Document:

EXHIBIT 4.1

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

                   MID-STATE CAPITAL CORPORATION 2004-1 TRUST

                                     Issuer

                                       and

                              THE BANK OF NEW YORK

                                Indenture Trustee

                                    INDENTURE

                               Dated July 15, 2004

                                   Relating to

                 $180,251,000 6.005% Asset-Backed Notes, Class A

                $48,282,000 6.497% Asset-Backed Notes, Class M-1

                $34,602,000 8.114% Asset-Backed Notes, Class M-2

                 $31,383,000 8.900% Asset-Backed Notes, Class B

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

<PAGE>

                                TABLE OF CONTENTS

                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.01   General Definitions.........................................

                                   ARTICLE II

                                    THE NOTES

SECTION 2.01   Forms Generally.............................................
SECTION 2.02   Forms of Notes and Certificate of Authentication............
SECTION 2.03   Notes; General Provisions with Respect to Principal and
                  Interest Payments........................................
SECTION 2.04   Denominations...............................................
SECTION 2.05   Execution, Authentication, Delivery and Dating..............
SECTION 2.06   Temporary Notes.............................................
SECTION 2.07   Registration, Registration of Transfer and Exchange.........
SECTION 2.08   Mutilated, Destroyed, Lost or Stolen Notes..................
SECTION 2.09   Payments of Principal and Interest..........................
SECTION 2.10   Persons Deemed Owners.......................................
SECTION 2.11   Cancellation................................................
SECTION 2.12   Authentication and Delivery of Notes........................
SECTION 2.13   Tax Treatment...............................................

                                   ARTICLE III

                    COVENANTS; REPRESENTATIONS AND WARRANTIES

SECTION 3.01   Payment of Notes............................................
SECTION 3.02   Maintenance of Office or Agency.............................
SECTION 3.03   Money for Note Payments to Be Held in Trust.................
SECTION 3.04   Existence of Issuer.........................................
SECTION 3.05   Protection of Trust Estate..................................
SECTION 3.06   Opinions as to Trust Estate.................................
SECTION 3.07   Performance of Obligations; Servicing Agreement.............
SECTION 3.08   Negative Covenants..........................................
SECTION 3.09   Annual Statement as to Compliance...........................
SECTION 3.10   Recording of Assignments....................................
SECTION 3.11   Representations and Warranties Concerning the Mortgage
                  Assets...................................................
SECTION 3.12   Review of Mortgage Asset Documents..........................
SECTION 3.13   Trust Estate; Mortgage Asset Documents......................
SECTION 3.14   Amendments to Servicing Agreement...........................
SECTION 3.15   Servicer as Agent and Bailee of Indenture Trustee...........
SECTION 3.16   Investment Company Act......................................
SECTION 3.17   Business Activity...........................................
SECTION 3.18   Liability of Owner Trustee..................................
SECTION 3.19   Exculpation of the Indenture Trustee........................
SECTION 3.20   Owner Trustee Agrees Not to File for Bankruptcy of the
                  Issuer...................................................
SECTION 3.21   Reports to the Commission...................................
SECTION 3.22   Representations and Warranties Regarding the Trust
                  Estate...................................................

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

SECTION 4.01   Satisfaction and Discharge of Indenture.....................
SECTION 4.02   Application of Trust Money..................................

                                    ARTICLE V

                              DEFAULTS AND REMEDIES

SECTION 5.01   Event of Default............................................
SECTION 5.02   Acceleration of Maturity; Rescission and Annulment..........
SECTION 5.03   Collection of Indebtedness and Suits for Enforcement by
                  Indenture Trustee........................................
SECTION 5.04   Remedies....................................................
SECTION 5.05   Optional Preservation of Trust Estate.......................
SECTION 5.06   Indenture Trustee May File Proofs of Claim..................
SECTION 5.07   Indenture Trustee May Enforce Claims Without Possession
                  of Notes.................................................
SECTION 5.08   Application of Money Collected..............................
SECTION 5.09   Limitation on Suits.........................................
SECTION 5.10   Unconditional Rights of Noteholders to Receive Principal
                  and Interest.............................................
SECTION 5.11   Restoration of Rights and Remedies..........................
SECTION 5.12   Rights and Remedies Cumulative..............................
SECTION 5.13   Delay or Omission Not Waiver................................
SECTION 5.14   Control by the Noteholders..................................
SECTION 5.15   Waiver of Past Defaults.....................................
SECTION 5.16   Undertaking for Costs.......................................
SECTION 5.17   Waiver of Stay or Extension Laws............................
SECTION 5.18   Sale of Trust Estate........................................
SECTION 5.19   Action on Notes.............................................
SECTION 5.20   Allocation of Realized Loss Amount..........................

                                   ARTICLE VI

                              THE INDENTURE TRUSTEE

SECTION 6.01   Duties of Indenture Trustee.................................
SECTION 6.02   Notice of Default...........................................
SECTION 6.03   Rights of Indenture Trustee.................................
SECTION 6.04   Not Responsible for Recitals or Issuance of Notes...........
SECTION 6.05   May Hold Notes..............................................
SECTION 6.06   Money Held in Trust.........................................
SECTION 6.07   Compensation and Reimbursement..............................
SECTION 6.08   Eligibility; Disqualification...............................
SECTION 6.09   Indenture Trustee's Capital and Surplus.....................
SECTION 6.10   Resignation and Removal; Appointment of Successor...........
SECTION 6.11   Acceptance of Appointment by Successor......................
SECTION 6.12   Merger, Conversion, Consolidation or Succession to
                  Business of Indenture Trustee............................
SECTION 6.13   Preferential Collection of Claims Against Issuer............
SECTION 6.14   Co-trustees and Separate Indenture Trustees.................
SECTION 6.15   Authenticating Agents.......................................
SECTION 6.16   Document Custodian..........................................

                                   ARTICLE VII

                         NOTEHOLDERS' LISTS AND REPORTS

SECTION 7.01   Issuer to Furnish Indenture Trustee Names and Addresses
                  of Noteholders...........................................
SECTION 7.02   Preservation of Information; Communications to
                  Noteholders..............................................
SECTION 7.03   Reports by Indenture Trustee................................
SECTION 7.04   Compliance by Issuer with TIA ss. 314(a)....................

                                  ARTICLE VIII

        MORTGAGE ASSETS, PAYMENTS OF INTEREST AND PRINCIPAL, RELEASES AND
                              SUBSEQUENT TRANSFERS

SECTION 8.01   Collection of Moneys........................................
SECTION 8.02   Collection Account..........................................
SECTION 8.03   Capitalized Interest Account; Interest Reserve Account
                  and Pre-Funding Account..................................
SECTION 8.04   General Provisions Regarding the Collection Account.........
SECTION 8.05   Reports by Indenture Trustee to Noteholders.................
SECTION 8.06   Reports by Indenture Trustee................................
SECTION 8.07   Reports by Independent Accountants..........................
SECTION 8.08   Reports by the Servicer.....................................
SECTION 8.09   Subsequent Transfers........................................

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

SECTION 9.01   Supplemental Indentures without Consent of Noteholders......
SECTION 9.02   Supplemental Indentures with Consent of Noteholders.........
SECTION 9.03   Execution of Supplemental Indentures........................
SECTION 9.04   Effect of Supplemental Indentures...........................
SECTION 9.05   Conformity with Trust Indenture Act.........................
SECTION 9.06   Reference in Notes to Supplemental Indentures...............

                                    ARTICLE X

                               REDEMPTION OF NOTES

SECTION 10.01  Optional Redemption of Notes................................
SECTION 10.02  Form of Redemption Notice...................................
SECTION 10.03  Notes Payable on Redemption Date............................

                                   ARTICLE XI

                                  MISCELLANEOUS

SECTION 11.01  Compliance Certificates and Opinions........................
SECTION 11.02  Form of Documents Delivered to Indenture Trustee............
SECTION 11.03  Acts of Noteholders.........................................
SECTION 11.04  Notices, etc., to Indenture Trustee and Issuer..............
SECTION 11.05  Notices and Reports to Noteholders; Waiver of Notices.......
SECTION 11.06  Rules by Indenture Trustee and Agents.......................
SECTION 11.07  Conflict with Trust Indenture Act...........................
SECTION 11.08  Effect of Headings and Table of Contents....................
SECTION 11.09  Successors and Assigns......................................
SECTION 11.10  Separability................................................
SECTION 11.11  Benefits of Indenture.......................................
SECTION 11.12  Governing Law...............................................
SECTION 11.13  Counterparts................................................
SECTION 11.14  Recording of Indenture......................................
SECTION 11.15  Issuer Obligations..........................................
SECTION 11.16  Inspection..................................................

EXHIBIT A              -    Form of Face of Class A Note
EXHIBIT B              -    Form of Face of Class M-1 Note
EXHIBIT C              -    Form of Face of Class M-2 Note
EXHIBIT D              -    Form of Face of Class B Note
EXHIBIT E              -    Form of Subsequent Transfer Agreement
EXHIBIT F              -    Form of Certification to be Provided with Form 10-K
EXHIBIT G              -    Form of Certification to be Provided by the
                            Indenture Trustee
EXHIBIT H              -    Form of Initial Certification
EXHIBIT I              -    Form of Final Certification
Schedule I             -    Schedule of Mortgage Assets

<PAGE>

            INDENTURE, dated July 15, 2004 (herein, as amended or supplemented
from time to time as permitted hereby, called this "Indenture"), between
MID-STATE CAPITAL CORPORATION 2004-1 TRUST (the "Issuer"), a Delaware statutory
trust and THE BANK OF NEW YORK, a New York banking corporation, as indenture
trustee (herein, together with its permitted successors in the trusts hereunder,
called the "Indenture Trustee").

                              PRELIMINARY STATEMENT

            The Issuer is a statutory trust created by a Trust Agreement, dated
July 13, 2004, as amended, restated, supplemented or otherwise modified from
time to time, between Wilmington Trust Company (in its capacity as Owner Trustee
thereunder, the "Owner Trustee"), and Mid-State Capital Corporation, as Grantor.
The Issuer will act at all times through the Owner Trustee. The Issuer has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of its 6.005% Asset-Backed Notes, Class A (the "Class A Notes"), 6.497%
Asset-Backed Notes, Class M-1 (the "Class M-1 Notes"), 8.114% Asset-Backed
Notes, Class M-2 (the "Class M-2 Notes") and 8.900% Asset-Backed Notes, Class B
(the "Class B Notes," and, together with the Class A Notes, Class M-1 Notes and
Class M-2 Notes, the "Notes"), issuable as provided in this Indenture. All
covenants and agreements made by the Issuer herein are for the benefit and
security of the Holders of the Notes and for the benefit and security of the
Indenture Trustee, in its individual capacity, to the extent of its interest.
The Issuer is entering into this Indenture, and the Indenture Trustee is
accepting the trusts created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.

            All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.

                                GRANTING CLAUSES

            The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Notes, all of the Issuer's right, title and
interest in and to (a) the Initial Mortgage Assets listed in the Schedule of
Mortgage Assets delivered to the Indenture Trustee, or Document Custodian on
behalf of the Indenture Trustee, pursuant to this Indenture, all Subsequent
Mortgage Assets added to the Schedule of Mortgage Assets as delivered from time
to time to the Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, pursuant to this Indenture, all property acquired in respect
of the Mortgage Assets, including the related Mortgage Asset Documents and all
Monthly Payments that have not been received prior to the Cut-off Date,
regardless of the Due Date for such Monthly Payment, (b) the Servicing Agreement
(including the right to compel performance by the Sub-Servicer), (c) the
Mortgage Asset Sale Agreement and the Purchase and Sale Agreement, (d) all cash,
instruments or other property held in the Capitalized Interest Account, the
Interest Reserve Account and the Pre-Funding Account, including all investments
made with funds in each account and all income on such investments, (e) all
cash, instruments or other property held or required to be deposited in the
Collection Account and the Holding Account, including all investments made with
funds in the Collection Account and the Holding Account and all income from
investments made with funds in the Collection Account and the Holding Account,
(f) all new Mortgage Assets originated in connection with the sale of property
acquired in respect of Mortgage Assets, (g) all "accounts," "general
intangibles," "instruments," "chattel paper," "deposit accounts" and "investment
property" (as such terms are defined in the Uniform Commercial Code)
constituting or relating to the foregoing, and (h) all proceeds in any way
derived from any of the foregoing, including all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other assets,
including, without limitation, all insurance proceeds and condemnation awards.

            Such Grants are made, however, in trust to secure the Notes equally
and ratably without priority or discrimination, except as provided in this
Indenture, between any Note and any other Note by reason of difference in time
of issuance or otherwise, and to secure (i) the payment of all amounts due on
the Notes in accordance with their terms, (ii) the payment of all other sums
payable under this Indenture and (iii) compliance with the provisions of this
Indenture, all as provided in this Indenture. All terms used in the foregoing
Granting Clauses that are defined in Section 1.01 are used with the meanings
given in said Section.

            The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties herein required to the end that the interests of the Holders
of the Notes as set forth herein may be adequately and effectively protected.

                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.01 General Definitions.

            Except as otherwise specified or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture, and the definitions of such terms are applicable
to the singular as well as to the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms. The term
"including" shall mean "including without limitation." All other terms used
herein that are defined in the Trust Indenture Act (as hereinafter defined),
either directly or by reference herein, have the meanings assigned to them
therein.

            "60+ Day Delinquent Mortgage Asset": Each Mortgage Asset (including
each Mortgage Asset in foreclosure and each Mortgage Asset for which the Obligor
has filed for bankruptcy after the Closing Date) with respect to which any
portion of a Monthly Payment is, as of the last day of the prior Collection
Period, two months or more past due and each Mortgage Asset relating to an REO
Property. Any Mortgage Asset which, on a 3-month rolling average basis, has made
its scheduled Monthly Payments will not be considered to be a 60+ Day Delinquent
Mortgage Asset.

            "Account": Each (i) building contract or instalment sale contract
together with the related Account Note and Mortgage and (ii) new Account with a
related Account Note and Mortgage entered into in connection with the
liquidation of the items specified in (i) and the sale of property acquired in
respect thereof.

            "Account Note": The original promissory note or, with respect to
Accounts originated in Texas, the retail instalment contract executed by an
Obligor that evidences the indebtedness of such Obligor under an Account.

            "Accountant": A Person engaged in the practice of accounting who
(except when this Indenture provides that an Accountant must be Independent) may
be employed by or affiliated with the Issuer or an Affiliate of the Issuer.

            "Accrual Date": The date upon which interest begins accruing on the
Notes, which date is July 1, 2004.

            "Act": With respect to any Noteholder, as defined in Section
11.03(a).

            "Addition Notice": A written notice provided to the Indenture
Trustee pursuant to Section 8.09(b)(i) hereof.

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

            "Agent": Any Note Registrar, Paying Agent or Authenticating Agent.

            "Aggregate Outstanding Principal Amount": As of any Payment Date, an
amount equal to the sum of the Outstanding Principal Amounts as of such Payment
Date.

            "Aggregate Principal Balance": With respect to the Mortgage Assets,
the aggregate of the Principal Balances of all such Mortgage Assets at the time
of determination.

            "Assignments": Collectively, (i) the original instrument of
assignment of such Mortgage, Account Note or Mortgage Note, as applicable, and
other documents made by or on behalf of the Grantor to the Issuer and (ii) the
original instrument of assignment of such Mortgage, Account Note or Mortgage
Note, as applicable, and other documents made by the Issuer to the Indenture
Trustee (which in either case may to the extent permitted by the laws of the
state in which the related Mortgaged Property is located be a blanket instrument
of assignment covering other Mortgages and Account Notes or Mortgage Notes, as
applicable, as well and which may also, to the extent permitted by the laws of
the state in which the related Mortgaged Property is located, be an instrument
of assignment running directly from the mortgagee of record under the related
Mortgage to the Indenture Trustee).

            "Authenticating Agent": The Person, if any, appointed as
Authenticating Agent by the Indenture Trustee at the request of the Issuer
pursuant to Section 6.15, until any successor Authenticating Agent is named, and
thereafter "Authenticating Agent" shall mean such successor.

            "Authorized Officer": In the case of the Owner Trustee, the
President, any Vice-President, Financial Services Officer or Trust Officer or
any other officer of the Owner Trustee who is authorized to act for the Owner
Trustee in respect of the Issuer.

            "Available Funds": With respect to any Payment Date, an amount equal
to (A) the sum of (i) the amount of collections on the Mortgage Assets on
deposit in the Collection Account at the close of business on the last Business
Day of the related Collection Period, (ii) net investment income earned on funds
in the Collection Account from the date two Business Days prior to the preceding
Payment Date (or, in the case of the first Payment Date, from the Closing Date)
to the date two Business Days prior to such Payment Date, (iii) net investment
income on funds in the Holding Account during the related Collection Period,
(iv) any deposits made by the Indenture Trustee into the Collection Account on
such Payment Date from the Capitalized Interest Account to cover any Capitalized
Interest Shortfalls, (v) any interest or other investment earnings on amounts on
deposit in the Interest Reserve Account and any Pre-Funding Earnings, (vi) with
respect to the first Payment Date following the end of the Pre-Funding Period,
any amounts deposited into the Collection Account from the Pre-Funding Account
(exclusive of any Pre-Funding Earnings), (vii) the proceeds of any insurance
policy relating to the Mortgage Assets and (viii) any Reimbursement Amount or
Subsequent Recovery deposited to the Collection Account during the Collection
Period immediately preceding such Payment Date minus (B) Issuer Expenses.

            "Available Funds Allocation": The allocation of Available Funds
pursuant to Section 8.02(b) hereof.

            "Bank": Wilmington Trust Company, a Delaware banking corporation, in
its individual capacity and not as Owner Trustee pursuant to the Trust
Agreement, or any successor in its individual capacity.

            "Business Day": Any day that is not a Saturday, Sunday or a day on
which banking institutions in New York City or in the city in which the
Corporate Trust Office of the Indenture Trustee under this Indenture is located
are authorized or obligated by law or executive order to be closed.

            "Capitalized Interest Account": The account established and
maintained pursuant to Section 8.03(b).

            "Capitalized Interest Amount": The amount to be paid by the Issuer
to the Indenture Trustee for deposit into the Capitalized Interest Account on
the Closing Date pursuant to Section 8.03, which amount is $726,411.00.

            "Capitalized Interest Shortfall": With respect to a Payment Date
through and including the Payment Date immediately following the end of the
Pre-Funding Period, (A) the product of (a) a fraction, the numerator of which is
the balance of the Pre-Funding Account as of such Payment Date and the
denominator of which is the sum of (i) the aggregate Principal Balance of the
Initial Mortgage Assets as of the Cut-off Date and (ii) the amount of any funds
on deposit in the Pre-Funding Account on the Closing Date and (b) the aggregate
Interest Accrual Amount for the Notes for the related Interest Accrual Period
plus Issuer Expenses, minus (B) any Pre-Funding Earnings for such Collection
Period.

            "Class": Any one of the classes of Notes issued pursuant to this
Indenture.

            "Class A Initial Principal Amount": $180,251,000.

            "Class A Optimal Principal Amount": As to any Payment Date, the
greater of (A) an amount which, when paid to the Holders of the Class A Notes,
will result in the Current Class Percentage for the Class A Notes equaling the
Original Class Percentage for the Class A Notes; and (B) the product of (i) the
Optimal Principal Amount for such Payment Date and (ii) a fraction, the
numerator of which is the Class A Outstanding Principal Amount for such Payment
Date and the denominator of which is the Aggregate Outstanding Principal Amount
for such Payment Date; such product not to exceed the Class A Outstanding
Principal Amount.

            "Class A Outstanding Principal Amount": As of any Payment Date, the
Class A Initial Principal Amount reduced by (i) all payments, if any, on the
Class A Notes in reduction of their principal amount made on all prior Payment
Dates and (ii) all Class A Realized Loss Amounts allocated thereto with respect
to prior Payment Dates and increased by any Subsequent Recoveries allocated to
the Class A Notes with respect to prior Payment Dates.

            "Class A Realized Loss Amount": With respect to any Payment Date, an
amount equal to the excess of (i) the Class A Outstanding Principal Amount as of
such Payment Date (after taking into account any increase in the Class A
Outstanding Principal as a result of Subsequent Recoveries and the application
of the Class A Optimal Principal Amount, but prior to the application of losses
on such Payment Date) over (ii) the sum of the Aggregate Principal Balance of
the Mortgage Assets and the amount of any funds in the Pre-Funding Account
immediately following the Collection Period related to such Payment Date, not to
exceed the Class A Outstanding Principal Amount.

            "Class B Initial Principal Amount": $31,383,000.

            "Class B Optimal Principal Amount": As to any Payment Date, the
greater of (A) an amount which, when paid to the holders of the Class B Notes,
will result in the Current Class Percentage for the Class B Notes equaling the
Original Class Percentage for the Class B Notes; and (B) the product of (i) the
Optimal Principal Amount for such Payment Date and (ii) a fraction, the
numerator of which is the Class B Outstanding Principal Amount for such Payment
Date and the denominator of which is the Aggregate Outstanding Principal Amount
for such Payment Date; such product not to exceed the Class B Outstanding
Principal Amount.

            "Class B Outstanding Principal Amount": As of any Payment Date, the
Class B Initial Principal Amount reduced by (i) all payments, if any, on the
Class B Notes in reduction of their principal amount made on all prior Payment
Dates and (ii) all Class B Realized Loss Amounts with respect to prior Payment
Dates and increased by any Subsequent Recoveries allocated to the Class B Notes
with respect to prior Payment Dates.

            "Class B Realized Loss Amount": With respect to any Payment Date, an
amount equal to the excess of (i) the sum of (a) the Class A Outstanding
Principal Amount as of such Payment Date (after taking into account any increase
in the Class A Outstanding Principal as a result of Subsequent Recoveries and
the application of the Class A Optimal Principal Amount, but prior to the
application of losses on such Payment Date), (b) the Class M-1 Outstanding
Principal Amount as of such Payment Date (after taking into account any increase
in the Class M-1 Outstanding Principal as a result of Subsequent Recoveries and
the application of the Class M-1 Optimal Principal Amount, but prior to the
application of losses on such Payment Date), (c) the Class M-2 Outstanding
Principal Amount as of such Payment Date (after taking into account any increase
in the Class M-2 Outstanding Principal as a result of Subsequent Recoveries and
the application of the Class M-2 Optimal Principal Amount, but prior to the
application of losses on such Payment Date) and (d) the Class B Outstanding
Principal Amount as of such Payment Date (after taking into account any increase
in the Class B Outstanding Principal as a result of Subsequent Recoveries and
the application of the Class B Optimal Principal Amount, but prior to the
application of losses on such Payment Date) over (ii) the sum of the Aggregate
Principal Balance of the Mortgage Assets and the amount of any funds in the
Pre-Funding Account immediately following the Collection Period related to such
Payment Date, not to exceed the Class B Outstanding Principal Amount.

            "Class Interest Shortfall": With respect to a Class of Notes on any
Payment Date, an amount equal to the excess, if any, of the Interest Accrual
Amount for such Class of Notes over Available Funds (less any interest paid on
such Payment Date on each Class of Notes senior to such Class of Notes);
provided, however, that such amount shall not include interest due and payable
with respect to unreimbursed Realized Loss Amounts.

            "Class M-1 Initial Principal Amount": $48,282,000.

            "Class M-1 Optimal Principal Amount": As to any Payment Date, the
greater of (A) an amount which, when paid to the Holders of the Class M-1 Notes,
will result in the Current Class Percentage for the Class M-1 Notes equaling the
Original Class Percentage for the Class M-1 Notes; and (B) the product of (i)
the Optimal Principal Amount for such Payment Date and (ii) a fraction, the
numerator of which is the Class M-1 Outstanding Principal Amount for such
Payment Date and the denominator of which is the Aggregate Outstanding Principal
Amount for such Payment Date; such product not to exceed the Class M-1
Outstanding Principal Amount.

            "Class M-1 Outstanding Principal Amount": As of any Payment Date,
the Class M-1 Initial Principal Amount reduced by (i) all payments, if any, on
the Class M-1 Notes in reduction of their principal amount made on all prior
Payment Dates and (ii) all Class M-1 Realized Loss Amounts with respect to prior
Payment Dates and increased by any Subsequent Recoveries allocated to the Class
M-1 Notes with respect to prior Payment Dates.

            "Class M-1 Realized Loss Amount": With respect to any Payment Date,
an amount equal to the excess of (i) the sum of (a) the Class A Outstanding
Principal Amount as of such Payment Date (after taking into account any increase
in the Class A Outstanding Principal as a result of Subsequent Recoveries and
the application of the Class A Optimal Principal Amount, but prior to the
application of losses on such Payment Date) and (b) the Class M-1 Outstanding
Principal Amount as of such Payment Date (after taking into account any increase
in the Class M-1 Outstanding Principal as a result of Subsequent Recoveries and
the application of the Class M-1 Optimal Principal Amount, but prior to the
application of losses on such Payment Date) over (ii) the sum of the Aggregate
Principal Balance of the Mortgage Assets and the amount of any funds in the
Pre-Funding Account immediately following the Collection Period related to such
Payment Date, not to exceed the Class M-1 Outstanding Principal Amount.

            "Class M-2 Initial Principal Amount": $34,602,000.

            "Class M-2 Optimal Principal Amount": As to any Payment Date, the
greater of (A) an amount which, when paid to the Holders of the Class M-2 Notes,
will result in the Current Class Percentage for the Class M-2 Notes equaling the
Original Class Percentage for the Class M-2 Notes; and (B) the product of (i)
the Optimal Principal Amount for such Payment Date and (ii) a fraction, the
numerator of which is the Class M-2 Outstanding Principal Amount for such
Payment Date and the denominator of which is the Aggregate Outstanding Principal
Amount for such Payment Date; such product not to exceed the Class M-2
Outstanding Principal Amount.

            "Class M-2 Outstanding Principal Amount": As of any Payment Date,
the Class M-2 Initial Principal Amount reduced by (i) all payments, if any, on
the Class M-2 Notes in reduction of their principal amount made on all prior
Payment Dates and (ii) all Class M-2 Realized Loss Amounts with respect to prior
Payment Dates and increased by any Subsequent Recoveries allocated to the Class
M-2 Notes with respect to prior Payment Dates.

            "Class M-2 Realized Loss Amount": With respect to any Payment Date,
an amount equal to the excess of (i) the sum of (a) the Class A Outstanding
Principal Amount as of such Payment Date (after taking into account any increase
in the Class A Outstanding Principal as a result of Subsequent Recoveries and
the application of the Class A Optimal Principal Amount, but prior to the
application of losses on such Payment Date), (b) the Class M-1 Outstanding
Principal Amount as of such Payment Date (after taking into account any increase
in the Class M-1 Outstanding Principal as a result of Subsequent Recoveries and
the application of the Class M-1 Optimal Principal Amount, but prior to the
application of losses on such Payment Date) and (c) the Class M-2 Outstanding
Principal Amount as of such Payment Date (after taking into account any increase
in the Class A Outstanding Principal as a result of Subsequent Recoveries and
the application of the Class M-2 Optimal Principal Amount, but prior to the
application of losses on such Payment Date) over (ii) the sum of the Aggregate
Principal Balance of the Mortgage Assets and the amount of any funds in the
Pre-Funding Account immediately following the Collection Period related to such
Payment Date, not to exceed the Class M-2 Outstanding Principal Amount.

            "Closing Date": July 15, 2004.

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

            "Collection Account": The trust account or accounts created and
maintained pursuant to Section 8.02.

            "Collection Period": With respect to any Payment Date, the one-month
period ending on the close of business on the last day of the month preceding
the month in which the related Payment Date occurs.

            "Commission": The Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, as
amended, or if at any time such Commission is not existing and performing the
duties now assigned under the Trust Indenture Act, then the body performing such
duties at such time under the Trust Indenture Act or similar legislation
replacing the Trust Indenture Act.

            "Corporate Trust Office": The designated corporate trust office of
the Indenture Trustee located at 101 Barclay Street - 8W, New York, New York
10286 or at such other address as the Indenture Trustee may designate from time
to time by notice to the Noteholders and the Issuer, or the principal corporate
trust office of any successor Indenture Trustee.

            "Coupon Rate": The per annum rate a which a Mortgage Asset accrues
finance charges.

            "Cumulative Realized Losses": With respect to any Payment Date, the
cumulative excess as of the end of the related Collection Period of (A) the
Principal Balance of all Mortgage Assets that have been charged off, written off
or otherwise reduced, in whole or in part (other than any REO Property that has
not yet been liquidated), less (B) the Net Liquidation Proceeds, if any, of such
Mortgage Assets, any new Mortgage Asset that is part of such Net Liquidation
Proceeds being valued for this purpose at its Principal Balance, and the
remaining Principal Balance of any Mortgage Asset that has been charged off,
written off or reduced for any reason, in part but not in whole.

            "Current Class Percentage": With respect to any Class of Notes and
any Payment Date (following the Available Funds Allocation and the allocation of
any Realized Loss Amounts with respect to such Payment Date), the percentage
produced by dividing such Class' Outstanding Principal Amount by the Aggregate
Outstanding Principal Amount.

            "Custodial Agreement": Initially, the Custodial Agreement, dated
July 15, 2004, among the Issuer, the Servicer, the Indenture Trustee and the
Document Custodian and thereafter any custodial agreement entered in to pursuant
to Section 6.16.

            "Cut-off Date": With respect to each Initial Mortgage Asset, the
close of business on June 30, 2004. With respect to each Subsequent Mortgage
Asset acquired during the Pre-Funding Period, the close of business on the last
day of the month prior to the month in which such Subsequent Mortgage Asset was
pledged to the Indenture Trustee pursuant to a Subsequent Transfer Agreement.

            "Debt Service Requirement Determination Date": The date prior to
each Payment Date as of which the Indenture Trustee is required to compute the
amount due and payable on the Notes on such Payment Date; such date is the third
Business Day prior to a Payment Date.

            "Default": Any occurrence which is, or with notice or the lapse of
time or both would become, an Event of Default.

            "Defective Mortgage Asset": As defined in Section 3.11(b) and
Section 3.12(b).

            "Deleted Mortgage Asset": As defined in Section 3.11(b) and Section
3.12(b).

            "Document Custodian": Initially, Wachovia Bank, National
Association, and thereafter the Document Custodian, if any, hereafter appointed
by the Indenture Trustee pursuant to Section 6.16. The Document Custodian may
(but need not) be the Indenture Trustee or any Person directly or indirectly
controlling or controlled by or under common control of the Indenture Trustee.
None of the Issuer, the Servicer or any Person directly or indirectly
controlling or controlled by or under common control with the Issuer or the
Servicer may be appointed Document Custodian.

            "Due Date": With respect to any Mortgage Asset, the date each month
on which the Monthly Payment is payable.

            "Eligible Account": (a) A segregated account or accounts maintained
with a depository institution or trust company whose long-term unsecured debt
obligations are rated at least "AA-" by S&P and at least "A1" by Moody's at the
time of any deposit therein or whose short-term unsecured debt obligations are
rated the Highest Credit Rating by the Rating Agencies or (b) a segregated trust
account or accounts maintained with a federal or state chartered depository
institution subject to regulations regarding fiduciary funds on deposit
substantially similar to 12 C.F.R. Section 9.10(b).

            "Eligible Investments": Any one or more of the following obligations
or securities:

            (a) (i) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America or any agency or
instrumentality of the United States of America, the obligations of which are
backed by the full faith and credit of the United States of America and (ii)
direct obligations of, and obligations guaranteed as to timely payment by,
Fannie Mae or Freddie Mac only if, at the time of investment, they are assigned
the Highest Credit Rating by the Rating Agencies;

            (b) demand and time deposits in, certificates of deposit of, or
banker's acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America (including the
Indenture Trustee or any agent of the Indenture Trustee acting in their
respective commercial capacities) or any State and subject to supervision and
examination by federal and/or State banking authorities; provided that (1) the
commercial paper and/or the debt obligations of such depository institution (or,
in the case of the principal depository institution in a holding company system,
the commercial paper or debt obligations of such holding company) at the time of
such investment or contractual commitment providing for such investment is
assigned the Highest Credit Rating by the Rating Agencies or (2) the long-term
debt securities of such depository institutions are rated the Highest Credit
Rating by the Rating Agencies;

            (c) repurchase obligations pursuant to a written agreement with
respect to (i) any security described in clause (a) above or (ii) any other
security issued or guaranteed by an agency or instrumentality of the United
States of America, in either case entered into with an entity whose debt
obligations are assigned the Highest Credit Rating by the Rating Agencies
(including, if applicable, the Indenture Trustee or any agent of the Indenture
Trustee acting in their respective commercial capacities) and in each case where
the Indenture Trustee has taken delivery of such security;

            (d) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
State whose debt obligations are assigned the Highest Credit Rating by the
Rating Agencies at the time of such investment or contractual commitment
providing for such investment; provided, however, that securities issued by any
particular corporation will not be Eligible Investments to the extent that such
an investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the Trust Estate for
the Notes to exceed 10% of the Trust Estate for the Notes;

            (e) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) which have been
assigned the Highest Credit Rating by the Rating Agencies at the time of such
investment;

            (f) certificates or receipts representing ownership interests in
future interest or principal payments on obligations described in clause (a)
above which are held by a custodian on behalf of the holders of such
certificates or receipts; and

            (g) any other demand or time deposit, obligation, security or
investment provided that the Issuer shall have given prior written notice of
such other investment to the Rating Agencies, and the Indenture Trustee shall
have received written confirmation from each of the Rating Agencies that no
reduction, withdrawal or qualification in the rating on the Notes by either such
Rating Agency will result from the addition of such Eligible Investment.

            "Eligible Moneys": Any moneys on deposit in trust with the Indenture
Trustee for the benefit of the Noteholders with respect to which the Indenture
Trustee has received an Opinion of Counsel nationally recognized as expert in
bankruptcy acceptable to the Indenture Trustee that payment of such amounts to
the Noteholders would not constitute avoidable preferences under Section 547 of
the United States Bankruptcy Code in the event of the filing of a petition for
relief under the United States Bankruptcy Code by or against the Issuer or any
borrower or the person from whom the money is received, if other than the Issuer
or the borrower.

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

            "Event of Default": As defined in Section 5.01.

            "Exchange Act": As defined in Section 3.21(a).

            "Full Prepayment": Payment to the Servicer, whether by the Obligor
or through Insurance Proceeds, of an amount with respect to a Mortgage Asset
such that the full amount due with respect to such Mortgage Asset has been paid.

            "Grant": A Grant of a Mortgage Asset and the related Mortgage Asset
Documents, an Eligible Investment, the Servicing Agreement or any other
instrument means to mortgage, pledge, assign or grant a security interest in
such instrument and shall include all rights, powers and options (but none of
the obligations) of the granting party thereunder, including without limitation
the immediate and continuing right to claim, collect and receive payments in
respect of the Mortgage Asset or Eligible Investment, insurance proceeds,
condemnation awards, purchase prices and all other moneys payable thereunder and
all proceeds thereof, 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 which the granting party is or may be entitled to do or
receive thereunder or with respect thereto.

            "Grantor": Mid-State Capital Corporation, a Delaware corporation, in
its capacity as grantor of the Trust, and as otherwise defined in the Trust
Agreement.

            "Hazard Insurance Policy": With respect to each Mortgage Asset, the
policy of fire and extended coverage insurance required to be maintained for the
related Mortgaged Property, as provided in Section 2.13 of the Servicing
Agreement, and which, as provided in said Section 2.13, may be a blanket
mortgage impairment policy maintained by the Servicer in accordance with the
terms and conditions of said Section 2.13.

            "Hazard Insurer": The named insurer in any Hazard Insurance Policy.

            "Highest Credit Rating": With respect to Moody's, "P-1" or "Aaa" and
with respect to S&P, "A-1+" or "AAA."

            "Holding Account": The account created and maintained pursuant to
the Holding Account Agreement.

            "Holding Account Agreement": The Holding Account Agreement, dated
July 15, 2004, among Wachovia Bank, National Association, as custodian for the
Indenture Trustee, the Indenture Trustee, the Servicer and the Issuer.

            "Indenture" or "this Indenture": This instrument as originally
executed and, if from time to time supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, as so supplemented or amended. All references in this
instrument to designated "Articles," "Sections," "Subsections" and other
subdivisions are to the designated Articles, Sections, Subsections and other
subdivisions of this instrument as originally executed. The words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section, Subsection or other
subdivision.

            "Indenture Maturity Date":  The Payment Date in August 2037.

            "Indenture Trustee": The Bank of New York, a New York banking
corporation, until a successor Person shall have become the Indenture Trustee
pursuant to the applicable provisions of this Indenture, and thereafter
"Indenture Trustee" shall mean such successor Person.

            "Independent": When used with respect to any specified Person means
such a Person who (1) is in fact independent of the Issuer, any Affiliate of the
Issuer, any other obligor upon the Notes and any Affiliate of any such other
obligor, (2) does not have any direct financial interest or any material
indirect financial interest in the Issuer or in any such other obligor or in an
Affiliate of the Issuer or such other obligor, and (3) is not connected with the
Issuer, any Affiliate of the Issuer, any such other obligor or any Affiliate of
any such other obligor as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate shall be furnished
to the Indenture Trustee, such Person shall be appointed by an Issuer Order and
such opinion or certificate shall state that the signer has read this definition
and that the signer is Independent within the meaning thereof.

            "Individual Note": A Note of an initial principal amount of $25,000;
a Note of an original principal amount in excess of $25,000 shall be deemed to
be a number of Individual Notes equal to the quotient obtained by dividing such
initial principal amount by $25,000.

            "Initial Mortgage Asset": Any of the Mortgage Assets purchased
pursuant to the Purchase and Sale Agreement listed in the Schedule of Mortgage
Assets delivered to the Indenture Trustee, or Document Custodian on behalf of
the Indenture Trustee, pursuant to this Indenture as of the Closing Date.

            "Initial Principal Amount": Any of the Class A Initial Principal
Amount, the Class M-1 Initial Principal Amount, the Class M-2 Initial Principal
Amount or the Class B Initial Principal Amount.

            "Initial Reserve Account Deposit": The initial deposit into the
Interest Reserve Account equal to 0.50% of the sum of the Aggregate Principal
Balance of the Initial Mortgage Assets as of the Cut-off Date and the amount of
any funds on deposit in the Pre-Funding Account on the Closing Date.

            "Insolvency Proceeding": As defined in Section 5.06.

            "Insurance Proceeds": Amounts paid by a Hazard Insurer with respect
to a particular Mortgaged Property pursuant to any related Hazard Insurance
Policy or paid by any other insurer with respect to a particular Mortgaged
Property pursuant to any other related insurance policy.

            "Insured Expenses": Expenses incurred by the Servicer in connection
with a Mortgage Asset under which the mortgagor is in default which are covered
by any related Hazard Insurance Policy and are paid by the Hazard Insurer under
any such policy.

            "Interest Accrual Amount": As to any Class of Notes for any Payment
Date, an amount equal to the interest accrued on the Outstanding Principal
Amount of such Class of Notes (after giving effect to payments and allocations
of losses on the preceding Payment Date) during the Interest Accrual Period at
the applicable Note Interest Rate for such Class of Notes; provided, however,
that such amount shall not include interest due and payable with respect to
unreimbursed Realized Loss Amounts.

            "Interest Accrual Period": With respect to any Payment Date, the
period from and including the first day of the calendar month preceding the
calendar month of such Payment Date to but not including the first day of the
calendar month of such Payment Date. Interest will be calculated on the basis of
a 360-day year consisting of twelve 30-day months. Interest on the Notes will be
payable from any funds on deposit in the Collection Account on such Payment
Date.

            "Interest Reserve Account": The trust account created and maintained
pursuant to Section 8.03(c).

            "Interest Reserve Account Withdrawal Amount": The amount, if any,
with respect to any Payment Date, which remains unpaid after the application of
Available Funds pursuant to priorities first through eighth, tenth, thirteenth,
sixteenth and nineteenth pursuant to Section 8.02(b), such amount not to exceed
the amount on deposit in the Interest Reserve Account on such Payment Date.

            "Issuer": Mid-State Capital Corporation 2004-1 Trust, a Delaware
statutory trust created pursuant to the Trust Agreement, until a successor
Person shall have become the Issuer pursuant to the applicable provisions of
this Indenture, and thereafter "Issuer" shall mean such successor Person.

            "Issuer Expenses": All operating expenses of the Issuer (exclusive
of interest on the Notes, but including the expenses of the Owner Trustee and
the fees and expenses of the Indenture Trustee (including, without limitation,
amounts to which the Indenture Trustee is entitled under Section 6.07), the
Standby Servicer Fee and the Servicing Fee (which includes amounts payable to
the Sub-Servicer)).

            "Issuer Order" and "Issuer Request": A written order or request
signed in the name of the Issuer by an Authorized Officer, and delivered to the
Indenture Trustee.

            "Liquidation Expenses": Expenses incurred by the Servicer in
connection with the liquidation of any Mortgage Asset which is in default and
the sale of any property acquired in respect thereof which are not recoverable
as Insured Expenses and are otherwise reimbursable to the Servicer in accordance
with Sections 2.07(c), 2.11 and 2.15 of the Servicing Agreement.

            "Liquidation Proceeds": Cash and new Account Notes or Mortgage Notes
with related security instruments received by the Servicer (before reimbursement
of the Servicer for Liquidation Expenses) in connection with the liquidation of
any Mortgage Asset which is in default and the sale of any property acquired in
respect thereof, whether as Insurance Proceeds or through trustee's sale,
foreclosure sale or otherwise.

            "Maturity": With respect to the Notes, the date on which the entire
unpaid principal amount of the Notes becomes due and payable as therein or
herein provided, whether at the date specified therefor in the Notes or, if
earlier, by declaration of acceleration, call for redemption or otherwise.

            "Maturity Date": With respect to any Mortgage Asset, the date on
which the last payment of principal of such Mortgage Asset shall be due and
payable.

            "Mid-State Trust IX": Mid-State Trust IX, a Delaware statutory
trust, as seller under the Mortgage Asset Sale Agreement.

            "Monthly Payment": With respect to any Mortgage Asset, the scheduled
monthly payment payable to the holder of such Mortgage Asset in accordance with
the terms of the related Account Note or Mortgage Note.

            "Moody's": Moody's Investors Service, Inc. and its successors and
assigns.

            "Mortgage": With respect to (i) an Account, the original mortgage,
deed of trust, mechanic's lien contract or other security instrument executed by
an Obligor which creates a lien on real property and improvements thereon
securing an Account Note and (ii) a Mortgage Loan, the mortgage, deed of trust
or other instrument creating a first lien on, or first priority security
interest in, a Mortgaged Property securing a Mortgage Note.

            "Mortgage Asset": The Accounts and Mortgage Loans. The term
"Outstanding Mortgage Assets" as of any date means the Mortgage Assets other
than those which, as of or prior to such date as indicated in any report of the
Servicer delivered to the Indenture Trustee pursuant to Section 3.01 of the
Servicing Agreement, have been the subject of a Full Prepayment or as to which
the Servicer has determined that no further amounts can be recovered. "Mortgage
Assets" shall include both Initial Mortgage Assets and Subsequent Mortgage
Assets.

            "Mortgage Asset Documents": With respect to each Mortgage Asset, (i)
in the case of each Account, the building or instalment sale contract relating
to such Account, (ii) the Account Note or Mortgage Note, endorsed to the order
of the Issuer, without recourse, and endorsed by or on behalf of the Issuer in
blank or to the order of the Indenture Trustee, without recourse, (iii) the
original of the recorded Mortgage and the originals of all other documents, if
any, securing said Account Note or Mortgage Note, (iv) unrecorded Assignments in
recordable form to the Indenture Trustee, together with originals or certified
copies of any intervening recorded assignment, (v) the originals of any
assumption agreement, written assurance or substitution agreement required to be
delivered to the Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, pursuant to Section 2.10 of the Servicing Agreement, (vi) all
insurance policies, including without limitation lenders title insurance
policies (in the case of the Mortgage Loans) and fire and extended hazard
insurance policies related to the Mortgage Assets, naming the Issuer, the
Indenture Trustee, the Servicer or the Sub-Servicer as the loss payee of such
policies, and (vii) any and all other documents or instruments in the possession
of the Grantor relating to the Mortgage Assets, which evidence, or were created
in connection with the origination of, or necessary for the administration of
the Mortgage Assets, including without limitation any credit reports, copies of
deeds, completion certificates, title search reports and loan applications; if
the original copy of any document described in clause (iii), (iv) or (v) has
been retained by the recording office in which such document was recorded, then
a copy thereof certified as true and correct by a duly authorized representative
of such recording office shall be included as part of the Mortgage Asset
Documents for the related Mortgage Asset. Notwithstanding any provision
contained herein, the Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, shall have no duty to review, maintain custody of or take any
action with respect to the documents set forth in clauses (vi) and (vii) above.

            "Mortgage Asset Sale Agreement": The Mortgage Asset Sale Agreement,
dated July 15, 2004 among Mid-State Trust IX, as seller, Mid-State Homes, Inc.
and Mid-State Capital Corporation, as purchaser.

            "Mortgage Loan": Each closed-end, fixed-rate mortgage loan secured
by a mortgage, deed of trust or other similar security instrument which create a
first lien on a single family residential property consisting of a single family
dwelling unit originated or purchased by Walter Mortgage Company.

            "Mortgage Note": The original executed note or other evidence of
indebtedness of an Obligor under a Mortgage Loan.

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

            "Net Liquidation Proceeds": With respect to any Mortgage Asset, the
amount derived by subtracting the related Liquidation Expenses from the
Liquidation Proceeds of such Mortgage Asset.

            "Note Interest Rate": With respect to each Class, the annual rate at
which interest accrues on such Class of Notes, as specified in such Class of
Notes and in Section 2.03.

            "Note Register" and "Note Registrar": As defined in Section 2.07.

            "Notes": Any notes authorized by, and authenticated and delivered
under, this Indenture.

            "Noteholder" or "Holder": The Person in whose name a Note is
registered in the Note Register.

            "Obligor": Each Person who is indebted under an Account Note or
Mortgage Note or who has acquired real property subject to the Mortgage securing
an Account Note or Mortgage Note.

            "Officer's Certificate": A certificate signed by an Authorized
Officer.

            "Opinion of Counsel": A written opinion of counsel who may, except
as otherwise expressly provided in this Indenture, be counsel for the Issuer and
who shall be satisfactory to the Indenture Trustee.

            "Optimal Principal Amount": An amount equal to (A) on any Payment
Date on which there exists an uncured Trigger Event, the Remaining Available
Funds; and (B) on any Payment Date on which there does not exist an uncured
Trigger Event, the amount which, when paid as principal on the Notes, will
result in an Overcollateralization Amount equal to the Target
Overcollateralization Level; provided that in no event will the Optimal
Principal Amount for any Payment Date exceed the Remaining Available Funds for
such Payment Date or the Aggregate Outstanding Principal Amount.

            "Original Class Percentage" With respect to any Class of Notes, the
percentage produced by dividing such Class' Initial Principal Amount by the
aggregate Initial Principal Amount for all Classes of Notes.

            "Outstanding": As of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:

            (i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;

            (ii) Notes or portions thereof for whose payment or redemption money
(complying with Section 4.01) in the necessary amount has been theretofore
deposited with the Indenture Trustee or any Paying Agent (other than the Issuer)
in trust for the Holders of such Notes; provided, however, that if such Notes
are to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor, satisfactory to the Indenture Trustee, has
been made; and

            (iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this 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 in determining whether the Holders of the requisite
percentage of the Voting Rights of the Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Issuer, any other obligor upon the Notes or any Affiliate of the Issuer or
such other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Indenture Trustee shall be fully protected in
relying upon any such request, demand, authorization, direction, notice,
consent, or waiver, only Notes which a Responsible Officer of the Indenture
Trustee knows to be so owned shall be so disregarded. Notes so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Indenture 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 the Issuer or such other
obligor.

            "Outstanding Principal Amount": Any of the Class A Outstanding
Principal Amount, the Class M-1 Outstanding Principal Amount, the Class M-2
Outstanding Principal Amount and Class B Outstanding Principal Amount, as
applicable.

            "Overcollateralization Amount": With respect to any Payment Date, an
amount equal to (a) the sum of (i) the Aggregate Principal Balance of the
Mortgage Assets on the last day of the related Collection Period and (ii) the
amount, if any, on deposit in the Pre-Funding Account on the last day of the
related Collection Period less (b) the Aggregate Outstanding Principal Amount of
the Notes after giving effect to the payments to be made on such Payment Date,
the allocation of Realized Loss Amounts and the increase of any Outstanding
Principal Amount as a result of Subsequent Recoveries.

            "Owner Trustee": Wilmington Trust Company, acting not in its
individual capacity but solely as owner trustee with respect to the Issuer, or
such successor Person as shall become owner trustee pursuant to applicable
provisions of this Indenture and shall be owner trustee under, or become owner
trustee pursuant to applicable provisions of the Trust Agreement.

            "Paying Agent": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Issuer pursuant to
Section 3.03 to pay the principal of, or interest on, any Notes on behalf of the
Issuer.

            "Payment Date": The 15th day of each month beginning August 15, 2004
or, if such date is not a Business Day, the next Business Day thereafter.

            "Payment Date Statement": As defined in Section 2.09(d).

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

            "Predecessor Notes": 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 2.08 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note.

            "Preference Claim": As defined in Section 5.06(a).

            "Pre-Funded Amount": With respect to any date, the amount on deposit
in the Pre-Funding Account as of such date (net of any reinvestment earnings
thereon).

            "Pre-Funding Account": The account established and maintained
pursuant to Section 8.03(a).

            "Pre-Funding Earnings": With respect to each Payment Date, the
actual investment earnings earned on amounts on deposit in the Pre-Funding
Account during the period from the preceding Payment Date (or the Closing Date,
in the case of the first Payment Date) to the current Payment Date.

            "Pre-Funding Period": The period beginning on the day following the
Closing Date and ending on the earlier of (a) the date on which the amount on
deposit in the Pre-Funding Account is less than $100,000 or (b) the close of
business on October 14, 2004.

            "Principal Balance": With respect to any Mortgage Asset, as of any
date, the amount financed at its origination, less the sum of scheduled and
unscheduled principal payments made on such Mortgage Asset.

            "Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.

            "Purchase and Sale Agreement": The Purchase and Sale Agreement,
dated July 15, 2004 between Mid-State Capital Corporation and Mid-State Capital
Corporation 2004-1 Trust which provides for, among other things, the purchase by
Mid-State Capital Corporation 2004-1 Trust of all interest of Mid-State Capital
Corporation in the Initial Mortgage Assets.

            "Qualified Substitute Mortgage Asset" means a mortgage asset
substituted by the Issuer for a Deleted Mortgage Asset which must, on the date
of such substitution, (i) have an outstanding Principal Balance, after deduction
of all scheduled payments due in the month of substitution, not less than the
Principal Balance of the Deleted Mortgage Asset (unless the amount of any
shortfall will be deposited into the Collection Account by the Issuer, pursuant
to Section 3.11(b), for distribution to Noteholders in the month following the
month of substitution), (ii) have a Coupon Rate not less than the Coupon Rate of
the Deleted Mortgage Asset, (iii) comply with each representation and warranty
set forth in Section 3.11(a), (iv) generally be of like quality and type as the
Deleted Mortgage Asset and (v) have an original term to maturity which shall not
cause such Mortgage Asset to mature later than August 2037. In the event that
either one mortgage asset is substituted for more than one Deleted Mortgage
Asset, or more than one mortgage asset is substituted for one or more Deleted
Mortgage Assets, then the amount described in clause (i) hereof shall be
determined on the basis of aggregate Principal Balance.

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

            "Realized Loss Amount": Any of the Class A Realized Loss Amount, the
Class M-1 Realized Loss Amount, the Class M-2 Realized Loss Amount and Class B
Realized Loss Amount, as applicable.

            "Record Date": With respect to any Payment Date, the last day of the
month (or, if such day is not a Business Day, the preceding Business Day)
preceding the month of such Payment Date.

            "Redemption Date": Any Payment Date on which Notes are to be
redeemed at the option of the Grantor pursuant to Article X.

            "Redemption Price": With respect to any Notes to be redeemed
pursuant to Article X hereof, an amount equal to 100% of the Aggregate
Outstanding Principal Amount of the Notes (prior to allocations of any Realized
Loss Amounts), together with interest on such amount and interest on any unpaid
interest or unreimbursed Realized Loss Amounts at the applicable Note Interest
Rate from the latest date to which interest has been paid to the applicable
Redemption Date.

            "Reimbursement Amount": As defined in Section 3.11(b).

            "Remaining Available Funds": With respect to any Payment Date, the
Available Funds for such Payment Date reduced by the amount of interest due on
the Notes on such Payment Date (excluding interest on any Realized Loss
Amounts).

            "Remittance": With respect to any one or more Mortgage Assets for
any particular date or period, the net amount with respect to collections or
receipts on such Mortgage Assets for such date or period that is required to be
remitted by the Servicer to the Indenture Trustee for deposit in the Collection
Account.

            "Remittance Date": The first Remittance Date shall be the Closing
Date and thereafter the first Business Day of each week.

            "REO Property": A Mortgaged Property acquired by the Servicer on
behalf of the Trust through foreclosure or deed-in-lieu of foreclosure.

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

            "Responsible Officer": With respect to the Indenture Trustee, the
president, any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer or any other officer of the Indenture Trustee in the
Corporate Trust Office customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.

            "S&P": Standard & Poor's, a division of The McGraw Hill Companies,
Inc., and its successors and assigns.

            "Sale": As defined in Section 5.18(a).

            "Schedule of Mortgage Assets": Collectively, the list of Initial
Mortgage Assets being Granted to the Indenture Trustee as part of the Trust
Estate on the Closing Date appearing on a magnetic media delivered to the
Indenture Trustee and any Document Custodian on the Closing Date, as
supplemented by each schedule of Subsequent Mortgage Assets attached to an
Subsequent Transfer Agreement, which list shall set forth the following
information as of the Cut-off Date or Subsequent Transfer Date, as applicable,
with respect to each such Mortgage Asset in numbered columns.

     Column Number                        Information
     -------------                        -----------
           1               Account Number
           2               Trust
           3               As of [report date]
           4               Economic Balance
           5               Current Principal Balance
           6               Current Gross Instalment Balance
           7               Original Gross Instalment Balance
           8               Original Amount Financed
           9               Total Original Time Charge
          10               Original Payment Amount
          11               First Pay Due
          12               Property State
          13               Property ZIP
          14               Original Terms
          15               Original Rate
          16               Next Due Date
          17               Sale Date
          18               Fund Date
          19               Maturity

            "Servicer": Mid-State Homes, Inc., a Florida corporation, as
servicer under the Servicing Agreement, and its permitted successors and assigns
thereunder, including any successor servicer appointed pursuant to Section
3.07(d).

            "Servicer Reporting Date": The date each month on which the Servicer
is required pursuant to Section 3.01 of the Servicing Agreement to report to the
Issuer, the Successor Servicer and the Indenture Trustee information concerning
the Mortgage Assets, including all collections on the Mortgage Assets received
by it during the related Collection Period (as defined in the Servicing
Agreement), which date shall be the 10th day of each month following such
Collection Period or, if such day is not a Business Day, the next preceding
Business Day.

            "Servicer Termination Delinquency Rate Trigger": As of any Payment
Date commencing with the third Payment Date, if the percentage equal to the
average of the 60+ Day Delinquent Mortgage Assets for each of the three
immediately preceding Collection Periods with respect to the Mortgage Assets
exceeds 8.00%

            "Servicer Termination Loss Trigger": With respect to any Payment
Date, if the percentage equal to Cumulative Realized Losses divided by the sum
of (i) the Aggregate Principal Balance of the Initial Mortgage Assets as of the
Cut-off Date and (ii) the amount on deposit in the Pre-Funding Account as of the
Closing Date exceeds the applicable percentages set forth below with respect to
such Payment Date:

Payment Date Occurring In                            Percentage
-------------------------                            ----------
August 2004 through July 2010                          4.75%
August 2010 through July 2011                          5.50%
August 2011 through July 2012                          6.50%
August 2012 through July 2013                          7.00%
August 2013 and thereafter                             8.00%

            "Servicing Account": As defined in Section 2.08(b) of the Servicing
Agreement.

            "Servicing Agreement": The Servicing Agreement, dated July 15, 2004,
among the Issuer, the Servicer and the Indenture Trustee, providing, among other
things, for the servicing of the Mortgage Assets, as said agreement may be
amended or supplemented from time to time as permitted hereby and thereby. Such
term shall also include any servicing agreement for Mortgage Assets entered into
with a Successor Servicer pursuant to Section 3.07(d) hereof.

            "Servicing Default": Any default by the Servicer under the Servicing
Agreement that is an "Event of Default" under the Servicing Agreement, as
specified in Section 5.01 thereof.

            "Servicing Fee": With respect to any Mortgage Asset, other than a
Mortgage Asset with respect to which (i) the related Mortgaged Property has been
repossessed or (ii) the related Principal Balance is zero pursuant to the
proviso of the definition of "Principal Balance," the fee payable to the
Servicer under the Servicing Agreement, which fee shall be the product of 0.60%
per annum (60 basis points) and the Principal Balance of such Mortgage Asset as
of the beginning of the immediately preceding Collection Period.

            "Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Assets whose
name appears on a list of servicing officers furnished to the Issuer, the
Indenture Trustee and any Document Custodian by the Servicer, as such list may
be amended or supplemented from time to time.

            "Similar Law": As defined in Section 2.07 hereof.

            "Standby Servicer": Initially GMAC Mortgage Corporation, a
Pennsylvania corporation, or any successor appointed in accordance with the
Standby Servicing Agreement.

            "Standby Servicer Fee": The fee payable to the Standby Servicer
pursuant to the Standby Servicing Agreement.

            "Standby Servicing Agreement": The Standby Servicing Agreement dated
July 15, 2004 by and among the Servicer, the Issuer, the Indenture Trustee and
the Standby Servicer.

            "Subsequent Mortgage Asset": Any of the Mortgage Assets purchased by
the Issuer using funds in the Pre-Funding Account and pledged to the Indenture
Trustee, all pursuant to Section 8.09, such Mortgage Assets being identified on
the Schedule of Mortgage Assets attached to the Subsequent Transfer Agreement.

            "Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
executed by the Indenture Trustee and the Issuer substantially in the form of
Exhibit E hereto, by which Subsequent Mortgage Assets are pledged to the
Indenture Trustee.

            "Subsequent Transfer Date": The date specified in each Subsequent
Transfer Agreement.

            "Subsequent Recovery": Any amount (net of reimbursable expenses)
received on a Mortgage Asset subsequent to the liquidation of such Mortgage
Asset that resulted in a Realized Loss in a prior month.

            "Sub-Servicer": As defined in the Servicing Agreement.

            "Successor Servicer": The Person appointed, or required to act as,
Successor Servicer pursuant to Section 3.07 hereof.

            "Target Overcollateralization Level": As of any Payment Date, 10.00%
of the sum of (a) Aggregate Principal Balance of the Initial Mortgage Assets as
of the Cut-off Date and (b) the amount on deposit in the Pre-Funding Account as
of the Closing Date.

            "Trigger Event": The occurrence of any of the following events:

            (a) the Issuer fails to make a payment due hereunder and such
failure continues for two Business Days;

            (b) the Servicer fails to make a required payment or deposit due
under the Servicing Agreement and such failure continues for five Business Days;

            (c) an Event of Default (as defined in the Servicing Agreement)
occurs under Section 5.01(a)(iv), (v) or (vi) of the Servicing Agreement;

            (d) a breach of any covenant of the Servicer in the Servicing
Agreement which may have a materially adverse effect on the Servicer or its
performance under the Servicing Agreement is not cured within 60 days after the
Servicer becomes aware thereof or after notice thereof from any Person;

            (e) any representation or warranty by Mid-State Capital Corporation
in the Purchase and Sale Agreement, or any representation or warranty by the
Issuer herein, is incorrect and such breach may have a materially adverse effect
on the Issuer or the Noteholders and is not cured, or the related Mortgage Asset
is not substituted for or repurchased by Mid-State Capital Corporation and in
either case released from the lien of this Indenture, within 90 days after
notice thereof from the Indenture Trustee;

            (f) there shall occur the entry of a decree or order for relief by a
court having jurisdiction in respect of the Issuer in an involuntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other present
or future federal or state bankruptcy, insolvency or similar law, or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or of any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days;

            (g) there shall occur the commencement by the Issuer of a voluntary
case under the federal bankruptcy laws, as now or hereafter in effect, or any
other present or future federal or state bankruptcy, insolvency or similar law,
or the consent by the Issuer to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or of any substantial part of its property or the
making by the Issuer of an 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 corporate action by the Issuer in furtherance of any of the foregoing;

            (h) the Purchase and Sale Agreement, the Servicing Agreement or this
Indenture ceases to be in full force and effect;

            (i) the lien of this Indenture ceases to be effective or ceases to
be of a first priority; or

            (j) the occurrence of a Servicer Termination Delinquency Rate
Trigger or a Servicer Termination Loss Trigger.

            "Trust": The trust established by the Trust Agreement.

            "Trust Agreement": The trust agreement dated July 13, 2004 and as
restated, supplemented or otherwise modified from time to time, between the Bank
and the Grantor.

            "Trust Estate": All money, instruments and other property subject or
intended to be subject to the lien of this Indenture for the benefit of the
Holders of the Notes as of any particular time (including all property and
interests Granted to the Indenture Trustee in the Granting Clauses of this
Indenture), including all proceeds thereof, and all right, title and interest of
the Indenture Trustee in, to and under the Servicing Agreement and all money and
property received by the Indenture Trustee pursuant thereto in respect of the
Mortgage Assets.

            "Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939, as
amended, as in force at the Closing Date, unless otherwise specifically
provided.

            "Voting Rights": With respect to a Class of Notes, a fraction,
expressed as a percentage, the numerator of which is equal to the Outstanding
Principal Amount of such Class of Notes and the denominator of which is equal to
the Aggregate Outstanding Principal Amount of all Classes of Notes. Each Holder
of a Note will have Voting Rights equal to the product of the Voting Rights to
which the related Class is entitled and the percentage interest in such Class
represented by such Holder's Notes based on Outstanding Principal Amount.

                                   ARTICLE II

                                    THE NOTES

            SECTION 2.01 Forms Generally.

            The Notes and the Indenture Trustee's certificate of authentication
shall be in substantially the forms set forth in this Article, 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 be required to comply with the rules of any securities exchange on which the
Notes may be listed, or as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution thereof. Any
portion of the text of any Note may be set forth on the reverse thereof with an
appropriate reference on the face of the Notes.

            The definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the officers executing such Notes, as
evidenced by their execution thereof.

            SECTION 2.02 Forms of Notes and Certificate of Authentication.

            The form of the Class A Notes, the Class M-1 Notes, the Class M-2
Notes and the Class B Notes shall be as set forth respectively as Exhibits A, B,
C and D hereto.

            SECTION 2.03 Notes; General Provisions with Respect to Principal and
Interest Payments.

            The aggregate principal amount of Notes that may be authenticated
and delivered under the Indenture is limited to $294,518,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Sections 2.06, 2.07, 2.08 or 9.06 of
this Indenture. The Notes shall be divided into four Classes having the
designations, Initial Principal Amounts, Note Interest Rates and Indenture
Maturity Dates as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                              Initial Principal         Note Interest
      Designation                  Amount                   Rate                 Indenture Maturity Date
------------------------------------------------------------------------------------------------------------------
<S>                             <C>                        <C>                 <C>
Class A Notes                   $180,251,000               6.005%              Payment Date in August 2037
------------------------------------------------------------------------------------------------------------------
Class M-1 Notes                  $48,282,000               6.497%              Payment Date in August 2037
------------------------------------------------------------------------------------------------------------------
Class M-2 Notes                  $34,602,000               8.114%              Payment Date in August 2037
------------------------------------------------------------------------------------------------------------------
Class B Notes                    $31,383,000               8.900%              Payment Date in August 2037
------------------------------------------------------------------------------------------------------------------
</TABLE>

            The principal of each Note shall be payable in instalments ending no
later than the Indenture Maturity Date unless the unpaid principal of such Note
becomes due and payable at an earlier date by declaration of acceleration or
call for redemption or otherwise.

            Interest on the Notes of each Class shall be payable on each Payment
Date in the amount of the sum of (i) the Interest Accrual Amount for such Class
of Notes and (ii) all Class Interest Shortfalls for such Class of Notes that
have not previously been paid, together with accrued interest on such Class
Interest Shortfalls at the related Note Interest Rate to the extent permitted by
law. All payments made with respect to any Note shall be applied as set forth in
Section 8.02(b) or 5.08, as applicable. All computations of interest accrued on
any Note shall be made as if each year consisted of twelve months of thirty days
each.

            All payments of principal of and interest on any Note shall be made
in the manner specified in Section 2.09 and in the amounts prescribed in Section
5.08 or 8.02(b), as the case may be.

            Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes, if the Notes have become or
been declared due and payable following an Event of Default and such
acceleration of Maturity and its consequences have not been rescinded and
annulled and the provisions of Section 5.05(a) are not applicable, then payments
of principal of and interest on the Notes shall be made in accordance with
Section 5.08.

            All Notes of the same Class shall be identical in all respects
except for the denominations, Note numbers and dates thereof. All Notes of the
same Class issued under this Indenture shall be in all respects equally and
ratably entitled to the benefits hereof without preference, priority or
distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of this Indenture.

            SECTION 2.04 Denominations.

            The Notes shall be issuable only as registered Notes in minimum
denominations of $25,000 and in integral multiples of $1 in excess thereof.

            SECTION 2.05 Execution, Authentication, Delivery and Dating.

            The Notes shall be executed on behalf of the Issuer by its
Authorized Officer. The signature of any of these officers on the Notes may be
manual or facsimile.

            Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers 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 Notes which are authenticated and delivered by the Indenture
Trustee to or upon the order of the Issuer on the Closing Date shall be dated
the Closing Date. All other Notes which are authenticated after the Closing Date
for any other purpose hereunder shall be dated the date of their authentication.

            The Notes may be authenticated by the Indenture Trustee either at
the Corporate Trust Office or at the Indenture Trustee's office or agency in the
Borough of Manhattan, City and State of New York.

            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 in the
related exhibit hereto executed by the Indenture Trustee or by any
Authenticating Agent by the manual signature of one of its authorized officers,
employees or 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.

            SECTION 2.06 Temporary Notes.

            Pending the preparation of definitive Notes, the Issuer may execute,
and upon Issuer Order the Indenture Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, type-written, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Notes in lieu of which they may be so issued and with such
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
definitive Notes, the temporary Notes shall be exchangeable for definitive Notes
upon surrender of the temporary Notes at the office or agency of the Issuer to
be maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender or cancellation of any one or more temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver and exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.

            SECTION 2.07 Registration, Registration of Transfer and Exchange.

            The Issuer shall cause to be kept a register (the "Note Register")
in which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee is hereby initially appointed "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided. Upon
any resignation of any Note Registrar appointed by the Issuer, the Issuer shall
promptly appoint a successor or, in the absence of such appointment, shall
assume the duties of Note Registrar.

            At any time at which the Indenture Trustee is not also the Note
Registrar, the Indenture Trustee shall be a co-Note Registrar. The Indenture
Trustee, if it shall ever be serving as co-Note Registrar, shall furnish the
Note Registrar promptly after each authentication of a Note by the Indenture
Trustee appropriate information with respect thereto for entry by the Note
Registrar into the Note Register. If the Indenture Trustee shall at any time not
be authorized to keep and maintain the Note Register, the Indenture Trustee
shall have the right to inspect such Note Register at all reasonable times and
to rely conclusively upon a certificate of the Person in charge of the Note
Register as to the names and addresses of the holders of the Notes and the
principal amounts and numbers of such Notes so held.

            Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.02, the
Issuer shall execute, and the Indenture Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new Notes
of any authorized denominations, and of the same Class and a like aggregate
principal amount.

            At the option of the Holder, Notes may be exchanged for other Notes
of the same Class of any authorized denominations and of a like aggregate
initial principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, the Issuer
shall execute, and the Indenture Trustee shall authenticate and deliver, the
Notes which the Noteholder making the exchange is entitled to receive.

            All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.

            Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed, by the
Holder thereof or his attorney duly authorized in writing.

            No service charge shall be made for any registration of transfer or
exchange of Notes, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge as may be imposed in connection with
any registration of transfer or exchange of Notes, other than exchanges pursuant
to Section 2.08 not involving any transfer.

            The Notes will initially be represented by certificated Notes
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"). No person acquiring a beneficial interest in a Note will be entitled to
receive a certificated Note, except as described in the next paragraph of this
Section 2.07.

            The Notes will be issued to and registered in the Note Register in
the name of a person acquiring a beneficial interest in such Notes only if the
Indenture Trustee receives a written notice from DTC that DTC is no longer
willing or able to discharge properly its responsibilities as depository with
respect to the Notes and the Issuer in consultation with the Indenture Trustee
is unable to locate a qualified successor. Upon surrender by DTC of the
certificated Notes and satisfaction of the conditions set forth in this Section
2.07 of the Indenture for the registration of transfer and receipt by the
Indenture Trustee of a list of the names and addresses of the beneficial owners
of the Notes in whose name the Notes are to be registered, new Notes shall be
delivered pursuant to this Section 2.07.

            Each purchaser of a beneficial interest in a Note will be deemed to
represent either that (i) it is not, and is not purchasing its interest in a
Note on behalf of, or with the assets of, a retirement plan or other employee
benefit plan or arrangement subject to Title I of ERISA, Section 4975 of the
Code or any materially similar provisions of applicable federal, state or local
law ("Similar Law") or (ii) its purchase of its interest in a Note will not
result in a non-exempt prohibited transaction under ERISA or the Code or a
similar violation of Similar Law.

            SECTION 2.08 Mutilated, Destroyed, Lost or Stolen Notes.

            If (1) 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 (2) there is delivered to the Indenture Trustee
such security or indemnity as may be required by the Indenture Trustee to save
each of the Indenture Trustee and the Issuer harmless, then, in the absence of
notice to the Issuer or the Indenture Trustee that such Note has been acquired
by a protected purchaser, the Issuer shall execute and upon its written
direction the Indenture Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note or
Notes of the same Class, tenor and aggregate initial principal amount bearing a
number not contemporaneously outstanding; provided, however, that if any such
mutilated, destroyed, lost or stolen Note shall have become or shall be about to
become due and payable, or shall have become subject to redemption in full,
instead of issuing a new Note, the Issuer may pay such Note without surrender
thereof, except that any mutilated Note shall be surrendered. If, after the
delivery of such new Note or payment of a destroyed, lost or stolen Note
pursuant to the proviso to the preceding sentence, a protected purchaser of the
original Note in lieu of which such new Note was issued presents for payment
such original Note, the Issuer and the Indenture Trustee shall be entitled to
recover such new Note (or such payment) from the Person to whom it was delivered
or any Person taking such new Note from such Person, except a protected
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 new Note under this Section, the Issuer may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable expenses
(including the fees and expenses of the Indenture Trustee and its counsel)
connected therewith.

            Except to the extent provided in the first paragraph of this Section
2.08, every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Issuer, whether or not the 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, to the extent provided
herein, with any and all other Notes duly issued hereunder.

            The provisions of this Section 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 2.09 Payments of Principal and Interest.

            (a) Any instalment of interest or principal payable on any Note
which is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered at the close of business on the Record Date for
such Payment Date by check mailed to such Person's address as it appears in the
Note Register on such Record Date, except that with respect to a Note registered
in the name of the nominee of a clearing 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 in writing at least two Business
Days prior to such Payment Date and except for the final instalment of principal
payable with respect to such Note (or the Redemption Price for any Note called
for redemption), which shall be payable as provided in subsection (b) of this
Section 2.09.

            (b) All reductions in the principal amount of a Note (or one or more
Predecessor Notes) effected by means of an allocation of the Realized Loss
Amount or by payments of instalments of principal made on any Payment Date shall
be binding upon all Holders of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such payment is noted on such Note. The final instalment of
principal of each Note (including the Redemption Price of any Note called for
redemption pursuant to Section 10.01) shall be payable only upon presentation
and surrender thereof on or after the Payment Date or Redemption Date therefor
at the Corporate Trust Office or at the office or agency of the Issuer
maintained by it for such purpose set forth in Section 3.02.

            Whenever, on the basis of Remittances on the Mortgage Assets
received and expected to be received during the related Collection Periods or on
the related Payment Date, as applicable, the Issuer expects that the entire
remaining unpaid principal amount of the Notes will become due and payable on
the next Payment Date, it shall, no later than five days prior to such Payment
Date, mail or cause to be mailed to each Person in whose name a Note to be so
retired is registered at the close of business on the Record Date that would
otherwise be applicable to such Payment Date a notice to the effect that:

            (i) the Issuer expects that funds sufficient to pay such final
      instalment will be available in the Collection Account on such Payment
      Date, and

            (ii) if such funds are available, (A) such final instalment will be
      payable on such Payment Date, but only upon presentation and surrender of
      such Note at the Corporate Trust Office or at the office or agency of the
      Issuer maintained for such purpose pursuant to Section 3.02 (the addresses
      of which shall be set forth in such notice), and (B) no interest shall
      accrue on such Note after such Payment Date.

            Notices in connection with redemptions of Notes shall contain the
information set forth in, and be mailed in accordance with, Section 10.02.

            (c) Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to unpaid principal and
interest that were carried by such other Note. Any checks mailed pursuant to
subsection (a) or (b) of this Section 2.09 and returned undelivered shall be
held in accordance with Section 3.03.

            (d) Not later than each Debt Service Requirement Determination Date,
the Indenture Trustee shall prepare (based on information received from the
Servicer) and deliver to the Issuer a statement with respect to the following
Payment Date (a "Payment Date Statement") setting forth:

            (i) the amount of Issuer Expenses paid or due to be paid in respect
      of the related Collection Period;

            (ii) the amount of the Available Funds for such Payment Date;

            (iii) the amount of interest then due and payable on the Notes then
      Outstanding (stated separately as to each Class);

            (iv) the Optimal Principal Amount for each Class for such Payment
      Date;

            (v) whether the Available Funds for such Payment Date will be
      sufficient to pay on such Payment Date all amounts specified in clause
      (iii) and, if not, the percentages of such amount which may be paid in
      accordance with the priorities set forth in Section 8.02(b) from the
      amounts expected to be available in the Collection Account;

            (vi) the Class Interest Shortfall (stated separately as to each
      Class);

            (vii) the amounts included in such statement pursuant to clauses
      (iii) and (iv), expressed in each case per Individual Note, to be paid on
      such Payment Date;

            (viii) the amount, if any, to be released to the Issuer pursuant to
      clause twenty-third of Section 8.02(b);

            (ix) the total Realized Loss Amount for such Payment Date and the
      amount allocated to each Class of Notes;

            (x) the unpaid principal amount of each Class of Notes which will
      remain after giving effect to the payments to be made on such Payment Date
      expressed both on an aggregate basis and per Individual Note;

            (xi) the Principal Balance as of the end of the related Collection
      Period of Mortgage Assets with respect to which there is a material breach
      of any representation or warranty made in Section 3.11 or as to which
      there is a material defect in the related Mortgage Asset Documents in
      accordance with Section 3.12(b);

            (xii) the Overcollateralization Amount;

            (xiii) the cumulative unreimbursed Realized Loss Amounts and the
      amount of interest accrued thereon;

            (xiv) the Aggregate Principal Balance of the Mortgage Assets
      immediately following the end of the related Collection Period;

            (xv) the number and Aggregate Principal Balance of all Mortgage
      Assets 30, 60 and 90 or more days past due and in repossession,
      foreclosure or bankruptcy;

            (xvi) the amount of Cumulative Realized Losses;

            (xvii) the amount of Subsequent Recoveries, if any;

            (xviii) the amount on deposit in the Capitalized Interest Account,
      if any;

            (xix) the amount of any Capitalized Interest Shortfall, if any;

            (xx) the amount on deposit in the Interest Reserve Account;

            (xxi) the amount on deposit in the Pre-Funding Account, if any; and

            (xxii) the Pre-Funding Earnings at the end of the related Collection
      Period.

            Each Payment Date Statement shall be made available by the Indenture
Trustee on its website, initially located at www.mbsreporting.com, to the
Issuer, each designee of the Issuer specified in writing to the Indenture
Trustee, Banc of America Securities LLC, S&P, Moody's and, upon request, to the
firm of Independent Accountants appointed by the Issuer pursuant to Section
8.07(a) and/or the beneficial owners of the Notes.

            SECTION 2.10 Persons Deemed Owners.

            Prior to due presentment for registration of transfer of any Note,
the Issuer, the Indenture Trustee, any Agent and any other agent of the Issuer
or the Indenture Trustee may treat the Person in whose name any Note is
registered as the absolute owner of such Note for all purposes whatsoever,
whether or not such Note is overdue, and neither the Issuer, the Indenture
Trustee, any Agent nor any other agent of the Issuer or the Indenture Trustee
shall be affected by notice to the contrary.

            SECTION 2.11 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 such Notes,
together with all such Notes so surrendered directly to the Indenture Trustee,
shall be promptly canceled by it. The Issuer may at any time deliver to the
Indenture Trustee for cancellation any Note previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly canceled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes canceled
as provided in this Section, except as expressly permitted by this Indenture.
All canceled Notes held by the Indenture Trustee shall be held by the Indenture
Trustee in accordance with its standard retention policy, unless the Issuer
shall direct by an Issuer Order that they be destroyed or returned to it.

            SECTION 2.12 Authentication and Delivery of Notes.

            The Notes may be executed by the Issuer and delivered to the
Indenture Trustee for authentication, and thereupon the same shall be
authenticated and delivered by the Indenture Trustee, upon Issuer Request and
upon receipt by the Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, of the following items required to be delivered to the
Indenture Trustee, or Document Custodian on behalf of the Indenture Trustee, in
connection with the initial authentication and delivery of the Notes on the
Closing Date:

            (a) an Issuer Order authorizing the authentication and delivery of
the Notes;

            (b) an Officer's Certificate of the Issuer, complying with the
requirements of Section 11.01, stating that:

            (i) the Issuer is not in Default under this Indenture and the
      issuance of the Notes will not result in any breach of any of the terms,
      conditions or provisions of, or constitute a default under, the Trust
      Agreement or any other constituent documents of the Issuer, or any
      indenture, mortgage, deed of trust or other agreement or instrument to
      which the Issuer is a party or by which it is bound, or any order of any
      court or administrative agency entered in any proceeding to which the
      Issuer is a party or by which it may be bound or to which it may be
      subject, and all conditions precedent provided in this Indenture relating
      to the authentication and delivery of the Notes have been complied with;

            (ii) the Issuer is the owner of and has good title to each Mortgage
      Asset, has not assigned any interest or participation in any such Mortgage
      Asset (or, if any such interest or participation has been assigned, it has
      been released) and has the right to Grant each such Mortgage Asset to the
      Indenture Trustee, and no other Person has any lien on, security interest
      in or other rights to any such Mortgage Asset;

            (iii) the Issuer has Granted to the Indenture Trustee all of its
      right, title, and interest in each Mortgage Asset Granted to the Indenture
      Trustee by it to secure the Notes;

            (iv) the information set forth in the Schedule of Mortgage Assets to
      this Indenture is correct;

            (v) attached thereto are true and correct copies of letters signed
      by the Rating Agencies confirming that the Class A Notes have been rated
      "AAA" by S&P and "Aaa" by Moody's, the Class M-1 Notes have been rated
      "AA" by S&P and "Aa2" by Moody's, the Class M-2 Notes have been rated "A-"
      by S&P and "A2" by Moody's and the Class B Notes have been rated "BBB" by
      S&P and "Baa2" by Moody's; and

            (vi) each of the Mortgage Assets satisfies the requirements of
      subsection (c) below;

            (c) all of the Mortgage Assets and all Mortgage Asset Documents
(except that (A) in lieu of delivering the Mortgage Asset Documents for any
Mortgage Asset which has been the subject of a Full Prepayment received by the
Servicer after the Cut-off Date but no later than five Business Days prior to
the Closing Date, the Issuer may deliver, or cause to be delivered, as indicated
in the Officer's Certificate from the Servicer delivered pursuant to subsection
(e) of this Section 2.12, the cash proceeds of such Full Prepayment, (B) in lieu
of delivering the Mortgage Asset Documents for any Mortgage Asset with respect
to which foreclosure proceedings have been commenced and such Mortgage Asset
Documents are required in connection with the prosecution of such proceedings,
the Issuer may deliver a trust receipt pursuant to Section 3.13(c) of this
Indenture and (C) the Indenture Trustee's review, or Document Custodian's review
on behalf of the Indenture Trustee, of such Mortgage Asset Documents pursuant to
Section 3.12 need not be completed until 90 days following the Closing Date),
which Mortgage Assets:

            (i) shall have an Aggregate Principal Balance at least equal to
      $271,869,670.43 as of the Cut-Off Date, and

            (ii) shall satisfy each of the representations and warranties with
      respect to such Mortgage Assets set forth in Section 3.11 of this
      Indenture;

            (d) an executed counterpart of the Servicing Agreement and an
executed counterpart of the Standby Servicing Agreement;

            (e) an Officer's Certificate from the Servicer, dated as of the
Closing Date, certifying that all Monthly Payments (net of the Servicing Fee) on
the Initial Mortgage Assets due after the Cut-off Date and received more than
five Business Days prior to the Closing Date plus the proceeds of each Full
Prepayment of any such Initial Mortgage Asset (including any related payment of
interest) received by the Servicer after the Cut-off Date but more than five
Business Days prior to the Closing Date have been remitted to the Indenture
Trustee for deposit in the Collection Account in accordance with Section 2.08 of
the Servicing Agreement, setting forth (i) the amount which represents a Full
Prepayment received by the Servicer after the Cut-off Date but more than five
Business Days prior to the Closing Date and (ii) the aggregate amount so
remitted;

            (f) cash in the amount equal to the amount, if any, required to be
remitted to the Indenture Trustee pursuant to Section 2.08 of the Servicing
Agreement (as indicated by the Officer's Certificate from the Servicer delivered
pursuant to subsection (e) of this Section 2.12) and deposited in the Collection
Account and held by the Indenture Trustee and applied in accordance with Section
8.02;

            (g) an executed copy of the Mortgage Asset Sale Agreement;

            (h) (g) an executed copy of the Purchase and Sale Agreement;

            (i) an executed copy of the Trust Agreement;

            (j) an executed copy of the Holding Account Agreement;

            (k) a copy of the fidelity bond required pursuant to Section 4.05 of
the Servicing Agreement; and

            (l) an Opinion of Counsel in the form required by the underwriting
agreement among the Grantor, Banc of America Securities LLC, Calyon Securities
(USA) Inc. and SunTrust Capital Markets, Inc.

            SECTION 2.13 Tax Treatment.

            The Issuer has entered into this Indenture, and the Notes will be
issued, with the intention that, for all purposes including federal, state and
local tax purposes, the Notes will qualify as indebtedness secured by the Trust
Estate. The Issuer, by entering into this Indenture, and each purchaser of a
beneficial interest in a Note, agree to treat the Notes for all purposes
including federal, state and local tax purposes as indebtedness of the Issuer.

                                   ARTICLE III

                    COVENANTS; REPRESENTATIONS AND WARRANTIES

            SECTION 3.01 Payment of Notes.

            The Issuer will pay or cause to be duly and punctually paid the
principal of and interest on the Notes in accordance with the terms of the Notes
and this Indenture.

            SECTION 3.02 Maintenance of Office or Agency.

            The Issuer will maintain in the Borough of Manhattan, the City of
New York, the State of New York and in the city where the Corporate Trust Office
is located an office or agency where Notes may be presented or surrendered for
payment or 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 will give prompt written notice to the
Indenture Trustee of the location and any change in the location of such office
or agency. Until written notice of any change in the location of such office or
agency is delivered to the Indenture Trustee or if at any time the Issuer shall
fail to maintain any such required office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, Notes may be so presented or
surrendered, and such notices and demands may be made or served, at the office
of The Bank of New York, 101 Barclay Street - 8W, New York, New York 10286, and
at the Corporate Trust Office.

            The Issuer may also from time to time designate one or more other
offices or agencies (in or outside the City of New York or the city where the
Corporate Trust Office is located) where the Notes may be presented or
surrendered for any or all such purposes and where notices and demands may be
served and may from time to time rescind such designations; provided, however,
that (i) no such designation or rescission shall in any manner relieve the
Issuer of its obligation to maintain an office or agency in the City of New
York, for the purposes set forth in the preceding paragraph and (ii) any
designation of an office or agency for payment of Notes shall be subject to
Section 3.03. The Issuer will give prompt written notice to the Indenture
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.

            SECTION 3.03 Money for Note Payments to Be Held in Trust.

            All payments of amounts due and payable with respect to any Notes
which are to be made from amounts withdrawn from the Collection Account pursuant
to Section 8.02(b) or Section 5.08 shall be made on behalf of the Issuer by the
Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from
the Collection Account for payments of Notes shall be paid over to the Issuer
under any circumstances except as provided in this Section 3.03 or in Section
5.08 or 8.02.

            If the Issuer shall have a Paying Agent that is not also the Note
Registrar, it shall furnish, or cause the Note Registrar to furnish no later
than the third Business Day after each Record Date a list, in such form as such
Paying Agent may reasonably require, of the names and addresses of the Holders
of Notes and of the number of Individual Notes held by each such Holder.

            Whenever the Issuer shall have a Paying Agent other than the
Indenture Trustee, it will, on or before the Business Day next preceding each
Payment Date, direct the Indenture Trustee to deposit with such Paying Agent an
aggregate sum sufficient to pay all amounts then becoming due (to the extent
funds are then available for such purpose in the Collection Account), such sum
to be held in trust for the benefit of the Persons entitled thereto. Any moneys
deposited with a Paying Agent in excess of an amount sufficient to pay the
amounts then becoming due on the Notes with respect to which such deposit was
made shall, upon Issuer Order, be paid over by such Paying Agent to the
Indenture Trustee for application in accordance with Article VIII.

            Any Paying Agent other than the Indenture Trustee shall be appointed
by Issuer Order, and the Indenture Trustee is hereby appointed, and the
Indenture Trustee hereby accepts such appointment, as initial Paying Agent. The
Issuer shall not appoint any Paying Agent which is not, at the time of such
appointment, a depository institution or trust company. 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, that such Paying Agent
will:

                  (1) allocate all sums received for payment to the Holders of
            Notes on each Payment Date among such Holders in the proportion
            specified in the Payment Date Statement, to the extent permitted by
            applicable law;

                  (2) 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;

                  (3) if such Paying Agent is not the Indenture Trustee,
            immediately resign as a 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 set forth above
            required to be met by a Paying Agent at the time of its appointment;

                  (4) if such Paying Agent is not the Indenture Trustee, give
            the Indenture Trustee notice of any Default by the Issuer (or any
            other obligor upon the Notes) in the making of any payment required
            to be made with respect to any Notes;

                  (5) if such Paying Agent is not the Indenture Trustee, 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; and

                  (6) comply with all requirements of the Code and all
            regulations thereunder, 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; provided, however, that with
            respect to withholding and reporting requirements applicable to
            original issue discount (if any) on the Notes, the Issuer has
            provided the calculations pertaining thereto to the Indenture
            Trustee.

            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
Order direct any Paying Agent, if other than the Indenture Trustee, 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 such
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.

            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 two years after such amount has become due and payable to the
Holder of such Note shall be discharged from such trust and paid to the Issuer
upon Issuer Order; 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 cease upon
such payment. The Indenture Trustee may adopt and employ, at the expense of the
Issuer, any 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 moneys due and payable but not claimed is determinable from the
records of the Indenture Trustee or any Agent, at the last address of record for
each such Holder).

            SECTION 3.04 Existence of Issuer.

            The Issuer will keep in full effect its existence, rights and
franchises as a statutory 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 Trust Estate and each instrument or agreement included in the Trust
Estate.

            SECTION 3.05 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 as may be necessary or advisable to

            (i) Grant more effectively all or any portion of the Trust Estate,

            (ii) maintain or preserve the lien of this Indenture or carry out
      more effectively the purposes hereof,

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

            (iv) enforce any of the Mortgage Asset Documents,

            (v) preserve and defend title to the Trust Estate and the rights of
      the Indenture Trustee and of the Noteholders in the Mortgage Asset
      Documents and the other property held as part of the Trust Estate against
      the claims of all persons and parties, or

            (vi) pay all taxes or assessments levied or assessed upon the Trust
      Estate when due.

            The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement or continuation statement
and execute any other instrument required pursuant to this Section 3.05;
provided, however, that such designation shall not be deemed to create a duty in
the Indenture Trustee to monitor the compliance of the Issuer with the foregoing
covenants and provided, further, that the duty of the Indenture Trustee to
execute any instrument required pursuant to this Section 3.05 shall arise only
if the Indenture Trustee has knowledge of any failure of the Issuer to comply
with provisions of this Section 3.05.

            (b) Except as otherwise provided herein and in the Servicing
Agreement, 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 Independent Counsel delivered pursuant to Section 3.06 (or
from the jurisdiction in which it was held as described in the Opinion of
Counsel delivered at the Closing Date pursuant to Section 2.12(k), if no Opinion
of Independent Counsel has yet been delivered pursuant to Section 3.06) unless
the Indenture Trustee shall have first received an Opinion of Independent
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.

            SECTION 3.06 Opinions as to Trust Estate.

            On or before May 15 in each calendar year, beginning in 2005, the
Issuer shall furnish to the Indenture Trustee an Opinion of Independent Counsel
either stating that, in the opinion of such counsel, such action has been taken
as is necessary to perfect and to maintain the lien and security interest
created by this Indenture with respect to the Trust Estate 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 address any other matter reasonably requested by the
Indenture Trustee with respect to the Trust Estate and describe all such action,
if any, that will, in the opinion of such counsel, be required to be taken to
maintain the lien and security interest of this Indenture with respect to the
Trust Estate until May 15 in the following calendar year. The Issuer shall be
required to take whatever action set forth in the Opinion of Independent Counsel
to perfect or maintain the lien and security interest in the Trust Estate
created by this Indenture.

            SECTION 3.07 Performance of Obligations; Servicing Agreement.

            (a) The Issuer will punctually perform and observe all of its
obligations and agreements contained in the Servicing Agreement.

            (b) 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 Mortgage Asset Documents 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 Mortgage Asset Documents, or any such
instrument, except for such actions that are expressly provided for in the
Servicing Agreement.

            (c) If the Issuer shall have knowledge of the occurrence of a
Servicing Default, the Issuer shall promptly notify the Indenture Trustee
thereof, and shall specify in such notice the action, if any, the Issuer is
taking in respect of such Servicing Default. If any Servicing Default arises
from the failure of the Servicer to perform any of its duties or obligations
under the Servicing Agreement with respect to the Mortgage Assets, the Issuer
may remedy such failure, provided that if any Servicing Default arises from the
failure by the Servicer to comply with requirements imposed upon it under
Section 2.12 of the Servicing Agreement regarding advances for taxes,
assessments and other charges against the Mortgaged Property or under Section
2.13 of the Servicing Agreement with respect to hazard insurance for the
Mortgaged Properties, the Issuer shall promptly pay such taxes, assessments or
other charges or such premiums or obtain substitute insurance coverage meeting
the requirements of said Section 2.13. So long as any Servicing Default shall be
continuing, the Indenture Trustee may, and upon the direction of the Holders of
Notes entitled to 51% or more of the aggregate Voting Rights of all Classes
voting together as a single class shall, terminate all of the rights and powers
of the Servicer under the Servicing Agreement pursuant to Section 5.01 of the
Servicing Agreement or take any other action with respect to such Servicing
Default as is permitted under said Section 5.01. Unless granted or permitted by
the Holders of Notes to the extent provided above, the Issuer may not waive any
such Servicing Default or terminate the rights and powers of the Servicer under
the Servicing Agreement.

            (d) Upon any termination of the Servicer's rights and powers
pursuant to Section 5.01 of the Servicing Agreement, the Indenture Trustee shall
appoint, or shall petition a court of competent jurisdiction to appoint, a
successor servicer or upon the occurrence of a Trigger Event, the Indenture
Trustee may appoint such successor servicer (the "Successor Servicer"). Upon the
termination of the Servicer's rights and powers pursuant to Section 5.01 of the
Servicing Agreement, pending the appointment of a Successor Servicer, GMAC
Mortgage Corporation, a Pennsylvania corporation, shall be the Successor
Servicer (subject to and in accordance with the Standby Servicing Agreement).
Upon any termination of the Servicer's rights and powers pursuant to Section
5.01 of the Servicing Agreement or upon the occurrence of a Trigger Event, all
rights, powers, duties and responsibilities of the Servicer with respect to the
Mortgage Assets shall vest in and be assumed by the Successor Servicer, and the
Successor Servicer shall be the successor in all respects to the Servicer in its
capacity as servicer with respect to the Mortgage Assets under the Servicing
Agreement. If the Indenture Trustee has appointed a Successor Servicer upon the
occurrence of a Trigger Event, no such termination of the Servicer's rights and
powers shall be effective until a Successor Servicer has assumed all the rights,
powers, duties and responsibilities of the Servicer with respect to the Mortgage
Assets. Upon any such termination, the Successor Servicer is hereby authorized
to mail a notice to each Obligor whose Mortgage Asset is serviced by the
terminated Servicer directing each such Obligor to mail all Monthly Payments to
the Successor Servicer or its agent at the address specified in such notice. In
connection with any such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor as it and such successor
shall agree, and the Issuer shall enter into an agreement with such successor
for the servicing of the Mortgage Assets, such agreement to be substantially
similar to the Servicing Agreement or otherwise acceptable to the Indenture
Trustee.

            (e) The Issuer 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 3.08 Negative Covenants.

            The Issuer will not:

            (i) sell, transfer, exchange or otherwise dispose of any portion of
      the Trust Estate except as expressly permitted by this Indenture;

            (ii) obtain or carry insurance relating to the Mortgage Assets
      separate from that required by the Servicing Agreement, unless the
      Indenture Trustee shall have the same rights with respect thereto as it
      has with respect to the insurance required by the Servicing Agreement;

            (iii) claim any credit on, or make any deduction from, the principal
      of, or interest on, any of the Notes by reason of the payment of any taxes
      levied or assessed upon any portion of the Trust Estate;

            (iv) engage in any business or activity other than in connection
      with, or relating to, the issuance of the Notes or the preservation of the
      Trust Estate and the release of assets therefrom pursuant to this
      Indenture and the Trust Agreement;

            (v) dissolve or liquidate in whole or in part;

            (vi) (1) 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 under this Indenture,
      except as may be expressly permitted hereby, (2) permit any lien, charge,
      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 (3) except as permitted hereby, permit the lien of
      this Indenture not to constitute a valid and perfected first priority
      security interest in the Trust Estate;

            (vii) cause or permit any Affiliate to petition or otherwise invoke
      the process of any court or government authority for the purpose of
      commencing or sustaining a case against the Issuer under any Federal or
      state bankruptcy, insolvency or similar law or appointing a receiver,
      liquidator, assignee, trustee, custodian, sequester or other similar
      official of the Issuer or any substantial part of its property, or
      ordering the winding up or liquidation of the affairs of the Issuer; or

            (viii) amend the Trust Agreement without the consent of the
      Indenture Trustee.

            SECTION 3.09 Annual Statement as to Compliance.

            On or before 120 days after the first anniversary of the Closing
Date and each subsequent anniversary date of the Closing Date, the Issuer shall
deliver to the Indenture Trustee a written statement, signed by two Authorized
Officers, stating, as to each signer thereof, that

                  (1) a review of the fulfillment by the Issuer during such year
            of its obligations under this Indenture has been made under such
            officer's supervision; and

                  (2) to the best of such officer's knowledge, based on such
            review, the Issuer has fulfilled all its obligations under this
            Indenture throughout such year or, if there has been a Default in
            the fulfillment of any such obligation, specifying each such Default
            known to such officer and the nature and status thereof.

            SECTION 3.10 Recording of Assignments.

            The Issuer shall use reasonable best efforts to record substantially
all Assignments within 21 days of the Closing Date and in any event all
Assignments shall be duly recorded not later than 90 days after the date of the
Grant of the related Mortgage Asset unless the recordation of an Assignment is
not required by either Rating Agency in order to obtain the initial ratings on
the Notes on the Closing Date.

            SECTION 3.11 Representations and Warranties Concerning the Mortgage
Assets.

            (a) The Issuer represents and warrants to the Indenture Trustee,
with respect to each Mortgage Asset, that as of the Closing Date (and the Issuer
shall be deemed to have made such representations and warranties at the time of
the transfer thereof to the Indenture Trustee with respect to each Subsequent
Mortgage Asset pledged to the Indenture Trustee during the Pre-Funding Period
and each new Mortgage Asset originated in connection with the sale of property
acquired in respect of a Mortgage Asset):

            (i) the information set forth with respect to such Mortgage Asset in
      the Schedule of Mortgage Assets attached hereto, or to the applicable
      Subsequent Transfer Agreement, as applicable, is true and correct as of
      the date as of which such information is given;

            (ii) in the case of each Account, the related building or instalment
      sale contract, as the case may be, has been duly executed by the parties
      thereto and the duties to be performed thereunder prior to the date the
      first payment in connection with such contract is due have been performed;

            (iii) the Mortgage Asset Documents have been duly executed by the
      related Obligor and the Mortgage has been duly executed by the Obligor
      and, to the extent required under local law for recordation or
      enforcement, properly acknowledged;

            (iv) the Mortgage has been properly recorded as required by law. The
      Mortgage constitutes a valid first priority lien upon and secures title to
      the real property and improvements thereon described therein, which
      include a single family detached dwelling, and such Mortgage and the
      Account Note or Mortgage Note, as applicable, secured thereby are fully
      enforceable in accordance with their terms except as enforceability
      thereof may be limited by bankruptcy, insolvency, moratorium and other
      laws affecting creditors' rights generally and by general principles of
      equity (whether applied in a proceeding in law or at equity);

            (v) the Issuer is the sole owner and holder of each Mortgage Asset
      and has good and marketable title to such Mortgage Asset, free and clear
      of any and all liens, pledges, charges, claims, participation interests,
      mortgages, security interests or encumbrances or other interests of any
      nature and has full right and authority to transfer such Mortgage Asset
      and to Grant such Mortgage Asset to the Indenture Trustee and, upon
      delivery of the related Mortgage Asset Documents to the Indenture Trustee,
      or Document Custodian on behalf of the Indenture Trustee, the Indenture
      Trustee will have a valid and perfected lien or security interest in such
      Mortgage Asset;

            (vi) all costs, fees, intangible, documentary and recording taxes
      and expenses incurred in making, closing, and recording each Mortgage
      Asset and in connection with the issuance of the Notes have been paid;

            (vii) no part of the Mortgaged Property purporting to secure any
      Account Note or Mortgage Note, as the case may be, has been, or shall have
      been, released from the lien or security interest of the Mortgage securing
      such Account Note or Mortgage Note, as applicable, except for Mortgaged
      Property securing Account Notes or Mortgage Notes, as applicable, which
      have been prepaid in full between the Cut-off Date and the Closing Date,
      the amount of such prepayments received more than five days prior to the
      Closing Date to be deposited in the Collection Account on or before the
      Closing Date;

            (viii) the terms of any Mortgage Asset have not been impaired,
      waived, altered or modified in any respect, except by written instruments,
      recorded in the applicable public recording office if necessary to
      maintain the lien priority of the Mortgage, and which have been delivered
      to the Indenture Trustee, or Document Custodian on behalf of the Indenture
      Trustee; the substance of any such waiver, alteration or modification has
      been approved by the title insurer, to the extent required by the related
      policy, and is reflected on the Schedule of Mortgage Assets. No instrument
      of waiver, alteration or modification has been executed, and no Obligor
      has been released, in whole or in part, except, in connection with an
      assumption agreement approved by the title insurer, to the extent required
      by the policy, and which assumption agreement has been delivered to the
      Indenture Trustee, or Document Custodian on behalf of the Indenture
      Trustee, and the terms of which are reflected in the Schedule of Mortgage
      Assets. Except to the extent permitted by the Servicing Agreement, no term
      or provision of any Mortgage Asset will be altered, changed or modified in
      any way by the Servicer or the Issuer without the consent of the Indenture
      Trustee;

            (ix) Mid-State Homes, Inc., Mid-State Trust IX, the Grantor and the
      Issuer acquired title to the Mortgage Assets in good faith, for value and
      without notice of any adverse claim;

            (x) the Account Notes or Mortgage Notes, as the case may be,
      evidence Mortgage Assets bearing a fixed Coupon Rate and fully amortizing
      level monthly payments. Each Account Note or Mortgage Note, as applicable,
      has an original term to maturity not in excess of 30 years;

            (xi) as of the Closing Date, or as of the related Subsequent
      Transfer Date, as applicable, there is no right of rescission, setoff,
      defense or counterclaim to any Account Note, Mortgage Note or Mortgage,
      including both the obligation of the Obligor to pay the unpaid cash price
      or finance charge on such Account Note or Mortgage Note, as applicable,
      and the defense of usury; furthermore, neither the operation of any of the
      terms of the Account Note or Mortgage Note and the Mortgage nor the
      exercise of any right thereunder will render the Account Note or Mortgage
      Note, as applicable, or the Mortgage unenforceable, in whole or in part,
      or subject such Account Note or Mortgage Note, as applicable, or Mortgage
      to any right of rescission, setoff, counterclaim or defense, including the
      defense of usury, and no such right of rescission, setoff, counterclaim or
      defense has been asserted with respect thereto;

            (xii) there are no mechanics' liens or claims for work, labor or
      material (and to the best of the Issuer's knowledge, no rights or claims
      are outstanding that under law could give rise to such lien) affecting any
      Mortgaged Property which are or may be a lien prior to, or equal with, the
      lien of such Mortgage;

            (xiii) any and all requirements of any federal, state or local law
      with respect to the origination and servicing of the Mortgage Assets
      including, without limitation, usury, truth in lending, real estate
      settlement procedures, consumer credit protection, equal credit
      opportunity, predatory and abusive lending laws or disclosure laws
      applicable to the Mortgage Assets have been complied with, and
      consummation of the transactions contemplated by the Purchase and Sale
      Agreement and hereby will not violate any such laws;

            (xiv) no Mortgage Asset is a "high cost" mortgage asset as defined
      under any federal, state or local laws applicable to such Mortgage Asset
      at the time of its origination, no Mortgage Asset originated in the State
      of Georgia is subject to the Georgia Fair Lending Act as in effect from
      October 1, 2002 through March 6, 2003 and no Mortgage Asset is subject to
      the provisions of the Home Ownership and Equity Protection Act of 1994, as
      amended;

            (xv) no Mortgage Asset (other than a Mortgage Asset that would be
      subject to the provisions of the Oakland, California or Los Angeles,
      California predatory and abusive lending laws or a Mortgage Loan that is a
      New Jersey covered purchase loan originated on or after November 27, 2003
      through July 6, 2004) is a High Cost Loan or Covered Loan, as applicable
      (as such terms are defined in S&P's LEVELS(R) Glossary which is now
      Version 5.6 Revised, Appendix E);

            (xvi) with respect to each Mortgage constituting a deed of trust, a
      trustee, duly qualified under applicable law to serve as such, is properly
      designated, serving and named in such Mortgage;

            (xvii) there has been no fraud, dishonesty, misrepresentation or
      negligence on the part of the originator in connection with the
      origination of any Account Note or Mortgage Note, as applicable, or in
      connection with the sale of the related Mortgage Asset;

            (xviii) to the best knowledge of the Issuer, except Mortgaged
      Properties for which Insurance Proceeds are available, each Mortgaged
      Property is in good condition and free of damage which materially and
      adversely affects the value thereof;

            (xix) to the best knowledge of the Issuer, there is no proceeding
      pending for the total or partial condemnation and no eminent domain
      proceedings pending affecting any Mortgaged Property;

            (xx) each Mortgage Asset obligates the Obligor thereunder to
      maintain a hazard insurance policy in an amount at least equal to the
      unpaid Principal Balance of the Mortgage Asset at the Obligor's cost and
      expense;

            (xxi) no Mortgage Asset contains provisions pursuant to which
      monthly payments are (1) paid or partially paid with funds deposited in
      any separate account established by the Servicer, the Obligor, or anyone
      on behalf of the Obligor, (2) paid by any source other than the Obligor or
      (3) contains any other similar provisions which may constitute a "buydown"
      provision. No Mortgage Asset is a graduated payment Mortgage Asset and no
      Mortgage Asset has a shared appreciation or other contingent interest
      feature;

            (xxii) the Issuer used no selection procedures that identified the
      Mortgage Assets as being less desirable or valuable than other comparable
      Mortgage Assets acquired by the Issuer;

            (xxiii) the Mortgage Assets comply in all material respects to the
      description set forth under the heading "The Assets of the Trust" in the
      Issuer's Prospectus Supplement, dated July 12, 2004;

            (xxiv) each Mortgage Asset, at the time of its origination,
      conformed to the applicable originator's underwriting guidelines;

            (xxv) the related Mortgage Asset file contains each of the documents
      and instruments specified;

            (xxvi) each Mortgage Asset is being serviced in accordance with the
      Servicer's servicing procedures;

            (xxvii) other than the Mortgage Assets identified in the Issuer's
      Prospectus Supplement, dated July 12, 2004, as 31-60 days past due, there
      is no default, breach, waiver, violation or event of acceleration existing
      under the Account Note or Mortgage Note, as applicable, or Mortgage and no
      event which, with the passage of time or with notice and the expiration of
      any grace or cure period, would constitute a default, breach, violation or
      event of acceleration;

            (xxviii) to the best knowledge of the Issuer, there are no
      delinquent taxes or assessments affecting the related Mortgaged Property;
      and

            (xxix) in the case of each Mortgage Loan, a lender's title policy or
      binder, or other assurance of title insurance, was issued at origination
      and each policy or binder is valid and remains in full force and effect.

            (b) If any of the representations, warranties or covenants with
respect to any Mortgage Asset set forth in this Section 3.11 are found to be
incorrect as of the time made in any respect which materially and adversely
affects the interest of the Indenture Trustee or the Noteholders in the Mortgage
Asset, the Issuer or the Servicer shall notify the Indenture Trustee immediately
after obtaining knowledge thereof, and the Issuer shall use its best efforts to
eliminate or otherwise cure the circumstances or conditions in respect of which
such representation, warranty or covenant was incorrect as of the time made
within 90 days of such notice to the Indenture Trustee. If such breach is not or
cannot be cured within such 90-day period or, with the prior written consent of
a Responsible Officer of the Indenture Trustee, such longer period as specified
in such consent, the Issuer shall either (i) deposit in the Collection Account
an amount equal to 100% of the then current Principal Balance of the affected
Mortgage Asset (a "Defective Mortgage Asset"), at which time the Defective
Mortgage Asset shall be released from the lien of the Indenture or (ii) remove
such Mortgage Asset from the Trust Estate and substitute one or more Qualified
Substitute Mortgage Assets (in which case the removed Mortgage Asset shall
become a "Deleted Mortgage Asset"). The Issuer shall promptly reimburse the
Servicer (other than Mid-State Homes, Inc. or an Affiliate) and the Indenture
Trustee for any reasonable expenses (including without limitation reasonable
attorney's fees) incurred by the Servicer (other than Mid-State Homes, Inc. or
an Affiliate) and the Indenture Trustee, respectively, in respect of any such
breach. In addition to the foregoing, in the case of a breach of the
representations set forth in Section 3.11(a)(xiii) or (xv) above, the Issuer
shall reimburse the Trust Estate, the Servicer (other than Mid-State Homes, Inc.
or an Affiliate) or the Indenture Trustee for all costs or damages incurred by
the Trust Estate, the Servicer (other than Mid-State Homes, Inc. or an
Affiliate) or the Indenture Trustee, as applicable, as a result of the violation
of such law (such amount, the "Reimbursement Amount"). The Reimbursement Amount
shall be delivered to the Indenture Trustee for deposit into the Collection
Account within 10 days from the date the Issuer was notified by the Indenture
Trustee of the amount of such costs and damages.

            As to any Deleted Mortgage Asset for which the Issuer substitutes a
Qualified Substitute Mortgage Asset or Qualified Substitute Mortgage Assets, the
Issuer shall effect such substitution by delivery to the Indenture Trustee, or
Document Custodian on behalf of the Indenture Trustee, of the Account Notes or
Mortgage Notes, as applicable, for such Qualified Substitute Mortgage Asset or
Qualified Substitute Mortgage Assets and such other Mortgage Asset Documents
related thereto, with each such Account Note or Mortgage Note, as applicable,
endorsed to the order of the Issuer, without recourse, and endorsed by the
Issuer in blank or to the order of the Indenture Trustee, without recourse.
Monthly Payments due with respect to Qualified Substitute Mortgage Assets in the
month of substitution are not part of the Trust Estate and will be retained by
the Issuer. Available Funds will include the Monthly Payment due on any Deleted
Mortgage Asset in the month of substitution, and the Issuer shall deposit such
amount in the Collection Account if received by it subsequent to the month of
substitution. The Issuer shall be entitled to receive all amounts due subsequent
to the month of substitution in respect of such Deleted Mortgage Asset. The
Issuer shall give or cause to be given written notice to the Indenture Trustee
and the Rating Agencies that such substitution has taken place. Upon such
substitution, such Qualified Substitute Mortgage Asset or Qualified Substitute
Mortgage Assets shall be subject to the terms of this Indenture in all respects,
and the Issuer shall be deemed to have made with respect to such Qualified
Substitute Mortgage Asset or Qualified Substitute Mortgage Assets, as of the
date of substitution, the representations and warranties set forth in this
Section 3.11. The Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, shall at the written direction of the Issuer immediately
effect the release of the lien of this Indenture with respect to such Deleted
Mortgage Asset, the form of the instruments effecting such release being
specified in such direction.

            For any month in which the Issuer substitutes one or more Qualified
Substitute Mortgage Assets for one or more Deleted Mortgage Assets, the Issuer
will determine the amount (if any) by which the aggregate outstanding Principal
Balance of all such Qualified Substitute Mortgage Assets as of the date of
substitution is less than the aggregate outstanding Principal Balance of all
such Deleted Mortgage Assets. On the date of such substitution, the Issuer will
deposit from its own funds into the Collection Account an amount equal to the
amount of such shortfall, if any, without reimbursement therefor.

            It is understood and agreed that the obligations of the Issuer set
forth in this Section 3.11(b) to cure, substitute for or deposit funds in the
Collection Account in connection with a Mortgage Asset constitute the sole
remedies available to the Indenture Trustee, the Servicer and the Noteholders
(or to the Indenture Trustee on their behalf) respecting a breach of the
representations and warranties set forth in Section 3.11(a).

            SECTION 3.12 Review of Mortgage Asset Documents.

            (a) Upon execution and delivery of this document, the Indenture
Trustee agrees, for the benefit of the holders of the Notes, to deliver or cause
the Document Custodian to deliver to the Issuer, the Servicer and the Indenture
Trustee (if delivered by the Document Custodian) a certification in the form of
Exhibit H hereto, to the effect that, except as may be specified in a list of
exceptions attached thereto, it or the Document Custodian, on its behalf, has
received the original Account Note or Mortgage Note relating to each of the
Initial Mortgage Assets listed on the Schedule of Mortgage Assets. In addition,
the Indenture Trustee agrees, for the benefit of the holders of the Notes, to
review or to cause the Document Custodian to review, within 90 days after the
Closing Date (or other date of transfer to the Trust of a Mortgage Asset or
substitution of a Qualified Substitute Mortgage Asset), the Mortgage Asset
Documents delivered to it on or prior to the Closing Date (or other date of
transfer to the Trust of a Mortgage Asset or substitution of a Qualified
Substitute Mortgage Asset) in connection with the Grant of the Mortgage Assets
listed on the Schedule of Mortgage Assets as security for the Notes and to
deliver or cause the Document Custodian to deliver to the Issuer, the Servicer
and the Indenture Trustee (if delivered by the Document Custodian) a
certification in the form of Exhibit I hereto. Such review shall be limited to a
determination that all documents referred to in the definition of the term
Mortgage Asset Documents have been delivered with respect to each such Mortgage
Asset (other than the documents related to (i) any Mortgage Asset so listed
which has been subject to a Full Prepayment, the proceeds of which have been
deposited in the Collection Account in lieu of delivery of the applicable
Mortgage Asset Documents and (ii) any Mortgage Asset with respect to which the
related Mortgaged Property was foreclosed, repossessed or otherwise converted
subsequent to the Cut-off Date and prior to the Closing Date or with respect to
which foreclosure proceedings have been commenced and the related Mortgage Asset
Documents are required in connection with the prosecution of such foreclosure
proceedings and the Issuer has delivered a trust receipt called for by Section
3.13(c)), that all such documents have been executed, and that all such
documents relate to the Mortgage Assets listed on the Schedule of Mortgage
Assets; provided, however, that with respect to the review made of the Mortgage
Assets in connection with the Closing Date, assumption or substitution
agreements shall not be considered Mortgage Asset Documents. In performing such
review, the Indenture Trustee, or Document Custodian on behalf of the Indenture
Trustee, may rely upon the purported genuineness and due execution of any such
document and on the purported genuineness of any signature thereon.

            (b) If any Mortgage Asset Document is defective in any material
respect which may materially and adversely affect the value of the related
Mortgage Asset, the priority of the related Mortgage or the interest of the
Indenture Trustee or the Noteholders in such Mortgage Asset or if any document
required to be delivered to the Indenture Trustee, or Document Custodian on
behalf of the Indenture Trustee, has not been delivered or if any documents so
delivered do not relate to a Mortgage Asset listed on the Schedule of Mortgage
Assets, the Indenture Trustee or any Document Custodian on behalf of the
Indenture Trustee, shall notify the Issuer and Servicer immediately after
obtaining knowledge thereof. Within 90 days of the earlier of discovery by or
notice to the Issuer that any Mortgage Asset Document is missing or defective
and such omission or defect materially and adversely affects the interest of the
Noteholders in a Mortgage Asset, the Issuer is required to use its best efforts
to cure such omission or defect. If such omission or defect is not or cannot be
cured within such 90-day period or, with the prior written consent of a
Responsible Officer of the Indenture Trustee, such longer period as specified in
such consent, the Issuer shall either (i) deposit in the Collection Account an
amount equal to 100% of the then current Principal Balance of the affected
Mortgage Asset (a "Defective Mortgage Asset"), at which time the Defective
Mortgage Asset shall be released from the lien of the Indenture or (ii) remove
such Mortgage Asset from the Trust Estate and substitute one or more Qualified
Substitute Mortgage Assets (in which case the removed Mortgage Asset shall
become a "Deleted Mortgage Asset"). The Issuer shall promptly reimburse the
Servicer (other than Mid-State Homes, Inc. or an Affiliate) the Indenture
Trustee for any reasonable expenses (including without limitation reasonable
attorney's fees) incurred by the Servicer (other than Mid-State Homes, Inc. or
an Affiliate) and the Indenture Trustee, respectively, in respect of any such
defect or omission; provided, however, except for the review by the Indenture
Trustee, or Document Custodian on behalf of the Indenture Trustee, pursuant to
Section 3.12(a), the foregoing shall not impose an obligation on the Indenture
Trustee or any Document Custodian to discover defects in the Mortgage Asset
Documents or to ascertain the priority of the related Mortgage.

            As to any Deleted Mortgage Asset for which the Issuer substitutes a
Qualified Substitute Mortgage Asset or Qualified Substitute Mortgage Assets, the
Issuer shall effect such substitution by delivery to the Indenture Trustee, or
Document Custodian on behalf of the Indenture Trustee, of the Account Note(s) or
Mortgage Note(s), as applicable, for such Qualified Substitute Mortgage Asset or
Qualified Substitute Mortgage Assets and such other Mortgage Asset Documents
related thereto, with each such Account Note or Mortgage Note, as applicable,
endorsed to the order of the Issuer, without recourse, and endorsed by the
Issuer in blank or to the order of the Indenture Trustee, without recourse.
Monthly Payments due with respect to Qualified Substitute Mortgage Assets in the
month of substitution are not part of the Trust Estate and will be retained by
the Issuer. Available Funds will include the Monthly Payment due on any Deleted
Mortgage Asset in the month of substitution, and the Issuer shall deposit such
amount in the Collection Account if received by it subsequent to the month of
substitution. The Issuer shall be entitled to receive all amounts due subsequent
to the month of substitution in respect of such Deleted Mortgage Asset. The
Issuer shall give or cause to be given written notice to the Indenture Trustee
and the Rating Agencies that such substitution has taken place. Upon such
substitution, such Qualified Substitute Mortgage Asset or Qualified Substitute
Mortgage Assets shall be subject to the terms of this Indenture in all respects,
and the Issuer shall be deemed to have made with respect to such Qualified
Substitute Mortgage Asset or Qualified Substitute Mortgage Assets, as of the
date of substitution, the representations and warranties set forth in Section
3.11. The Indenture Trustee, or Document Custodian on behalf of the Indenture
Trustee, shall at the written direction of the Issuer immediately effect the
release of the lien of this Indenture with respect to such Deleted Mortgage
Asset, the form of the instruments effecting such release being specified in
such direction.

            For any month in which the Issuer substitutes one or more Qualified
Substitute Mortgage Assets for one or more Deleted Mortgage Assets, the Issuer
will determine the amount (if any) by which the aggregate outstanding Principal
Balance of all such Qualified Substitute Mortgage Assets as of the date of
substitution is less than the aggregate outstanding Principal Balance of all
such Deleted Mortgage Assets. On the date of such substitution, the Issuer will
deposit from its own funds into the Collection Account an amount equal to the
amount of such shortfall, if any, without reimbursement therefor.

            It is understood and agreed that the obligations of the Issuer set
forth in this Section 3.12(b) to cure, substitute for or deposit funds in the
Collection Account in connection with a Mortgage Asset constitute the sole
remedies available to the Noteholders or to the Indenture Trustee on their
behalf respecting an omission or defect set forth in Section 3.12(a).

            SECTION 3.13 Trust Estate; Mortgage Asset Documents.

            (a) When required by the provisions of this Indenture, the Indenture
Trustee, or Document Custodian on behalf of the Indenture Trustee, 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
which are not inconsistent with the provisions of this Indenture. No party
relying upon an instrument executed by the Indenture Trustee, or Document
Custodian on behalf of the Indenture Trustee, as provided in this Article III
shall be bound to ascertain the Indenture Trustee's or Document Custodian's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any moneys.

            (b) In order to facilitate the servicing of the Mortgage Assets by
the Servicer, the Servicer is hereby authorized in the name and on behalf of the
Indenture Trustee and the Issuer, to execute assumption agreements, substitution
agreements, and instruments of satisfaction or cancellation, or of partial or
full release or discharge, and other comparable instruments with respect to the
Mortgage Assets and with respect to the Mortgaged Properties subject to the
Mortgages (and the Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, shall execute any such documents on request of the Servicer),
subject to the obligations of the Servicer under the Servicing Agreement. If
from time to time the Servicer shall deliver to the Indenture Trustee, or
Document Custodian on behalf of the Indenture Trustee, copies of any written
assurance, assumption agreement or substitution agreement or other similar
agreement pursuant to Section 2.10 of the Servicing Agreement, the Indenture
Trustee, or Document Custodian on behalf of the Indenture Trustee, shall check
that each of such documents purports to be an original executed copy and, if so,
shall file such documents with the related Mortgage Asset Documents. If any such
documents submitted by the Servicer do not meet the above qualifications, such
documents shall promptly be returned by the Indenture Trustee, or Document
Custodian on behalf of the Indenture Trustee, to the Servicer, with a direction
to the Servicer to forward the correct documentation.

            (c) Upon Issuer Request accompanied by an Officer's Certificate of
the Servicer pursuant to Section 2.15 of the Servicing Agreement to the effect
that a Mortgage Asset has been the subject of a Full Prepayment or that all
Liquidation Proceeds which have been determined by the Servicer in its
reasonable judgment to be finally recoverable, have been recovered and upon
deposit to the Holding Account of such final Monthly Payment, an amount that
satisfies the definition of Full Prepayment with respect to such Mortgage Asset
or, if applicable, Liquidation Proceeds, the Indenture Trustee, or Document
Custodian on behalf of the Indenture Trustee, shall promptly release the related
Mortgage Asset Documents to or upon the written order of the Issuer, along with
such documents as the Servicer or the Obligor may request to evidence
satisfaction and discharge of such Mortgage Asset. If from time to time and as
appropriate for the servicing or foreclosure of any Mortgage Asset, the Servicer
requests the Indenture Trustee, or Document Custodian on behalf of the Indenture
Trustee, to release the related Mortgage Asset Documents and delivers to the
Indenture Trustee, or Document Custodian on behalf of the Indenture Trustee, a
trust receipt reasonably satisfactory to the Indenture Trustee, or Document
Custodian on behalf of the Indenture Trustee, and signed by a Servicing Officer,
the Indenture Trustee, or Document Custodian on behalf of the Indenture Trustee,
shall release the related Mortgage Asset Documents to the Servicer. If such
Mortgage Asset shall be liquidated and the Indenture Trustee and any Document
Custodian receives a certificate from the Servicer as provided above, then, upon
written request of the Issuer, the Indenture Trustee, or Document Custodian on
behalf of the Indenture Trustee, shall release the trust receipt to or upon the
order of the Issuer.

            (d) The Indenture Trustee shall, at such time as there are no Notes
Outstanding, release all of the Trust Estate to the Issuer (other than any cash
held for the payment of the Notes pursuant to Section 3.03 or 4.01), subject,
however, to the rights of the Indenture Trustee under Section 6.07.

            SECTION 3.14 Amendments to Servicing Agreement.

            The Indenture Trustee may enter into any amendment or supplement to
the Servicing Agreement only in accordance with Section 7.02 of the Servicing
Agreement; provided, however, at any time, the Indenture Trustee may, without
the consent of the Noteholders, enter into an amendment to the Servicing
Agreement modifying the repossession, foreclosure and liquidation procedures if
such modifications are likely to minimize payments in connection with any filing
or recording required in any jurisdiction where any Mortgaged Properties are
located. The Indenture Trustee may, in its discretion, decline to enter into or
consent to any such supplement or amendment if its own rights, duties or
immunities shall be adversely affected.

            SECTION 3.15 Servicer as Agent and Bailee of Indenture Trustee.

            In order to facilitate the servicing of the Mortgage Assets by the
Servicer, the Servicer shall retain, in accordance with the provisions of the
Servicing Agreement and this Indenture, the moneys to be deposited in each
Servicing Account. Solely for purposes of perfection under Section 9-313 of the
Uniform Commercial Code of the state in which such property is held by the
Servicer, the Indenture Trustee hereby acknowledges that the Servicer is acting
as agent and bailee for the benefit of the Indenture Trustee in holding such
moneys pursuant to Section 2.09 of the Servicing Agreement, as well as agents
and bailees for its benefit in holding any Mortgage Asset Documents released to
the Servicer pursuant to Section 3.13(c), and any other items constituting a
part of the Trust Estate which from time to time come into the possession of the
Servicer. It is intended that, by the Servicer's acceptance of such agency
pursuant to Section 2.09 of the Servicing Agreement, the Indenture Trustee, as a
secured party, will be deemed to have possession of such Mortgage Asset
Documents, such moneys and such other items for purposes of Section 9-313 of the
Uniform Commercial Code of the state in which such property is held by the
Servicer.

            SECTION 3.16 Investment Company Act.

            The Issuer shall not become an "investment company" as 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 3.16 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 3.17 Business Activity.

            (a) The Issuer shall furnish to the Indenture Trustee and the Rating
Agencies copies of the form of each proposed amendment to the Trust Agreement at
least 60 days prior to the proposed date of adoption of any such proposed
amendment.

            (b) The Issuer will at all times hold itself out to the public,
including creditors of any entity owning more than a 50% undivided interest in
the Issuer (hereinafter referred to as a "Majority Owner" of the Issuer), under
the Issuer's own name and as a separate and distinct entity from Walter
Industries, Inc. or any of its Affiliates.

            (c) The Issuer will at all times be responsible for the payment of
all its obligations and indebtedness, will at all times maintain a business
office, records, books of account, and funds separate from its Majority Owner
and will observe all customary formalities of independent existence.

            (d) To the extent such compliance involves questions of law, the
Issuer shall be deemed in compliance with the requirements of any provision of
this Section 3.17 if it is acting in accordance with an Opinion of Counsel as to
such requirements.

            (e) The Issuer represents, warrants and covenants that its chief
executive office is and shall be located in the State of Delaware.

            SECTION 3.18 Liability of Owner Trustee.

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

            SECTION 3.19 Exculpation of the Indenture Trustee.

            By entering into this Indenture and agreeing to perform the duties
of the Indenture Trustee as set forth herein, the Indenture Trustee makes no
implied or express representation or warranty to the Noteholders with respect to
the sufficiency or the adequacy in any respect whatsoever of the terms of this
Indenture and the documents executed in connection herewith. Under no
circumstances shall the Indenture Trustee have any liability of any kind
whatsoever for the failure of any Noteholder adequately to review and evaluate
to the full satisfaction of such Noteholder the terms and provisions of this
Indenture, the Notes, the Servicing Agreement, the Sub-Servicing Agreement, and
the other documents executed in connection with this Indenture. The Indenture
Trustee shall in no way be liable for the decision of any Noteholder to purchase
any Notes.

            SECTION 3.20 Owner Trustee Agrees Not to File for Bankruptcy of the
Issuer.

            Prior to one year after payment in full of all the Notes, the Owner
Trustee will not cause or consent to the filing of a petition in bankruptcy
against the Issuer for any reason without the written consent of all the
Noteholders.

            SECTION 3.21 Reports to the Commission.

            (a) The Indenture Trustee shall reasonably cooperate with the Issuer
in connection with the Issuer's satisfying the reporting requirements under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (the "Exchange Act"). Without limiting the generality
of the foregoing, the Indenture Trustee shall prepare on behalf of the Issuer
any monthly Current Reports on Form 8-K (each, a "Monthly Form 8-K") and Annual
Reports on Form 10-K customary for similar securities as required by the
Exchange Act and the rules and regulations of the Securities and Exchange
Commission thereunder, and the Indenture Trustee shall sign (other than any
Annual Reports on Form 10-K) and file (via the Commission's Electronic Data
Gathering and Retrieval System) such forms on behalf of the Issuer. The Servicer
shall sign any Annual Reports on Form 10-K.

            (b) Each Monthly Form 8-K shall be filed by the Indenture Trustee
within 15 days after each Payment Date (commencing on the Payment Date occurring
in August 2004 and ending with the Payment Date following the filing of the Form
15 Suspension Notification as set forth in Section 3.21(g) hereof), including a
copy of the Payment Date Statement for such Payment Date as an exhibit thereto.
Prior to March 30th of each year (or such earlier date as may be required by the
Exchange Act and the rules and regulations of the Commission), the Indenture
Trustee shall file a Form 10-K, in substance as required by applicable law or
applicable Commission staff's interpretations. Such Form 10-K shall include as
exhibits the Servicer's annual statement of compliance described under Section
3.02 of the Servicing Agreement and the accountant's report described under
Section 3.03 of the Servicing Agreement, in each case to the extent they have
been timely delivered to the Indenture Trustee. If they are not so timely
delivered, the Indenture Trustee shall file an amended Form 10-K including such
documents as exhibits reasonably promptly after they are delivered to the
Indenture Trustee. The Form 10-K shall also include a certification in the form
attached hereto as Exhibit F (the "Certification"), which shall be signed by the
senior officer of the Servicer in charge of servicing.

            (c) The Indenture Trustee shall sign a certification (in the form
attached hereto as Exhibit G) for the benefit of the Servicer and its officers,
directors and Affiliates (provided, however, that the Indenture Trustee shall
not undertake an analysis of the accountant's report attached as an exhibit to
the Form 10-K). No later than the 20th day prior to the latest date on which the
Form 10-K is permitted to be filed, without regard to extension (or if such day
is not a Business Day, the immediately preceding Business Day), the Indenture
Trustee shall deliver to the Servicer (i) such certification and (ii) a
completed Form 10-K to be executed by the Servicer. No later than the 10th day
prior to the latest date on which the Form 10-K is permitted to be filed,
without regard to extension (or if such day is not a Business Day, the
immediately preceding Business Day), the Servicer shall deliver the signed Form
10-K and the signed Certification to be filed to the Indenture Trustee. In
addition, the Indenture Trustee shall indemnify and hold harmless the Servicer
and its officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of the Indenture
Trustee's failure to deliver the certification (in the form attached hereto as
Exhibit G) pursuant to this Section 3.21(c) or any inaccuracy in such
certification, other than any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses arising out of the Servicer's breach of its obligations under this
Agreement. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Servicer and its officers, directors and
Affiliates, then the Indenture Trustee shall contribute to the amount paid or
payable by the Servicer, its officers, directors or Affiliates as a result of
the losses, claims, damages or liabilities of the Servicer, its officers,
directors or Affiliates in such proportion as is appropriate to reflect the
relative fault of the Servicer and its officers, directors and Affiliates on the
one hand and the Indenture Trustee on the other.

            (d) If the Securities and Exchange Commission issues additional
interpretative guidance or promulgates additional rules or regulations, or if
other changes in applicable law occur, that would require the reporting
arrangements, or the allocation of responsibilities with respect thereto,
described in this Section 3.21, to be conducted differently than as described,
the Issuer and the Indenture Trustee will reasonably cooperate to amend the
provisions of this Section 3.21 in order to comply with such amended reporting
requirements and such amendment of this Section 3.21. Any such Supplemental
Indenture shall be made in accordance with the Section 9.01 without further
consent of the Noteholders and without the requirement to deliver an Opinion of
Counsel delivered to the Servicer and the Indenture Trustee as set forth in
Section 9.03 hereof. Such Supplemental Indenture may result in the reduction of
the reports filed by the Indenture Trustee on behalf of the Issuer under the
Exchange Act. Notwithstanding the foregoing, neither the Issuer nor the
Indenture Trustee shall be obligated to enter into any amendment pursuant to
this Section 3.21 that adversely affects its obligations and immunities under
this Indenture.

            (e) In filing any Monthly Form 8-K or Form 10-K, the Indenture
Trustee shall not undertake any analysis of, and shall have no responsibility
for, any financial information, accountant's report, certification or other
matter contained therein, except for computations performed by the Indenture
Trustee and reflected in the Payment Date Statement; provided, however, that all
information provided by the Servicer to the Indenture Trustee under Section
3.01(a) of the Servicing Agreement for inclusion in the Payment Date Statements
has been accurately transcribed.

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

            (g) Prior to January 30 of the first year in which the Indenture
Trustee is able to do so under applicable law, the Indenture Trustee shall file
a Form 15 Suspension Notification with respect to the Issuer.

            (h) Upon the request of the Indenture Trustee, the Grantor shall
provide to the Indenture Trustee in a timely manner all such information or
documentation as the Indenture Trustee may reasonably request in connection with
the performance of its duties and obligations under this Section 3.21.

            SECTION 3.22 Representations and Warranties Regarding the Trust
Estate.

            The Issuer represents and warrants as follows:

            (a) This Indenture creates a valid and continuing security interest
(as defined in the applicable Uniform Commercial Code) in the Trust Estate in
favor of the Indenture Trustee, which security interest is prior to all other
liens, and is enforceable as such as against creditors of and purchasers from
the Issuer;

            (b) All of the Trust Estate constitutes "securities entitlements,"
"instruments," "general intangibles" or "financial assets" (within the meaning
of the applicable Uniform Commercial Code);

            (c) The Issuer owns and has good and marketable title to the Trust
Estate free and clear of any lien, claim or encumbrance of any Person;

            (d) The Issuer has caused or will have caused, within ten (10) days
of the Closing Date, the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under applicable law in
order to perfect the security interest in the Trust Estate granted to the
Indenture Trustee hereunder;

            (e) The Issuer has taken all steps necessary to cause the securities
intermediary to identify in its records the Indenture Trustee as the person
having a security entitlement against the securities intermediary in the Holding
Account;

            (f) Other than the security interest granted to the Indenture
Trustee pursuant to the Indenture, the Issuer has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Trust Estate.
The Issuer has not authorized the filing of and is not aware of any filed
financing statement listing the Issuer as debtor that include a description of
collateral covering the Trust Estate. The Issuer is not aware of any judgment or
tax lien filings against the Issuer;

            (g) All original executed copies of each Account Note or Mortgage
Note, as applicable, Mortgage or other writing constituting an "instrument"
(within the meaning of the applicable Uniform Commercial Code) that constitute
or evidence the Trust Estate have been delivered to the Indenture Trustee, or
Document Custodian on behalf of the Indenture Trustee (and the Issuer has
received written acknowledgment from the Document Custodian that the Document
Custodian is acting solely as agent of the Indenture Trustee);

            (h) None of the "instruments" (within the meaning of the applicable
Uniform Commercial Code) that constitute or evidence the Trust Estate has any
marks or notations indicating that they have been pledged, assigned or otherwise
conveyed to any Person other than the Indenture Trustee;

            (i) The Issuer has received all consents and approvals required by
the terms of the Trust Estate to the transfer to the Indenture Trustee of its
interest and rights in the Trust Estate hereunder;

            (j) Each of the Holding Account, the Collection Account, the
Capitalized Interest Account, the Interest Reserve Account and the Pre-Funding
Account is a "securities account" (within the meaning of the applicable Uniform
Commercial Code);

            (k) Other than the Holding Account, the Collection Account, the
Capitalized Interest Account, the Interest Reserve Account and the Pre-Funding
Account, the Trust Estate consists of (i) Mortgage Notes, Account Notes,
promissory notes, contracts or other writings constituting "instruments" (within
the meaning of the applicable Uniform Commercial Code) or (ii) "general
intangibles" (within the meaning of the applicable Uniform Commercial Code);

            (l) The Collection Account, the Capitalized Interest Account, the
Interest Reserve Account and the Pre-Funding Account are not in the name of any
Person other than the Indenture Trustee. The Issuer has not consented to the
securities intermediary of the Holding Account to comply with entitlement orders
of any Person other than the Indenture Trustee;

            (m) All of the Trust Estate consisting of "security entitlements"
(within the meaning of the applicable Uniform Commercial Code) has been and will
be credited to one of the Holding Account, the Collection Account, the
Capitalized Interest Account, the Interest Reserve Account and the Pre-Funding
Account;

            (n) The securities intermediary for the Holding Account has agreed
to treat all assets credited to such account as "financial assets" (within the
meaning of the applicable Uniform Commercial Code);

            (o) The security interest of the Indenture Trustee in the Trust
Estate shall, until payment in full of the indebtedness secured hereunder and
termination of this Indenture, be a first-priority perfected security interest;

            (p) Each of the foregoing representations shall, as applicable, be
deemed repeated each time new assets become part of the Trust Estate;

            (q) The foregoing representations shall survive termination of this
Indenture; and

            (r) The foregoing representations may not be waived, amended or
modified without 60 days prior notice to S&P.

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

            SECTION 4.01 Satisfaction and Discharge of Indenture.

            (a) Whenever the following conditions shall have been satisfied:

                  (1) either

                        (A) all Notes theretofore authenticated and delivered
                  (other than (i) Notes which have been destroyed, lost or
                  stolen and which have been replaced or paid as provided in
                  Section 2.08, and (ii) Notes for whose payment money has
                  theretofore been deposited in trust and thereafter repaid to
                  the Issuer, as provided in Section 3.03) have been delivered
                  to the Indenture Trustee for cancellation; or

                        (B) all Notes not theretofore delivered to the Indenture
                  Trustee for cancellation

                              (i) have become due and payable, or

                              (ii) will become due and payable at the Maturity
                  of the final instalment of the principal thereof within one
                  year, or

                              (iii) are to be called for redemption within one
                  year under irrevocable arrangements satisfactory to the
                  Indenture Trustee for the giving of notice of redemption by
                  the Indenture Trustee in the name, and at the expense of the
                  Issuer,

                  and the Issuer, in the case of clauses (i), (ii) or (iii)
                  above, has deposited or caused to be deposited with the
                  Indenture Trustee, in trust for such purpose, an amount of
                  cash (which cash, in the case of clauses (ii) and (iii) above
                  must constitute Eligible Moneys) sufficient to pay and
                  discharge the entire indebtedness on such Notes not
                  theretofore delivered to the Indenture Trustee for
                  cancellation, for principal and interest to the Maturity of
                  their entire unpaid principal amount or the applicable
                  Redemption Date, as the case may be;

                  (2) the Issuer has paid or caused to be paid all other sums
            payable hereunder by the Issuer;

                  (3) the Issuer has delivered to the Indenture Trustee an
            Officer's Certificate and an Opinion of Counsel each stating that
            all conditions precedent herein provided for the satisfaction and
            discharge of this Indenture have been complied with and covering
            such other matters as the Indenture Trustee may reasonably request;

            then, upon Issuer Request this Indenture and the lien, rights and
interests created hereby and thereby shall cease to be of further effect, and
the Indenture Trustee and each co-trustee and separate trustee, if any, then
acting as such hereunder shall, at the expense of the Issuer, execute and
deliver all such instruments as may be necessary to acknowledge the satisfaction
and discharge of this Indenture and shall pay, or assign or transfer and
deliver, to the Issuer or upon Issuer Order all cash, securities and other
property held by it as part of the Trust Estate remaining after satisfaction of
the conditions set forth in clauses (1) and (2) above.

            (b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Issuer to the Indenture Trustee under Section
6.07, the obligations of the Indenture Trustee to the Issuer and to the Holders
of Notes under Section 3.03, the obligations of the Indenture Trustee to the
Holders of Notes under Section 4.02 and the provisions of Article II with
respect to lost, stolen, destroyed or mutilated Notes, registration of transfers
of Notes, and rights to receive payments of principal of and interest on the
Notes shall survive and the provisions of Section 5.06 as they relate to clause
(a) of Section 5.06 shall continue for one year after such satisfaction and
discharge.

            SECTION 4.02 Application of Trust Money.

            All money deposited with the Indenture Trustee pursuant to Sections
3.03 and 4.01 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, as the Indenture Trustee may determine, to the Persons
entitled thereto, of the principal and interest for whose payment such money has
been deposited with the Indenture Trustee.

                                    ARTICLE V

                              DEFAULTS AND REMEDIES

            SECTION 5.01 Event of Default.

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

                  (1) (i) there shall occur a default in the payment of any
            amount due under the Notes by or on the Indenture Maturity Date,
            (ii) there shall occur a failure to apply funds in the Collection
            Account in accordance with Section 8.02(b) and such failure shall
            continue for a period of two Business Days, (iii) there shall occur
            a default in the payment when due of interest on any Notes and such
            default shall continue for a period of thirty days (provided that
            neither the reimbursement of any Realized Loss Amounts nor interest
            on any Realized Loss Amounts in respect of any Class of Notes will
            be deemed due unless there exist Available Funds sufficient to pay
            such amount and all prior amounts under the Available Funds
            Allocation) or (iv) there shall occur a failure to pay the
            Outstanding Principal Amount of each Class of Notes on the Indenture
            Maturity Date;

                  (2) the Issuer shall breach or default in the due observance
            of any one or more of the covenants set forth in Section 3.08;

                  (3) the Issuer shall breach, or default in the due observance
            or performance of, any other of its other covenants in this
            Indenture, such Default shall continue for a period of five Business
            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 Notes entitled to 51% or
            more of the aggregate Voting Rights of all Classes voting together
            as a single class, a written notice specifying such Default and
            requiring it to be remedied and stating that such notice is a
            "Notice of Default" hereunder;

                  (4) there shall occur the entry of a decree or order for
            relief by a court having jurisdiction in respect of the Issuer in an
            involuntary case under the federal bankruptcy laws, as now or
            hereafter in effect, or any other present or future federal or state
            bankruptcy, insolvency or similar law, or appointing a receiver,
            liquidator, assignee, trustee, custodian, sequestrator or other
            similar official of the Issuer or of any substantial part of its
            property, or ordering the winding up or liquidation of the affairs
            of the Issuer and the continuance of any such decree or order
            unstayed and in effect for a period of 60 consecutive days; or

                  (5) there shall occur the commencement by the Issuer of a
            voluntary case under the federal bankruptcy laws, as now or
            hereafter in effect, or any other present or future federal or state
            bankruptcy, insolvency or similar law, or the consent by the Issuer
            to the appointment of or taking possession by a receiver,
            liquidator, assignee, trustee, custodian, sequestrator or other
            similar official of the Issuer or of any substantial part of its
            property or the making by the Issuer of an 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 corporate action
            by the Issuer in furtherance of any of the foregoing.

            SECTION 5.02 Acceleration of Maturity; Rescission and Annulment.

            Prior to the Indenture Maturity Date, upon the occurrence of an
Event of Default, the Indenture Trustee or the Holders entitled to at least 66
2/3% of the aggregate Voting Rights of the Notes then Outstanding may declare
the principal of the Notes, together with accrued and unpaid interest thereon
through the date of acceleration, to be immediately due and payable by a notice
in writing to the Issuer (and to the Indenture Trustee if given by such
Noteholders). Upon such declaration, the Indenture Trustee may, or at the
written direction of the Holders entitled to at least 66 2/3% of the aggregate
Voting Rights of the Notes then Outstanding shall, pursue one or more remedies
subject to, and in accordance with the terms of this Indenture, including
without limitation, selling the Mortgage Assets at one or more public or private
sales. Notwithstanding such acceleration of the Maturity of the Notes and
subject to Section 5.05(a), the Indenture Trustee shall refrain from selling the
Mortgage Assets and continue to apply all amounts received on the Mortgage
Assets to payments due on the Notes in accordance with Section 8.02(b) hereof if
(i) the Indenture Trustee determines, in accordance with Section 5.05(b), that
anticipated collections on the Mortgage Assets would be sufficient to pay the
most senior Class of Notes then Outstanding and (ii) the Indenture Trustee has
not been otherwise directed by the Holders of all the Notes.

            On or after the Indenture Maturity Date, if an Event of Default
occurs or shall have occurred, the Indenture Trustee shall declare the principal
of the Notes, together with accrued and unpaid interest thereon through the date
of acceleration, to be immediately due and payable by a notice in writing to the
Issuer. Upon such declaration, the Indenture Trustee may, or at the direction or
with the consent of the Holders entitled to at least a majority of the Voting
Rights of all Classes of Notes voting together as a single class shall pursue
one or more remedies subject to, and in accordance with the terms hereof,
including without limitation, selling the Mortgage Assets at one or more public
or private sales. Notwithstanding the acceleration of the Maturity of the Notes
and subject to Section 5.05(a), the Indenture Trustee shall refrain from selling
the Mortgage Assets and continue to apply all amounts received on the Mortgage
Assets to payments due on the Notes in accordance with Section 8.02(b) hereof if
(i) the Indenture Trustee determines, in accordance with Section 5.05(b), that
anticipated collections on the Mortgage Assets would be sufficient to pay all
the Classes of Notes then Outstanding and (ii) the Indenture Trustee has not
been otherwise directed by the Holders of all the Notes.

            Notwithstanding the foregoing, the Indenture Trustee may not declare
the Notes to be due and payable pursuant to this Section 5.02 as a result of an
Event of Default arising solely from the Issuer's failure to perform any of its
agreements set forth in Section 6.07.

            At any time after such a declaration of acceleration of Maturity of
the Notes has been made and before a judgment or decree for payment of the money
due has been obtained by the Indenture Trustee as hereinafter in this Article
provided, the Holders entitled to at least a majority of the aggregate Voting
Rights of all Classes of Notes Outstanding voting together as a single class, by
written notice to the Issuer and the Indenture Trustee, may rescind and annul
such declaration and its consequences if:

                  (1) the Issuer has paid or deposited with the Indenture
            Trustee a sum sufficient to pay

                        (A) all payments of principal of and interest on all
                  Notes and all other amounts which would then be due hereunder
                  or upon such 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, its
                  agents and counsel; and

                  (2) all Events of Default, other than the non-payment of the
            principal of Notes which have become due solely by such
            acceleration, have been cured or waived as provided in Section 5.15.

            No such rescission shall affect any subsequent Default or impair any
right consequent thereon.

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

            The Issuer covenants that if an Event of Default shall occur and be
continuing, the Issuer will pay to the Indenture Trustee for the benefit of the
Holders of the Notes:

                  (1) (A) if the Notes have not been declared due and payable,
            the whole amount then due and payable on the Notes in respect of
            principal, including Realized Loss Amounts; or

                        (B) if the Notes have been declared due and payable and
                  such declaration and its consequences have not been rescinded
                  and annulled, the Aggregate Outstanding Principal Amount of
                  all Notes, including Realized Loss Amounts;

                  (2) (A) if the Notes have not been declared due and payable,
            the whole amount then due and payable on the Notes in respect of
            interest, including interest on any overdue instalments of principal
            at the applicable Note Interest Rate, and, to the extent payment of
            such interest on interest shall be legally enforceable, interest on
            any overdue instalments of interest at the applicable Note Interest
            Rate and interest due and payable with respect to unreimbursed
            Realized Loss Amounts; or

                        (B) if the Notes have been declared due and payable and
                  such declaration and its consequences has not been rescinded
                  and annulled, (i) with respect to the period prior to the date
                  of such declaration, accrued interest to the date of such
                  declaration, at the applicable Note Interest Rate, on the
                  Outstanding Principal Amount of each Note and interest to the
                  date of such declaration at the applicable Note Interest Rate,
                  on any instalment of interest on each Note that was not paid
                  when due, but only to the extent that payment of such interest
                  on interest shall be legally enforceable and interest to the
                  date of such declaration at the applicable Note Interest Rate,
                  on any previously unreimbursed Realized Loss Amounts and (ii)
                  with respect to the period from and including the date of such
                  declaration, interest to the date such payment is made, at the
                  applicable Note Interest Rate, on the Outstanding Principal
                  Amount of each Note and on any instalment of interest on each
                  Note that was not paid when due, but only to the extent that
                  payment of such interest on interest shall be legally
                  enforceable and on any previously unreimbursed Realized Loss
                  Amounts; and

                  (3) in addition thereto, such further amounts as shall be
            sufficient to cover the costs and expenses of collection, including
            the reasonable compensation, expenses, disbursements and advances of
            the Indenture Trustee, its agent and counsel.

            If the Issuer fails to pay such amounts forthwith upon such demand,
or in any event if an Event of Default under clause (1) of Section 5.01 shall
have occurred, the Indenture Trustee, in its own name and as trustee of an
express trust, 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 any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law.

            If an Event of Default occurs and is continuing, the Indenture
Trustee may 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 enforce any
other proper remedy, including, without limitation, instituting a Proceeding
prior to any declaration of acceleration of the Maturity of the Notes for the
collection of all amounts then due and unpaid on the Notes, prosecuting such
Proceeding to final judgment or decree, enforcing the same against the Trust
Estate and collecting out of the property, wherever situated, of the Issuer the
moneys adjudged or decreed to be payable in the manner provided by law,
provided, however, that neither the Indenture Trustee nor any owner of any
equity interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for any amounts payable under the Notes or this
Indenture.

            SECTION 5.04 Remedies.

            If an Event of Default shall have occurred and be continuing and the
Notes have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Indenture Trustee may
(subject to Sections 5.02, 5.05 and 5.18, to the extent applicable) do one or
more of the following:

            (a) institute Proceedings for the collection of all amounts then
payable on the Notes, or under this Indenture in respect of Notes, whether such
amounts have become due and payable by declaration of acceleration or otherwise
and all amounts payable under the Servicing Agreement, enforce any judgment
obtained, and collect from the Issuer moneys adjudged due;

            (b) 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;

            (c) file or record all Assignments that have not previously been
recorded;

            (d) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture; and

            (e) 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 Indenture Trustee or the Holders of the Notes
hereunder.

            In the event the Indenture Trustee takes any of the foregoing
actions to protect the Noteholders' rights or interests under the Indenture, the
Indenture Trustee shall be indemnified from the Trust Estate against any loss,
liability or expense arising out of or in connection with any such actions.

            SECTION 5.05 Optional Preservation of Trust Estate.

            (a) If the Notes have been declared due and payable following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee shall apply all Remittances and
other amounts receivable with respect to the Trust Estate, first, to the Issuer
Expenses and then to the payment of the principal of and interest on the Notes
as and when such principal and interest would have become due pursuant to the
terms of Section 8.02(b) hereof and to such other purposes as are specified in
this Indenture, with all such Remittances and other amounts being applied as if
there had not been a declaration of acceleration of the Maturity of the Notes,
provided that:

            (i) the Indenture Trustee shall have determined that the Remittances
      and other amounts receivable with respect to the Trust Estate are
      sufficient to provide the funds required to pay the principal of and
      interest on the applicable Class or Classes of Notes specified in Section
      5.02 hereof;

            (ii) all the Holders of the Notes shall not have directed the
      Indenture Trustee in accordance with Section 5.14 (subject, however, to
      Section 5.18(b)) to sell the Trust Estate securing such Notes;

            (iii) there shall have been delivered to the Indenture Trustee an
      Opinion of Counsel to the effect that notwithstanding the acceleration of
      the Maturity of the Notes, but after giving effect to the provisions of
      this Section 5.05;

                  (A) in accordance with the provisions of this Section 5.05,
            the Issuer is legally obligated to make payments of principal of and
            interest on the Notes and perform its obligations hereunder in the
            same manner and amounts as it was legally obligated to make such
            payments prior to the acceleration of the Maturity of the Notes; and

                  (B) such obligation is legally enforceable under applicable
            law, subject to bankruptcy, reorganization, insolvency and other
            laws affecting the enforcement of creditors' rights generally and to
            general principles of equity (regardless whether such enforceability
            is considered in a proceeding in equity or at law).

            (iv) unless the Trust Estate has already been acquired by the
      Indenture Trustee in a Sale conducted pursuant to Section 5.18 or the lien
      of this Indenture has been otherwise foreclosed and all rights of the
      Issuer in the Trust Estate have been terminated by such foreclosure, the
      Issuer shall not have exercised the Issuer's rights, if any, under
      applicable law to compel the Sale of the Trust Estate; and

            (v) if the Indenture Trustee shall have acquired the entire Trust
      Estate by purchasing it at any public or private Sale conducted pursuant
      to Section 5.18, or the lien of this Indenture shall have been otherwise
      foreclosed and all rights of the Issuer in the Trust Estate have been
      terminated by such foreclosure, there shall have been delivered to the
      Indenture Trustee an Opinion of Counsel to the effect that:

                        (A) the Trust Estate will not as a result of such action
                  be deemed an association taxable as a corporation under the
                  Code; and

                        (B) notwithstanding the acquisition of the Trust Estate
                  by the Indenture Trustee, the rights, powers and duties of the
                  Indenture Trustee with respect to the Trust Estate (or the
                  proceeds thereof) and the Noteholders and the rights of the
                  Noteholders shall continue to be governed by the terms of this
                  Indenture.

            (b) The Indenture Trustee may in its sole discretion rely upon an
opinion of an Independent investment banking firm of national reputation as to
the feasibility of any action proposed to be taken in accordance with subsection
(a) of this Section 5.05 and as to the sufficiency of the Remittances and other
amounts receivable with respect to the Trust Estate to make the required
payments of principal of and interest on the Notes, which opinion shall be
conclusive evidence as to such feasibility or sufficiency. Such an opinion may,
but need not, be obtained by the Indenture Trustee in its sole discretion or may
be delivered to the Indenture Trustee by an Independent investment banking firm
of national reputation engaged by the Issuer to prepare and deliver such
opinion.

            (c) Pending determination by the Indenture Trustee as to whether the
criteria set forth in subsection (a) of this Section 5.05 are satisfied, all
Remittances and other amounts receivable with respect to the Trust Estate shall
be applied first to payment of Issuer Expenses that consist of the fees and
expenses of, and other amounts payable to, the Owner Trustee, the Indenture
Trustee and the Successor Servicer, and the Servicing Fee and then pursuant to
Section 8.02(b) to the payment of the principal of and interest on the Notes as
and when such principal and interest would have become due pursuant to the terms
hereof and of the Notes if there had not been a declaration of acceleration of
the Maturity of the Notes. The Indenture Trustee shall make its determination
whether the criteria set forth in subsection (a) of this Section 5.05 can be
satisfied as promptly as practicable following any declaration of acceleration
of the Maturity of the Notes.

            (d) If the Indenture Trustee determines that the criteria set forth
in subsection (a) of this Section 5.05 are not or cannot be satisfied, then all
amounts collected by the Indenture Trustee pursuant to this Section 5.05 or
otherwise shall be applied in accordance with Section 5.08.

            SECTION 5.06 Indenture Trustee May File Proofs of Claim.

            (a) The Indenture Trustee shall promptly notify the Noteholders of
(i) the commencement of any of the events or proceedings (individually, an
"Insolvency Proceeding") described in Section 5.01(5) hereof with respect to the
Issuer and (ii) the making of any claim in connection with any Insolvency
Proceeding seeking the avoidance as a preferential transfer (a "Preference
Claim") of any payment of principal of, or interest on, the Notes. The
obligation of the Indenture Trustee to notify the Noteholders of any Insolvency
Proceeding or Preference Claims is expressly limited to such matters of which a
Responsible Officer of the Indenture Trustee has actual knowledge. The Indenture
Trustee, on its behalf and on behalf of the Holders, may, at any time during the
continuation of an Insolvency Proceeding, direct all matters relating to such
Insolvency Proceeding, including, without limitation, (i) all matters relating
to any Preference Claim, (ii) the direction of any appeal of any order relating
to any Preference Claim and (iii) the posting of any surety, supersedeas or
performance bond pending any such appeal;

            (b) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, composition or other
judicial Proceeding relative to the Issuer or any other obligor upon any of the
Notes or the property of the Issuer or of such other obligor or their creditors,
the Indenture Trustee (irrespective of whether the Notes shall then be due and
payable as therein expressed or by declaration or otherwise) shall be entitled
and empowered, by intervention in such Proceeding or otherwise, to

            (i) file and prove a claim for the whole 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 the reasonable
      compensation, expenses, disbursements and advances of the Indenture
      Trustee, its agents and counsel) and of the Noteholders allowed in such
      Proceeding, and

            (ii) collect and receive any moneys or other property payable or
      deliverable on any such claims and to distribute the same,

and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such Proceeding is hereby authorized by each Noteholder
to make such payments to the Indenture Trustee and, in the event that the
Indenture Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Indenture Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel, and any other amounts due the Indenture Trustee
under Section 6.07.

            Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment, or composition
affecting any of 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.

            SECTION 5.07 Indenture Trustee May Enforce Claims Without Possession
of Notes.

            All rights of action and claims under this Indenture or any of the
Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceeding instituted by the Indenture Trustee in
accordance with Section 5.03 shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the benefit of the
Holders of the Notes in the priority specified herein. Any surplus shall be
available, in accordance with Section 5.08, for the payment of the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel.

            SECTION 5.08 Application of Money Collected.

            If the Notes have been declared due and payable following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, any money collected by the Indenture Trustee with respect to the Notes
pursuant to this Article or otherwise and any moneys which may then be held or
thereafter received by the Indenture Trustee as security for the Notes shall
(unless such money is being applied in accordance with Section 5.05(a)) be
applied in the following order, at the date or dates fixed by the Indenture
Trustee and, in case of the distribution of the entire amount due on account of
principal of and interest on any Notes, upon presentation and surrender thereof:

                  First: To the payment of Issuer Expenses;

                  Second: To the holders of the Class A Notes, in an amount up
            to the Interest Accrual Amount thereof;

                  Third: To the holders of the Class A Notes, in an amount up to
            all unreimbursed Class Interest Shortfalls related thereto, together
            with accrued interest thereon;

                  Fourth: To the holders of the Class M-1 Notes, in an amount up
            to the Interest Accrual Amount thereof ;

                  Fifth: To the holders of the Class M-1 Notes, in an amount up
            to all unreimbursed Class Interest Shortfalls related thereto,
            together with accrued interest thereon;

                  Sixth: To the holders of the Class M-2 Notes, in an amount up
            to the Interest Accrual Amount thereof;

                  Seventh: To the holders of the Class M-2 Notes, in an amount
            up to all unreimbursed Class Interest Shortfalls related thereto,
            together with accrued interest thereon;

                  Eighth: To the holders of the Class B Notes, in an amount up
            to the Interest Accrual Amount thereof;

                  Ninth: To the holders of the Class B Notes, in an amount up to
            all unreimbursed Class Interest Shortfalls related thereto, together
            with accrued interest thereon;

                  Tenth: To the holders of the Class A Notes, in an amount up to
            the Class A Outstanding Principal Amount, ratably, without
            preference or priority of any kind;

                  Eleventh: To the holders of the Class A Notes, accrued and
            unpaid interest at the related Note Interest Rate on the amount of
            any unreimbursed Class A Realized Loss Amounts previously allocated
            thereto;

                  Twelfth: To the holders of the Class A Notes, in an amount up
            to the amount of any unreimbursed Class A Realized Loss Amounts
            previously allocated thereto;

                  Thirteenth: To the holders of the Class M-1 Notes, in an
            amount up to the Class M-1 Outstanding Principal Amount, ratably,
            without preference or priority of any kind;

                  Fourteenth: To the holders of the Class M-1 Notes, accrued and
            unpaid interest at the related Note Interest Rate on the amount of
            any unreimbursed Class M-1 Realized Loss Amounts previously
            allocated thereto;

                  Fifteenth: To the holders of the Class M-1 Notes, in an amount
            up to the amount of any unreimbursed Class M-1 Realized Loss Amounts
            previously allocated thereto;

                  Sixteenth: To the holders of the Class M-2 Notes, in an amount
            up to the Class M-2 Outstanding Principal Amount, ratably, without
            preference or priority of any kind;

                  Seventeenth: To the holders of the Class M-2 Notes, accrued
            and unpaid interest at the related Note Interest Rate on the amount
            of any unreimbursed Class M-2 Realized Loss Amounts previously
            allocated thereto;

                  Eighteenth: To the holders of the Class M-2 Notes, in an
            amount up to the amount of any unreimbursed Class M-2 Realized Loss
            Amounts previously allocated thereto;

                  Nineteenth: To the holders of the Class B Notes, in an amount
            up to the Class B Outstanding Principal Amount of the Class B Notes,
            ratably, without preference or priority of any kind;

                  Twentieth: To the holders of the Class B Notes, accrued and
            unpaid interest at the related Note Interest Rate on the amount of
            any unreimbursed Class B Realized Loss Amounts previously allocated
            thereto;

                  Twenty-First: To the holders of the Class B Notes, in an
            amount up to the amount of any unreimbursed Class B Realized Loss
            Amounts previously allocated thereto;

                  Twenty-Second: To the Successor Servicer, in an amount up to
            any due and unpaid "expenses" (as defined in Section 5.4 of the
            Standby Servicing Agreement) owed to the Successor Servicer pursuant
            to Section 5.4 of the Standby Servicing Agreement, but only to the
            extent not received from the terminated Servicer under the Standby
            Servicing Agreement; and

                  Twenty-Third: To the payment of the remainder, if any, to the
            Issuer or any other Person legally entitled thereto.

            SECTION 5.09 Limitation on Suits.

            No Holder of a Note shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless

                  (1) such Holder has previously given written notice to the
            Indenture Trustee of a continuing Event of Default;

                  (2) the Holders of Notes entitled to 51% or more of the
            aggregate Voting Rights of all Classes Outstanding voting together
            as a single class (or, if there has been a declaration that the
            Notes are immediately due and payable, or a sale or foreclosure with
            respect to the Mortgage Assets, the required holders of the
            applicable Class or Classes of Notes as set forth in Section 5.02
            hereof) shall have made written request to the Indenture Trustee to
            institute such Proceedings in respect of such Event of Default in
            its own name as Indenture Trustee hereunder;

                  (3) such Holder or Holders have offered to the Indenture
            Trustee reasonable indemnity against the costs, expenses and
            liabilities to be incurred in compliance with such request;

                  (4) the Indenture Trustee for 60 days after its receipt of
            such notice, request and offer of indemnity has failed or refused to
            institute any such Proceeding; and

                  (5) no direction inconsistent with such written request has
            been given to the Indenture Trustee during such 60-day period by the
            Holders of Notes entitled to 51% or more of the aggregate Voting
            Rights;

            it being 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 and for the equal and ratable benefit of
all the Holders of Notes in the priority specified herein.

            SECTION 5.10 Unconditional Rights of Noteholders to Receive
Principal and Interest.

            To the extent permitted by applicable law, the Holder of any Note
shall have the right, which right is absolute and unconditional except to the
extent restricted by applicable law, to receive payment of each instalment of
interest when due and payable on such Note on the respective Payment Dates of
such instalments of interest and to receive payment of each instalment of
principal of such Note when due (or in the case of any Note called for
redemption, on the date fixed for such redemption) and to institute suit for the
enforcement of any such payment, and except as otherwise set forth in this
Indenture, such right shall not be impaired without the consent of such Holder.

            SECTION 5.11 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 5.12 Rights and Remedies Cumulative.

            No right or remedy herein conferred upon or reserved to the
Indenture Trustee 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 5.13 Delay or Omission Not Waiver.

            No delay or omission of the Indenture Trustee or of 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 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 5.14 Control by the Noteholders.

            The Holders of Notes entitled to at least a majority of the
aggregate Voting Rights of all Classes voting together as a single class shall
have the right to direct the time, method and place of conducting any Proceeding
for any remedy available to the Indenture Trustee or exercising any trust or
power conferred on the Indenture Trustee; provided that

                  (1) such direction shall not be in conflict with any rule of
            law or with this Indenture,

                  (2) any direction to the Indenture Trustee to undertake a Sale
            of the Trust Estate shall be by the Holders of Notes entitled to the
            percentage of the Voting Rights specified in Section 5.18(b)(1) or
            (2), whichever is applicable,

                  (3) if the conditions to retention of the Trust Estate set
            forth in Section 5.05(a) have been satisfied, then any direction by
            less than all of the Noteholders to the Indenture Trustee to
            undertake a Sale of the Trust Estate shall be of no force and
            effect, and

                  (4) the Indenture Trustee may take any other action deemed
            proper by the Indenture Trustee which is not inconsistent with such
            direction; provided, however, that, subject to Section 6.01, the
            Indenture Trustee need not take action which it determines might
            involve it in liability or expense or be unjustly prejudicial to the
            Noteholders not consenting.

            Notwithstanding anything herein to the contrary, any direction to
the Indenture Trustee to declare the Notes due and payable shall be made by
those Classes of Notes as specified in Section 5.02 hereof.

            SECTION 5.15 Waiver of Past Defaults.

            The Holders entitled to the Voting Rights specified in Section 5.02
hereof may, on behalf of the Holders of all the Notes, waive any past Default
hereunder and its consequences, except a Default

                  (1) in the payment of any instalment of principal of, or
            interest on, any Note; or

                  (2) in respect of a covenant or provision hereof which under
            Section 9.02 cannot be modified or amended without the consent of
            the Holder of each Outstanding Note affected.

            Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.

            SECTION 5.16 Undertaking for Costs.

            All parties to this Indenture agree, and each Holder of any Note by
his 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 shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate Notes representing more than 10% of the
Voting Rights, or to any suit instituted by any Noteholder for the enforcement
of the payment of any instalment of interest on any Note on or after the
maturity thereof expressed in such Note or for the enforcement of the payment of
any instalment of principal of any Note when due (or, in the case of a Note
called for redemption, on or after the applicable redemption date) or for the
enforcement of the payment of any instalment of principal of any Note when due
as indicated in the Payment Date Statement prepared and delivered by the
Indenture Trustee pursuant to Section 2.09(d).

            SECTION 5.17 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, which may affect the covenants in, 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 will 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 5.18 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 5.18. 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 shall have been paid. To the fullest extent permitted by
law, 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 or public Sale
sell the Trust Estate, or any portion thereof, unless

                  (1) prior to the Indenture Maturity Date, the Holders of Notes
            entitled to 51% or more of the aggregate Voting Rights of all
            Classes voting together as a single class, consent to or direct the
            Indenture Trustee to make, such Sale, or

                  (2) the Indenture Trustee determines, in its sole discretion,
            that the conditions for retention of the Trust Estate set forth in
            Section 5.05(a)(i), (iii) or (iv) 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(b), and prior to the Indenture Maturity
            Date, the Holders of Notes entitled to 51% or more of at least a
            majority of the aggregate Voting Rights of all Classes voting
            together as a single class, 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 5.18(b).

            (c) Unless the Holders of Notes entitled to 51% or more at least a
majority of the aggregate Voting Rights of all Classes voting together as a
single class, 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 entire amount which would be payable to the Holders
under the Notes, in full payment thereof in accordance with Section 5.08 on the
Payment Date next succeeding the date of such Sale 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; provided that the payment for such bid will be limited to the
application of the credit as set forth in Section 5.18(d)(2).

            (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 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 Outstanding 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 as a result of such
            Sale in accordance with Section 5.08 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 moneys.

            SECTION 5.19 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 the Indenture Trustee
or the Holders of Notes 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.

            SECTION 5.20 Allocation of Realized Loss Amount.

            On each Payment Date: any Class A Realized Loss Amount allocated to
the Class A Notes will be applied in reduction of the Class A Outstanding
Principal Amount; any Class M-1 Realized Loss Amount will be applied in
reduction of the Class M-1 Outstanding Principal Amount; any Class M-2 Realized
Loss Amount will be applied in reduction of the Class M-2 Outstanding Principal
Amount; and any Class B Realized Loss Amount will be applied in reduction of the
Class B Outstanding Principal Amount; in each case, until the Outstanding
Principal Amount of such Class has been reduced to zero.

                                   ARTICLE VI

                              THE INDENTURE TRUSTEE

            SECTION 6.01 Duties of Indenture Trustee.

            (a) If an Event of Default known to a Responsible Officer of the
Indenture Trustee has occurred and is continuing, the Indenture Trustee shall
exercise such of 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 man would
exercise or use under the circumstances in the conduct of his own affairs.

            (b) Except during the continuance of an Event of Default:

                  (1) The Indenture Trustee need perform only those duties that
            are specifically set forth in this Indenture and no others, and no
            implied covenants or obligations of the Indenture Trustee shall be
            read into this Indenture.

                  (2) 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. The Indenture Trustee shall,
            however, examine such certificates and opinions to determine whether
            they conform to the requirements of this Indenture but need not
            verify the accuracy of the contents thereof or whether procedures
            specified by or pursuant to the provisions of this Indenture have
            been followed in the preparation thereof.

            (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:

                  (1) This paragraph does not limit the effect of subsection (b)
            of this Section.

                  (2) 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.

                  (3) 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 pursuant to Section 5.14.

            (d) For all purposes under this Indenture, the Indenture Trustee
shall not be deemed to have notice of any Event of Default described in Section
5.01(2) through 5.01(5) or any Default described in Section 5.01(2) through
5.01(5) unless a Responsible Officer assigned to and working in the Indenture
Trustee's corporate trust department has actual knowledge thereof or unless
written notice of any event which is in fact such an Event of Default or Default
is received by the Indenture Trustee at the Corporate Trust Office, and such
notice references the Notes, the Issuer, the Trust Estate or this Indenture.

            (e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any 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 for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.

            (f) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to the provisions of this Section.

            (g) Notwithstanding any extinguishment of all right, title and
interest of the Issuer in and to the Trust Estate following an Event of Default
and a consequent declaration of acceleration of the Maturity of the Notes
secured thereby, whether such extinguishment occurs through a Sale of the Trust
Estate to another Person, the acquisition of the Trust Estate by the Indenture
Trustee or otherwise, the rights, powers and duties of the Indenture Trustee
with respect to the Trust Estate (or the proceeds thereof) and the Holders of
the Notes and the rights of such Noteholders shall continue to be governed by
the terms of this Indenture.

            (h) The Indenture Trustee agrees not to consent to or cause the
filing of a petition in bankruptcy against the Issuer as a result of any amounts
due and owing the Indenture Trustee in its capacity as trustee hereunder.

            SECTION 6.02 Notice of Default.

            Upon a Default becoming known to the Indenture Trustee, the
Indenture Trustee shall, within 90 days after the occurrence of such Default
becomes known to the Indenture Trustee, transmit notice of such Default by mail
to all Holders of Notes as to which such Default has occurred and to S&P, unless
such Default shall have been cured or waived; provided, however, that except in
the case of a Default of the type described in Section 5.01(1), the Indenture
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Indenture Trustee in good faith determine
that the withholding of such notice is in the interests of the Holders of the
Notes; and provided, further, that in the case of any Default of the character
specified in Section 5.01(3) or 5.01(4) no such notice to Noteholders shall be
given until at least 30 days after the occurrence thereof.

            SECTION 6.03 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.

            (b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel; provided,
however, that the Indenture Trustee may not, by relying on an Officer's
Certificate or Opinion of Counsel, refrain from making payments of principal or
interest on the Notes or exercise remedies pursuant to Article V. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Certificate or Opinion.

            (c) The Indenture Trustee may act through agents, nominees,
custodians or attorneys and shall not be responsible for the misconduct or
negligence of any agent, nominees, custodians or attorneys appointed with due
care.

            (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 as provided herein.

            (e) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith pursuant to the Indenture at the direction
of Holders of Notes in accordance with the Indenture, after notice to the
Holders of the Notes of a Default under this Indenture.

            (f) The Indenture Trustee shall be afforded the same rights,
protections, immunities and indemnities in each of its capacities, including,
without limitation, as Note Registrar and Paying Agent.

            (g) The Indenture Trustee may consult with counsel and the advice or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken or omitted to be taken by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel.

            (h) The Indenture Trustee shall not be under any obligation to
exercise any of the rights or powers vested in it by this Indenture, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of the Noteholders pursuant to the provisions of
this Indenture, unless such Noteholders shall have offered to the Indenture
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.

            (i) Anything in this Indenture to the contrary notwithstanding, in
no event shall the Indenture Trustee be liable for any special, indirect or
consequential damages of any kind whatsoever.

            (j) In no event shall the Indenture Trustee be responsible for the
actions or omissions of the Issuer, the Servicer or any Document Custodian.

            SECTION 6.04 Not Responsible for Recitals or Issuance of Notes.

            The recitals contained herein and in the Notes, except the
certificates of authentication on the Notes, shall be taken as the statements of
the Issuer and the Indenture Trustee assumes no responsibility for their
correctness. The Indenture Trustee makes no representations with respect to the
Trust Estate or as to the validity or sufficiency of this Indenture or of the
Notes. The Indenture Trustee shall not be accountable for the use or application
by the Issuer of Notes or the proceeds thereof or any money paid to the Issuer
or upon Issuer Order pursuant to the provisions hereof.

            SECTION 6.05 May Hold Notes.

            The Indenture Trustee, any Agent, or any other agent of the Issuer,
in its individual or any other capacity, may become the owner or pledgee of
Notes and, subject to Sections 6.08 and 6.13, may otherwise deal with the Issuer
or any Affiliate of the Issuer with the same rights it would have if it were not
Indenture Trustee, Agent, or such other agent.

            SECTION 6.06 Money Held in Trust.

            Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds except to the extent required by Sections 8.03 and
8.04, by any other provision of this Indenture or by law. The Indenture Trustee
shall be under no liability for interest on any money received by it hereunder
except to the extent of income or other gain on investments which are
obligations of the Indenture Trustee, in its commercial capacity, and income or
other gain actually received by the Indenture Trustee on investments which are
obligations of others.

            SECTION 6.07 Compensation and Reimbursement.

            The Issuer (with respect to clause (1) below), Mid-State Capital
Corporation (with respect to clauses (2) and (4) below) and Mid-State Homes,
Inc. (with respect to clause (3) below) agree:

                  (1) subject to any separate written agreement with the
            Indenture Trustee, to pay the Indenture Trustee from time to time
            reasonable compensation for all services rendered by it hereunder or
            any documents executed in connection herewith (which compensation
            shall not be limited by any provision of law in regard to the
            compensation of a trustee of an express trust);

                  (2) except as otherwise expressly provided herein, to
            reimburse the Indenture Trustee upon its request for all reasonable
            expenses, disbursements and advances incurred or made by the
            Indenture Trustee in connection with the administration of the Trust
            Estate pursuant to the terms of this Indenture (including the
            reasonable compensation and the expenses and disbursements of its
            agents and counsel incurred in connection with litigation affecting
            the Trust Estate or the Indenture Trustee), except any such expense,
            disbursement or advance as may be attributable to its negligence or
            bad faith;

                  (3) for so long as Mid-State Homes, Inc. is the Servicer, to
            indemnify and hold harmless the Indenture Trustee and its officers,
            agents, employees, directors and Affiliates from and against any
            losses, damages, penalties, fines, forfeitures, reasonable and
            necessary legal fees and related costs, judgments and other costs
            and expenses arising out of Mid-State Homes, Inc.'s failure to sign
            and deliver either the Certification or the Form 10-K within the
            time frame provided in Section 3.21(c), other than any losses,
            damages, penalties, fines, forfeitures, reasonable and necessary
            legal fees and related costs, judgments and other costs and expenses
            arising out of the Indenture Trustee's breach of its obligations
            under this Indenture. If the indemnification provided for herein is
            unavailable or insufficient to hold harmless the Indenture Trustee
            and its officers, agents, employees, directors and Affiliates, then
            Mid-State Homes, Inc. shall contribute to the amount paid or payable
            by the Indenture Trustee, its officers, agents, employees, directors
            or Affiliates as a result of the losses, claims, damages or
            liabilities of the Indenture Trustee, its officers, agents,
            employees, directors or Affiliates in such proportion as is
            appropriate to reflect the relative fault of the Indenture Trustee
            and its officers, agents, employees, directors and Affiliates on the
            one hand and Mid-State Homes, Inc. on the other; and

                  (4) to indemnify the Indenture Trustee and its officers,
            directors, employees and agents for, and to hold them harmless
            against, any loss, liability or expense incurred without negligence
            or bad faith on their part, arising out of, or in connection with,
            the acceptance or administration of this trust, including the costs
            and expenses of defending themselves against any claim in connection
            with the exercise or performance of any of their powers or duties
            hereunder, provided that:

                  (i) with respect to any such claim, the Indenture Trustee
            shall have given Mid-State Capital Corporation or Mid-State Homes,
            Inc., as the case may be, written notice thereof promptly after the
            Indenture Trustee shall have knowledge thereof;

                  (ii) while maintaining absolute control over its own defense,
            the Indenture Trustee shall cooperate and consult fully with
            Mid-State Capital Corporation in preparing such defense; and

                  (iii) notwithstanding anything to the contrary in this Section
            6.07(3), Mid-State Capital Corporation shall not be liable for
            settlement of any such claim by the Indenture Trustee entered into
            without the prior consent of Mid-State Capital Corporation, which
            consent shall not be unreasonably withheld or delayed.

            As security for the performance of the obligations of the Issuer
under this Section, the Indenture Trustee shall have a lien ranking junior to
the lien of this Indenture for the benefit of the Holders of the Notes (but
senior to all other liens, if any) upon all property and funds held or collected
as part of the Trust Estate by the Indenture Trustee in its capacity as such.
The Indenture Trustee shall not institute any Proceeding seeking the enforcement
of such lien against the Trust Estate unless such Proceeding is in connection
with a Proceeding in accordance with Article V for enforcement of the lien of
this Indenture for the benefit of the Holders of the Notes after the occurrence
of an Event of Default (other than an Event of Default arising solely from the
Issuer's failure to pay amounts due the Indenture Trustee under this Section
6.07) and a resulting declaration of acceleration of Maturity of the Notes which
has not been rescinded and annulled.

            SECTION 6.08 Eligibility; Disqualification.

            This Indenture shall always have a Indenture Trustee who satisfies
the requirements of TIA ss. 310(a)(1) and who is Independent of the Issuer and
Servicer (except that the Indenture Trustee may serve as Successor Servicer).
The Indenture Trustee shall always have a combined capital and surplus as stated
in Section 6.09. The Indenture Trustee shall be subject to TIA ss. 310(b). The
Indenture Trustee shall have a place of business in the State of Florida. Any
successor Indenture Trustee shall execute the Servicing Agreement and this
Indenture.

            SECTION 6.09 Indenture Trustee's Capital and Surplus.

            The Indenture Trustee or any successor or substitute trustee shall
at all times have a combined capital and surplus of at least $50,000,000 and the
long-term unsecured debt obligations of which are rated at least "AA-" and "A1"
by S&P and Moody's, respectively and the short-term unsecured debt obligations
of which are rated at least "A-1" by S&P. If the Indenture Trustee publishes
annual reports of condition of the type described in TIA ss. 310(a)(2), its
combined capital and surplus for purposes of this Section 6.09 shall be as set
forth in the latest such report.

            SECTION 6.10 Resignation and Removal; Appointment of Successor.

            (a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 6.11

            (b) The Indenture Trustee may resign at any time by giving written
notice thereof to the Issuer. If an instrument of acceptance by a successor
Indenture Trustee shall not have been delivered to the Indenture Trustee within
30 days after the giving of such notice of resignation, the resigning Indenture
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Indenture Trustee. The costs and expenses incurred in connection
with the resignation of the Indenture Trustee and any petition filed for
appointment of a Successor Indenture Trustee shall be paid by the Issuer.

            (c) The Indenture Trustee may be removed at any time by Act of the
Holders of Notes entitled to 51% or more of the aggregate Voting Rights of all
Classes voting together as a single class delivered to the Indenture Trustee and
to the Issuer.

            (d) If at any time:

                  (1) the Indenture Trustee shall have a conflicting interest
            prohibited by Section 6.08 and shall fail to resign or eliminate
            such conflicting interest in accordance with Section 6.08 after
            written request therefor by the Issuer or by any Noteholder, or

                  (2) the Indenture Trustee shall cease to be eligible under
            Section 6.09 or shall become incapable of acting or shall be
            adjudged a bankrupt or insolvent, or a receiver of the Indenture
            Trustee or of its property shall be appointed, or any public officer
            shall take charge or control of the Indenture Trustee or of its
            property or affairs for the purpose of rehabilitation, conservation
            or liquidation,

then, in any such case, (i) the Issuer by an Issuer Order may remove the
Indenture Trustee, or (ii) subject to Section 5.16, any Noteholder who has been
a bona fide Holder of a Note for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee.

            (e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Indenture
Trustee for any cause, the Issuer by an Issuer Order shall promptly appoint a
successor Indenture Trustee. If within one year after such resignation, removal
or incapability or the occurrence of such vacancy, a successor Indenture Trustee
has not been appointed by the Issuer, then a successor trustee shall be
appointed by Act of the Holders of Notes entitled to 51% or more of the
aggregate Voting Rights of all Classes voting together as a single class
delivered to the Issuer and the retiring Indenture Trustee. The successor
Indenture Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Indenture Trustee and supersede the successor
Indenture Trustee appointed by the Issuer. If no successor Indenture Trustee
shall have been so appointed by the Issuer or Noteholders or the successor
Indenture Trustee shall not have accepted appointment in the manner hereinafter
provided, any Noteholder who has been a bona fide Holder of a Note for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Indenture
Trustee.

            (f) The Issuer shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor Indenture
Trustee to the Noteholders and S&P. Each notice shall include the name of the
successor Indenture Trustee and the address of its Corporate Trust Office.

            SECTION 6.11 Acceptance of Appointment by Successor.

            Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective and such successor
Indenture Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Indenture
Trustee. Notwithstanding the foregoing, on request of the Issuer or the
successor Indenture Trustee, such retiring Indenture Trustee shall, upon payment
of its charges, execute and deliver an Instrument transferring to such successor
Indenture Trustee all the rights, powers and trusts of the retiring Indenture
Trustee, and shall duly assign, transfer and deliver to such successor Indenture
Trustee all property and money held by such retiring Indenture Trustee hereunder
subject nevertheless to its lien, if any, provided for in Section 6.07. Upon
request of any such successor Indenture Trustee, the Issuer shall execute and
deliver any and all instruments for more fully and certainly vesting in and
confirming to such successor Indenture Trustee all such rights, powers and
trusts.

            No successor Indenture Trustee shall accept its appointment unless
at the time of such acceptance such successor Indenture Trustee shall be
qualified and eligible under this Article.

            SECTION 6.12 Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee.

            Any entity into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any entity resulting from any
merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any entity succeeding to all or substantially all of the corporate
trust business of the Indenture Trustee, shall be the successor of the Indenture
Trustee hereunder, provided such entity shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes have
been authenticated, but not delivered, by the Indenture Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Indenture Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Indenture Trustee had
authenticated such Notes.

            SECTION 6.13 Preferential Collection of Claims Against Issuer.

            The Indenture Trustee shall be subject to TIA ss. 311(a), excluding
any creditor relationship listed in TIA ss. 311(b), and a Indenture Trustee who
has resigned or been removed shall be subject to TIA ss. 311(a) to the extent
indicated in TIA ss. 311(a).

            SECTION 6.14 Co-trustees and Separate Indenture Trustees.

            At any time or times, for the purpose of meeting the legal
requirements of the TIA or of any jurisdiction in which any of the Trust Estate
may at the time be located, the Issuer and the Indenture Trustee shall have
power to appoint, and, upon the written request of the Indenture Trustee or of
the Holders of Notes entitled to 51% or more of the aggregate Voting Rights of
all Classes voting together as a single class, the Issuer shall for such purpose
join with the Indenture Trustee in the execution, delivery and performance of
all instruments and agreements necessary or proper to appoint, one or more
Persons approved by the Rating Agencies and the Indenture Trustee either to act
as co-trustee, jointly with the Indenture Trustee, of all or any part of the
Trust Estate, or to act as separate trustee of any such property, in either case
with such powers as may be provided in the instrument of appointment, and to
vest in such Person or Persons in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the other provisions of
this Section. If the Issuer does not join in such appointment within 15 days
after the receipt by it of a request so to do, or in case an Event of Default
has occurred and is continuing, the Indenture Trustee alone shall have power to
make such appointment.

            Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any such
instrument shall, on request, be executed, acknowledged and delivered by the
Issuer.

            Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms:

                  (1) The Notes shall be authenticated and delivered and all
            rights, powers, duties and obligations hereunder in respect of the
            custody of securities, cash and other personal property held by, or
            required to be deposited or pledged with, the Indenture Trustee
            hereunder, shall be exercised, solely by the Indenture Trustee.

                  (2) The rights, powers, duties and obligations hereby
            conferred or imposed upon the Indenture Trustee in respect of any
            property covered by such appointment shall be conferred or imposed
            upon and exercised or performed by the Indenture Trustee or by the
            Indenture Trustee and such co-trustee or separate trustee jointly,
            as shall be provided in the instrument appointing such co-trustee or
            separate trustee, except to the extent that under any law of any
            jurisdiction in which any particular act is to be performed, the
            Indenture Trustee shall be incompetent or unqualified to perform
            such act, in which event such rights, powers, duties and obligations
            shall be exercised and performed by such co-trustee or separate
            trustee.

                  (3) The Indenture Trustee at any time, by an instrument in
            writing executed by it, with the concurrence of the Issuer evidenced
            by an Issuer Order, may accept the resignation of or remove any
            co-trustee or separate trustee appointed under this Section, and, in
            case an Event of Default has occurred and is continuing, the
            Indenture Trustee shall have power to accept the resignation of, or
            remove, any such co-trustee or separate trustee without the
            concurrence of the Issuer. Upon the written request of the Indenture
            Trustee, the Issuer shall join with the Indenture Trustee in the
            execution, delivery and performance of all instruments and
            agreements necessary or proper to effectuate such resignation or
            removal. A successor to any co-trustee or separate trustee so
            resigned or removed may be appointed in the manner provided in this
            Section.

                  (4) No co-trustee or separate trustee hereunder shall be
            personally liable by reason of any act or omission of the Indenture
            Trustee, or any other such trustee hereunder, and the Indenture
            Trustee shall not be personally liable by reason of any act or
            omission of any co-trustee or other such separate trustee hereunder.

                  (5) Any Act of Noteholders delivered to the Indenture Trustee
            shall be deemed to have been delivered to each such co-trustee and
            separate trustee.

            SECTION 6.15 Authenticating Agents.

            The Indenture Trustee may appoint an Authenticating Agent with power
to act on its behalf and subject to its direction in the authentication and
delivery of the Notes designated for such authentication by the Issuer and
containing provisions therein for such authentication (or with respect to which
the Issuer has made other arrangements, satisfactory to the Indenture Trustee
and such Authenticating Agent, for notation on the Notes of the authority of an
Authenticating Agent appointed after the initial authentication and delivery of
such Notes) in connection with transfers and exchanges under Sections 2.06 and
2.07 as fully to all intents and purposes as though the Authenticating Agent had
been expressly authorized by those Sections to authenticate and deliver Notes.
For all purposes of this Indenture (other than in connection with the
authentication and delivery of Notes pursuant to Sections 2.05 and 2.12 in
connection with their initial issuance and for purposes of Section 2.08), the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section shall be deemed to be the authentication and delivery of Notes "by
the Indenture Trustee." Such Authenticating Agent shall at all times be a Person
that both meets the requirements of Section 6.09 for the Indenture Trustee
hereunder and has its principal office in the City and State of New York.

            Any Authenticating Agent shall also serve as Note Registrar or
co-Note Registrar as provided in Section 2.07. Any Authenticating Agent
appointed by the Indenture Trustee pursuant to the terms of this Section 6.15
shall deliver to the Indenture Trustee as a condition precedent to the
effectiveness of such appointment an instrument accepting the trusts, duties and
responsibilities of Authenticating Agent and of Note Registrar or co-Note
Registrar and indemnifying the Indenture Trustee for and holding the Indenture
Trustee harmless against, any loss, liability or expense (including reasonable
attorneys' fees) incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance, administration of the trust or
exercise of authority by such Authenticating Agent, Note Registrar or co-Note
Registrar.

            Any entity into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any entity resulting from any
merger, consolidation or conversion to which any Authenticating Agent shall be a
party, or any entity succeeding to the corporate trust business of any
Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor entity is otherwise eligible under this Section,
without the execution or filing of any further act on the part of the parties
hereto or the Authenticating Agent or such successor corporation.

            Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Indenture Trustee and the Issuer. The Indenture
Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Issuer. Upon receiving such a notice of resignation or upon such a termination,
or in case at any time any Authenticating Agent shall cease to be eligible under
this Section, the Indenture Trustee shall promptly appoint a successor
Authenticating Agent, shall give written notice of such appointment to the
Issuer and shall mail notice of such appointment to all Holders of Notes.

            The Issuer agrees to pay to any Authenticating Agent from time to
time reasonable compensation for its services. The provisions of Sections 2.10,
6.04 and 6.05 shall be applicable to any Authenticating Agent.

            SECTION 6.16 Document Custodian.

            The Indenture Trustee may appoint a Document Custodian to hold all
or a portion of the Mortgage Asset Documents as agent for the Indenture Trustee,
by entering into a Custodial Agreement in a form acceptable to the Issuer and
the Servicer. The Indenture Trustee agrees to comply with the terms of each
Custodial Agreement and to enforce the terms and provisions thereof against the
Document Custodian for the benefit of the Noteholders. Any Document Custodian
shall be a depository institution subject to supervision by federal or state
authority, shall have a combined capital and surplus of at least $10,000,000 and
shall be qualified to do business in the jurisdiction in which it holds any
Mortgage Asset Documents.

                                  ARTICLE VII

                         NOTEHOLDERS' LISTS AND REPORTS

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

            (a) The Issuer will furnish or cause to be furnished to the
Indenture Trustee (i) monthly, not less than 10 days after the Record Date for
each Payment Date, a list, in such form as the Indenture Trustee may reasonably
require, of the names and addresses of the Holders of Notes, and (ii) at such
other times, as the Indenture Trustee 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 to the Indenture
Trustee.

            (b) In addition to furnishing to the Indenture Trustee the
Noteholder lists, if any, required under subsection (a), the Issuer shall also
furnish all Noteholder lists, if any, required under Section 3.03 at the times
required by said Section 3.03.

            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, if any, furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of the 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 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 TIA ss. 312(c).

            SECTION 7.03 Reports by Indenture Trustee.

            (a) (i) Within 60 days after May 15 of each year (the "reporting
date"), commencing with the year after the issuance of the Notes, the Indenture
Trustee shall mail to all Holders (together with all other Persons to whom
reports are to be transmitted under TIA ss. 313(c)) a brief report dated as of
such reporting date that complies with TIA ss. 313(a); (ii) the Indenture
Trustee shall also mail to Holders any reports that are required by TIA ss.
313(b)(2) with respect to any advances made by the Indenture Trustee and (iii)
the Indenture Trustee shall also mail to Holders of Notes any reports required
by TIA ss. 313(a)(5) and ss. 313(b)(1) with respect to the release and
substitution of any Mortgage Assets. For purposes of the information required to
be included in any such reports pursuant to TIA ss. 313(a)(3), 313(b)(1) or
313(b)(2), the principal amount of indenture securities outstanding on the date
as of which such information is provided shall be the Aggregate Outstanding
Principal Amount of the then Outstanding Notes at the date as of which such
information is presented.

            (b) A copy of each report required under this Section 7.03 shall, at
the time of such transmission to Noteholders, be filed by the Indenture Trustee
with the Commission (unless the Indenture Trustee has filed a Form 15 Suspension
Notice as set forth in Section 3.21(g) hereof) and with each securities exchange
upon which the Notes are listed, provided that the Issuer has previously
notified the Indenture Trustee of such listing. The Issuer will notify the
Indenture Trustee when the Notes are listed on any securities exchange.

            SECTION 7.04 Compliance by Issuer with TIA ss. 314(a).

            The Issuer shall comply with the provisions of TIA ss. 314(a).

                                  ARTICLE VIII

  MORTGAGE ASSETS, PAYMENTS OF INTEREST AND PRINCIPAL, RELEASES AND SUBSEQUENT
                                    TRANSFERS

            SECTION 8.01 Collection of Moneys.

            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 hold all such money and
property received by it as part of the Trust Estate, and shall apply 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 the Servicing Agreement, or any Hazard Insurance Policy or any other
related insurance policy, the Indenture Trustee may, and upon the request of the
Holders of Notes entitled to 51% or more of the aggregate Voting Rights of all
Classes voting together as a class shall, 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 to proceed
thereafter as provided in Article V.

            SECTION 8.02 Collection Account.

            (a) Prior to the initial authentication and delivery of the Notes,
the Issuer shall open, at the Corporate Trust Office, a segregated trust account
(the "Collection Account") in the name of the Indenture Trustee on behalf of the
Noteholders which such account shall be an Eligible Account. All payments to be
made from time to time to the Holders of Notes out of funds in the Collection
Account pursuant to this Indenture shall be made by the Indenture Trustee as the
Paying Agent of the Issuer or, pursuant to Section 3.03, by any other Paying
Agent appointed by the Issuer. All moneys deposited from time to time in the
Collection Account, including the deposits to be made by the Servicer in the
Collection Account pursuant to the Servicing Agreement, and all deposits therein
pursuant to this Indenture, and all investments made with such moneys including
all income or other gain from such investments shall be held by the Indenture
Trustee as part of the Trust Estate as herein provided. So long as no Servicing
Default shall have occurred and be continuing, moneys in the Collection Account
representing collections on the Mortgage Assets erroneously deposited therein
shall be subject to withdrawals by the Servicer pursuant to Section 2.11 of the
Servicing Agreement.

            (b) So long as no Default or Event of Default shall have occurred
and be continuing, all or a portion of the Collection Account shall be invested
and reinvested by the Indenture Trustee at the Issuer's written direction in one
or more Eligible Investments bearing interest or sold at discount. The Indenture
Trustee shall have no obligation to invest or reinvest any funds held in the
Collection Account in the absence of such written direction. In no event shall
the Indenture Trustee be liable for the selection of Eligible Investments or for
losses incurred thereon. The Indenture Trustee shall have no liability in
respect of losses incurred as a result of the liquidation of any investment
prior to its stated maturity or the failure of the Issuer to provide timely
written direction. No such investment shall mature later than one Business Day
prior to the next Payment Date (or on such Payment Date, in the case of
obligations referred to in clause (a)(i) of the definition of Eligible
Investments and in the case of Eligible Investments of which the Indenture
Trustee is the obligor, so long as at the time of such investment the long-term
unsecured debt securities of the Indenture Trustee are rated the Highest Credit
Rating by the Rating Agencies).

            All income or other gains from investment of moneys deposited in the
Collection Account shall be deposited by the Indenture Trustee in the Collection
Account immediately upon receipt, and any loss resulting from such investment
shall be charged to the Collection Account.

            Unless the Notes have been declared due and payable pursuant to
Section 5.02 and moneys collected by the Indenture Trustee with respect to the
Notes are being applied in accordance with Section 5.08, Available Funds for
such Payment Date shall be withdrawn from the Collection Account, in the amounts
required, for application in the following order of priority:

                  First: To the holders of the Class A Notes, in an amount up to
            the Interest Accrual Amount thereof;

                  Second: To the holders of the Class A Notes, in an amount up
            to all unreimbursed Class Interest Shortfalls related thereto,
            together with accrued interest thereon;

                  Third: To the holders of the Class M-1 Notes, in an amount up
            to the Interest Accrual Amount thereof ;

                  Fourth: To the holders of the Class M-1 Notes, in an amount up
            to all unreimbursed Class Interest Shortfalls related thereto,
            together with accrued interest thereon;

                  Fifth: To the holders of the Class M-2 Notes, in an amount up
            to the Interest Accrual Amount thereof;

                  Sixth: To the holders of the Class M-2 Notes, in an amount up
            to all unreimbursed Class Interest Shortfalls related thereto,
            together with accrued interest thereon;

                  Seventh: To the holders of the Class B Notes, in an amount up
            to the Interest Accrual Amount thereof;

                  Eighth: To the holders of the Class B Notes, in an amount up
            to all unreimbursed Class Interest Shortfalls related thereto,
            together with accrued interest thereon;

                  Ninth: To the holders of the Class A Notes, in an amount up to
            the Class A Optimal Principal Amount;

                  Tenth: To the holders of the Class A Notes, accrued and unpaid
            interest at the related Note Interest Rate on the amount of any
            unreimbursed Class A Realized Loss Amounts previously allocated to
            the Class A Notes;

                  Eleventh: To the holders of the Class A Notes, in an amount up
            to amount of any unreimbursed Class A Realized Loss Amounts
            previously allocated thereto;

                  Twelfth: To the holders of the Class M-1 Notes, in an amount
            up to the Class M-1 Optimal Principal Amount;

                  Thirteenth: To the holders of the Class M-1 Notes, accrued and
            unpaid interest at the related Note Interest Rate on the amount of
            any unreimbursed Class M-1 Realized Loss Amounts previously
            allocated to the Class M-1 Notes;

                  Fourteenth: To the holders of the Class M-1 Notes, in an
            amount up to the amount of any unreimbursed Class M-1 Realized Loss
            Amounts previously allocated thereto;

                  Fifteenth: To the holders of the Class M-2 Notes, in an amount
            up to the Class M-2 Optimal Principal Amount;

                  Sixteenth: To the holders of the Class M-2 Notes, accrued and
            unpaid interest at the related Note Interest Rate on the amount of
            any unreimbursed Class M-2 Realized Loss Amounts previously
            allocated to the Class M-2 Notes;

                  Seventeenth: To the holders of the Class M-2 Notes, in an
            amount up to the amount of any unreimbursed Class M-2 Realized Loss
            Amounts previously allocated thereto;

                  Eighteenth: To the holders of the Class B Notes, in an amount
            up to the Class B Optimal Principal Amount;

                  Nineteenth: To the holders of the Class B Notes, accrued and
            unpaid interest at the related Note Interest Rate on the amount of
            any unreimbursed Class B Realized Loss Amounts previously allocated
            to the Class B Notes;

                  Twentieth: To the holders of the Class B Notes, in an amount
            up to the amount of any unreimbursed Class B Realized Loss Amounts
            previously allocated thereto;

                  Twenty-First: To the Interest Reserve Account, if necessary,
            such that the amount on deposit therein equals the Initial Reserve
            Account Deposit;

                  Twenty-Second: To the Successor Servicer, in an amount up to
            any due and unpaid "expenses" (as defined in Section 5.4 of the
            Standby Servicing Agreement) owed to the Successor Servicer pursuant
            to Section 5.4 of the Standby Servicing Agreement, but only to the
            extent not received from the terminated Servicer under the Standby
            Servicing Agreement; and

                  Twenty-Three: To the Issuer, free of the lien of this
            Indenture, an amount equal to the excess, if any, of (x) the
            Available Funds for such Payment Date over (y) the aggregate of the
            amounts applied pursuant to subclauses first through twenty-second
            in this Section 8.02(b) for such Payment Date, each such amount
            being the amount thereof set forth in the applicable Payment Date
            Statement.

            In addition to distributions of Available Funds thereto in
accordance with the Available Funds Allocation, on each Payment Date the
Indenture Trustee shall apply any Interest Reserve Account Withdrawal Amount in
the order of priority of the Available Funds Allocation to cover any Class
Interest Shortfalls or any unpaid interest at the related Note Interest Rate on
any unreimbursed Realized Loss Amounts.

            On any Payment Date on which the Grantor may, but fails to, exercise
its option to redeem the Notes pursuant to Section 10.01 hereof, any amounts
that would be paid pursuant to priority Twenty-Second or Twenty-Third above will
instead be applied in reduction of Outstanding Principal Amount in accordance
with this Section 8.02(b). Any remaining amounts will be distributed to the
Issuer.

            Unreimbursed Realized Loss Amounts with respect to any Class of
Notes and any Payment Date will be reduced the amount of any Subsequent
Recoveries allocated to such Class on such Payment Date.

            (c) Funds on deposit in the Collection Account shall be withdrawn
therefrom and applied on each Payment Date to the payment of Issuer Expenses
(or, in the case of fees payable to the Servicer, to the extent not paid in
accordance with the Servicing Agreement); provided that (i) funds shall not be
withdrawn from the Collection Account for such purpose during the period from
the end of each Collection Period through the next Payment Date if such
withdrawal would result in the funds on deposit in the Collection Account on
such Payment Date being less than the Available Funds for such Payment Date as
set forth in the related Payment Date Statement and (ii) such Issuer Expenses,
to the extent not paid on such Payment Date because of clause (i), shall be paid
as soon as possible after such Payment Date.

            (d) After the entire principal amount of, and accrued and unpaid
interest on, the Notes and any unreimbursed Realized Loss Amounts have been paid
or provided for as provided in Section 4.01, the cash balance, if any, then
remaining in the Collection Account shall be withdrawn from such Collection
Account by the Indenture Trustee, released from the lien of this Indenture and
paid to the Issuer.

            SECTION 8.03 Capitalized Interest Account; Interest Reserve Account
and Pre-Funding Account.

            (a) On the Closing Date, the Issuer shall open at the Corporate
Trust Office, a segregated trust account (the "Pre-Funding Account") in the name
of the Indenture Trustee on behalf of the Noteholders, which account shall be an
Eligible Account.

            (b) On the Closing Date, the Issuer shall open at the Corporate
Trust Office, a segregated trust account (the "Capitalized Interest Account") in
the name of the Indenture Trustee on behalf of the Noteholders, which account
shall be an Eligible Account.

            (c) On the Closing Date, the Issuer shall open at the Corporate
Trust Office, a segregated trust account (the "Interest Reserve Account") in the
name of the Indenture Trustee on behalf of the Noteholders, which account shall
be an Eligible Account.

            (d) The amounts on deposit in the Pre-Funding Account, the Interest
Reserve Account and the Capitalized Interest Account shall be invested in
Eligible Investments in the same manner as amounts in the Collection Account as
set forth in Sections 8.02(b) and 8.04 hereof.

            (e) On the Closing Date, the Issuer shall cause to be deposited in
the Pre-Funding Account the amount of $50,000,000, shall cause to be deposited
in the Interest Reserve Account the amount of $1,609,387.21, and shall cause to
be deposited in the Capitalized Interest Account the amount of $726,411.00.

            (f) On each Subsequent Transfer Date, upon satisfaction of the
conditions set forth in Section 8.09 hereof and the related Subsequent Transfer
Agreement, the Indenture Trustee shall withdraw from the Pre-Funding Account an
amount equal to 100% of the Aggregate Principal Balance of the Subsequent
Mortgage Assets pledged to the Indenture Trustee by the Issuer on such
Subsequent Transfer Date and pay such amount upon the written order of the
Issuer.

            (g) On the Business Day prior to each Payment Date, the Indenture
Trustee shall transfer from the Interest Reserve Account to the Collection
Account the Interest Reserve Account Withdrawal Amount, if any, applicable to
such Payment Date and shall distribute such amount to the Noteholders on such
Payment Date pursuant to Section 8.02 hereof.

            (h) On the Business Day prior to the Payment Date immediately
following the Collection Period in which the Pre-Funding Period ends, the
Indenture Trustee shall (i) withdraw the unutilized Pre-Funded Amount, if any,
from the Pre-Funding Account, (ii) promptly deposit such amount in the
Collection Account net of Pre-Funding Earnings.

            (i) On the Business Day prior to each Payment Date, through the
Payment Date immediately following the Collection Period in which the
Pre-Funding Period ends, the Indenture Trustee shall transfer from the
Capitalized Interest Account to the Collection Account the amount of the
Capitalized Interest Shortfall, if any, applicable to such Payment Date and
promptly deposit such amount in the Collection Account.

            (j) All interest and any other earnings from Eligible Investments of
amounts on deposit in the Capitalized Interest Account will be retained in the
Capitalized Interest Account. Any amounts remaining in the Capitalized Interest
Account not needed to cover any Capitalized Interest Shortfalls on the Payment
Date following the end of the Pre-Funding Period will be withdrawn therefrom by
the Indenture Trustee and remitted to the Issuer, free and clear of the lien of
this Indenture.

            SECTION 8.04 General Provisions Regarding the Collection Account.

            (a) The Collection Account shall relate solely to the Notes and to
the Mortgage Assets, Eligible Investments and other property securing the Notes.
Funds and other property in the Collection Account shall not be commingled with
any other moneys or property of the Issuer or any Affiliate thereof.

            (b) The Issuer will not direct the Indenture Trustee to make any
investment of any funds in the Collection Account or to sell any investment held
in the Collection Account except under the following terms and conditions:

            (i) each such investment shall be made in the name of the Indenture
      Trustee (in its capacity as such) or in the name of a nominee of the
      Indenture Trustee (or, if, as indicated by an Opinion of Counsel delivered
      to the Indenture Trustee, applicable law provides for perfection of
      pledges of an investment not evidenced by a certificate or other
      instrument through registration of such pledge on books maintained by or
      on behalf of the issuer of such investment, such pledge may be so
      registered),

            (ii) the Indenture Trustee shall have sole control over such
      investment, the income thereon and the proceeds thereof,

            (iii) any certificate or other instrument evidencing such investment
      shall be delivered directly to the Indenture Trustee or its agent, and

            (iv) the proceeds of each sale of such an investment shall be
      remitted by the purchaser thereof directly to the Indenture Trustee for
      deposit in the Collection Account.

            (c) If any amounts are needed for disbursement from the Collection
Account and sufficient uninvested funds are not available therein to make such
disbursement, in the absence of an Issuer Order for the liquidation of
investments held therein in an amount sufficient to provide the required funds,
the Indenture Trustee shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in the Collection Account.

            (d) The Indenture Trustee shall not in any way be held liable by
reason of any insufficiency in the Collection Account except for its liability
on investments which are liabilities of the Indenture Trustee in its commercial
capacity as an obligor of any Eligible Investment.

            (e) All investments of funds in the Collection Account and all sales
of investments held in the Collection Account shall, except as provided below,
be made by the Indenture Trustee in accordance with an Issuer Order; provided,
however, such Issuer Order shall specify investment of such funds only in
Eligible Investments. Subject to compliance with the requirements of Sections
8.02(b) and 8.04(b), such Issuer Order may authorize the Indenture Trustee to
make the specific investments set forth therein, to make investments from time
to time consistent with the general instructions set forth therein, or to make
specific investments pursuant to written instructions of the employees or agents
of the Issuer identified therein, in each case only in Eligible Investments and
in such amounts as such Issuer Order shall specify.

            In the event that:

            (i) the Issuer shall have failed to give investment directions to
      the Indenture Trustee by 10:30 a.m. Eastern Time on the Business Day prior
      to any day on which funds are due to be deposited in the Collection
      Account (whether with respect to Remittances or payments of principal of
      or interest on Eligible Investments) authorizing the Indenture Trustee to
      invest such funds,

            (ii) a Default or Event of Default shall have occurred and be
      continuing but the Notes shall not have been declared due and payable
      pursuant to Section 5.02, or if such Notes shall have been declared due
      and payable following an Event of Default, amounts collected or receivable
      from the Trust Estate are being applied in accordance with Section 5.05,
      or

            (iii) an Event of Default shall have occurred and be continuing, the
      Notes shall have been declared due and payable pursuant to Section 5.02
      and amounts collected or receivable from the Trust Estate are being
      applied in accordance with Section 5.08, the Indenture Trustee shall
      invest and reinvest the funds then in the Collection Account to the
      fullest extent practicable in Eligible Investments as directed in the last
      Issuer Order received prior to such Event of Default. All investments made
      pursuant to clause (i) above shall mature on the next Business Day
      following the date of such investment, all such investments made pursuant
      to clause (ii) above shall mature no later than the maturity date therefor
      permitted by Section 8.02(b), and all investments made pursuant to this
      clause (iii) shall mature no later than the first date following the date
      of such investment on which the Indenture Trustee proposes to make a
      distribution to Holders of Notes pursuant to Section 5.08.

            (f) Subject to the restriction on the maturity of investments set
forth in Section 8.02(b) and notwithstanding subsection (e) above, the Issuer
will give appropriate and timely investment directions to the Indenture Trustee
such that at the close of business on not more than two Business Days in any one
calendar year not more than an aggregate of $25,000 of funds in the Collection
Account are not invested pursuant, directly or indirectly, to an Issuer Order in
Eligible Investments bearing interest or sold at a discount which mature on or
after the opening of business on the next Business Day.

            SECTION 8.05 Reports by Indenture Trustee to Noteholders.

            On each Payment Date the Indenture Trustee shall deliver to the
Noteholders a written report based upon the Payment Date Statement for such
Payment Date setting forth the amount of such payment which represents principal
and the amount which represents interest (in each case on a per Individual Note
basis), and the principal amount of an Individual Note after giving effect to
the payment of principal made on such Payment Date.

            SECTION 8.06 Reports by Indenture Trustee.

            In addition to any statement required to be delivered or prepared by
the Indenture Trustee pursuant to Section 2.09, 8.02 or 10.01, the Indenture
Trustee shall deliver to the Issuer, the Servicer and, if appointed pursuant to
Section 8.07, the Independent Accountants, within two Business Days after the
request of the Issuer or such Independent Accountants, a written report setting
forth the amount of the Collection Account established hereunder and the
identity of the investments included therein. Without limiting the generality of
the foregoing, the Indenture Trustee shall, upon the request of the Issuer,
promptly transmit to the Issuer copies of all accountings of, and information
with respect to, Remittances furnished to it by the Servicer and shall promptly
notify the Issuer if, on the fifth day after any Remittance Date, any Remittance
then due or any portion thereof has not been received by the Indenture Trustee.

            SECTION 8.07 Reports by Independent Accountants.

            (a) At the Closing Date the Issuer shall appoint the firm of
Independent Accountants as its Independent Accountants for purposes of preparing
and delivering the reports or certificates required by Section 8.07(b). Upon any
resignation by such firm the Issuer shall promptly appoint a successor thereto
that shall also be a firm of Independent Accountants of recognized national
reputation. If the Issuer shall fail to appoint a successor to a firm of
Independent Accountants which has resigned within fifteen days after such
resignation, the Issuer shall promptly notify the Indenture Trustee of such
failure in writing. If the Issuer shall not have appointed a successor within
ten days thereafter, the Indenture Trustee shall promptly appoint a successor
firm of Independent Accountants of recognized national reputation. The fees of
such successor shall be payable by the Issuer, and any fees not so paid by the
Issuer may be paid by the Indenture Trustee on behalf of the Issuer, from
amounts otherwise payable to the Issuer from the related Collection Account
pursuant to Section 8.02(d).

            (b) If the Indenture Trustee shall fail to deliver to the Issuer any
Payment Date Statement by the due date therefor, the Issuer shall, at the
opening of business on the next Business Day after such due date, direct the
firm of Independent Accountants appointed pursuant to subsection (a) to prepare
and deliver to the Indenture Trustee such Payment Date Statement at the expense
of the Indenture Trustee, no later than 2:00 p.m. on the Business Day following
the day on which such direction was given. Any fees of such Independent
Accountants not paid by the Issuer may be paid by the Indenture Trustee, on
behalf of the Issuer (unless such fees are for the account of the Indenture
Trustee), from amounts otherwise payable to the Issuer from the Collection
Account pursuant to Section 8.02(d).

            SECTION 8.08 Reports by the Servicer.

            In the Servicing Agreement, the Servicer has agreed to deliver to
the Indenture Trustee at the time specified therein the information called for
by Section 3.01(a) of the Servicing Agreement.

            SECTION 8.09 Subsequent Transfers.

            (a) Subject to the satisfaction of the conditions set forth in
paragraph (b) below and pursuant to the terms of the related Subsequent Transfer
Agreement, in consideration of the Indenture Trustee's delivery on each
Subsequent Transfer Date to or upon the order of the Issuer of all or a portion
of the balance of funds in the Pre-Funding Account, the Issuer shall on such
Subsequent Transfer Date Grant to the Indenture Trustee, for the exclusive
benefit of the Holders of the Notes, all of the Issuer's right, title and
interest in and to each related Subsequent Mortgage Asset listed in the Schedule
of Mortgage Assets attached to such Subsequent Transfer Agreement delivered by
the Issuer on such Subsequent Transfer Date for inclusion in the Trust Estate,
including all property acquired in respect of the Mortgage Assets, including the
related Mortgage Asset Documents and all Monthly Payments that have not been
received prior to the Subsequent Transfer Date, as applicable, regardless of the
Due Date for such Monthly Payment and all proceeds in any way derived from any
of the foregoing, including all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other assets, including,
without limitation, all insurance proceeds and condemnation awards.

            (b) The Indenture Trustee shall withdraw from the Pre-Funding
Account funds in an amount equal to the purchase price for the Subsequent
Mortgage Assets to be pledged to the Indenture Trustee and deliver such cash to,
or at the direction of, the Issuer for the purchase of the Subsequent Mortgage
Assets by the Issuer from the Grantor only upon the satisfaction of each of the
following conditions on or prior to each Subsequent Transfer Date:

            (i) the Issuer shall have provided the Indenture Trustee and each
      Rating Agency with an Addition Notice, which notice shall be given not
      less than two Business Days prior to such Subsequent Transfer Date and
      shall designate the Subsequent Mortgage Assets to be pledged to the
      Indenture Trustee and the Aggregate Principal Balance of such Subsequent
      Mortgage Assets;

            (ii) the Issuer shall have delivered an Officer's Certificate to the
      Indenture Trustee confirming that, as of each Subsequent Transfer Date,
      the Grantor was not insolvent, nor would it be made insolvent by the sale
      of such Subsequent Mortgage Assets to the Issuer, nor was it aware of any
      pending insolvency of the Grantor;

            (iii) the Pre-Funding Period shall not have ended;

            (iv) the Issuer shall have delivered to the Indenture Trustee an
      Officer's Certificate confirming the satisfaction of each condition
      precedent specified in this paragraph (b) and in the related Subsequent
      Transfer Agreement;

            (v) the Issuer shall have delivered an Officer's Certificate to the
      Indenture Trustee confirming that the representations and warranties of
      the Issuer pursuant to Section 3.11 hereof are true and correct with
      respect to the Subsequent Mortgage Assets as of the Subsequent Transfer
      Date;

            (vi) At the end of the Pre-Funding Period, the addition of the
      Subsequent Mortgage Assets to the Trust will not cause the Mortgage Assets
      in the aggregate or the Subsequent Mortgage Assets, as the case may be, to
      fail to meet the following requirements: (i) no more than 0.50% of the
      Mortgage Assets may have obligors in bankruptcy or similar proceedings;
      (ii) none of the Mortgage Assets may be over 60 days delinquent at the
      time of purchase by the Issuer; (iii) no Subsequent Mortgage Asset may
      have a remaining term to maturity less than 120 months or greater than 360
      months at the time of purchase by the Issuer; (iv) no Subsequent Mortgage
      Asset may have a Coupon Rate greater than 12.00% or less than 5.50% and
      the weighted average Coupon Rate for the Mortgage Assets in the aggregate
      must be at least 8.90%; (v) no more than 1.00% of the Mortgage Assets may
      be secured by homes that have been repossessed and resold; (vi) no State
      may account for more than 50.00% of the Mortgage Assets; (vii) units that
      are at least "90% complete" must account for at least 85.00% of the
      Accounts; and (viii) no more than 0.50% of the Mortgage Assets may be
      subject, at the time of purchase by the Issuer, to the interest rate
      limitations and other provisions of the Servicemembers Civil Relief Act;
      and

            (vii) in connection with the pledge of the Subsequent Mortgage
      Assets, the Issuer shall have delivered all the documents referred to in
      the definition of the term Mortgage Asset Documents.

            (c) The Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, shall acknowledge receipt on each Subsequent Transfer Date of
the Subsequent Mortgage Assets delivered to the Indenture Trustee, or Document
Custodian on behalf of the Indenture Trustee, on such date and within five
Business Days after such receipt the Indenture Trustee, or Document Custodian on
behalf of the Indenture Trustee, shall, as specified in Section 3.12 hereof,
review the Mortgage Asset Documents required to be delivered pursuant to this
Indenture.

            SECTION 8.10 Compliance with Withholding Requirements.

            Notwithstanding any other provision of this Indenture, the Indenture
Trustee shall comply with all federal withholding requirements with respect to
payments to Noteholders of interest, original issue discount, or other amounts
that the Indenture Trustee reasonably believes are applicable under the Code.
The consent of Noteholders shall not be required for any such withholding.
Amounts properly withheld pursuant to such requirements shall be treated as
having been distributed to the related Noteholder for all purposes of this
Indenture.

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

            SECTION 9.01 Supplemental Indentures without Consent of Noteholders.

            Without the consent of the Holders of any Notes and with notice to
Moody's and S&P, the Issuer and the Indenture Trustee when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Indenture Trustee
for any of the following purposes:

                  (1) 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;

                  (2) to evidence the succession 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;

                  (3) to add to the covenants of the Issuer, for the benefit of
            the Holders of all Notes, or to surrender any right or power herein
            conferred upon the Issuer;

                  (4) to cure any ambiguity, to correct or supplement any
            provision herein which may be defective or inconsistent with any
            other provision herein, or to make any other provisions with respect
            to matters or questions arising under this Indenture, which shall
            not be materially inconsistent with the other provisions of this
            Indenture, provided that such action shall not adversely affect in
            any material respect the interests of the Holders of the Notes; or

                  (5) 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 TIA or under any similar
            federal statute hereafter enacted, and to add to this Indenture such
            other provisions as may be expressly required by TIA.

            SECTION 9.02 Supplemental Indentures with Consent of Noteholders.

            With the consent of the Holders of Notes entitled to 51% or more of
the aggregate Voting Rights of all Classes voting together as a single class and
with notice to S&P and Moody's, by Act of said Holders delivered to the Issuer
and the Indenture Trustee, the Issuer and the Indenture Trustee, when authorized
by an Issuer Order, may 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 Outstanding Note affected thereby:

                  (1) change the final instalment of principal of, or any
            instalment of interest on, any Note or reduce the principal amount
            thereof, the Note Interest Rate thereon or the Redemption Price with
            respect thereto, change the Note Redemption Date, change any place
            of payment where, or the coin or currency in which, any Note or any
            interest thereon is payable, or impair the right to institute suit
            for the enforcement of the payment of any instalment of interest due
            on any Note on or after the date such payment is due or for the
            enforcement of the payment of the entire remaining unpaid principal
            amount of any Note on or after the Maturity of the final instalment
            of the principal thereof (or, in the case of redemption, on or after
            the applicable Redemption Date);

                  (2) reduce the percentage of the Voting Rights or waive
            compliance with provisions of this Indenture or Defaults hereunder
            and their consequences provided for in this Indenture;

                  (3) modify any of the provisions of this Section 9.02, Section
            5.14 or Section 5.18(b) or 5.18(c), except to increase any
            percentage specified therein or to provide that certain other
            provisions of this Indenture cannot be modified or waived without
            the consent of the Holder of each Outstanding Note affected thereby;

                  (4) modify or alter the provisions of the proviso to the
            definition of the term "Outstanding";

                  (5) 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 terminate the lien of this Indenture on any
            property at any time subject hereto or deprive the Holder of any
            Note of the security afforded by the lien this Indenture; or

                  (6) modify any of the provisions of this Indenture in such
            manner as to affect the calculation of the principal or interest for
            any Payment Date on any Notes (including the calculation of any of
            the individual components of such Debt Service Requirement) or to
            affect the rights of the Holders of Notes to the benefits of any
            provisions contained herein for the mandatory payment of principal.

            The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture pursuant to this
Section 9.02 or Section 9.01(4) hereof 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 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, the Issuer shall mail to
the Holders of the Notes to which such supplemental indenture relates a notice
setting forth in general terms the substance of such supplemental indenture. Any
failure of the Issuer 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 accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and (subject to Section 6.01) 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 (except to the extent required in the case of a supplemental indenture
entered into under Section 9.01(5)) be obligated to, enter into any such
supplemental indenture which affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise.

            SECTION 9.04 Effect of Supplemental Indentures.

            Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes to which such supplemental indenture relates which have theretofore
been or thereafter are authenticated and delivered hereunder shall be bound
thereby.

            SECTION 9.05 Conformity with Trust Indenture Act.

            Every supplemental indenture executed pursuant to this Section 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 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 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
which relates to the Notes may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for Outstanding
Notes.

                                   ARTICLE X

                               REDEMPTION OF NOTES

            SECTION 10.01 Optional Redemption of Notes.

            The Notes are subject to redemption in whole and not in part at the
option of the Grantor on any Payment Date following the Payment Date on which
the Aggregate Outstanding Principal Amount of the Notes is reduced to 10% or
less of the aggregate Initial Principal Amount of the Notes.

            Payment on the Notes pursuant to any optional redemption may be made
only with Eligible Moneys. If the Grantor elects to so redeem all Notes then
Outstanding, it shall, no later than 35 days prior to the Payment Date selected
for such redemption, deliver notice of such election to the Indenture Trustee
and cause the delivery of an Issuer Order directing the Indenture Trustee to
effect such redemption and the aggregate Redemption Price due on such Payment
Date for deposit into the Collection Account. Notwithstanding the foregoing, the
Grantor may not elect to redeem all Notes then Outstanding unless any
Reimbursement Amount owed to the Trust Estate, the Servicer or the Indenture
Trustee pursuant to Section 3.11(b) hereof has been paid. All such Notes shall
be due and payable on such Payment Date upon the giving of the notice thereof
required by Section 10.02.

            SECTION 10.02 Form of Redemption Notice.

            Notices of redemptions of Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer and shall be mailed no
later than 10 days (or, in the event that DTC is the Holder of the Notes, 30
days) prior to the Redemption Date to the Persons who were Holders of such Notes
on the Record Date that would otherwise be applicable to the Payment Date on
which such notes are to be redeemed.

            All notices of redemption shall state:

                  (1) the Redemption Date,

                  (2) the Redemption Price and

                  (3) the place where such Notes are to be surrendered for
            payment of the Redemption Price (which shall be the office or agency
            of the Issuer to be maintained as provided in Section 3.02) and that
            no interest shall accrue on such Note for any period after the date
            fixed for redemption.

            Failure to give notice of redemption, or any defect therein, to any
Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.

            SECTION 10.03 Notes Payable on Redemption Date.

            Notice of redemption having been given as provided in Section 10.02,
the Notes so to be redeemed shall, on the applicable Redemption Date, become due
and payable at the Redemption Price and (unless the Grantor shall default in the
payment of the Redemption Price) no interest shall accrue on such Redemption
Price for any period after such Redemption Date. Upon surrender of such Notes
for redemption in accordance with said notice such Notes shall be paid by or on
behalf of the Issuer at the Redemption Price.

                                   ARTICLE XI

                                  MISCELLANEOUS

            SECTION 11.01 Compliance Certificates and Opinions.

            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 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 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 relating to such particular application or request, 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 (including one furnished
pursuant to specific requirements of this Indenture relating to a particular
application or request) shall include to the extent applicable:

                  (1) a statement that each individual signing such certificate
            or opinion has read such covenant or condition and the definitions
            herein relating thereto;

                  (2) 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;

                  (3) a statement that, in the opinion of each such individual,
            he has made such examination or investigation as is necessary to
            enable him to express an informed opinion as to whether or not such
            covenant or condition has been complied with;

                  (4) a statement as to whether, in the opinion of each such
            individual, such condition or covenant has been complied with; and

                  (5) if the signer of such certificate or opinion is required
            to be Independent, the statement required by the definition of the
            term "Independent."

            SECTION 11.02 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 officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of
counsel, unless such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate 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
Owner Trustee, the Grantor or any other Person, stating that the information
with respect to such factual matters is in the possession of such Person, unless
such officer or 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. Any Opinion of Counsel may be based on the written
opinion of other counsel, in which event such Opinion of Counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Indenture Trustee may reasonably rely upon the opinion of such other counsel.

            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.

            Wherever 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, 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 Section
6.01(b)(2)

            Wherever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request or
direction of the Issuer, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Issuer's right to make such request or
direction, the Indenture Trustee shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.01(d).

            SECTION 11.03 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 agent
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 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.

            (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.

            (c) The ownership of Notes shall be proved by the Note Register.

            (d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration of transfer 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 Notes.

            SECTION 11.04 Notices, etc., to Indenture Trustee and Issuer.

            (a) Any request, demand, authorization, direction, notice, consent
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with

                  (1) the Indenture Trustee by any Noteholder or by the Issuer
            shall be sufficient for every purpose hereunder if filed in writing
            and mailed by registered mail to the Indenture Trustee at The Bank
            of New York, 101 Barclay Street - 8W, New York, New York 10286,
            Attention: Structured Finance - MBS, or

                  (2) the Issuer by the Indenture Trustee or by any Noteholder
            shall be sufficient for every purpose hereunder (except as provided
            in Section 5.01(3) and (4)) if in writing and mailed, first-class
            postage-prepaid, to the Issuer addressed to it at c/o Wilmington
            Trust Company, as Owner Trustee, Corporate Financial Services
            Division, Rodney Square North, Wilmington, Delaware 19890,
            Attention: Corporate Trust Administration, or at any other address
            previously furnished in writing to the Indenture Trustee by the
            Issuer.

            (b) Notices required under this Indenture to be sent to Noteholders
with respect to material amendments to the Indenture, the Trust Agreement or the
Servicing Agreement, satisfaction and discharge of the Indenture and any
reports, statements, or other notices required hereunder shall in addition be
sent to each Rating Agency; to Moody's at its address at 99 Church Street, New
York, New York 10007, and to S&P at its address at 55 Water Street, New York,
New York 10041.

            (c) Notices required under this Indenture to be sent to any Document
Custodian in addition to the Indenture Trustee shall be sent to such Document
Custodian at the address provided in the Custodial Agreement.

            SECTION 11.05 Notices and Reports to Noteholders; Waiver of Notices.

            Where this Indenture provides for notice to Noteholders of any event
or the mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder 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 or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Noteholder
shall affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.

            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 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.

            SECTION 11.06 Rules by Indenture Trustee and Agents.

            The Indenture Trustee may make reasonable rules for any meeting of
Noteholders. Any Agent may make reasonable rules and set reasonable requirements
for its functions.

            SECTION 11.07 Conflict with Trust Indenture Act.

            If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by, or which
is deemed to be included in this Indenture (an "incorporated provision") by
operation of, any of the provisions of TIA, such required provision or
incorporated provision shall control.

            SECTION 11.08 Effect of Headings and Table of Contents.

            The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.

            SECTION 11.09 Successors and Assigns.

            All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not.

            SECTION 11.10 Separability.

            In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

            SECTION 11.11 Benefits of Indenture.

            Nothing in this Indenture or in the Notes, expressed or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, any separate trustee or co-trustee appointed under Section 6.14 and
the Noteholders any benefit or any legal or equitable right, remedy or claim
under this Indenture.

            SECTION 11.12 Governing Law.

            This Indenture and each Note shall be construed in accordance with
and governed by the laws of the State of New York applicable to agreements made
and to be performed therein.

            SECTION 11.13 Counterparts.

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

            SECTION 11.14 Recording of Indenture.

            This Indenture is subject to recording in any appropriate public
recording offices, such recording to be effected by the Issuer and at its
expense in compliance with any Opinion of Counsel delivered pursuant to Section
2.12(k) or 3.06.

            SECTION 11.15 Issuer Obligations.

            No recourse may be taken, directly or indirectly, against (i) the
Owner Trustee in its individual capacity, (ii) any incorporator, subscriber to
the capital stock, stockholder, officer, director, employee or agent of the
Owner Trustee or of any predecessor or successor of the Owner Trustee in its
individual capacity, (iii) any holder of a beneficial interest in the Issuer,
(iv) any partner, beneficiary, agent, officer, director, employee, or successor
or assign of a holder of a beneficial interest in the Issuer, or (v) any
incorporator, subscriber to the capital stock, stockholder, officer, director or
employee of the Indenture Trustee or any predecessor or successor of the
Indenture Trustee with respect to the Issuer's obligations with respect to the
Notes or the obligation of the Issuer or the Indenture Trustee under this
Indenture or any certificate or other writing delivered in connection herewith
or therewith.

            SECTION 11.16 Inspection.

            The Issuer and the Note Registrar will agree that, on reasonable
prior notice, they will permit any representative of the Indenture Trustee,
during normal business hours, to examine all of the books of account, records,
reports and other papers in its possession relating to the Notes, to make copies
and extracts therefrom in the case of the Issuer, to cause such books to be
audited by Independent Accountants selected by the Indenture Trustee, and to
discuss its affairs, finances and accounts with its officers, employees and
Independent Accountants (and by this provision the Issuer hereby authorizes its
Independent Accountants to discuss with such representatives such affairs,
finances and accounts), all at such reasonable times and as often as may be
reasonably requested. Any expense incident to the exercise by the Indenture
Trustee of any right under this Section 11.16 shall be borne by the Issuer.

<PAGE>

            IN WITNESS WHEREOF, the Owner Trustee on behalf of the Issuer and
the Indenture Trustee have caused this Indenture to be duly executed by their
respective officers thereunto duly authorized and the seal of the Owner Trustee
and of the Indenture Trustee to be hereunto affixed, all as of the day and year
first above written

                                       MID-STATE CAPITAL CORPORATION 2004-1
                                          TRUST

                                       By:  Wilmington Trust Company, not in
                                            its individual capacity, but
                                            solely as Owner Trustee of
                                            Mid-State Capital Corporation
                                            2004-1 Trust

                                       By:
                                          --------------------------------------
                                                  Authorized Officer

                                       THE BANK OF NEW YORK,
                                          as Indenture Trustee

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

<PAGE>

Acknowledged and Agreed to with respect to Sections 3.21 and 6.07 herein:

MID-STATE HOMES, INC.,

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

Acknowledged and Agreed to with respect to Section 6.07 herein:

MID-STATE CAPITAL CORPORATION,

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

<PAGE>

STATE OF DELAWARE       )
                        :  ss.:
COUNTY OF ___________   )

            On the 15th day of July, 2004, before me, a notary public in and for
said State, personally appeared __________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person who
executed the within instrument on behalf of Mid-State Capital Corporation 2004-1
Trust, and acknowledged to me that such trust executed it.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                         ---------------------------------------
                                                     Notary Public

<PAGE>

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

            On the 15th day of July, 2004, before me, a notary public in and for
said State, personally appeared Diane Pickett, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person who executed the
within instrument on behalf of The Bank of New York, and acknowledged to me that
such banking corporation executed it.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                         ---------------------------------------
                                                     Notary Public

<PAGE>

                                    EXHIBIT A

                             [FORM OF CLASS A NOTE]

UNLESS THIS 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 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.

PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE ACTUAL OUTSTANDING PRINCIPAL
AMOUNT OF THIS NOTE MAY BE ASCERTAINED ONLY BY OBTAINING A WRITTEN CONFIRMATION
THEREOF FROM THE INDENTURE TRUSTEE NAMED HEREIN.

EACH PURCHASER OF A BENEFICIAL INTEREST IN THIS NOTE WILL BE DEEMED TO REPRESENT
EITHER THAT (I) IT IS NOT AND IS NOT PURCHASING ITS INTEREST IN THIS NOTE ON
BEHALF OF OR WITH THE ASSETS OF A RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN
OR ARRANGEMENT SUBJECT TO TITLE I OF ERISA, SECTION 4975 OF THE CODE OR SIMILAR
LAW OR (II) ITS PURCHASE OF ITS INTEREST IN THIS NOTE WILL NOT RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR THE CODE OR A SIMILAR VIOLATION
OF SIMILAR LAW.

<PAGE>

                   MID-STATE CAPITAL CORPORATION 2004-1 TRUST
                        6.005% CLASS A ASSET-BACKED NOTE
                                DUE: August 2037
                           ACCRUAL DATE: July 1, 2004
                               CUSIP: 59560U AA 9

$                                                                       No. __

            Mid-State Capital Corporation 2004-1 Trust (the "Issuer"), a
Delaware statutory trust governed by a Trust Agreement dated July 13, 2004 (the
"Trust Agreement"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of $180,251,000 in monthly instalments on
the 15th day of each month, or if such date is not a Business Day, the next
Business Day thereafter (the "Payment Dates") in each year, commencing on August
16, 2004 and ending on or before the Payment Date in August 2037 (the "Maturity"
of such final instalment of principal) and to pay interest accrued during the
period from and including the first day of the calendar month preceding the
calendar month of such Payment Date to but not including the first day of the
calendar month of such Payment Date (the "Interest Accrual Period"), until the
principal amount of this Note is paid in full, at the rate of 6.005% per annum,
such interest being computed on the basis of a 360-day year of twelve 30 day
months and payable monthly on each Payment Date. Interest on the Notes will be
payable from any funds on deposit in the Collection Account on such Payment
Date. Instalments of principal of this Note are due and payable in the amounts
and on the dates described on the reverse hereof.

            The principal of, and interest on, this 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 Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note. Any instalment of principal or interest which is not paid when and as due
shall bear interest at the rate of interest borne by the principal of this Note
from the date due to the date of payment thereof, but only to the extent that
the payment of such interest shall be lawful and enforceable.

            Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this 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.

<PAGE>

            IN WITNESS WHEREOF, Mid-State Capital Corporation 2004-1 Trust has
caused this instrument to be duly executed by and under the corporate seal of
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement.

Dated:                                   MID-STATE CAPITAL CORPORATION 2004-1
                                            TRUST

                                         By: Wilmington Trust Company,
                                             not in its individual
                                             capacity but solely in
                                             its capacity as Owner
                                             Trustee under the Trust
                                             Agreement

[SEAL]
                                         By:
                                            ------------------------------------
                                            Title:

<PAGE>

            This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 6.005% Class A Asset-Backed Notes (herein called the "Notes").
The Notes are issued and will be issued under an Indenture dated July 15, 2004
(herein called the "Indenture"), between the Issuer and The Bank of New York, as
Indenture Trustee (the "Indenture Trustee," which term includes any successor
Indenture Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights thereunder of the Issuer, the Indenture Trustee and the Holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. Also issued under the Indenture are the 6.497% Asset-Backed Notes,
Class M-1, 8.114% Asset-Backed Notes, Class M-2 and 8.900% Asset-Backed Notes,
Class B. The Notes are secured by the collateral pledged as security therefor to
the extent provided in the Indenture. All terms used in this Note which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.

            An instalment of principal shall be paid on the Notes on each
Payment Date in the amount equal to the amount available to be paid thereon as
principal pursuant to and subject to the priorities set forth in Section 8.02(b)
of the Indenture on such Payment Date; provided that the unpaid principal shall
be due and payable on the Payment Date occurring in August 2037. Each payment of
principal of the Notes shall be allocated among the Notes in proportion to their
then remaining unpaid principal amounts. The unpaid principal amount of this
Class A Note may be reduced by the allocation to it (in accordance with Section
5.20 of the Indenture) of Class A Realized Loss Amounts without any
corresponding payment.

            Payment of the then remaining unpaid principal amount of this Note
on the Maturity of its final instalment of principal or on such earlier date as
the Issuer shall be required to apply payments received with respect to the
collateral securing the Notes to payment of the then remaining unpaid principal
amount of this Note or to payment of the Redemption Price payable on any date as
of which this Note has been called for redemption in full shall be made upon
presentation of this Note to the office or agency of the Issuer maintained for
such purpose. Payments of interest on this Note due and payable on each Payment
Date, together with any instalment of principal of this Note due and payable on
each Payment Date which is also a Payment Date for this Note, shall be made by
check mailed to the Person whose name appears as the registered Holder of this
Note (or one or more Predecessor Notes) on the Note Register as of the Record
Date preceding such Payment Date, except that with respect to a Note registered
in the name of the nominee of a clearing 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.

            Checks for amounts due on this Note 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 Note be
submitted for notation of payment and checks returned undelivered will be held
for payment to the Person entitled thereto, subject to the terms of the
Indenture, at the office or agency in the United States of America designated by
the Issuer for such purpose pursuant to the Indenture. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date or by any allocation of a Class A Realized
Loss Amount shall be binding upon all Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange herefor 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 Note
on a Payment Date which is prior to the Maturity of the final instalment of
principal hereof, then the Indenture Trustee, on behalf of the Issuer, will
notify the Person who was the registered Holder hereof on the day immediately
preceding such Payment Date, and the amount then due and payable shall, if
sufficient funds therefor are available, be payable only upon presentation of
this Note to the office or agency of the Issuer maintained for such purpose.

            If an Event of Default shall occur and be continuing with respect to
the Notes, the Notes may become or be declared due and payable in the manner and
with the effect provided in the Indenture. Reference is hereby made to Article V
of the Indenture which sets forth certain events which constitute Events of
Default. If any such acceleration of maturity occurs prior to the Maturity of
the final instalment of principal of this Note, the amount payable to the Holder
of this Note will be equal to the aggregate unpaid principal amount of this Note
on the date this Note becomes so due and payable, together with accrued interest
on such unpaid principal amount to the date of payment thereof. The Indenture
provides that, notwithstanding the acceleration of the maturity of the Notes,
under certain circumstances specified therein all amounts collected as proceeds
of the collateral securing the Notes or otherwise shall continue to be applied
to payments of principal of and interest on the Notes as if they had not been
declared due and payable. In such event, interest on the then unpaid principal
amount of all Notes and on any overdue instalments of interest on the Notes
following the acceleration of the maturity of the Notes shall accrue and be
payable at the Note Interest Rate, but only to the extent that the payment
thereof shall be lawful and enforceable.

            The Notes are not prepayable or redeemable at the option or
direction of the Issuer except that all of the outstanding Notes may be called
for redemption in whole at the option of the Grantor on any Payment Date
following the Payment Date on which the Aggregate Outstanding Principal Amount
of the Notes is reduced to 10% or less of the aggregate Initial Principal Amount
of the Notes, at a redemption price equal to 100% of the aggregate unpaid
principal balance of the Notes plus accrued and unpaid interest to the date set
for redemption.

            As provided in the Indenture the transfer of this Note may be
registered on the Note Register of the Issuer, upon surrender of this Note for
registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, 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 his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and in the same
aggregate initial principal amount will be issued to the designated transferee
or transferees.

            Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note is registered (i)
on any Record Date, for purposes of making payments, and (ii) on any other date
for any other purpose, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent shall be
affected by written 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 rights of the Holders of the Notes under the Indenture at any
time by the Issuer, and the Holders of Notes entitled to 51% or more of the
aggregate Voting Rights of all Classes voting together as a single class. The
Indenture also contains provisions that permit the Holders of the percentage of
the Class or Classes of Notes specified in Section 5.02 of the Indenture, 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, at
the time of the giving thereof, of this Note (or any one or more Predecessor
Notes) shall be conclusive and binding upon such Holder and upon all future
holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.

            The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.

            The Notes are issuable only in registered form in the denominations
provided in the Indenture and subject to certain limitations therein set forth.
The Notes are exchangeable for a like aggregate initial principal amount of
Notes of different authorized denominations, as requested by the Holder
surrendering the same, pursuant to the terms and conditions set forth in the
Indenture.

            The Issuer has entered into this Indenture and this Note with the
intention that, for all purposes including federal, state and local tax
purposes, the Notes will qualify as indebtedness secured by the Trust Estate.
The Issuer, by entering into this Indenture, and each purchaser of a beneficial
interest in a Note, agree to treat the Notes for all purposes including federal,
state and local tax purposes as indebtedness of the Issuer.

            As provided in the Indenture, this Note and the Indenture shall be
construed in accordance with, and governed by, the laws of the State of New York
applicable to agreements made and to be performed therein.

            No reference herein to the Indenture and no provision of this 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 Note at
the times, place and rate, and in the coin or currency, herein prescribed.

            Anything herein to the contrary notwithstanding, neither the Owner
Trustee in its individual capacity, any beneficial owner of the Issuer, the
Indenture Trustee nor 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 and interest on, or performance of, or omission to perform, any of
the covenants, obligations or indemnifications contained in, this Note or the
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by the Owner Trustee for the sole purpose of
binding the respective interests of the beneficial owners of the Issuer and the
Owner Trustee in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that 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 the enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.

            The Owner Trustee has executed this Note on behalf of the Issuer,
not in its individual capacity but solely as owner trustee under the Trust
Agreement and the Owner Trustee shall be liable hereunder only in respect of the
assets of the Trust created by such Trust Agreement.

            The remedies of the Holder hereof as provided herein and in the
Indenture, shall be cumulative and concurrent and may be pursued solely against
the assets of the Trust created by the Trust Agreement pledged under the
Indenture as security for the Notes. No failure on the part of the holder in
exercising any right or remedy hereunder shall operate as a waiver or release
thereof, nor shall any single or partial exercise of any right or remedy
preclude any further exercise thereof or the exercise of any other right or
remedy hereunder.

<PAGE>

                INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

            This is one of the Class A Notes referred to in the within-mentioned
Indenture.

                                         The Bank of New York,
                                             as Indenture Trustee

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

<PAGE>

                                    EXHIBIT B

                            [FORM OF CLASS M-1 NOTE]

UNLESS THIS 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 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.

PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE ACTUAL OUTSTANDING PRINCIPAL
AMOUNT OF THIS NOTE MAY BE ASCERTAINED ONLY BY OBTAINING A WRITTEN CONFIRMATION
THEREOF FROM THE INDENTURE TRUSTEE NAMED HEREIN.

THE RIGHTS OF THE CLASS M-1 NOTEHOLDERS TO RECEIVE PAYMENTS IN RESPECT OF
PRINCIPAL AND INTEREST ON THE CLASS M-1 NOTES ARE SUBORDINATE TO THE RIGHTS OF
THE CLASS A NOTEHOLDERS TO RECEIVE PAYMENTS OF PRINCIPAL AND INTEREST TO THE
EXTENT DESCRIBED IN THE INDENTURE.

EACH PURCHASER OF A BENEFICIAL INTEREST IN THIS NOTE WILL BE DEEMED TO REPRESENT
EITHER THAT (I) IT IS NOT AND IS NOT PURCHASING ITS INTEREST IN THIS NOTE ON
BEHALF OF OR WITH THE ASSETS OF A RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN
OR ARRANGEMENT SUBJECT TO TITLE I OF ERISA, SECTION 4975 OF THE CODE OR SIMILAR
LAW OR (II) ITS PURCHASE OF ITS INTEREST IN THIS NOTE WILL NOT RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR THE CODE OR A SIMILAR VIOLATION
OF SIMILAR LAW.

<PAGE>

                   MID-STATE CAPITAL CORPORATION 2004-1 TRUST
                       6.497% CLASS M-1 ASSET-BACKED NOTE
                                DUE: August 2037
                           ACCRUAL DATE: July 1, 2004
                               CUSIP: 59560U AB 7

$[________]                                                             No. __

            Mid-State Capital Corporation 2004-1 Trust (the "Issuer"), a
Delaware statutory trust governed by a Trust Agreement dated July 13, 2004 (the
"Trust Agreement"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of $48,282,000 in monthly instalments on
the 15th day of each month, or if such date is not a Business Day, the next
Business Day thereafter (the "Payment Dates") in each year, commencing on August
15, 2004 and ending on or before the Payment Date in August 2037 (the "Maturity"
of such final instalment of principal) and to pay interest accrued during the
period from and including the first day of the calendar month preceding the
calendar month of such Payment Date to but not including the first day of the
calendar month of such Payment Date (the "Interest Accrual Period"), until the
principal amount of this Note is paid in full, at the rate of 6.497% per annum,
such interest being computed on the basis of a 360-day year of twelve 30-day
months and payable monthly on each Payment Date. Instalments of principal of
this Note are due and payable in the amounts and on the dates described on the
reverse hereof.

            The principal of, and interest on, this 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 Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note. Any instalment of principal or interest which is not paid when and as due
shall bear interest at the rate of interest borne by the principal of this Note
from the date due to the date of payment thereof, but only to the extent that
the payment of such interest shall be lawful and enforceable.

            Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this 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.

<PAGE>

            IN WITNESS WHEREOF, Mid-State Capital Corporation 2004-1 Trust has
caused this instrument to be duly executed by and under the corporate seal of
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement.

Dated:                                   MID-STATE CAPITAL CORPORATION 2004-1
                                            TRUST

                                         By: Wilmington Trust Company,
                                             not in its individual
                                             capacity but solely in
                                             its capacity as Owner
                                             Trustee under the Trust
                                             Agreement

[SEAL]
                                         By:
                                            ------------------------------------
                                            Title:

<PAGE>

            This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 6.497% Class M-1 Asset-Backed Notes (herein called the
"Notes"). The Notes are issued and will be issued under an Indenture dated July
15, 2004 (herein called the "Indenture"), between the Issuer and The Bank of New
York, as Indenture Trustee (the "Indenture Trustee," which term includes any
successor Indenture Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes and the terms upon which the Notes are, and are to be,
authenticated and delivered. Also issued under the Indenture are the 6.005%
Asset-Backed Notes, Class A, 8.114% Asset-Backed Notes, Class M-2 and 8.900%
Asset-Backed Notes, Class B. The Notes are secured by the collateral pledged as
security therefor to the extent provided in the Indenture. All terms used in
this Note which are defined in the Indenture shall have the meanings assigned to
them in the Indenture.

            An instalment of principal shall be paid on the Notes on each
Payment Date in the amount equal to the amount available to be paid thereon as
principal pursuant to and subject to the priorities set forth in Section 8.02(b)
of the Indenture on such Payment Date; provided that the unpaid principal shall
be due and payable on the Payment Date occurring in August 2037. Each payment of
principal of the Notes shall be allocated among the Notes in proportion to their
then remaining unpaid principal amounts. The unpaid principal amount of this
Class M-1 Note may be reduced by the allocation to it (in accordance with
Section 5.20 of the Indenture) of Class M-1 Realized Loss Amounts without any
corresponding payment.

            The rights of the Class M-1 Noteholders to receive payments in
respect of principal and interest on the Class M-1 Notes are subordinate to the
rights of the Class A Noteholders to receive payments of principal and interest
to the extent described in the Indenture.

            Payment of the then remaining unpaid principal amount of this Note
on the Maturity of its final instalment of principal or on such earlier date as
the Issuer shall be required to apply payments received with respect to the
collateral securing the Notes to payment of the then remaining unpaid principal
amount of this Note or to payment of the Redemption Price payable on any date as
of which this Note has been called for redemption in full shall be made upon
presentation of this Note to the office or agency of the Issuer maintained for
such purpose. Payments of interest on this Note due and payable on each Payment
Date, together with any instalment of principal of this Note due and payable on
each Payment Date which is also a Payment Date for this Note, shall be made by
check mailed to the Person whose name appears as the registered Holder of this
Note (or one or more Predecessor Notes) on the Note Register as of the Record
Date preceding such Payment Date, except that with respect to a Note registered
in the name of the nominee of a clearing 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.

            Checks for amounts due on this Note 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 Note be
submitted for notation of payment and checks returned undelivered will be held
for payment to the Person entitled thereto, subject to the terms of the
Indenture, at the office or agency in the United States of America designated by
the Issuer for such purpose pursuant to the Indenture. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date or by any allocation of a Class M-1
Realized Loss Amount shall be binding upon all Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor 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 Note
on a Payment Date which is prior to the Maturity of the final instalment of
principal hereof, then the Indenture Trustee, on behalf of the Issuer, will
notify the Person who was the registered Holder hereof on the day immediately
preceding such Payment Date, and the amount then due and payable shall, if
sufficient funds therefor are available, be payable only upon presentation of
this Note to the office or agency of the Issuer maintained for such purpose.

            If an Event of Default shall occur and be continuing with respect to
the Notes, the Notes may become or be declared due and payable in the manner and
with the effect provided in the Indenture. Reference is hereby made to Article V
of the Indenture which sets forth certain events which constitute Events of
Default. If any such acceleration of maturity occurs prior to the Maturity of
the final instalment of principal of this Note, the amount payable to the Holder
of this Note will be equal to the aggregate unpaid principal amount of this Note
on the date this Note becomes so due and payable, together with accrued interest
on such unpaid principal amount to the date of payment thereof. The Indenture
provides that, notwithstanding the acceleration of the maturity of the Notes,
under certain circumstances specified therein all amounts collected as proceeds
of the collateral securing the Notes or otherwise shall continue to be applied
to payments of principal of and interest on the Notes as if they had not been
declared due and payable. In such event, interest on the then unpaid principal
amount of all Notes and on any overdue instalments of interest on the Notes
following the acceleration of the maturity of the Notes shall accrue and be
payable at the Note Interest Rate, but only to the extent that the payment
thereof shall be lawful and enforceable.

            The Notes are not prepayable or redeemable at the option or
direction of the Issuer except that all of the outstanding Notes may be called
for redemption in whole at the option of the Grantor on any Payment Date
following the Payment Date on which the Aggregate Outstanding Principal Amount
of the Notes is reduced to 10% or less of the aggregate Initial Principal Amount
of the Notes, at a redemption price equal to 100% of the aggregate unpaid
principal balance of the Notes plus accrued and unpaid interest to the date set
for redemption.

            As provided in the Indenture the transfer of this Note may be
registered on the Note Register of the Issuer, upon surrender of this Note for
registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, 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 his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and in the same
aggregate initial principal amount will be issued to the designated transferee
or transferees.

            Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note is registered (i)
on any Record Date, for purposes of making payments, and (ii) on any other date
for any other purpose, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent shall be
affected by written 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 rights of the Holders of the Notes under the Indenture at any
time by the Issuer, and the Holders of Notes entitled to 51% or more of the
aggregate Voting Rights of all Classes voting together as a single class. The
Indenture also contains provisions that permit the Holders of the percentage of
the Class or Classes of Notes specified in Section 5.02 of the Indenture, 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, at
the time of the giving thereof, of this Note (or any one or more Predecessor
Notes) shall be conclusive and binding upon such Holder and upon all future
holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.

            The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.

            The Notes are issuable only in registered form in the denominations
provided in the Indenture and subject to certain limitations therein set forth.
The Notes are exchangeable for a like aggregate initial principal amount of
Notes of different authorized denominations, as requested by the Holder
surrendering the same, pursuant to the terms and conditions set forth in the
Indenture.

            The Issuer has entered into this Indenture and this Note with the
intention that, for all purposes including federal, state and local tax
purposes, the Notes will qualify as indebtedness secured by the Trust Estate.
The Issuer, by entering into this Indenture, and each purchaser of a beneficial
interest in a Note, agree to treat the Notes for all purposes including federal,
state and local tax purposes as indebtedness of the Issuer.

            As provided in the Indenture, this Note and the Indenture shall be
construed in accordance with, and governed by, the laws of the State of New York
applicable to agreements made and to be performed therein.

            No reference herein to the Indenture and no provision of this 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 Note at
the times, place and rate, and in the coin or currency, herein prescribed.

            Anything herein to the contrary notwithstanding, neither the Owner
Trustee in its individual capacity, any beneficial owner of the Issuer, the
Indenture Trustee nor 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 and interest on, or performance of, or omission to perform, any of
the covenants, obligations or indemnifications contained in, this Note or the
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by the Owner Trustee for the sole purpose of
binding the respective interests of the beneficial owners of the Issuer and the
Owner Trustee in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that 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 the enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.

            The Owner Trustee has executed this Note on behalf of the Issuer,
not in its individual capacity but solely as owner trustee under the Trust
Agreement and the Owner Trustee shall be liable hereunder only in respect of the
assets of the Trust created by such Trust Agreement.

            The remedies of the Holder hereof as provided herein and in the
Indenture, shall be cumulative and concurrent and may be pursued solely against
the assets of the Trust created by the Trust Agreement pledged under the
Indenture as security for the Notes. No failure on the part of the holder in
exercising any right or remedy hereunder shall operate as a waiver or release
thereof, nor shall any single or partial exercise of any right or remedy
preclude any further exercise thereof or the exercise of any other right or
remedy hereunder.

<PAGE>

                INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

            This is one of the Class M-1 Notes referred to in the
within-mentioned Indenture.

                                         The Bank of New York,
                                             as Indenture Trustee

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

<PAGE>

                                    EXHIBIT C

                            [FORM OF CLASS M-2 NOTE]

UNLESS THIS 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 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.

PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE ACTUAL OUTSTANDING PRINCIPAL
AMOUNT OF THIS NOTE MAY BE ASCERTAINED ONLY BY OBTAINING A WRITTEN CONFIRMATION
THEREOF FROM THE INDENTURE TRUSTEE NAMED HEREIN.

THE RIGHTS OF THE CLASS M-2 NOTEHOLDERS TO RECEIVE PAYMENTS IN RESPECT OF
PRINCIPAL AND INTEREST ON THE CLASS M-2 NOTES ARE SUBORDINATE TO THE RIGHTS OF
THE CLASS A NOTEHOLDERS AND THE CLASS M-1 NOTEHOLDERS TO RECEIVE PAYMENTS OF
PRINCIPAL AND INTEREST TO THE EXTENT DESCRIBED IN THE INDENTURE.

EACH PURCHASER OF A BENEFICIAL INTEREST IN THIS NOTE WILL BE DEEMED TO REPRESENT
EITHER THAT (I) IT IS NOT AND IS NOT PURCHASING ITS INTEREST IN THIS NOTE ON
BEHALF OF OR WITH THE ASSETS OF A RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN
OR ARRANGEMENT SUBJECT TO TITLE I OF ERISA, SECTION 4975 OF THE CODE OR SIMILAR
LAW OR (II) ITS PURCHASE OF ITS INTEREST IN THIS NOTE WILL NOT RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR THE CODE OR A SIMILAR VIOLATION
OF SIMILAR LAW.

<PAGE>

                   MID-STATE CAPITAL CORPORATION 2004-1 TRUST
                       8.114% CLASS M-2 ASSET-BACKED NOTE
                                DUE: August 2037
                           ACCRUAL DATE: July 1, 2004
                               CUSIP: 59560U AC 5

$[________]                                                             No. __

            Mid-State Capital Corporation 2004-1 Trust (the "Issuer"), a
Delaware statutory trust governed by a Trust Agreement dated July 13, 2004 (the
"Trust Agreement"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of $34,602,000 in monthly instalments on
the 15th day of each month, or if such date is not a Business Day, the next
Business Day thereafter (the "Payment Dates") in each year, commencing on August
15, 2004 and ending on or before the Payment Date in August 2037 (the "Maturity"
of such final instalment of principal) and to pay interest accrued during the
period from and including the first day of the calendar month preceding the
calendar month of such Payment Date to but not including the first day of the
calendar month of such Payment Date (the "Interest Accrual Period"), until the
principal amount of this Note is paid in full, at the rate of 8.114% per annum,
such interest being computed on the basis of a 360-day year of twelve 30-day
months and payable monthly on each Payment Date. Instalments of principal of
this Note are due and payable in the amounts and on the dates described on the
reverse hereof.

            The principal of, and interest on, this 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 Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note. Any instalment of principal or interest which is not paid when and as due
shall bear interest at the rate of interest borne by the principal of this Note
from the date due to the date of payment thereof, but only to the extent that
the payment of such interest shall be lawful and enforceable.

            Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this 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.

<PAGE>

            IN WITNESS WHEREOF, Mid-State Capital Corporation 2004-1 Trust has
caused this instrument to be duly executed by and under the corporate seal of
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement.

Dated:                                   MID-STATE CAPITAL CORPORATION 2004-1
                                            TRUST

                                         By: Wilmington Trust Company,
                                             not in its individual
                                             capacity but solely in
                                             its capacity as Owner
                                             Trustee under the Trust
                                             Agreement

[SEAL]
                                         By:
                                            ------------------------------------
                                            Title:

<PAGE>

            This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 8.114% Class M-2 Asset-Backed Notes (herein called the
"Notes"). The Notes are issued and will be issued under an Indenture dated July
15, 2004 (herein called the "Indenture"), between the Issuer and The Bank of New
York, as Indenture Trustee (the "Indenture Trustee," which term includes any
successor Indenture Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes and the terms upon which the Notes are, and are to be,
authenticated and delivered. Also issued under the Indenture are the 6.005%
Asset-Backed Notes, Class A, 6.497% Asset-Backed Notes, Class M-1 and 8.900%
Asset-Backed Notes, Class B. The Notes are secured by the collateral pledged as
security therefor to the extent provided in the Indenture. All terms used in
this Note which are defined in the Indenture shall have the meanings assigned to
them in the Indenture.

            An instalment of principal shall be paid on the Notes on each
Payment Date in the amount equal to the amount available to be paid thereon as
principal pursuant to and subject to the priorities set forth in Section 8.02(b)
of the Indenture on such Payment Date; provided that the unpaid principal shall
be due and payable on the Payment Date occurring in August 2037. Each payment of
principal of the Notes shall be allocated among the Notes in proportion to their
then remaining unpaid principal amounts. The unpaid principal amount of this
Class M-2 Note may be reduced by the allocation to it (in accordance with
Section 5.20 of the Indenture) of Class M-2 Realized Loss Amounts without any
corresponding payment.

            The rights of the Class M-2 Noteholders to receive payments in
respect of principal and interest on the Class M-2 Notes are subordinate to the
rights of the Class A Noteholders and the Class M-1 Noteholders to receive
payments of principal and interest to the extent described in the Indenture.

            Payment of the then remaining unpaid principal amount of this Note
on the Maturity of its final instalment of principal or on such earlier date as
the Issuer shall be required to apply payments received with respect to the
collateral securing the Notes to payment of the then remaining unpaid principal
amount of this Note or to payment of the Redemption Price payable on any date as
of which this Note has been called for redemption in full shall be made upon
presentation of this Note to the office or agency of the Issuer maintained for
such purpose. Payments of interest on this Note due and payable on each Payment
Date, together with any instalment of principal of this Note due and payable on
each Payment Date which is also a Payment Date for this Note, shall be made by
check mailed to the Person whose name appears as the registered Holder of this
Note (or one or more Predecessor Notes) on the Note Register as of the Record
Date preceding such Payment Date, except that with respect to a Note registered
in the name of the nominee of a clearing 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.

            Checks for amounts due on this Note 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 Note be
submitted for notation of payment and checks returned undelivered will be held
for payment to the Person entitled thereto, subject to the terms of the
Indenture, at the office or agency in the United States of America designated by
the Issuer for such purpose pursuant to the Indenture. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date or by any allocation of a Class M-2
Realized Loss Amount shall be binding upon all Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor 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 Note
on a Payment Date which is prior to the Maturity of the final instalment of
principal hereof, then the Indenture Trustee, on behalf of the Issuer, will
notify the Person who was the registered Holder hereof on the day immediately
preceding such Payment Date, and the amount then due and payable shall, if
sufficient funds therefor are available, be payable only upon presentation of
this Note to the office or agency of the Issuer maintained for such purpose.

            If an Event of Default shall occur and be continuing with respect to
the Notes, the Notes may become or be declared due and payable in the manner and
with the effect provided in the Indenture. Reference is hereby made to Article V
of the Indenture which sets forth certain events which constitute Events of
Default. If any such acceleration of maturity occurs prior to the Maturity of
the final instalment of principal of this Note, the amount payable to the Holder
of this Note will be equal to the aggregate unpaid principal amount of this Note
on the date this Note becomes so due and payable, together with accrued interest
on such unpaid principal amount to the date of payment thereof. The Indenture
provides that, notwithstanding the acceleration of the maturity of the Notes,
under certain circumstances specified therein all amounts collected as proceeds
of the collateral securing the Notes or otherwise shall continue to be applied
to payments of principal of and interest on the Notes as if they had not been
declared due and payable. In such event, interest on the then unpaid principal
amount of all Notes and on any overdue instalments of interest on the Notes
following the acceleration of the maturity of the Notes shall accrue and be
payable at the Note Interest Rate, but only to the extent that the payment
thereof shall be lawful and enforceable.

            The Notes are not prepayable or redeemable at the option or
direction of the Issuer except that all of the outstanding Notes may be called
for redemption in whole at the option of the Grantor on any Payment Date
following the Payment Date on which the Aggregate Outstanding Principal Amount
of the Notes is reduced to 10% or less of the aggregate Initial Principal Amount
of the Notes, at a redemption price equal to 100% of the aggregate unpaid
principal balance of the Notes plus accrued and unpaid interest to the date set
for redemption.

            As provided in the Indenture the transfer of this Note may be
registered on the Note Register of the Issuer, upon surrender of this Note for
registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, 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 his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and in the same
aggregate initial principal amount will be issued to the designated transferee
or transferees.

            Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note is registered (i)
on any Record Date, for purposes of making payments, and (ii) on any other date
for any other purpose, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent shall be
affected by written 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 rights of the Holders of the Notes under the Indenture at any
time by the Issuer, and the Holders of Notes entitled 51% or more of the
aggregate Voting Rights of all Classes voting together as a single class. The
Indenture also contains provisions that permit the Holders of the percentage of
the Class or Classes of Notes specified in Section 5.02 of the Indenture, 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, at
the time of the giving thereof, of this Note (or any one or more Predecessor
Notes) shall be conclusive and binding upon such Holder and upon all future
holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.

            The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.

            The Notes are issuable only in registered form in the denominations
provided in the Indenture and subject to certain limitations therein set forth.
The Notes are exchangeable for a like aggregate initial principal amount of
Notes of different authorized denominations, as requested by the Holder
surrendering the same, pursuant to the terms and conditions set forth in the
Indenture.

            The Issuer has entered into this Indenture and this Note with the
intention that, for all purposes including federal, state and local tax
purposes, the Notes will qualify as indebtedness secured by the Trust Estate.
The Issuer, by entering into this Indenture, and each purchaser of a beneficial
interest in a Note, agree to treat the Notes for all purposes including federal,
state and local tax purposes as indebtedness of the Issuer.

            As provided in the Indenture, this Note and the Indenture shall be
construed in accordance with, and governed by, the laws of the State of New York
applicable to agreements made and to be performed therein.

            No reference herein to the Indenture and no provision of this 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 Note at
the times, place and rate, and in the coin or currency, herein prescribed.

            Anything herein to the contrary notwithstanding, neither the Owner
Trustee in its individual capacity, any beneficial owner of the Issuer, the
Indenture Trustee nor 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 and interest on, or performance of, or omission to perform, any of
the covenants, obligations or indemnifications contained in, this Note or the
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by the Owner Trustee for the sole purpose of
binding the respective interests of the beneficial owners of the Issuer and the
Owner Trustee in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that 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 the enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.

            The Owner Trustee has executed this Note on behalf of the Issuer,
not in its individual capacity but solely as owner trustee under the Trust
Agreement and the Owner Trustee shall be liable hereunder only in respect of the
assets of the Trust created by such Trust Agreement.

            The remedies of the Holder hereof as provided herein and in the
Indenture, shall be cumulative and concurrent and may be pursued solely against
the assets of the Trust created by the Trust Agreement pledged under the
Indenture as security for the Notes. No failure on the part of the holder in
exercising any right or remedy hereunder shall operate as a waiver or release
thereof, nor shall any single or partial exercise of any right or remedy
preclude any further exercise thereof or the exercise of any other right or
remedy hereunder.

<PAGE>

                INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

            This is one of the Class M-2 Notes referred to in the
within-mentioned Indenture.

                                         The Bank of New York,
                                             as Indenture Trustee

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

<PAGE>

                                    EXHIBIT D

                             [FORM OF CLASS B NOTE]

UNLESS THIS 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 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.

PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE ACTUAL OUTSTANDING PRINCIPAL
AMOUNT OF THIS NOTE MAY BE ASCERTAINED ONLY BY OBTAINING A WRITTEN CONFIRMATION
THEREOF FROM THE INDENTURE TRUSTEE NAMED HEREIN.

THE RIGHTS OF THE CLASS B NOTEHOLDERS TO RECEIVE PAYMENTS IN RESPECT OF
PRINCIPAL AND INTEREST ON THE CLASS B NOTES ARE SUBORDINATE TO THE RIGHTS OF THE
CLASS A NOTEHOLDERS, THE CLASS M-1 NOTEHOLDERS AND THE CLASS M-2 NOTEHOLDERS TO
RECEIVE PAYMENTS OF PRINCIPAL AND INTEREST TO THE EXTENT DESCRIBED IN THE
INDENTURE.

EACH PURCHASER OF A BENEFICIAL INTEREST IN THIS NOTE WILL BE DEEMED TO REPRESENT
EITHER THAT (I) IT IS NOT AND IS NOT PURCHASING ITS INTEREST IN THIS NOTE ON
BEHALF OF OR WITH THE ASSETS OF A RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN
OR ARRANGEMENT SUBJECT TO TITLE I OF ERISA, SECTION 4975 OF THE CODE OR SIMILAR
LAW OR (II) ITS PURCHASE OF ITS INTEREST IN THIS NOTE WILL NOT RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR THE CODE OR A SIMILAR VIOLATION
OF SIMILAR LAW.

<PAGE>

                   MID-STATE CAPITAL CORPORATION 2004-1 TRUST
                        8.900% CLASS B ASSET-BACKED NOTE
                                DUE: August 2037
                           ACCRUAL DATE: July 1, 2004
                               CUSIP: 59560U AD 3

$[________]                                                             No. __

            Mid-State Capital Corporation 2004-1 Trust (the "Issuer"), a
Delaware statutory trust governed by a Trust Agreement dated July 13, 2004 (the
"Trust Agreement"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of $31,383,000 in monthly instalments on
the 15th day of each month, or if such date is not a Business Day, the next
Business Day thereafter (the "Payment Dates") in each year, commencing on August
15, 2004 and ending on or before the Payment Date in August 2037 (the "Maturity"
of such final instalment of principal) and to pay interest accrued during the
period from and including the first day of the calendar month preceding the
calendar month of such Payment Date to but not including the first day of the
calendar month of such Payment Date (the "Interest Accrual Period"), until the
principal amount of this Note is paid in full, at the rate of 8.900% per annum,
such interest being computed on the basis of a 360-day year of twelve 30-day
months and payable monthly on each Payment Date. Instalments of principal of
this Note are due and payable in the amounts and on the dates described on the
reverse hereof.

            The principal of, and interest on, this 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 Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note. Any instalment of principal or interest which is not paid when and as due
shall bear interest at the rate of interest borne by the principal of this Note
from the date due to the date of payment thereof, but only to the extent that
the payment of such interest shall be lawful and enforceable.

            Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this 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.

<PAGE>

            IN WITNESS WHEREOF, Mid-State Capital Corporation 2004-1 Trust has
caused this instrument to be duly executed by and under the corporate seal of
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement.

Dated:                                   MID-STATE CAPITAL CORPORATION 2004-1
                                            TRUST

                                         By: Wilmington Trust Company,
                                             not in its individual
                                             capacity but solely in
                                             its capacity as Owner
                                             Trustee under the Trust
                                             Agreement

[SEAL]
                                         By:
                                            ------------------------------------
                                            Title:

<PAGE>

            This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 8.900% Class B Asset-Backed Notes (herein called the "Notes").
The Notes are issued and will be issued under an Indenture dated July 15, 2004
(herein called the "Indenture"), between the Issuer and The Bank of New York, as
Indenture Trustee (the "Indenture Trustee," which term includes any successor
Indenture Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights thereunder of the Issuer, the Indenture Trustee and the Holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. Also issued under the Indenture are the 6.005% Asset-Backed Notes,
Class A, 6.497% Asset-Backed Notes, Class M-1 and 8.114% Asset-Backed Notes,
Class M-2. The Notes are secured by the collateral pledged as security therefor
to the extent provided in the Indenture. All terms used in this Note which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.

            An instalment of principal shall be paid on the Notes on each
Payment Date in the amount equal to the amount available to be paid thereon as
principal pursuant to and subject to the priorities set forth in Section 8.02(b)
of the Indenture on such Payment Date; provided that the unpaid principal shall
be due and payable on the Payment Date occurring in August 2037. Each payment of
principal of the Notes shall be allocated among the Notes in proportion to their
then remaining unpaid principal amounts. The unpaid principal amount of this
Class B Note may be reduced by the allocation to it (in accordance with Section
5.20 of the Indenture) of Class B Realized Loss Amounts without any
corresponding payment.

            The rights of the Class B Noteholders to receive payments in respect
of principal and interest on the Class B Notes are subordinate to the rights of
the Class A Noteholders, the Class M-1 Noteholders and the Class M-2 Noteholders
to receive payments of principal and interest to the extent described in the
Indenture.

            Payment of the then remaining unpaid principal amount of this Note
on the Maturity of its final instalment of principal or on such earlier date as
the Issuer shall be required to apply payments received with respect to the
collateral securing the Notes to payment of the then remaining unpaid principal
amount of this Note or to payment of the Redemption Price payable on any date as
of which this Note has been called for redemption in full shall be made upon
presentation of this Note to the office or agency of the Issuer maintained for
such purpose. Payments of interest on this Note due and payable on each Payment
Date, together with any instalment of principal of this Note due and payable on
each Payment Date which is also a Payment Date for this Note, shall be made by
check mailed to the Person whose name appears as the registered Holder of this
Note (or one or more Predecessor Notes) on the Note Register as of the Record
Date preceding such Payment Date, except that with respect to a Note registered
in the name of the nominee of a clearing 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.

            Checks for amounts due on this Note 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 Note be
submitted for notation of payment and checks returned undelivered will be held
for payment to the Person entitled thereto, subject to the terms of the
Indenture, at the office or agency in the United States of America designated by
the Issuer for such purpose pursuant to the Indenture. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date or by any allocation of a Class B Realized
Loss Amount shall be binding upon all Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange herefor 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 Note
on a Payment Date which is prior to the Maturity of the final instalment of
principal hereof, then the Indenture Trustee, on behalf of the Issuer, will
notify the Person who was the registered Holder hereof on the day immediately
preceding such Payment Date, and the amount then due and payable shall, if
sufficient funds therefor are available, be payable only upon presentation of
this Note to the office or agency of the Issuer maintained for such purpose.

            If an Event of Default shall occur and be continuing with respect to
the Notes, the Notes may become or be declared due and payable in the manner and
with the effect provided in the Indenture. Reference is hereby made to Article V
of the Indenture which sets forth certain events which constitute Events of
Default. If any such acceleration of maturity occurs prior to the Maturity of
the final instalment of principal of this Note, the amount payable to the Holder
of this Note will be equal to the aggregate unpaid principal amount of this Note
on the date this Note becomes so due and payable, together with accrued interest
on such unpaid principal amount to the date of payment thereof. The Indenture
provides that, notwithstanding the acceleration of the maturity of the Notes,
under certain circumstances specified therein all amounts collected as proceeds
of the collateral securing the Notes or otherwise shall continue to be applied
to payments of principal of and interest on the Notes as if they had not been
declared due and payable. In such event, interest on the then unpaid principal
amount of all Notes and on any overdue instalments of interest on the Notes
following the acceleration of the maturity of the Notes shall accrue and be
payable at the Note Interest Rate, but only to the extent that the payment
thereof shall be lawful and enforceable.

            The Notes are not prepayable or redeemable at the option or
direction of the Issuer except that all of the outstanding Notes may be called
for redemption in whole at the option of the Grantor on any Payment Date
following the Payment Date on which the Aggregate Outstanding Principal Amount
of the Notes is reduced to 10% or less of the aggregate Initial Principal Amount
of the Notes, at a redemption price equal to 100% of the aggregate unpaid
principal balance of the Notes plus accrued and unpaid interest to the date set
for redemption.

            As provided in the Indenture the transfer of this Note may be
registered on the Note Register of the Issuer, upon surrender of this Note for
registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, 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 his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and in the same
aggregate initial principal amount will be issued to the designated transferee
or transferees.

            Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note is registered (i)
on any Record Date, for purposes of making payments, and (ii) on any other date
for any other purpose, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent shall be
affected by written 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 rights of the Holders of the Notes under the Indenture at any
time by the Issuer, and the Holders of Notes entitled to 51% or more of the
aggregate Voting Rights of all Classes voting together as a single class. The
Indenture also contains provisions that permit the Holders of the percentage of
the Class or Classes of Notes specified in Section 5.02 of the Indenture, 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, at
the time of the giving thereof, of this Note (or any one or more Predecessor
Notes) shall be conclusive and binding upon such Holder and upon all future
holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.

            The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.

            The Notes are issuable only in registered form in the denominations
provided in the Indenture and subject to certain limitations therein set forth.
The Notes are exchangeable for a like aggregate initial principal amount of
Notes of different authorized denominations, as requested by the Holder
surrendering the same, pursuant to the terms and conditions set forth in the
Indenture.

            The Issuer has entered into this Indenture and this Note with the
intention that, for all purposes including federal, state and local tax
purposes, the Notes will qualify as indebtedness secured by the Trust Estate.
The Issuer, by entering into this Indenture, and each purchaser of a beneficial
interest in a Note, agree to treat the Notes for all purposes including federal,
state and local tax purposes as indebtedness of the Issuer.

            As provided in the Indenture, this Note and the Indenture shall be
construed in accordance with, and governed by, the laws of the State of New York
applicable to agreements made and to be performed therein.

            No reference herein to the Indenture and no provision of this 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 Note at
the times, place and rate, and in the coin or currency, herein prescribed.

            Anything herein to the contrary notwithstanding, neither the Owner
Trustee in its individual capacity, any beneficial owner of the Issuer, the
Indenture Trustee nor 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 and interest on, or performance of, or omission to perform, any of
the covenants, obligations or indemnifications contained in, this Note or the
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by the Owner Trustee for the sole purpose of
binding the respective interests of the beneficial owners of the Issuer and the
Owner Trustee in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that 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 the enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.

            The Owner Trustee has executed this Note on behalf of the Issuer,
not in its individual capacity but solely as owner trustee under the Trust
Agreement and the Owner Trustee shall be liable hereunder only in respect of the
assets of the Trust created by such Trust Agreement.

            The remedies of the Holder hereof as provided herein and in the
Indenture, shall be cumulative and concurrent and may be pursued solely against
the assets of the Trust created by the Trust Agreement pledged under the
Indenture as security for the Notes. No failure on the part of the holder in
exercising any right or remedy hereunder shall operate as a waiver or release
thereof, nor shall any single or partial exercise of any right or remedy
preclude any further exercise thereof or the exercise of any other right or
remedy hereunder.

<PAGE>

                INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

            This is one of the Class B Notes referred to in the within-mentioned
Indenture.

                                         The Bank of New York,
                                             as Indenture Trustee

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

<PAGE>

                                    EXHIBIT E

                      FORM OF SUBSEQUENT TRANSFER AGREEMENT

            Subsequent Transfer Agreement, dated ____________, 200 , between
Mid-State Capital Corporation 2004-1 Trust, a Delaware statutory trust (the
"Issuer"), as pledgor (in such capacity, the "Pledgor"), and The Bank of New
York, as indenture trustee (the "Indenture Trustee").

            WITNESSETH:

            WHEREAS, Mid-State Capital Corporation 2004-1 Trust (in its capacity
as Issuer) and the Indenture Trustee are parties to that certain indenture dated
July 15, 2004 (as amended or supplemented, the "Indenture") relating to the
Mid-State Capital Corporation 2004-1 Trust, Asset-Backed Notes, Class A, Class
M-1, Class M-2 and Class B; and

            WHEREAS, as contemplated in the Indenture, the Pledgor desires to
convey certain Subsequent Mortgage Assets (as hereinafter defined) to the
Indenture Trustee.

            NOW, THEREFORE, the parties hereto hereby agree as follows:

            Section 1.01. Defined Terms. Capitalized terms used herein that are
not otherwise defined shall have the meanings ascribed thereto in the Indenture.

            "Agreement" means this Subsequent Transfer Agreement and all
amendments hereof and supplements hereto.

            "Subsequent Mortgage Assets" means the Mortgage Assets identified on
the Schedule of Mortgage Assets specified in Section 1.02 hereof.

            "Subsequent Transfer Date" means, with respect to the Subsequent
Mortgage Assets conveyed hereby, _______________ ___, 200_.

            Section 1.02. Schedule of Mortgage Assets. Annexed hereto is a
supplement to Schedule I to the Indenture listing the Subsequent Mortgage Assets
to be conveyed by the Pledgor to the Indenture Trustee pursuant to this
Agreement on the Subsequent Transfer Date.

            Section 1.03. Pledge of Subsequent Mortgage Assets by the Pledgor.
Subject to the conditions set forth in Section 1.05, in consideration of the
Indenture Trustee's delivery upon the order of the Pledgor of an amount equal to
$________ (i.e., ___% of the Aggregate Principal Balance of the Subsequent
Mortgage Assets as of the Subsequent Transfer Date) to Mid-State Homes, Inc.,
the Pledgor does hereby Grant its right, title and interest in and to (a) the
Subsequent Mortgage Assets listed in the Schedule of Mortgage Assets attached
hereto, all property acquired in respect of the Subsequent Mortgage Assets,
including the related Mortgage Asset Documents and all Monthly Payments that
have not been received prior to the Subsequent Transfer Date, regardless of the
Due Date for such Monthly Payment, (b) all new Mortgage Assets originated in
connection with the sale of property acquired in respect of Subsequent Mortgage
Assets and (c) all proceeds in any way derived from any of the foregoing,
including all proceeds of the conversion, voluntary or involuntary, of any of
the foregoing into cash or other assets, including, without limitation, all
insurance proceeds and condemnation awards.

            Section 1.04. Representations and Warranties of Pledgor. The Pledgor
does hereby reaffirm the representations and warranties set forth in Section
3.11 of the Indenture for the benefit of the Indenture Trustee.

            Section 1.05. Conditions Precedent. The obligation of the Indenture
Trustee to accept the Subsequent Mortgage Assets is subject to the satisfaction,
on or prior to the Subsequent Transfer Date, of the conditions precedent set
forth in Section 8.09(b) of the Indenture.

            The Indenture Trustee shall not be required to investigate or
otherwise verify satisfaction of the conditions listed in Section 8.09(b) of the
Indenture, but shall be entitled to conclusively rely upon one or more Officer's
Certificates confirming such fulfillment.

            Section 1.06. Reaffirmation of Indenture. All terms, conditions and
provisions of the Indenture are hereby reaffirmed and incorporated by reference
by the Pledgor as to the Subsequent Mortgage Assets.

            Section 1.07. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.

<PAGE>

            IN WITNESS WHEREOF, the Owner Trustee on behalf of the Pledgor and
the Indenture Trustee have caused this Subsequent Transfer Agreement to be duly
executed by their respective officers thereunto duly authorized and the seal of
the Owner Trustee and of the Indenture Trustee to be hereunto affixed, all as of
the day and year first above written

                                         MID-STATE CAPITAL CORPORATION 2004-1
                                            TRUST

                                         By:  Wilmington Trust Company, not in
                                              its individual capacity, but
                                              solely as Owner Trustee of
                                              Mid-State Capital Corporation
                                              2004-1 Trust

                                         By:
                                            ------------------------------------
                                                  Authorized Officer

                                         THE BANK OF NEW YORK,
                                            as Indenture Trustee

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

<PAGE>

                                    EXHIBIT F

                              Form of Certification

                   CERTIFICATION TO BE PROVIDED WITH FORM 10-K

                   MID-STATE CAPITAL CORPORATION 2004-1 TRUST

I, [identify the certifying individual], certify that:

1.    I have reviewed this annual report on Form 10-K, and all reports on Form
      8-K containing a copy of the Payment Date Statement (as defined in the
      Indenture, dated July 15, 2004 (the "Indenture"), between Mid-State
      Capital Corporation 2004-1 Trust, a Delaware statutory trust (the
      "Issuer"), and The Bank of New York, as indenture trustee (the "Indenture
      Trustee")), filed in respect of periods included in the year covered by
      this annual report, of Mid-State Capital Corporation 2004-1 Trust;

2.    Based on my knowledge, the information in these reports, taken as a whole,
      does not contain any untrue statement of a material fact or omit to state
      a material fact necessary to make the statements made, in light of the
      circumstances under which such statements were made, not misleading as of
      the last day of the period covered by this annual report;

3.    Based on my knowledge, the distribution or servicing information required
      to be provided to the Indenture Trustee by the Servicer under the
      Indenture and the Servicing Agreement, dated July 15, 2004 (the "Servicing
      Agreement"), among the Issuer, Mid-State Homes, Inc., as servicer (the
      "Servicer") and the Indenture Trustee, for inclusion in these reports is
      included in these reports;

4.    I am responsible for reviewing the activities performed by the Servicer
      under the Servicing Agreement and based upon my knowledge and the annual
      compliance review required under the Servicing Agreement, and except as
      disclosed in the reports, the Servicer has fulfilled its obligations under
      the Servicing Agreement; and

5.    The reports disclose all significant deficiencies relating to the
      Servicer's compliance with the minimum servicing standards based upon the
      reports provided by an independent public accountant, after conducting a
      review in compliance with the Uniform Single Attestation Program for
      Mortgage Bankers or similar procedure, as set forth in the Servicing
      Agreement, that is included in these reports.

6.    In giving the certifications above, I have reasonably relied on
      information provided to me by the following unaffiliated parties: The Bank
      of New York.

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

<PAGE>

                                    EXHIBIT G

        Form of Certification to be Provided by the Indenture Trustee

                   MID-STATE CAPITAL CORPORATION 2004-1 TRUST

            Reference is made to the Indenture, dated July 15, 2004 (the
"Indenture"), between Mid-State Capital Corporation 2004-1 Trust, a Delaware
statutory trust (the "Issuer"), and The Bank of New York, as indenture trustee
(the "Indenture Trustee") and to the Servicing Agreement, dated July 15, 2004
(the "Servicing Agreement"), among the Issuer, the Indenture Trustee and
Mid-State Homes, Inc., as servicer (the "Servicer"). Pursuant to Section 3.21 of
the Indenture, the Indenture Trustee hereby certifies to the Servicer and its
officers, directors and affiliates, and with the knowledge and intent that they
will rely upon this certification, that:

7.    A Responsible Officer of the Indenture Trustee has reviewed the annual
      report on Form 10-K for the calendar year [____], and all reports on Form
      8-K containing Payment Date Statements filed in respect of periods
      included in the year covered by that annual report, relating to Mid-State
      Capital Corporation 2004-1 Trust;

8.    The distribution  information (to the extent calculated by the Indenture
      Trustee) in the Payment  Date  Statements  contained in all monthly Form
      8-K's  included  in the year  covered by the annual  report on Form 10-K
      for the  calendar  year  [___],  taken as a whole,  does not contain any
      untrue  statement  of a material  fact or omit to state a material  fact
      required by the  Indenture to be included  therein and necessary to make
      the  statements  made,  in light of the  circumstances  under which such
      statements  were made,  not  misleading as of the last day of the period
      covered by that annual report; and

9.    The distribution or servicing information required to be provided to the
      Indenture Trustee under the Indenture for inclusion in these reports is
      included in these reports.

                                         THE BANK OF NEW YORK, as Indenture
                                            Trustee

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

<PAGE>

                                    EXHIBIT H

             FORM OF INITIAL CERTIFICATION OF THE DOCUMENT CUSTODIAN

                                  July 15, 2004

The Bank of New York
101 Barclay Street - 8W
New York, New York  10286

Mid-State Capital Corporation
4211 West Boy Scout Boulevard
Tampa, Florida  33607

Mid-State Homes, Inc.
4211 West Boy Scout Boulevard
Tampa, Florida  33607

      Re:   Mid-State Capital Corporation 2004-1 Trust,
            Asset Backed Notes, Class A, Class M-1,
            Class M-2 and Class B
            -------------------------------------------

Ladies and Gentlemen:

In accordance with the provisions of Section 2.3 of the Custodial Agreement,
dated July 15, 2004, among Mid-State Capital Corporation 2004-1 Trust (the
"Issuer"), Mid-State Homes, Inc., as servicer, The Bank of New York, as
indenture trustee (the "Indenture Trustee"), and Wachovia Bank, National
Association, as document custodian (the "Document Custodian"), the undersigned
hereby certifies that, except as specified in any list of exceptions attached
hereto, it has received the original Account Note or Mortgage Note relating to
each of the Mortgage Assets listed on Schedule I to the Indenture, dated July
15, 2004, between the Issuer and the Indenture Trustee.

The Document Custodian has made no independent examination of any documents
contained in each Custodial File beyond the review specifically required in the
Custodial Agreement in connection with this Initial Certification. The Document
Custodian makes no representations as to: (i) the validity, legality,
sufficiency, enforceability, recordability or genuineness of any of the
documents contained in each Custodial File or any of the Mortgage Assets
identified in the Mortgage Asset Schedule or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Asset.

<PAGE>

Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Indenture, Servicing Agreement or Custodial Agreement, as
applicable.

                                         WACHOVIA BANK, NATIONAL
                                         ASSOCIATION,
                                          as Document Custodian

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

<PAGE>

                                    EXHIBIT I

              FORM OF FINAL CERTIFICATION OF THE DOCUMENT CUSTODIAN

                                  July 15, 2004

The Bank of New York
101 Barclay Street - 8W
New York, New York  10286

Mid-State Capital Corporation
4211 West Boy Scout Boulevard
Tampa, Florida  33607

Mid-State Homes, Inc.
4211 West Boy Scout Boulevard
Tampa, Florida  33607

      Re:   Mid-State Capital Corporation 2004-1 Trust,
            Asset Backed Notes, Class A, Class M-1,
            Class M-2 and Class B
            -------------------------------------------

Ladies and Gentlemen:

In accordance with the provisions of Section 2.3 of the Custodial Agreement,
dated July 15, 2004, among Mid-State Capital Corporation 2004-1 Trust (the
"Issuer"), Mid-State Homes, Inc., as servicer, The Bank of New York, as
indenture trustee (the "Indenture Trustee"), and Wachovia Bank, National
Association, as document custodian (the "Document Custodian"), the undersigned
hereby certifies that, except as specified in any list of exceptions attached
hereto, it has reviewed the Mortgage Asset Documents delivered to it on or prior
to the Closing Date. Such review was limited to a determination that all
documents referred to in the definition of the term Mortgage Asset Documents
have been delivered with respect to each such Mortgage Asset (other than the
documents related to (i) any Mortgage Asset so listed which has been subject to
a Full Prepayment, the proceeds of which have been deposited in the Collection
Account in lieu of delivery of the applicable Mortgage Asset Documents and (ii)
any Mortgage Asset with respect to which the related Mortgaged Property was
foreclosed, repossessed or otherwise converted subsequent to the Cut-off Date
and prior to the Closing Date or with respect to which foreclosure proceedings
have been commenced and the related Mortgage Asset Documents was required in
connection with the prosecution of such foreclosure proceedings and the Issuer
has delivered a trust receipt called for by Section 3.13(c) of the Indenture),
that all such documents have been executed, and that all such documents relate
to the Mortgage Assets listed on the Schedule of Mortgage Assets.

The Document Custodian has made no independent examination of any Mortgage Asset
Documents contained in each Custodial File beyond the review specifically
required in the Custodial Agreement in connection with this Final Certification.
The Document Custodian makes no representations as to: (i) the validity,
legality, sufficiency, enforceability, recordability or genuineness of any of
the documents contained in each Custodial File or any of the Mortgage Assets
identified in the Mortgage Asset Schedule or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Asset.

<PAGE>

Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Indenture, Servicing Agreement or Custodial Agreement, as
applicable.

                                         WACHOVIA BANK, NATIONAL
                                         ASSOCIATION,
                                          as Document Custodian

                                         By:
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------EXHIBIT 4.2

                           PURCHASE AND SALE AGREEMENT

            THIS AGREEMENT is made and entered into on July 15, 2004 by and
between MID-STATE CAPITAL CORPORATION, a Delaware corporation (the "Seller") and
MID-STATE CAPITAL CORPORATION 2004-1 TRUST (the "Issuer" or the "Purchaser"), a
Delaware statutory trust. Capitalized terms used but not defined herein shall
have the meaning ascribed to them in the Indenture or the Trust Agreement, each
as defined below.

                              W I T N E S S E T H :

            WHEREAS, the Purchaser is a statutory trust created under the
Delaware Statutory Trust Act by a trust agreement dated July 13, 2004 (the
"Trust Agreement"), as amended from time to time, between the Seller and
Wilmington Trust Company (in its capacity as trustee thereunder, the "Owner
Trustee");

            WHEREAS, Jim Walter Homes, Inc., and its affiliates, Dream Homes,
Inc., Dream Homes USA, Inc., Neatherlin Homes, Inc. and Crestline Homes, Inc.
(collectively, "Jim Walter Homes"), are in the business of supervising the
construction and selling partially-finished homes, generally on a deferred,
installment sale basis pursuant to a building or installment sale contract
between Jim Walter Homes and the purchaser of the home, and Jim Walter Homes
receives from each Obligor an Account Note and a related Mortgage. All Account
Notes together with the related Mortgages are collectively referred to herein as
the "Accounts;"

            WHEREAS, Walter Mortgage Company ("Walter Mortgage") is in the
business of financing homes the construction of which is supervised by Jim
Walter Homes, Inc. and its affiliates and purchasing and originating residential
mortgage loans ("Mortgage Loans," and together with the Accounts, the "Mortgage
Assets");

            WHEREAS, Jim Walter Homes and Walter Mortgage, as part of the
ordinary course of their businesses, assigned to Mid-State Homes, Inc.
("Mid-State"), without recourse, all of their right, title and interest in each
of the Mortgage Assets;

            WHEREAS, Mid-State, as part of the ordinary course of its business,
assigned to Mid-State Trust IX, a Delaware statutory trust ("Trust IX"), without
recourse, all of its right, title and interest in each of the Mortgage Assets,
including all of its interests in the related Account Note or Mortgage Note, as
applicable, and the related Mortgage;

            WHEREAS, Trust IX sold and assigned to the Seller, without recourse,
all of its right, title and interest in each of the Mortgage Assets, including
all of its interests in the related Account Note or Mortgage Note, as
applicable, and the related Mortgage;

            WHEREAS, the Seller, as holder of 100% ownership interest in the
Purchaser and in furtherance of the issuance of the Notes as described below,
desires to sell and assign all of its right, title and interest in and to the
Mortgage Assets listed on the Schedule of Mortgage Assets (the "Mortgage
Collateral") and the related Mortgage Asset Files, as defined below, to the
Purchaser and the Purchaser desires to purchase all the Seller's right, title
and interest in and to the Mortgage Collateral and the related Mortgage Asset
Files; and

            WHEREAS, the Issuer will issue 6.005% Asset-Backed Notes, Class A,
6.497% Asset-Backed Notes, Class M-1, 8.114% Asset-Backed Notes, Class M-2 and
8.900% Asset-Backed Notes, Class B (collectively, the "Notes"), secured by the
mortgage assets and other collateral, as more particularly set forth in the
Indenture, dated July 15, 2004 (the "Indenture"), between the Issuer and The
Bank of New York, as trustee (the "Indenture Trustee");

            NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereby do agree as follows:

            1. Purchase and Sale of Mortgage Collateral; Assignment of Rights
Under the Mortgage Asset Sale Agreement. Subject to the terms and conditions set
forth herein, the Seller in its capacity as such agrees to sell and assign, and
hereby does sell and assign, to the Purchaser all of its right, title and
interest in and to (i) the Mortgage Collateral, including all payments received
in respect of the Mortgage Assets comprising the Mortgage Collateral due after
the Cut-off Date and all payments in respect of such Mortgage Assets due prior
to the Cut-off Date but received after the Cut-off Date; (ii) all documents and
instruments related to the Mortgage Assets comprising the Mortgage Collateral as
specified in Section 3 hereof (the "Mortgage Asset Files") and (iii) the
Mortgage Asset Sale Agreement, dated July 15, 2004, among the Seller, Trust IX
and Mid-State.

            The Purchaser agrees to purchase, and does hereby purchase from the
Seller, in exchange for the Notes, all of the Seller's right, title and interest
in and to (i) the Mortgage Collateral, including all payments in respect of the
Mortgage Assets comprising the Mortgage Collateral due after the Cut-off Date
and all payments in respect of such Mortgage Assets due prior to the Cut-off
Date but received after the Cut-off Date; (ii) the Mortgage Asset Files and
(iii) the Mortgage Asset Sale Agreement. The Purchaser agrees, on behalf of the
Issuer, to cause the deposit, from the net proceeds of the sale of the Notes, of
an amount equal to all payments due after the Cut-off Date and received on or
before five Business Days prior to the Closing Date in respect of the Mortgage
Collateral into the Collection Account on the Closing Date. All payments
received in respect of the Mortgage Collateral subsequent to such date shall be
deposited by Mid-State Homes, Inc. (the "Servicer") in the Holding Account.

            2. Conditions to Sale and Purchase. The sale to the Purchaser of the
Mortgage Collateral and Mortgage Asset Files is subject to the following
conditions: (i) the Seller shall have delivered to the Purchaser those documents
set forth in subsections (i) through (v) of Section 3 hereof and (ii) the
Purchaser shall deliver to the Seller the net proceeds from the sale of the
Notes.

            3. Mortgage Asset Documents and Files. Except as otherwise disclosed
in writing at the time of delivery, each Mortgage Asset File with respect to
each Mortgage Asset shall consist of the following documents or instruments:

                  (i) in the case of each Account, the building or installment
            sale contract relating to such Account;

                  (ii) the Account Note or Mortgage Note, endorsed to the order
            of the Purchaser, without recourse;

                  (iii) the original of the recorded Mortgage and the originals
            of other documents, if any, securing such Account Note or Mortgage
            Note;

                  (iv) unrecorded assignments in recordable form to the
            Purchaser or its designee, together with originals or certified
            copies of any recorded assignment(s) from the originator of such
            Mortgage Asset to the Seller in respect of each such Mortgage Asset;

                  (v) the originals of any assumption agreement, written
            assurance or substitution agreement relating to any Mortgaged
            Property conveyed by an Obligor in respect of any such Mortgage
            Asset;

                  (vi) all insurance policies, including without limitation,
            fire and extended hazard insurance policies, related to the Mortgage
            Asset, naming the Issuer, the Indenture Trustee, the Servicer or the
            Subservicer as the loss payee of such policies; and

                  (vii) any and all other documents or instruments in the
            possession of the Seller relating to the Mortgage Asset, which
            evidence, or were created in connection with the origination of, or
            are necessary for the administration of the Mortgage Asset,
            including without limitation any credit reports, copies of deeds,
            completion certificates, title search reports and credit
            applications;

provided, however, that if the original copy of any document described in clause
(iii), (iv) or (v) has been retained by the recording office in which such
document was recorded or is otherwise unavailable, then a copy thereof certified
as true and correct by a duly authorized representative of such local recording
office or officer of the Servicer or Subservicer shall be included as part of
the documents for the related Mortgage Asset.

            4. Representations, Warranties and Covenants with Respect to the
Mortgage Assets.

            A. The Seller represents, warrants and covenants to the Purchaser as
of the date hereof and as of the Closing Date with respect to each Mortgage
Asset comprising the Mortgage Collateral that:

                  (i) the information set forth with respect to such Mortgage
            Asset in the Schedule of Mortgage Assets is true and correct as of
            the date as of which such information is given;

                  (ii) in the case of each Account, the related building or
            instalment sale contract, as the case may be, has been duly executed
            by the parties thereto and the duties to be performed thereunder
            prior to the date the first payment in connection with such contract
            is due have been performed;

                  (iii) the Mortgage Asset Documents have been duly executed by
            the related Obligor and the Mortgage has been duly executed by the
            Obligor and, to the extent required under local law for recordation
            or enforcement, properly acknowledged;

                  (iv) the Mortgage has been properly recorded as required by
            law. The Mortgage constitutes a valid first priority lien upon and
            secures title to the real property and improvements thereon
            described therein, which include a single family detached dwelling,
            and such Mortgage and the Account Note or Mortgage Note, as
            applicable, secured thereby are fully enforceable in accordance with
            their terms except as enforceability thereof may be limited by
            bankruptcy, insolvency, moratorium and other laws affecting
            creditors' rights generally and by general principles of equity
            (whether applied in a proceeding in law or at equity);

                  (v) Immediately prior to the transfer and assignment
            contemplated herein, the Seller was the sole owner and holder of the
            Mortgage Assets and has good and marketable title to each Mortgage
            Asset, free and clear of any and all liens, pledges, charges,
            claims, participation interests, mortgages, security interests or
            encumbrances or other interests of any nature and has full right and
            authority to sell and assign the same;

                  (vi) all costs, fees, intangible, documentary and recording
            taxes and expenses incurred in making, closing, and recording each
            Mortgage Asset have been paid;

                  (vii) no part of the Mortgaged Property purporting to secure
            any Account Note or Mortgage Note, as the case may be, has been, or
            shall have been, released from the lien or security interest of the
            Mortgage securing such Account Note or Mortgage Note, as applicable,
            except for Mortgaged Property securing any Account Note or Mortgage
            Note, as the case may be, which has been prepaid in full between the
            Cut-off Date and the Closing Date, the amount of such prepayment
            received more than five days prior to the Closing Date to be
            deposited in the Collection Account on or before the Closing Date;

                  (viii) the terms of the Account Note or Mortgage Note and the
            Mortgage have not been impaired, waived, altered or modified in any
            respect, except by written instruments, recorded in the applicable
            public recording office if necessary to maintain the lien priority
            of the Mortgage, and which have been delivered to the Purchaser or
            its designee; the substance of any such waiver, alteration or
            modification has been approved by the title insurer, to the extent
            required by the related policy, and is reflected on the Schedule of
            Mortgage Assets. No instrument of waiver, alteration or modification
            has been executed, and no Obligor has been released, in whole or in
            part, except, in connection with an assumption agreement approved by
            the title insurer, to the extent required by the policy, and which
            assumption agreement has been delivered to the Purchaser or its
            designee and the terms of which are reflected in the Schedule of
            Mortgage Assets;

                  (ix) Mid-State Homes, Inc., Mid-State Trust IX and the Seller
            acquired title to the Mortgage Assets in good faith, for value and
            without notice of any adverse claim;

                  (x) the Account Notes or Mortgage Notes, as the case may be,
            evidence obligations bearing a fixed Coupon Rate and fully
            amortizing level monthly payments. Each Account Note or Mortgage
            Note, as applicable, has an original term to maturity not in excess
            of 30 years;

                  (xi) as of the Closing Date, there is no right of rescission,
            setoff, defense or counterclaim to any Account Note or Mortgage
            Note, as applicable, or Mortgage, including both the obligation of
            the Obligor to pay the unpaid cash price or finance charge on such
            Account Notes or Mortgage Notes, as the case may be, and the defense
            of usury; furthermore, neither the operation of any of the terms of
            the Account Notes or Mortgage Notes, as applicable, and the Mortgage
            nor the exercise of any right thereunder will render the Account
            Notes or Mortgage Notes, as the case may be, or the Mortgage
            unenforceable, in whole or in part, or subject such Account Notes or
            Mortgage Notes, as applicable, or Mortgage to any right of
            rescission, setoff, counterclaim or defense, including the defense
            of usury, and no such right of rescission, setoff, counterclaim or
            defense has been asserted with respect thereto;

                  (xii) there are no mechanics' liens or claims for work, labor
            or material (and to the best of the Seller's knowledge, no rights or
            claims are outstanding that under law could give rise to such lien)
            affecting any Mortgaged Property which are or may be a lien prior
            to, or equal with, the lien of such Mortgage;

                  (xiii) any and all requirements of any federal, state or local
            law with respect to the origination and servicing of the Mortgage
            Assets including, without limitation, usury, truth in lending, real
            estate settlement procedures, consumer credit protection, equal
            credit opportunity, predatory and abusive lending laws or disclosure
            laws applicable to the Mortgage Assets have been complied with, and
            consummation of the transactions contemplated hereby will not
            violate any such laws;

                  (xiv) no Mortgage Asset is a "high cost" mortgage asset as
            defined under any federal, state or local laws applicable to such
            Mortgage Asset at the time of its origination, no Mortgage Asset
            originated in the State of Georgia is subject to the Georgia Fair
            Lending Act as in effect from October 1, 2002 through March 6, 2003
            and no Mortgage Asset is subject to the provisions of the Home
            Ownership and Equity Protection Act of 1994, as amended;

                  (xv) no Mortgage Asset (other than a Mortgage Asset that would
            be subject to the provisions of the Oakland, California or Los
            Angeles, California predatory and abusive lending laws or a Mortgage
            Asset that is a New Jersey covered purchase loan originated on or
            after November 27, 2003 through July 6, 2004) is a High Cost Loan or
            Covered Loan, as applicable (as such terms are defined in S&P's
            LEVELS(R) Glossary which is now Version 5.6 Revised, Appendix E);

                  (xvi) with respect to each Mortgage constituting a deed of
            trust, a trustee, duly qualified under applicable law to serve as
            such, is properly designated, serving and named in such Mortgage;

                  (xvii) there has been no fraud, dishonesty, misrepresentation
            or negligence on the part of the originator in connection with the
            origination of any Account Note or Mortgage Note, as applicable, or
            in connection with the sale of the related Mortgage Asset;

                  (xviii) to the best knowledge of the Seller, except Mortgaged
            Properties for which Insurance Proceeds are available, each
            Mortgaged Property is in good condition and free of damage which
            materially and adversely affects the value thereof;

                  (xix) to the best knowledge of the Seller, there is no
            proceeding pending for the total or partial condemnation and no
            eminent domain proceedings pending affecting any Mortgaged Property;

                  (xx) each Mortgage Asset obligates the Obligor thereunder to
            maintain a hazard insurance policy in an amount at least equal to
            the unpaid Principal Balance of the Mortgage Asset at the Obligor's
            cost and expense;

                  (xxi) no Mortgage Asset contains provisions pursuant to which
            monthly payments are (1) paid or partially paid with funds deposited
            in any separate account established by a Servicer, the Obligor, or
            anyone on behalf of the Obligor, (2) paid by any source other than
            the Obligor or (3) contains any other similar provisions which may
            constitute a "buydown" provision. No Mortgage Asset is a graduated
            payment Mortgage Asset and no Mortgage Asset has a shared
            appreciation or other contingent interest feature;

                  (xxii) the Seller used no selection procedures that identified
            the Mortgage Assets as being less desirable or valuable than other
            comparable Mortgage Assets acquired by the Seller;

                  (xxiii) the Mortgage Assets comply in all material respects to
            the description set forth under the heading "The Assets of the
            Trust" in the Issuer's Prospectus Supplement, dated July 12, 2004;

                  (xxiv) each Mortgage Asset, at the time of its origination,
            conformed to the applicable originator's underwriting guidelines;

                  (xxv) the related Mortgage Asset file contains each of the
            documents and instruments specified;

                  (xxvi) each Mortgage Asset is being serviced in accordance
            with the Servicer's servicing procedures;

                  (xxvii) other than the Mortgage Assets identified in the
            Issuer's Prospectus Supplement, dated July 12, 2004, as 31-60 days
            past due, there is no default, breach, violation or event of
            acceleration existing under the Account Notes or Mortgage Notes, as
            applicable, or Mortgage and no event which, with the passage of time
            or with notice and the expiration of any grace or cure period, would
            constitute a default, breach, violation or event of acceleration;

                  (xxviii) to the best knowledge of the Seller, there are no
            delinquent taxes or assessments affecting the related Mortgaged
            Property; and

                  (xxix) in the case of each Mortgage Loan, a lender's title
            policy or binder, or other assurance of title insurance, was issued
            at origination and each policy or binder is valid and remains in
            full force and effect.

            B. If any of the representations and warranties with respect to any
Mortgage Asset set forth in Section 4(A) hereof are found to be incorrect as of
the time made in any respect which materially and adversely affects the interest
of the Purchaser in a Mortgage Asset or if any Mortgage Asset Document is
defective in any material respect which materially and adversely affects the
interest of the Purchaser in a Mortgage Asset or if any document required to be
delivered to the Purchaser or its designee has not been delivered or if any
documents so delivered do not relate to a Mortgage Asset listed on the Schedule
of Mortgage Assets, the Seller shall notify the Purchaser immediately after
obtaining knowledge thereof and shall use its best efforts to eliminate or
otherwise cure the circumstances and conditions in respect of such omission or
defect or of which such representation or warranty was incorrect as of the time
made within 90 days of such notice to the Purchaser. If such breach or omission
or defect is not or cannot be cured within such 90-day period or, with the prior
written consent of a Responsible Officer of the Indenture Trustee if so
consented to under the Indenture, such longer period as specified in such
consent, the Seller shall either (i) purchase such Mortgage Asset from the
Purchaser for an amount equal to 100% of the then current Principal Balance of
the affected Mortgage Asset (a "Defective Mortgage Asset") or (ii) substitute
for such affected Mortgage Asset one or more Qualified Substitute Mortgage
Assets (in which case the removed Mortgage Asset shall become a "Deleted
Mortgage Asset"). The Seller shall promptly reimburse the Purchaser for any
reasonable expenses (including without limitation reasonable attorney's fees)
incurred by the Purchaser, in respect of any such breach, omission or defect. In
addition to the foregoing, in the case of a breach of the representation set
forth in Section 4A(xiii) or (xv) above, the Seller shall reimburse the
Purchaser for all costs or damages incurred by the Purchaser as a result of the
violation of such law (such amount, the "Reimbursement Amount"). Until the
Seller receives written notice to the contrary from the Purchaser, the
Reimbursement Amount shall be delivered to the Indenture Trustee for deposit
into the Collection Account within 10 days from the date the Purchaser or the
Seller was notified by the Indenture Trustee of the amount of such costs and
damages.

            As to any Deleted Mortgage Asset for which the Seller substitutes a
Qualified Substitute Mortgage Asset or Qualified Substitute Mortgage Assets, the
Seller shall effect such substitution by delivery to the Purchaser for such
Qualified Substitute Mortgage Asset or Qualified Substitute Mortgage Assets of
the Account Note or Mortgage Note, as applicable, and such other Mortgage Asset
Documents related thereto, with the Account Note or Mortgage Note, as
applicable, endorsed to the order of the Seller, without recourse, and endorsed
by the Seller in blank or to the order of the Purchaser, without recourse.
Monthly Payments due with respect to Qualified Substitute Mortgage Assets in the
month of substitution will be retained by the Seller. Available Funds will
include the Monthly Payment due on any Deleted Mortgage Asset in the month of
substitution, and the Seller shall deposit such amount in the Collection Account
if received by it subsequent to the month of substitution. The Seller shall be
entitled to receive all amounts due subsequent to the month of substitution in
respect of such Deleted Mortgage Asset. The Seller shall give or cause to be
given written notice to the Purchaser, the Indenture Trustee and the Rating
Agencies that such substitution has taken place. Upon such substitution, such
Qualified Substitute Mortgage Asset or Qualified Substitute Mortgage Assets
shall be subject to the terms of this Agreement in all respects, and the Seller
shall be deemed to have made with respect to such Qualified Substitute Mortgage
Asset or Qualified Substitute Mortgage Assets, as of the date of substitution,
the representations and warranties set forth in Section 4A hereof.

            For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Assets for one or more Deleted Mortgage Assets, the Seller
will determine the amount (if any) by which the aggregate outstanding Principal
Balance of all such Qualified Substitute Mortgage Assets as of the date of
substitution is less than the aggregate outstanding Principal Balance of all
such Deleted Mortgage Assets. On the date of such substitution, the Seller will
deposit from its own funds into the Collection Account an amount equal to the
amount of such shortfall, if any, without reimbursement therefor.

            It is understood and agreed that the obligations of the Seller set
forth in this Section 4B to cure, substitute for or deposit funds in the
Collection Account in connection with a Mortgage Asset constitute the sole
remedies available to the Purchaser respecting a breach of the representations
and warranties set forth in Section 4A or defect or omission.

            5. Representations, Warranties and Covenants of the Seller.

            The Seller hereby represents and warrants to the Purchaser that, as
of the Closing Date:

                  (i) The Seller has been duly incorporated and is validly
            existing as a Delaware corporation in good standing under the laws
            of the State of Delaware with full corporate power and authority to
            own, lease, operate and sell its properties and to conduct its
            business as presently conducted by it.

                  (ii) The Seller has the full power and authority and legal
            right to own the Mortgage Collateral and the related Mortgage Asset
            Files and to transfer and convey the Mortgage Collateral and the
            related Mortgage Asset Files to the Purchaser and has the full power
            and authority and legal right to execute and deliver, engage in the
            transactions contemplated by, and perform and observe the terms and
            conditions of, this Agreement.

                  (iii) This Agreement has been duly and validly authorized,
            executed and delivered by the Seller, all requisite action has been
            taken, and this Agreement constitutes the legal, valid and binding
            obligation of the Seller, enforceable in accordance with its terms,
            except as enforcement may be limited by bankruptcy, insolvency or
            similar laws affecting the enforcement of creditors' rights
            generally.

                  (iv) No consent, approval, authorization or order of, or
            filing with, any court or governmental agency or body is required
            for the consummation by the Seller of the sale contemplated by this
            Agreement except as required under the Uniform Commercial Code or in
            respect of recordings under real estate recording statutes and
            except as has been obtained and are in effect.

                  (v) Neither the sale of the Mortgage Collateral to the
            Purchaser nor the execution, delivery or performance of this
            Agreement by the Seller conflicts or will conflict with or results
            or will result in a breach of or constitutes or will constitute a
            default under (i) any term or provision of the charter or by-laws of
            the Seller, (ii) any term or provision of any agreement, contract,
            instrument or indenture of any nature whatsoever, to which the
            Seller or any of its subsidiaries is a party or is bound or (iii)
            any law, rule, regulation, order, judgment, writ, injunction or
            decree of any court or governmental authority having jurisdiction
            over the Seller or its subsidiaries, or results or will result in
            the creation or imposition of any lien, charge or encumbrance upon
            the Mortgage Collateral or any documents or instrument evidencing or
            securing the Mortgage Collateral, except as contemplated by the
            Indenture.

                  (vi) The Seller has duly and validly sold and assigned its
            entire right, title and interest in and to the Mortgage Collateral
            and the related Mortgage Asset Files to the Purchaser, free and
            clear of any lien, encumbrance or any other interests of others
            (including without limitation any claim of any creditor of the
            Seller or any affiliate of the Seller).

                  (vii) There are no actions, suits or proceedings pending or
            threatened against or affecting the Seller which if adversely
            determined, individually or in the aggregate, would materially
            adversely affect the Seller's obligations under this Agreement.

            6. Payment for the Mortgage Collateral. The Seller acknowledges
receipt of payment in full for the Mortgage Collateral and Mortgage Asset Files
and the Purchaser and the Seller agree that subsequent to the date hereof, no
modification or adjustment shall be made in respect of such purchase price.

            7. Indemnity. The Seller agrees to indemnify, reimburse and hold the
Purchaser and its successors, assigns, trustees, employees, agents and servants
(hereinafter in this Section 7 referred to individually as "Indemnitee," and
collectively as "Indemnities") harmless from any and all claims, demands,
actions, suits, judgments and any and all related costs and expenses (including
reasonable attorneys' fees and expenses) (for the purposes of this Section 7 the
foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnities in any way
relating to or arising out of the enforcement of any of the terms of this
Agreement, or the preservation of any rights hereunder, or in any way relating
to or arising out of the origination, ownership, purchase, repossession, sale or
other disposition of any of the Mortgage Assets prior to the Closing Date, the
breach of any representation or warranty herein, the violation of the laws of
any state or other governmental body or unit by the Seller, or any tort or
contract claim accruing prior to the Closing Date (including, without
limitation, the claims or off-sets of third parties based on facts that cause a
breach of a representation or warranty herein); provided that no Indemnitee
shall be indemnified pursuant to this Section 7 for losses, damages or
liabilities to the extent caused by the negligence or misconduct of such
Indemnitee; provided further that, for the avoidance of doubt, this Section 7
shall not indemnify against the payment performance of the Mortgage Assets or
the market value of the Mortgage Assets or related Mortgaged Properties.

            The Seller agrees that upon written notice by any Indemnitee of the
assertion of such a claim, demand, action, judgment or suit, the Seller shall
assume full responsibility for the defense thereof. Each Indemnitee agrees to
use its best efforts to promptly notify the Seller of any such assertion of
which such Indemnitee has knowledge.

            8. Notices. All demands, notices and communications hereunder shall
be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
telex or telegraph and confirmed by a similar mailed writing, if to the
Purchaser, addressed to the Purchaser, at such address as the Purchaser may
designate in writing to the Seller; if to the Seller, addressed to the Seller at
such address as the Seller may designate in writing to the Purchaser.

            Notices required hereunder shall in addition be sent to Moody's
Investors Service, Inc. at its address at 99 Church Street, New York, New York
10007, and to Standard & Poor's, a division of The McGraw-Hill Companies, Inc.,
at its address at 55 Water Street, New York, New York 10041.

            9. Severability of Provisions. Any part, provision, representation
or warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage
Asset shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof.

            10. Further Assurances. (i) The Seller agrees to execute and deliver
such instruments and take such actions as the Purchaser may, from time to time,
reasonably request in order to convey the Mortgage Assets and the Mortgage Asset
Files to the Purchaser and to effectuate the purpose and to carry out the terms
of this Agreement.

                  (ii) The Seller and the Purchaser intend that, as a result of
            the consummation of the transaction contemplated by this Agreement,
            the Seller will have transferred all of its right, title and
            interest in the Mortgage Collateral and the Mortgage Asset Files to
            the Purchaser and that this transaction be a true sale and agree
            that their actions have been and will be consistent with this
            characterization of the transaction.

                  (iii) Notwithstanding subsection (ii) hereof, solely in the
            event that a court of appropriate jurisdiction were to
            recharacterize the transaction as a secured loan, the Seller hereby
            grants a security interest in and pledges, assigns and transfers to
            the Purchaser as of the date hereof (a) all of the right, title and
            interest of the Seller in and to the Mortgage Collateral and the
            related Mortgage Asset Files, (b) all of the right, title and
            interest of the Seller in and to the Mortgage Asset Purchase
            Agreement, (c) all cash, instruments or other property owned by the
            Seller and relating to the Mortgage Collateral held or required to
            be deposited on the Closing Date or thereafter in the Holding
            Account or the Collection Account, including all investments made
            with such funds and all income from such investments and (d) all
            proceeds of the foregoing, including, without limitation, all new
            Mortgage Assets originated in connection with the sale of property
            acquired in respect of the Mortgage Collateral, all insurance
            proceeds and condemnation awards. The Seller agrees to execute any
            financing statements (including a UCC-1 financing statement naming
            the Seller as seller/debtor and the Purchaser as purchaser/secured
            party) or other documentation necessary to create, maintain or
            perfect this security interest in the Mortgage Collateral, the
            Mortgage Asset Files and the Mortgage Asset Sale Agreement. The
            Seller and the Purchaser acknowledge that in the event a court were
            to recharacterize the transaction as a secured loan, the Indenture
            Trustee will act as agent of the Purchaser pursuant to the terms of
            that certain letter between the Purchaser and the Indenture Trustee
            attached hereto as Exhibit A.

            11. Survival. The Seller agrees that the representations, warranties
and agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Purchaser,
notwithstanding any investigation heretofore or hereafter made by the Purchaser
or on the Purchaser's behalf, and that the representations, warranties and
agreements made by the Seller herein or in any such certificate or other
instrument shall survive the delivery of and payment for the Mortgage Collateral
and the related Mortgage Asset Files.

            12. Parties. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.

            13. Entire Agreement. This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings relating to the
subject matter hereof. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.

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

            15. Successors and Assigns. All representations, warranties,
covenants and agreements contained herein shall be binding upon, and inure to
the benefit of the Purchaser and the Indenture Trustee and their respective
successors and assigns and the Seller and its successors and assigns, all as
provided herein.

            16. Headings. The headings of the various Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.

            17. Governing Law. This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Florida,
including all matters of construction, validity and performance.

            18. Liability. It is expressly understood and agreed by the parties
hereto that (a) this Agreement is executed and delivered on behalf of the
Purchaser by Wilmington Trust Company, not individually or personally but solely
as owner trustee under the applicable trust agreements, in the exercise of the
powers and authority conferred and vested in it as the owner trustee, (b) each
of the representations, undertakings and agreements herein made on the part of
the Purchaser is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose of binding only the Purchaser, and (c) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Purchaser or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Purchaser under this Agreement.

            19. Non-Petition. The Seller hereby agrees not to petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequester or other similar official of
the Issuer or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Issuer.

<PAGE>

            IN WITNESS WHEREOF, each party has caused this Agreement to be
signed and executed by its proper officer thereunder duly authorized, as of the
day and year first written above.

                                         SELLER:

                                         MID-STATE CAPITAL CORPORATION

                                         By: -----------------------------------
                                             Name:    Miles C. Dearden, III
                                             Title:   Vice President

                                         PURCHASER:

                                         MID-STATE CAPITAL CORPORATION 2004-1
                                         TRUST

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

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

<PAGE>

                                    EXHIBIT A

                      [Letterhead of the Indenture Trustee]

                                                  July 15, 2004

Mid-State Capital Corporation 2004-1 Trust
c/o Wilmington Trust Company,
  as Owner Trustee
1100 North Market Street
Wilmington, DE 19890
Attention:  Corporate Trust Administration

      Re:   Indenture dated July 15, 2004, between The Bank of New York, and
            Mid-State Capital Corporation 2004-1 Trust, as Issuer relating to
            Class A, Class M-1, Class M-2 and Class B Notes
            -----------------------------------------------------------------

Ladies and Gentlemen:

            We are writing in connection with the issuance of your asset-backed
notes pursuant to the Indenture described above. Capitalized terms used in this
letter shall have the meanings assigned to them in the Indenture.

            This will confirm that in the event that the Purchase and Sale
Agreement is deemed to transfer to the Issuer a security interest in any portion
of the Trust Estate, we will act as the agent of the Issuer solely for purposes
of perfecting its security interest in any such portion of the Trust Estate in
our possession during the term of the Indenture, subject to the Grant made by
the Issuer in the Indenture and in acting as such agent, we will have all of the
protections given to us as Indenture Trustee under the Indenture.

                                         Very truly yours,

                                         THE BANK OF NEW YORK
                                         as Indenture Trustee

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]