Document:

<PAGE>

                                                                    EXHIBIT 10.8

                                                         DRY/CW/CONDUIT PROGRAMS
                                                                         3/04/94

                       MORTGAGE LOAN CUSTODIAL AGREEMENT
                       ---------------------------------

PURCHASER:     PAINE WEBBER REAL ESTATE SECURITIES INC.

ADDRESS:       1285 AVENUE OF THE AMERICAS
               NEW YORK, NEW YORK 10019
               ATTENTION: AL MARRAPODI

CUSTODIAN:     CHEMICAL BANK

ADDRESS:       55 WATER STREET
               NEW YORK, NEW YORK 10041
               ATTENTION:

SELLER:        CRESCENT BANK AND TRUST COMPANY

ADDRESS:       SOUTH TERRACES, SUITE 285
               115 PERIMETER CENTERPLACE
               ATLANTA, GA 30346

DATE:          MAY 23, 1994
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<S>                                                                                                  <C>
Section 1.     Definitions.........................................................................   1

Section 2.     Delivery of Documents by Seller.....................................................   9

Section 3.     Custodian as Custodian for, and Bailee of, Purchaser, Assignee and Warehouse
               Lender..............................................................................  10

Section 4.     Certification by Custodian; Delivery of Documents...................................  11

Section 5.     Funding by the Takeout Investor.....................................................  14

Section 6.     Default.............................................................................  15

Section 7.     Access to Documents.................................................................  15

Section 8.     Custodian's Fees and Expenses; Successor Custodian; Standard of Care................  15

Section 9.     Assignment by Purchaser.............................................................  17

Section 10.    Insurance...........................................................................  17

Section 11.    Representations, Warranties and Covenants...........................................  18

Section 12.    No Adverse Interests................................................................  19

Section 13.    Amendments..........................................................................  19

Section 14.    Execution in Counterparts...........................................................  19

Section 15.    Agreement for Exclusive Benefit of Parties; Assignment..............................  20

Section 16.    Effect of Invalidity of Provisions..................................................  20

Section 17.    Governing Law.......................................................................  20

Section 18.    Consent to Service..................................................................  20

Section 19.    Notices.............................................................................  20

Section 20.    Certification.......................................................................  20

Section 21.    Construction........................................................................  20
</TABLE>

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<PAGE>

Exhibit A      Dry Submission Package
Exhibit B-1    Cash Window Submission Package
Exhibit B-2    FHLMC Document List
Exhibit B-3    FNMA Document List
Exhibit B-4    FNMA Bailee Letter
Exhibit C-1    Conduit Submission Package
Exhibit C-2    Conduit Bailee Letter
Exhibit D      Conversion Submission Packages
Exhibit E      Request for Certification
Exhibit F      Document Codes
Exhibit G-1    Warehouse Lender's Release
Exhibit G-2    Warehouse Lender's Wire Instructions
Exhibit H-1    Seller's Release
Exhibit H-2    Seller's Wire Instructions
Exhibit I-1    Purchaser's Wire Instructions to Seller
Exhibit I-2    Purchaser's Wire Instructions to Custodian
Exhibit I-3    Purchaser's Delivery Instructions to Custodian
Exhibit J      Notice by Assignee to Custodian of Purchaser's Default
Exhibit K      Limited Power of Attorney
Exhibit L      Unidentified Mortgage Loans List
Exhibit M      Unidentified/Suspension Mortgage Loan Directive
Exhibit N      Form of Delivery Instructions
Exhibit O      Purchaser's Instructions to Custodian to Destroy Specified Files
Exhibit P      List of Primary Mortgage Insurer
Schedule A     List of Conduits

                                      ii
<PAGE>

                       MORTGAGE LOAN CUSTODIAL AGREEMENT

          THIS Mortgage Loan Custodial Agreement ("Agreement"), dated as of the
date set forth on the cover page hereof, among PAINE WEBBER REAL ESTATE
SECURITIES INC. ("Purchaser"), CHEMICAL BANK ("Custodian") and the SELLER whose
name is set forth on the cover page hereof ("Seller").

                             PRELIMINARY STATEMENT

          Purchaser has agreed to purchase, from time to time, at its sole
election from Seller, certain residential first mortgage loans pursuant to the
terms and conditions of one or more Purchase Agreements between Purchaser and
Seller relating to Dry Transactions, Cash Window Transactions or Conduit
Transactions. Seller is obligated to service the Mortgage Loans pursuant to the
terms and conditions of the Purchase Agreements. Purchaser desires to have
Custodian take possession of the Mortgage Notes evidencing the Mortgage Loans,
along with certain other documents specified herein, as the custodian for and
bailee of Purchaser or Assignee in accordance with the terms and conditions
hereof.

          The parties hereto agree as follows:

          Section 1.  Definitions.
                      -----------

          As used in this Agreement, the following terms shall have the
          following meanings:

               "Agency": FHLMC or FNMA, as applicable.

               "Applicable Agency Documents": The documents listed on Exhibit B-
          2 or Exhibit B-3, as applicable.

               "Applicable Guide":  With respect to each Takeout Investor the
          applicable guide published by such Takeout Investor setting forth the
          requirements each Mortgage Loan needs to satisfy in order to be
          eligible for purchase by such Takeout Investor, as such guide may be
          amended or supplemented from time to time.

               "Assignee":  Chemical Bank, as agent for certain beneficiaries
          pursuant to certain Repurchase Transaction Tri-Party Custody
          Agreements.

               "Assignment of Mortgage":  An assignment of the Mortgage, notice
          of transfer or equivalent instrument sufficient under the laws of the
          jurisdiction wherein the related Mortgaged Property is located to
          reflect of record the sale of a Mortgage Loan.

                                       1
<PAGE>

               "Bailee Letter":  A FNMA Bailee Letter or a Conduit Bailee
          Letter, as applicable.

               "Business Day": Any day other than (a) a Saturday, Sunday or
          other day on which banks located in The City of New York, New York are
          authorized or obligated by law or executive order to be closed, or (b)
          any day on which Paine Webber Real Estate Securities Inc. is closed
          for business, provided that notice thereof shall have been given not
          less than sevens calendar days prior to such day.

               "Cash Window Submission Package":  The documents listed on
          Exhibit B-1, which shall be delivered by Seller to Custodian in
          connection with each Cash Window Transaction.

               "Cash Window Transaction":  A transaction initiated by
          Purchaser's delivery of a Request for Certification which identifies
          FNMA or FHLMC as the Takeout Investor but does not include a
          Conversion Code.

               "Certification":  With respect to a Mortgage Loan, the full
          performance by Custodian of the procedures set forth in Sections 4(a)
          and 4(b).

               "Certification Code":  A Mortgage Loan Absentee Code, a Mortgage
          Loan Approval Code or a Mortgage Loan Suspension Code.

               "Certification Report":  A Request for Certification to which
          Custodian has added its Certification Codes and, when a Certification
          Code indicates suspension, applicable Exception Codes, and which is
          transmitted by Custodian to Purchaser in an appropriate data layout
          provided by Purchaser.

               "Commitment":  A commitment executed by Takeout Investor and
          Seller evidencing Takeout Investor's agreement to purchase one or more
          Mortgage Loans from Seller and Seller's agreement to sell one or more
          Mortgage Loans to an investor in a forward trade by the applicable
          Commitment Expiration Date.

               "Commitment Expiration Date": With respect to any Commitment, the
          expiration date thereof.

               "Conduit": Any of the Entities listed on Schedule A, as amended
          or supplemented from time to time.

               "Conduit Bailee Letter": The master bailee letter, in the form of
          Exhibit C-2, for use by Custodian in connection with the delivery of a

                                       2
<PAGE>

          Conduit Submission Package, provided, however, for the purposes of
          delivering the related Conduit Submission Package, excluding (i) a
          copy of the Commitment, (ii) the Warehouse Lender's Release or
          Seller's Release, as applicable, and (iii) the original Assignment of
          Mortgage, in blank, to a Conduit.

               "Conduit Submission Package":  The documents listed on Exhibit C-
          1, which shall be delivered by Seller to Custodian in connection with
          each Conduit Transaction.

               "Conduit Transaction":  A transaction initiated by Purchaser's
          delivery of a Request for Certification which identifies a Conduit as
          the Takeout Investor but does not include a Conversion Code.

               "Confirmation":  A confirmation confirming a trade between Seller
          and Takeout Investor.

               "Conversion Code":  With respect to a Mortgage Loan, the
          conversion code set forth in Part II of Exhibit F, entered by
          Purchaser, along with the Program Code, in the "PROG CODE" column of
          the related Request for Certification indicating that (i) such
          Mortgage Loan was previously acquired by Purchaser in a Dry
          Transaction and (ii) a Conversion Submission Package shall be received
          by Custodian on the applicable Delivery Date.

               "Conversion Submission Package":  One of the sets of documents
          listed on Exhibit D, which shall be delivered by Seller to Custodian
          in connection with each Conversion Transaction.

               "Conversion Transaction":  With respect to a Mortgage Loan, a
          transaction initiated by Purchaser's delivery to Custodian of a
          Request for Certification containing a Conversion Code. A Conversion
          Transaction shall always be preceded by a Dry Transaction.

               "Custodian":  Chemical Bank and its permitted successors
          hereunder.

               "Delivery Date":  With respect to a Mortgage Loan, the date set
          forth on the related Request for Certification in the "DELIVERY DATE"
          column, which shall be the Business Day on which Seller desires the
          applicable portion of the related Submission Package be sent by
                                                                  ----
          Custodian to the Takeout Investor, i.e., one Business Day prior to the
          Business Day on which Seller desires the applicable portion of the
          Submission Package to be received by the Takeout Investor.
                                   --------

                                       3
<PAGE>

               "Delivery Directive":  With respect to each Mortgage Loan either
          appearing on an Unidentified Mortgage Loan List or marked by Custodian
          with a Suspension Code on a Certification Report, the delivery
          directive, set forth in Part IV of Exhibit F, used by Purchaser in a
          notice in the form of Exhibit M, to direct Custodian to deliver the
          related Submission Package in accordance with the Delivery
          Instructions.

               "Delivery Instructions": With respect to a Mortgage Loan,
          instructions prepared by Seller, in the form of Exhibit N indicating
          the address for the delivery by Custodian of the applicable portion of
          the related Submission Package.

               "Dry Submission Package":  The documents listed on Exhibit A,
          which shall be delivered by Seller to Custodian in connection with
          each Dry Transaction.

               "Dry Transaction":  A transaction initiated by Purchaser's
          delivery to Custodian of a Request for Certification, which does not
          identify a Takeout Investor, and which does not include a Conversion
          Code.

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

               "Exception Code":  Each of the exception codes set forth in Part
          V of Exhibit F, placed by Custodian on a Certification Report
          indicating missing documents, incomplete documents and deficiencies in
          documents reviewed by Custodian.

               "Expected Delivery Date":  The date identified on a Request for
          Certification as the "Expected Delivery Date of Mortgage File", which
          shall be the date on which Seller has informed Purchaser that a
          Submission Package will be received by Custodian from Seller.

               "FHLMC":  The Federal Home Loan Mortgage Corporation and any
          successor thereto.

               "FHLMC Commitment":  A commitment executed by FHLMC and Seller
          evidencing FHLMC's agreement to purchase one or more Mortgage Loans
          from Seller and Seller's agreement to sell one or more Mortgage Loans
          to FHLMC by the applicable Commitment Expiration Date under the
          Applicable Guide.

                                       4
<PAGE>

               "FNMA":  The Federal National Mortgage Association and any
          successor thereto.

               "FNMA Bailee Letter":  The master bailee letter, in the form of
          Exhibit B-4, for use by Custodian in connection with the delivery to
          FNMA of the Cash Window Submission Package, excluding (i) the original
          Assignment of Mortgage, in blank, (ii) the Warehouse Lender's Release
          or Seller's Release, as applicable, (iii) all modification agreements
          relating to a Mortgage, (iv) the Delivery Instructions and (v) a copy
          of the Commitment.

               "FNMA Commitment":  A commitment executed by FNMA and Seller,
          evidencing FNMA's agreement to purchase one or more Mortgage Loans
          from Seller and Seller's agreement to sell one or more Mortgage Loans
          to FNMA by the applicable Commitment Expiration Date under the
          Applicable Guide.

               "Hold Directive":  With respect to a Mortgage Loan either
          appearing on an Unidentified Mortgage Loan List or marked by Custodian
          with a Suspension Code on a Certification Report, the hold directive,
          set forth in Part IV of Exhibit F, used by Purchaser in a notice in
          the form of Exhibit M to direct Custodian to continue to hold the
          related Submission Package.

               "HUD":  United States Department of Housing and Urban Development
          and any successor thereto.

               "Limited Power of Attorney":  A limited power of attorney, in the
          form of Exhibit K, executed by Seller and delivered to Custodian,
          authorizing Custodian to prepare Mortgage Note endorsements in the
          form indicated thereon.

               "Loan Identification Data":  The applicable information regarding
          a Mortgage Loan, set forth on a Request for Certification, which shall
          include Purchaser's reference number, the name of Purchaser's
          applicable program, the Mortgage Loan number, the last name of the
          Mortgagor, the face amount of the Mortgage Note, the number of months
          to maturity of the Mortgage Loan, and the interest rate borne by the
          Mortgage Note and, solely with respect to Cash Window Transactions,
          Conduit Transactions and Conversion Transactions, the name of the
          Takeout Investor, the sale price of the Mortgage Loan to the Takeout
          Investor, the commitment number, the Commitment Expiration Date, the
          Delivery Date, the Release Payment, and the name of the Warehouse
          Lender.

               "Losses":  Any and all losses, claims, damages, liabilities or
          expenses (including reasonable attorney's fees) incurred by any person

                                       5
<PAGE>

          specified; provided however that "Losses" shall not include losses,
          claims, damages, liabilities or expenses which would have been avoided
          had such person taken reasonable actions to mitigate such losses,
          claims, damages, liabilities or expenses.

               "Mortgage":  A mortgage, deed of trust or other security
          instrument creating a first lien on an estate in fee simple in real
          property securing a Mortgage Note.

               "Mortgage Loan":  A one-to-four family residential mortgage loan
          that is subject to this Agreement.

               "Mortgage Loan Absentee Code":  The mortgage loan absentee code,
          set forth in Part III of Exhibit F, placed by Custodian on a
          Certification Report to notify Purchaser that a Submission Package
          related to a Mortgage Loan listed on a Request for Certification is
          not in Custodian's possession.

               "Mortgage Loan Approval Code":  The mortgage loan approval code,
          set forth in Part III of Exhibit F, placed by Custodian on a
          Certification Report to notify Purchaser that Custodian's review of
          the applicable items in a Submission Package is complete and that such
          items satisfy all the applicable requirements set forth in Section
          4(a) and Section 4(b).

               "Mortgage Loan Suspension Code": The mortgage loan suspension
          code, set forth in Part III of Exhibit F, placed by Custodian on a
          Certification Report to notify Purchaser that Custodian's review of
          the Submission Package has determined that one or more of the
          documents in the Submission Package are missing, incomplete or
          incorrect and/or do not satisfy one or more of the requirements set
          forth in Section 4(a) or Section 4(b).

               "Mortgage Note":  The note or other evidence of the indebtedness
          of a Mortgagor secured by a Mortgage.

               "Mortgaged Property":  The property subject to the lien of the
          Mortgage securing a Mortgage Note.

               "Mortgagor":  The obligor on a Mortgage Note.

               "Notice of Bailment":  A notice, in the form of Schedule A to
          Exhibit B-4 or C-2, as applicable, delivered by Custodian to Takeout
          Investor in connection with each delivery to Takeout Investor of the
          applicable portion of each Submission Package.

                                       6
<PAGE>

               "Payee Number":  The code used by FNMA to indicate the wire
          transfer instructions that will be used by FNMA to purchase a Mortgage
          Loan.

               "Primary Mortgage Insurer":  Any one of the Entities set forth on
          Exhibit P, as such Exhibit may be amended or supplemented from time to
          time.

               "Program Code":  Each of the codes, set forth in Part I of
          Exhibit F, placed by the Purchaser in the "PROG CODE" column of a
          Request for Certification indicating that the Mortgage Loan is being
          offered by Seller to Purchaser in a Dry Transaction, Cash Window
          Transaction or a Conduit Transaction, as applicable.

               "Purchase Agreement":  Each Mortgage Loan Purchase Agreement,
          dated as of the date set forth on the cover page thereof, between
          Seller and Purchaser, as each is amended from time to time providing
          the terms of Dry Transactions, Cash Window Transactions, Conduit
          Transactions or Conversion Transactions.

               "Purchase Date":  With respect to a Mortgage Loan, the date on
          which Purchaser purchases such Mortgage Loan from Seller.

               "Purchaser":  Paine Webber Real Estate Securities Inc. and its
          successors.

               "Purchaser's Wire Instructions to Seller":  The wire
          instructions, set forth on Exhibit I-1, specifying the account which
          shall be used for the payment of all amounts due and payable by Seller
          to Purchaser hereunder.

               "Purchaser's Payment":  The amount set forth on the Request for
          Certification in the "RELEASE PAYMENT" column.

               "Purchaser's Wire Instructions to Custodian":  Wire Instructions
          delivered by Purchaser to Custodian, in the form of Exhibit I-2,
          executed by Purchaser, receipt of which has been acknowledged by
          Custodian specifying the wire address where all funds received in
          accordance with Purchaser's Wire Instructions to Seller shall be
          transferred by Custodian.

               "Release Payment":  The funds referred to in a Warehouse Lender's
          Release or Seller's Release, as applicable.

               "Request for, Certification":  A report detailing Loan
          Identification Data supplied by Seller to Purchaser, transmitted by
          Purchaser to Custodian either via facsimile in the form of Exhibit E
          or

                                       7
<PAGE>

          transmitted electronically in an appropriate data layout, regarding
          all Mortgage Loans being offered for sale by Seller to Purchaser on
          the Submission Package Delivery Date.

               "Return Directive":  With respect to each Mortgage Loan either
          appearing on an Unidentified Mortgage Loan List or marked by Custodian
          with a Suspension Code on a Certification Report, the return
          directive, set forth in Part IV of Exhibit F, used by Purchaser in a
          notice in the form of Exhibit M, to direct Custodian to deliver (i)
          the related Submission Package in accordance with the terms of the
          applicable bailee letter pursuant to which such Submission Package was
          delivered to Custodian or (ii) the related Submission Package to the
          Entity who sent such Submission Package to Custodian if no bailee
          letter was included in the Submission Package, as applicable.

               "Seller":  The Seller whose name is set forth on the cover page
          hereof, and its permitted successors hereunder.

               "Seller's Release":  A letter, in the form of Exhibit H-1,
          delivered by Seller when no Warehouse Lender has an interest in a
          Mortgage Loan, conditionally releasing all of Seller's right, title
          and interest in such Mortgage Loan upon receipt of payment by Seller.

               "Seller's Wire Instructions":  The wire instructions, set forth
          in a letter in the form of Exhibit H-2, to be used for the payment of
          funds to Seller when no Warehouse Lender has an interest in the
          Mortgage Loans to which such payment relates.

               "Submission Package":  With respect to each Mortgage Loan, a Dry
          Submission Package, a Cash Window Submission Package, a Conduit
          Submission Package or a Conversion Submission Package, as applicable.

               "Successor Servicer":  An entity designated by Purchaser, in
          conformity with the Purchase Agreement, to replace Seller as servicer
          for Purchaser, and, with respect to Cash Window Transactions, as
          seller/servicer of the Mortgage Loans for the Agency.

               "Takeout Investor":  An Agency or a Conduit, as applicable.

               "Underwriter":  Any party, including but not limited to a
          mortgage loan pool insurer, who underwrites a Mortgage Loan prior to
          its purchase by Purchaser.

               "Underwriter's Form":  A FNMA/FHLMC Form 1008/1077, HUD 92900WS,
          HUD92900.4, VA Form 26-6393, VA Form 26-1866, a

                                       8
<PAGE>

          mortgage loan pool insurance certificate, or an underwriting approval
          form from a Primary Mortgage Insurer, as applicable, completed by an
          Underwriter with respect to a Mortgage Loan, indicating that such
          Mortgage Loan complies with its underwriting requirements.

               "Unidentified/Suspension Mortgage Loan Directive":  A Delivery
          Directive, a Hold Directive or a Return Directive, as applicable.

               "Unidentified Mortgage Loans List":  A list of Mortgage Loans for
          which Custodian has received the related Submission Packages from
          Seller but which have not been identified by Purchaser in a Request
          for Certification. Such list shall include, with respect to each
          Mortgage Loan, the information set forth in Exhibit L.

               "Warehouse Lender":  Any lender providing financing to Seller in
          any fractional amount for the purpose of originating or purchasing
          Mortgage Loans, which lender has a security interest in such Mortgage
          Loans as collateral for the obligations of Seller to such lender. In
          all Dry Transactions and Conversion Transactions, Purchaser shall be
          the Warehouse Lender.

               "Warehouse Lender's Release": A letter, in the form of Exhibit
          G-1, from a Warehouse Lender to Purchaser, conditionally releasing all
          of Warehouse Lender's right, title and interest in certain Mortgage
          Loans identified therein upon receipt of payment by Warehouse Lender.

               "Warehouse Lender's Wire Instructions":  The wire instructions,
          set forth in a letter in the form of Exhibit G-2, from a Warehouse
          Lender to Purchaser, setting forth wire instructions for all amounts
          due and payable to such Warehouse Lender.

          Section 2.  Delivery of Documents by Seller.
                      -------------------------------

          (a)  Seller may, before the first purchase by Purchaser under a
Purchase Agreement of a Mortgage Loan, deliver to Custodian a Limited Power of
Attorney, provided, however, Custodian shall have no responsibility or
obligation to act under such Limited Power of Attorney.

          (b)  If Seller desires to engage in Cash Window Transactions:

               (1)  relating to a FHLMC Commitment, Seller shall deliver to
     Purchaser a copy of (i) FHLMC Form 1035 (Custodial Agreement), if
     applicable, duly executed by the related custodian and FHLMC, and (ii)
     FHLMC Form 3 (Summary Agreement) or such other equivalent agreement as is
     acceptable to Purchaser, duly executed by Seller and FHLMC; or

                                       9
<PAGE>

               (2)  relating to a FNMA Commitment, Seller shall deliver to
          Purchaser a copy of (i) Fannie Mae Form 2003 (Custodial Agreement) if
          applicable, duly executed by the related custodian and FNMA, (ii)
          Fannie Mae Mortgage Selling and Servicing Contract, and Fannie Mae
          Form 482 (Designation of Payee - Wire Transfer Information).

          (b)  With respect to each Mortgage Loan being offered by Seller for
sale to Purchaser pursuant to (i) a Dry Transaction, (ii) a Cash Window
Transaction, (iii) a Conduit Transaction or (iv) a Conversion Transaction,
Seller shall deliver to Custodian a Submission Package on the Expected Delivery
Date. In no event shall Seller deliver a Submission Package to Custodian later
than 12:00 Noon New York City time on the related Delivery Date.

          Section 3.  Custodian as Custodian for, and Bailee of, Purchaser,
                      -----------------------------------------------------
Assignee and Warehouse Lender.
-----------------------------

          (a)  With respect to each Mortgage Note, each Assignment of Mortgage
and all other documents constituting each Submission Package that are delivered
to Custodian or that at any time come into Custodian's possession, Custodian,
subject to the provisions of paragraphs (b) and (c) of this Section 3, shall act
solely in the capacity of custodian for, and bailee of, Purchaser. Custodian
shall, subject to the provisions of paragraphs (b) and (c) of this Section 3 and
except as otherwise required by Section 4, hold all documents constituting a
Submission Package received by it for the exclusive use and benefit of
Purchaser, and shall make disposition thereof only in accordance with this
Agreement. Custodian shall segregate and maintain continuous custody of all
documents constituting a Submission Package received by it in secure and
fireproof facilities in accordance with customary standards for such custody and
shall mark its books and records to indicate that the Submission Package is
being held for Purchaser.

          (b)  Purchaser hereby notifies Custodian that each Mortgage Loan
purchased by Purchaser from Seller shall be promptly assigned by Purchaser to
Assignee, as of the date of Purchase, as described in Section 9. Upon notice, in
the form of Exhibit J, by Assignee to Custodian of Purchaser's default, Assignee
may (i) require Custodian to act with respect to the related Submission Packages
solely in the capacity of custodian for, and bailee of, Assignee, but
nevertheless subject to and in accordance with the terms of this Agreement, (ii)
require Custodian to hold such Submission Packages for the exclusive use and
benefit of Assignee and (iii) assume the rights of Purchaser under this
Agreement to furnish instructions to Custodian as to the disposition of such
Submission Packages and such rights shall be exercisable solely by Assignee.
Custodian shall give Assignee written acknowledgment to the effect set forth in
(i), (ii) and (iii), by executing such notice and returning a copy thereof to
Assignee. In the event that, prior to receipt of such notice from Assignee,
Custodian delivered any Submission Package to Purchaser, Takeout Investor or
Purchaser's designee, Custodian shall so notify Assignee, and Custodian shall
not be deemed to hold such Submission Package for Assignee unless and until such
Submission Package is redelivered to

                                      10
<PAGE>

Custodian. The failure of Custodian to give the written acknowledgment referred
to above shall not affect the validity of such assignment, pledge or grant of a
security interest. The effects of Assignee's notice to Custodian set forth above
shall continue until Custodian is otherwise notified in writing by Assignee. The
terms of this Agreement shall not apply to any Submission Package physically
delivered by Custodian to Assignee.

          (c)  Seller and Purchaser acknowledge that Warehouse Lender, if any,
identified from time to time in each Warehouse Lender's Release to be received
by Custodian pursuant to Section 2(c), is a warehouse lender for the Seller.
Seller and Purchaser acknowledge that, in accordance with the terms of each
Warehouse Lender's Release to be received by the Custodian pursuant to Section
2(c), pursuant to which each such Warehouse Lender conditionally releases its
security interest in the Mortgage Loan referred to in the related Warehouse
Lender's Release, such release shall not be effective until the Release Payment
is received in accordance with the Warehouse Lender's Wire Instructions. Until
receipt of a Release Payment, the interest of the related Warehouse Lender in a
Mortgage Loan shall continue and remain in full force and effect.

          (d)  If any additional documents relating to the Submission Package
come into the Custodian's possession, the provisions of paragraphs (a), (b) and
(c) of this Section 3 shall apply to such additional documents in the same
manner as such provisions apply to related Submission Package.

          (e)  Purchaser shall notify Custodian on each Business Day, of all
Mortgage Loans purchased by Purchaser on such Business Day which relate to this
Agreement.

          Section 4.  Certification by Custodian; Delivery of Documents.
                      -------------------------------------------------

          (a)  With respect to each Mortgage Loan that Purchaser desires to
purchase, Purchaser shall deliver to Custodian a Request for Certification. Upon
receipt by Custodian of a Request for Certification, Custodian shall perform the
following procedures with respect to each Mortgage Loan listed on such Request
for Certification:

               (i)  Custodian shall ascertain whether it is in possession of a
     Submission Package for each Mortgage Loan identified on a Request for
     Certification. If Custodian is not in possession of a Submission Package
     relating to a Mortgage Loan identified on a Request for Certification,
     Custodian shall annotate its Certification Report in the appropriate space
     provided with a Mortgage Loan Absentee Code.  If Custodian is in possession
     of Submission Packages delivered by Seller which do not relate to any of
     the Mortgage Loans listed on a Request for Certification, Custodian shall
     generate an Unidentified Mortgage Loans List and shall deliver such List
     promptly to Purchaser. Purchaser shall deliver a copy of such Unidentified
     Mortgage Loans List to Seller. No action shall be taken by Custodian, other
     than in accordance with

                                      11
<PAGE>

     Unidentified/ Suspension Mortgage Loan Directive or a notice in the form of
     Exhibit I-3, with respect to Mortgage Loans appearing on an Unidentified
     Mortgage Loans List until any such Mortgage Loans are included in a Request
     for Certification. On each Business Day during which a Mortgage Loan shall
     appear on an Unidentified Mortgage Loans List, Purchaser shall send to
     Custodian an Unidentified/Suspension Mortgage Loan Directive or a notice in
     the form of Exhibit I-3, with respect to the related Submission Package.

               (ii) With respect to each Request for Certification Custodian
     shall:

               (A)  verify the Loan Identification Data appearing in (1) the
          "LAST NAME" column by comparing such Loan Identification Data to the
          information in the Mortgage Note and Assignment of Mortgage and (2)
          the "FACE AMOUNT", "# OF MONTHS TO MATURITY" and "NOTE RATE" columns
          by comparing such Loan Identification Data to the information in the
          Mortgage Note;

               (B)  if the Program Code indicates a Cash Window Transaction,
          verify the Loan Identification Data appearing in the "LOAN #" column
          by comparing the related information in any of the related Applicable
          Agency Documents;

               (C)  if the Program Code indicates a Cash Window Transaction,
          Conduit Transaction or Conversion Transaction, verify the Loan
          Identification Data appearing in the "TAKEOUT INVESTOR", "SALE PRICE",
          "COMMITMENT #", and "COMMITMENT EXPIRATION DATE" columns by comparing
          such Loan Identification Data to the information appearing in the
          Commitment; and

               (D)  if the Program Code indicates a Cash Window Transaction or a
          Conduit Transaction, verify the Loan Identification Data appearing in
          the "WAREHOUSE LENDER" column by comparing such Loan Identification
          Data to the information appearing in the Warehouse Lender's Release or
          Seller's Release, as applicable.

After applying the applicable procedures set forth in clauses (A), (B) and (C)
above, any discrepancies between the Loan Identification Data and documents
comprising the Submission Package shall be noted by Custodian in the appropriate
column immediately below each item of Loan Identification Data.

          (b)  With respect to each Request for Certification, following
completion by Custodian of the procedures set forth in Section (4)(a).

          (i)  Custodian shall review each applicable set of documents
     comprising the Submission Package and shall ascertain whether (A) each such

                                      12
<PAGE>

     document is in Custodian's possession, (B) each such document accurately
     conforms with the Loan Identification Data set forth in the Request for
     Certification or as modified by any notations supplied by Custodian
     pursuant to Section 4(a)(ii), (C) each such document appears regular on its
     face, (D) each such document in the Submission Package appears on its face
     to conform to the requirements of Exhibit A, Exhibit B-1, Exhibit C-1 or
     Exhibit F, as applicable, (E) unless the Program Code indicates either a
     Dry Transaction or a Conversion Transaction, the Mortgage Loan is listed on
     a schedule attached to a Warehouse Lender's Release or a Seller's Release,
     as the case may be, (F) either (1) if the Release Payment is a dollar
     amount, the amount appearing in the "RELEASE PAYMENT" column on the Request
     for Certification is equal to or exceeds the Release Payment, or (2) if the
     Program Code indicates either a Dry Transaction or a Conversion
     Transaction, or if the Release Payment is a formula, as indicated in
     Exhibit G-1, the Custodian need not verify the amount, if any, appearing in
     the "RELEASE PAYMENT" column and (G) (1) with respect to the wire transfer
     instructions as set forth in FHLMC Form 987 (Wire Transfer Authorization
     for a Cash Warehouse Delivery) such wire transfer instructions are
     identical to Purchaser's Wire Instructions to Seller or (2) the Payee
     Number set forth on Fannie Mae Form 1068 (Fixed-Rate, Graduated-Payment, or
     Growing-Equity Mortgage Loan Schedule) or Fannie Mae Form 1069 (Adjustable-
     Rate Mortgage Loan Schedule), as applicable, is identical to the Payee
     Number that has been identified by Purchaser in the Request for
     Certification.

          (ii) If Custodian determines that the documents in the Submission
     Package and the Mortgage Loan to which they relate conform in all respects
     with Section 4(b)(i), Custodian shall so indicate in the space provided in
     its Certification Report with a Mortgage Loan Approval Code. If Custodian
     determines that the documents in a Submission Package and the Mortgage Loan
     to which they relate conform in all respects with Section 4(b)(i) except
     that the endorsement of the Mortgage Note is missing, Custodian may, but
     shall not be obligated to, prepare such endorsement pursuant to the Limited
     Power of Attorney. If documents in the Submission Package do not conform in
     all respects with Section 4(b)(i) or are missing and/or do not conform,
     Custodian shall annotate its Certification Report with a Mortgage Loan
     Suspension Code followed by each applicable Exception Code such that
     Purchaser is informed of each and every missing document and/or non-
     conformity in the space provided in its Certification Report. With respect
     to each Mortgage Loan that has been given a Mortgage Loan Suspension Code,
     Purchaser shall, on each Business Day during which such Mortgage Loan
     Suspension Code is in effect, send to Custodian an Unidentified/Suspension
     Mortgage Loan Directive or a notice in the form of Exhibit I-3, with
     respect to the related Submission Package.

          (c)  Custodian shall use its reasonable efforts to perform a
Certification with respect to any Submission Package delivered after 12:00 Noon
New York City time on a related Delivery Date for which it has received a
Request for

                                      13
<PAGE>

Certification. Upon completion of its Certification, Custodian shall deliver a
Certification Report to Purchaser. All applicable documents comprising a
Submission Package relating to Mortgage Loans with respect to which Custodian
has assigned a Mortgage Loan Approval Code shall be delivered by Custodian in
the form and specific order required by Seller, via overnight courier in
accordance with the Delivery Instructions on the applicable Delivery Date and,
except with respect to Mortgage Loans for which FHLMC is the Takeout Investor,
under cover of a fully completed Notice of Bailment prepared by Custodian in
accordance with the terms of the Bailee Letter. If Seller fails to instruct
Custodian regarding the order and specific form for a delivery to Takeout
Investor of such applicable documents, the Custodian shall deliver such
applicable documents in the original form and specific order received from
Seller. With respect to Conduit Transactions in which the Takeout Investor is
The Prudential Home Mortgage Corporation each folder must be clearly marked
"SRF". In those cases where a copy of any intervening mortgage assignment, or an
unrecorded original of any intervening mortgage assignment are delivered to the
Custodian, Seller shall cause the original of such instrument to be recorded. If
Delivery Instructions direct Custodian to deliver any portion of a Submission
Package to a location that is not Takeout Investor's office, Custodian must
receive Purchaser's written consent to make deliveries to such location prior to
complying with such Delivery Instructions. Upon receipt of one written approval
from Purchaser, such written approval shall, unless Custodian receives a notice
from Purchaser to the contrary, be deemed to apply to all Delivery Instructions
delivered in the future by Seller that list such location. Following delivery by
Custodian of the applicable portion of a Submission File to Takeout Investor,
all remaining documents comprising such Submission Package shall be held by
Custodian until receipt by Custodian of written instructions from Purchaser to
destroy such documents. Each month, Purchaser may, but shall not be obligated
to, deliver to Custodian a notice in the form of Exhibit O, informing Custodian
of all files that Purchaser has authorized Custodian to destroy.

          All applicable documents comprising a Submission Package relating to
Mortgage Loans with respect to which Custodian has assigned a Mortgage Loan
Suspension Code shall be held by Custodian until receipt from Purchaser of
instructions. On each Business Day during which a Mortgage Loan shall have a
Mortgage Loan Suspension Code assigned to it, Purchaser shall send to Custodian
an Unidentified/Suspension Mortgage Loan Directive with respect to such Mortgage
Loan.

          (d)  At any time following the delivery of a Certification, in the
event Custodian becomes aware of any defect with respect to such Submission
Package or the related forms, including the return of documents to the Custodian
from Takeout Investor due to a defect in such documents, the Custodian shall
give prompt oral notice of such defect to the Purchaser, followed by a written
specification thereof.

          Section 5.  Funding by the Takeout Investor.  Custodian shall promptly
                      -------------------------------
notify Purchaser, either electronically or by facsimile, upon receipt, in
accordance with Purchaser's Wire Instructions to Seller, of funds by Custodian.
Each notice shall identify all such funds by (i) the amount, (ii) the source
from which such

                                      14
<PAGE>

funds were received and (iii) to the extent received by Custodian, Seller's
name. Unless Custodian is otherwise instructed by Assignee, Custodian shall
promptly transfer such funds to Purchaser in accordance with Purchaser's Wire
Instructions to Custodian.

          Section 6.  Default.  If Seller fails to fulfill any of its
                      -------
obligations under the Purchase Agreement or hereunder or in connection with the
exercise by Purchaser of any remedy pursuant to Section 3 of the Purchase
Agreement then, subject to the provisions of Section 3(c) hereof, Purchaser may,
by notice to Custodian, (a) appoint Custodian as its delegee to complete the
endorsements on the Mortgage Notes held by Custodian and to complete and record
at Purchaser's expense the related blank Assignments of Mortgages relating to
the affected Mortgage Loan in accordance with Purchaser's instructions and, when
applicable, and(b) require Custodian to deliver to Purchaser, Takeout Investor
or Successor Servicer the Submission Packages (or any portion thereof specified
by Purchaser) in Custodian's possession or under Custodian's control to which
the failure relates.

          Section 7.  Access to Documents.  Upon reasonable prior written notice
                      -------------------
to Custodian, Purchaser (and if the Mortgage Loans have been assigned, Assignee)
and its agents, accountants, attorneys and auditors will be permitted during
normal business hours to examine and copy at their expense the Submission
Packages, documents, records and other papers in possession of or under the
control of Custodian relating to any or all of the Mortgage Loans in which
Purchaser has an interest. Upon the request of Purchaser (or, if applicable,
Assignee) and at the cost and expense of Purchaser (or, if applicable,
Assignee), Custodian shall provide such Purchaser (or, if applicable, Assignee)
with copies of the Mortgage Notes, Assignments of Mortgage and other documents
in Custodian's possession relating to any of the Mortgage Loans in which
Purchaser (or, if applicable, Assignee) has an interest.

          Section 8.  Custodian's Fees and Expenses; Successor Custodian;
                      ---------------------------------------------------
Standard of Care.
----------------

          (a)  It is understood that Custodian will charge such fees for its
services under this Agreement as are set forth in a separate agreement between
Custodian and Seller, the payment of which, together with Custodian's expenses
in connection herewith, shall be solely the obligation of Seller. Custodian has
no lien on, and shall not attempt to place a lien on, any of the Mortgage Loans
or proceeds thereof to secure the payment of its fees.

          (b)  Custodian or any successor Custodian may resign at any time by
giving 90 days' written notice to Seller and Purchaser. Such resignation shall
take effect upon the earlier of (i) the appointment of a successor Custodian by
Purchaser and delivery of all the Submission Packages and any portion of the
related documents in Custodian's possession to the successor Custodian, and (ii)
the delivery of all the Submission Packages and any portion of the related
documents in Custodian's possession to the Purchaser or its designee pursuant to
(c) below.

                                      15
<PAGE>

          (c)  In the event of any such resignation, Custodian shall promptly
transfer to the successor Custodian all Submission Packages and related
documents in Custodian's possession and the successor Custodian shall hold
Submission Packages and related documents in accordance with this Agreement. If
Purchaser directs the removal of Custodian, Purchaser shall be responsible for
all expenses associated with the transfer of the Submission Packages and any
related documents in Custodian's possession and for any, fee of the successor
Custodian in excess of the fees of the initial Custodian hereunder. The
Purchaser shall have 90 days in which to appoint and designate an acceptable
successor Custodian. If the Purchaser fails to appoint a successor Custodian
within such 90-day period, then Custodian shall deliver possession and custody
of the Submission Packages and any related Submission Packages in Custodian's
possession to Purchaser at the address specified on the cover page hereof, or if
a timely written designation is received by Custodian, to any designee of
Purchaser.

          (d)  Custodian shall have responsibility only for the Submission
Packages and the contents thereof which have been actually delivered to it and
which have not been released to Seller, Purchaser, the Agency or Assignee or
their respective agent or designee in accordance with this Agreement. The
standard of care to be exercised by Custodian in the performance of its duties
under this Agreement shall be to exercise the same degree of care as Custodian
exercises when it holds mortgage loan documents as security for its own loans or
its own mortgage warehouse loan customers. Custodian is an agent, bailee and
custodian only and is not intended to be, nor shall it be construed to be
(except only as agent, bailee and custodian), a representative, trustee or
fiduciary of or for either Seller, the Agency, Purchaser or Assignee.

          (e)  Custodian shall incur no liability to any Entity for Custodian's
acts or omissions hereunder, except for liabilities which (i) arise from
Custodian's gross negligence or willful misconduct or (ii) solely with respect
to the Purchaser, which arise from Custodian negligently or intentionally
failing to (A) issue an accurate Certification Report, provided, however, any
such liability shall not be incurred with respect to the issuance of an
inaccurate Certification Report if the defect causing such inaccuracy would not
have been ascertainable by the Custodian applying the procedures expressly set
forth in this Agreement, (E) timely deliver the Submission Package in accordance
with the Delivery Instructions or Purchaser's written instructions, as
applicable, (C) prevent the loss, damage or destruction of any document included
in a Submission Package when held by Custodian, (D) perform its obligations
under Section 5 or (E) comply with an Unidentified/Suspension Mortgage Loan
Directive; provided, however, Custodian shall have no liability hereunder if
Custodian's failure to perform resulted from the inaction or action of any other
Entity, other than Entities that are affiliated with Custodian or are acting
under the direct control of Custodian. Custodian's liability under this
Agreement shall be limited to direct damages resulting from aforesaid. In
addition Custodian shall not be liable, directly or indirectly, for any losses,
claims, damages, liabilities or expenses which would have been avoided had any
Entity making a claim taken reasonable action to mitigate such losses, claims,
damages, liabilities or expenses or (2) special or consequential damages, even
if Custodian has

                                      16
<PAGE>

been advised of the possibility of such damages; provided, however, that
Purchaser's direct damages resulting from a decline in the market value of a
Mortgage Loan shall not be deemed special or consequential damages.

          (f)  Custodian shall be entitled to rely upon the advice of its legal
counsel from time to time and shall not be liable for any action or inaction by
it in reliance upon such advice. Custodian also shall be entitled to rely upon
any notice, document, correspondence, request or directive received by it from
Seller, Takeout Investor, Purchaser or Assignee, as the case may be, that
Custodian believes to be genuine and to have been signed or presented by the
proper and duly authorized officer or representative thereof, and shall not be
obligated to inquire as to the authority or power of any person so executing or
presenting such documents or as to the truthfulness of any statements set forth
therein.

          (g)  Seller hereby indemnifies, defends and holds Custodian harmless
from and against any claim, legal action, liability or loss that is initiated
against or incurred by Custodian, including court costs and reasonable
attorney's fees and disbursements, in connection with Custodian's performance of
its duties under this Agreement, including those involving ordinary negligence,
but excluding those involving gross negligence or willful misconduct of
Custodian.

          (h)  Custodian undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement, it being expressly understood
that there are no implied duties hereunder.

          Section 9.  Assignment by Purchaser.  Purchaser hereby notifies
                      -----------------------
Custodian that Purchaser shall assign, as of the date of the purchase of all of
its right, title and interest in and to all Mortgage Loans purchased by
Purchaser pursuant to the Purchase Agreement and all rights of Purchaser under
the Purchase Agreement (and this Agreement) in respect of such Mortgage Loans
represented thereby to Assignee, subject only to an obligation on the part of
Assignee to deliver each such Mortgage Loan to Custodian or to Purchaser to
permit Custodian, Purchaser or its designee to make delivery thereof to Takeout
Investor, but not otherwise. Seller hereby irrevocably consents to such
assignment. Assignment by Purchaser of the Mortgage Loans as provided in this
Section 9 shall not release Purchaser from its obligations otherwise under this
Agreement. Subject to any limitations in any agreement between Assignee and
Purchaser, Assignee may, upon notice of Purchaser's default as provided in
Section 3(b) hereof, directly enforce and exercise such rights under this
Agreement that have been assigned or pledged to it and, until otherwise notified
by Assignee, Purchaser shall no longer have any of such rights. Custodian shall
assume that any assignment from Purchaser to Assignee is subject to no
limitations that are not expressly set forth in this Agreement.

          Section 10.  Insurance.  Custodian shall, at its own expense,
                       ---------
maintain at all times during the existence of this Agreement such (a) fidelity

                                      17
<PAGE>

insurance, (b) theft of documents insurance, (c) forgery insurance and (d)
errors and omissions insurance as Custodian deems, from time to time
appropriate.

          Section 11.  Representations, Warranties and Covenants.
                       -----------------------------------------

          (a)  By Custodian.  Custodian hereby represents and warrants to, and
covenants with, Seller and Purchaser that, as of the date hereof and at all
times while Custodian is performing services under this Agreement:

          (i)  Custodian is duly organized, validly existing and in good
     standing under the laws of the jurisdiction of its incorporation; and

          (ii) Custodian has the full power and authority to hold each Mortgage
     Loan and to execute, deliver and perform, and to enter into and perform its
     duties and obligations as contemplated by, this Agreement, has duly
     authorized the execution, delivery and performance of this Agreement and
     has duly executed and delivered this Agreement, and this Agreement
     constitutes a legal, valid and binding obligation of Custodian, enforceable
     against it in accordance with its terms, except as the enforcement thereof
     may be limited by applicable receivership, conservatorship or similar
     debtor relief laws and except that certain equitable remedies may not be
     available regardless of whether enforcement is sought in equity or law.

          (b)  By Seller.  Seller hereby represents and warrants to, and
               ---------
covenants with, Custodian and Purchaser that, as of the date hereof and
throughout the term of this Agreement:

          (i)  Seller is duly organized, validly existing and in good standing
     under the laws of the jurisdiction of its incorporation; and

          (ii) Seller has the full power and authority to hold each Mortgage
     Loan and to execute, deliver and perform, and to enter into and consummate
     all transactions contemplated by, this Agreement, has duly authorized the
     execution, delivery and performance of this Agreement and has duly executed
     and delivered this Agreement, and this Agreement constitutes a legal, valid
     and binding obligation of Seller, enforceable against it in accordance with
     its terms, except as the enforcement thereof may be limited by applicable
     receivership, conservatorship or similar debtor relief laws and except that
     certain equitable remedies may not be available regardless of whether
     enforcement is sought in equity or law.

          (c)  By Purchaser.  Purchaser hereby represents and warrants to, and
               ------------
covenants with, Custodian and Seller that, as of the date hereof and throughout
the term of this Agreement:

                                      18
<PAGE>

          (i)    Purchaser is acquiring the Mortgage Loans for its own account
     only and not for any other person;

          (ii)   Purchaser considers itself a substantial, sophisticated
     institutional investor having such knowledge and experience in financial
     and business matters that it is capable of evaluating the merits and risks
     of investment in the Mortgage Loans;

          (iii)  Purchaser has been furnished with all information regarding the
     related Mortgage Loans that it has requested from Seller;

          (iv)   Purchaser is duly organized, validly existing and in good
     standing under the laws of the jurisdiction of its incorporation; and

          (v)    Purchaser has the full power and authority to hold each
     Mortgage Loan and to execute, deliver and perform, and to enter into and
     consummate all transactions contemplated by, this Agreement, has duly
     authorized the execution, delivery and performance of this Agreement and
     has duly executed and delivered this Agreement, and this Agreement
     constitutes a legal, valid and binding obligation of Purchaser, enforceable
     against it in accordance with its terms, except as the enforcement thereof
     may be limited by applicable receivership, conservatorship or similar
     debtor relief laws and except that certain equitable remedies may not be
     available regardless of whether enforcement is sought in equity or law.

          Section 12.  No Adverse Interests.  By its acceptance of each
                       --------------------
Submission Package, Custodian covenants and warrants to Purchaser that: (a) as
of the date of payment by Purchaser of the Release Payment, Custodian, solely in
its capacity as Custodian, holds no adverse interests, by way of security or
otherwise, in the related Mortgage Loan and (b) Custodian hereby waives and
releases any such interest in such Mortgage Loan which it, acting solely in its
capacity as Custodian, has or which it may thereafter acquire prior to the time
of release of such Mortgage Loan from the terms of this Agreement.

          Section 13.  Amendments.  This Agreement may be amended from time to
                       ----------
time only by written agreement of Seller, Purchaser and Custodian except that,
if this Agreement shall have been assigned by Purchaser, no amendment shall be
effective unless the amendment is also signed by Assignee. Purchaser shall give
at least five days' prior written notice to Assignee of any proposed amendment
to this Agreement and shall furnish Assignee with a copy of each such amendment
within five days after it is executed and delivered.

          Section 14.  Execution in Counterparts. This Agreement may be executed
                       -------------------------
in any number of counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.

                                      19
<PAGE>

          Section 15.  Agreement for Exclusive Benefit of Parties; Assignment.
                       ------------------------------------------------------
This Agreement is for the exclusive benefit of the parties hereto and their
respective successors and permitted assigns hereunder and shall not be deemed to
give any legal or equitable right, remedy or claim to any other person
whatsoever. This Agreement shall bind the parties hereto and their respective
successors, but, except for the assignments provided in Sections 3(b) and 9,
shall not be assigned or pledged by any party without the prior written consent
of the other parties. Written notice from Assignee to Custodian (with a copy to
Purchaser) that Purchaser has defaulted in any material respect under any
funding or loan agreement relating to the financing of Purchaser's purchase of
Mortgage Loans shall be conclusive for all purposes of this Agreement.

          Section 16.  Effect of Invalidity of Provisions.  In case any one or
                       ----------------------------------
more of the provisions contained in this Agreement should be or become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall in
no way be affected, prejudiced or disturbed thereby.

          Section 17.  Governing Law.  This Agreement shall be governed by and
                       -------------
construed in accordance with the laws of the State of New York, without regard
to conflict of laws rules.

          Section 18.  Consent to Service.  Each party irrevocably consents to
                       ------------------
the service of process by registered or certified mail, postage prepaid, to it
at its address given in or pursuant to Section 19.

          Section 19.  Notices.  Any notices, consents, directions and other
                       -------
communications given under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by facsimile or electronic
transmission, or personally delivered at, or sent by overnight courier to the
addresses of the parties hereto set forth on the cover page hereof or such other
address as any party shall give in a notice to the other parties pursuant to
this Section 19.

          Section 20.  Certification.  Custodian hereby acknowledges that each
                       -------------
time it enters the Approval Code on a Request for Certification in the "Approval
Code" column, it is making an express representation and warranty to Purchaser
that it has performed the Certification as specified in Sections 4(a) and (b)
with respect to the related Mortgage Loan.

          Section 21.  Construction.  The headings in this Agreement are for
                       ------------
convenience only and are not intended to influence its construction. References
to Sections and Exhibits in this Agreement are to the Sections of and Exhibits
to this Agreement. The Exhibits are part of this Agreement. In this Agreement,
the singular includes the plural, the plural the singular, and the words "and"
and "or" are used in the conjunctive or disjunctive as the sense and
circumstances may require.

                                      20
<PAGE>

          IN WITNESS WHEREOF, Seller, Purchaser and Custodian have caused this
Agreement to be duly executed as of the date and year first above written.

          Seller's Name:           CRESCENT BANK & TRUST COMPANY

               By:_________________________________
               Name:  Michael P. Leddy
               Title: Vice President

               PAINE WEBBER REAL ESTATE SECURITIES INC.

               By:_________________________________
               Names: Al Marrapodi
               Title: Managing Director

               CHEMICAL BANK

               By:_________________________________
               Name:  John H. Hutten
               Title: Trust Officer
               Telephone No.:

                                      21
<PAGE>

                                                                       EXHIBIT A
                            DRY SUBMISSION PACKAGE

     With respect to each Mortgage Loan being offered by Seller for sale to
Purchaser Seller shall deliver and release to Custodian the following documents:

          (i)    The original Mortgage Note endorsed, "Pay to the order of
                 ______________________, without recourse" and signed in the
                 name of Seller by an authorized officer and, if Seller did not
                 originate the Mortgage Loan, bearing an unbroken chain of
                 endorsements from the originator thereof to Seller; and (if
                 applicable) the original assumption agreement, together with
                 the original of, any surety agreement or guaranty agreement
                 relating to the Mortgage Note or any such assumption agreement,
                 and if the Mortgage Note or Mortgage has been signed by a third
                 party on behalf of the Mortgagor, the original power of
                 attorney or other instrument that authorized and empowered such
                 third-party to sign or a copy of such power of attorney
                 together with an Officer's Certificate (or a certificate from
                 the recorder's office) certifying that such copy presents a
                 true and correct reproduction of the original and that such
                 original has been duly recorded or delivered for recordation in
                 the appropriate records of the jurisdiction in which the
                 related Mortgaged Property is located;

          (ii)   If Seller did not originate, the Mortgage Loan, all original
                 intervening assignments duly executed and acknowledged and in
                 recordable form, which together with the Assignment of
                 Mortgage, evidence the chain of mortgage assignments from the
                 originator of the Mortgage Loan to Seller, and/or copies of all
                 such intervening mortgage assignments, together with an
                 Officer's Certificate, or a certificate from the recorder's
                 office, certifying that any such copy represents a true and
                 correct reproduction of the original of such instrument and
                 that such original has been duly recorded or delivered for
                 recordation in the appropriate records of the jurisdiction
                 where the Mortgaged Property is located;

          (iii)  An original Assignment of Mortgage, in blank, in recordable
                 form but unrecorded signed in the name of Seller by an
                 authorized officer; and

          (iv)   A copy of the Mortgage naming the Seller, or if the Seller was
                 not the originator, the originator, as the "mortgagee" or
                 "beneficiary" thereof, and either bearing evidence that such
                 instrument has been recorded in the appropriate jurisdiction
<PAGE>

                 where the property with respect to the Mortgage Property is
                 located or a duplicate or conformed copy of the Mortgage,
                 together with a certificate of an officer of the originator
                 certifying that such copy represents a true and correct copy of
                 the original and that such original has been submitted to the
                 title insurance company for recordation in the appropriate
                 governmental recording office of the jurisdiction where the
                 Mortgage Property is located.

All documents delivered to Custodian have been and as to future deliveries will
be placed by Seller in an appropriate file folder, properly secured, and clearly
marked with Seller's loan number identifying such Mortgage Loan.

In those cases where a copy of a Mortgage, or any intervening mortgage
assignment, or an unrecorded original of any intervening mortgage assignment are
delivered to the Custodian, Seller shall cause the original of such instrument
to be recorded.
<PAGE>

                                                                     EXHIBIT B-1

                        CASH WINDOW SUBMISSION PACKAGE

          With respect to each Mortgage Loan being offered by Seller for sale to
Purchaser pursuant to a Cash Window Transaction, Seller shall deliver and
release to Custodian the following documents:

          (i)    The original Mortgage Note endorsed, "Pay to the order of
     ______________________, without recourse" and signed in the name of Seller
     by an authorized officer and, if Seller did not originate the Mortgage
     Loan, bearing an unbroken chain of endorsements from the originator thereof
     to Seller; (if applicable) the original assumption agreement, together with
     the original of any surety agreement or guaranty agreement relating to the
     Mortgage Note or any such assumption agreement, and if the Mortgage Note
     has been signed by a third party on behalf of the Mortgagor, the original
     power of attorney or other instrument that authorized and empowered such
     Entity to sign or a copy of such power of attorney together with an
     officer's certificate (or a certificate from the recorder's office)
     certifying that such copy presents a true and correct reproduction of the
     original and that such original has been duly recorded or delivered for
     recordation in the appropriate records of the jurisdiction in which the
     related Mortgaged Property is located and if FHLMC is the Agency for the
     related Mortgage Loan, the Freddie Mac loan number should appear on the top
     right hand corner of the Mortgage Note;

          (ii)   With respect to each Mortgage Loan that has been designated for
     sale to FNMA, an original Assignment of Mortgage to FNMA in recordable form
     but unrecorded signed in the name of Seller by an authorized officer;

          (iii)  If Seller did not originate a Mortgage Loan, all necessary
     intervening assignments to show a complete chain of title from the
     originating mortgagee to Seller;

          (iv)   An original Assignment of Mortgage, in blank, in recordable
     form but unrecorded (which Assignment of Mortgage may be in the form of a
     blanket assignment of two or more such Mortgages to the extent permitted by
     applicable law) signed in the name of Seller by an authorized officer;

          (v)    A Warehouse Lender's Release, from any Warehouse Lender having
     a security interest in the Mortgage Loans or, if there is no Warehouse
     Lender with respect to such Mortgage Loans, a Seller's Release, from
     Seller, addressed to Purchaser, releasing any and all right, title and
     interest in such Mortgage Loans;

          (vi)   Delivery Instructions;

                                      24
<PAGE>

          (vii)  A copy of a Confirmation; and

          (viii) The Applicable Agency Documents, listed on Exhibit B-2 and
     Exhibit B-3.

All documents delivered to Custodian will be placed by Seller in an appropriate
file folder, properly secured, and clearly marked with Seller's appropriate
FHLMC or FNMA loan number identifying such Mortgage Loan in the form and order
required by the Agency. In those cases where a copy of any intervening mortgage
assignment, or an unrecorded original of any intervening mortgage assignment are
delivered to the Custodian, Seller shall cause the original of such instrument
to be recorded.
<PAGE>

                                                                     EXHIBIT B-2

                              FHLMC DOCUMENT LIST

(i)    FHLMC Form 1 (Fixed-Rate Mortgage Purchase Contract Conventional Home
       Mortgages - Original Cash) or FHLMC Form 9 (Fixed-Rate Mortgage Purchase
       Contract Conventional Home Mortgages - Gold Cash), or FHLMC Form 2
       (Adjustable Rate Purchase Contract Conventional Home Mortgages).

(ii)   FHLMC Form 1034 (Custodial Certification Schedule).

(iii)  FHLMC Form 996 (Warehouse Lender Release of Security Interest)./1/

(iv)   FHLMC Form 987 (Wire Transfer Authorization for a Cash Warehouse
       Delivery).

(v)    FHLMC Form 960 (Transfer of Servicing) (if supplied by Seller).

___________________
/1/ Consisting either of the form submitted by Seller to Custodian naming
Purchaser as Warehouse Lender or a substituted form completed by Custodian
naming Purchaser as Warehouse Lender.

                                      26
<PAGE>

                                                                     EXHIBIT B-3

                              FNMA DOCUMENT LIST

(i)    Either a Standard Mandatory Delivery Commitment or a Negotiated Mandatory
       Delivery Commitment or a Negotiated Market-Rate Standby Commitment.

(ii)   FNMA Form 1068 (Fixed-Rate, Graduated-Payment, or Growing-Equity Mortgage
       Loan Schedule) or FNMA Form 1069 (Adjustable-Rate Mortgage Loan
       Schedule).

(iii)  FNMA Form 2004 (Security Release Certification) (executed by Purchaser
       and Seller)./1/

(iv)   FNMA Form 360 (Incumbency Certificate) (executed by Seller naming person
       authorized to instruct FNMA on where to wire funds)./2/

(v)    All original intervening assignments (if any) duly executed and
       acknowledged and in recordable form, but unrecorded.

________________________
/1/ Consisting either of the form submitted by the Seller to the Custodian
naming a person other than the Purchaser as Warehouse Lender or a substituted
form completed by the Custodian naming the Purchaser as Warehouse Lender.

/2/ If applicable.

                                      27
<PAGE>

                                                                     EXHIBIT B-4

                           [LETTERHEAD OF PURCHASER]

                           FNMA MASTER BAILEE LETTER

                                                               ___________, 199_

Chemical Bank
55 Water Street
New York, New York 10041
Attention:

Ladies and Gentlemen:

          In connection with its Conforming Whole Loan Purchase: Cash Window
Program, the undersigned Paine Webber Real Estate Securities Inc. ("Purchaser")
shall from time to time, cause Chemical Bank, as custodian ("Custodian"), to
deliver to the Federal National Mortgage Association ("FNMA") original
promissory notes ("Mortgage Notes") evidencing certain mortgage loans ("Mortgage
Loans"), along with certain other documents comprising the related files
("Mortgage Documents"). Custodian is hereby instructed to prepare and insert a
Notice of Bailment in the form of Schedule A hereto with respect to each
Mortgage Loan ("Notice of Bailment"), in each file of Mortgage Documents
delivered by Custodian to FNMA.

          Except as otherwise provided herein, each Mortgage Document so
delivered to FNMA is to be held by FNMA, as agent for Custodian, and subject to
only Purchaser's direction and control.

          Upon Purchaser's receipt of all of the proceeds from the sale of a
Mortgage Loan in accordance with the wiring instructions set forth in FNMA's
Form 482 or 1068 all of Purchaser's legal or equitable interest in the Mortgage
Loan shall terminate.

          The persons listed on the attached Schedule B are the authorized
representatives ("Authorized Representatives") of Purchaser. Custodian shall not
honor any communication relating to a Mortgage Loan, which is not confirmed by
the written or telephonic consent, confirmed in writing at the request of
Custodian, of an Authorized Representative of Purchaser.

                                      28
<PAGE>

          Please execute and return the enclosed copy of this Master Bailee
Letter in the enclosed self-addressed envelope.

                              Sincerely,

                              PAINE WEBBER REAL ESTATE SECURITIES INC.
                              (Purchaser)

                              By:________________________________
                              Name:  Al Marrapodi
                              Title: Managing Director

                              Agreed to:

                              CHEMICAL BANK
                              (Custodian)

                              By:________________________________
                              Name:______________________________
                              Title:_____________________________
                              Dated: As of the date first set forth above
<PAGE>

                                                                      SCHEDULE A
                                                                  TO EXHIBIT B-4

                              NOTICE OF BAILMENT
                              ------------------

[FNMA Address]

          Re:  [Insert Description of Loan, including Borrower's Name, Loan
               Amount and FNMA's Loan Number]
               ------------------------------

Ladies and Gentlemen:

          Pursuant to the Master Bailee Letter, dated _______________, 199_ (the
"Master Bailee Letter"), between Paine Webber Real Estate Securities Inc.
("Purchaser") and Chemical Bank (the "Custodian"), you are hereby notified that
the enclosed original promissory note with respect to the referenced loan
together with certain other documents comprising the related file with respect
to that loan (the "Mortgage Documents") being hereby delivered to you herewith
are to be held by you as agent of Custodian (which holds the Mortgage Documents
as custodian and bailee for the benefit of Purchaser).

          Any Mortgage Documents (or portion thereof) not purchased by you in
accordance with the provisions of the Fannie Mae Guide shall be sent to the
Custodian by overnight courier to: [insert address for return of documents].

          Any questions relating to the Mortgage Documents should be referred to
the Purchaser at (212) 713-2419.

                                   Sincerely,

                                   CHEMICAL BANK

                                   By:________________________
                                   Name:______________________
                                   Title:_____________________

                                      30
<PAGE>

                                                                      SCHEDULE B
                                                                  TO EXHIBIT B-4

                    AUTHORIZED REPRESENTATIVES OF PURCHASER
                    ---------------------------------------

     Name           Title          Authorized Signature
     ----           -----          --------------------

                                      31
<PAGE>

                                                                     EXHIBIT C-1

                          CONDUIT SUBMISSION PACKAGE

          With respect to each Mortgage Loan being offered by Seller for sale to
Purchaser, pursuant to a Conduit Transaction, Seller shall deliver and release
to Custodian the following documents:

          (i)    The original Mortgage Note endorsed, "Pay to the order of
     ________________________, without recourse" and signed in the name of
     Seller by an authorized officer and, if Seller did not originate the
     Mortgage Loan, bearing an unbroken chain of endorsements from the
     originator thereof to Seller; (if applicable) the original assumption
     agreement, together with the original of any surety agreement or guaranty
     agreement relating to the Mortgage Note or any such assumption agreement,
     and if the Mortgage Note has been signed by a third party on behalf of the
     Mortgagor, the original power of attorney or other instrument that
     authorized and empowered such Entity to sign or a copy of such power of
     attorney together with an officer's certificate (or a certificate from the
     recorder's office) certifying that such copy presents a true and correct
     reproduction of the original and that such original has been duly recorded
     or delivered for recordation in the appropriate records of the jurisdiction
     in which the related Mortgaged Property is located;

          (ii)   A Mortgage meeting one of the following requirements:

                 (A)  The original Mortgage bearing evidence that the Mortgage
          has been duly recorded in the records of the jurisdiction in which the
          Mortgaged Property is located; or

                 (B)  A copy of the Mortgage together with an officer's
          certificate (which may be a blanket officer's certificate of Seller
          covering all such Mortgage Loans), or a certificate from the
          recorder's office, certifying that such copy represents a true and
          correct reproduction of the original Mortgage and that such original
          has been duly recorded or delivered for recordation in the appropriate
          records of the jurisdiction in which the Mortgaged Property is
          located;

          (iii)  If Seller did not originate the Mortgage Loan, all original
     intervening assignments duly executed and acknowledged and in recordable
     form, which together with the Assignment of Mortgage, evidence the chain of
     mortgage assignments from the originator of the Mortgage Loan to Seller,
     and/or two copies of each such intervening mortgage assignments, each copy
     together with an officer's certificate, or a certificate from the
     recorder's office, certifying that such copy represents a true and correct
     reproduction of the original of such instrument and that such original has
     been duly recorded or

                                      32
<PAGE>

     delivered for recordation in the; appropriate records of the jurisdiction
     where the Mortgaged Property is located;

          (iv)   An original Assignment of Mortgage, in blank, in recordable
     form but unrecorded signed in the name of Seller by an authorized officer;

          (v)    A Warehouse Lender's Release, from any Warehouse Lender having
     a security interest in the Mortgage Loans or, if there is no Warehouse
     Lender with respect to such Mortgage Loans, a Seller's Release, from
     Seller, addressed to Purchaser, releasing any and all right, title and
     interest in such Mortgage Loans;

          (vi)   Delivery Instructions;

          (vii)  A copy of a Commitment;

          (viii) A copy of a Confirmation;

          (ix)   Each Mortgage Loan, as identified by Seller, relating to a
     Mortgage Note with an original principal amount in excess of 80 % of the
     appraised value of the related Mortgaged Property at the time of
     origination of such Mortgage Loan, either (A) an original of the
     certificate/commitment of Primary Mortgage Insurance Policy, issued by the
     applicable insurer, without verification of the expiration date thereon, or
     (B) an Officer's Certificate (which may be a blanket Officer's Certificate
     of Seller covering all such Mortgage Loans), certifying that an appraisal
     report has been obtained by Seller which shows that the appraised value of
     the Mortgage Property is such that the outstanding principal balance of
     such Mortgage Note is less than 80 % of such appraised value; and*

          (x)    An Underwriter's Form.

_________________________
*Not applicable to Submission Packages in which the Delivery Instructions
require delivery of the Submission Package to Springfield, Illinois.
<PAGE>

                                                                     EXHIBIT C-2

                           [LETTERHEAD OF PURCHASER]

                         CONDUIT MASTER BAILEE LETTER

                                             _______________, 199_

[ADDRESS]

Chemical Bank
55 Water Street
New York, New York 10041
Attention:

Ladies and Gentlemen:

          The undersigned Paine Webber Real Estate Securities Inc. ("Purchaser")
shall from time to time, cause Chemical Bank, as custodian ("Custodian"), to
deliver to [Conduit] ("Takeout Investor") original promissory notes ("Mortgage
Notes") evidencing certain mortgage loans ("Mortgage Loans"), along with certain
other documents comprising the related files ("Custodial File") and, in each
case, a Notice of Bailment in the form of Schedule A hereto with respect to each
Mortgage Loan ("Notice of Bailment"), for inspection by Takeout Investor prior
to the possible purchase by Takeout Investor of such Mortgage Loans pursuant to
commitments ("Commitments") from certain sellers of Mortgage Loans ("Sellers").
Prior to its delivery to Takeout Investor, all of Seller's right, title and,
interest in each Mortgage Loan and proceeds thereof shall have been conveyed to
Purchaser in accordance with each Seller's agreement with Purchaser. Initially
capitalized terms used herein but not defined herein shall have the respective
meanings ascribed to such terms in the Takeout Investor [Acknowledgement]
Agreement, dated ______________, 199_ (as amended, supplemented or otherwise
modified from time to time, the "TIAA") between Takeout Investor and Purchaser.

          Except as otherwise provided herein and/or in the TIAA, each Custodial
File so delivered to Takeout Investor is to be held by Takeout Investor, as
agent for Custodian, and subject to only Purchaser's direction and control until
released as provided herein. The TIAA shall govern the manner in which Takeout
Investor and Purchaser may agree on the amount to be paid by Takeout Investor
for each Mortgage Loan accepted for purchase. The proceeds of the sale of each
Mortgage Loan accepted for purchase must be remitted immediately upon settlement
by Takeout Investor, by wire transfer in immediately available funds, in
accordance with the wire instructions set forth in the Notice of Bailment which
shall be placed in each Custodial File by. Custodian prior to the shipment of
each Custodial File to Takeout Investor. Takeout Investor shall be responsible
for making certain that all of the proceeds from the sale of
<PAGE>

the Mortgage Loan are received in accordance with the wire transfer instructions
set forth on each Notice of Bailment.

          Upon Purchaser's receipt of all of the proceeds from the sale of a
Mortgage Loan in accordance with the wiring instructions in the applicable
Notice of Bailment, all of Purchaser's legal or equitable interest in the
Mortgage Loan shall terminate.

          All Mortgage Documents held by Takeout Investor which are received by
Takeout Investor from Custodian with respect to a Mortgage Loan that is not
purchased must be returned immediately to Custodian at the address for delivery
of documents set forth on the Notice of Bailment. Purchaser reserves the right
at any time, until a Mortgage Loan has been purchased by Takeout Investor, to
demand the return of the related Mortgage Documents to Custodian, and Takeout
Investor agrees to return to Custodian the Mortgage Documents pertaining to a
Mortgage Loan not purchased by Takeout Investor immediately upon such demand by
Purchaser.

          The persons listed on the attached Schedule B are the authorized
representatives ("Authorized Representatives") of Purchaser. Takeout Investor
shall not honor any communication from Sellers relating to a Mortgage Loan,
which is not confirmed by the written or telephonic consent of an Authorized
Representative of Purchaser, or until Purchaser has received the minimum amount
of proceeds of the sale of such Mortgage Loan.

          In the event Takeout Investor is not able for any reason to comply
with the terms of this Bailee Letter, Takeout Investor shall immediately return
the Custodial File to Custodian at the above address.

          Takeout Investor acknowledges that the Custodial File is being
delivered in accordance with its instructions. Takeout Investor shall not
deliver a Custodial File to any third party without the prior written consent of
Purchaser unless such third party is a wholly owned subsidiary of Takeout
Investor or a custodian and bailee of Takeout Investor who is receiving such
Custodial File with written notice of the bailment created by this Master Bailee
Letter.

          In the event Takeout Investor is not able for any reason to comply
with the terms of this Master Bailee Letter, Takeout Investor shall immediately
return each Custodial File in Takeout Investor's possession to Custodian at the
address for delivery of documents set forth in the related Notice of Bailment.

          Custodial File shall be delivered to Takeout Investor in accordance
with its instructions.

          No deviation in performance of the terms of any previous bailment
agreement will alter any of Takeout Investor's duties or responsibilities as
provided herein.
<PAGE>

          By accepting delivery of a Custodial File containing a Notice of
Bailment, Takeout Investor shall be bound by the terms hereof. Please execute
and return the enclosed copy of this Master Bailee Letter in the enclosed self-
addressed envelope.

                                   Sincerely,

                                   PAINE WEBBER REAL ESTATE SECURITIES INC.
                                   (Purchaser)

                                   By:_______________________________
                                   Name:  Al Marrapodi

                                   Title: Managing Director

          The undersigned Custodian executes this Master Bailee Letter solely
for purposes of appointing Takeout Investor its custodian and bailee to hold the
Custodial Files in accordance with the terms of this Master Bailee Letter.

                                   Agreed to:

                                   CHEMICAL BANK
                                   (Custodian)

                                   By:_______________________________
                                   Name:_____________________________
                                   Title:____________________________
                                   Dated: As of the date first set forth above
Agreed to:

[CONDUIT]
(Takeout Investor)

By:___________________________
Name:_________________________
Title:________________________
Dated: As of the date first set forth above
<PAGE>

                                                                      SCHEDULE A
                                                                  TO EXHIBIT C-2

                              NOTICE OF BAILMENT
                              ------------------

[Conduit Address]

          Re:  [Insert Description of Loan, including Borrower's Name, Loan
               Amount and Loan Number]
               -----------------------------------------

Ladies and Gentlemen:

          Pursuant to the Master Bailee Letter, dated _______________, 199_ (the
"Master Bailee Letter"), between Paine Webber Real Estate Securities Inc.
("Purchaser") and Chemical Bank (the "Custodian"), you are hereby notified that
the enclosed original promissory note with respect to the referenced loan
together with certain other documents comprising the related file with respect
to that loan (the "Mortgage Documents") being hereby delivered to you herewith
are to be held by you as agent of Custodian (which holds the Mortgage Documents
as custodian and bailee for the benefit of Purchaser).

          Any Mortgage Documents (or portion thereof) not purchased by you in
accordance with the provisions of the Fannie Mae Guide shall be sent to the
Custodian by overnight courier to: [insert address for return of documents].

          Any questions relating to the Mortgage Documents should be referred to
the Purchaser at (212) 713-2419.

                                        Sincerely,

                                        CHEMICAL BANK

                                        By:_______________________
                                        Name:_____________________
                                        Title:____________________

                                      37
<PAGE>

                                                                      SCHEDULE B
                                                                  TO EXHIBIT C-2

                    AUTHORIZED REPRESENTATIVES OF PURCHASER
                    ---------------------------------------

     Name                Title               Authorized Signature
     ----                -----               --------------------

                                      38
<PAGE>

                                                                       EXHIBIT D

                        CONVERSION SUBMISSION PACKAGES

1.   To convert from a Dry Transaction to a Cash Window Transaction, Seller
     shall deliver to Custodian:

     A.   if FNMA is the Takeout Investor, an original Assignment of Mortgage to
          FNMA, in recordable form but unrecorded, signed in the name of Seller
          by an authorized officer;

     B.   the Applicable Agency Documents; and

     C.   Delivery Instructions.

2.   To convert from a Dry Transaction to a Conduit Transaction, Seller shall
     deliver to Custodian:

     A.   a Mortgage meeting one of the following requirements:

          (i)  The original Mortgage bearing evidence that the Mortgage has been
          duly recorded in the records of the jurisdiction in which the
          Mortgaged Property is located; or

          (ii) A copy of the Mortgage together with an officer's certificate
          (which may be a blanket officer's certificate of Seller covering all
          such Mortgage Loans), or a certificate from the recorder's office,
          certifying that such copy represents a true and correct reproduction
          of the original Mortgage and that such original has been duly recorded
          or delivered for recordation in the appropriate records of the
          jurisdiction in which the Mortgaged Property is located;

     B.   a copy of a Commitment;

     C.   Delivery Instructions;

     D.   Each Mortgage Loan, as identified by Seller, relating to a Mortgage
          Note with an original principal amount in excess of 80 % of the
          appraised value. of the related Mortgaged Property at the time of
          origination of such Mortgage Loan, either (A) an original of the
          certificate/commitment of Primary Mortgage Insurance Policy, issued by
          the applicable insurer, without verification of the expiration date
          thereon, or (B) an Officer's Certificate (which may be a blanket
          Officer's Certificate of Seller covering all such Mortgage Loans),
          certifying that an appraisal report has been obtained by Seller which
          shows that the appraised value of the

                                      39
<PAGE>

          Mortgage Property is such that the outstanding principal balance of
          such Mortgage Note is less than 80% of such appraised value;

     E.   An Underwriter's Form; and

     F.   A copy of a Confirmation.
<PAGE>

                                                                       EXHIBIT E
                   PAINE WEBBER REAL ESTATE SECURITIES, INC.
                           REQUEST FOR CERTIFICATION
  CLIENT:                 , PAYNE NUMBER (ONLY APPLICABLE TO FNMA CASH WINDOW
                                 TRANSACTION):
        Expected Delivery Date of Mortgage File is ___________, 200___

<TABLE>
<CAPTION>
                                                      # OF                                                         COMMITMENT
REF    PROG                               FACE      MONTHS TO     NOTE      TAKEOUT     SALE                       EXPIRATION
NO.    CODE     LOAN #     LAST NAME     AMOUNT     MATURITY      RATE     INVESTOR     PRICE     COMMITMENT #        DATE
==============================================================================================================================
<S>    <C>      <C>        <C>           <C>        <C>           <C>      <C>          <C>       <C>              <C>
             (Information  supplied by  Purchaser)
------------------------------------------------------------------------------------------------------------------------------
             (Information  supplied by  Custodian)
------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

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<CAPTION>
                                             COMPLETION/
   DELIVERY     RELEASE     WAREHOUSE         EXCEPTION
     DATE       PAYMENT       LENDER             CODE
=======================================   =================
<S>             <C>         <C>           <C>
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------
</TABLE>
<PAGE>

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

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

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

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

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

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

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

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

---------------------------------------   -----------------
                                             (         )
---------------------------------------   -----------------

=======================================   =================
<PAGE>

                                                                       EXHIBIT F

                           Paine Webber Real Estate
                                Document Codes

I.        Program Codes

     D    Dry Transaction
     W    Cash Window Transaction
     C    Conduit Transaction

II.  V    Conversion Code

III.      Certification Codes

     A    Mortgage Loan Absentee Code
     N    Mortgage Loan Suspension Code
     Y    Mortgage Loan Approval Code

IV.       Unidentified/Suspension Mortgage Loan Directives

     H    Hold Directive
     R    Return Directive
     D    Delivery Directive

V.        Exception Codes

     1.   Note is missing
     2.   Note is not original
     3.   Note is missing the borrower's name
     4.   Note - the borrower's name does not match the file
     5.   Note is missing the borrower's signature
     6.   Endorsement in blank on the note is missing
     7.   Endorsement in blank on the note is missing Seller's authorized
          signature
     8.   Intervening Endorsement (from/to) on the note is missing
     9.   Intervening Endorsement (from/to) on the note is missing authorized
          signature
     10.  Mortgage/deed is missing
     11.  Mortgage/deed is not certified
     12.  Mortgage/deed is missing assumption agreement
     13.  Mortgage/deed - the borrower's name and signature does not match the
          note
     14.  Mortgage/deed - the amount is not less or equal to the amount on the
          note
     15.  Mortgage/deed not signed
     16.  Intervening assignment (from/to) is missing

                                      43
<PAGE>

     17.  Intervening assignment (from/to) is not signed
     18.  Intervening assignment (from/to) is not certified
     19.  Assignment in blank is missing
     20.  Assignment in blank not signed
     21.  Assignment in blank is not original
     22.  Assignment to FNMA is missing
     23.  Assignment to FNMA is not signed
     24.  Assignment to FNMA is not original
     25.  Warehouse/Sellers Release/Letter is missing
     26.  Warehouse/Sellers Release/Letter is not signed
     27.  Commitment is missing
     28.  LTV/PMI certificate is missing
     29.  LTV MI officer's certificate is not original
     30.  Third party underwriters form is missing
     31.  Consolidation/modification agreement is missing
     32.  Consolidation/modification agreement is not certified
     33.  FHLMC purchase contract confirmation is missing
     34.  FHLMC purchase contract confirmation is missing the price
     35.  FHLMC midanet/mortgage detail listing is missing
     36.  FHLMC Form 1034/certification schedule is missing
     37.  From the FHLMC Form 1034 all files are not present
     38.  FHLMC Form 996 is missing
     39.  FHLMC Form 996 wire instruction is incorrect
     40.  FHLMC Form 987 is missing
     41.  FHLMC Form 987 wire instruction is incorrect
     42.  FHLMC 960
     43.  FNMA mandatory delivery commitment is missing
     44.  FNMA mandatory delivery commitment is missing the price
     45.  FNMA Form 1068/1069 mornet is missing
     46.  FNMA Form 1068/1069 - all files are not present
     47.  FNMA Form 1068/1069 Payee Code is incorrect
     48.  FNMA Form 1068/1069 Information does not correspond to the note.
     49.  FNMA 2004 is missing
     50.  FNMA 360 is missing
     51.  Delivery Instructions missing
     52.  Submission Package does not appear regular on its face but no other
          Exception Code is applicable.
<PAGE>

                                                                     EXHIBIT G-1

                         [WAREHOUSE LENDER'S RELEASE]

Paine Webber Real Estate Securities Inc.
1285 Avenue of the Americas
New York, New York 10019

Ladies and Gentlemen:

          We hereby release all right, interest or claim of any kind with
respect to the mortgage loan(s) referenced below, such release to be effective
automatically without any further action by any party, upon receipt, in one or
more installments, from Paine Webber Real Estate Securities Inc., in accordance
with the wire instructions which we delivered to you in a letter dated
_______________, 199__, in immediately available funds, of an aggregate amount
equal to the product of A multiplied by B (such product being rounded to the
nearer $0.01) multiplied by C.

                                   Street
     Loan #       Mortgagor       Address      City       State        Zip

    ________     ___________     _________    ______     _______      _____

                                   Very truly yours,

                                   [WAREHOUSE LENDER]

                                   By:_________________________
                                   Name:_______________________
                                   Title:______________________

         *A = weighted average trade price
          B = principal amount of the mortgage loans
          C = 1 minus the discount set forth on the related funding confirmation

                                      45
<PAGE>

                                                                     EXHIBIT G-2

                    [WAREHOUSE LENDER'S WIRE INSTRUCTIONS]

Paine Webber Real Estate Securities, Inc.
1285 Avenue of the Americas
New York, New York 10019

          Re:  Paine Webber Real Estate Securities, Inc. Conforming Whole Loan
               Purchase: Cash Window Program with [Seller]
               -------------------------------------------

Ladies and Gentlemen:

          Set forth below are [Warehouse Lender's] wire instructions applicable
to the above-referenced Conforming Whole Loan Purchase: Cash Window Program.

Wire Instructions:
------------------

          Bank Name:
          City, State:
          ABA #:
          Account #:
          Account Name:

          Please acknowledge receipt of this letter in the space provided below.
This letter supersedes and replaces any prior notice specifying the name of
[Warehouse Lender] and setting forth wire instructions and shall remain in
effect until superseded and replaced by a letter, in the form of this letter,
executed by each of us and acknowledged by you.

                                   Very truly yours,

                                   [SELLER]

                                   By:_________________________
                                   Name:_______________________
                                   Title:______________________

                                   [WAREHOUSE LENDERS)]*

                                   By:_________________________
                                   Name:_______________________
                                   Title:______________________

PAINE WEBBER REAL ESTATE
SECURITIES INC.

By:___________________________
Name:   Al Marrapodi
Title:  Managing Director

___________________
*The authorized officer of each warehouse lender executing this letter must be
the same authorized officer as signs the Warehouse Lender's Release. Not
applicable if there is no warehouse leader.

                                      46
<PAGE>

                                                                     EXHIBIT H-1

                              [SELLER'S RELEASE]

Paine Webber Real Estate Securities Inc.
1285 Avenue of the Americas
New York, New York 10019

Ladies and Gentlemen:

          With respect to the mortgage loan(s) referenced below (a) we hereby
certify to you that the mortgage loan(s) is not subject to a lien of any
warehouse lender and (b) we hereby release all right, interest or claim of any
kind with respect to such mortgage loan, such release to be effective
automatically without any further action by any party upon payment from
Purchaser to Seller of an aggregate amount equal to the product of A multiplied
by B (such product being rounded to the nearer $0.01) multiplied by C* in
accordance with our wire instructions in effect on the date of such payment.

                                   Street
     Loan #       Mortgagor       Address      City       State        Zip

    ________     ___________     _________    ______     _______      _____

                                   Very truly yours,

                                   [SELLER]

                                   By:_________________________
                                   Name:_______________________
                                   Title:______________________

         *A = weighted average trade price
          B = principal amount of the mortgage loan(s)
          C = 1 minus the discount set forth on the related funding confirmation

                                      47
<PAGE>

                                                                     EXHIBIT H-2
                                                                 Date:__________

                         [SELLER'S WIRE INSTRUCTIONS]

Paine Webber Real Estate Securities Inc.
1285 Avenue of the Americas
New York, New York 10019

     Re:  Mortgage Loan Custodial Agreement dated as of _______, 199_, among
          Paine Webber Real Estate Securities Inc., [Seller] and [Custodian]
          ------------------------------------------------------------------

Ladies and Gentlemen:

          Capitalized terms used herein and not defined herein shall have the
meanings ascribed to such terms in the above-referenced Custodial Agreement.

          Set forth below are the Seller's Wire Instructions applicable to the
above-referenced Custodial Agreement.

Wire Instructions:
------------------

          Bank Name:
          City, State:
          ABA #:
          Account #:
          A/C Name:

          Please acknowledge receipt of this letter in the space provided below
and return it to Seller. This letter supersedes and replaces any prior notice
specifying the name of Seller and the Seller's Wire Instructions and shall
remain in effect until superseded and replaced by a letter, in the form of this
letter, executed by us and acknowledged by you.

                              Very truly yours,

                              [SELLER]

                              By:_________________________
                              Name:_______________________
                              Title:______________________

Receipt acknowledged by:

PAINE WEBBER REAL ESTATE
SECURITIES INC.

By:___________________________
Name:  Al Marrapodi
Title: Managing Director

____________________
*The authorized officer of executing this letter must be the same authorized
officer as signs the Seller's Release. Applicable only if there is no Warehouse
Lender.

                                      48
<PAGE>

                                                                     EXHIBIT I-1

                   [PURCHASER'S WIRE INSTRUCTIONS TO SELLER]

Wire Instructions:
-----------------

          Bank Name:
          City, State:
          ABA#:
          Account #:
          A/C Name:
          Ref: [Name of Seller]

                                      49
<PAGE>

                                                                     EXHIBIT I-2

                  [PURCHASER'S WIRE INSTRUCTIONS TO CUSTODIAN]

                                                                     Date:______
[Custodian]
[Address]

              Re:    Whole Loan Purchase Program
                     ---------------------------

Ladies and Gentlemen:

          Set forth below are the Purchaser's Wire Instructions to Custodian (as
defined in all Conforming Mortgage Loan Custodial Agreements used in the above-
referenced program).

Wire Instructions:
-----------------

          Bank Name:
          City, State:
          ABA #:
          Account #:
          Account Name:

          Please acknowledge receipt of this letter in the space provided below
and return it to Paine Webber Real Estate Securities Inc. ("Purchaser"). This
letter supersedes and replaces any prior notice specifying the name of Purchaser
and the Purchaser's Wire Instructions to Custodian and shall remain in effect
until superseded and replaced by a letter, in the form of this letter, executed
by us and acknowledged by you.

                              Very truly yours,

                              PAINS WEBBER REAL ESTATE
                              SECURITIES INC.

                              By:___________________________
                              Name: Al Marrapodi
                              Title: Managing Director

Receipt acknowledged by:

[CUSTODIAN]

By:________________________
Name:______________________
Title:_____________________

                                      50
<PAGE>

                                                                     EXHIBIT I-3

                PURCHASER'S DELIVERY INSTRUCTIONS TO CUSTODIAN

[CUSTODIAN]
[ADDRESS]
Attention:_________________

          Re:   Delivery of Submission Package
                ------------------------------

Dear _____________:

          Please deliver, via overnight courier, each of the Submission Packages
relating the Mortgage Loans listed below to:

          _________________

          _________________

          _________________

          Initially capitalized terms are defined in the Mortgage Loan Custodial
Agreement, dated ____________, 199_ among [Seller], [Purchaser] and [Custodian].

                                   Very truly yours,

                                   [PURCHASER]

                                   By:______________________
                                   Title:___________________

                                      51
<PAGE>

                                                                       EXHIBIT J

           [NOTICE BY ASSIGNEE TO CUSTODIAN OF PURCHASER'S DEFAULT]

[Custodian]
[Address]

          Re:  Whole Loan Purchase Program
               ---------------------------

Ladies and Gentlemen:

          Notice is hereby given that Purchaser has materially defaulted in its
obligations under an agreement between Assignee and Purchaser relating to the
financing by Assignee of Purchaser's purchase of Mortgage Loans described on
Schedule 1 hereto. Assignee hereby (i) directs that Custodian act with respect
to the related mortgage files solely in the capacity of custodian for, and
bailee of, Assignee, (ii) directs that Custodian hold such mortgage files for
the exclusive use and benefit of Assignee and (iii) assumes the rights of
Purchaser to furnish instructions to Custodian as to the disposition of such
mortgage files and such rights shall be exercisable solely by Assignee.

          Please acknowledge the foregoing by signing below and returning a copy
of this notice to us at [address].

                                   Very truly yours,

                                   [ASSIGNEE]

                                   By:_______________________
                                   Name:_____________________
                                   Title:____________________

RECEIPT ACKNOWLEDGED:

[CUSTODIAN]

By:_______________________
Name:_____________________
Title:____________________

cc: Paine Webber Real Estate Securities Inc.

                                      52
<PAGE>

                                                                       EXHIBIT K
                           LIMITED POWER OF ATTORNEY

          Reference is hereby made to the Mortgage Loan Custodial Agreement (the
"Agreement"), dated ______________, 199_, among Chemical Bank ("Custodian"),
Paine Webber Real Estate Securities Inc. ("Purchaser") and ("Seller").  Any
capitalized term not otherwise defined herein shall have the meaning assigned to
such term in the Agreement.

          Know all people by these presents, that Seller, a corporation
organized and existing under the laws of the State of ____________, does hereby
make, constitute and appoint, _____________ or __________, or any officer
assigned to the [Corporate Trust Group] (or any successor thereto), including
any Vice President, Assistant Vice President, Trust Officer, any Assistant
Secretary, any trust officer or any other officer of Custodian customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of the
Agreement, each acting singly and independently of the other, as its true and
lawful attorney for it and in its name, place and stead to endorse a Mortgage
Note that has not otherwise been endorsed as follows:

          "Pay to the order of _____________

                                   [Name of Seller]

                                   By:_____________________________
                                   Its: Attorney-in-Fact"

provided, however, a Mortgage Note shall only be endorsed pursuant to this Power
of Attorney pursuant to the terms and conditions sit forth in Section 4(b)(ii)
of the Agreement.

          IN WITNESS WHEREOF, [Name of Seller], has caused this Power of
Attorney to be executed in its name by its duly authorized officer this _ day of
_____________, 199___.

                                   [Name of Seller]

                                   By:_____________________________
                                   Its:____________________________

STATE OF
                   ss:
COUNTY OF

          On the ___th day of __________, in the year 199_, before me personally
came to me known, who, being by me duly sworn, did depose and say that he/she is
___________________ of [Name of Seller], the corporation described in and which
executed the above instrument and that he/she executed said instrument by order
of the board of directors of said corporation.

                                   ______________________________
                                   Notary Public

                                      53
<PAGE>

                                                                       EXHIBIT L

                       UNIDENTIFIED MORTGAGE LOANS LIST

          With regard to [SELLER], the following mortgage loans were received by
Chemical Bank on [Date) and were not referenced on Paine Webber Real Estate
Securities Inc.'s Request for Certification.

<TABLE>
<CAPTION>
     Loan #             Last Name             Face Amount           Takeout Investor          Expiration Date
----------------  ---------------------  ---------------------  -------------------------  ---------------------
                                                                     (if applicable)
<S>               <C>                    <C>                    <C>                        <C>

</TABLE>

                                      54
<PAGE>

                                                                       EXHIBIT M

                UNIDENTIFIED/SUSPENSION MORTGAGE LOAN DIRECTIVE
                -----------------------------------------------

                         Seller's Name:_______________________

                         Product Name:________________________

<TABLE>
<CAPTION>
  Reference #       Unidentified/                                         Commitment               Instruction
(if applicable)      Suspension      Loan #  Last Name  Face Amount    Expiration Date       (Hold/Return/Delivery)
---------------      ----------      ------  ---------  -----------    ---------------       ----------------------
<S>                 <C>              <C>     <C>        <C>            <C>                   <C>

</TABLE>

                                      55
<PAGE>

                                                                       EXHIBIT N

                            [LETTERHEAD OF SELLER]

[DATE]

To:  Chemical Bank
     55 Water Street
     New York, New York 10041

________________________________________________________________________________

Please deliver the Submission Package(s) as indicated on the attached list, in
accordance with the terms of the agreement, to the following:

          Company Name        :
          Address             :
          City, State Zip     :
          Attn:               :

The documents in the Submission Package shall be arranged as follows:

                                      56
<PAGE>

                              [LETTER OF SELLER]

                                    [DATE]

                LOANS TO BE DELIVERED BY CHEMICAL FOR [SELLER]

          Loan #:                  Borrower's Name:                 Loan Amount:
          ------                   ---------------                  -----------

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

                                      57
<PAGE>

                                                                       EXHIBIT O

       PURCHASER'S INSTRUCTIONS TO CUSTODIAN TO DESTROY SPECIFIED FILES

[CUSTODIAN]
[ADDRESS]
Attention:

     Re:  Destruction of Files
          --------------------

Dear ________:

          You are hereby authorized to destroy any documents relating the
Mortgage Loans listed below which were delivered to you in connection with the
Mortgage Loan Custodial Agreement referenced below and which remain in your
possession:

     Loan #                Last Name                     Face Amount
     ------                ---------                     -----------

          Initially capitalized terms are defined in the Mortgage Loan Custodial
Agreement, dated ________________, 199_ among [Seller], [Purchaser] and
[Custodian].

                                        Very truly yours,

                                        [PURCHASER]

                                        By:___________________________
                                        Title:

                                      58
<PAGE>

                                                                       EXHIBIT P

                       LIST OF PRIMARY MORTGAGE INSURERS

                                      59
<PAGE>

CHEMICAL
--------
Geoserve(R)

Chemical Bank                                   Richard L. Dervan Vice President
55 Water Street                                 Financial Institutions Group
New York, NY 10041-0199
212/638-3382
Fax 212/638-6502

October 13, 1994

Mr. Michael Leddy
Cresent Bank & Trust Co.
South Terrace, Suite 285
115. Perimeter Center Pl.
Atlanta, GA 30346

Dear Mr. Leddy:

We are pleased to announce that effective October 1, 1994, Chemical Bank's fees
as document custodian for the PaineWebber Residential Mortgage Funding Programs
are revised to the following for files processed from that date:

Program                                          October 1 Fee
-------                                          -------------

Conduit                                          $ 4 per file

Cash Window                                      $ 4 per file

Dry                                              $ 6 per file

These changes, which represent a fee reduction of over 50%, reflect efficiencies
created through the commitment of PaineWebber Real Estate Securities and
Chemical Bank to the automation of our operations. We appreciate our
relationship with Cresent Bank & Trust Co. and look to provide further benefits
in the future in this regard, we would be very pleased to hear your comments or
suggestions for service improvements.  Please do not hesitate to call George
Mangiaracina at PaineWebber (212) 713-3734 or me at any time.

Sincerely,

          /s/ [ILLEGIBLE]

                                      60
<PAGE>

                                                                      SCHEDULE A

                               LIST OF CONDUITS

1.   BancBoston Mortgage Corporation

2.   Capstead Mortgage Corporation

3.   Countrywide Funding Corporation

4.   Countrywide Mortgage Conduit, Inc.

5.   GE Capital Mortgage Services, Inc.

6.   Lomas Mortgage USA, Inc.

7.   The Prudential Home Mortgage Company, Inc.

8.   Residential Funding Corporation

9.   PaineWebber Real Estate Securities Inc.<PAGE>

                                                                    EXHIBIT 10.9

                       MORTGAGE LOAN PURCHASE AGREEMENT
                       --------------------------------

PURCHASER:          PAINE WEBBER REAL ESTATE SECURITIES INC.

ADDRESS:            1285 AVENUE OF THE AMERICAS
                    NEW YORK, NEW YORK 10019
                    ATTENTION:  AL MARRAPODI

SELLER:             CRESCENT BANK & TRUST COMPANY
                    -----------------------------

ADDRESS:            SOUTH TERRACES, SUITE 285
                    -------------------------
                    115 PERIMETER CENTER PLACE
                    --------------------------
                    ATLANTA, GA 30346
                    -----------------

DATE OF AGREEMENT:  MAY 23, 1994
                    ------------
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                   Page
<S>                                                                                <C>
Section 1.     Definitions.........................................................   1
Section 2.     Procedures for Purchases of Mortgage Loans..........................   7
Section 3.     Sale of Mortgage Loans to the Agency................................   9
Section 4.     Servicing of the Mortgage Loans.....................................  11
Section 5.     Trade Assignments...................................................  12
Section 6.     Transfers of Mortgage Loan by Purchaser.............................  12
Section 7.     Record Title to Mortgage Loans; Intent of Parties; Security Interest  13
Section 8.     Representations and Warranties......................................  13
Section 9.     Covenants of Seller.................................................  19
Section 10.    Term................................................................  21
Section 11.    Exclusive Benefit of Parties; Assignment............................  21
Section 12.    Amendments; Waivers; Cumulative Rights..............................  22
Section 13.    Execution in Counterparts...........................................  22
Section 14.    Effect of Invalidity of Provisions..................................  22
Section 15.    Governing Law.......................................................  22
Section 16.    Notices.............................................................  22
Section 17.    Entire Agreement....................................................  22
Section 18.    Costs of Enforcement................................................  22
Section 19.    Consent to Service..................................................  23
Section 20.    Construction........................................................  23
</TABLE>

                                       i
<PAGE>

Exhibit A-1    Loan Purchase Detail

Exhibit A-2    Takeout Proceeds Identification Letter

Exhibit A-3    Unidentified Funds Notice

Exhibit A-4    Resubmission Letter

Exhibit B-1    Warehouse Lender's Release

Exhibit B-2    Warehouse Lender's Wire Instructions

Exhibit C-1    Seller's Release

Exhibit C-2    Seller's Wire Instructions

Exhibit D      Purchaser's Wire Instructions to Seller

Exhibit E      UCC-1 Financing Statement

                                      ii
<PAGE>

                       MORTGAGE LOAN PURCHASE AGREEMENT
                       --------------------------------

          This Mortgage Loan Purchase Agreement ("Agreement"), dated as of the
date set forth on the cover page hereof, between PAINE WEBBER REAL ESTATE
SECURITIES INC. ("Purchaser") and the Seller whose name is set forth on the
cover page hereof ("Seller").

                             PRELIMINARY STATEMENT
                             ---------------------

          Seller may, in its sole discretion, offer to sell to Purchaser from
time to time Mortgage Loans, and Purchaser, in its sole discretion, may agree to
purchase such Mortgage Loans from Seller in accordance with the terms and
conditions set forth in this Agreement. Seller, subject to the terms hereof,
will cause each Mortgage Loan to be purchased by the Agency. During the period
from the purchase of a Mortgage Loan to the sale of the Mortgage Loan to the
Agency, Purchaser expects to rely entirely upon Seller to service each such
Mortgage Loan.

          The parties hereto hereby agree as follows:

          Section 1.  Definitions.
                      -----------

          Capitalized terms used but not defined herein shall have the meanings
set forth in the Custodial Agreement. As used in this Agreement, the following
terms shall have the following meanings:

                 "Act of Insolvency": With respect to Seller, (a) the
          commencement by Seller as debtor of any case or proceeding under any
          bankruptcy, insolvency, reorganization, liquidation, dissolution or
          similar law, or Seller's seeking the appointment of a receiver,
          trustee, custodian or similar official for Seller or any substantial
          part of its property, or (b) the commencement of any such case or
          proceeding against Seller, or another's seeking such appointment, or
          the filing against Seller of an application for a protective decree
          which (1) is consented to or not timely contested by Seller, (2)
          results in the entry of an order for relief, such an appointment, the
          issuance of such a protective decree or the entry of an order having a
          similar effect, or (3) is not dismissed within sixty (60) days, (c)
          the making by Seller of a general assignment for the benefit of
          creditors, or (d) the admission in writing by Seller that Seller is
          unable to pay its debts as they become due or the nonpayment generally
          by Seller of its debts as they become due.

                 "Agency":  FNMA or FHLMC, as applicable.

                 "Assignee": Chemical Bank, as agent for certain beneficiaries
          pursuant to certain Repurchase Transaction Tri-Party Custody
          Agreements.

                                       1
<PAGE>

               "Applicable Guide":  The Freddie Mac Sellers' Guide, or the
                                     --------------------------
          Fannie Mae Selling Guide, as applicable, and as each may be amended or
          ------------------------
          supplemented from time to time.

               "Business Day": Any day other than (a) a Saturday, Sunday or
          other day on which banks located in the City of New York, New York are
          authorized or obligated by law or executive order to be closed, or (b)
          any day on which Paine Webber Real Estate Securities Inc. is closed
          for business, provided that notice thereof shall have been given not
          less than seven calendar days prior to such day.

               "Cash Window Submission Package":  As defined in the Custodial
          Agreement.

               "Collateral": The Mortgage Loans (including all servicing rights
          related thereto), any Custodial Accounts, the Takeout Commitments and
          the proceeds of any and all of the foregoing.

               "Commitment Expiration Date":  With respect to any Takeout
          Commitment, the expiration date thereof.

               "Commitment Requirements":  The requirements issued by the Agency
          in the Applicable Guide regarding the issuance of Takeout Commitments,
          as amended from time to time by the Agency.

               "Credit File":  All papers and records of whatever kind or
          description, whether developed or originated by Seller or others,
          required to document or service the Mortgage Loan; provided, however,
          that such Mortgage Loan papers, documents and records shall not
          include any Mortgage Loan papers, documents or records which are
          contained in the Cash Window Submission Package.

               "Cure Expiration Date":  With respect to a Defective Mortgage
          Loan, the date occurring five Business Days after the Commitment
          Expiration Date.

               "Custodial Account":  A separate custodial account, established
          and maintained by Seller under the conditions set forth in Section
          4(b), for the deposit by Seller of all collections in respect of a
          Mortgage Loan that are payable to Purchaser as the owner of the
          Mortgage Loan.

               "Custodial Agreement":  The Mortgage Loan Custodial Agreement,
          dated as of the date set forth on the cover sheet thereof, among
          Seller, Purchaser and Custodian, as amended from time to time.

                                       2
<PAGE>

               "Custodian":  Chemical Bank and its permitted successors
          hereunder.

               "Defective Mortgage Loan":  A Mortgage Loan that is not in
          compliance with the Applicable Guide and this Agreement.

               "Defective Settlement Information": Any Settlement Information
          (i) that does not accurately identify Mortgage Loans by the
          Mortgagor's name, (ii) in which the aggregate disbursement information
          does not equal the precise amount of Takeout Proceeds received by
          Purchaser from the Agency or (iii) does not include a Takeout Proceeds
          Identification Letter, when applicable.

               "Discount":  With respect to each Mortgage Loan, the amount set
          forth on such related Funding Confirmation as the Discount.

               "Document File":  The Credit File and the Cash Window Submission
          Package.

               "Due Date":  The day of the month on which the Monthly Payment is
          due on a Mortgage Loan.

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

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

               "FHLMC Commitment":  A commitment executed by FHLMC and Seller
          evidencing FHLMC's agreement to purchase one or more Mortgage Loans
          from Seller and Seller's agreement to sell one or more Mortgage Loans
          to FHLMC by the applicable Commitment Expiration Date under any FHLMC
          cash program.

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

               "FNMA Commitment":  A commitment executed by FNMA and Seller,
          evidencing FNMA's agreement to purchase one or more Mortgage Loans
          from Seller and Seller's agreement to sell one or more Mortgage Loans
          to FNMA by the applicable Commitment Expiration Date under any FNMA
          cash program.

               "Funding Confirmation":  With respect to all Mortgage Loans
          purchased by Purchaser from Seller via a single wire funds transaction
          on a particular Business Day, the trade confirmation from Purchaser to

                                       3
<PAGE>

          Seller confirming the terms of Purchaser's purchase of such Mortgage
          Loans.

               "Incremental Pass-Through Rate":  The amount by which the Pass-
          Through Rate is increased upon the occurrence of (i) a Cure Expiration
          Date or (ii) any event giving Participant the right to elect a remedy
          pursuant to Section 3, which amount shall be set forth in a Funding
          Confirmation as the "Incremental Pass-Through Rate".

               "Loan Purchase Detail":  A loan purchase detail, transmitted via
          facsimile in the form of Exhibit A-1, or transmitted electronically in
          an appropriate data layout provided by Purchaser, prepared by Seller,
          containing certain information regarding the characteristics of all
          Mortgage Loans being offered for sale by Seller on a particular
          Business Day.

               "Losses": Any and all losses, claims, damages, liabilities or
          expenses (including reasonable attorneys' fees) incurred by any person
          specified; provided, however, that "Losses" shall not include any
          losses, claims, damages, liabilities or expenses which would have been
          avoided had such person taken reasonable actions to mitigate such
          losses, claims, damages, liabilities or expenses.

               "Monthly Payment":  The scheduled monthly payment of principal
          and interest on a Mortgage Loan.

               "Mortgage":  The mortgage, deed of trust or other instrument
          creating a first lien on an estate in fee simple in real property
          securing a Mortgage Note.

               "Mortgage Loan":  A conventional single family residential
          mortgage loan which is subject to this Agreement, and which satisfies
          the Commitment Requirements as the same may be modified from time to
          time.

               "Mortgage Note":  The note or other evidence of the indebtedness
          of a Mortgagor secured by a Mortgage.

               "Mortgaged Property":  The property subject to the lien of the
          Mortgage securing a Mortgage Note.

               "Mortgagor": The obligor on a Mortgage Note.

               "NCUA": The National Credit Union Administration, or any
          successor thereto.

                                       4
<PAGE>

               "OTS":  The Office of Thrift Supervision, or any successor
          thereto.

               "Parent Company":  A corporation or other entity owning at least
          50% of the outstanding shares of voting stock of Seller.

               "Pass-Through Rate":  With respect to each Mortgage Loan, the
          rate at which interest is passed through to Purchaser which initially
          shall be the rate of interest specified on a Funding Confirmation as
          the Pass-Through Rate.

               "Performance Fee":  With respect to each Mortgage Loan, an amount
          equal to the Discount, plus the Yield Compensation Adjustment plus or
          minus any other adjustments permitted hereunder, which amount shall be
          payable to Seller by Purchaser as compensation to Seller for its
          services hereunder.

               "Purchase Advice":  An advice delivered to Seller by the Agency
          via either MIDANET or MORNET, as applicable, confirming the amount of
          Takeout Proceeds allocable to each Mortgage Loan purchased by the
          Agency.

               "Purchase Date":  With respect to any Mortgage Loan, the date of
          payment thereof by Purchaser to Seller of the Purchase Price.

               "Purchase Price":  With respect to each Mortgage Loan, an amount
          equal to the Trade Principal less an amount equal to the product of
          the Trade Principal and the Discount.  Accrued interest shall be
          allocated in accordance with Section 2(c).

               "Purchaser":  Paine Webber Real Estate Securities Inc. and its
          successors.

               "Purchaser's Wire Instructions to Seller": The wire instructions,
          set forth in a notice delivered by Purchaser to Seller containing the
          information set forth in Exhibit D, to be used for the payment of all
          amounts due and payable to Purchaser hereunder.

               "Resubmission Letter":  A letter in the form of Exhibit A-4
          delivered by Seller to Purchaser requesting Purchaser's permission to
          resubmit a Mortgage Loan to the Agency.

               "RTC":  The Resolution Trust Corporation or any successor
          thereto.

                                       5
<PAGE>

               "Seller":  The Seller whose name is set forth on the cover page
          hereof, and its permitted successors hereunder.

               "Seller's Release":  A letter in the form of Exhibit C-1,
          delivered by Seller when no Warehouse Lender has an interest in a
          Mortgage Loan, conditionally releasing all of Seller's interest in a
          Mortgage Loan upon receipt of payment by Seller.

               "Seller's Wire Instructions":  The wire instructions, set forth
          in a letter in the form of Exhibit C-2, to be used for the payment of
          funds to Seller when no Warehouse Lender has an interest in the
          Mortgage Loans to which such payment relates.

               "Settlement Date":  With respect to any Mortgage Loan, the date
          the allocable Pass-Through Rate shall cease to accrue upon payment by
          the Agency to Purchaser of the Takeout Proceeds as confirmed by
          Purchaser's receipt from Seller of the related Settlement Information
          in accordance with Section 3(a).

               "Settlement Information":  (i) The Purchase Advice or group of
          Purchase Advices which shall identify or be modified by Seller to
          identify each Mortgage Loan by the Mortgagor's name, and of which the
          aggregate disbursement amount equals the precise dollar amount of
          Takeout Proceeds received by Purchaser from the Agency and (ii) when
          applicable, a Takeout Proceeds Identification Letter.

               "Successor Servicer":  An entity designated by Purchaser, in
          conformity with Section 16, to replace Seller as servicer for
          Purchaser, and as seller/servicer of the Mortgage Loans for the
          Agency.

               "Takeout Commitment":  A FHLMC Commitment or a FNMA Commitment.

               "Takeout Proceeds":  The amount of funds the Agency pays to
          Purchaser on a particular Business Day as identified by the related
          Settlement Information.

               "Takeout Proceeds Identification Letter":  A letter in the form
          of Exhibit A-2, delivered by Seller to Purchaser identifying Takeout
          Proceeds received by Purchaser from the Agency which funds do not
          relate to Mortgage Loans purchased by Purchaser from Seller.

               "Trade Price":  The trade price set forth on a Takeout
          Commitment.

                                       6
<PAGE>

               "Trade Principal":  With respect to any Mortgage Loan, the
          outstanding principal balance of the Mortgage Loan multiplied by a
          percentage equal to the Trade Price.

               "Unidentified Funds Notice":  A letter, in the form of Exhibit A-
          3, from Purchaser to Seller notifying Seller that Purchaser has
          received Takeout Proceeds which have not yet been properly identified
          by Seller.

               "Warehouse Lender":  Any lender, including, without limitation,
          Purchaser, providing financing to the Seller in any fractional amount
          for the purpose of originating or purchasing Mortgage Loans, which
          lender has a security interest in such Mortgage Loans as collateral
          for the obligations of Seller to such lender.

               "Warehouse Lender's Release":  A letter in the form of Exhibit B-
          1, from a Warehouse Lender to Purchaser, conditionally releasing all
          of Warehouse Lender's right, title and interest in certain Mortgage
          Loans identified therein upon receipt of payment by Warehouse Lender.

               "Warehouse Lender's Wire Instructions":  The wire instructions,
          set forth in a letter in the form of Exhibit B-2, from a Warehouse
          Lender to Purchaser, setting forth wire instructions for all amounts
          due and payable to such Warehouse Lender hereunder.

               "Yield Compensation Adjustment": Subject to any further
          adjustment provided in this Agreement, an amount (which may be a
          negative number) equal to:

                                   A(BC-DE)
                                   --------
                                      360

          where (i) A equals the number of days in the period beginning on the
          Purchase Date to but not including the Settlement Date, (ii) B equals
          the principal amount of the Mortgage Loan, (iii) C equals the interest
          rate (expressed as a decimal) on the Mortgage Loan, (iv) D equals the
          Purchase Price and (v) E equals the Pass-Through Rate (expressed as a
          decimal).

          Section 2.  Procedures for Purchases of Mortgage Loans  .
                      ------------------------------------------

          (a)(1) Purchaser may, in its sole discretion, from time to time,
purchase one or more Mortgage Loans from Seller.  Seller shall be deemed to make
for the benefit of Purchaser, as of the applicable dates specified in Section 8,
the

                                       7
<PAGE>

representations and warranties set forth in Section 8 in respect of each such
Mortgage Loan.

          (a)(2) Prior to Purchaser's election to purchase any Mortgage Loan,
Purchaser shall have received from Seller a Loan Purchase Detail, either
electronically or via a facsimile transmission, and Custodian shall have
received all applicable documents required by Section 2 of the Custodial
Agreement.  The terms and conditions of such purchase shall be set forth in this
Agreement and in each Funding Confirmation.

          (b)(1) If Purchaser elects to purchase any Mortgage Loan, Purchaser
shall pay the amount of the Purchase Price for such Mortgage Loan by wire
transfer of immediately available funds (i) if a Warehouse Lender's Release has
been included in the related Cash Window Submission Package, in accordance with
the Warehouse Lender's Wire Instructions or (ii) if there is no Warehouse
Lender's Release included in the related Cash Window Submission Package, in
accordance with the Seller's Wire Instructions.  If Purchaser is the Warehouse
Lender with respect to a Mortgage Loan, the amount transferred shall be reduced
to account for amounts previously advanced by Purchaser with respect to such
Mortgage Loan.  With respect to each Mortgage Loan which Purchaser has elected
to purchase, Custodian shall deliver to the Agency the Cash Window Submission
Package in respect of such Mortgage Loans, in the manner and at the time set
forth in the Custodial Agreement. Seller shall thereafter promptly deliver to
the Agency any and all additional documents requested by the Agency to enable
the Agency to make payment to Purchaser of the Takeout Proceeds.

          (b)(2) Simultaneously with the payment by Purchaser of the Purchase
Price of a Mortgage Loan, in accordance with the Warehouse Lender's Wire
Instructions or the Seller's Wire Instructions, as applicable, with respect to a
Mortgage Loan, Seller hereby conveys to Purchaser all of Seller's right, title
and interest in and to such Mortgage Loan, free and clear of any lien, claim or
encumbrance.

          (c)    With respect to each Mortgage Loan that Purchaser elects to
purchase hereunder, Purchaser shall owe to Seller a Performance Fee.  The Yield
Compensation Adjustment component of the Performance Fee shall include an
accrued interest calculation.  Purchaser's accrued interest calculation shall be
identical to that of the Agency, therefore the amount of accrued interest
included in a settlement calculation will represent accrued interest paid to
Purchaser and paid by Purchaser.

          (d)    Notwithstanding the satisfaction by Seller of the conditions
specified in Section 2(a), Purchaser is not obligated to purchase any Mortgage
Loan offered to it hereunder.  In the event that Purchaser rejects a Mortgage
Loan for purchase for any reason and/or does not transmit the Purchase Price,
any Cash Window Submission Package delivered to Custodian in anticipation of
such purchase shall be returned by Custodian in accordance with the terms of
Custodial Agreement.

                                       8
<PAGE>

          Section 3.    Sale of Mortgage Loans to the Agency.
                        ------------------------------------

          (a)(1) Upon the sale to the Agency of a Mortgage Loan previously
purchased by Purchaser hereunder, Seller shall cause Takeout Proceeds relating
to such Mortgage Loan to be paid to Purchaser in accordance with Purchaser's
Wire Instructions to Seller.  Since the Agency may aggregate Takeout Proceeds
from several Mortgage Loans in one wire transfer, it may be necessary, from time
to time, for Seller to cause the Agency to also pay to Purchaser Takeout
Proceeds relating to Mortgage Loans not purchased by Purchaser.

          (a)(2) Upon receipt by Purchaser of any Takeout Proceeds, Purchaser
will attempt to identify such Takeout Proceeds by reviewing the Settlement
Information that has been supplied by Seller in advance of the purchase of
Mortgage Loans by the Agency.

          (a)(3) If Settlement Information has not been supplied by Seller to
Purchaser, or if Purchaser has received Defective Settlement Information,
Purchaser will deliver an Unidentified Funds Notice to Seller.  Upon receipt of
an Unidentified Funds Notice from Purchaser, Seller shall promptly deliver
Settlement Information to Purchaser.  If Seller fails to deliver Settlement
Information to Purchaser within one Business Day after receipt by Seller of an
Unidentified Funds Notice, Purchaser may, in its sole discretion, return any
Takeout Proceeds that it can not identify to the source from which such Takeout
Proceeds were received by Purchaser.

          (a)(4) The Settlement Date will occur on the earliest date Settlement
Information is made available by Seller to Purchaser.  Purchaser will (i) place
all unidentified Takeout Proceeds in a non-interest bearing account and (ii)
continue to accrue interest at the Pass-Through Rate on all Mortgage Loans which
relate to such unidentified Takeout Proceeds until the Settlement Date of such
Mortgage Loans.

          (a)(5) All Takeout Proceeds received by Purchaser from the Agency and
all Settlement Information received by Purchaser from Seller after 2:00 P.M. New
York City time on a Business Day (or at any time on a day which is not a
Business Day) shall be deemed, with regard to determining the Settlement Date,
received by Purchaser on the next succeeding Business Day.

          (b)(1) If any Mortgage Loan is rejected by the Agency because it is a
Defective Mortgage Loan, Seller shall promptly notify Purchaser.  If any
Mortgage Loan is a Defective Mortgage Loan on the Purchase Date and in
Purchaser's sole judgment the defects in such Mortgage Loan will not be cured
(or in fact are not cured) by Seller prior to the Cure Expiration Date, the
Pass-Through Rate applicable to such Defective Mortgage Loan shall, on such Cure
Expiration Date, increase by the Incremental Pass-Through Rate and Purchaser, at
its election, may require that Seller, upon receipt of notice from Purchaser,
either (i) immediately repurchase Purchaser's ownership interest in such
Defective Mortgage Loan by remitting to Purchaser (in immediately available
funds in accordance with Purchaser's instructions) the amount paid by Purchaser
for such Defective Mortgage Loan plus interest at the Pass-Through Rate on the
principal amount thereof from the Purchase Date of such Mortgage Loan to the
date of such repurchase or (ii) pursuant to a request from Seller

                                       9
<PAGE>

evidenced by the receipt by Purchaser of a Resubmission Letter, permit Seller to
resubmit such modified Mortgage Loan to the Agency under a new Takeout
Commitment. If at any time prior to the repurchase of a Defective Mortgage Loan
by Seller or the purchase of a Mortgage Loan by the Agency, Seller receives the
Mortgage Note or any other portion of the Cash Window Submission Package, Seller
shall promptly forward such Mortgage Note and/or other portion of the Cash
Window Submission Package to Purchaser.

          (b)(2) If Seller fails to comply with its obligations in the manner
described in Section 3(b)(1), upon receipt by Seller of notice from Purchaser,
Seller's rights and obligations to service Mortgage Loans, as provided in this
Agreement, shall terminate.  If an Act of Insolvency occurs at any time,
Seller's rights and obligations to service the Mortgage Loans, as provided in
this Agreement, shall terminate immediately, without any notice or action by
Purchaser.  Upon any such termination, Purchaser is hereby authorized and
empowered as the exclusive agent for Seller to sell and transfer such rights to
service the Mortgage Loans for such price and on such terms and conditions as
Purchaser shall reasonably determine, and Seller shall not otherwise attempt to
sell or transfer such rights to service without the prior consent of Purchaser.
Seller shall perform all acts and take all action so that all files and
documents relating to the Mortgage Loans held by Seller, together with all
escrow amounts relating to such Mortgage Loans, are delivered to Successor
Servicer.  To the extent that the approval of the Agency or any other person is
required for any such sale or transfer, Seller shall fully cooperate with
Purchaser to obtain such approval.  Upon exercise by Purchaser of its remedies
under this Section 3(b)(2), Seller hereby authorizes Purchaser to receive all
amounts paid by any purchaser of such rights to service the Mortgage Loans and
to remit such amounts to Seller subject to Purchaser's rights of set-off under
this Agreement.  Upon exercise by Purchaser of its remedies under this Section
3(b)(2), Purchaser's obligation to pay and Seller's right to receive any portion
of the Performance Fee relating to such Mortgage Loans shall automatically be
canceled and become null and void, provided that such cancellation shall in no
way relieve Seller or otherwise affect the obligation of Seller to indemnify and
hold Purchaser harmless as specified in Section 3(c).

          (b)(3) Each Mortgage Loan required to be delivered to Successor
Servicer by Section 3(b)(2) shall be delivered free of any servicing rights in
favor of Seller and free of any title, interest, lien, encumbrance or claim of
any kind of Seller.  Seller shall deliver or cause to be delivered all files and
documents relating to each Mortgage Loan held by Seller to Successor Servicer.
Seller shall promptly take such actions and furnish to Purchaser such documents
that Purchaser deems necessary or appropriate to enable Purchaser to cure any
defect in each such Mortgage Loan or to enforce such Mortgage Loans, as
appropriate.

          (c)    Seller agrees to indemnify and hold Purchaser and its assignees
harmless from and against all Losses resulting from or relating to any breach or
failure to perform by Seller of any representation, warranty, covenant, term or
condition made or to be performed by Seller under this Agreement.

          (d)    No exercise by Purchaser of its rights under this Section 3
shall relieve Seller of responsibility or liability for any breach of this
Agreement.

                                      10
<PAGE>

          (e)    Seller hereby grants Purchaser a right of set-off against the
payment of any amounts that may be due and payable to Purchaser from Seller,
such right to be upon any and all monies or other property of Seller held or
received by Purchaser, or due and owing from Purchaser to Seller.

          Section 4.  Servicing of the Mortgage Loans.
                      -------------------------------

          (a)    Seller shall service and administer each Mortgage Loan on
behalf of Purchaser in accordance with prudent mortgage loan servicing standards
and procedures generally accepted in the mortgage banking industry and in
accordance with the requirements of the Agency as though the Agency's
requirement were set forth in independent contract between Seller and Purchaser,
provided that Seller shall at all times comply with applicable law, and the
requirements of any applicable insurer or guarantor so that the insurance in
respect of any Mortgage Loan is not voided or reduced. Seller shall at all times
maintain accurate and complete records of its servicing of each Mortgage Loan,
and Purchaser may, at any time during Seller's business hours on reasonable
notice, examine and make copies of such records. In addition, if a Mortgage Loan
is not purchased by the Agency on or before the Cure Expiration Date, Seller
shall at Purchaser's request deliver to Purchaser monthly reports regarding the
status of such Mortgage Loan, which reports shall include, but shall not be
limited to, a description of each Mortgage Loan in default for more than thirty
days, and such other circumstances with respect to any Mortgage Loan (whether or
not such Mortgage Loan is included in the foregoing list) that could materially
adversely affect any such Mortgage Loan, Purchaser's ownership of any such
Mortgage Loan or the collateral securing any such Mortgage Loan. Seller shall
deliver such a report to Purchaser every thirty days until (i) the purchase by
the Agency of such Mortgage Loan pursuant to the related Takeout Commitment or
(ii) the exercise by Purchaser of any remedial election pursuant to Section 3.

          (b)    Within five Business Days of notice from Purchaser or, with
respect to any Mortgage Loan, on the Cure Expiration Date, Seller shall
establish and maintain a Custodial Account entitled "[name of Seller], in trust
for Paine Webber Real Estate Securities Inc. and its assignees under the
Mortgage Loan Purchase Agreement dated [the date of this Agreement]" and shall
promptly deposit into such Custodial Account, in the form received with any
necessary endorsements, all collections received in respect of each Mortgage
Loan that are payable to Purchaser as the owner of each such Mortgage Loan.

          (c)    Amounts deposited in the Custodial Account with respect to any
Mortgage Loan shall be held in trust for Purchaser as the owner of such Mortgage
Loan and shall be released only as follows:

                 (1)  Except as otherwise provided in this Section 4(c),
          following receipt by Purchaser or its designee of the Takeout Proceeds
          for such Mortgage Loan from the Agency or Seller amounts deposited in
          the Custodial

                                      11
<PAGE>

          Account shall be paid in accordance with Section 2(c). Notwithstanding
          the foregoing, all amounts deposited in the Custodial Account shall be
          paid to Seller upon the purchase by the Agency of the related Mortgage
          Loan(s) from Purchaser if, and to the extent that, the amounts due and
          payable to Purchaser hereunder have been set off against the Purchase
          Price for the Mortgage Loan or the Performance Fee relating to the
          Mortgage Loan. The amounts paid to Seller (if any) pursuant to this
          Section 4(c)(1) shall constitute Seller's sole compensation for
          servicing the Mortgage Loans as provided in this Section 4.

                 (2)  If Successor Servicer is appointed by Purchaser (either
          under the circumstances set forth in Section 3 or otherwise), all
          amounts deposited in the Custodial Account shall be paid to Purchaser
          promptly upon such delivery.

                 (3)  If a Mortgage Loan is not purchased by the Agency on or
          before the Cure Expiration Date, during the period thereafter that
          Seller remains as servicer, all amounts deposited in the Custodial
          Account shall be released only in accordance with a Purchaser's
          written instructions.

          Section 5.  Trade Assignments.  Seller hereby assigns to Purchaser,
                      -----------------
free of any security interest, lien, claim or encumbrance of any kind, Seller's
rights, under each Takeout Commitment to the full extent permitted by the
Agency, to deliver the Mortgage Loan(s) specified therein to the related the
Agency and to receive the Takeout Proceeds therefor from the Agency. Purchaser
shall not be deemed to have accepted such rights of Seller which relate to a
particular Mortgage Loan unless and until it purchases the Mortgage Loan, and
nothing set forth herein shall be deemed to impair Purchaser's right to reject
any Mortgage Loan for any reason, in its sole discretion.

          Section 6.  Transfers of Mortgage Loan by Purchaser.  Purchaser may,
                      ---------------------------------------
in its sole discretion, assign all of its right, title and interest in or grant
a security interest in any Mortgage Loan sold by Seller hereunder and all rights
of Purchaser under this Agreement and the Custodial Agreement, in respect of
such Mortgage Loan to Assignee, subject only to an obligation on the part of
Assignee to deliver each such Mortgage Loan to the Agency pursuant to Section 5
or to Purchaser to permit Purchaser or its designee to make delivery thereof to
a the Agency pursuant to Section 5.  It is anticipated that such assignment to
Assignee will be made by Purchaser, and Seller hereby irrevocably consents to
such assignment.  No notice of such assignment shall be given by Purchaser to
Seller or the Agency.  Assignment by Purchaser of the Mortgage Loans as provided
in this Section 6 shall not release Purchaser from its obligations otherwise
under this Agreement.

          Without limitation of the foregoing, an assignment of a Mortgage Loan
to Assignee, as described in this Section 6, shall be effective upon delivery to
Assignee of a Cash Window Submission Package.

                                      12
<PAGE>

          Section 7.  Record Title to Mortgage Loans; Intent of Parties;
                      --------------------------------------------------
Security Interest.
-----------------

          (a)    From and after the delivery of the related Cash Window
Submission Package, and subject to the remedies of Purchaser in Section 3,
Seller shall remain the last named payee or endorsee of each Mortgage Note and
the mortgagee or assignee of record of each Mortgage in trust for the benefit of
Purchaser, for the sole purpose of facilitating the servicing of such Mortgage
Loan.

          (b)    Seller shall maintain a complete set of books and records for
each Mortgage Loan which shall be clearly marked to reflect the ownership
interest in each Mortgage Loan of Purchaser.

          (c)    Purchaser and Seller confirm that the transactions contemplated
herein are intended to be sales of the Mortgage Loans by Seller to Purchaser
rather than borrowings secured by the Mortgage Loans.  In the event, for any
reason, any transaction is construed by any court or regulatory authority as a
borrowing rather than as a sale, the Seller and Purchaser intend that Purchaser
or Assignee, as the case may be, shall have a perfected first priority security
interest in the Collateral, free and clear of adverse claims.  In such case,
Seller shall be deemed to have hereby granted to Purchaser or Assignee, as the
case may be, a first priority security interest in and lien upon the Collateral,
free and clear of adverse claims.  In such event, this Agreement shall
constitute a security agreement, the Custodian shall be deemed to be an
independent custodian for purposes of perfection of the security interest
granted to Purchaser or Assignee, as the case may be, and Purchaser or Assignee,
as the case may be, shall have all of the rights of a secured party under
applicable law.  Seller shall, not later than the date of the first purchase of
a Mortgage Loan by Purchaser under this Agreement, deliver to Purchaser a UCC-1
Financing Statement, executed by Seller, containing a description of collateral
in the form attached hereto in Exhibit E.

          Section 8.  Representations and Warranties.
                      ------------------------------

          (a)    Seller hereby represents and warrants to Purchaser as of the
date hereof and as of the date of each delivery of a Cash Window Submission
Package that:

                 (i)    Seller is duly organized, validly existing and in good
          standing under the laws of the state of its organization or of the
          United States of America and has all licenses necessary to carry on
          its business as now being conducted and is licensed, qualified and in
          good standing in the state where the Mortgaged Property is located if
          the laws of such state require licensing or qualification in order to
          conduct business of the type conducted by Seller.  Seller has all
          requisite power and authority (including, if applicable, corporate
          power) to execute and deliver this Agreement and to perform in
          accordance herewith; the execution, delivery and performance of this
          Agreement (including all instruments of transfer to be delivered
          pursuant to this Agreement) by Seller and the consummation of the
          transactions contemplated hereby have been duly

                                      13
<PAGE>

          and validly authorized; this Agreement evidences the valid, binding
          and enforceable obligation of Seller; and all requisite action
          (including, if applicable, corporate action) has been taken by Seller
          to make this Agreement valid and binding upon Seller in accordance
          with its terms;

               (ii)   No approval of the transactions contemplated by this
          Agreement from the OTS, the NCUA, the FDIC or any similar federal or
          state regulatory authority having jurisdiction over Seller is
          required, or if required, such approval has been obtained.  There are
          no actions or proceedings pending or affecting Seller which would
          adversely affect its ability to perform hereunder.  The transfers,
          assignments and conveyances provided for herein are not subject to the
          bulk transfer or any similar statutory provisions in effect in any
          applicable jurisdiction;

               (iii)  The consummation of the transactions contemplated by this
          Agreement are in the ordinary course of business of Seller and will
          not result in the breach of any term or provision of the charter or
          by-laws of Seller or result in the breach of any term or provision of,
          or conflict with or constitute a default under or result in the
          acceleration of any obligation under, any agreement, indenture or loan
          or credit agreement or other instrument to which Seller or its
          property is subject, or result in the violation of any law, rule,
          regulation, order, judgment or decree to which Seller or its property
          is subject;

               (iv)   This Agreement, the Custodial Agreement and every document
          to be executed by Seller pursuant to this Agreement is and will be
          valid, binding and subsisting obligations of Seller, enforceable in
          accordance with their respective terms.  No consents or approvals are
          required to be obtained by Seller or its Parent Company for the
          execution, delivery and performance of this Agreement or the Custodial
          Agreement by Seller;

               (v)    Purchaser will be the sole owner of the related Mortgage
          Loan, free and clear of any lien, claim or encumbrance; and

               (vi)   All information relating to Seller that Seller has
          delivered or caused to be delivered to Purchaser, including, but not
          limited to, all documents related to this Agreement, the Custodial
          Agreement or Seller's financial statements, does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made therein or herein in light of
          the circumstances under which they were made, not misleading.

          (b)  Seller hereby represents, warrants and covenants to Purchaser
with respect to each Mortgage Loan as of the related Purchase Date that:

                                      14
<PAGE>

               (i)    The Mortgage Loan conforms in all respects to the
          requirements of this Agreement, the Commitment Requirements and all
          other requirements of the Agency;

               (ii)   Seller is the sole owner and holder of the Mortgage Loan
          free and clear of any and all liens, pledges, charges or security
          interests of any nature and has full right and authority, subject to
          no interest or participation of, or agreement with, any other party,
          to sell and assign the same pursuant to this Agreement;

               (iii)  No servicing agreement has been entered into with respect
          to the Mortgage Loan, or any such servicing agreement has been
          terminated and there are no restrictions, contractual or governmental,
          which would impair the ability of Purchaser or Purchaser's designees
          from servicing the Mortgage Loan;

               (iv)   The Mortgage is a valid and subsisting first lien on the
          property therein described and the Mortgaged Property is free and
          clear of all encumbrances and liens having priority over the first
          lien of the Mortgage except for liens for real estate taxes and
          special assessments not yet due and payable.  Any pledge account,
          security agreement, chattel mortgage or equivalent document related
          to, and delivered to Purchaser with the Mortgage, establishes in
          Seller a valid and subsisting first lien on the property described
          therein, and Seller has full right to sell and assign the same to
          Purchaser;

               (v)    Neither Seller nor any prior holder of the Mortgage has
          modified the Mortgage in any material respect; satisfied, canceled or
          subordinated the Mortgage in whole or in part; released the Mortgaged
          Property in whole or in part from the lien of the Mortgage; or
          executed any instrument of release, cancellation, modification or
          satisfaction unless such release, cancellation, modification or
          satisfaction does not adversely affect the value of the Mortgage Loan
          and is contained in the related Document File;

               (vi)   The Mortgage Loan is not in default, and all Monthly
          Payments due prior to the Purchase Date and all taxes, governmental
          assessments, insurance premiums, water, sewer and municipal charges,
          leasehold payments or ground rents have been paid.  Seller has not
          advanced funds, or induced or solicited any advance of funds by a
          party other than the Mortgagor directly or indirectly, for the payment
          of any amount required by the Mortgage Loan.  The collection practices
          used by each entity which has serviced the Mortgage Loan have been in
          all respects legal, proper, prudent, and customary in the mortgage
          servicing business.  With respect to escrow deposits and payments in
          those instances where such were required, there exist no deficiencies
          in connection therewith for which customary arrangements for repayment

                                      15
<PAGE>

          thereof have not been made and no escrow deposits or payments or other
          charges or payments have been capitalized under any Mortgage or the
          related Mortgage Note;

               (vii)  There is no default, breach, violation or event of
          acceleration existing under the Mortgage or the related Mortgage Note
          and no event which, with the passage of time or with notice and the
          expiration of any grace of cure period, would constitute a default,
          breach, violation or event of acceleration; and Seller has not waived
          any default, breach, violation or event of acceleration;

               (viii) The Mortgage Loan is not subject to any right of
          rescission, set-off, counterclaim or defense, including the defense of
          usury, nor will the operation of any of the terms of the Mortgage Note
          or the Mortgage, or the exercise of any right thereunder, render
          either the Mortgage Note or the Mortgage unenforceable, in whole or in
          part, or subject to any right of rescission, set-off, counterclaim or
          defense, including the defense of usury, and no such right of
          rescission, set-off, counterclaim or defense has been asserted with
          respect thereto;

               (ix)   The Mortgage Note and the related Mortgage are genuine and
          each is the legal, valid and binding obligation of the maker thereof,
          enforceable in accordance with its terms.  All parties to the Mortgage
          Note and the Mortgage had legal capacity to execute the Mortgage Note
          and the Mortgage and each Mortgage Note and Mortgage have been duly
          and property executed by the Mortgagor;

               (x)    The Mortgage Loan meets, or is exempt from, applicable
          state or federal laws, regulations and other requirements pertaining
          to usury, and the Mortgage Loan is not usurious;

               (xi)   Any and all requirements of any federal, state or local
          law including, without limitation, truth-in-lending, real estate
          settlement procedures, consumer credit protection, equal credit
          opportunity or disclosure laws applicable to the Mortgage Loan have
          been complied with, and Seller shall deliver to Purchaser upon demand,
          evidence of compliance with all such requirements;

               (xii)  Either: (i) Seller and every other holder of the Mortgage,
          if any, were authorized to transact and do business in the
          jurisdiction in which the Mortgaged Property is located at all times
          when such party held the Mortgage; or (ii) the loan of mortgage funds,
          the acquisition of the Mortgage (if Seller was not the original
          lender), the holding of the Mortgage and the transfer of the Mortgage
          did not constitute the transaction of business or the doing of
          business in such jurisdiction;

                                      16
<PAGE>

               (xiii)  The proceeds of the Mortgage Loan have fully disbursed,
          there is no requirement for future advances thereunder and any and all
          requirements as to completion of any on-site or off-site improvements
          and as to disbursements of any escrow funds, therefore, have been
          complied with. All costs, fees and expenses incurred in making, or
          closing or recording the Mortgage Loans were paid;

               (xiv)   The related Mortgage contains customary and enforceable
          provisions such as to render the rights and remedies of the holder
          thereof adequate for the realization against the Mortgaged Property of
          the benefits of the security, including, (i) in the case of a Mortgage
          designated as a deed of trust, by trustee's sale, and (ii) otherwise
          by judicial foreclosure.  There is no homestead or other exemption
          available to the Mortgagor which would interfere with the right to
          sell the Mortgaged Property at a trustee's sale or the right to
          foreclose the Mortgage;

               (xv)    Each Mortgage Loan was originated by an institution that
          is eligible to issue Mortgage Loans under the Applicable Guide;

               (xvi)   At origination, the Mortgaged Property was free and clear
          of all mechanics' and materialmen's liens or liens in the nature
          thereof which are or could be prior to the Mortgage lien, and no
          rights are outstanding that under law could give rise to any such
          lien;

               (xvii)  All of the improvements which are included for the
          purpose of determining the appraised value of the Mortgaged Property
          lie wholly within the boundaries and building restriction lines of
          such property, and no improvements on adjoining properties encroach
          upon the Mortgaged Property;

               (xviii) At origination, no improvement located on or being part
          of the Mortgaged Property was in violation of any applicable zoning
          law or regulation and all inspections, licenses and certificates
          required to be made or issued with respect to all occupied portions of
          the Mortgaged Property, and with respect to the use and occupancy of
          the same, including but not limited to certificates of occupancy and
          fire underwriting certificates, had been made or obtained from the
          appropriate authorities and the Mortgaged Property was lawfully
          occupied under applicable law.  No improvement located on or being
          part of the Mortgaged Property is in violation of any applicable
          zoning law or regulation and all inspections, licenses and
          certificates required to be made or issued with respect to Property,
          and with respect to the use and occupancy of the same, including but
          not limited to certificates of occupancy and fire underwriting
          certificates, have been made or obtained from the appropriate
          authorities and the Mortgaged Property is lawfully occupied under
          applicable law;

                                      17
<PAGE>

               (xix)   There is no proceeding pending for the total or partial
          condemnation of the Mortgaged Property and said property is undamaged
          by waste, fire, earthquake or earth movement, windstorm, flood,
          tornado or other casualty;

               (xx)    All buildings upon the Mortgaged Property are insured
          against loss by fire, hazards of extended coverage and such other
          hazards as are customary in the area where the Mortgaged Property is
          located, pursuant to fire and hazard insurance policies with extended
          coverage or other insurance required by the Applicable Guide, in an
          amount at least equal to the lesser of (i) the outstanding principal
          balance of the Mortgage Loan or (ii) the maximum insurable value
          (replacement cost without deduction for depreciation) of the
          improvements constituting the Mortgaged Property.  If applicable laws
          limit the amount of such insurance to the replacement cost of the
          improvements constituting the Mortgaged Property or to some other
          amount, then such insurance is in an amount equal to the maximum
          allowed by such laws.  Such insurance amount is sufficient to prevent
          the Mortgagor or the loss payee under the policy from becoming a co-
          insurer.  The insurer issuing such insurance is acceptable pursuant to
          the Applicable Guide.  All individual insurance policies contain a
          standard mortgagee clause naming Seller, its successors and assigns,
          as mortgagee and all premiums thereon have been paid.  Each Mortgage
          obligates the Mortgagor thereunder to maintain all such insurance at
          Mortgagor's cost and expense, and upon the Mortgagor's failure to do
          so, authorizes the holder of the Mortgage to obtain and maintain such
          insurance at Mortgagor's cost and expense and to seek reimbursement
          therefor from the Mortgagor.  Any flood insurance required by
          applicable law has been obtained;

               (xxi)   The related Mortgage Note is payable on the Due Date of
          each month in self-amortizing monthly installments of principal and
          interest, with interest payable in arrears, providing for full
          amortization by maturity, over an original term of not more than
          thirty years;

               (xxii)  The Mortgaged Property consists of a single parcel of
          real property; and

               (xxiii) There are no circumstances or conditions with respect to
          the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor's
          credit standing that can be reasonably expected to cause the Agency or
          private institutional investors to regard the Mortgage Loan as an
          unacceptable investment, cause the Mortgage Loan to become delinquent
          or adversely affect the value or marketability of the Mortgage Loan.

          The representations and warranties of Seller in this Section 8 are
unaffected by and supersede any provision in any endorsement of any Mortgage
Loan

                                      18
<PAGE>

or in any assignment with respect to such Mortgage Loan to the effect that
such endorsement or assignment is without recourse or without representation or
warranty.

          Section 9.  Covenants of Seller.  Seller hereby covenants and agrees
                      -------------------
with Purchaser as follows:

          (a)  Seller shall deliver to Purchaser:

               (i)    Within one hundred twenty (120) days after the end of each
          fiscal year of Seller, consolidated balance sheets of Seller and its
          consolidated subsidiaries and the related consolidated statements of
          income showing the financial condition of Seller and its consolidated
          subsidiaries as of the close of such fiscal year and the results of
          operations during such year, and a consolidated statement of cash
          flows, as of the close of such fiscal year, setting forth, in each
          case, in comparative form the corresponding figures for the preceding
          year, all the foregoing consolidated financial statements to be
          reported on by, and to carry the report (acceptable in form and
          content to Purchaser) of an independent public accountant of national
          standing acceptable to Purchaser;

               (ii)   Within sixty (60) days after the end of each of the first
          three fiscal quarters of each fiscal year of Seller, unaudited
          consolidated balance sheets and consolidated statements of income, all
          to be in a form acceptable to Purchaser, showing the financial
          condition and results of operations of Seller and its consolidated
          subsidiaries on a consolidated basis as of the end of each such
          quarter and for the then elapsed portion of the fiscal year, setting
          forth, in each case, in comparative form the corresponding figures for
          the corresponding periods of the preceding fiscal year, certified by a
          financial officer of Seller (acceptable to Purchaser) as presenting
          fairly the financial position and results of operations of Seller and
          its consolidated subsidiaries and as having been prepared in
          accordance with generally accepted accounting principles consistently
          applied, in each case, subject to normal year-end audit adjustments;

               (iii)  Promptly upon receipt thereof, a copy of each other report
          submitted to Seller by its independent public accountants in
          connection with any annual, interim or special audit of Seller;

               (iv)   Promptly upon becoming aware thereof, notice of (1) the
          commencement of, or any determination in, any legal, judicial or
          regulatory proceedings, (2) any dispute between Seller or its Parent
          Company and any governmental or regulatory body, (3) any event or
          condition, which, in any case of (1) or (2) if adversely determined,
          would have a material adverse effect on (A) the validity or
          enforceability of this Agreement, (B) the financial condition or
          business operations of Seller,

                                      19
<PAGE>

          or (C) the ability of Seller to fulfill its obligations under this
          Agreement or (4) any material adverse change in the business,
          operations, prospects or financial condition of Seller, including,
          without limitation, the insolvency of Seller or its Parent Company;

               (v)    Promptly upon becoming available, copies of all financial
          statements, reports, notices and proxy statements sent by its Parent
          Company, Seller or any of Seller's consolidated subsidiaries in a
          general mailing to their respective stockholders and of all reports
          and other material (including copies of all registration statements
          under the Securities Act of 1933, as amended) filed by any of them
          with any securities exchange or with the Securities and Exchange
          Commission or any governmental authority succeeding to any or all of
          the functions of said Commission;

               (vi)   Promptly upon becoming available, copies of any press
          releases issued by its Parent Company or Seller and copies of any
          annual and quarterly financial reports and any reports on Form H-(b)12
          which its Parent Company or Seller may be required to file with the
          OTS or the RTC or comparable reports which a Parent Company or Seller
          may be required to file with the FDIC or any other federal banking
          agency containing such financial statements and other information
          concerning such Parent Company's or Seller's business and affairs as
          is required to be included in such reports in accordance with the
          rules and regulations of the OTS, the RTC, the FDIC or such other
          banking agency, as may be promulgated from time to time;

               (vii)  Such supplements to the aforementioned documents and such
          other information regarding the operations, business, affairs and
          financial condition of its Parent Company, Seller or any of Seller's
          consolidated subsidiaries as Purchaser may request;

               (viii) A copy of (1) the articles of incorporation of Seller and
          any amendments thereto, certified by the Secretary of State of
          Seller's state of incorporation, (2) a copy of Seller's by-laws,
          together with any amendments thereto, (3) a copy of the resolutions
          adopted by Seller's Board of Directors authorizing Seller to enter
          into this Agreement and the Custodial Agreement and authorizing one or
          more of Seller's officers to execute the documents related to this
          Agreement and Custodial Agreement, and (4) a certificate of incumbency
          and signature of each officer of Seller executing any document in
          connection with this Agreement; and

                                      20
<PAGE>

               (ix)   Not later than 2:00 P.M. New York City time on a
          Settlement Date, the related Settlement Information.

          (b)  The consideration received by the Seller upon the sale of each
Mortgage Loan will constitute reasonably equivalent value and fair consideration
for the ownership interest in the Mortgage Loan.

          (c)  Neither the Seller nor any affiliate thereof will acquire at any
time any Mortgage Loan or any other economic interest in, or obligation with
respect to any Mortgage Loan.

          (d)  Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, the Seller will report each sale of a Mortgage Loan
to the Purchaser as a sale of the ownership interest in the Mortgage Loan.  The
Seller has been advised by or has confirmed with its independent public
accountants that the foregoing transactions will be so classified under GAAP.

          (e)  The Seller will be solvent at all relevant times prior to, and
will not be rendered insolvent by, any sale of a Mortgage Loan to the Purchaser.

          (f)  The Seller will not sell any Mortgage Loan to the Purchaser with
any intent to hinder, delay or defraud any of the Seller's creditors.

          (g)  Seller shall comply, in all material respects, with all laws,
rules and regulations to which it is or may become subject.

          (h)  Seller shall, upon request of Purchaser, promptly execute and
deliver to Purchaser all such other and further documents and instruments of
transfer, conveyance and assignment, and shall take such other action as
Purchaser may require more effectively to transfer, convey, assign to and vest
in Purchaser and to put Purchaser in possession of the property to be
transferred, conveyed, assigned and delivered hereunder and otherwise to carry
out more effectively the intent of the provisions under this Agreement.

          (i)  Seller shall ensure that all Takeout Proceeds paid by the Agency
resulting from Takeout Commitments that relate to Mortgage Loans purchased by
Purchaser pursuant to the terms of this Agreement are paid to Purchaser by the
Agency in accordance with Purchaser's Wire Instructions to Seller.

          Section 10.  Term.  This Agreement shall continue in effect until
                       ----
terminated as to future transactions by written instruction signed by either
Seller or Purchaser and delivered to the other, provided that no termination
will affect the obligations hereunder as to any of the Mortgage Loans with
respect to which Cash Window Submission Packages have been delivered to
Custodian pursuant to the terms of this Agreement or the Custodial Agreement.

          Section 11.  Exclusive Benefit of Parties; Assignment.  This
                       ----------------------------------------
Agreement is for the exclusive benefit of the parties hereto and their
respective

                                      21
<PAGE>

successors and assigns and shall not be deemed to give any legal or equitable
right to any other person, including the Custodian. Except as provided in
Section 6, no rights or obligations created by this Agreement may be assigned by
any party hereto without the prior written consent of the other parties.

          Section 12.  Amendments; Waivers; Cumulative Rights.  This Agreement
                       --------------------------------------
may be amended from time to time only by written agreement of Seller and
Purchaser. Any forbearance, failure or delay by either party in exercising any
right, power or remedy hereunder shall not be deemed to be a waiver thereof, and
any single or partial exercise by Purchaser of any right, power or remedy
hereunder shall not preclude the further exercise thereof. Every right, power
and remedy of Purchaser shall continue in full force and effect until
specifically waived by Purchaser in writing. No right, power or remedy shall be
exclusive, and each such right, power or remedy shall be cumulative and in
addition to any other right, power or remedy, whether conferred hereby or
hereafter available at law or in equity or by statute or otherwise.

          Section 13.  Execution in Counterparts.  This Agreement may be
                       -------------------------
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.

          Section 14.  Effect of Invalidity of Provisions.  In case any one or
                       ----------------------------------
more of the provisions contained in this Agreement should be or become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall in
no way be affected, prejudiced or disturbed thereby.

          Section 15.  Governing Law.  This Agreement shall be governed by and
                       -------------
construed in accordance with the laws of the State of New York, without regard
to conflict of laws rules.

          Section 16.  Notices.  Any notices, consents, elections, directions
                       -------
and other communications given under this Agreement shall be in writing and
shall be deemed to have been duly given when telecopied or delivered by
overnight courier to, personally delivered to, or on the third day following the
placing thereof in the mail, first class postage prepaid to, the respective
addresses set forth on the cover page hereof for Seller and Purchaser, or to
such other address as either party shall give notice to the other party pursuant
to this Section 16.  Notices to Assignee shall be given to such address as
Assignee shall provide to Seller in writing.

          Section 17.  Entire Agreement.  This Agreement, the Funding
                       ----------------
Confirmations and the Custodial Agreement contain the entire agreement between
the parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements between them, oral or written, of any
nature whatsoever with respect to the subject matter hereof.

          Section 18.  Costs of Enforcement.  In addition to any other indemnity
                       --------------------
specified in this Agreement, in the event of a breach by Seller of this
Agreement, the

                                      22
<PAGE>

Custodial Agreement or a Takeout Commitment, Seller agrees to pay the reasonable
attorneys' fees and expenses of Purchaser and, when applicable, Assignee
incurred as a consequence of such breach.

          Section 19.  Consent to Service.  Each party irrevocably consents to
                       ------------------
the service of process by registered or certified mail, postage prepaid, to it
at its address given in or pursuant to Section 16.

          Section 20.  Construction.  The headings in this Agreement are for
                       ------------
convenience only and are not intended to influence its construction. References
to Sections, Exhibits and Annexes in this Agreement are to the Sections of and
Exhibits to this Agreement.  The Exhibits are part of this Agreement, and are
incorporated herein by reference.  The singular includes the plural, the plural
the singular, and the words "and" and "or" are used in the conjunctive or
disjunctive as the sense and circumstances may require.

                                      23
<PAGE>

          IN WITNESS WHEREOF, Purchaser and Seller have duly executed this
Agreement as of the date and year set forth on the cover page hereof.

                                   PAINE WEBBER REAL ESTATE SECURITIES INC.

                                   By    /s/
                                         ______________________________________
                                   Name:  Al Marrapodi
                                   Title: Managing Director

                                   Seller's Name: CRESCENT BANK & TRUST COMPANY
                                                  -----------------------------
                                                  _____________________________
                                   By    /s/
                                         ______________________________________
                                   Name:
                                   Title:
                                   Address (if different from cover page)

                                      24
<PAGE>

                                                                     EXHIBIT A-1

                   PAINE WEBBER REAL ESTATE SECURITIES INC.
                       CASH WINDOW LOAN PURCHASE DETAIL

                             CLIENT:_____________

       PAYEE NUMBER (ONLY APPLICABLE TO FNMA CASH WINDOW TRANSACTIONS):

                            EXPECTED DELIVERY DATE
                    OF MORTGAGE FILE IS:  __________, 199_

<TABLE>
<CAPTION>
                                    # OF
                       FACE      MONTHS TO                  TAKEOUT       SALES                  COMMIT. EXP.  DELIVERY   WAREHOUSE
LOAN #   LAST NAME    AMOUNT      MATURITY     NOTE RATE    INVESTOR      PRICE      COMMIT. #       DATE        DATE      LENDER
-------  ---------  ----------  ------------  -----------  ----------  -----------  -----------  ------------  --------  ----------
<S>      <C>        <C>         <C>           <C>          <C>         <C>          <C>          <C>           <C>       <C>
-------  ---------  ----------  ------------  -----------  ----------  -----------  -----------  ------------  --------  ----------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

-------  ---------  ----------  ------------  -----------  ----------  -----------  -----------  ------------  --------  ----------
</TABLE>

                                      25
<PAGE>

                                                                     EXHIBIT A-2

                   [TAKEOUT PROCEEDS IDENTIFICATION LETTER]

                             [SELLER'S LETTERHEAD]

                                                                          [Date]

Paine Webber Real Estate Securities Inc.
1285 Avenue of the Americas
New York, New York 10019

Ladies and Gentlemen:

          On [date] FNMA or FHLMC wired to your account at Chemical Bank [total
amount of agency wire]. Contained within the total amount of the wire was a
disbursement amount of ___________.  This amount represents proceeds for one or
more loans which were not purchased through PaineWebber's Conforming Whole Loan
Purchase: Cash Window Program the details of which are:

          loan #:                                 ___________________

          borrower's name:                        ___________________

          loan #:                                 ___________________

          borrower's name:                        ___________________

                [list additional Mortgage Loans, if necessary]

          Please wire these funds to:

                        [insert wire instructions here]

                              Very truly yours,

                              [SELLER]

                              By:______________________
                              Name:____________________
                              Title:___________________

                                      27
<PAGE>

                                                                     EXHIBIT A-3

                          [UNIDENTIFIED FUNDS NOTICE]

[SELLER]                                                    [DATE]
[ADDRESS]

RE: Settlement - Cash Windows

          The following proceeds have been received by PaineWebber from FNMA or
FHLMC regarding our Conforming Whole Loan Purchase: Cash Window Program. We can
not proceed without receipt of all settlement information that is required by
the Conforming Mortgage Loan Purchase Agreement ("Agreement"). Please forward
the settlement information which relates to the individual amounts listed below
by facsimile transmission to me at [PaineWebber's facsimile number].
Unidentified proceeds will not earn interest, while loans which we have
purchased and which have subsequently been purchased by FNMA or FHLMC will be
deemed to continue to accrue interest in accordance with Section 3(4)(4) of the
Agreement until we have all settlement information required by the Agreement. If
I can be of any further assistance, please call me at [PaineWebber's telephone
number].

AGENCY:   ____________________
AMOUNT:   ____________________

AGENCY:   ____________________
AMOUNT:   ____________________

AGENCY:   ____________________
AMOUNT:   ____________________

          [list additional amounts, if necessary]

                                        Very truly yours,

                                        PAINE WEBBER REAL ESTATE
                                         SECURITIES INC.

                                        By:__________________________
                                        Name:________________________
                                        Title:_______________________

                                      28
<PAGE>

                                                                     EXHIBIT A-4
                             [RESUBMISSION LETTER]

                             [SELLER'S LETTERHEAD]

                                                       [Date]
Paine Webber Real
 Estate Securities Inc.
1285 Avenue of the Americas
11th Floor
New York, New York 10019

Ladies and Gentlemen:

          The following loan which was purchased through PaineWebber's
Conforming Whole Loan Purchase: Cash Window Program has been rejected for
purchase by the FNMA or FHLMC Cash Window. FNMA or FHLMC will continue to hold
                                           -----------------------------------
the related mortgage note which was delivered to them by PaineWebber's agent,
-----------------------------------------------------------------------------
Chemical Bank. The modified loan is being resubmitted under a new commitment the
--------------------------------------------------------------------------------
details of which are as follows:
--------------------------------

          Loan #:                       Investor:

          Last Name:                    Commitment #:

          Face Amount:                       Window Term:

          1st Pay Date:                 Commitment Expiration Date:

          Coupon:                       Sale Price:

          Loan Term:

          If the loan should again be rejected for purchase by the FNMA or
FHLMC, we will notify PaineWebber and repurchase the loan immediately upon FNMA
or FHLMC notification of rejection. If for any reason we receive the related
mortgage note from FNMA or FHLMC, we will notify PaineWebber immediately and
either repurchase the loan or deliver the mortgage note to PaineWebber, in
accordance with PaineWebber's instructions.

                              Very truly yours,

                              [SELLER]

                              By:________________________
                              Name:______________________
                              Title:_____________________

                                      29
<PAGE>

                                                                     EXHIBIT B-1

                         [WAREHOUSE LENDER'S RELEASE]

Paine Webber Real Estate Securities Inc.
1285 Avenue of the Americas
New York, New York 10019

Ladies and Gentlemen:

          We hereby release all right, interest or claim of any kind, including
any security interest or lien, with respect to the mortgage loan(s) referenced
below, such release to be effective automatically without any further action by
any party, upon receipt, in one or more installments, from Paine Webber Real
Estate Securities Inc., in accordance with the wire instructions which we
delivered to you in a letter dated _________________, 199_, in immediately
available funds, of an aggregate amount equal to the product of A multiplied by
B (such product being rounded to the nearest $0.01) multiplied by C.*

                              Street
Loan #   Mortgagor            Address         City          State      Zip

_______  _________________    _________     ___________   _________    ________

                                    Very truly yours,

                                    [WAREHOUSE LENDER]

                                    By:_________________________
                                    Name:_______________________
                                    Title:______________________

          *A = weighted average trade price
           B = principal amount of the mortgage loan(s)
           C = 1 minus the discount set forth on the related funding
               confirmation

                                      30
<PAGE>

                                                                     EXHIBIT B-2
                    [WAREHOUSE LENDER'S WIRE INSTRUCTIONS]

Paine Webber Real Estate Securities, Inc.
1285 Avenue of the Americas
New York, New York 10019

          Re:  Paine Webber Real Estate Securities, Inc. Conforming Whole Loan
               Purchase: Cash Window Program with [Seller]
               --------- ---------------------------------

Ladies and Gentlemen:

          Set forth below are [Warehouse Lender's] wire instructions applicable
to the above-referenced Conforming Whole Loan Purchase: Cash Window Program.

Wire Instructions:
-----------------

          Bank Name:
          City, State:
          ABA #:
          Account #:
          Account Name:

          Please acknowledge receipt of this letter in the space provided below.
This letter supersedes and replaces any prior notice specifying the name of
[Warehouse Lender] and setting forth wire instructions and shall remain in
effect until superseded and replaced by a letter, in the form of this letter,
executed by each of us and acknowledged by you.

                              Very truly yours,

                              [SELLER]

                              By:_____________________________
                              Name:___________________________
                              Title:__________________________

                              [WAREHOUSE LENDER(S)]*

                              By:_____________________________
                              Name:___________________________
                              Title:__________________________

PAINE WEBBER REAL ESTATE
 SECURITIES INC.

By:_______________________
Name: Al Marrapodi
Title:   Managing Director

__________________________________
* The authorized officer of each warehouse lender executing this letter must be
the same authorized officer as signs the Warehouse Lender's Release. Not
applicable if there is no warehouse lender.

                                      31
<PAGE>

                                                                     EXHIBIT C-1
                              [SELLER'S RELEASE]

Paine Webber Real Estate Securities Inc.
1285 Avenue of the Americas
New York, New York 10019

Ladies and Gentlemen:

          With respect to the mortgage loan(s) referenced below (a) we hereby
certify to you that the mortgage loan(s) is not subject to a lien of any
warehouse lender and (b) we hereby release all right, interest or claim of any
kind with respect to such mortgage loan, such release to be effective
automatically without any further action by any party upon payment from
Purchaser to Seller of an aggregate amount equal to the product of A multiplied
by B (such product being rounded to the newest $0.01) multiplied by C* in
accordance with our wire instructions in effect on the date of such payment.

                           Street
Loan #    Mortgagor        Address           City        State     Zip

_______   ______________   ____________    _________   _________   __________

                                   Very truly yours,

                                   [SELLER]

                                   By:___________________________
                                   Name:_________________________
                                   Title:________________________

          *A = weighted average trade price
           B = principal amount of the mortgage loan(s)
           C = 1 minus the discount set forth on the related funding
               confirmation

                                      32
<PAGE>

                                                                     EXHIBIT C-2
                         [SELLER'S WIRE INSTRUCTIONS]

Paine Webber Real Estate Securities Inc.
1285 Avenue of the Americas
New York, New York 10019

          Re:  Conforming Whole Loan Purchase: Cash Window
               Program with [Seller]
               -------------------------------------------

Ladies and Gentlemen:

          Set forth below are the [Seller's] wire instructions applicable to the
above-referenced Conforming Whole Loan Purchase: Cash Window Program with
[Seller].

Wire Instructions:
-----------------

          Bank Name:
          City, State:
          ABA #:
          Account #:
          Account Name:

          Please acknowledge receipt of this letter in the space provided below.
This letter supersedes and replaces any prior notice specifying our wire
instructions and shall remain in effect until superseded and replaced by a
letter, in the form of this letter, executed by us and acknowledged by you.

                                   Very truly yours,

                                   [SELLER]*

                                   By:_______________________________
                                   Name:_____________________________
                                   Title:____________________________
Receipt acknowledged by:

PAINE WEBBER REAL ESTATE
 SECURITIES INC.

By:________________________
Name:  Al Marrapodi
Title: Managing Director

__________________________________
*The authorized officer of executing this letter must be the same authorized
officer as signs the Seller's Release.  Applicable only if there is no Warehouse
Lender.

                                   33
<PAGE>

                                                                       EXHIBIT D

                   [PURCHASER'S WIRE INSTRUCTIONS TO SELLER]

Wire Instructions:
-----------------

          Bank Name:
          City, State:
          ABA #:
          Account #:
          Account Name:
          Ref: [Name of Seller]

                                      34
<PAGE>

                                                                       EXHIBIT E

                           UCC-1 FINANCING STATEMENT

Debtor:             [Seller]

Secured Party:      Paine Webber Real Estate Securities Inc.

Item   :
-------

          All right (including the power to convey title thereto), title and
interest of Debtor in and to the property listed below:

          All participation certificates evidencing an interest in
          mortgage loans, and all mortgage loans, mortgage notes,
          mortgages or deeds of trust, assignments thereof and any and
          all documents and instruments related thereto, which are
          subject to the interest of Secured Party or any assignee under
          or pursuant to the Mortgage Loan Participation Agreements and
          Mortgage Loan Purchase Agreements between Secured Party and the
          Debtor.

                                   35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}]]