the name of the Issuer,  the Owner  Trustee or the  Indenture  Trustee or any
Affiliate  of any  of  them  shall  be  deemed  not to be  outstanding  and  the
registered  holder will not be  considered a  Certificateholder  or a holder for
purposes  of giving  any  request,  demand,  authorization,  direction,  notice,
consent or waiver under the Indenture or the Trust  Agreement  provided that, in
determining  whether  the  Indenture  Trustee  or the  Owner  Trustee  shall  be
protected in relying upon any such request,  demand,  authorization,  direction,
notice,  consent or waiver,  only Certificates that the Indenture Trustee or the
Owner  Trustee  knows  to  be  so  owned  shall  be so  disregarded.  Owners  of
Certificates  that have been pledged in good faith may be regarded as Holders if
the pledgee  establishes  to the  satisfaction  of the Indenture  Trustee or the
Owner Trustee, as the case may be, the pledgee's right so to act with respect to
such Certificates and that the pledgee is not the Issuer, any other obligor upon
the Certificates or any Affiliate of any of the foregoing Persons.

     Certificates: The Group I Certificates and the Group II Certificates.

     Class:  Collectively,  all of the Notes or  Certificates  bearing  the same
designation. -

               Class A-I-IO Net WAC Rate:  With  respect to any Payment  Date, a
fraction, expressed as a per annum percentage, the numerator of which equals the
excess of (x) the product of (i) the  weighted  average of the Loan Rates of the

                                       7
<PAGE>

Group I Loans as of the beginning of the related Collection  Period,  less 1.34%
per annum and (ii) the aggregate unpaid  principal  balance of the Group I Loans
as of the beginning of the related  Collection  Period,  over (y) the product of
(i) the weighted average of the Note Rates on all other classes of Class I Notes
for such  Payment Date and (ii) the  aggregate  unpaid  Security  Balance of the
Class I Notes,  other than the Class A-I-IO  Notes,  as of the  beginning of the
month in which such Payment Date occurs, and the denominator of which equals the
Class A-I-IO Notional Amount for the related Payment Date.

               Class A-I-IO  Notional  Amount:  With respect to the Class A-I-IO
Notes  and any  Payment  Date,  the  lesser of (a) the  Class  A-I-IO  Scheduled
Notional Balance for such Payment Date and (b) the aggregate  principal  balance
of the Group I Loans,  without  giving  effect to actual  payments of  principal
received during the related Collection Period.

               Class  A-I-IO  Scheduled  Notional  Balance:  With respect to any
Payment Date, the amount with respect to that Payment Date set forth on Schedule
I to the Indenture.

               Class A-I-1 Notes:  The Class A-I-1 Home Equity  Loan-Backed Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class A-I-2 Notes:  The Class A-I-2 Home Equity  Loan-Backed Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class A-I-3 Notes:  The Class A-I-3 Home Equity  Loan-Backed Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class A-I-4 Notes:  The Class A-I-4 Home Equity  Loan-Backed Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class A-I-5 Notes:  The Class A-I-5 Home Equity  Loan-Backed Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class A-I-IO Notes: The Class A-I-IO Home Equity Loan-Backed Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class A-II  Notes:  The Class A-II Home Equity  Loan-Backed  Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class I Notes:  The Class A-I-1 Notes, the Class A-I-2 Notes, the
Class A-I-3  Notes,  the Class A-I-4  Notes,  the Class A-I-5  Notes,  the Class
A-I-IO Notes,  the Class M-I-1 Notes,  the Class M-I-2 Notes and the Class M-I-3
Notes.

               Class I-LT1 Principal  Distribution Amount: For any Payment Date,
the  excess,  if any,  of the Class I-LT1  Principal  Reduction  Amount for such
Payment Date over the principal  Liquidation Loss Amounts allocated to the Class
I-LT1 REMIC I Regular Interest on such Payment Date.

                                       8
<PAGE>

               Class I-LT2 Principal  Distribution Amount: For any Payment Date,
the  excess,  if any,  of the Class I-LT2  Principal  Reduction  Amount for such
Payment Date over the principal  Liquidation Loss Amounts allocated to the Class
I-LT2 REMIC I Regular Interest on such Payment Date.

               Class I-LT3 Principal  Distribution Amount: For any Payment Date,
the  excess,  if any,  of the Class I-LT3  Principal  Reduction  Amount for such
Payment Date over the principal  Liquidation Loss Amounts allocated to the Class
I-LT3 REMIC I Regular Interest on such Payment Date.

               Class I-LT4 Principal  Distribution Amount: For any Payment Date,
the  excess,  if any,  of the Class I-LT4  Principal  Reduction  Amount for such
Payment Date over the principal  Liquidation Loss Amounts allocated to the Class
I-LT4 REMIC I Regular Interest on such Payment Date.
               Class I-LT5 Principal  Distribution Amount: For any Payment Date,
the  excess,  if any,  of the Class I-LT5  Principal  Reduction  Amount for such
Payment Date over the principal  Liquidation Loss Amounts allocated to the Class
I-LT5 REMIC I Regular Interest on such Payment Date.

               Class I-LT6 Principal  Distribution Amount: For any Payment Date,
the  excess,  if any,  of the Class I-LT6  Principal  Reduction  Amount for such
Payment Date over the principal  Liquidation Loss Amounts allocated to the Class
I-LT6 REMIC I Regular Interest on such Payment Date.

               Class LT Principal  Reduction Amounts:  For any Payment Date, the
amounts by which the principal  balances of the Class LT1, Class LT2, Class LT3,
Class LT4, Class LT5 and Class LT6 REMIC I Regular  Interests  respectively will
be reduced on such Payment Date by the  allocation of  Liquidation  Loss Amounts
and the distribution of principal, determined as follows:

For purposes of the  succeeding  formulas the  following  symbols shall have the
meanings set forth below:

        Y1     = the Class  Principal  Balance  of the Class LT1 REMIC I Regular
               Interest after the allocation of REMIC I Liquidation Loss Amounts
               and making of distributions on the prior Payment Date.

        Y2     = the Class  Principal  Balance  of the Class LT2 REMIC I Regular
               Interest after the allocation of REMIC I Liquidation Loss Amounts
               and making of distributions on the prior Payment Date.

        Y3     = the Class  Principal  Balance  of the Class LT3 REMIC I Regular
               Interest after the allocation of REMIC I Liquidation Loss Amounts
               and making of distributions on the prior Payment Date.

        Y4     = the Class  Principal  Balance  of the Class LT4 REMIC I Regular
               Interest after the allocation of REMIC I Liquidation Loss Amounts
               and making of distributions on the prior Payment Date (note: Y4 =
               Y3 + Y6 ).

                                       9
<PAGE>

        Y5     = the Class  Principal  Balance  of the Class LT5 REMIC I Regular
               Interest after the allocation of REMIC I Liquidation Loss Amounts
               and making of distributions on the prior Payment Date.

        Y6     = the Class  Principal  Balance  of the Class LT6 REMIC I Regular
               Interest after the allocation of REMIC I Liquidation Loss Amounts
               and making of distributions on the prior Payment Date.

        (DELTA)Y1 = the Class LT1 Principal Reduction Amount.

        (DELTA)Y2 = the Class LT2 Principal Reduction Amount.

        (DELTA)Y3 = the Class LT3 Principal Reduction Amount.

        (DELTA)Y4 = the Class LT4 Principal Reduction Amount.

        (DELTA)Y5 = the Class LT5 Principal Reduction Amount.

        (DELTA)Y6 = the Class LT6 Principal Reduction Amount.

        P0     = the aggregate  principal  balance of the Class LT1,  Class LT2,
               Class  LT3,  Class  LT4,  Class LT5 and Class LT6 REMIC I Regular
               Interests after  distributions  and the allocation of Liquidation
               Loss Amounts on the prior Payment Date.

            =  the aggregate principal balance of the Group I Loans after giving
               effect to principal  payments  distributed and  Liquidation  Loss
               Amounts allocated on the prior Payment Date.

        P1     = the aggregate  principal  balance of the Class LT1,  Class LT2,
               Class  LT3,  Class  LT4,  Class LT5 and Class LT6 REMIC I Regular
               Interests after  distributions  and the allocation of Liquidation
               Loss Amounts to be made on such Payment Date.

            =  the aggregate principal balance of the Group I Loans after giving
               effect to principal  payments  distributed and  Liquidation  Loss
               Amounts allocated on such Payment Date.

        (DELTA)P = P0 - P1 = the  aggregate of the Class LT1,  Class LT2,  Class
               LT3,  Class  LT4,  Class LT5 and Class  LT6  Principal  Reduction
               Amounts.

              =the sum of (I) the  aggregate  of the  Liquidation  Loss  Amounts
               attributable  to Loan Group I for such Payment Date and allocated
               to  principal  by the  definition  of  REMIC I  Liquidation  Loss
               Amounts,  (II) the  portion  of  Principal  Collections  for such
               Payment  Date  attributable  to the  Group I Loans  and (III) the
               principal  portion of amounts  advanced  for such Payment Date in
               respect of the Group I Loans.

                                       10
<PAGE>

        R0     = the Group I Net WAC Rate  (stated  as a  monthly  rate) for the
               Group I Loans  after  giving  effect to amounts  distributed  and
               Liquidation Loss Amounts allocated on the prior Payment Date.

        R1     = the Group I Net WAC Rate  (stated  as a  monthly  rate) for the
               Group I Loans after  giving  effect to amounts to be  distributed
               and  Liquidation  Loss  Amounts to be  allocated  on such Payment
               Date.

     (alpha)= (Y2 + Y3)/P0. The initial value of (alpha) on the Closing Date for
          use on the first Payment Date shall be 0.0001.

     a    = (Y5 + Y6)/P0.  The initial value of a on the Closing Date for use on
          the first Payment Date shall be 0.0001.

        (gamma)0 = (I) if such Payment  Date is on or before June 25, 2004,  the
               sum of (A) the interest  accruing on the Class I Notes other than
               the Class I-A-IO Notes in respect of the Interest  Period related
               to such Payment Date (without  reduction by the interest  portion
               of Liquidation Loss Amounts,  Prepayment  Interest  Shortfalls or
               Relief  Act  Shortfalls  allocated  to  such  Notes)  and (B) the
               excess, if any, of Ro*Po over the sum of (i) the amount described
               in (A) and (ii) the  product of (x) one  twelfth of 7.25% and (y)
               the Class A-I-IO  Notional  Amount for such Payment Date, or (II)
               if such Payment Date is after June 25, 2004, Ro*Po.

        (gamma)1 = (I) if the next succeeding  Payment Date is on or before June
               25,  2004,  the sum of (A) the  interest  accruing on the Class I
               Notes  other  than  the  Class  I-A-IO  Notes in  respect  of the
               Interest  Period  related  to the next  succeeding  Payment  Date
               (without  reduction by the interest  portion of Liquidation  Loss
               Amounts,  Prepayment Interest Shortfalls or Relief Act Shortfalls
               allocated  to such  Notes) and (B) the  excess,  if any, of R1*P1
               over  the sum of (i) the  amount  described  in (A) and  (ii) the
               product  of (x) one  twelfth  of 7.25% and (y) the  Class  A-I-IO
               Notional Amount for the next succeeding  Payment Date, or (II) if
               the next succeeding Payment Date is after June 25, 2004, R1*P1.

        A0     = the  interest  accruing  on the Class I Notes in respect of the
               Interest  Period related to such Payment Date (without  reduction
               by the interest portion of Liquidation  Loss Amounts,  Prepayment
               Interest  Shortfalls or Relief Act  Shortfalls  allocated to such
               Notes).

        A1     = the  interest  accruing  on the Class I Notes in respect of the
               Interest  Period  related  to the next  succeeding  Payment  Date
               (without  reduction by the interest  portion of Liquidation  Loss
               Amounts,  Prepayment Interest Shortfalls or Relief Act Shortfalls
               allocated to such Notes).

Then, based on the foregoing definitions:

     (DELTA)Y1 = (DELTA)P -  (DELTA)Y2  -  (DELTA)Y3  -  (DELTA)Y4 - (DELTA)Y5 -
          (DELTA)Y6;

                                       11
<PAGE>

        (DELTA)Y2 =   ((alpha)/2){((gamma) 0R1 - (gamma)1R0)/R0R1};

        (DELTA)Y3 =   (alpha)(DELTA)P - (DELTA)Y2; and

        (DELTA)Y4 =   (DELTA)Y3 + (DELTA)Y6

     if  both  (DELTA)Y2  and  (DELTA)Y3,  as so  determined,  are  non-negative
numbers. Otherwise:

        (1)    If (DELTA)Y2, as so determined, is negative, then

        (DELTA)Y2 = 0;

        (DELTA)Y3 = {2(alpha)(DELTA)PY2R1R0 - (alpha)2P0((gamma)0R1 -
(gamma)1R0)}/{2(alpha)Y2R1R0 - (alpha)((gamma)0R1 - (gamma)1R0)};

        (DELTA)Y4 = (DELTA)Y3 + (DELTA)Y6; and

        (DELTA)Y1  = (DELTA)P -  (DELTA)Y2 - (DELTA)Y3 - (DELTA)Y4 - (DELTA)Y5 -
(DELTA)Y6.

        (2)    If (DELTA)Y3, as so determined, is negative, then

        (DELTA)Y3 = 0;

        (DELTA)Y2 = {(alpha)2P0((gamma)0R1 - (gamma)1R0)} -
               2(alpha)(DELTA)PY2R1R0}/(2(alpha)Y2R1R0- 2(alpha)(DELTA)PR1R0 +
               (alpha)((gamma)0R1 - (gamma)1R0)};

        (DELTA)Y4 = (DELTA)Y3 + (DELTA)Y6; and

        (DELTA)Y1  = (DELTA)P -  (DELTA)Y2 - (DELTA)Y3 - (DELTA)Y4 - (DELTA)Y5 -
(DELTA)Y6.

For purposes of the foregoing,

        (DELTA)Y5 =   (a/2){(A0R1 - A1R0)/R0R1} and

        (DELTA)Y6 =   a(DELTA)P - (DELTA)Y5,

     if  both  (DELTA)Y5  and  (DELTA)Y6,  as so  determined,  are  non-negative
numbers. Otherwise:

        (1)    If (DELTA)Y5, as so determined, is negative, then

        (DELTA)Y5 = 0 and

        (DELTA)Y6 = {2a(DELTA)PY5R1R0 - a2P0(A0R1 - A1R0)}/{2aY5R1R0 - a (A0R1 -
A1R0)}.

                                       12
<PAGE>

        (2)    If (DELTA)Y6, as so determined, is negative, then

        (DELTA)Y6 = 0 and

        (DELTA)Y5   =   {a2P0(A0R1   -  A1R0)}  -   2a(DELTA)PY5R1R0}/(2aY5R1R0-
2a(DELTA)PR1R0 + a(A0R1 - A1R0)}.

     Class II Notes: The Class A-II Notes and the Variable Funding Notes.

     Class M-I Notes: Collectively, the Class M-I-1 Notes, the Class M-I-2 Notes
and the Class M-I-3 Notes.

               Class M-I-1 Notes:  The Class M-I-1 Home Equity  Loan-Backed Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class M-I-2 Notes:  The Class M-I-2 Home Equity  Loan-Backed Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class M-I-3 Notes:  The Class M-I-3 Home Equity  Loan-Backed Term
Notes,  Series 2001-HS3,  in substantially  the form set forth in Exhibit A-1 to
the Indenture.

               Class  Principal  Balance:  For each  Class  of  REMIC I  Regular
Interests,  the Initial Balance thereof (as set forth in the definition of REMIC
I Regular  Interests)  as  reduced  on each  successive  Payment  Date  first by
Liquidation Loss Amounts allocated to the principal thereof by the definition of
REMIC I Liquidation Loss Amounts and second by principal  deemed  distributed in
respect  thereof on such Payment Date  pursuant to Section  5.01(e) of the Trust
Agreement.  For the REMIC II Regular Interest SB-PO, the Initial Balance thereof
(as set forth in the  definition  of REMIC II Regular  Interests)  as reduced on
each successive  Payment Date first by Liquidation Loss Amounts allocated to the
principal  thereof by the  definition of REMIC II  Liquidation  Loss Amounts and
second by principal  deemed  distributed in respect thereof on such Payment Date
pursuant to Section 5.01(f) of the Trust Agreement. For each Class of Notes, the
initial Security  Balance thereof as reduced on each successive  Payment Date by
principal  distributed  in respect  thereof on such  Payment  Date  pursuant  to
Section 3.05 of the Indenture.

               Class R Certificates:  The Class R-I  Certificates  and the Class
R-II Certificates  substantially in the form set forth in Exhibit I to the Trust
Agreement.

     Class SB  Certificates:  The Class SB-I  Certificates  and the Class  SB-II
Certificates.

               Class SB-I  Certificates:  The Class SB-I Home Equity Loan-Backed
Certificates,  Series  2001-HS3,  substantially  in the form of Exhibit A to the
Trust Agreement.

               Class SB-II Certificates: The Class SB-II Home Equity Loan-Backed
Certificates,  Series  2001-HS3,  substantially  in the form of Exhibit A to the
Trust Agreement.

               Class SB-I  Distribution  Amount: On any Payment Date, the sum of
the amounts deemed distributed in respect of the REMIC I Regular Interests SB-IO
and SB-PO pursuant to Sections 5.01(e) and (f) of the Trust Agreement reduced by
the amounts required to be paid pursuant to clauses (vi), (vii), (viii) and (ix)
of Section 3.05(a)(I) of the Indenture.

               Closing Date:  September 27, 2001.

     Code:  The  Internal  Revenue Code of 1986,  as amended,  and the rules and
regulations promulgated thereunder.

                                       13
<PAGE>

     Collateral: The meaning specified in the Granting Clause of the Indenture.

     Collection  Period:  With  respect to any Home  Equity Loan and any Payment
Date, the calendar month preceding any such Payment Date.

               Combined  Loan-to-Value  Ratio: With respect to any HELOC and any
date, the percentage equivalent of a fraction, the numerator of which is the sum
of (i) the Credit  Limit and (ii) the  outstanding  principal  balance as of the
date of the  origination of such HELOC (or any subsequent  date as of which such
outstanding  principal  balance may be determined in connection with an increase
or decrease in the Credit Limit,  to reduce the amount of primary  insurance for
such HELOC or to approve a subordinate lien) and of all other mortgage loans, if
any,  that are  secured by liens on the  Mortgaged  Property  that are senior or
subordinate to the Mortgage and the  denominator of which is the Appraised Value
of the related  Mortgaged  Property.  With respect to any HEL and any date,  the
percentage  equivalent  of a fraction,  the numerator of which is the sum of (i)
the initial  principal  balance of such HEL and (ii) the  outstanding  principal
balance as of the date of  origination  of such HEL,  and of all other  mortgage
loans,  if any,  that are secured by liens on the  Mortgaged  Property  that are
senior  or  subordinate  to the  Mortgage  and the  denominator  of which is the
Appraised Value of the related Mortgaged Property.

               Corporate  Trust Office:  With respect to the Indenture  Trustee,
Certificate Registrar,  Certificate Paying Agent and Paying Agent, the principal
corporate  trust office of the Indenture  Trustee and Note Registrar at which at
any particular  time its corporate trust business shall be  administered,  which
office at the date of the  execution of this  instrument  is located at 450 West
33rd Street,  14th Floor,  New York,  New York 10001,  Attention:  Institutional
Trust  Services/Structured   Finance.  For  purposes  of  Section  4.15  of  the
Indenture,  however,  such term shall mean the Indenture  Trustee's agent, Chase
Manhattan Trust Company,  National  Association,  located at 1650 Market Street,
Suite  5210,  Philadelphia,  Pennsylvania  19103,  or such  other  office as the
Indenture  Trustee  shall  designate.  With  respect to the Owner  Trustee,  the
principal corporate trust office of the Owner Trustee at which at any particular
time its corporate  trust  business shall be  administered,  which office at the
date of the execution of this Trust Agreement is located at Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration.

               Credit  Enhancement Draw Amount:  (1) With respect to any Payment
Date,  an amount,  if any,  equal to the sum of (a) the amount by which  accrued
interest on the Class II Notes, at the applicable Note Rate on such Payment Date
exceeds  the amount on deposit in the Payment  Account  available  for  interest
distributions  on such Payment Date  (exclusive of any Basis Risk Shortfalls and
any Relief Act Shortfalls),  (b) any Liquidation Loss Amount with respect to the
Class II Notes  (other than any Excess Loss Amount) not  currently  covered by a
Liquidation  Loss  Distribution   Amount  or  a  reduction  in  the  Outstanding
Overcollateralization  Amount  and (c) and any  Excess  Loss  Amount;  (2)  with
respect to the  Dissolution  Payment Date,  the amount of the  Dissolution  Draw
payable to the Noteholders of the Class II Notes following the sale, liquidation
or other  disposition of the assets of the Owner Trust Estate in connection with
the liquidation of the Trust Estate as permitted  under the Indenture  following
an Event of Default thereunder;  (3) with respect to the Final Scheduled Payment
Date for the Class II Notes,  the amount by which the  Security  Balances on the
Class II Notes,  and any accrued and unpaid interest  thereon  (exclusive of any
Basis Risk  Shortfalls  and any Relief  Act  Shortfalls)  to the extent not paid
pursuant  to clause  (1) of this  definition,  exceeds  the  payments  otherwise
available to be made to the Holders thereof on the Final Scheduled Payment Date;
and (4) with respect to the Insured  Undercollateralization  Payment  Date,  the
Undercollateralization Amount.

                                       14
<PAGE>

               Credit Enhancement Instrument: The Group II Policy.

     Credit Enhancer:  Ambac, or any successor thereto or any replacement credit
enhancer  for the Class II Notes  substituted  pursuant  to Section  3.29 of the
Indenture.

     Credit  Enhancer  Default:  If the Credit  Enhancer fails to make a payment
required under the Credit Enhancement Instrument in accordance with its terms.

     Credit Enhancer Premium Rate: As set forth in the Insurance Agreement.

     Credit Limit: With respect to any HELOC, the maximum Loan Balance permitted
under the terms of the related Loan Agreement.

     Credit  Limit  Increase:  As  defined  in  Section  3.01  of the  Servicing
Agreement.

               Credit Score: With respect to any Home Equity Loan, the numerical
designation  obtained  from  credit  reports  provided  by any credit  reporting
organization  used to assess a  borrower's  credit-worthiness  and the  relative
degree of risk a borrower  represents  to a lender,  as determined in accordance
with the applicable underwriting criteria.

     Curtailment:  Any Principal  Prepayment  made by a Mortgagor which is not a
Principal Prepayment in full.

               Custodial Account: The account or accounts created and maintained
by the Master Servicer  pursuant to Section 3.02(b) of the Servicing  Agreement,
in which the Master  Servicer  shall  deposit or cause to be  deposited  certain
amounts in respect of the Home Equity Loans.

               Custodial Agreement: Any Custodial Agreement among the Custodian,
the  Indenture  Trustee,  the  Issuer and the Master  Servicer  relating  to the
custody of the Home Equity Loans and the Related Documents.

     Custodian:  Wells  Fargo  Bank  Minnesota,  N.A.,  and its  successors  and
assigns.

               Cut-off Date:  September 1, 2001.

               Cut-off Date Loan Balance:  With respect to any Home Equity Loan,
the unpaid principal balance thereof as of the close of business on the last day
of the Billing Cycle immediately prior to the Cut-off Date.

               Debt Service  Reduction:  With respect to any Home Equity Loan, a
reduction  in the  scheduled  payment  for such Home  Equity  Loan by a court of
competent  jurisdiction  in a proceeding  under the Bankruptcy Code that becomes
final and  non-appealable,  except  such a  reduction  constituting  a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.

                                       15
<PAGE>

     Default:  Any  occurrence  which is or with  notice or the lapse of time or
both would become an Event of Default.

               Deficient  Valuation:  With  respect to any Home Equity  Loan,  a
valuation by a court of competent  jurisdiction of the Mortgaged  Property in an
amount less than the then outstanding  indebtedness  under the Home Equity Loan,
or any  reduction in the amount of principal to be paid in  connection  with any
scheduled payment that constitutes a permanent  forgiveness of principal,  which
valuation or reduction  results from a proceeding under the Bankruptcy Code that
becomes final and non-appealable.

     Definitive Notes: The meaning specified in Section 4.06 of the Indenture.

     Deleted  Loan:  A Home  Equity  Loan  replaced  or to be  replaced  with an
Eligible Substitute Loan.

               Delinquent:  As used herein,  a Home Equity Loan is considered to
be: "30 to 59 days" or "30 or more days"  delinquent  when a payment  due on any
due date  remains  unpaid  as of the  close of  business  on the next  following
monthly due date. Since the determination as to whether a Home Equity Loan falls
into these  categories  is made as of the close of business on the last business
day of each month,  a Home  Equity  Loan with a payment due on  September 1 that
remained  unpaid as of the close of  business  on  September  30 would  still be
considered current as of September 30. If that payment remained unpaid as of the
close of business  on October 31, the Home Equity Loan would then be  considered
30-59  days  delinquent.  Delinquency  information  as of the  Cut-off  Date  is
determined  and  prepared as of the close of business on the last  business  day
immediately prior to the Cut-off Date.

               Delinquent  Reserve  Amount:  With  respect  to Loan  Group I, an
amount  equal to  approximately  $200,000,  representing  an amount that will be
available  to cover  delinquencies  on the Group I Loans in the first and second
Collection Period.

     Depositor:  Residential  Funding  Mortgage  Securities II, Inc., a Delaware
corporation, or its successor in interest.

               Depository or Depository  Agency: The Depository Trust Company or
a  successor  appointed  by the  Indenture  Trustee  with  the  approval  of the
Depositor.  Any successor to the Depository shall be an organization  registered
as a  "clearing  agency"  pursuant to Section  17A of the  Exchange  Act and the
regulations of the Securities and Exchange Commission thereunder.

     Depository  Participant:  A  Person  for  whom,  from  time  to  time,  the
Depository effects book-entry transfers and pledges of securities deposited with
the Depository.

               Determination  Date:  With respect to any Payment Date,  the 20th
day of the  month in which  such  Payment  Date  occurs  or if such day is not a
Business Day, the next succeeding Business Day.

                                       16
<PAGE>

               Disqualified   Organization:   Any  organization   defined  as  a
"disqualified  organization"  under Section  860E(e)(5) of the Code,  and if not
otherwise  included,  any of the following:  (i) the United States, any State or
political  subdivision  thereof,  any  possession of the United  States,  or any
agency or instrumentality of any of the foregoing (other than an instrumentality
which is a corporation if all of its  activities are subject to tax and,  except
for Freddie  Mac, a majority of its board of  directors  is not selected by such
governmental unit), (ii) a foreign government,  any international  organization,
or any agency or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers' cooperatives  described in Section 521 of the Code)
which is exempt from the tax imposed by Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on unrelated  business taxable income),  (iv)
rural electric and telephone  cooperatives described in Section 1381(a)(2)(C) of
the Code, (v) any "electing large  partnership," as defined in Section 775(a) of
the Code and (vi) any other Person so designated by the Owner Trustee based upon
an Opinion of Counsel  that the  holding of an  Ownership  Interest in a Class R
Certificate  by such Person may cause the Trust  Estate or any Person  having an
Ownership  Interest  in any  Class of Notes or  Certificates  (other  than  such
Person) to incur a liability  for any  federal  tax imposed  under the Code that
would not otherwise be imposed but for the Transfer of an Ownership  Interest in
a Class R Certificate  to such Person.  The terms "United  States",  "State" and
"international  organization"  shall have the meanings set forth in Section 7701
of the Code or successor provisions.

               Dissolution  Draw:  Following  an  Event of  Liquidation,  on the
Business Day following the date on which the proceeds of the sale or liquidation
of the Trust Estate are to be distributed to the Securityholders, the amount, if
any,  by which the  aggregate  amount  available  for  distribution  to Class II
Noteholders  is less  than the sum of (1) an  amount  equal to all  accrued  and
unpaid  interest on the Class II Notes through such Payment Date and (2) 100% of
the aggregate  Security  Balance of the Class II Notes  outstanding  immediately
prior to such Payment Date.

     Dissolution Payment Date:  Following an Event of Liquidation,  the Business
Day following the date on which the proceeds of the sale of the Trust Estate are
paid to Securityholders.

     Draw: With respect to any HELOC, a borrowing by the related Mortgagor under
the related Loan Agreement.

               Draw Period: With respect to each HELOC, the period consisting of
either the first five,  ten or fifteen  years after the date of  origination  of
such HELOC, during which the related Mortgagor is permitted to make Draws.

               Due Date:  With respect to any Home Equity  Loan,  the day of the
month the Minimum  Monthly  Payment or fixed monthly payment is due as set forth
in the related Mortgage Note.

               Eligible  Account:  An account that is any of the following:  (i)
maintained  with a depository  institution  the short-term  debt  obligations of
which have been  rated by each  Rating  Agency in its  highest  rating  category
available,  or (ii) an account or accounts in a depository  institution in which
such accounts are fully insured to the limits established by the FDIC,  provided
that any deposits not so insured shall, to the extent  acceptable to each Rating

                                       17
<PAGE>

Agency,  as evidenced in writing,  be  maintained  such that (as evidenced by an
Opinion of Counsel  delivered to the Indenture  Trustee and each Rating  Agency)
the Indenture  Trustee have a claim with respect to the funds in such account or
a perfected  first  security  interest  against any  collateral  (which shall be
limited to Permitted Investments) securing such funds that is superior to claims
of any other  depositors or creditors of the depository  institution  with which
such  account  is  maintained,  or (iii) in the case of the  Custodial  Account,
either  (A) a trust  account  or  accounts  maintained  at the  corporate  trust
department of the Indenture Trustee or (B) an account or accounts  maintained at
the corporate trust  department of the Indenture  Trustee,  as long as its short
term debt obligations are rated P-1 by Moody's, A-1 by Standard & Poor's (or the
equivalent)  and F1,  if rated by Fitch  (or the  equivalent)  or better by each
Rating  Agency  and its long term debt  obligations  are rated A by  Standard  &
Poor's (or the  equivalent)  and AA-, if rated by Fitch (or the  equivalent)  or
better by each Rating Agency,  or (iv) in the case of the Custodial  Account and
the Payment  Account,  a trust  account or accounts  maintained in the corporate
trust  division  of the  Indenture  Trustee,  or (v) an account or accounts of a
depository institution acceptable to each Rating Agency (as evidenced in writing
by each Rating Agency that use of any such account as the  Custodial  Account or
the Payment Account will not reduce the rating assigned to any of the Securities
by such Rating Agency (if determined  without  regard to the Credit  Enhancement
Instrument) below the lower of the then-current rating or the rating assigned to
such  Securities  (if  determined  without  regard  to  the  Credit  Enhancement
Instrument) as of the Closing Date by such Rating Agency).

               Eligible  Substitute  Loan: A Home Equity Loan substituted by the
Seller  for a Deleted  Loan which  must,  on the date of such  substitution,  as
confirmed in an Officer's  Certificate  delivered to the Indenture Trustee,  (i)
have an outstanding principal balance,  after deduction of the principal portion
of the  monthly  payment due in the month of  substitution  (or in the case of a
substitution  of more than one Home Equity Loan for a Deleted  Home Equity Loan,
an aggregate outstanding principal balance, after such deduction), not in excess
of the  outstanding  principal  balance of the  Deleted  Loan (the amount of any
shortfall to be deposited by the Seller in the Custodial Account in the month of
substitution);  (ii) comply with each  representation  and warranty set forth in
Section  3.1(b) of the  Purchase  Agreement  (other than clauses  (xiv),  (xvi),
(xvii), (xviii), (xxvi), (xxvii),  (xxviii) and (xxxi) thereof), if such Deleted
Loan is a Group I Loan, or Section 3.1(c) (other than clauses (xiii), (xxiv)(B),
(xxv)(B), (xxvi), (xxvii), (xxxiv) and (xxxvi) thereof), if such Deleted Loan is
a Group II Loan,  as of the date of  substitution;  (iii) have a Loan Rate,  Net
Loan Rate and Gross  Margin (if  applicable)  no lower than and not more than 1%
per  annum  higher  than the Loan  Rate,  Net Loan  Rate and  Gross  Margin  (if
applicable),  respectively,  of the Deleted Loan as of the date of substitution;
(iv) have a Combined  Loan-to-Value  Ratio at the time of substitution no higher
than that of the Deleted Loan at the time of substitution;  (v) have a remaining
term to stated  maturity not greater than (and not more than one year less than)
that of the Deleted Loan and (vi) not be 30 days or more delinquent.

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

               Event of Default:  With respect to the Indenture,  any one of the
following  events  (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment,  decree or order of any court or any order,  rule or regulation
of any administrative or governmental body):

                                       18
<PAGE>

               (i) a default in the payment of any interest on any Note when the
        same becomes due and  payable,  and such  default  shall  continue for a
        period of five days; or

               (ii)  a  default  in  the  payment  of  the  principal  of or any
        installment  of the  principal of any Note when the same becomes due and
        payable, and such default shall continue for a period of five days; or

               (iii) there occurs a default in the  observance or performance of
        any covenant or agreement  of the Issuer made in the  Indenture,  or any
        representation or warranty of the Issuer made in the Indenture or in any
        certificate or other writing delivered  pursuant hereto or in connection
        herewith  proving to have been  incorrect in any material  respect as of
        the time when the same shall have been made which has a material adverse
        effect on  Securityholders,  and such default  shall  continue or not be
        cured,  or the  circumstance  or  condition  in  respect  of which  such
        representation  or warranty was incorrect shall not have been eliminated
        or otherwise  cured, for a period of 30 days after there shall have been
        given,  by registered or certified  mail, to the Issuer by the Indenture
        Trustee or to the Issuer and the Indenture  Trustee by the Holders of at
        least 25% of the outstanding Security Balance of the Notes or the Credit
        Enhancer,   a  written  notice  specifying  such  default  or  incorrect
        representation  or warranty and  requiring it to be remedied and stating
        that such notice is a notice of default hereunder; or

               (iv) there occurs the filing of a decree or order for relief by a
        court  having  jurisdiction  in the premises in respect of the Issuer or
        any  substantial  part of the Trust Estate in an involuntary  case under
        any applicable federal or state bankruptcy,  insolvency or other similar
        law now or hereafter in effect,  or  appointing a receiver,  liquidator,
        assignee,  custodian,  trustee,  sequestrator or similar official of the
        Issuer or for any substantial part of the Trust Estate,  or ordering the
        winding-up or  liquidation of the Issuer's  affairs,  and such decree or
        order shall remain unstayed and in effect for a period of 60 consecutive
        days; or

               (v) there  occurs the  commencement  by the Issuer of a voluntary
        case under any  applicable  federal or state  bankruptcy,  insolvency or
        other  similar  law now or  hereafter  in effect,  or the consent by the
        Issuer to the entry of an order for relief in an involuntary  case under
        any such law, or the consent by the Issuer to the  appointment or taking
        possession  by a receiver,  liquidator,  assignee,  custodian,  trustee,
        sequestrator  or similar  official of the Issuer or for any  substantial
        part of the assets of the Trust  Estate,  or the making by the Issuer of
        any general  assignment for the benefit of creditors,  or the failure by
        the Issuer  generally  to pay its debts as such debts become due, or the
        taking  of  any  action  by  the  Issuer  in  furtherance  of any of the
        foregoing.

               Event of  Liquidation:  Following  the  occurrence of an Event of
Default under the Indenture,  the  determination  by the Indenture  Trustee,  as
evidenced by a written notice  provided to the Owner Trustee,  the Depositor and
the Credit Enhancer, that all conditions precedent to the sale or liquidation of
the Trust Estate pursuant to Section 5.04 of the Indenture have been satisfied.

                                       19
<PAGE>

     Event of Servicer Termination:  With respect to the Servicing Agreement,  a
Servicing Default as defined in Section 7.01 of the Servicing Agreement.

               Excess Loss  Amount:  With  respect to the Group II Loans and any
Payment Date,  the sum of (i) the excess,  if any, of the aggregate  Liquidation
Loss Amounts on the Group II Loans (other than as described in clauses  (ii)-(v)
hereof) for the related  Collection Period and all preceding  Collection Periods
over $9,009,002,  (ii) any Special Hazard Losses on the Group II Loans in excess
of the Special Hazard Amount with respect to the Group II Loans, (iii) any Fraud
Losses on the Group II Loans in excess of the Fraud Loss Amount with  respect to
the Group II Loans,  (iv) any Bankruptcy  Losses on the Group II Loans in excess
of the  Bankruptcy  Loss Amount with respect to the Group II Loans,  and (v) any
losses on the Group II Loans caused by or resulting from an Extraordinary Event.

     Exchange  Act: The  Securities  Exchange Act of 1934,  as amended,  and the
rules and regulations promulgated thereunder.

               Excluded Amount:  For any Payment Date on or after the occurrence
of an Amortization  Event, the portion of the balance with respect to each HELOC
attributable to all Draws not  transferred to the Trust,  and the portion of the
Principal  Collections  (other than Net Liquidation  Proceeds to the extent that
the Excluded  Amount of Liquidation  Proceeds is not included in Net Liquidation
Proceeds) and Interest  Collections thereon for each Collection Period allocated
to such  Excluded  Amount  based on a pro rata  allocation  between  the related
Excluded  Amount and the Loan Balance in  proportion to the  respective  amounts
outstanding  as of the  end of the  calendar  month  preceding  such  Collection
Period.

     Expenses: The meaning specified in Section 7.02 of the Trust Agreement.

               Extraordinary Event: Any of the following conditions with respect
to a Mortgaged  Property or a Home Equity  Loan,  causing or resulting in a loss
which causes the liquidation of such Home Equity Loan:

               (a)  losses  that  are of a type  that  would be  covered  by the
        fidelity bond and the errors and omissions  insurance policy required to
        be maintained  pursuant to Section 3.13 of the  Servicing  Agreement but
        are in excess of the coverage maintained thereunder;

               (b)  nuclear   reaction  or  nuclear   radiation  or  radioactive
        contamination,  all whether controlled or uncontrolled, and whether such
        loss be direct  or  indirect,  proximate  or remote or be in whole or in
        part caused by,  contributed  to or aggravated by a peril covered by the
        definition of the term "Special Hazard Loss";

               (c) hostile or warlike action in time of peace or war,  including
        action in hindering, combating or defending against an actual, impending
        or expected attack:

                    1.  by any  government  or  sovereign  power,  de jure or de

                                       20
<PAGE>

               facto, or by any authority  maintaining or using military,  naval
               or air forces; or

                    2. by military, naval or air forces; or

                    3. by an agent of any such government,  power,  authority or
               forces;

               (d) any weapon of war  employing  atomic  fission or  radioactive
          force whether in time of peace or war; or

               (e) insurrection, rebellion, revolution, civil war, usurped power
        or action taken by  governmental  authority in  hindering,  combating or
        defending  against  such an  occurrence,  seizure or  destruction  under
        quarantine  or  customs  regulations,   confiscation  by  order  of  any
        government  or  public  authority;  or risks of  contraband  or  illegal
        transportation or trade.

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

               FDIC: The Federal Deposit Insurance  Corporation or any successor
          thereto.

               Final Scheduled  Payment Date: With respect to the Class I Notes,
the  Payment  Date in June 2031 and with  respect  to the  Class II  Notes,  the
Payment Date in February 2027.

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

               Foreclosure  Profit:  With  respect to a  Liquidated  Home Equity
Loan, the amount, if any, by which (i) the aggregate of Liquidation Proceeds net
of Liquidation  Expenses exceeds (ii) the related Loan Balance (plus accrued and
unpaid  interest  thereon at the applicable Loan Rate from the date interest was
last paid through the date of receipt of the final Liquidation Proceeds) of such
Liquidated  Home  Equity  Loan  immediately  prior to the final  recovery of its
Liquidation Proceeds.

               Fraud Loss Amount:  With respect to the Group I Loans,  as of any
date of determination  after the Cut-off Date, the Fraud Loss Amount shall equal
(X) prior to the first  anniversary of the Cut-off Date an amount equal to 3.00%
of the aggregate  principal  balance of the Group I Loans as of the Cut-off Date
minus the aggregate of any Liquidation  Loss Amounts on the Group I Loans due to
Fraud Losses up to such date of determination;  (Y) from the first to the second
anniversary  of the Cut-off  Date, an amount equal to the lesser of (1) 2.00% of
the aggregate  principal balance of the Group I Loans as of the Cut-off Date and
(2) the Fraud Loss Amount as of the most recent  anniversary of the Cut-off Date
minus the aggregate of any Liquidation  Loss Amounts on the Group I Loans due to
Fraud Losses since the first  anniversary of the Cut-off Date up to such date of
determination;  and (Z) from the second to the fifth  anniversary of the Cut-off
Date,  an  amount  equal to the  lesser  of (1)  1.00%  of the of the  aggregate
principal  balance of the Group I Loans as of the Cut-off Date and (2) the Fraud
Loss Amount as of the second anniversary of the Cut-off Date minus the aggregate
of any  Liquidation  Loss Amounts on the Group I Loans due to Fraud Losses since
the second anniversary of the Cut-off Date up to such date of determination.

               With  respect  to  the  Group  II  Loans,   as  of  any  date  of
determination  after the Cut-off  Date,  the Fraud Loss  Amount  shall equal (X)
prior to the first  anniversary  of the Cut-off Date an amount equal to 3.00% of

                                       21
<PAGE>

the  aggregate  Credit Limits of the Group II Loans as of the Cut-off Date minus
the aggregate of any Liquidation Loss Amounts on the Group II Loans due to Fraud
Losses  up to such  date of  determination;  (Y)  from the  first to the  second
anniversary  of the Cut-off  Date,  an amount equal to (1) the lesser of (a) the
Fraud Loss  Amount  with  respect to the Group II Loans,  as of the most  recent
anniversary  of the Cut-off  Date and (b) 2.00% of the  aggregate  of the Credit
Limits of the Group II Loans as of the most  recent  anniversary  of the Cut-off
Date minus (2) the  aggregate  of any  Liquidation  Loss Amounts on the Group II
Loans due to Fraud Losses since the most recent  anniversary of the Cut-off Date
up to  such  date of  determination;  and  (Z)  from  the  second  to the  fifth
anniversary  of the Cut-off  Date,  an amount equal to (1) the lesser of (a) the
Fraud Loss Amount as of the most recent  anniversary of the Cut-off Date and (b)
1.00% of the aggregate of the Credit Limits of the Group II Loans as of the most
recent  anniversary  of  the  Cut-off  Date  minus  (2)  the  aggregate  of  any
Liquidation  Loss  Amounts on the Group II Loans due to Fraud  Losses  since the
most recent anniversary of the Cut-off Date up to such date of determination. On
and after the fifth  anniversary  of the Cut-off  Date with respect to both Loan
Groups, the Fraud Loss Amount shall be zero.

     Fraud Losses: Losses on any Home Equity Loan as to which there was fraud in
the origination of such Home Equity Loan.

     Freddie  Mac:  Freddie  Mac,   formerly  the  Federal  Home  Loan  Mortgage
Corporation, or any successor thereto.

               Grant: Pledge, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer,  create, and grant a lien upon and a security interest
in and right of set-off against,  deposit,  set over and confirm pursuant to the
Indenture.  A Grant of the  Collateral  or of any other  agreement or instrument
shall include all rights,  powers and options (but none of the  obligations)  of
the granting party  thereunder,  including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of such  collateral or other  agreement or  instrument  and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other  agreements,  to exercise  all rights and  options,  to
bring proceedings in the name of the granting party or otherwise,  and generally
to do and receive  anything that the granting  party is or may be entitled to do
or receive thereunder or with respect thereto.

     Gross Margin:  With respect to any HELOC,  the  percentage set forth as the
"Margin" for such HELOC on the Home Equity Loan Schedule.

     Group  I  Certificates:   The  Class  SB-I  Certificates,   the  Class  R-I
Certificates and the Class R-II Certificates.

               Group I Loans:  The HELs in Loan Group I.

               Group I Net WAC Rate:  With  respect to any Payment  Date,  a per
annum rate equal to the weighted  average of the Loan Rates of the Group I Loans
as of the beginning of the related Collection Period, less 1.34% per annum.

                                       22
<PAGE>

               Group  I  Policy:  The  Mortgage  Pool  Insurance  Policy  number
R0039-01-8,  dated as of the  Closing  Date,  issued by Radian to the  Indenture
Trustee, with respect to the Group I Loans.

               Group I Stepdown  Date:  The  earlier to occur of (a) the Payment
Date on which the  Class  A-I Notes  have been paid in full and (b) the later to
occur of (x) the Payment Date in October 2004 and (y) the first  Payment Date on
which the  aggregate  principal  balance  of the Class A-I Notes is less than or
equal  to  77.5% of the  aggregate  principal  balance  of Loan  Group I,  after
applying payments received during the related Collection  Period,  provided that
no Trigger Event has occurred and is continuing.

               Group I Step-up  Date:  With  respect  to the Group I Loans,  the
Payment  Date on which the  aggregate  Loan  Balance of the Group I Loans (after
application of payments received during the related  Collection  Period) is less
than 10% of the initial Pool Balance of the Group I Loans.

               Group II Certificates: The Class SB-II Certificates.

               Group II Loans:  The HELOCs in Loan Group II.

               Group II Net WAC Rate:  With  respect to any Payment  Date, a per
annum rate equal to the weighted average of the Loan Rates of the Group II Loans
as of the beginning of the related Collection Period, less 0.72% per annum.

               Group II  Policy:  The  Certificate  Guarantee  Insurance  Policy
number  AB0490BE,  dated  as of  September  27,  2001,  issued  by  Ambac to the
Indenture Trustee, with respect to the Class II Notes.

               Group II  Stepdown  Date:  The later of (a) the  Payment  Date in
September 2003 and (b) the Payment Date on which the aggregate principal balance
of the Group II Loans after applying payments received in the related Collection
Period is less than 50% of the aggregate principal balance of the Group II Loans
as of the Cut-off Date.

     HEL: Each closed-end,  fixed rate home equity mortgage loan,  together with
the Related Documents, included in the Trust Estate.

               HELOC: Each adjustable-rate, home equity revolving line of credit
loan,  including  Additional  Balances,   if  any,  together  with  the  Related
Documents, included in the Trust Estate.

               Holder:  Any of the Noteholders or Certificateholders.

               Home Equity Loans:  Collectively, the HELs and HELOCs.

               Home Equity Loan  Schedule:  The initial  schedule of Home Equity
Loans as of the Cut-off Date set forth in Exhibit A of the Servicing  Agreement,
which  schedule sets forth as to each Home Equity Loan (as  applicable)  (i) the
Cut-off Date Loan Balance  ("Principal  Bal"), (ii) the Credit Limit,  (iii) the

                                       23
<PAGE>

Gross Margin ("Margin"), (iv) the Maximum Rate ("Ceiling"), if any, (v) the lien
position of the related  Mortgaged  Property,  (vi) the Depositor's  Home Equity
Loan identifying  number,  (vii) the Subservicer's  Home Equity Loan identifying
number  (viii) the city,  state and zip code of the Mortgaged  Property,  (ix) a
code indicating whether the Mortgaged  Property is owner-occupied,  (x) the type
of residential dwelling  constituting the Mortgaged Property,  (xi) the original
number of months to maturity,  (xii) the remaining  number of months to maturity
from the  Cut-off  Date,  (xiii) as to any  first  lien Home  Equity  Loan,  the
Loan-to-Value  Ratio at origination  and as to any second lien Home Equity Loan,
the Combined  Loan-to-Value Ratio at origination of such second lien Home Equity
Loan,  (xiv) the Loan Rate in effect as of the  Cut-off  Date,  (xv) the  stated
maturity date, (xvi) the prior encumbrance principal balance (denoted as "Senior
Lien" on the Home  Equity  Loan  Schedule),  if any,  (xvii) the  Credit  Score,
(xviii)  the  Mortgagor's  debt-to-income  ratio,  (xix) a code  indicating  the
product type, (xx) a code indicating the purpose of the Home Equity Loan,  (xxi)
the  Mortgage  Note date,  (xxii) the teaser  expiration  date,  and (xxiii) the
Appraised Value.

     Indemnified  Party:  The  meaning  specified  in Section  7.02 of the Trust
Agreement.

     Indenture: The indenture, dated as of the Closing Date, between the Issuer,
as debtor, and the Indenture Trustee, as indenture trustee.

     Indenture Trustee: The Chase Manhattan Bank, and its successors and assigns
or any  successor  indenture  trustee  appointed  pursuant  to the  terms of the
Indenture.

               Independent:  When used with respect to any specified Person, the
Person (i) is in fact independent of the Issuer, any other obligor on the Notes,
the Seller,  the Depositor  and any  Affiliate of any of the foregoing  Persons,
(ii)  does not have any  direct  financial  interest  or any  material  indirect
financial  interest  in the Issuer,  any such other  obligor,  the  Seller,  the
Depositor  or any  Affiliate  of any of the  foregoing  Persons and (iii) is not
connected with the Issuer, any such other obligor,  the Seller, the Depositor or
any Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.

               Independent Certificate: A certificate or opinion to be delivered
to the  Indenture  Trustee under the  circumstances  described in, and otherwise
complying  with, the applicable  requirements of Section 10.01 of the Indenture,
made by an  Independent  appraiser or other expert  appointed by an Issuer Order
and approved by the Indenture  Trustee in the exercise of reasonable  care,  and
such opinion or certificate  shall state that the signer has read the definition
of "Independent" in this Indenture and that the signer is Independent within the
meaning thereof.

     Index:  With respect to any HELOC, the prime rate from time to time for the
adjustment of the Loan Rate set forth as such on the related Loan Agreement.

               Initial Certificates:  The Home Equity Loan-Backed  Certificates,
Series  2001-HS3,   issued  on  the  Closing  Date,  each  evidencing  undivided
beneficial interests in the Issuer and executed by the Owner Trustee.

               Initial Class A-I-1 Security Balance:  $123,500,000.

                                       24
<PAGE>

               Initial Class A-I-2 Security Balance:  $53,000,000.

               Initial Class A-I-3 Security Balance:  $49,000,000.

               Initial Class A-I-4 Security Balance:  $48,000,000.

               Initial Class A-I-5 Security Balance:  $28,250,000.

               Initial Class A-I-IO Security Balance:  $0.

               Initial Class A-II Security Balance:  $118,755,000.

               Initial Class M-1-1 Security Balance:  $17,850,000.

               Initial Class M-I-2 Security Balance:  $11,900,000.

               Initial Class M-I-3 Security Balance:  $8,500,000.

               Initial  Monthly  Payment  Fund:  With  respect  to Loan Group I,
approximately  $250,000,  representing the amount of the Minimum Monthly Payment
for each Group I Loan for which the first Minimum  Monthly  Payment is due after
September 30, 2001.

               Initial   Security   Balance:   With   respect  to  the   Initial
Certificates,  $0.00,  the Term  Notes,  as listed  above for each Class and the
Variable Funding Notes, $0.00.

               Insolvency  Event:  With respect to a specified  Person,  (a) the
filing of a decree or order for  relief by a court  having  jurisdiction  in the
premises in respect of such Person or any substantial part of its property in an
involuntary  case under any applicable  bankruptcy,  insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator,  assignee,
custodian,  trustee, sequestrator or similar official for such Person or for any
substantial  part of its property,  or ordering the winding-up or liquidation of
such  Person's  affairs,  and such decree or order shall remain  unstayed and in
effect for a period of 60  consecutive  days;  or (b) the  commencement  by such
Person of a voluntary case under any applicable bankruptcy,  insolvency or other
similar  law now or  hereafter  in effect,  or the consent by such Person to the
entry of an order for relief in an  involuntary  case under any such law, or the
consent by such Person to the appointment of or taking possession by a receiver,
liquidator,  assignee,  custodian, trustee, sequestrator or similar official for
such Person or for any substantial  part of its property,  or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person in writing (as to which the Indenture  Trustee shall have notice)
of its  inability  to pay its debts  generally,  or the adoption by the Board of
Directors  or managing  member of such Person of a resolution  which  authorizes
action by such Person in furtherance of any of the foregoing.

               Insurance Agreement: The Insurance and Indemnity Agreement, dated
as of the Closing Date,  among the Master Servicer,  the Seller,  the Depositor,
the  Issuer,  the  Indenture  Trustee  and the Credit  Enhancer,  including  any
amendments and supplements thereto.

                                       25
<PAGE>

               Insurance Proceeds:  Proceeds paid by any insurer (other than the
Credit  Enhancer)  pursuant to any insurance policy covering a Home Equity Loan,
including  the Group I Policy,  which are  required to be remitted to the Master
Servicer,  or amounts required to be paid by the Master Servicer pursuant to the
next to last sentence of Section 3.04(a) of the Servicing Agreement,  net of any
component  thereof (i)  covering  any  expenses  incurred by or on behalf of the
Master Servicer in connection with obtaining such proceeds, (ii) that is applied
to the restoration or repair of the related Mortgaged  Property,  (iii) released
to the  Mortgagor in  accordance  with the Master  Servicer's  normal  servicing
procedures  or (iv)  required  to be paid to any holder of a mortgage  senior to
such Home Equity Loan.

               Insured  Undercollateralization Payment Date: The earliest of (i)
the ninth Payment Date, (ii) the Payment Date immediately following the purchase
of the  Group II Loans or Class  II Notes by the  Master  Servicer  pursuant  to
Section 8.08 of the  Servicing  Agreement or (iii) the Payment Date on which the
Security Balance of the Class II Notes is reduced to zero.

               Interest  Collections:  With  respect to any Payment Date and the
Group I Loans,  the sum of all  payments by or on behalf of  Mortgagors  and any
other amounts  constituting  interest (including without limitation such portion
of Insurance  Proceeds,  Net  Liquidation  Proceeds and Repurchase  Prices as is
allocable to interest on the  applicable  Group I Loan) as is paid by the Seller
or the Master  Servicer or is collected by the Master Servicer under the Group I
Loans,  reduced by the Servicing  Fees with respect to the Group I Loans for the
related  Collection  Period, by any fees (including annual fees) or late charges
or similar  administrative fees paid by Mortgagors during the related Collection
Period  with  respect  to the  Group I Loans  and the  interest  portion  of the
payments made under the Group I Policy.  The terms of the related Loan Agreement
shall determine the portion of each payment in respect of such Group I Loan that
constitutes principal or interest.

               With respect to any Payment Date and the Group II Loans,  the sum
of all payments by or on behalf of Mortgagors and any other amounts constituting
interest (including without limitation such portion of Insurance  Proceeds,  Net
Liquidation  Proceeds and  Repurchase  Prices as is allocable to interest on the
applicable  Group II Loan) as is paid by the Seller or the Master Servicer or is
collected by the Master Servicer under the Group II Loans  (exclusive of the pro
rata portion thereof  attributable  to any Excluded  Amounts not conveyed to the
Trust  following an Amortization  Event),  reduced by the Servicing Fees for the
related  Collection  Period  and by any  fees  (including  annual  fees) or late
charges or similar  administrative  fees paid by  Mortgagors  during the related
Collection  Period with respect to the Group II Loans.  The terms of the related
Loan  Agreement  shall  determine the portion of each payment in respect of such
Group II Loan that constitutes principal or interest.

               Interest  Distribution  Amount:  With  respect  to any  Class  or
Classes  of Class I Notes or Class II Notes,  and any  Payment  Date,  an amount
equal to interest accrued during the related Interest Period on those Classes of
Notes on their respective  Security Balance or Notional Amount immediately prior
to that Payment Date, at the related Note Rate, or Note Rates,  minus the amount
of any Relief Act  Shortfalls on the Home Equity Loans in the related Loan Group
during the related  Collection Period allocated to those Classes,  and minus, in
the case of the Class I Notes, any Prepayment Interest Shortfalls on the Group I
Loans during the related Collection Period allocated to such Classes.

                                       26
<PAGE>

               Interest  Period:  With  respect to the Class I Notes (other than
the Class A-I-1 Notes) and any Payment Date,  the calendar  month  preceding the
month in which such Payment Date occurs. The Interest Period for the Class A-I-1
Notes and the Class A-II Notes shall be, with  respect to any Payment Date other
than the first Payment Date, the period beginning on the preceding  Payment Date
and ending on the day preceding  such Payment Date, and in the case of the first
Payment  Date,  the period  beginning  on the Closing Date and ending on the day
preceding the first Payment Date.

               Interest Rate Adjustment  Date:  With respect to each HELOC,  the
date or dates on which the Loan Rate is adjusted in accordance  with the related
Loan Agreement.

     Interim  Certification:  The  meaning  specified  in Section  2.1(c) of the
Purchase Agreement.

     Issuer or Trust: The Home Equity Loan Trust 2001-HS3,  a Delaware  business
trust, or its successor in interest.

     Issuer Request: A written order or request signed in the name of the Issuer
by any one of its Authorized Officers and delivered to the Indenture Trustee.

               LIBOR:  For any  Interest  Period  other than the first  Interest
Period,  the rate for United States dollar  deposits for one month which appears
on the Telerate Screen Page 3750 as of 11:00 A.M., London,  England time, on the
second LIBOR Business Day prior to the first day of such Interest  Period.  With
respect to the first Interest Period, the rate for United States dollar deposits
for one month which  appears on the Telerate  Screen Page 3750 as of 11:00 A.M.,
London, England time, two LIBOR Business Days prior to the Closing Date. If such
rate does not appear on such page (or such other page as may  replace  that page
on that service, or if such service is no longer offered, such other service for
displaying  LIBOR or  comparable  rates  as may be  reasonably  selected  by the
Indenture  Trustee after  consultation  with the Master  Servicer and the Credit
Enhancer),  the rate will be the Reference Bank Rate. If no such  quotations can
be  obtained  and no  Reference  Bank  Rate is  available,  LIBOR  will be LIBOR
applicable to the preceding Payment Date.

               LIBOR Business Day: Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking  institutions in the city of London,  England are
required or authorized by law to be closed.

               Lien:   Any  mortgage,   deed  of  trust,   pledge,   conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other),  preference,  priority right or interest or other security
agreement  or  preferential  arrangement  of  any  kind  or  nature  whatsoever,
including,  without  limitation,  any conditional  sale or other title retention
agreement,  any financing lease having substantially the same economic effect as
any of the  foregoing and the filing of any  financing  statement  under the UCC
(other than any such financing statement filed for informational  purposes only)
or  comparable  law of  any  jurisdiction  to  evidence  any  of the  foregoing;
provided, however, that any assignment pursuant to Section 6.02 of the Servicing
Agreement shall not be deemed to constitute a Lien.

                                       27
<PAGE>

               Liquidated  Home Equity Loan:  With respect to any Payment  Date,
any Home Equity Loan in respect of which the Master Servicer has determined,  in
accordance with the servicing  procedures  specified in the Servicing Agreement,
as  of  the  end  of  the  related  Collection  Period  that  substantially  all
Liquidation  Proceeds  which it  reasonably  expects to  recover,  if any,  with
respect to the  disposition of the related Home Equity Loan have been recovered.
The  Master  Servicer  will  treat  any  Group I Loan  that is 180  days or more
Delinquent as having been finally liquidated.

               Liquidation  Expenses:   Out-of-pocket   expenses  (exclusive  of
overhead)  which  are  incurred  by or on  behalf  of  the  Master  Servicer  in
connection  with the liquidation of any Home Equity Loan and not recovered under
any insurance policy,  such expenses including,  without limitation,  legal fees
and expenses,  any unreimbursed amount expended (including,  without limitation,
amounts  advanced to correct  defaults on any  mortgage  loan which is senior to
such Home Equity Loan and amounts advanced to keep current or pay off a mortgage
loan that is senior to such Home Equity Loan) respecting the related Home Equity
Loan and any  related and  unreimbursed  expenditures  for real estate  property
taxes or for property  restoration,  preservation or insurance  against casualty
loss or damage.

               Liquidation  Loss  Amounts:  With respect to any Payment Date and
any Home  Equity  Loan that  became a  Liquidated  Home  Equity  Loan during the
related Collection  Period, the unrecovered  portion of the related Loan Balance
thereof at the end of such  Collection  Period,  after giving  effect to the Net
Liquidation  Proceeds applied in reduction of the Loan Balance.  If a Bankruptcy
Loss has  occurred  with  respect  to any Home  Equity  Loan,  the amount of the
Bankruptcy Loss will be treated as a Liquidation Loss Amount.

               Liquidation Loss Distribution  Amount:  With respect to the Group
II Loans and any Payment Date, the aggregate of (A) 100% of the Liquidation Loss
Amounts (other than any Excess Loss Amounts)  incurred with respect to the Group
II Loans during the related  Collection  Period,  plus (B) any such  Liquidation
Loss Amounts (other than any Excess Loss Amounts)  remaining  undistributed from
any preceding Payment Date,  provided that any Liquidation Loss Amount described
in this clause (B) shall not be distributed  to the extent that the  Liquidation
Loss  Amount  was paid on the  Class  II Notes by means of a draw on the  Credit
Enhancement  Instrument or excess  interest or was reflected in the reduction of
the Outstanding Overcollateralization Amount.

               Liquidation Proceeds:  Proceeds (including Insurance Proceeds but
not including  amounts  drawn under the Credit  Enhancement  Instrument)  if any
received in connection  with the  liquidation of any Home Equity Loan or related
REO, whether through trustee's sale, foreclosure sale or otherwise.

               Loan Agreement: With respect to any HEL, the promissory note, or,
with respect to any HELOC,  the credit line account  agreement,  executed by the
related Mortgagor and any amendment or modification thereof.

               Loan Balance: With respect to any HEL, other than a HEL which has
become a  Liquidated  Home Equity Loan,  and as of any day, the related  Cut-off
Date Loan Balance minus all collections  credited as principal in respect of any
such HEL in accordance  with the related Loan Agreement and applied in reduction

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<PAGE>

of the Loan Balance thereof. With respect to any HELOC, other than a HELOC which
has become a Liquidated Home Equity Loan, and as of any day, the related Cut-off
Date Loan  Balance,  plus (i) any  Additional  Balances in respect of such HELOC
conveyed  to the Trust,  minus (ii) all  collections  credited as  principal  in
respect of any such HELOC in accordance with the related Loan Agreement  (except
for any such  collections that are allocable to any Excluded Amount) and applied
in reduction of the Loan Balance  thereof.  For purposes of this  definition,  a
Liquidated  Home Equity Loan shall be deemed to have a Loan Balance equal to the
Loan Balance of the related HEL or HELOC immediately prior to the final recovery
of  substantially  all related  Liquidation  Proceeds and a Loan Balance of zero
thereafter.

     Loan Rate:  With respect to any Home Equity Loan and any day, the per annum
rate of interest applicable under the related Loan Agreement.

               Loan Group:  Loan Group I or Loan Group II.

               Loan Group A-I-IO Marker Rate: Two times the weighted  average of
the REMIC I Remittance  Rates for the Class LT2 REMIC I Regular Interest and the
Class LT3 REMIC I Regular Interest  weighted by their respective Class Principal
Balances.

               Loan  Group I:  The  HELs  identified  on the  Home  Equity  Loan
Schedule as being assigned to Loan Group I and which correspond with the Class I
Notes.

               Loan Group I SB-IO Marker Rate: Two times the weighted average of
the REMIC I Remittance  Rates for the Class LT5 REMIC I Regular Interest and the
Class LT6 REMIC I Regular Interest  weighted by their respective Class Principal
Balances.

               Loan Group II:  The HELOCs  identified  on the Home  Equity  Loan
Schedule as being assigned to Loan Group II and which  correspond with the Class
II Notes.

               Lost Note  Affidavit:  With respect to any Home Equity Loan as to
which the original Loan Agreement has been permanently lost or destroyed and has
not been replaced,  an affidavit  from the Seller or the related  Program Seller
certifying  that the  original  Loan  Agreement  has  been  lost,  misplaced  or
destroyed (together with a copy of the related Loan Agreement).

     Master Servicer:  Residential Funding Corporation,  a Delaware corporation,
and its successors and assigns.

               Master  Servicing  Fee:  With respect to any Home Equity Loan and
any Collection  Period, the product of (i) the Master Servicing Fee Rate divided
by 12 and (ii) the related Loan  Balance as of the first day of such  Collection
Period.

     Master  Servicing Fee Rate: With respect to any Home Equity Loan, 0.08% per
annum.

               Maximum  Rate:  With  respect to each HELOC with respect to which
the related Loan  Agreement  provides for a lifetime  rate cap, the maximum Loan
Rate  permitted  over the  life of such  HELOC  under  the  terms  of such  Loan

                                       29
<PAGE>

Agreement,  as set forth on the Home Equity Loan  Schedule and  initially as set
forth on Exhibit A to the Servicing Agreement.

               Maximum Variable Funding Balance: The maximum Security Balance of
the Variable  Funding  Notes,  which shall be an amount equal to  $37,197,669 or
such  greater  amount  as may be  permitted  pursuant  to  Section  9.01  of the
Indenture.

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

               MERS(R)  System:  The system of recording  transfers of Mortgages
electronically maintained by MERS.

     MIN: The Mortgage  Identification  Number for Home Equity Loans  registered
with MERS on the MERS(R)System.

               Minimum Monthly Payment: With respect to any HELOC and any month,
the minimum amount  required to be paid by the related  Mortgagor in such month.
With respect to any HEL and any month, the scheduled  monthly payment due on the
related Due Date.

               MOM Loan:  With respect to any Home Equity  Loan,  MERS acting as
the mortgagee of such Home Equity Loan,  solely as nominee for the originator of
such  Home  Equity  Loan and its  successors  and  assigns,  at the  origination
thereof.

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

               Mortgage:  The  mortgage,  deed  of  trust  or  other  instrument
creating  a first or second  lien on an estate in fee  simple  interest  in real
property securing a Home Equity Loan.

               Mortgage  File:  The  file   containing  the  Related   Documents
pertaining  to a  particular  Home  Equity  Loan  and any  additional  documents
required to be added to the Mortgage File pursuant to the Purchase  Agreement or
the Servicing Agreement.

               Mortgage  Note:  With respect to a Home Equity Loan, the mortgage
note  pursuant to which the  related  Mortgagor  agrees to pay the  indebtedness
evidenced thereby and secured by a Mortgage on a related Mortgaged Property,  as
modified or amended.

     Mortgaged Property:  The underlying  property,  including real property and
improvements thereon, securing a Home Equity Loan.

               Mortgagor:  The obligor or obligors under a Loan Agreement.

               Net  Liquidation  Proceeds:  With respect to any Liquidated  Home
Equity Loan,  Liquidation Proceeds (including the amounts paid under the Group I
Loans and proceeds  received  from the Group I Policy,  but  excluding any draws

                                       30
<PAGE>

under the Group II Policy) net of  Liquidation  Expenses  (but not including the
portion,  if any, of such net amount that  exceeds the Loan  Balance of the Home
Equity  Loan at the  end of the  Collection  Period  immediately  preceding  the
Collection Period in which such Home Equity Loan became a Liquidated Home Equity
Loan,  plus accrued and unpaid  interest on such Loan Balance from the date last
paid to the date of receipt of final Liquidation Proceeds).

     Net Loan  Rate:  With  respect  to any Home  Equity  Loan and any day,  the
related Loan Rate less 0.58% per annum.

               Net Principal Collections: With respect to the Group II Loans and
any Payment Date, the excess,  if any, of Principal  Collections for the related
Collection  Period over the amount of  Additional  Balances  created  during the
related Collection Period and conveyed to the Trust Estate.

     Non-United States Person: Any Person other than a United States Person.

               Note Owner:  The Beneficial Owner of a Note.

     Note Rate: With respect to the Notes and any Interest Period, the following
rates:

     (i)  Class A-I-1  Notes:  the least of (1) LIBOR plus 0.18%,  (2) 8.00% per
          annum, and (3) the Group I Net WAC Rate;

     (ii) Class A-I-2 Notes: the lesser of (i) 4.15% per annum or (ii) the Group
          I Net WAC Rate;

     (iii)Class  A-I-3  Notes:  the  lesser  of (i)  4.71% per annum or (ii) the
          Group I Net WAC Rate;

     (iv) Class A-I-4 Notes: the lesser of (i) 5.44% per annum or (ii) the Group
          I Net WAC Rate;

     (v)  Class A-I-5  Notes:  the lesser of (1) a fixed rate equal to 5.97% per
          annum  (or,  for any  Interest  Period  commencing  after  the Group I
          Step-Up Date, 6.47% per annum) or (2) the Group I Net WAC Rate;

     (vi) Class M-I-1  Notes:  the lesser of (1) a fixed rate equal to 5.82% per
          annum  (or,  for any  Interest  Period  commencing  after  the Group I
          Step-Up Date, 6.32% per annum) or (2) the Group I Net WAC Rate;

     (vii)Class M-I-2  Notes:  the lesser of (1) a fixed rate equal to 6.17% per
          annum  (or,  for any  Interest  Period  commencing  after  the Group I
          Step-Up Date, 6.67% per annum) or (2) the Group I Net WAC Rate;

     (viii) Class M-I-3 Notes: the lesser of (1) a fixed rate equal to 6.47% per
          annum  (or,  for any  Interest  Period  commencing  after  the Group I
          Step-Up Date, 6.97% per annum) or (2) the Group I Net WAC Rate;

     (ix) Class  A-I-IO  Notes:  (i) in the case of any  Payment  Date up to and
          including the May 2004 Payment Date, the lesser of (a) 7.25% per annum
          and (b) the Class  A-I-IO  Net WAC  Rate,  and (ii) in the case of any
          Payment Date after the May 2004 Payment Date, 0% per annum;

                                       31
<PAGE>

     (x)  Class A-II Notes:  the least of (i) LIBOR plus 0.23%,  (ii) 17.25% per
          annum and (iii) the Group II Net WAC Rate.

     (xi) Variable Funding Notes: the least of (i) LIBOR plus 0.23%, (ii) 17.25%
          per annum and (iii) the Group II Net WAC Rate.

     Note Register:  The register  maintained by the Note Registrar in which the
Note Registrar shall provide for the  registration of Notes and of transfers and
exchanges of Notes.

     Note Registrar: The Indenture Trustee, in its capacity as Note Registrar.

               Noteholder:  The Person in whose name a Note is registered in the
Note Register,  except that,  any Note  registered in the name of the Depositor,
the Issuer or the  Indenture  Trustee or any  Affiliate  of any of them shall be
deemed not to be outstanding and the registered  holder will not be considered a
Noteholder or holder for purposes of giving any request, demand,  authorization,
direction,  notice, consent or waiver under the Indenture or the Trust Agreement
provided that, in determining  whether the Indenture  Trustee shall be protected
in relying upon any such  request,  demand,  authorization,  direction,  notice,
consent or waiver,  only Notes that the  Indenture  Trustee or the Owner Trustee
knows to be so owned  shall be so  disregarded.  Owners of Notes  that have been
pledged in good faith may be regarded as Holders if the pledgee  establishes  to
the  satisfaction  of the  Indenture  Trustee or the Owner Trustee the pledgee's
right so to act with  respect  to such  Notes  and that the  pledgee  is not the
Issuer,  any  other  obligor  upon  the  Notes  or any  Affiliate  of any of the
foregoing Persons.

     Notes:  Collectively,  the Term Notes and the Variable Funding Notes issued
and outstanding at any time pursuant to the Indenture.

               Notional Amount:  With respect to the Class SB-I Certificates and
the REMIC II Regular  Interest  SB-IO and any Payment Date, the aggregate of the
Class  Principal  Balances for all Classes of REMIC I Regular  Interests  before
giving  effect to payments to be made and the  allocation  of  Liquidation  Loss
Amounts to occur on such Payment  Date.  With respect to the Class A-I-IO Notes,
the Class A-I-IO Notional Amount.

               Officer's  Certificate:  With respect to the Master  Servicer,  a
certificate  signed by the  President,  Managing  Director,  a Director,  a Vice
President or an Assistant Vice  President,  of the Master Servicer and delivered
to the Indenture  Trustee.  With respect to the Issuer, a certificate  signed by
any Authorized Officer of the Issuer, under the circumstances  described in, and
otherwise  complying  with, the applicable  requirements of Section 10.01 of the
Indenture,  and delivered to the Indenture Trustee.  Unless otherwise specified,
any  reference  in the  Indenture  to an  Officer's  Certificate  shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.

               Opinion of Counsel: A written opinion of counsel.  Any Opinion of
Counsel for the Master  Servicer  may be  provided  by in-house  counsel for the
Master Servicer if reasonably  acceptable to the Indenture  Trustee,  the Credit
Enhancer and the Rating  Agencies or counsel for the Depositor,  as the case may
be.

                                       32
<PAGE>

     Original Trust Agreement:  The Trust  Agreement,  dated as of September 25,
2001, between the Owner Trustee and the Depositor.

     Outstanding:  With respect to the Notes,  as of the date of  determination,
all Notes theretofore executed, authenticated and delivered under this Indenture
except:

               (i)  Notes  theretofore   cancelled  by  the  Note  Registrar  or
          delivered to the Indenture Trustee for cancellation; and

                      (ii) Notes in exchange for or in lieu of which other Notes
        have  been  executed,   authenticated  and  delivered  pursuant  to  the
        Indenture  unless  proof   satisfactory  to  the  Indenture  Trustee  is
        presented that any such Notes are held by a holder in due course;

provided, however, that for purposes of effectuating the Credit Enhancer's right
of  subrogation  as set forth in Section 4.12 of the Indenture  only,  all Notes
that have been paid with funds provided under the Credit Enhancement  Instrument
shall be deemed to be Outstanding  until the Credit Enhancer has been reimbursed
with respect thereto.

               Outstanding  Overcollateralization  Amount:  With  respect to the
Class II Notes,  and any Payment  Date,  the amount by which the Pool Balance of
the Group II Loans after applying  payments  received in the related  Collection
Period  exceeds  the  aggregate  Security  Balance of the Class II Notes on such
Payment Date (in each case,  after  application of Net Principal  Collections or
Principal Collections,  as the case may be, for such date and acquisition by the
Trust of Additional  Balances on such Payment  Date).  On each Payment Date, the
Outstanding  Overcollateralization  Amount  available to cover  Liquidation Loss
Amounts on such Payment Date, if any, shall be deemed to be reduced by an amount
equal to any  Liquidation  Loss Amounts (other than any Excess Loss Amounts) for
such  Payment  Date on the  Group II  Loans,  except  to the  extent  that  such
Liquidation Loss Amounts were covered on such Payment Date by P&I Collections on
the Group II Loans  pursuant  to Section  3.05(a)(II)  of the  Indenture  or P&I
Collections  on  the  Group  I  Loans  pursuant  to  Section  3.05(a)(I)  of the
Indenture.

               Overcollateralization Amount Target: With respect to the Class II
Notes and any  Payment  Date prior to the Group II Stepdown  Date,  1.70% of the
Cut-off  Date Loan  Balance of the Group II Loans.  With respect to the Class II
Notes and any Payment Date on or after the Group II Stepdown Date, the lesser of
(a) the Overcollateralization Amount Target as of the Cut-off Date and (b) 3.40%
of the Pool  Balance  for the  Group  II Loans  after  application  of  Interest
Collections and Principal  Collections  received  during the related  Collection
Period plus 50% of the outstanding  aggregate Loan Balance of all Group II Loans
90 or more  days  Delinquent  as of such  Payment  Date  but not  less  than the
Overcollateralization Floor.

     Overcollateralization  Floor:  An  amount  equal to 0.50% of the  aggregate
principal balances of the Group II Loans as of the Cut-off Date, or $585,000.

                                       33
<PAGE>

               Overcollateralization   Increase  Amount:  With  respect  to  any
Payment  Date and the Class II Notes,  an amount  equal to the lesser of (i) P&I
Collections  on the Group II Loans  remaining  after  application of clauses (i)
through (v) of Section 3.05(a)(II) of the Indenture and (ii) the excess, if any,
of (x) the  Overcollateralization  Amount  Target for that Payment Date over (y)
the Outstanding Overcollateralization Amount for that Payment Date.

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

     Owner Trust Estate: The corpus of the Issuer created by the Trust Agreement
which consists of the Home Equity Loans.

               Owner  Trustee:  Wilmington  Trust Company not in its  individual
capacity  but  solely as Owner  Trustee  of the Trust,  and its  successors  and
assigns or any successor  owner trustee  appointed  pursuant to the terms of the
Trust Agreement.

     Paying Agent:  Any paying agent or co-paying  agent  appointed  pursuant to
Section 3.03 of the Indenture, which initially shall be the Indenture Trustee.

               Payment Account: The account established by the Indenture Trustee
pursuant to Section  8.02 of the  Indenture  and Section  5.01 of the  Servicing
Agreement.  Amounts  deposited in the Payment Account will be distributed by the
Indenture Trustee in accordance with Section 3.05 of the Indenture.

     Payment Date: The 25th day of each month,  or if such day is not a Business
Day, then the next Business Day.

               Percentage  Interest:  With  respect to any Note and any  Payment
Date, the percentage  obtained by dividing the Security  Balance of such Note by
the aggregate of the Security  Balances of all Notes  (including  the Term Notes
and the Variable  Funding Notes) or all Notes of the same Class,  as applicable,
prior to such  Payment  Date.  With respect to any  Certificate  and any Payment
Date, the Percentage Interest stated on the face of such Certificate.

               Permitted Investments:  One or more of the following:

               (i)  obligations of or guaranteed as to principal and interest by
        the United  States or any agency or  instrumentality  thereof  when such
        obligations  are  backed  by the full  faith and  credit  of the  United
        States;

               (ii) repurchase agreements on obligations specified in clause (i)
        maturing not more than one month from the date of  acquisition  thereof,
        provided  that  the  unsecured  obligations  of the  party  agreeing  to
        repurchase such  obligations are at the time rated by each Rating Agency
        in its highest short-term rating category available;

               (iii) federal funds,  certificates of deposit,  demand  deposits,
        time  deposits  and  bankers'  acceptances  (which  shall  each  have an
        original  maturity of not more than 90 days and, in the case of bankers'

                                       34
<PAGE>

        acceptances,  shall in no event have an  original  maturity of more than
        365 days or a remaining  maturity of more than 30 days)  denominated  in
        United  States  dollars  of any  U.S.  depository  institution  or trust
        company  incorporated  under the laws of the United  States or any state
        thereof or of any domestic branch of a foreign depository institution or
        trust company;  provided that the debt  obligations  of such  depository
        institution  or trust company (or, if the only Rating Agency is Standard
        &  Poor's,  in the case of the  principal  depository  institution  in a
        depository   institution  holding  company,   debt  obligations  of  the
        depository  institution  holding  company)  at the  date of  acquisition
        thereof have been rated by each Rating Agency in its highest  short-term
        rating category available; and provided further that, if the only Rating
        Agency is Standard & Poor's and if the  depository or trust company is a
        principal  subsidiary of a bank holding company and the debt obligations
        of such subsidiary are not separately rated, the applicable rating shall
        be that of the bank holding company;  and, provided further that, if the
        original maturity of such short-term obligations of a domestic branch of
        a foreign depository  institution or trust company shall exceed 30 days,
        the short-term  rating of such institution  shall be A-1+ in the case of
        Standard & Poor's if Standard & Poor's is the Rating Agency;

               (iv)  commercial  paper (having  original  maturities of not more
        than 365  days) of any  corporation  incorporated  under the laws of the
        United States or any state thereof which on the date of acquisition  has
        been  rated by each  Rating  Agency  in its  highest  short-term  rating
        category  available;  provided that such  commercial  paper shall have a
        remaining maturity of not more than 30 days;

               (v) a money market fund or a qualified  investment  fund rated by
        each Rating Agency in its highest  long-term rating category  available;
        and

               (vi) other  obligations or securities that are acceptable to each
        Rating Agency as an Permitted  Investment  hereunder and will not reduce
        the rating  assigned to any  Securities  by such Rating Agency below the
        lower  of  the  then-current  rating  or the  rating  assigned  to  such
        Securities as of the Closing Date by such Rating  Agency,  and which are
        acceptable  to the Credit  Enhancer,  as evidenced in writing,  provided
        that if the Master Servicer or any other Person controlled by the Master
        Servicer  is the issuer or the  obligor of any  obligation  or  security
        described in this clause (vi) such  obligation  or security must have an
        interest  rate or  yield  that  is  fixed  or is  variable  based  on an
        objective  index that is not affected by the rate or amount of losses on
        the Home Equity Loans;

provided,  however,  that no  instrument  shall be a Permitted  Investment if it
represents,  either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest  payments derived from  obligations  underlying such instrument and the
principal and interest payments with respect to such instrument  provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations  References  herein to the highest  rating  available  on  unsecured
long-term debt shall mean AAA in the case of Standard & Poor's,  Aaa in the case
of  Moody's  and AAA in the case of  Fitch,  if rated by Fitch,  and  references
herein  to the  highest  rating  available  on  unsecured  commercial  paper and
short-term debt obligations shall mean A-1 in the case of Standard & Poor's, P-1
in the case of Moody's and F1 in the case of Fitch, if rated by Fitch.

                                       35
<PAGE>

     Permitted Transferee: Any Transferee of a Class R Certificate, other than a
Disqualified Organization or Non-United States Person.

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

     Pool Balance:  With respect to any date, the aggregate of the Loan Balances
of all Home Equity Loans in a Loan Group as of such date.

               Predecessor  Note:  With respect to any  particular  Note,  every
previous Note  evidencing all or a portion of the same debt as that evidenced by
such  particular  Note;  and,  for the  purpose  of this  definition,  any  Note
authenticated  and  delivered  under  Section 4.03 of the Indenture in lieu of a
mutilated,  lost,  destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.

               Prepayment  Assumption:  With  respect to the Class I Notes,  the
prepayment  assumption  that will be used in determining  the rate of accrual of
original issue discount, market discount and premium, if any, for federal income
tax  purposes,  based  on the  assumption  that,  subsequent  to the date of any
determination,  the Group I Loans  will  prepay  at a rate  equal to 100% of the
prepayment  assumption  with  respect  to the  Group I Loans as  defined  in the
Prospectus Supplement.

               Prepayment Interest  Shortfall:  With respect to any Group I Loan
and any Payment Date, the aggregate  shortfall,  if any, in Interest Collections
on the Group I Loans,  adjusted  to the related  Net Loan Rate,  resulting  from
mortgagor  prepayments during the related  Collection  Period.  These shortfalls
will result because  interest on prepayments in full is distributed  only to the
date of  prepayment,  and because no interest is  distributed  on prepayments in
part, as these  prepayments in part are applied to reduce the  outstanding  Loan
Balance of the Home Equity Loans as of the Due Date  immediately  preceding  the
date of prepayment.

     Principal Collections: With respect to any Payment Date and any Home Equity
Loan in a Loan Group, the aggregate of the following amounts:

               (i) the  total  amount  of  payments  made by or on behalf of the
        Mortgagor,  received  and applied as payments of  principal  on the Home
        Equity  Loan during the related  Collection  Period,  as reported by the
        related Subservicer;

               (ii) any Net  Liquidation  Proceeds,  allocable  as a recovery of
        principal,  received in connection  with the Home Equity Loan during the
        related Collection Period;

               (iii)  if the  Home  Equity  Loan  was  purchased  by the  Master
        Servicer  pursuant to Section  3.15 of the  Servicing  Agreement  or was
        repurchased by the Seller pursuant to the Purchase  Agreement during the
        related Collection  Period,  100% of the Loan Balance of the Home Equity
        Loan as of the date of such purchase or repurchase  and if a Home Equity
        Loan was  substituted  for a Deleted Loan,  the amount  deposited by the
        Seller as a Substitution Adjustment Amount; and

                                       36
<PAGE>

               (iv) any other amounts received as payments on or proceeds of the
        Home Equity Loan during the  Collection  Period to the extent applied in
        reduction of the principal amount thereof;

provided that Principal  Collections shall not include any Foreclosure  Profits,
and  shall be  reduced  by any  amounts  withdrawn  from the  Custodial  Account
pursuant to clauses (c), (d) and (j) of Section 3.03 of the Servicing Agreement,
and provided  further that  Principal  Collections  with respect to the Group II
Loans shall not include any portion of such  amounts  that are  allocable to any
Excluded Amount.

        Principal  Collection  Distribution  Amount: With respect to the Class I
Notes  and  any  Payment  Date,  the  lesser  of (a) the  excess  of (i) the P&I
Collections for Loan Group I over (ii) the Interest  Distribution Amount for the
Class I Notes and (b) the sum of:

               (i)  the  principal  portion  of  each  Minimum  Monthly  Payment
        received  with  respect to the Group I Loans and the related  Collection
        Period;

               (ii) the Loan Balance of any Group I Loan repurchased  during the
        related  Collection  Period  (or deemed to have been so  repurchased  in
        accordance with the Servicing Agreement) and the amount of any shortfall
        deposited in the Custodial  Account in connection with the  substitution
        of a Deleted Loan during the related Collection Period; and

               (iii) the principal portion of all other unscheduled  collections
        on  the  Group  I  Loans  (including,   without  limitation,   Principal
        Prepayments,  Insurance Proceeds, Liquidation Proceeds and REO Proceeds)
        received during the related Collection Period (or deemed to have been so
        received).

               With respect to the Class A-II Notes,  for any Payment Date,  (i)
at any time during the Revolving  Period,  so long as an Amortization  Event has
not occurred, Net Principal Collections and (ii) following an Amortization Event
or at any time after the end of the  Revolving  Period,  Principal  Collections;
provided,  however,  on any Payment Date with  respect to which the  Outstanding
Overcollateralization  Amount that would result if determined  without regard to
this proviso  exceeds the  Overcollateralization  Amount  Target,  the Principal
Collection  Distribution  Amount  will be reduced  by the amount of such  excess
until    the    Outstanding     Overcollateralization    Amount    equals    the
Overcollateralization Amount Target.

               Principal  Prepayment:  Any payment of  principal by a Mortgagor,
which is received in advance of its scheduled Due Date and is not accompanied by
an amount as to interest representing  scheduled interest on such payment due on
any date or dates in any month or months subsequent to the month of prepayment.

     Proceeding:  Any  suit  in  equity,  action  at law or  other  judicial  or
administrative proceeding.

     Program Guide:  Together, the Seller's Seller Guide and Servicing Guide, as
in effect from time to time.

                                       37
<PAGE>

     Program Seller:  With respect to any Home Equity Loan, the Person that sold
such Home Equity Loan to the Seller.

     Prospectus Supplement:  The prospectus supplement dated September 25, 2001,
relating to the Term Notes.

               Purchase  Agreement:  The Home  Equity Loan  Purchase  Agreement,
dated as of the Closing Date,  between the Seller, as seller, and the Depositor,
as purchaser, with respect to the Home Equity Loans.

     Purchase  Price:  The meaning  specified in Section  2.2(a) of the Purchase
Agreement.

     Purchaser:  Residential  Funding  Mortgage  Securities II, Inc., a Delaware
corporation, and its successors and assigns.

               P&I  Collections:  With  respect to Loan Group I and any  Payment
Date, the sum of Interest Collections and Principal Collections for that Payment
Date.  With respect to Loan Group II and any Payment  Date,  the sum of Interest
Collections for that Payment Date and so long as an  Amortization  Event has not
occurred and if during the Revolving Period, Net Principal  Collections for that
Payment Date, or if an Amortization  Event has occurred or the Revolving  Period
has ended,  Principal  Collections for the applicable Payment Date, in each case
with respect to the Group II Loans.

     Radian:  Radian  Insurance  Inc.,  a  Pennsylvania   corporation  (a  stock
insurance company).

               Rating  Agency:  Any  nationally  recognized  statistical  rating
organization,  or its successor, that rated the Securities at the request of the
Depositor  at the time of the  initial  issuance of the  Securities.  Initially,
Moody's,  Fitch and Standard & Poor's. If such organization or a successor is no
longer  in  existence,  "Rating  Agency"  shall  be such  nationally  recognized
statistical rating organization,  or other comparable Person,  designated by the
Depositor,  notice of which designation shall be given to the Indenture Trustee.
References  herein to the  highest  short term  unsecured  rating  category of a
Rating Agency shall mean A-1 or better in the case of Standard & Poor's,  P-1 or
better in the case of  Moody's  and F1 or better in the case of Fitch and in the
case of any other Rating Agency shall mean such equivalent  ratings.  References
herein to the highest  long-term  rating  category of a Rating Agency shall mean
"AAA" in the case of Standard & Poor's,  "AAA" in the case of Fitch and "Aaa" in
the case of Moody's and in the case of any other Rating Agency,  such equivalent
rating.

               Record Date: With respect to the Term Notes (other than the Class
A-I-1 Notes and the Class II Notes) and the  Certificates  and any Payment Date,
the last  Business Day of the month  preceding  the month of such Payment  Date.
With  respect to the Class  A-I-1  Notes and the Class II Notes and any  Payment
Date, the Business Day next preceding such Payment Date.

               Reference  Bank Rate:  With  respect to any Interest  Period,  as
follows: the arithmetic mean (rounded upwards, if necessary,  to the nearest one
sixteenth of a percent) of the offered rates for United  States dollar  deposits
for one month which are offered by the Reference Banks as of 11:00 A.M., London,
England  time,  on the second LIBOR  Business Day prior to the first day of such

                                       38
<PAGE>

Interest  Period to prime banks in the London  interbank  market for a period of
one month in amounts  approximately equal to the sum of the outstanding Security
Balance of the Class A-I-1 Notes and the Class II Notes;  provided that at least
two such  Reference  Banks  provide such rate.  If fewer than two offered  rates
appear,  the Reference Bank Rate will be the arithmetic mean of the rates quoted
by one or more major banks in New York City,  selected by the Indenture  Trustee
after consultation with the Master Servicer and the Credit Enhancer, as of 11:00
a.m., New York time, on such date for loans in U.S.  Dollars to leading European
Banks for a period of one month in amounts  approximately equal to the aggregate
Security  Balance of the Class  A-I-I  Notes and the Class II Notes.  If no such
quotations can be obtained,  the Reference Bank Rate shall be the Reference Bank
Rate applicable to the preceding Interest Period.

               Reference   Banks:   Three  major  banks  which  are  engaged  in
transactions in the London interbank markets selected by the Indenture  Trustee,
after consultation with the Master Servicer and the Credit Enhancer.

     Registered  Holder:  The Person in whose name a Note is  registered  in the
Note Register on the applicable Record Date.

     Regular Interest:  Any of the REMIC I Regular Interests or REMIC II Regular
Interests.

               Related  Documents:  With respect to each Home Equity  Loan,  the
documents  specified  in  Section  2.1(c)  of the  Purchase  Agreement  and  any
documents  required  to be  added to such  documents  pursuant  to the  Purchase
Agreement, the Trust Agreement or the Servicing Agreement.

               Relief Act Shortfalls:  With respect to any Payment Date, for any
Home  Equity  Loan as to which  there  has been a  reduction  in the  amount  of
interest  collectible  thereon for the related  Collection Period as a result of
the  application  of the  Soldiers'  and Sailors'  Civil Relief Act of 1940,  as
amended,  the shortfall,  if any, equal to (i) one month's  interest on the Loan
Balance  of  such  Home  Equity  Loan  at  the  applicable  Loan  Rate,  without
application of such Act, over (ii) the interest  collectible on such Home Equity
Loan during such Collection Period.

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

               REMIC   Administrator:   Residential  Funding   Corporation.   If
Residential Funding Corporation is found by a court of competent jurisdiction to
no longer be able to fulfill its obligations as REMIC  Administrator  under this
Agreement the Master Servicer or Trustee acting as Master Servicer shall appoint
a  successor   REMIC   Administrator,   subject  to   assumption  of  the  REMIC
Administrator obligations under the Indenture and the Trust Agreement.

               REMIC  I: The  segregated  pool of  assets  in the  Trust  Estate
(excluding the Initial Monthly  Payment Fund and the Delinquent  Reserve Amount)
with respect to which a REMIC election is to be made.

               REMIC I Certificates:  The Class R-I Certificates.

                                       39
<PAGE>

               REMIC  I  Liquidation   Loss  Amounts:   For  any  Payment  Date,
        Liquidation  Loss Amounts on the Group I Mortgage  Loans for the related
        Collection  Period  shall be  allocated  as  follows:  Liquidation  Loss
        Amounts  shall be allocated to the Class LT1, LT2, LT3, LT4, LT5 and LT6
        REMIC I Regular Interests in reduction of the principal balances thereof
        to the extent required to reduce the aggregate  principal balance of the
        Class LT1, LT2,  LT3, LT4, LT5 and LT6 REMIC I Regular  Interests to the
        aggregate  principal balance of the Loan Group I Mortgage Loans with any
        remaining  Liquidation Loss Amounts treated as reducing accrued interest
        on the Class LT1, LT2, LT3, LT4, LT5 and LT6 REMIC I Regular  Interests.
        Liquidation  Loss Amounts  treated as reducing the principal  balance of
        the Class LT1,  LT2,  LT3,  LT4,  LT5 and LT6 REMIC I Regular  Interests
        shall be allocated, first, to the Class LT2, LT3, LT4, LT5 and LT6 REMIC
        I Regular  Interests  pro-rata  according to their respective  Principal
        Reduction  Amounts in amounts not in excess of such Principal  Reduction
        Amounts,  second,  to the Class LT1 REMIC I Regular  Interest  until the
        principal  balance of such Regular  Interest  shall have been reduced to
        zero, and,  thereafter,  to the Class LT2, LT3, LT4, LT5 and LT6 REMIC I
        Regular  Interests  pro-rata  according  to their  respective  principal
        balances.

               REMIC I  Regular  Interests:  The  Class  I-LT1  REMIC I  Regular
Interest,  the Class  I-LT2  REMIC I Regular  Interest,  the Class I-LT3 REMIC I
Regular Interest,  Class LT4 REMIC I Regular Interest, Class LT5 REMIC I Regular
Interest and the Class I-LT6 REMIC  Interest  having the properties set forth in
the following table and elsewhere herein:
<TABLE>
<CAPTION>

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

                                 REMIC I                                          LATEST
      DESIGNATION               REMITTANCE               INITIAL                 POSSIBLE
          DATE                     RATE                   BALANCE              MATURITY(1)
------------------------- ----------------------- ----------------------- -----------------------
------------------------- ----------------------- ----------------------- -----------------------

<S>         <C>                        <C>           <C>                           <C> <C>
          LT1                  Variable(2)           $339,889,513.81          June 25, 2031
------------------------- ----------------------- ----------------------- -----------------------
------------------------- ----------------------- ----------------------- -----------------------

          LT2                  Variable(2)                 $8,661.07          June 25, 2031
------------------------- ----------------------- ----------------------- -----------------------
------------------------- ----------------------- ----------------------- -----------------------

          LT3                       0%                    $25,338.93          June 25, 2031
------------------------- ----------------------- ----------------------- -----------------------
------------------------- ----------------------- ----------------------- -----------------------

          LT4                  Variable(2)                $42,487.39          June 25, 2031
------------------------- ----------------------- ----------------------- -----------------------
------------------------- ----------------------- ----------------------- -----------------------

          LT5                  Variable(2)                $16,851.54          June 25, 2031
------------------------- ----------------------- ----------------------- -----------------------
------------------------- ----------------------- ----------------------- -----------------------

          LT6                       0%                    $17,148.46          June 25, 2031
------------------------- ----------------------- ----------------------- -----------------------
</TABLE>

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

     (2)  Calculated  in accordance  with the  definition of "REMIC I Remittance
          Rate" herein.

               REMIC I Remittance  Rate:  With respect to the Class LT1, LT2 and
LT5 REMIC I Regular  Interests,  the Group I Net WAC Rate. With respect to Class
LT3 and LT6 REMIC I Regular  Interests,  zero (0.00%) per annum. With respect to
the Class LT4 REMIC I Regular Interest, twice the Group I Net WAC Rate.

                                       40
<PAGE>

               REMIC  II:  The  segregated   pool  of  assets  subject   hereto,
constituting   a  portion  of  the  primary  trust  created  hereby  and  to  be
administered hereunder, with respect to which a separate REMIC election is to be
made, consisting of the REMIC I Regular Interests.

               REMIC II Regular  Interests:  Each Class of the Class I Notes and
the REMIC II Regular Interests SB-IO and SB-PO Certificates.

               REMIC II Regular  Interest SB-IO: A regular  interest in REMIC II
with no  entitlement  to  principal  and  entitled  to  interest at the REMIC II
Regular Interest SB-IO Certificate Rate on the Class SB-IO Notional Amount.

               REMIC II Regular  Interest SB-PO: A regular  interest in REMIC II
with no  entitlement to interest and entitled to principal in an amount equal to
the initial principal balance of the Class SB-I Certificates.

               REMIC  Provisions:  Provisions  of the  federal  income  tax  law
relating to real estate mortgage investment  conduits,  which appear at Sections
860A  through  860G of  Subchapter  M of  Chapter  1 of the  Code,  and  related
provisions,  and  temporary  and  final  regulations  (or,  to  the  extent  not
inconsistent with such temporary or final regulations, proposed regulations) and
published  rulings,  notices and announcements  promulgated  thereunder,  as the
foregoing may be in effect from time to time.

     REO: A Mortgaged  Property that is acquired by the Trust in  foreclosure or
by deed in lieu of foreclosure.

               REO Acquisition: The acquisition by the Master Servicer on behalf
of the Trustee for the benefit of the  Noteholders of any REO Property  pursuant
to Section 3.07 of the Servicing Agreement.

               REO Disposition:  As to any REO Property,  a determination by the
Master  Servicer  that it has received  substantially  all  Insurance  Proceeds,
Liquidation Proceeds,  REO Proceeds and other payments and recoveries (including
proceeds  of a final  sale)  which the  Master  Servicer  expects  to be finally
recoverable from the sale or other disposition of the REO Property.

               REO Proceeds:  Proceeds, net of expenses,  received in respect of
any REO Property (including, without limitation, proceeds from the rental of the
related Mortgaged Property) which proceeds are required to be deposited into the
Custodial  Account only upon the related REO Disposition,  including any amounts
received by the Master Servicer as a recovery subsequent to the deeming of a REO
Disposition as set forth in Section 3.13.

               REO  Property:  A  Mortgaged  Property  acquired  by  the  Master
Servicer through foreclosure or deed in lieu of foreclosure in connection with a
defaulted Home Equity Loan.

               Repurchase  Event:  With respect to any Home Equity Loan,  either
(i) a discovery  that,  as of the Closing Date,  the related  Mortgage was not a
valid lien on the related Mortgaged Property subject only to (A) the lien of any
prior mortgage indicated on the Home Equity Loan Schedule,  (B) the lien of real
property  taxes  and  assessments  not  yet  due  and  payable,  (C)  covenants,

                                       41
<PAGE>

conditions,  and  restrictions,  rights of way,  easements  and other matters of
public  record  as of the date of  recording  of such  Mortgage  and such  other
permissible  title  exceptions  as are listed in the Program Guide and (D) other
matters to which like  properties  are commonly  subject which do not materially
adversely  affect the value,  use,  enjoyment  or  marketability  of the related
Mortgaged  Property or (ii) with respect to any Home Equity Loan as to which the
Seller delivers a Lost Note Affidavit,  a subsequent default on such Home Equity
Loan if the  enforcement  thereof or of the related  Mortgage is materially  and
adversely affected by the absence of such original Loan Agreement.

               Repurchase  Price:  With respect to any Home Equity Loan required
to be repurchased on any date pursuant to the Purchase Agreement or purchased by
the Master Servicer pursuant to the Servicing Agreement,  an amount equal to the
sum of (i) 100% of the Loan Balance thereof  (without  reduction for any amounts
charged off) and (ii) unpaid accrued  interest at the Loan Rate (or with respect
to the last day of the month in the month of  repurchase,  the Loan Rate will be
the Loan  Rate in  effect  as to the  second  to last day in such  month) on the
outstanding  principal  balance  thereof from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month  following the month of
purchase.  No portion of any Repurchase  Price shall be included in any Excluded
Amount for any Payment Date.

     Request  for  Release:  The form  attached  as  Exhibit 4 to the  Custodial
Agreement or an electronic request in a form acceptable to the Custodian.

               Required Insurance Policy:  With respect to any Home Equity Loan,
any insurance  policy which is required to be maintained from time to time under
the Servicing Agreement, the Program Guide or the related Subservicing Agreement
in respect of such Home Equity Loan.

               Responsible  Officer:  With respect to the Indenture Trustee, any
officer  of  the   Indenture   Trustee  with  direct   responsibility   for  the
administration  of the Indenture and also, with respect to a particular  matter,
any other  officer to whom such  matter is  referred  because of such  officer's
knowledge of and familiarity with the particular subject.

     Revolving  Period:  The period commencing on the Closing Date and ending on
September 30, 2006.

     Securities  Act: The Securities Act of 1933, as amended,  and the rules and
regulations promulgated thereunder.

               Security:  Any of the Certificates or Notes.

               Security Balance: With respect to any Payment Date and each Class
of Term Notes,  the Initial  Security Balance thereof prior to such Payment Date
reduced by all payments of principal  thereon prior to such Payment  Date.  With
respect to any Payment Date and the Variable Funding Notes, the Initial Security
Balance  thereof  prior to such  Payment  Date (i)  increased  by the  Aggregate
Additional Balance Differential for such Variable Funding Note immediately prior
to such Payment  Date and (ii) reduced by all payments of principal  thereon and
Liquidation  Loss Amounts  allocated  thereto prior to such Payment  Date.  With
respect to any Payment  Date and the  Certificates,  the  Certificate  Principal
Balance thereof.

                                       42
<PAGE>

     Securityholder or Holder: Any Noteholder or a Certificateholder.

     Seller:  Residential Funding Corporation,  a Delaware corporation,  and its
successors and assigns.

     Seller's Agreement: The agreement between the Seller, as purchaser, and the
related Program Seller, as seller.

     Servicing Agreement: The Servicing Agreement, dated as of the Closing Date,
between the Indenture  Trustee,  the Issuer and the Master  Servicer,  as master
servicer.

     Servicing  Certificate:  A certificate  prepared by a Servicing  Officer on
behalf of the Master  Servicer in accordance  with Section 4.01 of the Servicing
Agreement.

     Servicing  Default:  The meaning specified in Section 7.01 of the Servicing
Agreement.

     Servicing Fee: With respect to any Home Equity Loan, the sum of the related
Master Servicing Fee and the related Subservicing Fee.

     Servicing  Fee Rate:  With respect to any Home Equity Loan,  the sum of the
related Master Servicing Fee Rate and the related Subservicing Fee Rate.

               Servicing  Officer:  Any officer of the Master Servicer  involved
in, or  responsible  for, the  administration  and  servicing of the Home Equity
Loans whose name and specimen  signature appear on a list of servicing  officers
furnished to the Indenture  Trustee (with a copy to the Credit  Enhancer) by the
Master Servicer, as such list may be amended from time to time.

     Single  Certificate:  A Certificate  in the  denomination  of a Certificate
Percentage Interest of 10.0000%.

               Special Hazard Amount:  With respect to the Group II Loans, as of
any date of determination  following the Cut-off Date, the Special Hazard Amount
shall equal $1,170,000 less the sum of (A) the aggregate of any Liquidation Loss
Amounts  on the  Group  II  Loans  due to  Special  Hazard  Losses  and  (B) the
Adjustment  Amount (as  defined  below) as most  recently  calculated.  For each
anniversary  of the Cut-off Date,  the  Adjustment  Amount shall be equal to the
amount,  if any, by which the amount calculated in accordance with the preceding
sentence  (without  giving effect to the deduction of the Adjustment  Amount for
such  anniversary)  exceeds the greatest of (i) twice the outstanding  principal
balance of the HELOC which has the largest outstanding  principal balance on the
Payment Date immediately  preceding such anniversary,  (ii) the product of 1.00%
multiplied  by the  outstanding  aggregate  Credit  Limits of all  HELOCs on the
Payment Date  immediately  preceding  such  anniversary  and (iii) the aggregate
outstanding  principal balance (as of the immediately preceding Payment Date) of
the HELOCs in any single  five-digit  California  zip code area with the largest
amount of HELOCs by aggregate principal balance as of such anniversary.

               Special Hazard Loss: Any Liquidation Loss Amount not in excess of
the cost of the lesser of repair or replacement of a Mortgaged Property suffered
by such Mortgaged Property on account of direct physical loss,  exclusive of (i)

                                       43
<PAGE>

any  loss of a type  covered  by a hazard  policy  or a flood  insurance  policy
required to be  maintained  in respect of such  Mortgaged  Property  pursuant to
Section 3.04 of the Servicing Agreement,  except to the extent of the portion of
such loss not  covered  as a result of any  coinsurance  provision  and (ii) any
losses resulting from an Extraordinary Event.

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

     Stated  Value:  With  respect  to any Home  Equity  Loan,  the value of the
Mortgaged Property as stated by the related Mortgagor in his or her application.

     Subservicer:  Any Person with whom the Master  Servicer  has entered into a
Subservicing Agreement as a Subservicer by the Master Servicer.

     Subservicing  Account:  An Eligible Account  established or maintained by a
Subservicer as provided for in Section 3.02(c) of the Servicing Agreement.

               Subservicing  Agreement:  The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of certain
Home Equity Loans as provided in Section 3.01 of the Servicing Agreement.

               Subservicing Fee: With respect to any Collection  Period, the fee
retained monthly by the Subservicer  (or, in the case of a  nonsubserviced  Home
Equity  Loan,  by  the  Master  Servicer)  equal  to  the  product  of  (i)  the
Subservicing  Fee Rate  divided by 12 and (ii) the Pool  Balance as of the first
day of such Collection Period.

     Subservicing  Fee Rate:  With respect to each Home Equity  Loan,  0.50% per
annum.

               Substitution  Adjustment  Amounts:  With  respect to any Eligible
Substitute  Loan and any Deleted Loan, the amount,  if any, as determined by the
Master Servicer,  by which the aggregate  principal balance of all such Eligible
Substitute  Loans  as of the date of  substitution  is less  than the  aggregate
principal balance of all such Deleted Loans (after  application of the principal
portion of the monthly payments due in the month of substitution  that are to be
distributed to the Payment Account in the month of substitution).

               Teaser Loan: Any HELOC which,  as of the Cut-off Date, has a Loan
Rate that is less than the sum of the Index at the time of origination  plus the
applicable Gross Margin.

               Telerate Screen Page 3750: The display designated as page 3750 on
the  Bridge  Telerate  Capital  Markets  Reports  (or (i) such other page as may
replace page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks) or (ii) if such service is no longer offered, such
other service for displaying LIBOR or comparable rates as may be selected by the
Indenture  Trustee after  consultation  with the Master  Servicer and the Credit
Enhancer.

               Term Notes: The Class I Notes and Class A-II Notes.

                                       44
<PAGE>

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

     Transfer Date: As defined in Section 3.15(c) of the Servicing Agreement.

     Transfer  Notice  Date:  As  defined in  Section  3.15(c) of the  Servicing
Agreement.

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

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

               Treasury   Regulations:   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.

               Trigger  Event:  A Trigger Event is in effect with respect to any
Payment Date and the Class I Notes on or after the Group I Stepdown  Date if any
of the following conditions are met:

               (i)  the  fraction,  expressed  as a  percentage,  equal  to  the
aggregate Loan Balance of the Group I Loans that are 90 or more days  Delinquent
in payment of principal and interest, including Home Equity Loans in foreclosure
and  Home  Equity  Loans  in REO,  as  determined  for the  current  and the two
immediately  preceding Payment Dates, over the Pool Balance of the Group I Loans
as determined for the current and the two immediately  preceding  Payment Dates,
exceeds 2.00%;

               (ii) if the Payment Date is  occurring  prior to the Payment Date
in October 2004, the aggregate amount of Liquidation Loss Amounts on the Group I
Loans since the Cut-off  Date  exceeds  1.3% of the Loan  Balance of the Group I
Loans as of the Cut-off Date;

               (iii) if the Payment  Date is  occurring  on or after the Payment
Date in October 2004 and before the Payment Date in October 2005,  the aggregate
amount of  Liquidation  Loss Amounts on the Group I Loans since the Cut-off Date
exceeds 1.8% of the Loan Balance of the Group I Loans as of the Cut-off Date;

               (iv) if the  Payment  Date is  occurring  on or after the Payment
Date in October 2005 and before the Payment Date in October 2006,  the aggregate
amount of  Liquidation  Loss Amounts on the Group I Loans since the Cut-off Date
exceeds 2.10% of the Loan Balance of the Group I Loans as of the Cut-off Date;

               (v) if the Payment Date is occurring on or after the Payment Date
in October  2006 and before the  Payment  Date in October  2007,  the  aggregate
amount of  Liquidation  Loss Amounts on the Group I Loans since the Cut-off Date
exceeds  2.60% of the Loan Balance of the Group I Loans as of the Cut-off  Date;
or

                                       45
<PAGE>

               (vi) if the  Payment  Date is  occurring  on or after the Payment
Date in October 2007, the aggregate  amount of  Liquidation  Loss Amounts on the
Group I Loans since the Cut-off  Date  exceeds  3.00% of the Loan Balance of the
Group I Loans as of the Cut-off Date.

     Trust:  The Home Equity Loan Trust  2001-HS3 to be created  pursuant to the
Trust Agreement.

     Trust Agreement: The Amended and Restated Trust Agreement,  dated as of the
Closing Date, between the Owner Trustee and the Depositor.

     Trust  Estate:  The  meaning  specified  in  the  Granting  Clause  of  the
Indenture.

               Trust  Indenture Act or TIA: The Trust  Indenture Act of 1939, as
amended from time to time, as in effect on any relevant date.

     UCC:  The Uniform  Commercial  Code,  as amended  from time to time,  as in
effect in the States of New York, Delaware or Minnesota, as applicable.

               Uncertificated  Accrued  Interest:  With  respect  to any REMIC I
Regular Interest for any Payment Date, one month's interest at the related REMIC
I Remittance Rate for such Payment Date, accrued on the Uncertificated Principal
Balance immediately prior to such Payment Date.  Uncertificated Accrued Interest
for the REMIC I Regular  Interests  shall  accrue on the basis of a 360-day year
consisting of twelve 30-day months.  For purposes of  calculating  the amount of
Uncertificated  Accrued  Interest  for the  REMIC I  Regular  Interests  for any
Payment  Date,  any  Prepayment  Interest  Shortfalls  or Relief Act  Shortfalls
relating to the Group I Loans for any Payment Date shall be allocated  among the
LT1, LT2, LT3,  LT4, LT5 and LT6 REMIC I Regular  Interests,  pro rata based on,
and to the extent of,  Uncertificated  Accrued Interest,  as calculated  without
application of this sentence.  With respect to any Payment Date and the REMIC II
Regular Interest SB-IO, one month's interest at the related  Certificate Rate on
the Notional  Amount  thereof  reduced by its pro-rata  share of any  Prepayment
Interest  Shortfalls or Relief Act Shortfalls relating to the Group I Loans, but
not reduced by amounts distributable  pursuant to clauses (vi), (vii), (viii) or
(ix) of Section 3.05(a)(I) of the Indenture.

               Uncertificated  Principal  Balance:  With  respect to any Payment
Date and any REMIC I Regular  Interest,  the Initial  Balance thereof reduced by
the  allocation to the principal  thereof on prior Payment Dates of  Liquidation
Loss Amounts  pursuant to the definition of REMIC I Liquidation Loss Amounts and
of amounts  deemed  distributed  with respect to the REMIC I Regular  Interests.
With respect to any Payment Date and the REMIC II Regular  Interest  SB-PO,  the
Initial Balance  thereof  reduced by the allocation to the principal  thereof on
prior Payment Dates of Liquidation Loss Amounts,  to the extent such Liquidation
Loss Amounts are allocated to the principal of the Class SB-I Certificates,  and
amounts deemed distributed with respect to such REMIC II Regular Interest.

     Underwriters:  Salomon Smith Barney Inc. and Residential Funding Securities
Corporation.

               Undercollateralization  Amount:  Initially equal to approximately
$1,754,973.  With respect to any Payment Date, the amount,  if any, by which the

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aggregate  Security  Balance of the Class II Notes on such  Payment Date exceeds
the Pool  Balance  of the  Group  II  Loans  as of the  last day of the  related
Collection Period (after  application of Net Principal  Collections or Principal
Collections, as the case may be, for such date).

               Uniform  Single  Attestation  Program for Mortgage  Bankers:  The
Uniform Single  Attestation  Program for Mortgage  Bankers,  as published by the
Mortgage  Bankers  Association  of America and effective  with respect to fiscal
periods ending on or after December 15, 1995.

               Uninsured  Cause:  Any cause of damage to  property  subject to a
Mortgage  such  that the  complete  restoration  of such  property  is not fully
reimbursable by the hazard insurance policies.

               Uninsured  Loss:  With respect to the Group I Loans only, any (i)
Liquidation Loss Amounts due to physical damage to the Mortgaged Property,  (ii)
Fraud  Losses  in  excess  of the Fraud  Loss  Amount  for Group I Loans,  (iii)
Bankruptcy  Losses in excess of the  Bankruptcy  Loss  Amount for Group I Loans,
(iv) Liquidation Loss Amounts that are not covered by the Group I Policy because
of a denial of or exclusion from coverage under the Group I Policy or exhaustion
of the Group I Policy,  and (v) on any Payment  Date,  the amount of  delinquent
interest  on the Group I Loans not  covered  by excess  interest  on the Group I
Loans.

     Uninsured Loss Carry Forward  Amount:  The Uninsured Loss remaining  unpaid
from prior Payment Dates.

               United States Person: A citizen or resident of the United States,
a corporation, partnership or other entity created or organized in, or under the
laws of, the United  States,  any state  thereof,  or the  District  of Columbia
(except  in the  case of a  partnership,  to the  extent  provided  in  Treasury
regulations)  or  any  political  subdivision  thereof,  or an  estate  that  is
described in Section 7701(a)(30)(D) of the Code, or a trust that is described in
Section 7701(a)(30)(E) of the Code.

     Variable  Funding  Notes:  The Class II Notes  designated  as the "Variable
Funding Notes" in the Indenture including any Capped Funding Notes.

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Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}]]