Document:

<PAGE>

                                                                    EXHIBIT 4.12

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE
OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

Warrant No.                                         Number of Shares:
            --------                                                  --------
Date of Issuance:          , 2001
                  ---------

                  BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.

                          COMMON STOCK PURCHASE WARRANT

         Brightstar Information Technology Group, Inc. (the "Company"), for
value received, hereby certifies that ______________________ or its registered
assigns (the "Registered Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company, at any time after the date hereof and on or
before the Expiration Date (as defined in Section 5 below), up to __________
shares (as adjusted from time to time pursuant to the provisions of this
Warrant) of Common Stock of the Company ("Common Stock"), at a purchase price of
$0.50 per share. The shares purchasable upon exercise of this Warrant and the
purchase price per share, as adjusted from time to time pursuant to the
provisions of this Warrant, are sometimes hereinafter referred to as the
"Warrant Stock" and the "Purchase Price," respectively.

         This Warrant is issued pursuant to a Subscription Agreement dated
____________, 2001 between the Company, Brightstar Information Technology
Services, Inc., and each of the Investors (as defined therein) (the
"Subscription Agreement") and is subject to the terms and conditions of the
Subscription Agreement.

         1. EXERCISE.

                  (a) MANNER OF EXERCISE. This Warrant may be exercised by the
Registered Holder, in whole or in part, by surrendering this Warrant, with the
purchase/exercise form appended hereto as Exhibit A duly executed by such
Registered Holder or by such Registered Holder's duly authorized attorney, at
the principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full of the Purchase Price
payable in respect of the number of shares of Warrant Stock purchased upon such
exercise. The Purchase Price may be paid by cash, check, wire transfer or by the
surrender of promissory notes or other instruments representing indebtedness of
the Company to the Registered Holder.

<PAGE>

                  (b) EFFECTIVE TIME OF EXERCISE. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the day on which this Warrant shall have been surrendered to the Company as
provided in Section 1(a) above. At such time, the person or persons in whose
name or names any certificates for Warrant Stock shall be issuable upon such
exercise as provided in Section 1(d) below shall be deemed to have become the
holder or holders of record of the Warrant Stock represented by such
certificates.

                  (c) NET ISSUE EXERCISE.

                           (i) After two (2) years from the Issuance Date of
this Warrant, in lieu of exercising this Warrant in the manner provided above in
Section 1(a), the Registered Holder may elect to receive shares equal to the
value of this Warrant (or the portion thereof being canceled) by surrender of
this Warrant at the principal office of the Company together with notice of such
election on the purchase/exercise form appended hereto as Exhibit A duly
executed by such Registered Holder or such Registered Holder's duly authorized
attorney, in which event the Company shall issue to holder a number of shares of
Common Stock computed using the following formula:

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

Where             X = The number of shares of Common Stock to be issued to the
                      Registered Holder.

                  Y = The number of shares of Common Stock purchasable under
                      this Warrant (at the date of such calculation).

                  A = The fair market value of one share of Common Stock (at the
                      date of such calculation).

                  B = The Purchase Price (as adjusted to the date of such
                      calculation).

                           (ii) For purposes of this Section 1(c), the fair
market value of one share of Common Stock on the date of calculation shall mean:

                                    (A) if the Company's Common Stock is traded
on a securities exchange or The Nasdaq Stock Market or actively traded
over-the-counter:

                                             (1) if the Company's Common Stock
is traded on a securities exchange or The Nasdaq Stock Market, the fair market
value shall be deemed to be the average of the closing prices over a thirty (30)
day period ending three days before date of calculation; or

                                             (2) if the Company's Common Stock
is actively traded over-the-counter, the fair market value shall be deemed to be
the average of the closing bid or sales price (whichever is applicable) over the
thirty (30) day period ending three days before the date of calculation; or

                                      -2-
<PAGE>

                                    (B) if (A) is not applicable, the fair
market value shall be at the highest price per share which the Company could
obtain on the date of calculation from a willing buyer (not a current employee
or director) for shares of Common Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by the Board of Directors, unless
the Company is at such time subject to an acquisition as described in Section
5(b) below, in which case the fair market value per share of Common Stock shall
be deemed to be the value of the consideration per share received by the holders
of such stock pursuant to such acquisition.

                  (d) DELIVERY TO HOLDER. As soon as practicable after the
exercise of this Warrant in whole or in part, and in any event within ten (10)
days thereafter, the Company at its expense will cause to be issued in the name
of, and delivered to, the Registered Holder, or as such Holder (upon payment by
such Holder of any applicable transfer taxes) may direct:

                           (i) a certificate or certificates for the number of
shares of Warrant Stock to which such Registered Holder shall be entitled, and

                           (ii) in case such exercise is in part only, a new
warrant or warrants (dated the date hereof) of like tenor, calling in the
aggregate on the face or faces thereof for the number of shares of Warrant Stock
equal (without giving effect to any adjustment therein) to the number of such
shares called for on the face of this Warrant minus the number of such shares
purchased by the Registered Holder upon such exercise as provided in Section
1(a) above.

         2. ADJUSTMENTS.

                  (a) STOCK SPLITS AND DIVIDENDS. If outstanding shares of the
Company's Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respect of Common Stock, the Purchase
Price in effect immediately prior to such subdivision or at the record date of
such dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Purchase Price, the number of shares of Warrant Stock purchasable upon the
exercise of this Warrant shall be changed to the number determined by dividing
(i) an amount equal to the number of shares issuable upon the exercise of this
Warrant immediately prior to such adjustment, multiplied by the Purchase Price
in effect immediately prior to such adjustment, by (ii) the Purchase Price in
effect immediately after such adjustment.

                  (b) RECLASSIFICATION, ETC. In case of any reclassification or
change of the outstanding securities of the Company or of any reorganization of
the Company (or any other corporation the stock or securities of which are at
the time receivable upon the exercise of this Warrant) or any similar corporate
reorganization on or after the date hereof, then and in each such case the
holder of this Warrant, upon the exercise hereof at any time after the
consummation of such reclassification, change, reorganization, merger or
conveyance, shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise hereof

                                      -3-
<PAGE>

prior to such consummation, the stock or other securities or property to which
such holder would have been entitled upon such consummation if such holder had
exercised this Warrant immediately prior thereto, all subject to further
adjustment as provided in Section 2(a); and in each such case, the terms of this
Section 2 shall be applicable to the shares of stock or other securities
properly receivable upon the exercise of this Warrant after such consummation.

                  (c) ADJUSTMENT CERTIFICATE. When any adjustment is required to
be made in the Warrant Stock or the Purchase Price pursuant to this Section 2,
the Company shall promptly mail to the Registered Holder a certificate setting
forth (i) a brief statement of the facts requiring such adjustment, (ii) the
Purchase Price after such adjustment and (iii) the kind and amount of stock or
other securities or property into which this Warrant shall be exercisable after
such adjustment.

         3. TRANSFERS.

                  (a) UNREGISTERED SECURITY. Each holder of this Warrant
acknowledges that this Warrant and the Warrant Stock have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and agrees
not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose
of this Warrant or any Warrant Stock issued upon its exercise in the absence of
(i) an effective registration statement under the Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect
or (ii) an opinion of counsel, satisfactory to the Company, that such
registration and qualification are not required. Each certificate or other
instrument for Warrant Stock issued upon the exercise of this Warrant shall bear
a legend substantially to the foregoing effect.

                  (b) TRANSFERABILITY. Subject to the provisions of Section 3(a)
hereof, this Warrant and all rights hereunder are transferable, in whole or in
part, upon surrender of the Warrant with a properly executed assignment (in the
form of Exhibit B hereto) at the principal office of the Company.

                  (c) WARRANT REGISTER. The Company will maintain a register
containing the names and addresses of the Registered Holders of this Warrant.
Until any transfer of this Warrant is made in the warrant register, the Company
may treat the Registered Holder of this Warrant as the absolute owner hereof for
all purposes; provided, however, that if this Warrant is properly assigned in
blank, the Company may (but shall not be required to) treat the bearer hereof as
the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary. Any Registered Holder may change such Registered Holder's address as
shown on the warrant register by written notice to the Company requesting such
change.

         4. NO IMPAIRMENT. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will (subject to Section 13 below) at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.

                                      -4-
<PAGE>

         5. TERMINATION. This Warrant (and the right to purchase securities upon
exercise hereof) shall terminate upon the earliest to occur of the following
(the "Expiration Date"): (a) ________________,2006, or (b) the sale, conveyance
or disposal of all or substantially all of the Company's property or business or
the Company's merger with or into or consolidation with any other corporation
(other than a wholly-owned subsidiary of the Company) or any other transaction
or series of related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of, provided that this Section 5(b)
shall not apply to a merger effected exclusively for the purpose of changing the
domicile of the Company or to an equity financing in which the Company is the
surviving corporation.

         6. NOTICES OF CERTAIN TRANSACTIONS. In case:

                  (a) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right, to subscribe for or purchase any shares of stock of any
class or any other securities, or to receive any other right, or

                  (b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company, any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the surviving entity), or any transfer of all or substantially all of the
assets of the Company, or

                  (c) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company,

then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon such reorganization, reclassification, consolidation,
merger, transfer, dissolution, liquidation or winding-up) are to be determined.
Such notice shall be mailed at least ten (10) days prior to the record date or
effective date for the event specified in such notice.

         7. RESERVATION OF STOCK. The Company will at all times reserve and keep
available, solely for the issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this Warrant.

         8. EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder of
any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company,

                                      -5-
<PAGE>

the Company will, subject to the provisions of Section 3 hereof, issue and
deliver to or upon the order of such Holder, at the Company's expense, a new
Warrant or Warrants of like tenor, in the name of such Registered Holder or as
such Registered Holder (upon payment by such Registered Holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant or Warrants so surrendered.

         9. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.

         10. NOTICES. Any notice required or permitted by this Warrant shall be
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid,
addressed (a) if to the Registered Holder, to the address of the Registered
Holder most recently furnished in writing to the Company and (b) if to the
Company, to the address set forth below or subsequently modified by written
notice to the Registered Holder.

         11. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.

         12. NO FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Common Stock on the date of exercise, as determined in good faith by the
Company's Board of Directors.

         13. AMENDMENT OR WAIVER. Any term of this Warrant may be amended or
waived upon written consent of the Company and the holders of at least [51]% of
the Common Stock issuable upon exercise of outstanding warrants purchased
pursuant to the Purchase Agreement. By acceptance hereof, the Registered Holder
acknowledges that in the event the required consent is obtained, any term of
this Warrant may be amended or waived with or without the consent of the
Registered Holder; provided, however, that any amendment hereof that would
materially adversely affect the Registered Holder in a manner different from the
holders of the remaining warrants issued pursuant to the Purchase Agreement
shall also require the consent of Registered Holder.

         14. HEADINGS. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.

                                      -6-
<PAGE>

         15. GOVERNING LAW. This Warrant shall be governed, construed and
interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.

                                        BRIGHTSTAR INFORMATION
                                        TECHNOLOGY GROUP, INC.

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

                                        Address:
                                                       -------------------------

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

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

                                        Fax Number:
                                                       -------------------------

                                      -7-
<PAGE>

                            EXHIBIT A TO THE WARRANT

                             PURCHASE/EXERCISE FORM

To:      Brightstar Information Technology Group, Inc.         Dated:

         The undersigned, pursuant to the provisions set forth in the attached
Warrant No. ___________, hereby irrevocably elects to (a) purchase _____ shares
of the Common Stock covered by such Warrant and herewith makes payment of $
_________, representing the full purchase price for such shares at the price per
share provided for in such Warrant, or (b) exercise such Warrant for _______
shares purchasable under the Warrant pursuant to the Net Issue Exercise
provisions of Section 1(c) of such Warrant.

         The undersigned acknowledges that it has reviewed the representations
and warranties contained in Section 4 of the Subscription Agreement (as defined
in the Warrant) and by its signature below hereby makes such representations and
warranties to the Company. Defined terms contained in such representations and
warranties shall have the meanings assigned to them in the Subscription
Agreement, provided that the term "Investor" shall refer to the undersigned and
the term "Units" shall, for the purposes hereof, refer to the Warrant Stock.

                                        Signature:
                                                  -----------------------------

                                        Name (print):
                                                     --------------------------

                                        Title (if applic.)
                                                          ---------------------

                                        Company (if applic.):
                                                             ------------------

<PAGE>

                            EXHIBIT B TO THE WARRANT

                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED, _________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant with respect to the number of shares of Common Stock covered
thereby set forth below, to:

<Table>
<Caption>
         NAME OF ASSIGNEE              ADDRESS/FAX NUMBER                NO. OF SHARES
         ----------------              ------------------                -------------
<S>                                    <C>                              <C>

</Table>

Dated:                                       Signature:
      -------------------                              ------------------------

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

                                             Witness:
                                                       ------------------------

<PAGE>

Schedule 1:

The following parties have identical agreements entered into with the Company:

Mr. Joseph A. Wagda
Mr. Kevin J. Murphy
Mr. Forest E. Hoglund
Mr. Kenneth A. Czaja
Mr. Thomas Krause
Mr. Larry Peterson
The Hoglund Foundation
Ivy Creek Investments, LTD
Nauset Properties Ltd.
Mr. George Mellinger Britton
Paul Schafer Defined Benefit Plan
Mr. Steve Schaefer
Mr. Chris Turner
Mr. G. Nicholas Farwell
Mr. Steve Robinson
Altamont Capital Management Inc.
Brewer Capital Group, LLC<PAGE>

                                                                  EXECUTION COPY

                            AAMES CAPITAL CORPORATION

                                   as Seller,

                      AAMES CAPITAL ACCEPTANCE CORPORATION

                                  as Depositor,

                          COUNTRYWIDE HOME LOANS, INC.

                                   as Servicer

                                       and

                    BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

                                   as Trustee

                         POOLING AND SERVICING AGREEMENT

                          Dated as of September 1, 2001
                           Aames Mortgage Trust 2001-3
                       Mortgage Pass-Through Certificates,
                                  Series 2001-3

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                  <C>                                                                                        <C>
                                    ARTICLE I

                                   DEFINITIONS

Section 1.01          Definitions.................................................................................1
Section 1.02          Interest Calculations......................................................................30

                                   ARTICLE II

                             CONVEYANCE OF THE TRUST ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01          Conveyance of the Trust....................................................................30
Section 2.02          Conveyance of the Subsequent Mortgage Loans; Fixed Price Contract..........................33
Section 2.03          Acceptance by the Trustee; Repurchase or Substitution of
                      Mortgage Loans.............................................................................36
Section 2.04          Representations and Warranties Regarding the Servicer and the Seller.......................39
Section 2.05          Representations and Warranties of the Seller Regarding the
                      Mortgage Loans.............................................................................42
Section 2.05A         Representations and Warranties of the Depositor as to the
                      Mortgage Loans.............................................................................53
Section 2.06          Execution and Authentication of Certificates...............................................53
Section 2.07          Reserved...................................................................................53
Section 2.08          Indemnification of the Trust...............................................................53

                                   ARTICLE III

                        ADMINISTRATION AND SERVICING OF MORTGAGE LOANS; CERTIFICATE ACCOUNT

Section 3.01          The Servicer and the Sub-Servicers.........................................................54
Section 3.02          Collection of Certain Mortgage Loan Payments; Collection Account and
                      Certificate Account........................................................................55
Section 3.03          Additional Servicing Responsibilities for the Adjustable Rate
                      Mortgage Loans.............................................................................58
Section 3.04          Hazard Insurance Policies..................................................................58
Section 3.05          Enforcement of Due-on-Sale Clauses; Assumption and Modification Agreements.................59
Section 3.06          Realization upon Liquidated Mortgage Loans.................................................60
Section 3.07          Trustee to Cooperate; Release of Mortgage Files............................................61
Section 3.08          Servicing Compensation; Payment of Certain Expenses by the Servicer........................62
Section 3.09          Annual Statement as to Compliance..........................................................62
Section 3.10          Annual Independent Public Accountants' Servicing Report....................................62
Section 3.11          Access to Certain Documentation and Information Regarding the
                      Mortgage Loans.............................................................................63
Section 3.12          Maintenance of Fidelity Bond and Errors and Omissions Policy...............................63
</TABLE>

                                      -i-

<PAGE>

<TABLE>
<CAPTION>
<S>                  <C>                                                                                        <C>
Section 3.13          Notices to the Rating Agencies and the Trustee ............................................63
Section 3.14          Reports of Foreclosures and Abandonment of Mortgaged Properties............................64
Section 3.15          Sub-Servicers and Sub-Servicing Agreements.................................................64
Section 3.16          Prefunding Account.........................................................................65
Section 3.17          Capitalized Interest Account...............................................................66
Section 3.18          [Reserved].................................................................................66
Section 3.19          [Reserved].................................................................................66
Section 3.20          [Reserved].................................................................................66
Section 3.21          Net Rate Cap Fund..........................................................................66
Section 3.22          Covenants and Representations Regarding Prepayment Charges.................................67
Section 3.23          Claims Upon the PMI Policy.................................................................68

                                   ARTICLE IV

                                REMITTANCE REPORT

Section 4.01          Servicer Remittance Report.................................................................68
Section 4.02          Trustee Distribution Date Statement........................................................68

                                    ARTICLE V

                  PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS

Section 5.01          Distributions..............................................................................70
Section 5.02          Monthly Advances; Servicing Advances.......................................................74
Section 5.03          Statements to Certificateholders...........................................................75
Section 5.04          Allocation of Losses.......................................................................77

                                   ARTICLE VI

                                THE CERTIFICATES

Section 6.01          The Certificates...........................................................................77
Section 6.02          Registration of Transfer and Exchange of Certificates......................................78
Section 6.03          Mutilated, Destroyed, Lost or Stolen Certificates..........................................83
Section 6.04          Persons Deemed Owners......................................................................83
Section 6.05          Actions of Certificateholders..............................................................83

                                   ARTICLE VII

                   THE SERVICER, THE SELLER AND THE DEPOSITOR

Section 7.01          Liability of the Seller, the Depositor and the Servicer....................................84
Section 7.02          Merger or Consolidation of, or Assumption of the Obligations
                      of the Seller, the Depositor or Servicer...................................................84
Section 7.03          Limitation on Liability of the Servicer and Others.........................................84
Section 7.04          Servicer Not to Resign.....................................................................84
Section 7.05          Merger or Consolidation of the Seller or Depositor.........................................86
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<CAPTION>
<S>                  <C>                                                                                        <C>
                                  ARTICLE VIII

                                     DEFAULT

Section 8.01          Events of Default..........................................................................86
Section 8.02          Trustee to Act; Appointment of Successor...................................................88
Section 8.03          Notifications to Certificateholders........................................................89
Section 8.04          Assumption or Termination of Sub-Servicing Agreements by the Trustee or
                      any Successor Servicer.....................................................................89

                                   ARTICLE IX

                                   THE TRUSTEE

Section 9.01          Duties of the Trustee......................................................................89
Section 9.02          Certain Matters Affecting the Trustee......................................................90
Section 9.03          Trustee Not Liable for Certificates or Mortgage Loans......................................91
Section 9.04          Trustee May Own Certificates...............................................................92
Section 9.05          Payment of the Trustee's Fees and Expenses.................................................92
Section 9.06          Eligibility Requirements for the Trustee...................................................92
Section 9.07          Resignation or Removal of the Trustee......................................................93
Section 9.08          Successor Trustee..........................................................................93
Section 9.09          Merger or Consolidation of the Trustee.....................................................94
Section 9.10          Appointment of Co-Trustee or Separate Trustee..............................................94
Section 9.11          Compliance with REMIC Provisions...........................................................95
Section 9.12          Trustee May Enforce Claims Without Possession of Certificates..............................96
Section 9.13          Exercise of Trustee Powers by Certificateholders...........................................96
Section 9.14          Tax Returns................................................................................97
Section 9.15          Taxpayer Identification Number.............................................................97
Section 9.16          Miscellaneous REMIC Matters................................................................97

                                    ARTICLE X

                                   TERMINATION

Section 10.01         Termination Upon Purchase or Liquidation of All Mortgage Loans............................101
Section 10.02         Additional Termination Requirements.......................................................103

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

Section 11.01         Amendment.................................................................................104
Section 11.02         Recordation of Agreement..................................................................106
Section 11.03         Limitation on Rights of Certificateholders................................................106
Section 11.04         Governing Law.............................................................................107
Section 11.05         Notices...................................................................................107
</TABLE>

                                      -iii-

<PAGE>

<TABLE>
<CAPTION>
<S>                  <C>                                                                                        <C>
Section 11.06         Severability of Provisions................................................................107
Section 11.07         Assignment................................................................................107
Section 11.08         Certificates Nonassessable and Fully Paid.................................................108
</TABLE>

                                      -iv-

<PAGE>

                             SCHEDULES AND EXHIBITS

        Schedule I          List of Sub-Servicers
        Schedule II         Schedule of Restricted Mortgage Loans
        Exhibit A-1         Form of Class A Certificate
        Exhibit A-2         Form of Class M Certificate
        Exhibit A-3         Form of Class B Certificate
        Exhibit A-4         Form of Class A-IO Certificate
        Exhibit B-1         Form of Class C Certificate
        Exhibit B-2         Form of Class R Certificate
        Exhibit B-3         Form of Class P Certificate
        Exhibit C           [Reserved]
        Exhibit D           [Reserved]
        Exhibit E           Mortgage Loan Schedule
        Exhibit F           Form of Annual Statement as to Compliance
        Exhibit G           Form of Transfer Affidavit
        Exhibit H           Form of Payoff Notice
        Exhibit I           Form of Liquidation Report
        Exhibit J           Form of Officer's Certificate as to Charge-offs
        Exhibit K           Form of Transferor Affidavit
        Exhibit L           [Reserved]
        Exhibit M           Form of Transferor Letter
        Exhibit N-1         Form of Investment Letter [Non-Rule 144A]
        Exhibit N-2         Form of Rule 144A Letter
        Exhibit O           Mortgage Guaranty Insurance Corporation PMI Policy
        Exhibit P           List of PMI Mortgage Loans
        Exhibit Q           [Reserved]
        Exhibit R           Prepayment Charge Schedule

                                      -v-

<PAGE>

         THIS POOLING AND SERVICING AGREEMENT (this "Agreement"), dated as of
September 1, 2001, by and among Aames Capital Corporation, as seller (in such
capacity, the "Seller"), Aames Capital Acceptance Corp., as depositor (the
"Depositor"), Countrywide Home Loans, Inc., as servicer (the "Servicer") and
Bankers Trust Company of California, N.A., as trustee (the "Trustee").

                         W I T N E S S E T H   T H A T:

         In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01 Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.

         Addition Notice: With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to Section 2.02 of this Agreement, notice of the
Seller's designation of Subsequent Mortgage Loans to be sold to the Trust
separated by Mortgage Loan Group and the aggregate Subsequent Cut-off Date
Principal Balance of such Subsequent Mortgage Loans in each Mortgage Loan Group,
which notice shall be given to the Trustee not later than one Business Day prior
to the related Subsequent Transfer Date.

         Adjustable Rate Mortgage Loan: Any Hybrid Loan which, upon the
expiration of its initial term bearing a fixed rate of interest, has a Mortgage
Loan Rate that is adjustable at regular periodic intervals, based on the Index
plus the related Gross Margin subject to any Minimum Rate, Maximum Rate and any
periodic limitations on adjustment from time to time, all as set forth in the
Mortgage Loan Schedule.

         Adjustment Date: With respect to any Adjustable Rate Mortgage Loan, the
date on which a change to the Mortgage Loan Rate on a Mortgage Loan becomes
effective.

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

         Aggregate Principal Amount: As to any Distribution Date, the sum of the
Basic Principal Amount for each Mortgage Loan Group.

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

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         Annual Statement of Compliance: The annual statement to be prepared and
delivered by the Servicer in accordance with Section 3.09.

         Applied Realized Loss Amounts: As to any Distribution Date, an amount
equal to the excess, if any, of (i) the aggregate of the Certificate Principal
Balances of the Offered Certificates, after giving effect to all distributions
on such Distribution Date over (ii) the Pool Balance as of the last day of the
related Collection period.

         Appraised Value: The appraised value of any Mortgaged Property based
upon the appraisal made at the time of origination of the related Mortgage Loan
or, in the case of a Mortgage Loan that is a purchase money mortgage loan, the
sales price of the related Mortgaged Property if such sales price is less than
such appraised value.

         Available Funds: With respect to any Mortgage Loan Group and any
Distribution Date, the sum, without duplication of the following amounts with
respect to the Mortgage Loans in such Mortgage Loan Group and the immediately
preceding Collection Period:

                           (i) scheduled and unscheduled payments of principal
                  and interest on the Mortgage Loans received by the Servicer,
                  including amounts deposited in respect of the Closing Date
                  Deposit (net of amounts representing the Monthly Servicing Fee
                  with respect to each Mortgage Loan and the applicable PMI
                  Insurer Fee to the extent previously paid to the Servicer and
                  reimbursement for Monthly Advances and Servicing Advances);

                           (ii) Net Liquidation Proceeds and Trust Insurance
                  Proceeds with respect to the Mortgage Loans (net of amounts
                  applied to the restoration or repair of a Mortgaged Property);

                           (iii) amounts payable in connection with each such
                  Mortgage Loan that was repurchased from the Trust, and all
                  amounts payable in respect of any Mortgage Loan in the related
                  Mortgage Loan Group in connection with a substitution of a
                  Qualified Replacement Mortgage Loan therefor;

                           (iv) payments from the Servicer in connection with
                  (a) Monthly Advances and (b) Compensating Interest, and
                  payments in connection with the termination of the Trust with
                  respect to the Mortgage Loans as provided in this Agreement;

                           (v) on the Distribution Dates during and immediately
                  following the Funding Period, amounts from the Capitalized
                  Interest Account for the payment of interest on the
                  Certificates of the related Mortgage Loan Group; and

                           (vi) on the Distribution Date at or immediately
                  following the end of the Funding Period, amounts remaining on
                  deposit in the Prefunding Account with respect to the related
                  Mortgage Loan Group.

         Available Funds Cap: A per annum rate equal to (i) the weighted average
Net Loan Rate of the Mortgage Loans minus (ii) the product of (x) the
Pass-Through Rate on the Class A-IO

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Certificates and (y) a fraction, the numerator of which is the Notional Amount
of such Class A-IO Certificates immediately prior to such Distribution Date, and
the denominator of which is the Pool Balance as of the end of the second
preceding Collection Period.

         Basic Principal Amount: With respect to any Mortgage Loan Group and any
Distribution Date, an amount equal to the sum of the following amounts (without
duplication) with respect to the Mortgage Loans in such Mortgage Loan Group and
the immediately preceding Collection Period:

                           (i) each payment of principal on a Mortgage Loan
                  received by the Servicer during such Collection Period,
                  including all full and partial principal prepayments (net of
                  reimbursements to the Servicer for Servicing Advances);

                           (ii) the Net Liquidation Proceeds and Trust Insurance
                  Proceeds allocable to principal received by the Servicer with
                  respect to any Mortgage Loan during such Collection Period
                  (net of amounts applied to the restoration or repair of a
                  Mortgaged Property);

                           (iii) all amounts allocable to principal payable in
                  connection with each such Mortgage Loan that was repurchased
                  from the Trust during such Collection Period, and all amounts
                  allocable to principal payable in respect any Mortgage Loan in
                  the related Mortgage Loan Group in connection with a
                  substitution of a Qualified Replacement Mortgage Loan
                  therefor; and

                           (iv) any related amounts remaining in the Prefunding
                  Account with respect to the related Mortgage Loan Group after
                  the Funding Period.

         Basic Principal Distribution Amount: As to any Distribution Date, is an
amount equal to the Aggregate Principal Amount minus the Excess
Overcollateralization Amount.

         Bloomberg: The on-line computer based information network maintained by
Bloomberg L.P., or any successor thereto.

         Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository). As of the Closing Date, only the Offered Certificates
constitute Book-Entry Certificates.

         Book-Entry Nominee:  As defined in Section 6.02(b).

         Business Day: Any day other than (a) a Saturday or a Sunday or (b) a
day on which banking institutions in the State of California or the State of New
York are required or authorized by law, executive order or governmental decree
to be closed.

         Capitalized Interest Account:  Not applicable.

         Capitalized Interest Account Deposit:  $0.

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         Capitalized Interest Requirement:  Not applicable.

         Certificate: Any Class A-1, Class A-2, Class A-IO, Class M-1, Class
M-2, Class B, Class C, Class P or Class R Certificate issued pursuant to this
Agreement.

         Certificate Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.02(e) and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
2001-3 Mortgage Pass-Through Certificates, Series 2001-3, Certificate Account".

         Certificateholder: The Person in whose name a Certificate is registered
in the Certificate Register, except that, solely for the purpose of taking any
action under Article Eight or giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Seller or the Servicer or any Person
actually known to a Responsible Officer of the Trustee to be an Affiliate of the
Seller, the Depositor or the Servicer shall be deemed not to be outstanding and
the Percentage Interest evidenced thereby shall not be taken into account in
determining whether Holders of the requisite Percentage Interests necessary to
take any such action or effect any such consent have acted or consented unless
the Seller, the Depositor, the Servicer or any such Person is an owner of record
of all of the Certificates.

         Certificate Owner: With respect to any Book-Entry Certificate, the
Person who is the beneficial owner thereof.

         Certificate Principal Balance: With respect to the Class A-1
Certificates, the Class A-1 Certificate Principal Balance; with respect to the
Class A-2 Certificates, the Class A-2 Certificate Principal Balance; with
respect to the Class M-1 Certificates, the Class M-1 Certificate Principal
Balance; with respect to the Class M-2 Certificates, the Class M-2 Certificate
Principal Balance; with respect to the B Certificates, the Class B Certificate
Principal Balance; with respect to the Class C Certificates, the Class C
Certificate Principal Balance; and with respect to the Class P Certificates, the
Class P Certificate Principal Balance. The Class A-IO Certificates do not have a
Certificate Principal Balance.

         Certificate Register: The register maintained pursuant to Section 6.02.

         Class: Any class of the Offered Certificates, the Class C Certificate,
the Class P Certificate, the Class R-I Certificate, the Class R-II Certificate
or the Class R-III Certificate, as the case may be, taken as a whole.

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

         Class A Principal Allocation Percentage: For any Distribution Date, the
percentage equivalent of a fraction, determined as follows: (i) in the case of
the Class A-1 Certificates, the numerator of which is (x) the portion of the
Aggregate Principal Amount for such distribution date that is attributable to
principal received on the Group I Mortgage Loans, and the denominator of which
is (y) the Aggregate Principal Amount for such Distribution Date, and (ii) in
the case of the Class A-2 Certificates, the numerator of which is (x) the
portion of the Aggregate Principal Amount for such Distribution Date that is
attributable to principal received

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on the Group II Mortgage Loans, and the denominator of which is (y) the
Aggregate Principal Amount for such Distribution Date.

         Class A-1 Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-1 hereto.

         Class A-1 Certificate Principal Balance: As to any Distribution Date,
the Initial Certificate Principal Balance for the Class A-1 Certificates less
the portions of the Senior Principal Distribution Amounts allocated and actually
distributed to the holders of the Class A-1 Certificates on previous
Distribution Dates.

         Class A-1 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 5.44%, and for
each Interest Period thereafter, 5.94% and (y) the Available Funds Cap.

         Class A-2 Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-1 hereto.

         Class A-2 Certificate Principal Balance: As to any Distribution Date,
the Initial Certificate Principal Balance for the Class A-2 Certificates less
the portions of the Senior Principal Distribution Amounts allocated and actually
distributed to the holders of the Class A-2 Certificates on previous
Distribution Dates.

         Class A-2 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 5.70%, and for
each Interest Period thereafter, 6.20% and (y) the Available Funds Cap.

         Class A-IO Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-4 hereto.

         Class A-IO Pass-Through Rate:  6.00% per annum.

         Class B Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-4 hereto.

         Class B Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance for the Class B Certificates less the
Class B Principal Distribution Amounts actually distributed to the holders of
the Class B Certificates on previous Distribution Dates and reduced by any
Applied Realized Loss Amounts allocated to such Class on prior Distribution
Dates.

         Class B Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 7.13%, and for
each Interest Period thereafter, 7.63% and (y) the Available Funds Cap.

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         Class B Principal Distribution Amount: On any Distribution Date on and
after the Stepdown Date and so long as a Delinquency Event is not in effect, an
amount equal to the excess of (1) the sum of (A) the aggregate Certificate
Principal Balance of the Class A Certificates (after giving effect to the
distribution of the Senior Principal Distribution Amount on such Distribution
Date), (B) the Certificate Principal Balance of the Class M-1 Certificates
(after giving effect to the distribution of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Certificate Principal Balance of the
Class M-2 Certificates (after giving effect to the distribution of the Class M-2
Principal Distribution Amount on such Distribution Date) and (D) the Certificate
Principal Balance of the Class B Certificates immediately prior to such
Distribution Date, over (2) the lesser of (A) 100% of the Pool Balance minus the
Subordination Required Overcollateralization Amount as of the last day of the
related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the OC Floor, provided, however, that after the
Certificate Principal Balances of the Class A, Class M-1 and Class M-2
Certificates are reduced to zero, the Class B Principal Distribution Amount for
such Distribution Date will equal 100% of the Principal Distribution Amount.

         Class C Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit B-1 hereto.

         Class C Carryforward Amount: With respect to any Distribution Date, the
amount by which the aggregate of the amount by which the Class C Distribution
Amount for each prior Distribution Date exceeded the amount actually distributed
in respect of the Class C Distribution Amount on each such date, reduced by the
aggregate of the amounts distributed in respect of the Class C Carryforward
Amount on each such prior Distribution Dates, and reduced by the aggregate of
the amounts of Applied Realized Loss Amounts that have resulted in the reduction
of the Overcollateralization Amount on each such prior Distribution Date.

         Class C Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance of the Class C Certificates less any
amounts distributed to the holders of the Class C Certificates on previous
Distribution Dates with respect to principal on the Class C Certificates.

         Class C Distribution Amount: With respect to any Distribution Date,
means the interest allocated to the Class C Certificates as separate components
in accordance with note (5) of Section 9.16(c) with respect to such Distribution
Date and additionally, with respect to the first Distribution Date, an amount
equal to the Class C Certificate Principal Balance.

         Class Interest Carryover Shortfall: With respect to any Class of
Offered Certificates on any Distribution Date, means the amount, if any, by
which (i) the Class Monthly Interest Amount on such Class for the preceding
Distribution Date plus any outstanding Class Interest Carryover Shortfall with
respect to such Class from the preceding Distribution Date (together with
interest on such outstanding Class Interest Carryover Shortfall at the related
Pass-Through Rate for the related Interest Period to the extent lawful) exceeds
(ii) the amount of interest actually distributed to the holders of such
Certificates on such Distribution Date.

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         Class Interest Distribution: As to any Class of Certificates and
Distribution Date, an amount equal to the sum of (a) the related Class Monthly
Interest Amount and (b) any Class Interest Carryover Shortfall for such Class of
Certificates for such Distribution Date.

         Class M-1 Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-2 hereto.

         Class M-1 Certificate Principal Balance: As to any Distribution Date,
the Initial Class Principal Balance for the Class M-1 Certificates less the
Class M-1 Principal Distribution Amounts actually distributed to the holders of
the Class M-1 Certificates on previous Distribution Dates and reduced by any
Applied Realized Loss Amounts allocated to such Class on prior Distribution
Dates.

         Class M-1 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 6.45%, and for
each Interest Period thereafter, 6.95% and (y) the Available Funds Cap.

         Class M-1 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
Certificate Principal Balance of each Class of Class A Certificates has been
reduced to zero and a Delinquency Event exists, or, if a Delinquency Event is
not in effect, the excess of (1) the sum of (A) the aggregate Certificate
Principal Balance of the Class A Certificates (after giving effect to
distributions of the Senior Principal Distribution Amount for such Distribution
Date) and (B) the Certificate Principal Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (2) the lesser of (A) 82.50% of
the Pool Balance minus the Subordination Required Overcollateralization Amount
as of the last day of the related Collection Period and (B) the Pool Balance as
of the last day of the related Collection Period minus the OC Floor.

         Class M-2 Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-3 hereto.

         Class M-2 Certificate Principal Balance: As to any Distribution Date,
the Initial Certificate Principal Balance for the Class M-2 Certificates less
the Class M-2 Principal Distribution Amounts actually distributed to the holders
of the Class M-2 Certificates on previous Distribution Dates and reduced by any
Applied Realized Loss Amounts allocated to such Class on prior Distribution
Dates.

         Class M-2 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 6.89%, and for
each Interest Period thereafter, 7.39% and (y) the Available Funds Cap.

         Class M-2 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
aggregate Certificate Principal Balance of each of the Class A and Class M-1
Certificates has been reduced to zero and a Delinquency Event exists, or, if a
Delinquency Event is not in effect, the excess of (1) the sum of (A) the
aggregate Certificate Principal Balance of the Class A Certificates (after
giving effect to

                                      -7-
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distributions of the Senior Principal Distribution Amount for such Distribution
Date), (B) the Certificate Principal Balance of the Class M-1 Certificates
(after giving effect to distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date) and (C) the Certificate Principal Balance of
the Class M-2 Certificates immediately prior to such Distribution Date over (2)
the lesser of (A) 92.00% of the Pool Balance minus the Subordination Required
Overcollateralization Amount as of the last day of the related Collection Period
and (B) the Pool Balance as of the last day of the related Collection Period
minus the OC Floor.

         Class Monthly Interest Amount: With respect to any Class and
Distribution Date, means the amount of interest due for any Class of
Certificates in respect of any Interest Period at the applicable Pass-Through
Rate on the related Certificate Principal Balance or Notional Amount, less such
Class' related share of Interest Shortfalls. All calculations of interest will
be made on the basis of a 360-day year assumed to consist of twelve 30-day
months.

         Class P Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit B-3 hereto.

         Class P Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance of the Class P Certificates less any
amounts distributed to the holders of the Class P Certificates on previous
Distribution Dates with respect to principal on the Class P Certificates.

         Class P Deposit: $100.00, to be deposited into the Certificate Account.

         Class Principal Carryover Shortfall: As to any Class of Subordinate
Certificates and any Distribution Date, the excess, if any, of (i) the sum of
(x) the amount of the reduction in the Certificate Principal Balance of that
Class of Subordinate Certificates as a result of the application of Applied
Realized Loss Amounts and (y) the amount of such reductions on prior
Distribution Dates over (ii) the amount distributed in respect of the Class
Principal Carryover Shortfall to such Class of Subordinate Certificates on prior
Distribution Dates.

         Class R Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit B-2 hereto representing each of the Class R-I, Class R-II and Class
R-III Certificates.

         Class R-I Certificate: Any one of the Certificates described in Section
9.16 as representing the "residual interest" in REMIC I, as such term is defined
in Code Section 860G(a)(2). The Class R-I Certificate shall be certificated
together with the Class R-II and Class R-III Certificates, in the form of the
Class R Certificate.

         Class R-II Certificate: Any one of the Certificates described in
Section 9.16 as representing the "residual interest" in REMIC II, as such term
is defined in Code Section 860G(a)(2). The Class R-II Certificate shall be
certificated together with the Class R-I and Class R-III Certificates, in the
form of the Class R Certificate.

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         Class R-III Certificate: Any one of the Certificates described in
Section 9.16 as representing the "residual interest" in REMIC III, as such term
is defined in Code Section 860G (a)(2). The Class R-III Certificate shall be
certificated together with the Class R-I and Class R-II Certificates, in the
form of the Class R Certificate.

         Clean-up Call Date: The first Distribution Date on which the Pool
Balance is less than 5% of the sum of the Original Pool Balance and the
Prefunding Account Deposit.

         Closing Date:  September 25, 2001.

         Closing Date Deposit:  $________.

         Code:  The Internal Revenue Code of 1986 as amended.

         Collection Account: The segregated account, which shall at all times be
an Eligible Account, established and maintained pursuant to Section 3.02(a) and
entitled "Countrywide Home Loans, Inc. in trust for Bankers Trust Company of
California, N.A., and for the benefit of Holders of Aames Mortgage Trust 2001-3
Mortgage Pass-Through Certificates, Series 2001-3, Collection Account".
References herein to the Collection Account shall include any Sub-Servicing
Account as the context requires.

         Collection Period: As to the first Distribution Date, the period
beginning on and including September 2, 2001 and ending on and including October
1, 2001 (except that with respect to payments due and unpaid on or before
September 1, 2001, only collections of principal are included). As to any
Distribution Date thereafter for collections of both interest and principal, the
period beginning on and including the second day of the calendar month
immediately preceding the month in which such Distribution Date occurs and
ending on and including the first day of the calendar month of such Distribution
Date.

         Combined Loan-to-Value Ratio: With respect to a Mortgage Loan, the
ratio (expressed as a percentage) of (i) the sum of the Original Principal
Amount of such related Mortgage Loan plus the outstanding principal balance (at
the time of origination of such Mortgage Loan) of each mortgage loan secured by
the related Mortgaged Property that is senior to such Mortgage Loan, if any, to
(ii) the Appraised Value of the related Mortgaged Property determined by the
Seller at the time of origination of such Mortgage Loan.

         Company:  Aames Capital Corporation, a California corporation.

         Compensating Interest: As to any Distribution Date and any Mortgage
Loan Group, an amount equal to the lesser of (a) one-half of the related Monthly
Servicing Fee for the related Collection Period and (b) the difference between
(i) 30 days' interest (at the related Mortgage Loan Rates, net of the Servicing
Fee Rate) on the Principal Balance of each Mortgage Loan in such Mortgage Loan
Group as to which a Principal Prepayment was received or that became a
Liquidated Mortgage Loan or that was otherwise charged-off (before giving effect
to any related reduction in the Principal Balance of such Mortgage Loan) by the
Servicer during the related Collection Period and (ii) the amount of interest
actually collected by the Servicer for such Mortgage Loans in such Mortgage Loan
Group during such Collection Period.

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         Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be principally administered, which office at the date of the execution of
this Agreement is located at 1761 East St. Andrew Place, Santa Ana, California
92705-4934, Attention: AA0103; Aames Mortgage Loan Pass-Through Certificates,
Series 2001-3.

         Cumulative Loss Event: For any Distribution Date in the applicable
period below, if Cumulative Net Losses shall be in excess of the applicable
percentage of the aggregate Pool Balance as of the Cut-off Date:

                         Number of
                    Distribution Dates                        Percentages
                    ------------------                        -----------
                      37-48                                      3.50%
                      49-60                                      4.00%
                      61 and thereafter                          4.50%

         Cumulative Net Losses: As of any date of determination, the aggregate
of the Liquidation Loan Losses incurred from the Cut-Off Date through the end of
the calendar month preceding such date of determination.

         Cut-off Date: With respect to the Initial Mortgage Loans in each
Mortgage Loan Group, the close of business on September 1, 2001. With respect to
the Subsequent Mortgage Loans, the close of business on the Subsequent Cut-off
Date.

         Cut-off Date Principal Balance: As to any Mortgage Loan, its Principal
Balance as of the related Cut-off Date.

         Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased or substituted by the Seller pursuant to Section 2.03 or 2.05.

         Definitive Certificates:  As defined in Section 6.02(e).

         Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Replacement Mortgage Loan.

         Delinquency Event: A Delinquency Event shall have occurred and be
continuing, if at any time the Three Month Delinquency Rate exceeds 50% of the
Senior Enhancement Percentage.

         Deposit Date: As to any Distribution Date, the third Business Day prior
to such Distribution Date.

         Depositor: Aames Capital Acceptance Corporation, a Delaware
corporation.

         Depository: The initial depository shall be The Depository Trust
Company, the nominee of which is Cede & Co. The Depository shall at all times be
a "clearing corporation" as defined

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<PAGE>

in Section 8102(3) of the Uniform Commercial Code of the State of California, as
amended, or any successor provisions thereto.

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

         Determination Date: As to any Distribution Date, the last day of the
related Collection Period.

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

         Distribution Date: The 25th day of each month or, if such day is not a
Business Day, the Business Day immediately following such 25th day, beginning
October 25, 2001.

         Eligible Account: Either (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
unsecured and uncollateralized debt obligations of which shall be rated "AA" or
better by Standard & Poor's or "A2" or better by Moody's and in the highest
short term rating category by Standard & Poor's and Moody's and that is either
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws and (iv) a
principal subsidiary of a bank holding company or (B) a segregated trust account
maintained with the trust department of a federal or state chartered depository
institution or trust company, having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity, the unsecured and
uncollateralized debt obligations of which shall be rated "Baa3" or better by
Moody's. Any Eligible Accounts maintained with the Trustee shall conform to the
preceding clause (B).

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<PAGE>

         ERISA Plan: Any Person that is an employee benefit plan within the
meaning of Section 3(3) of ERISA or any Person that is an individual retirement
account or employee benefit plan, trust or account subject to Section 4975 of
the Code.

         ERISA Prohibited Holder: As defined in Section 6.02(b).

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

         Event of Default: As defined in Section 8.01.

         Excess Interest: With respect to any Distribution Date, the sum of (a)
any Excess Overcollateralization Amount for such Distribution Date and (b) the
excess of (x) the Available Funds for such Distribution Date (excluding any
amounts payable therefrom for the Trustee Fee, the Monthly Servicing Fee and the
PMI Insurer Premium) over (y) the sum for such Distribution Date of (A) the
Class Monthly Interest Amounts for the Offered Certificates, (B) any Class
Interest Carryover Shortfall for the Senior Certificates, and (C) the Aggregate
Principal Amount.

         Excess Overcollateralization Amount: As to any Distribution Date, the
lesser of (i) the Aggregate Principal Amount for such Distribution Date and (ii)
the excess, if any, of (x) the Overcollateralization Amount (assuming 100% of
the Aggregate Principal Amount is distributed on the Offered Certificates) over
(y) the Required Overcollateralization Amount.

         Expense Fee Rate: The sum of (i) the Servicing Fee Rate, (ii) the per
annum rate for calculating the Trustee Fee (i.e., 0.015%) and (iii) the PMI
Insurer Premium expressed as a per annum rate equal to a fraction, expressed as
a percentage, the numerator of which is the PMI Insurer Premium and the
denominator of which is the Principal Balance of the Mortgage Loans as of the
applicable Determination Date.

         FDIC: The Federal Deposit Insurance Corporation and its successors in
interest.

         FEMA: The Federal Emergency Management Agency and its successors in
interest.

         FHLMC: The Federal Home Loan Mortgage Corporation and its successors in
interest.

         Final Scheduled Distribution Date: The Final Scheduled Distribution
Date for each of the Classes of Certificates are as set forth below:

             Class                    Final Scheduled Distribution Date
             -----                    ---------------------------------
           Class A-1                           November 2031
           Class A-2                           November 2031
           Class A-IO                          September 2004
           Class M-1                           November 2031
           Class M-2                           November 2031
           Class B                             November 2031
           Class C                             November 2031
           Class P                             November 2031
           Class R                             November 2031

                                      -12-
<PAGE>

         FNMA: The Federal National Mortgage Association and its successors in
interest.

         Foreign Person: A Person that is not (i) a citizen or resident of the
United States, (ii) a corporation or partnership (including an entity treated as
a corporation or partnership for U.S. federal income tax purposes) created in
the United States or organized under the laws of the United States or any state
thereof or the District of Columbia (except, in the case of a partnership, as
otherwise provided by Treasury regulations), (iii) an estate that is subject to
United States federal income tax regardless of the source of its income, or (iv)
a trust whose administration may be subject to the primary supervision of a
court within the United States and for which one or more United States persons
have the authority to control all substantial decisions of the trust.

         Funding Period: Not applicable.

         Gross Margin: With respect to any Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note, which amount is
added to the Index in accordance with the terms of the related Mortgage Note to
determine the applicable Mortgage Loan Rate.

         Group Factor: As to any Distribution Date and any Mortgage Loan Group,
the percentage (carried to eight places, rounded down) obtained by dividing the
aggregate Principal Balances of the Mortgage Loans in the related Mortgage Loan
Group (after giving effect to any distribution of principal on the related
Certificates on such Distribution Date) by (i) in the case of Group I, the sum
of the Original Group I Balance and the related allocated Prefunding Account
Deposit or (ii) in the case of Group II, the sum of the Original Group II
Balance and the related allocated Prefunding Account Deposit, as applicable.

         Group I: The group of Initial Mortgage Loans comprised of fixed rate
mortgage loans having agency-conforming balances and identified in the Mortgage
Loan Schedule as having been assigned to Group I and any Subsequent Mortgage
Loans identified in a Subsequent Transfer Agreement as having been assigned to
Group I, including any Qualified Replacement Mortgage Loans delivered in
replacement thereof.

         Group I Class A-IO Class Interest Distribution: As to any distribution
date, an amount equal to the Class Interest Distribution for the Class A-IO
Certificates for such Distribution Date multiplied by a fraction, the numerator
of which is (x) the Certificate Principal Balance of the Class A-1 Certificates
immediately prior to such Distribution Date and the denominator of which is (y)
the aggregate Certificate Principal Balance of the Class A Certificates
immediately prior to such Distribution Date.

         Group II: The group of Initial Mortgage Loans comprised of fixed rate
mortgage loans and Hybrid Loans, both having and not having agency conforming
balances and identified in the Mortgage Loan Schedule as having been assigned to
Group II and any Subsequent Mortgage Loans identified in a Subsequent Transfer
Agreement as having been assigned to Group II, including any Qualified
Replacement Mortgage Loans delivered in replacement thereof.

         Group II Class A-IO Class Interest Distribution: As to any Distribution
Date, an amount equal to the Class Interest Distribution for the Class A-IO
Certificates for such Distribution Date

                                      -13-
<PAGE>

multiplied by a fraction, the numerator of which is (x) the Certificate
Principal Balance of the Class A-2 Certificates immediately prior to such
Distribution Date and the denominator of which is (y) the aggregate Certificate
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date.

         Holder: A Certificateholder.

         Hybrid Loan: Any Mortgage Loan that bears interest at a fixed rate for
its initial three year period following origination, and at an adjustable rate
for the ensuring 27 years in which it remains outstanding.

         Index: With respect to any Adjustable Rate Mortgage Loan, the
applicable index for computing the Mortgage Loan Rate as specified in the
Mortgage Note.

         Initial Certificate Principal Balance: As to the Class P Certificates,
$100. As to the Class C Certificates, $8,314.47, which is equal to the initial
Overcollateralization Amount as of the Closing Date. As to the Class R
Certificates, $0. As to any other Class of Offered Certificates, other than the
Class A-IO Certificates, the respective amount set forth below opposite such
Class:

                                               Initial Certificate
                        Class                   Principal Balance
                        -----                   -----------------
               Class A-1 Certificates            $  132,663,000
               Class A-2 Certificates            $  16,087,000
               Class M-1 Certificates            $  10,937,500
               Class M-2 Certificates            $  8,312,500
               Class B Certificates              $  7,000,000

         Initial Mortgage Loan: Any Mortgage Loan in any Mortgage Loan Group
included in the assets of the Trust as of the Closing Date that is indicated as
such on the Mortgage Loan Schedule.

         Insurance Proceeds: With respect to any Distribution Date, proceeds
paid by any insurer (other than the PMI Insurer) and received by the Servicer
during the related Collection Period pursuant to any insurance policy covering a
Mortgage Loan or the related Mortgaged Property, including any deductible
payable by the Servicer with respect to a blanket insurance policy pursuant to
Section 3.04 and the proceeds from any fidelity bond or errors and omission
policy pursuant to Section 3.12 (to the extent such payments compensate for
losses that would otherwise be payable to Certificateholders pursuant to this
Agreement), net of any component thereof covering any expenses incurred by or on
behalf of the Servicer and specifically reimbursable under this Agreement.

         Interest Period: The calendar month preceding the month in which such
Distribution Date occurs.

         Interest Remittance Amount: As to any Distribution Date, that portion
of the Available Funds for such Distribution Date attributable to interest
received or advanced on the Mortgage Loans.

                                      -14-
<PAGE>

         Interest Shortfall: As to any Distribution Date, the amount of any (i)
Prepayment Interest Shortfall and (ii) Relief Act Shortfall. On any Distribution
Date, the amount of any Interest Shortfalls will be applied to reduce the Class
Monthly Interest Amount of a Class in the following order: first, to the Class C
Certificates in reduction of the interest amounts payable to such Class on the
related Distribution Date and, to the extent the amount of such Interest
Shortfall exceeds the interest due and payable to the Class C Certificates on
such Distribution Date, thereafter to the Offered Certificates, pro rata, based
on the respective Class Monthly Interest Amount for each such Class on such
Distribution Date.

         Investment Company Act: The Investment Company Act of 1940, as amended.

         Junior Mortgage Loan: Any Mortgage Loan secured by a Mortgage with a
lien of other than first priority.

         Late Payment Rate: With respect to any date of determination, the rate
of interest as it is publicly announced by Citibank, N.A. at its principal
office in New York, New York on its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%.

         Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage
Loan as to which the Servicer has determined, in accordance with the servicing
procedures specified herein, during the related Collection Period that all
Liquidation Proceeds that it expects to recover from or on account of such
Mortgage Loan have been recovered.

         Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under any
insurance policy or from any Mortgagor. Such expenses shall include, without
limitation, legal fees and expenses, real estate brokerage commissions, any
unreimbursed amount expended by the Servicer pursuant to Section 3.06 with
respect to the related Mortgage Loan (including, without limitation, amounts
voluntarily advanced to correct defaults on each mortgage loan that is senior to
such Mortgage Loan), any other related and previously unreimbursed Servicing
Advances and any related and previously unreimbursed Property Protection
Expenses.

         Liquidation Loan Losses: For each Liquidated Mortgage Loan the amount,
if any, by which the Principal Balance thereof plus accrued and unpaid interest
thereon is in excess of the related Net Liquidation Proceeds with respect
thereto.

         Liquidation Proceeds: Cash (other than Insurance Proceeds) received in
connection with the liquidation of any Mortgaged Property, including payments
received under the PMI Policy, whether through trustee's sale, foreclosure sale,
condemnation, taking by eminent domain or otherwise received in respect of any
Mortgage Loan foreclosed upon as described in Section 3.06 (including, without
limitation, proceeds from the rental of the related Mortgaged Property).

         Liquidation Report: A liquidation report in the form of Exhibit I
attached hereto.

         Loan-to-Value Ratio: The Original Principal Amount of a Mortgage Loan
as a percentage of the lesser of (a) the Appraised Value and (b) the sales
price, if applicable, of the

                                      -15-
<PAGE>

related Mortgaged Property determined by the Seller at the time of origination
of such Mortgage Loan.

         Maximum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute maximum Mortgage Loan Rate set by provisions in the related Mortgage
Note.

         Minimum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute minimum Mortgage Loan Rate, set by provisions in the related Mortgage
Note, subject to the initial Mortgage Loan Rate first adjusting to a level in
excess of such minimum Mortgage Loan Rate in accordance with the terms of the
Mortgage Note.

         Monthly Advance: Defined in Section 5.02(a).

         Monthly Mortgage Payment: With respect to any Mortgage Note, the amount
of each monthly payment (other than any final balloon payment) payable under
such Mortgage Note in accordance with its terms by the Mortgagor, including one
month's accrued interest on the related Principal Balance at the then applicable
Mortgage Loan Rate, but net of any portion of such monthly payment that
represents late payment charges, prepayment or extension fees or collections
allocable to payments to be made by Mortgagors for payment of insurance premiums
or similar items.

         Monthly Servicing Fee: With respect to any Collection Period and each
Mortgage Loan Group, 1/12 of the product of the Servicing Fee Rate and the
aggregate Principal Balance of the Mortgage Loans in such Mortgage Loan Group as
of the beginning of the related Collection Period (or, in the case of the first
Collection Period, the aggregate Principal Balance of the related Mortgage Loans
as of the Cut-off Date). The Monthly Servicing Fee shall be payable on the
following Deposit Date to the Servicer as servicing compensation hereunder
pursuant to Section 3.08.

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

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

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

         Mortgage Loan: Each of the Mortgage Loans transferred and assigned to
the Trustee pursuant to Section 2.01 or 2.02, that from time to time comprise
part of the Trust, the Mortgage Loans originally so held being identified in the
Mortgage Loan Schedule attached hereto as Exhibit E.

         Mortgage Loan Group: Group I or Group II. References herein to any
Class or Classes of Certificates being related to a Mortgage Loan Group, shall
mean (A) in the case of Group I, the Class A-1 Certificates, the Class A-IO
Certificates, the Class M-1 Certificates, the Class M-2 Certificates, the Class
B Certificates, the Class C Certificates, the Class P Certificates and the Class
R Certificates, and (B) in the case of Group II, the Class A-2 Certificates, the
Class A-IO

                                      -16-
<PAGE>

Certificates, the Class M-1 Certificates, the Class M-2 Certificates, the Class
B Certificates, the Class C Certificates, the Class P Certificates and the Class
R Certificates.

         Mortgage Loan Rate: With respect to any Adjustable Rate Mortgage Loan,
the per annum rate of interest computed in accordance with the provisions of the
related Mortgage Note as the sum of the Index and the Gross Margin, subject to
any Minimum Rate, the Maximum Rate or periodic limitation on adjustments to such
rate applicable from time to time to the calculation of interest thereon. As to
any Fixed Rate Mortgage Loan, the fixed per annum rate of interest applicable to
the calculation of interest thereon specified in the related Mortgage Note.

         Mortgage Loan Schedule: As of any date, the schedule of Mortgage Loans
as amended by each subsequently delivered schedule of Subsequent Mortgage Loans
separated by Mortgage Loan Group. The initial schedule of Mortgage Loans as of
the related Cut-off Date is attached hereto as Exhibit E and sets forth as to
each such Mortgage Loan, among other things, (a) its identifying number and the
name of the related Mortgagor; (b) the street address of the related Mortgaged
Property including the state, county and zip code; (c) its date of origination;
(d) the original number of months to stated maturity; (e) its original stated
maturity; (f) its Original Principal Amount; (g) its Cut-off Date Principal
Balance; (h) the related Mortgage Loan Rate as of the related Cut-off Date and,
with respect to any Adjustable Rate Mortgage Loan, the related Index, Gross
Margin, Minimum Rate, Maximum Rate and any periodic limitations on adjustment;
(i) the scheduled Monthly Mortgage Payment as of the related Cut-off Date; (j)
the date in each month on which the related Monthly Mortgage Payments are due;
(k) its Combined Loan-to-Value Ratio or the ratio, expressed as a percentage, of
the Original Principal Amount of such Mortgage Loan to the Appraised Value of
the related Mortgaged Property, as applicable; (l) the lien status of the
related Mortgage and, with respect to any Junior Mortgage Loan, the principal
amount (as of the date of origination) of all related Senior Liens; (m) whether
the related Mortgaged Property is owner-occupied or non-owner-occupied; (n)
whether the related Mortgaged Property is a single-family residence, a two- to
four-family residence, a unit in a condominium or planned unit development, or
manufactured housing; (o) whether the Mortgage Loan has been originated by an
Affiliate of the Company; (p) the related Cut-off Date (unless specified in a
related Subsequent Transfer Agreement); and (q) a code indicating if the
Mortgage Loan is covered under the PMI Policy.

         Mortgage Note: The note or other instrument evidencing the indebtedness
of a Mortgagor under the related Mortgage Loan.

         Mortgaged Property: The underlying property securing a Mortgage Loan.

         Mortgagor: The obligor under a Mortgage Note.

         Net Liquidation Proceeds: As to any Mortgage Loan, Liquidation Proceeds
net of Liquidation Expenses. If Liquidation Expenses exceed Liquidation Proceeds
as to any Mortgage Loan, Net Liquidation Proceeds shall be zero. For all
purposes of this Agreement, Net Liquidation Proceeds shall be allocated first to
accrued and unpaid interest on the related Mortgage Loan and then to the
Principal Balance thereof.

                                      -17-
<PAGE>

         Net Loan Rate: With respect to any Mortgage Loan as to any day, the
Mortgage Loan Rate less the Expense Fee Rate.

         Net Rate Cap Carryover: As to any Distribution Date and the Offered
Certificates (other than the Class A-IO Certificates), the sum of (i) the
excess, if any, of the related Class Monthly Interest Amount, calculated at the
applicable Pass-Through Rate (without regard to the Available Funds Cap), over
the Class Monthly Interest Amount for such Distribution Date, (ii) any Net Rate
Cap Carryover remaining unpaid from the prior Distribution Date and (iii) 30
days' interest on the amount in clause (ii) calculated at the applicable
Pass-Through Rate (without regard to the Available Funds Cap).

         Net Rate Cap Fund: The Net Rate Cap Fund established and maintained as
described in Section 3.21 and entitled "Bankers Trust Company of California,
N.A., as Trustee for Aames Mortgage Trust 2001-3, Mortgage Pass-Through
Certificates, Series 2001-3, Net Rate Cap Fund."

         Non-permitted Foreign Holder: As defined in Section 6.02(c).

         Notional Amount: The Notional Amount of the Class A-IO Certificates for
any Distribution Date prior to the 37th Distribution Date will equal the lesser
of (i) the Pool Balance as of the end of the second preceding related Collection
Period and (ii) the applicable amount set forth below:

                Distribution Date              Notional Amount
                -----------------              ---------------
                  1 through 3                    $35,000,000
                  4 through 6                     33,390,974
                  7 through 9                     31,252,480
                  10 through 12                   28,387,048
                  13 through 15                   25,024,348
                  16 through 18                   21,971,706
                  19 through 21                   19,290,166
                  22 through 24                   16,934,736
                  25 through 27                   14,865,868
                  28 through 30                   13,048,799
                  31 through 33                   11,452,973
                  34 through 36                   10,051,536

         On and after the 37th Distribution Date, the Notional Amount of the
Notional Amount Certificates will be zero.

         OC Floor: An amount equal to 0.50% of the aggregate Certificate
Principal Balance of the Offered Certificates as of the Closing Date. (i.e.,
$875,000).

         Offered Certificateholder: A holder of an Offered Certificate.

         Offered Certificates: The Certificates other than the Retained
Certificates.

                                      -18-
<PAGE>

         Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President of the
Seller, the Depositor or the Servicer, as the case may be, and delivered to the
Trustee or each Rating Agency, as the case may be.

         Opinion of Counsel: A written opinion of counsel reasonably acceptable
to the Trustee, who may be in-house counsel for the Seller, the Depositor or the
Servicer (except with respect to any opinion with respect to or concerning the
REMIC status of any REMIC Pool). Any expense related to obtaining an Opinion of
Counsel for an action requested by a party shall be borne by the party required
to obtain such opinion or seeking to effect the action that requires the
delivery of such Opinion of Counsel.

         Original Group I Balance: Means the aggregate of the outstanding
principal amounts of each Initial Mortgage Loan that is a Group I Mortgage Loan
as of the Cut-off Date, which amount is $156,080,445.17.

         Original Group II Balance: Means the aggregate of the outstanding
principal amounts of each Initial Mortgage Loan that a Group II Mortgage Loan as
of the Cut-off Date, which amount is $18,927,869.30.

         Original Pool Balance: Means the aggregate outstanding principal
amounts of each Initial Mortgage Loan as of the Cut-off Date, which amount is
$175,008,314.47.

         Original Principal Amount: With respect to any Mortgage Loan, the
original principal amount due under the related Mortgage Note as of its date of
origination.

         Overcollateralization Amount: As of any Distribution Date, the excess
of (x) the Pool Balance as of the last day of the related Collection Period
(plus, during the Funding Period, related allocated amounts on deposit in the
Prefunding Account on such date) over (y) the aggregate Certificate Principal
Balance of the Offered Certificates (after taking into account all distributions
in respect of principal collections on such Distribution Date).

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

         Payment Ahead: Any payment of one or more Monthly Mortgage Payments
remitted by a Mortgagor with respect to a Mortgage Note in excess of the Monthly
Mortgage Payment due during such Collection Period with respect to such Mortgage
Note, which sums the related Mortgagor has instructed the Servicer to apply to
Monthly Mortgage Payments due in one or more subsequent Collection Periods. A
Monthly Mortgage Payment that was a Payment Ahead shall, for purposes of
computing Available Funds, be deemed to have been received by the Servicer on
the date in the related Collection Period on which such Monthly Mortgage Payment
would have been due if such Monthly Mortgage Payment was not a Payment Ahead.

         Payoff Notice: The certification delivered by the Servicer in
connection with any payment in full of the outstanding principal balance of a
Mortgage Loan pursuant to Section 3.07, to be substantially in the form of
Exhibit H.

                                      -19-
<PAGE>

         Percentage Interest: With respect to any Certificate, the undivided
percentage interest (carried to eight places, rounded down) obtained by dividing
the original principal balance of such Certificate by the Initial Certificate
Principal Balance of the related Class, as applicable, and multiplying the
result by 100; provided that with respect to a Class C Certificate, a Class P
Certificate or a Class R Certificate, Percentage Interest means the undivided
percentage interest set forth on the face of such Certificate, which in the
aggregate shall not exceed 100%.

         Permitted Investments: One or more of the following obligations,
instruments and securities:

                  (A) direct general obligations of, or obligations fully and
         unconditionally guaranteed as to the timely payment of principal and
         interest by, the United States or any agency or instrumentality
         thereof, provided such obligations are backed by the full faith and
         credit of the United States;

                  (B) Federal Housing Administration debentures, FHLMC senior
         debt obligations and FNMA senior debt obligations, but excluding any of
         such securities whose terms do not provide for payment of a fixed
         dollar amount upon maturity or call for redemption or that are not
         rated in the highest rating category by each Rating Agency;

                  (C) federal funds, certificates of deposit, time and demand
         deposits and banker's acceptances (in each case having original
         maturities of not more than 365 days) of any bank or trust company
         incorporated under the laws of the United States or any state thereof,
         provided that the short-term debt obligations of such bank or trust
         company at the date of acquisition thereof have been rated "A-1" or
         better by Standard & Poor's, "Prime-1" or better by Moody's;

                  (D) deposits of any bank or savings and loan association that
         has combined capital, surplus and undivided profits of at least
         $100,000,000, which deposits are held up to the applicable limits
         insured by the Bank Insurance Fund or the Savings Association Insurance
         Fund of the FDIC;

                  (E) commercial paper (having original maturities of not more
         than 180 days) that has the highest short term rating of each of
         Standard & Poor's and Moody's;

                  (F) investments in money market funds rated "AAAm" or "AAAm-G"
         by Standard & Poor's and "Aaa" by Moody's (any such money market funds
         that provide for demand withdrawals without penalty being conclusively
         deemed to satisfy any maturity requirement for Permitted Investments
         set forth herein); and

                  (G) investments approved in writing by all Rating Agencies;

provided that (1) no investment described hereunder shall evidence either the
right to receive (i) only interest with respect to obligations underlying such
instrument or (ii) both principal and interest payments derived from obligations
underlying such instrument and the principal and interest payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity of the underlying obligations; (2) no instrument described
hereunder may be purchased at a price greater than par if such instrument may be
prepaid or

                                      -20-
<PAGE>

called at a price less than its purchase price prior to stated maturity; (3) no
investment described hereunder shall contain options or otherwise have voting
rights with respect thereto (unless such voting rights are relinquished upon the
purchase of such investment); and (4) no investment shall mature later than the
latest Final Scheduled Distribution Date or be sold or disposed of prior to
maturity. Permitted Investments shall mature not later than the Business Day
prior to the date on which such monies will be needed to make payments, or in
the case of Permitted Investments held in the Prefunding Account, shall be
available on the Business Day next succeeding the date the Trustee receives the
Addition Notice that such monies will be needed. Notwithstanding the foregoing,
with respect to investment of amounts in any account, any of the foregoing
obligations, instruments or securities will not be Permitted Investments to the
extent that an investment therein will cause the then outstanding principal
amount thereof in which such funds are then invested to exceed $25,000,000 (such
investments being valued at par).

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

         PMI Insurer: Mortgage Guaranty Insurance Corporation, a monoline
private insurance company organized and created under the laws of the State of
Wisconsin, or its successors in interest.

         PMI Insurer Premium: For any Distribution Date and any Mortgage Loan
Group, the aggregate of the premiums payable, if any, during the immediately
preceding Collection Period under each PMI Policy for any PMI Mortgage Loans in
the related Mortgage Loan Group, as set forth in an a statement delivered to the
Trustee by the PMI Insurer with respect to such Distribution Date.

         PMI Mortgage Loans: The list of Mortgage Loans insured by the PMI
Insurer attached hereto as Exhibit P as amended by each subsequently delivered
schedule of Subsequent Mortgage Loans insured by the PMI Insurer.

         PMI Policy: The related primary mortgage insurance policy set forth on
Exhibit O hereto with respect to the PMI Mortgage Loans and all endorsements
thereto, issued by the PMI Insurer or collective reference to such policies, as
the context requires.

         Pool Balance: As to any Distribution Date, the sum of the aggregate of
the Principal Balances of the Mortgage Loans as of the end of the related
Collection Period plus, in the case of any Distribution Date relating to a
Collection Period that includes any part of the Funding Period, any portion of
the related allocated Prefunding Account Deposit remaining on deposit in the
Prefunding Account or Certificate Account as of the last day of such Collection
Period.

         Prefunding Account: Not applicable.

         Prefunding Account Deposit: Not applicable.

         Prefunding Distribution Date: Not applicable.

                                      -21-
<PAGE>

         Prepayment Assumption: Means the prepayment assumptions described in
the Prospectus Supplement as having been used to generate the prepayment
scenarios therein described.

         Prepayment Charge: As to a Mortgage Loan, any charge paid by a
Mortgagor in connection with certain partial prepayments and all prepayments in
full made within the related Prepayment Charge Period, the Prepayment Charges
with respect to each applicable Mortgage Loan so held by the Trust being
identified in a prepayment charge schedule (other than any Servicer Prepayment
Charge Payment Amount).

         Prepayment Charge Period: As to any Mortgage Loan, the period of time,
if any, during which a Prepayment Charge may be imposed.

         Prepayment Charge Schedule: As of any date, the list of Prepayment
Charges on the Mortgage Loans included in the Trust on such date, attached
hereto as Exhibit R (including the Prepayment Charge Summary attached thereto).
The Prepayment Charge Schedule shall set forth the following information with
respect to each Prepayment Charge:

                           (i) the Mortgage Loan identifying number;

                           (ii) a code indicating the term of the Prepayment
                  Charge;

                           (iii) the state of origination of the related
                  Mortgage Loan;

                           (iv) the date on which the first Monthly Mortgage
                  Payment was due on the related Mortgage Loan;

                           (v) the term of the related Mortgage Loan;

                           (vi) the Principal Balance of the related Mortgage
                  Loan as of the Cut-off Date;

                           (vii) a code indicating whether a Mortgage Loan has a
                  prepayment penalty;

                           (viii) a code indicating the type of prepayment
                  penalty;

                           (ix) a code indicating the amount, if any, of a
                  prepayment by a Mortgagor that would not be subject to the
                  prepayment penalty that would otherwise apply; and

                           (x) the period from the date of origination of the
                  Mortgage Loan during which the prepayment penalty applies.

         Prepayment Interest Shortfall: As to any Distribution Date and any
Mortgage Loan Group, the amount, if any, by which the amount described in clause
(b) of the first sentence of the definition of Compensating Interest for such
Distribution Date exceeds one-half of the

                                      -22-
<PAGE>

Monthly Servicing Fee (calculated with a Servicing Fee Rate of 0.50% per annum)
for such Mortgage Loan Group and the related Collection Period.

         Principal Balance: As to any Mortgage Loan and any day, the actual
outstanding principal amount thereof as of the close of business on the last day
of the preceding calendar month (or, if prior to the last day of the calendar
month in which the Cut-off Date occurs, as of the related Cut-off Date, without
duplication), less the following amounts, if any, received through the last day
of the preceding calendar month (i) any Principal Payments received in respect
of such Mortgage Loan, (ii) Net Liquidation Proceeds and Trust Insurance
Proceeds allocable to principal recovered or collected in respect of such
Mortgage Loan, (iii) the portion of the Purchase Price allocable to principal to
be remitted by the Seller or the Servicer to the Trustee on the next succeeding
Deposit Date in connection with a purchase or repurchase of such Mortgage Loan
pursuant to Section 2.03, 2.05, 3.01, 3.06 or 10.01, to the extent such amount
is actually received by the Trustee on such Deposit Date and (iv) the amount to
be remitted by the Seller to the Trustee on the next succeeding Deposit Date in
connection with a substitution of a Qualified Replacement Mortgage Loan for such
Mortgage Loan pursuant to Section 2.03 or 2.05, to the extent such amount is
actually received by the Trustee on such Deposit Date.

         Principal Distribution Amount: As to any Distribution Date, the lesser
of (a) the aggregate Certificate Principal Balances immediately preceding such
Distribution Date and (b) the sum of (1) the Aggregate Principal Amount minus
the Excess Overcollateralization Amount and (2) the Subordination Increase
Amount.

         Principal Payment: As to any Mortgage Loan and Collection Period, all
amounts received or, in the case of the principal portion of any Payment Ahead,
deemed to have been received by the Servicer from or on behalf of the related
Mortgagor during such Collection Period (including Principal Prepayments) that,
at the time of receipt or, in the case of any Payment Ahead, at the time such
Payment Ahead is deemed to have been received, were applied or were required to
be applied by the Servicer in reduction of the Principal Balance of such
Mortgage Loan.

         Principal Prepayment: As to any Mortgage Loan and Collection Period,
any payment by a Mortgagor or other recovery in respect of principal on a
Mortgage Loan (including Net Liquidation Proceeds) that, in the case of a
payment by a Mortgagor, is received in advance of its scheduled due date and is
not a Payment Ahead.

         Property Protection Expenses: Expenses (exclusive of overhead expenses)
reasonably paid or incurred by or for the account of the Servicer in connection
with the preservation or protection of a Mortgaged Property or the security of a
Mortgaged Property, including (a) hazard insurance policy premiums, (b) real
estate taxes and property repair, replacement, protection and preservation
expenses, (c) amounts expended to cure or prevent any default with respect to
any mortgage loan senior to the related Mortgage Loan and (d) similar expenses
reasonably paid or incurred to preserve or protect the value of such Mortgaged
Property or security (including but not limited to reasonable legal fees and
expenses).

         Prospectus: That certain Prospectus dated as of September 7, 2001
relating to the asset-backed bonds and certificates to be sold by the Company.

                                      -23-
<PAGE>

         Prospectus Supplement: That certain Prospectus Supplement dated as of
September 7, 2001 relating to $175,000,000 principal amount of Mortgage
Pass-Through Certificates, Series 2001-3.

         Purchase Price: With respect to (a) any Defective Mortgage Loan or (b)
any Mortgage Loan to be purchased by the Servicer pursuant to Section 3.01 or
Section 3.06, an amount equal to (i) the sum of (A) the outstanding principal
balance of such Mortgage Loan or Defective Mortgage Loan, as the case may be, as
of the beginning of the Collection Period next preceding the Deposit Date on
which such repurchase or purchase is required to occur, (B) interest computed at
the applicable Mortgage Loan Rate on such outstanding principal balance from the
date to which interest was last paid by the Mortgagor to the last day of the
Collection Period immediately preceding the Deposit Date on which such
repurchase or purchase occurs and (C) any previously unreimbursed Servicing
Advances made on or in respect of such Defective Mortgage Loan or Mortgage Loan,
as the case may be, less (ii) any payments of principal and interest in respect
of such Defective Mortgage Loan or Mortgage Loan, as the case may be, made by or
on behalf of the related Mortgagor during such Collection Period; provided that
the Purchase Price with respect to any Restricted Mortgage Loan to be purchased
by the Servicer pursuant to Section 3.06 will be the fair market value of the
related Mortgaged Property as described in such Section 3.06.

         Qualified Replacement Mortgage Loan: A Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 2.03 or Section 2.05
that must, at the end of the Collection Period preceding the date of such
substitution, (i) have an outstanding principal balance (when taken together
with any other Qualified Replacement Mortgage Loan being substituted for such
Deleted Mortgage Loan), not in excess of and not substantially less than the
unpaid principal balance of the Deleted Mortgage Loan at the end of the
Collection Period preceding the date of substitution, (ii) if the Deleted
Mortgage Loan is an Adjustable Rate Mortgage Loan, have the Mortgage Loan Rate
computed on the same basis as the Mortgage Loan Rate on the related Mortgage
Loan, utilizing the same Index and having a Gross Margin or Minimum Rate not
less than (and not more than one percentage point in excess of) the Gross Margin
and Minimum Rate applicable to the Deleted Mortgage Loan and if the Deleted
Mortgage Loan is a Fixed Rate Mortgage Loan, have a Mortgage Loan Rate not less
than (and not more than one percentage point in excess of) the Mortgage Loan
Rate of the Deleted Mortgage Loan, (iii) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan, (iv) have a Combined Loan-to-Value Ratio equal to or lower than the
Combined Loan-to-Value Ratio of the Deleted Mortgage Loan, (v) satisfy the
criteria set forth from time to time in the definition "qualified replacement
mortgage" at Section 860G(a)(4) of the Code, (vi) have the same or a superior
lien priority as the Deleted Mortgage Loan, (vii) comply as of the date of
substitution with each representation and warranty set forth in Section 2.05,
(viii) have the same or better property type as the Deleted Mortgage Loan and
(ix) have the same or better occupancy status. In the event that one or more
mortgage loans are proposed to be substituted for one or more Deleted Mortgage
Loans, the foregoing tests may be met on a weighted average basis or other
aggregate basis, except that the requirements of clauses (iv) through (viii)
hereof must be satisfied as to each Qualified Replacement Mortgage Loan.

                                      -24-
<PAGE>

         Rating Agencies: Standard & Poor's and Moody's (each, a "Rating
Agency"). If either such agency or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical credit rating
agency, or other comparable Person, designated by the Servicer, notice of which
designation shall be given to the Trustee.

         Realized Loss: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the Principal Balance of such Mortgage Loan and accrued
and unpaid interest thereon (determined as of the Determination Date immediately
prior to such Mortgage Loan becoming a Liquidated Mortgage Loan) exceeds the Net
Liquidation Proceeds, if any, in respect of such Mortgage Loan, which amount
shall in no event exceed the Principal Balance of such Mortgage Loan (determined
as of the Determination Date immediately prior to such Mortgage Loan becoming a
Liquidated Mortgage Loan), in each case as determined by the Servicer and set
forth on a Liquidation Report and accompanying Officer's Certificate
substantially in the form of Exhibits I and J hereto.

         Record Date: As to any Distribution Date, the close of business on the
last Business Day of the calendar month immediately preceding such Distribution
Date.

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

         Relief Act Shortfall: As to any Distribution Date and any Mortgage Loan
Group, the amount of any reduction of interest collectible on any Mortgage Loan
in such Mortgage Loan Group for the related Collection Period due to the
application of the Relief Act.

         REMIC: A "real estate mortgage investment conduit" as defined in Code
Section 860D, and in particular, any of REMIC I, REMIC II or REMIC III as
indicated by context.

         REMIC I Interests: As defined in Section 9.16(b) and described in
Section 9.16.

         REMIC I Regular Interests: As defined in Section 9.16(b) and described
in Section 9.16.

         REMIC II Interests: As defined in Section 9.16(c) and described in
Section 9.16.

         REMIC II Regular Interests: As defined in Section 9.16(c) and described
in Section 9.16.

         REMIC Pool: With respect to REMIC I, the assets of the Trust other than
the Prefunding Account, Capitalized Interest Account, Net Rate Cap Fund, the
REMIC I Regular Interests and the REMIC II Regular Interests; with respect to
REMIC II, the REMIC I Regular Interests, other than the Class P Certificates;
and, with respect to REMIC III, the REMIC II Regular Interests.

         REMIC Provisions: Provisions of the federal income tax law relating to
REMICs that appear at Sections 860A through 860G of Part IV of Subchapter M of
Chapter 1 of Subtitle A of the Code, and related provisions, and U.S. Department
of the Treasury proposed, temporary or final regulations and rulings promulgated
thereunder, as the foregoing may be in effect from time to time.

         REO Property: As defined in Section 5.02(a).

                                      -25-
<PAGE>

         Representative: Morgan Stanley & Co. Incorporated.

         Required Overcollateralization Amount: As to any Distribution Date (a)
prior to the Stepdown Date, the product of (i) 2.75% and (ii) the Pool Balance
as of the Cut-off Date; and (b) on and after the Stepdown Date, the greater of
(i) the lesser of (x) the product of 2.75% of the Pool Balance as of the Cut-off
Date and (y) the product of 5.50% and the Pool Balance as of the end of the
related Collection Period and (ii) the OC Floor; provided, however, that on each
Distribution Date during the continuance of (a) a Delinquency Event or
Cumulative Loss Event, the Required Overcollateralization Amount will equal the
Required Overcollateralization Amount in effect as of the Distribution Date
immediately preceding the date on which such Delinquency Event or Cumulative
Loss Event first occurred.

         Responsible Officer: When used with respect to the Trustee, any Vice
President or Assistant Vice President, any Assistant Secretary, any Assistant
Treasurer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. When used
with respect to the Seller, Depositor or Servicer, the President or any Vice
President, Assistant Vice President or any Secretary or Assistant Secretary.

         Restricted Mortgage Loan: A Mortgage Loan that as of the Closing Date
was 90 or more days contractually delinquent. As of the date hereof, there are
no Restricted Mortgage Loans in any Mortgage Loan Group.

         Restricted Mortgaged Property: With respect to any Restricted Mortgage
Loan, the Mortgaged Property securing such Restricted Mortgage Loan.

         Retained Certificates: The Class C Certificates, the Class P
Certificates and the Class R Certificates.

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

         Seller: The Company.

         Senior Certificates: The Class A-1, Class A-2 and Class A-IO
Certificates.

         Senior Enhancement Percentage: As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate Certificate Principal Balances of the Subordinate Certificates and
(ii) the Overcollateralization Amount (in each case, prior to taking into
account the distribution of the Principal Distribution Amount on such
Distribution Date) and the denominator of which is the Pool Balance as of the
last day of the related Collection Period.

         Senior Lien: With respect to any Junior Mortgage Loan, any liens on the
related Mortgaged Property of higher priority.

         Senior Principal Distribution Amount: As to (a) any Distribution Date
prior to the Stepdown Date or during the continuance of a Delinquency Event, the
lesser of (i) 100% of the

                                      -26-
<PAGE>

Principal Distribution Amount and (ii) the aggregate Certificate Principal
Balances of the Class A Certificates, and (b) any other Distribution Date, an
amount equal to the lesser of (x) the Principal Distribution Amount and (y) the
excess, if any, of (i) the aggregate Certificate Principal Balance of the Class
A Certificates immediately prior to such Distribution Date over (ii) the lesser
of (x) the product of 70.00% and the Pool Balance as of the last day of the
related Collection Period less the Subordination Required Overcollaterization
Amount for that Distribution Date and (y) the Pool Balance as of the last day of
the related Collection Period minus the OC Floor.

         Servicer: Countrywide Home Loans, Inc., a New York corporation, or any
successor servicer appointed as provided pursuant to this Agreement.

         Servicer Prepayment Charge Payment Amount: The amounts payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.22.

         Servicer Remittance Report: The monthly report prepared by the Servicer
and delivered to the Trustee pursuant to Section 4.01.

         Servicing Advances: All reasonable and customary "out-of-pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligation, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, including without
limitation advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and, if applicable, flood insurance policies,
(ii) the prosecution or defense of any enforcement or judicial proceedings,
including foreclosures, (iii) the management and liquidation of any REO
Property, (iv) compliance with the obligations under Section 3.04 and (v)
expenditures relating to the correction of a default on any Senior Lien pursuant
to Section 3.06 in connection with the liquidation of a Mortgage Loan.

         Servicing Fee Rate: With respect to any Mortgage Loan Group and each
Collection Period, 0.50% per annum.

         Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers annexed to an
Officer's Certificate furnished to the Trustee by the Servicer, as such list may
from time to time be amended.

         Sixty Day Delinquency Rate: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate Principal
Balances of the Mortgage Loans that are (a) 60 or more days delinquent as of the
last day of the related Collection Period, (b) 60 or more days delinquent and in
bankruptcy as of the last day of the related Collection Period or (c) REO
Property and Mortgage Loans in foreclosure and the denominator of which is the
Pool Balance as of the last day of the related Collection Period.

         Standard & Poor's: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and its successors in interest.

         Startup Day: As defined in Section 9.16(e).

                                      -27-
<PAGE>

         Statement to Certificateholders: As defined in Section 5.03.

         Stepdown Date: The later to occur of (x) the earlier to occur of (i)
the Distribution Date in October 2004 and (ii) the Distribution Date on which
the aggregate Certificate Principal Balance of the Class A Certificates is
reduced to zero, and (y) the first Distribution Date on which the Pool Balance
has been reduced to 50% of the Pool Balance as of the Cut-off Date.

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

         Subordination Deficiency: As to any Distribution Date, the excess, if
any, of (i) the Required Overcollateralization Amount for such Distribution Date
over (ii) the Overcollateralization Amount for such Distribution Date after
giving effect to the distribution of the Basic Principal Amount on such
Distribution Date (but prior to the distribution of any Subordination Increase
Amount on that Distribution Date).

         Subordination Increase Amount: As to any Distribution Date, the lesser
of (i) the Subordination Deficiency and (ii) the Excess Interest.

         Subordination Required Overcollateralization Amount: (A) as to any
Distribution Date on which a Delinquency Event or a Cumulative Loss Event does
not exist, the Required Overcollateralization Amount without giving effect to
clause (b) (ii) of such definition and (B) as to any Distribution Date on which
a Delinquency Event or a Cumulative Loss Event exists, the Required
Overcollateralization Amount.

         Subsequent Cut-off Date: None.

         Subsequent Cut-off Date Principal Balance: None.

         Subsequent Mortgage Loan Schedule: None.

         Subsequent Mortgage Loan: None.

         Subsequent Purchase Price: None.

         Subsequent Transfer Agreement: None.

         Subsequent Transfer Date: None.

         Sub-Servicer: Any Person, including an Affiliate of the Servicer, with
whom the Servicer has entered into a Sub-Servicing Agreement and who satisfies
the requirements set forth in Section 3.15 hereof in respect of the
qualification of a Sub-Servicer. The Sub-Servicers with respect to any of the
Mortgage Loans as of the related Cut-off Date are listed on Schedule I attached
to this Agreement.

         Sub-Servicing Account: Any segregated account, which shall at all times
be an Eligible Account, established and maintained pursuant to Section 3.02(b)
and entitled "Bankers Trust Company of California, N.A., in trust for the
benefit of Holders of Aames Mortgage Trust 2001-

                                      -28-
<PAGE>

3 Mortgage Pass-Through Certificates, Series 2001-3, Collection Account".
References herein to the Collection Account shall include any Sub-Servicing
Account as the context requires.

         Sub-Servicing Agreement: A written contract between the Servicer and
any Sub-Servicer relating to the servicing and/or administration of certain
Mortgage Loans.

         Three Month Delinquency Rate: As to any Distribution Date the
arithmetic average of the Sixty Day Delinquency Rates for the three Distribution
Dates preceding such Distribution Date.

         Transfer Affidavit: The affidavit to be delivered by any transferee of
an interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit G.

         Transferor Affidavit: The affidavit to be delivered by any transferor
of an interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit K.

         Transition Cost: Any documented expenses reasonably incurred by Trustee
in connection with a transfer of servicing from the Servicer to a successor
servicer as successor servicer pursuant to Section 8.02, but not to exceed
$5,000 with respect to any single succession.

         Trust: The trust created by this Agreement and the corpus thereof,
which consists of, to the extent described herein, the Mortgage Loans, such
assets as shall from time to time be identified or shall be required by this
Agreement to be deposited in the Collection Account, the Certificate Account,
the Prefunding Account or the Capitalized Interest Account or invested in
Permitted Investments in accordance with this Agreement, all rights under any
insurance policy covering a Mortgage Loan or the related Mortgaged Property,
including the PMI Policy, and property and any proceeds thereof that secured a
Mortgage Loan and that has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

         Trust Insurance Proceeds: Insurance Proceeds that (a) are applied by
the Servicer to reduce the Principal Balance of the related Mortgage Loan or pay
interest due on the related Mortgage Loan and (b) not applied to the restoration
or repair of the related Mortgaged Property or released to the related Mortgagor
in accordance with the Servicer's normal servicing procedures or the terms of
the related Mortgage Loan.

         Trust Parties: As defined in Section 5.04.

         Trustee: Bankers Trust Company of California, N.A., a national banking
association, and its successors in interest or any successor trustee appointed
as provided pursuant to this Agreement.

         Trustee Fee: With respect to any Distribution Date and each Mortgage
Loan Group, 1/12 of the product of 0.015% and the aggregate Principal Balance of
the Mortgage Loans in such Mortgage Loan Group as of the beginning of the
related Collection Period (or, in the case of the first Distribution Date, the
aggregate Principal Balance of the related Mortgage Loans as of the Cut-off
Date).

                                      -29-
<PAGE>

         Turbo Amount: As defined in Section 9.16(c).

         Vice President: Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".

         Voting Interest: The portion of the voting interests of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Interests shall be allocated to the Class
A-IO Certificates (such Voting Rights to be allocated among the Holders of
Certificates of such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Interests shall be allocated to the Class C
Certificates (such Voting Rights to be allocated among the Holders of
Certificates of such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Interests shall be allocated to the Class P
Certificates, (d) 1% of all Voting Interests shall be allocated to the Class R
Certificates in the aggregate, or if separate Class R-I and Class R-II and Class
R-III Certificates are issued, 1/3% to each such Class (such Voting Interests to
be allocated among the Holders of Certificates of each such Class in accordance
with their respective Percentage Interests), and (e) the remaining Voting
Interests shall be allocated among Holders of the Classes of Offered
Certificates in proportion to the Certificate Principal Balances of their
respective Offered Certificates on such date. Each Certificateholder of a Class
will have a Voting Interest equal to the product of the Voting Interest to which
such Class is collectively entitled and the Percentage Interest in such Class
represented by such Holder's Certificates. With respect to any provision hereof
providing for action, consent or approval of each Class of Certificates or
specified Classes of Certificates, each Certificateholder of a Class will have a
Voting Interest in such Class equal to such Holder's Percentage Interest in such
Class.

         Section 1.02 Interest Calculations. All calculations of interest at the
Mortgage Loan Rate that are made in respect of the Principal Balance of a
Mortgage Loan, shall be made on a daily basis using a 360-day year of twelve
30-day months.

         All calculations of interest on the Offered Certificates will be
computed on the basis of a 360-day year of twelve 30-day months.

                                   ARTICLE II

                             CONVEYANCE OF THE TRUST
                        ORIGINAL ISSUANCE OF CERTIFICATES

         Section 2.01 Conveyance of the Trust. The Seller, concurrently with the
execution and delivery of this Agreement, does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Depositor, without
recourse (except as otherwise explicitly provided for herein), all of its right,
title and interest in and to the corpus of the Trust, including specifically,
without limitation, the Mortgage Loans, the Mortgages, the Mortgage Files and
the Mortgage Notes, including all interest and principal (whether in the form of
payments by Mortgagors or other proceeds) received or deemed to be received by
the Seller on or with respect to the Mortgage Loans on or after the related
Cut-off Date net of amounts in respect of interest accrued on the Mortgage Loans
in periods prior to the related Cut-off Date, (whether in the nature of amounts
held by the Seller for application on behalf of the related Mortgagor as a
Monthly Mortgage

                                      -30-
<PAGE>

Payment that is due on any date on or after the related Cut-off Date or
otherwise), and the Class P Deposit together with all of its right, title and
interest in and to the proceeds received on or after the related Cut-off Date of
any related insurance policies. Such delivery of the Mortgage Loans, the
Mortgages, Mortgage Files and the Mortgage Notes shall be made against payment
by the Depositor of the purchase price, previously agreed to by the Seller and
Depositor, for the Mortgage Loans. In addition, on or prior to the Closing Date
the Seller shall (i) cause the PMI Policy to be delivered to the Depositor and
(ii) deposit the Closing Date Deposit with the Depositor for deposit in the
Collection Account.

         Immediately upon the conveyance of the corpus of the Trust referred to
in the preceding paragraph, the Depositor does hereby sell, transfer, assign,
set over and otherwise convey to the Trustee in trust for the benefit of the
Certificateholders, without recourse (except as otherwise explicitly provided
for herein), all the right, title and interest of the Depositor in and to the
Trust, the PMI Policy and the Closing Date Deposit together with the Depositor's
right to require the Seller to cure any breach of a representation or warranty
made herein by the Seller or to repurchase or substitute for any affected
Mortgage Loan in accordance herewith.

         In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the corpus of the Trust by the Seller to the
Depositor and by the Depositor to the Trustee, such sale and assignment is
deemed to constitute a pledge of security for a loan, it is the intent of this
Agreement that the Seller shall be deemed to have granted to Depositor and the
Depositor shall be deemed to have granted to the Trustee for the benefit of the
Certificateholders a first priority perfected security interest in all of the
related transferring party's right, title and interest in and to the Mortgage
Loans, the Mortgages, the Mortgage Files and the Mortgage Notes, all payments of
principal or interest on the Mortgage Loans received on or after the related
Cut-off Date net of amounts in respect of interest accrued on the Mortgage Loans
in periods prior to the related Cut-off Date, all other payments made in respect
of such Mortgage Loans on or after the related Cut-off Date and all proceeds of
any thereof, including all amounts on deposit in the Certificate Account, the
Collection Account, the Prefunding Account and the Capitalized Interest Account
and amounts invested in Permitted Investments (but excluding all investment
income with respect to the Prefunding Account and Capitalized Interest Account),
and that this Agreement shall constitute a security agreement under applicable
law. The Seller and the Depositor shall file financing statements and
continuation statements as necessary to maintain the perfection of such security
interest.

         The Company confirms to the Depositor and the Depositor confirms to the
Trustee that it has caused its computer records relating to the Initial Mortgage
Loans to indicate by a code that the Initial Mortgage Loans have been sold,
respectively, to the Depositor and to the Trustee on behalf of the Trust and
constitute part of the Trust in accordance with the terms of this Agreement. The
Company further confirms to the Depositor and the Depositor further confirms to
the Trustee that it will cause its computer records relating to each Subsequent
Mortgage Loan to indicate by a code that such Subsequent Mortgage Loan has been
sold, respectively, to the Depositor and to the Trustee on behalf of the Trust
and that it constitutes part of the Trust in accordance with the terms of this
Agreement. The Company and the Depositor each confirms that it will treat the
conveyance transactions contemplated hereby and in each Subsequent Transfer
Agreement as sales in accordance with generally accepted accounting principles
and will reflect such transactions as sales on its primary accounting records.

                                      -31-
<PAGE>

         In connection with the sale and assignment set forth in the second
paragraph of this Section 2.01, the Depositor does hereby deliver to or cause to
be delivered to, and deposit with or cause to be deposited with, the Trustee the
originals of the following documents or instruments with respect to each
Mortgage Loan so assigned:

                  (a) The original Mortgage Note, with all intervening
         endorsements sufficient to show a complete chain of endorsement to the
         Person endorsing the Mortgage Note to the Trustee, endorsed (which
         endorsement may be by manual or facsimile signature) by the Person so
         endorsing without recourse to the order of the Trustee in the following
         form: "Pay to the order of Bankers Trust Company of California, N.A.,
         in trust for the benefit of holders of Aames Mortgage Trust 2001-3
         Mortgage Pass-Through Certificates, Series 2001-3, without recourse";

                  (b) The original Mortgage with evidence of recording indicated
         thereon;

                  (c) The original assignment of the Mortgage executed by the
         Person assigning the Mortgage to the Trustee;

                  (d) Originals of all assumption, modification and substitution
         agreements in those instances where the terms or provisions of a
         Mortgage or Mortgage Note have been modified or such Mortgage or
         Mortgage Note has been assumed;

                  (e) Originals of all intervening mortgage assignments with
         evidence of recording indicated thereon sufficient to show a complete
         chain of assignment from the originator of the Mortgage Loan to the
         Person assigning such assignments to the Trustee; and

                  (f) Original lender's title insurance policy issued on the
         date of the origination of such Mortgage Loan or a true copy thereof
         or, if such original lender's title insurance policy has been lost, a
         copy thereof certified by the appropriate title insurer to be true and
         complete or, if such lender's title insurance policy has not been
         issued as of the Closing Date, a marked up commitment (binder) to issue
         such policy.

         As promptly as practicable subsequent to the Closing Date, and in any
event, within 30 days thereafter, the Company, in its capacity as initial
Sub-Servicer shall (i) affix the Trustee's name to each assignment of Mortgage,
as the assignee thereof in the following form: "Bankers Trust Company of
California, N.A., in trust for the benefit of holders of Aames Mortgage Trust
2001-3 Mortgage Pass-Through Certificates, Series 2001-3, without recourse",
(ii) cause such assignment to be in proper form for recording in the appropriate
public office for real property records, and (iii) cause to be delivered for
recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any
assignments of Mortgage as to which the Servicer has not received the
information required to prepare such assignment in recordable form, the Servicer
shall be obligated to prepare and to deliver such assignment for such recording
as soon as practicable after receipt of such information and in any event within
30 days after receipt thereof (and in no event more than one year after the
Closing Date) and that the Servicer need not cause to be recorded any assignment
that relates to a Mortgage Loan in any jurisdiction under the laws of which, as
evidenced by an

                                      -32-
<PAGE>

Opinion of Counsel delivered to the Trustee at Seller's expense to the effect
that the recordation of such assignment is not necessary to protect the
Trustee's and the Certificateholders' interest in the related Mortgage Loan.

         If the Depositor cannot deliver the original Mortgage or any
intervening mortgage assignment with evidence of recording thereon concurrently
with the execution and delivery of this Agreement solely because of a delay
caused by the public recording office where such original Mortgage or mortgage
assignment has been delivered for recordation, the Depositor shall deliver to
the Trustee an Officer's Certificate, with a photocopy of such Mortgage or
mortgage assignment, as the case may be, attached thereto, stating that such
original Mortgage or mortgage assignment has been delivered to the appropriate
public recording official for recordation. The Depositor shall promptly deliver
to the Trustee such original Mortgage or intervening mortgage assignment with
evidence of recording indicated thereon upon receipt thereof from the public
recording official. If the Depositor within six months from the Closing Date
shall not have received such original Mortgage or intervening mortgage
assignment from the public recording official, it shall obtain, and deliver to
the Trustee within eight months from the Closing Date, a copy of such original
Mortgage or mortgage assignment certified by such public recording official to
be a true and complete copy of such original Mortgage or mortgage assignment as
recorded by such public recording office.

         The costs relating to the delivery of the documents specified in this
Section shall be borne by the Depositor.

         The Seller shall deliver to the Depositor, within the time periods
called for by this Article II, such documents as are required to be delivered by
the Depositor to the Trustee pursuant to this Article II.

         Section 2.02 Conveyance of the Subsequent Mortgage Loans; Fixed Price
Contract. Subject to the conditions set forth in the paragraphs below, in
consideration of the Trustee's delivery on the Closing Date or related
Subsequent Transfer Dates to or upon the order of the Depositor of the
Subsequent Purchase Price of the related Subsequent Mortgage Loans from amounts
on deposit in the Prefunding Account (or other amounts payable to or upon the
order of the Depositor if such purchases of all Subsequent Mortgage Loans occur
on the Closing Date) with respect to the related Mortgage Loan Group, the Seller
shall, from time to time, on the Closing Date or any Subsequent Transfer Date,
sell, transfer, assign, set over and otherwise convey without recourse to the
Depositor, all right, title and interest of the Seller in and to each Subsequent
Mortgage Loan identified on the Subsequent Mortgage Loan Schedule attached to
the related Subsequent Transfer Agreement delivered on the Closing Date or such
Subsequent Transfer Date, including all of its right, title and interest in and
to principal and interest (whether in the form of payments by Mortgagors or
other proceeds) received or deemed to be received by the Seller on each such
Subsequent Mortgage Loan on and after the related Subsequent Cut-off Date, net
of amounts in respect of interest accrued on such Subsequent Mortgage Loans in
periods prior to the related Subsequent Cut-off Date (whether in the nature of
amounts held by the Seller for application on behalf of the related Mortgagor as
a Monthly Mortgage Payment that is due on any date on or after the related
Subsequent Cut-off Date or otherwise) plus all items with respect to such
Subsequent Mortgage Loan to be delivered pursuant to Section 2.01 and other
items in the related Mortgage File; provided, however, that the Seller reserves
and

                                      -33-
<PAGE>

retains all of its right, title and interest in and to principal (including
prepayments) and interest collected on each such Subsequent Mortgage Loan prior
to the related Subsequent Cut-off Date (except for amounts held by the Seller
for application on or after the related Subsequent Cut-off Date).

         Immediately upon the conveyance of the Subsequent Mortgage Loans as
referred to in the preceding paragraph, the Depositor shall sell, transfer,
assign, set over and otherwise convey without recourse to the Trustee for
benefit of the Certificateholders, all right, title and interest of the
Depositor in the Subsequent Mortgage Loans as referred to in the preceding
paragraph.

         The respective transfers by the Seller and the Depositor of the
Subsequent Mortgage Loans set forth on the Subsequent Mortgage Loan Schedule
shall be absolute and shall be intended by the parties hereto to be treated as a
sale by the Seller and the Depositor, respectively. On or before the last day of
the Funding Period, the Seller shall convey to the Depositor and the Depositor
to the Trustee pursuant to this Section 2.02 the lesser of: (i) all Mortgage
Loans then in its possession that satisfy the requirements of this Section 2.02
or (ii) the maximum principal balance of Mortgage Loans as determined by Seller
that satisfy the requirements of this Section 2.02 whose aggregate Subsequent
Purchase Price does not exceed the Prefunding Account Deposit. Subsequent
Mortgage Loans to be conveyed on a given Subsequent Transfer Date must have an
aggregate Subsequent Cut-off Date Principal Balance of not less than $500,000;
provided, however, that the Subsequent Mortgage Loans to be conveyed on the
final Subsequent Transfer Date may have an aggregate Subsequent Cut-off Date
Principal Balance of less than $500,000.

         In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Subsequent Mortgage Loans on the related
Subsequent Transfer Date by the Seller to the Depositor and by the Depositor to
the Trustee, such sale and assignment will be deemed to constitute a pledge of
security for a loan, it is the intent of this Agreement that the Seller shall be
deemed to have granted to the Depositor and the Depositor to the Trustee for the
benefit of the Certificateholders a first priority perfected security interest
in all of the related transferor's right, title and interest in and to the
Subsequent Mortgage Loans, the Mortgages, the Mortgage Files and the Mortgage
Notes, all payments of principal and interest on the Subsequent Mortgage Loans
received on or after their respective Subsequent Cut-off Dates, net of amounts
in respect of interest accrued on such Subsequent Mortgage Loans in periods
prior to the related Subsequent Cut-off Date, all other payments (provided that
the parties to this Agreement acknowledge that the Servicer is entitled to
receive all assumption fees, late payment charges, charges for checks returned
for insufficient funds, if any, and extension and other administrative charges
other than Prepayment Charges) made in respect of such Subsequent Mortgage Loans
on or after the related Subsequent Cut-off Date, and that this Agreement and the
related Subsequent Transfer Agreement shall each constitute a security agreement
with respect to the related Subsequent Mortgage Loans under applicable law. The
Seller and the Depositor shall file financing statements and continuation
statements as necessary to maintain the perfection of such security interest.

         The amount released to or upon the order of the Depositor from the
Prefunding Account on any Subsequent Transfer Date (or from other amounts
payable to the Depositor on the Closing Date) in connection with any conveyance
of Subsequent Mortgage Loans to be included

                                      -34-
<PAGE>

in any Mortgage Loan Group shall be equal to the aggregate of the related
Subsequent Purchase Prices for such related Subsequent Mortgage Loans to be
included in such related Mortgage Loan Group, which related amounts, in the
aggregate, shall not exceed the allocated Prefunding Account Deposit for such
related Mortgage Loan Group. The amount so released to or upon the order of the
Depositor in connection with any conveyance of Subsequent Mortgage Loans shall,
for federal income tax purposes, be considered cash contributed to REMIC I by
the Depositor and used by the Trustee to acquire the related Subsequent Mortgage
Loans pursuant to a fixed price contract established pursuant to this Section
2.02.

         On each related Subsequent Transfer Date, the Seller shall transfer to
the Depositor and the Depositor shall transfer to the Trustee the Subsequent
Mortgage Loans and the other property and rights related thereto described in
the first paragraph in this section only upon the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:

                  (a) the Seller or the Depositor shall provide the Trustee, the
         Servicer, the Representative and the Rating Agencies with an Addition
         Notice and shall provide any information reasonably requested by the
         Trustee, the Servicer, the Representative or the Rating Agencies with
         respect to the Subsequent Mortgage Loans;

                  (b) the Seller or the Depositor shall deliver to the Trustee,
         the Servicer, the Representative and the Rating Agencies a duly
         executed Subsequent Transfer Agreement and any other related
         documentation in the forms of the exhibits listed thereon;

                  (c) the Seller shall deposit in the Collection Account all
         collections in respect of the Subsequent Mortgage Loans received by the
         Seller and the Depositor on or after the related Subsequent Cut-off
         Date (whether in the nature of amounts held by the Seller for later
         application on behalf of the related Mortgagor in respect of a Monthly
         Payment due on or after the related Subsequent Cut-off Date or
         otherwise) except for amounts in respect of interest accrued on such
         Subsequent Mortgage Loans prior to the related Cut-off Date;

                  (d) the Seller and the Depositor each shall certify that, as
         of the Subsequent Transfer Date, neither the Seller nor the Depositor
         was insolvent, nor was made insolvent by such transfer and neither is
         aware of any pending insolvency;

                  (e) the Depositor shall certify that such addition of
         Subsequent Mortgage Loans will not result in a material adverse tax
         consequence to the Trust or the Certificateholders; and

                  (f) the Funding Period shall not have expired.

         In addition, the Seller or the Depositor will provide the Servicer, the
Representative, the Rating Agencies and the Trustee with data regarding all
Subsequent Mortgage Loans to be transferred to the Trust on any Subsequent
Transfer Date prior to the related Subsequent Transfer Date. On or prior to each
Subsequent Transfer Date, the following conditions shall have been satisfied
with respect to all Subsequent Mortgage Loans to be transferred to the Trust on
any Subsequent Transfer Date:

                                      -35-
<PAGE>

                  (A) the Depositor shall have confirmed to the Rating Agencies,
         the Representative and the Trustee, in the related Subsequent Transfer
         Agreement, the satisfaction of each condition precedent specified in
         this Section 2.02;

                  (B) the Seller or the Depositor shall have delivered to the
         Rating Agencies, the Representative and the Trustee Opinions of Counsel
         with respect to the transfer of all of the Subsequent Mortgage Loans to
         the Trust on any Subsequent Transfer Date substantially in the form of
         the Opinions of Counsel delivered to the Trustee on the Closing Date
         regarding bankruptcy, corporate and tax matters;

                  (C) the Trustee shall deliver to the Rating Agencies, the
         Representative and the Depositor an Opinion of Counsel with respect to
         the enforceability of each of the Subsequent Transfer Agreements
         substantially in the form of the Opinion of Counsel delivered to the
         Seller on the Closing Date; and

                  (D) the Servicer shall deliver to the Depositor, the Trustee,
         the Representative and the Rating Agencies the Servicer's
         acknowledgment to service all Subsequent Mortgage Loans purchased by
         the Trust on any Subsequent Transfer Date.

         On or prior to each Subsequent Transfer Date, the Seller or the
Depositor shall provide to the Trustee, the Servicer and the Representative a
schedule of mortgage loans that are expected to be Subsequent Mortgage Loans,
and Subsequent Mortgage Loans transferred to the Trust shall be taken only from
such schedule; provided, however, if any such identified mortgage loans do not
satisfy the requirements of Subsequent Mortgage Loans as set forth in this
Section 2.02 or if any such mortgage loans are rejected as Subsequent Mortgage
Loans by the Servicer, mortgage loans acceptable to the Servicer may be
substituted for such defective or rejected mortgage loans. The Depositor shall
certify that the Subsequent Mortgage Loans will be transferred to the Trust in
accordance with the foregoing and that such Subsequent Mortgage Loans satisfy
the requirements of Subsequent Mortgage Loans as set forth in this Section 2.02
as of the Closing Date.

         Subject to Section 3.16, if all of the Subsequent Mortgage Loans are
transferred to the Trust on the Closing Date, then the remaining portion of the
Prefunding Account Deposit will be deposited into the Certificate Account and
held there, without investment thereof, until the first Distribution Date. On
such first Distribution Date, such amounts will be deemed to comprise a portion
of the Principal Distribution Amount and will be distributable to the
Certificateholders.

         Section 2.03 Acceptance by the Trustee; Repurchase or Substitution of
Mortgage Loans. The Trustee acknowledges the sale and assignment to the Trust
and receipt by it of the original Mortgage Notes, Assignments and Mortgages
pursuant to this Agreement and the delivery to it of the PMI Policy, and subject
to (i) the provisions of the penultimate paragraph of Section 2.01, (ii) the
review provided for in this Section of the documents referred to in clauses (a)
through (f) of Section 2.01 and (iii) delivery of the Officer's Certificates
pursuant to Section 2.01, declares that it will hold the Trust in trust upon the
terms herein set forth for the use and benefit of all present and future
Certificateholders. The Trustee agrees, for the benefit of Certificateholders,
to review each Mortgage File within 45 days after the Closing Date (or, 45 days
after the Subsequent Transfer Date, with respect to the Subsequent Mortgage
Loans) to

                                      -36-
<PAGE>

determine whether the documents described in Section 2.01(a)-(c), (e) and (f)
have been executed and received, and whether such documents relate to the
Mortgage Loans identified in the Mortgage Loan Schedule, or the Subsequent
Mortgage Loan Schedule, as applicable, and in so doing the Trustee may rely on
the purported due execution and genuineness of any such document and on the
purported genuineness of any signature thereon. If within such 45-day period the
Trustee finds any document constituting a part of a Mortgage File not to have
been executed or received or to be unrelated to the Mortgage Loans identified in
the Mortgage Loan Schedule or the Subsequent Mortgage Loan Schedule, as
applicable, the Trustee shall promptly, but in no event later than 30 days
following such finding, notify the Seller of such findings. The Seller shall
have a period of 60 days from the date of such notice to correct or cure any
such defect. Notwithstanding the second paragraph of Section 9.01, the Trustee
shall be under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face.

         If the Trustee has notified the Seller of a defect in a Mortgage File
that materially and adversely affects the value of the related Mortgage Loan or
the interests of the Certificateholders in the related Mortgage Loan, and such
defect remains uncured after such 60-day period following the Seller's
notification, the Seller shall, (i) in the case of a defect consisting solely of
the failure of Seller to deliver the original Mortgage or any intervening
mortgage assignment with evidence of recording thereon for reasons set forth in
Section 2.01, on the first Deposit Date occurring after the expiration of eight
months from the Closing Date, and (ii) in the case of all other defects, on the
Deposit Date occurring not later than 60 days after receipt of notice of such
defect from the Trustee either (I) repurchase the related Mortgage Loan
(including any property acquired in respect thereof and any insurance policy or
current or future insurance proceeds with respect thereto) from the Trust at a
price equal to the Purchase Price, which shall be accomplished by deposit of
monies by the Seller in the Certificate Account on such Deposit Date, or (II)
substitute one or more Qualified Replacement Mortgage Loans for the related
Mortgage Loan.

         Upon receipt by the Trustee of an Officer's Certificate of the Servicer
to the effect that the Purchase Price for a Defective Mortgage Loan (other than
a Defective Mortgage Loan that is a Deleted Mortgage Loan) has been deposited in
the Certificate Account, and upon confirmation by the Trustee that such Purchase
Price has been received by it, the Trustee shall execute and deliver such
instrument of transfer or assignment presented to it by the Seller, in each case
without recourse, as shall be necessary to vest in the Seller legal and
beneficial ownership of such repurchased Defective Mortgage Loan (including any
property acquired in respect thereof or insurance policy or current or future
insurance proceeds with respect thereto).

         Payments received with respect to Qualified Replacement Mortgage Loans
in the Collection Period prior to the Deposit Date on which such substitution
occurs will not be part of the Trust and will be retained by the Seller. For the
Distribution Date following the Deposit Date on which such substitution occurs,
distributions to Certificateholders will reflect the payments received on such
Deleted Mortgage Loan in the related Collection Period representing amounts due
or accrued thereon prior to such Deposit Date, and the Seller shall thereafter
be entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. In the case

                                      -37-
<PAGE>

of a Qualified Replacement Mortgage Loan, the Mortgage File relating thereto
shall be delivered to the Trustee and the amount, if any, by which the Principal
Balance of the related Deleted Mortgage Loan as of the related Deposit Date
exceeds the Principal Balance of the Qualified Replacement Mortgage Loan as of
the first day of the related Collection Period shall be remitted by the Seller
to the Trustee for deposit in the Certificate Account on the Deposit Date on
which the substitution occurs. For purposes of this Agreement, any such amount
so deposited in the Certificate Account shall be deemed a prepayment of the
related Deleted Mortgage Loan received by the Servicer as of the prior
Determination Date. Upon receipt by the Trustee of an Officer's Certificate of
the Seller certifying that the Qualified Replacement Mortgage Loan conforms to
the requirements of this Agreement and (a) written notification of such deposit
signed by a Servicing Officer and (b) the new Mortgage File (containing all of
the documents referred to in clauses (a), (b), (c), (d), (e) and (f) of Section
2.01), the Trustee shall release or cause to be released to the Seller the
Mortgage File related to the Deleted Mortgage Loan or property and shall execute
and deliver or cause to be executed and delivered such instrument of transfer or
assignment presented to it by the Seller, without recourse, as shall be
necessary to vest in the Seller all of the legal and beneficial ownership of
such Deleted Mortgage Loan or property and the Trustee shall have no further
responsibility with respect to said Mortgage File. In addition, the Trustee
shall assign to the Seller any of the Trustee's rights under the PMI Policy in
respect of any such Deleted Mortgage Loan released to the Seller. It is
understood and agreed that the obligation of the Seller to substitute a
Qualified Replacement Mortgage Loan for or repurchase any Defective Mortgage
Loan (or any property acquired in respect thereof or insurance policy or current
or future insurance proceeds with respect thereto) shall constitute the sole
remedy against it respecting such defect available to the Certificateholders,
the Depositor or the Trustee. Notwithstanding the foregoing, a substitution by
the Seller for a defect in a constituent document will not be made unless the
Trustee receives an Officer's Certificate certifying that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and an
Opinion of Counsel that such substitution will not be a "prohibited transaction"
as defined in Section 860F(a)(2) of the Code. Any substitution must be effected
not later than two years after the Closing Date, or within such longer period of
time as may be permitted under the REMIC Provisions for substitution of mortgage
loans.

         On or prior to the 90th day after the Closing Date (or the 90th day
after the applicable Subsequent Transfer Date with respect to the Subsequent
Mortgage Loans), the Trustee shall certify to the Seller, the Depositor and the
Servicer that it has received all of the documents referred to in clauses (a)
(b), (c), (e) and (f) of Section 2.01 and that all corrections or curative
actions required to be taken by the Seller within the 60-day period referred to
in the first paragraph of this Section have been completed or effected, or the
related Mortgage Loans have been repurchased or substituted, in accordance with
the provisions of this Section or, if any deficiencies in the Mortgage Files or
other omissions of the Seller with respect to the Mortgage Files are known to
the Trustee at the time of such certification, the Trustee shall make such
certification only with respect to those Mortgage Loans as to which no such
defects or omissions are known, and shall qualify such certification with
respect to the remaining Mortgage Loans, identifying the related defects or
omissions. Thereafter, the Trustee shall provide the Seller, the Depositor and
the Servicer with monthly exception reports indicating the status of any
exceptions until all such exceptions have been eliminated. Such monthly
exception reports shall be distributed by the Trustee on the related
Distribution Date with the Statement to Certificateholders.

                                      -38-
<PAGE>

         Section 2.04 Representations and Warranties Regarding the Servicer and
the Seller. (a) The Company, as Seller, hereby represents and warrants to the
Trustee, the Depositor, the Servicer and the Certificateholders that, as of the
Closing Date:

                           (i) The Company is a corporation duly organized,
                  validly existing and in good standing under the laws of the
                  State of California. The Company has the power and authority
                  to execute and deliver this Agreement and to perform its
                  obligations in accordance herewith; the execution, delivery
                  and performance of this Agreement (including all instruments
                  of transfer to be delivered pursuant to this Agreement) by the
                  Company and the consummation of the transactions contemplated
                  hereby have been duly and validly authorized by all necessary
                  corporate action; this Agreement evidences the valid and
                  binding obligation of the Company enforceable against the
                  Company in accordance with its terms, subject to the effect of
                  bankruptcy, insolvency, reorganization, moratorium and other
                  similar laws relating to or affecting creditors' rights
                  generally or the application of equitable principles in any
                  proceeding, whether at law or in equity; and the consummation
                  of the transactions contemplated hereby will not result in the
                  breach of any terms or provisions of the articles of
                  incorporation or by-laws of the Company 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 material agreement, indenture or
                  loan or credit agreement or other material instrument to which
                  the Company or its property is subject, or result in the
                  violation of any law, rule, regulation, order, judgment or
                  decree to which the Company or its property is subject.

                           (ii) All actions, approvals, consents, waivers,
                  exemptions, variances, franchises, orders, permits
                  authorizations, rights and licenses required to be taken,
                  given or obtained, as the case may be, by or from any federal,
                  state or other governmental authority or agency, that are
                  necessary in connection with the execution and delivery by the
                  Company of this Agreement, have been duly taken, given or
                  obtained, as the case may be, are in full force and effect,
                  are not subject to any pending proceedings or appeals
                  (administrative, judicial or otherwise) and either the time
                  within which any appeal therefrom may be taken or review
                  thereof may be obtained has expired or no review thereof may
                  be obtained or appeal therefrom taken, and are adequate to
                  authorize the consummation of the transactions contemplated by
                  this Agreement on the part of the Company and the performance
                  by the Company of its obligations under this Agreement;

                           (iii) There is no action, suit, proceeding or
                  investigation pending or, to the best of the Company's
                  knowledge, threatened against the Company that, either in any
                  one instance or in the aggregate, may result in any material
                  adverse change in the business, operations, financial
                  condition, properties or assets of the Company or in any
                  material impairment of the right or ability of the Company to
                  carry on its business substantially as now conducted, or in
                  any material liability on the part of the Company or that
                  would draw into question the validity of this Agreement or the
                  Mortgage Loans or of any action taken or to be taken in
                  connection with the obligations of the Company contemplated
                  herein, or that

                                      -39-
<PAGE>

                  would be likely to impair the ability of the Company to
                  perform under the terms of this Agreement;

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

                           (v) The transfer, assignment and conveyance of the
                  Mortgage Loans by the Company, as Seller, pursuant to this
                  Agreement are not subject to the bulk transfer laws or any
                  similar statutory provisions in effect in any applicable
                  jurisdiction and are not being transferred with the intent to
                  hinder, delay or defraud any creditors; and

                           (vi) The collection practices used by the Company are
                  in all material respects legal, proper, prudent and customary
                  in the home equity mortgage loan servicing business.

                  (b) The Servicer hereby represents and warrants to the
         Trustee, the Depositor, the Seller and the Certificateholders that, as
         of the Closing Date:

                           (i) The Servicer is a corporation licensed as a
                  mortgage banker duly organized, validly existing and in good
                  standing under the laws of the state of its incorporation and
                  has, and had at all relevant times, full corporate power to
                  service the Mortgage Loans, to own its property, to carry on
                  its business as presently conducted and to enter into and
                  perform its obligations under this Agreement. The Servicer has
                  all necessary licenses and is qualified to transact business
                  in and is in good standing under the laws of each state where
                  a Mortgaged Property is located or is otherwise exempt under
                  applicable law from such qualification or is otherwise not
                  required under applicable law to effect such qualification and
                  no demand for such qualification has been made upon the
                  Servicer by any state having jurisdiction;

                           (ii) The execution and delivery of this Agreement by
                  the Servicer and the performance by it of and compliance with
                  the terms of this Agreement will not violate the Servicer's
                  articles of incorporation or by-laws or constitute a default
                  (or an event which, with notice or lapse of time or both,
                  would constitute a default) under, or result in the breach or
                  acceleration of, any material contract, agreement or other
                  instrument to which the Servicer is a party or which may be
                  applicable to the Servicer or any of its assets;

                           (iii) The Servicer has the full power and authority
                  to enter into and consummate all transactions contemplated by
                  this Agreement to be consummated by it, has duly authorized
                  the execution, delivery and performance of this Agreement, and
                  has duly executed and delivered this Agreement. This

                                      -40-
<PAGE>

                  Agreement, assuming due authorization, execution and delivery
                  by the other parties hereto, constitutes a valid, legal and
                  binding obligation of the Servicer, enforceable against it in
                  accordance with the terms hereof, except as such enforcement
                  may be limited by bankruptcy, insolvency, reorganization,
                  receivership, moratorium or other similar laws relating to or
                  affecting the rights of creditors generally, and by general
                  equity principles (regardless of whether such enforcement is
                  considered in a proceeding in equity or at law);

                           (iv) The Servicer is not in violation of, and the
                  execution and delivery of this Agreement by the Servicer and
                  the performance by it and compliance with the terms of this
                  Agreement will not constitute a violation with respect to, any
                  order or decree of any court or any order or regulation of any
                  federal, state, municipal or governmental agency having
                  jurisdiction, which violation would materially and adversely
                  affect the condition (financial or otherwise) or operations of
                  the Servicer or any of its properties or materially and
                  adversely affect the performance of any of its duties
                  hereunder;

                           (v) There are no actions or proceedings against, or
                  investigations of, the Servicer pending or, to the knowledge
                  of the Servicer, threatened, before any court, administrative
                  agency or other tribunal (A) that, if determined adversely,
                  would prohibit its entering into this Agreement, (B) seeking
                  to prevent the consummation of any of the transactions
                  contemplated by this Agreement or (C) that, if determined
                  adversely, would prohibit or materially and adversely affect
                  the performance by the Servicer of any of its obligations
                  under, or the validity or enforceability of, this Agreement;

                           (vi) No consent, approval, authorization or order of
                  any court or governmental agency or body is required for the
                  execution, delivery and performance by the Servicer of, or
                  compliance by the Servicer with, this Agreement, or for the
                  consummation of the transactions contemplated by this
                  Agreement, except for such consents, approvals, authorizations
                  and orders, if any, that have been obtained prior to the
                  Closing Date;

                           (vii) No Officer's Certificate, statement, report or
                  other document prepared by the Servicer and furnished or to be
                  furnished by it pursuant to this Agreement or in connection
                  with the transactions contemplated hereby contains any untrue
                  statement of material fact;

                           (viii) The Servicer believes that the Servicing Fee
                  Rate provides a reasonable level of base compensation to the
                  Servicer for servicing the Mortgage Loans on the terms set
                  forth herein; and

                           (ix) The transactions contemplated by this Agreement
                  are in the ordinary course of business of the Servicer.

                           (x) Each Sub-Servicer engaged by the Servicer has
                  obtained all licenses and approvals required under state or
                  federal law to service the Mortgage

                                      -41-
<PAGE>

                  Loans specified in the Sub-Servicing Agreement to which the
                  Sub-Servicer is a party.

                  (c) The representations and warranties set forth in this
         Section shall survive the sale and assignment of the Mortgage Loans to
         the Trust and the issuance, sale and delivery of the Certificates. Upon
         discovery of a breach of any of the foregoing representations and
         warranties that materially and adversely affects the value of such
         Mortgage Loans or the interests of the Certificateholders in such
         Mortgage Loans, the party discovering such breach shall give prompt
         written notice to the other parties. Within 60 days of its discovery or
         its receipt of notice of breach, the Company or the Servicer, as the
         case may be, shall cure such breach in all material respects.

         Section 2.05 Representations and Warranties of the Seller Regarding the
Mortgage Loans. The Seller represents and warrants to the Trustee, the
Depositor, the Servicer and the Certificateholders as of the Closing Date and,
with respect to any Subsequent Mortgage Loan, as of the Subsequent Transfer Date
(in either case except as otherwise expressly stated) that, as to each Mortgage
Loan conveyed to the Trust by it:

                           (i) The information with respect to each Mortgage
                  Loan set forth in the Mortgage Loan Schedule or Subsequent
                  Mortgage Loan Schedule is true and correct as of the related
                  Cut-off Date or related Subsequent Transfer Date;

                           (ii) All of the original or certified documentation
                  set forth in Section 2.01 (including all material documents
                  related thereto), with respect to each Mortgage Loan has been
                  or will be delivered to the Trustee on the Closing Date or as
                  otherwise provided in Section 2.01 or Section 2.02, as
                  applicable;

                           (iii) Each related Mortgaged Property is improved by
                  a one- to four-family residential dwelling owned by the
                  related Mortgagor in fee simple that is permanently affixed to
                  the land and constitutes real property under the laws of the
                  state in which the Mortgaged Property is located but shall not
                  include co-operatives or mobile homes;

                           (iv) Each Mortgage Loan is a "qualified mortgage" as
                  defined in Section 860G(a)(3) of the Code and no such Mortgage
                  Loan has a loan-to-value ratio (calculated in accordance with
                  the REMIC Provisions) in excess of 125%; none of the Mortgage
                  Loans are either "consumer credit contracts" or "purchase
                  money loans" as such terms are defined in 16 C.F.R. ss. 433;
                  with respect to each Mortgage Loan that is a "mortgage" as
                  such term is defined in 15 U.S.C. 1602(aa), no obligor has or
                  will have a claim or defense under such Mortgage Loan;

                           (v) As of the Cut-off Date, no Initial Mortgage Loan
                  included in Group I or Group II has a Loan-to-Value Ratio in
                  excess of 100%; and Mortgage Loans in Group I representing not
                  more than 0.19% of the Original Group I Balance have
                  Loan-to-Value Ratios between 95% and 100% and no Mortgage

                                      -42-
<PAGE>

                  Loans in Adjustable Rate Group II have Loan-to-Value Ratios
                  between greater than 90%;

                           (vi) Each Mortgage Loan was originated by the Seller,
                  an Affiliate of the Seller or by an originator not affiliated
                  with the Seller authorized to originate such Mortgage Loan and
                  is being serviced by the Seller;

                           (vii) Each fixed rate Initial Mortgage Loan included
                  in Group I and Group II as of the Cut-off Date bears interest
                  at a fixed rate of at least 6.625% and 7.100% per annum,
                  respectively. Each Hybrid Loan in Group I and Group II has a
                  Minimum Rate of not less than 8.399% per annum and 10.250% per
                  annum, respectively, and a Mortgage Loan Rate as of the
                  Cut-off Date of not less than 6.625% per annum and 7.100% per
                  annum, respectively. The terms of each Hybrid Loan that
                  becomes an Adjustable Rate Mortgage Loan require that
                  adjustments in the related Mortgage Loan Rate be made
                  employing the related Index measured as of a date not more
                  than three months prior to the related adjustment date;

                           (viii) Each Mortgage Note provides for a schedule of
                  substantially level and equal Monthly Mortgage Payments
                  (subject, in the case of an Adjustable Rate Mortgage Loan, to
                  periodic adjustments relating to changes in the Mortgage Loan
                  Rate) that are sufficient to amortize fully the principal
                  balance of such Mortgage Note on or before its maturity date,
                  except that, Mortgage Notes with respect to Initial Mortgage
                  Loans representing not more than 1% of the initial Pool
                  Balance, provide for level and equal Monthly Mortgage Payments
                  that are sufficient to amortize fully the principal balances
                  of such Notes over a period not exceeding 30 years, with
                  "balloon" payments at stated maturity that are substantially
                  in excess of the Monthly Mortgage Payments;

                           (ix) Each Mortgage is a valid and subsisting lien of
                  record on the Mortgaged Property having the priority indicated
                  on the Mortgage Loan Schedule, subject, in the case of any
                  Junior Mortgage Loan, only to any Senior Lien or Senior Liens
                  on such Mortgaged Property and subject in all cases to the
                  exceptions to title set forth in the title insurance policy
                  with respect to the related Mortgage Loan, which exceptions
                  are generally acceptable to home equity mortgage lending
                  institutions, and such other exceptions to which similar
                  properties are commonly subject and that do not individually,
                  or in the aggregate, materially and adversely affect the
                  benefits of the security intended to be provided by such
                  Mortgage;

                           (x) Immediately prior to the sale, transfer and
                  assignment herein contemplated, the Seller held good and
                  indefeasible title to, and was the sole owner of, each
                  Mortgage Loan conveyed by the Seller subject to no liens,
                  charges, mortgages, encumbrances or rights of others, except
                  with respect to liens that will be released simultaneously
                  with such transfer and assignment; and immediately upon the
                  transfer and assignment herein contemplated, the Trustee

                                      -43-
<PAGE>

                  will hold good and indefeasible title to, and be the sole
                  owner of, each Mortgage Loan subject to no liens, charges,
                  mortgages, encumbrances or rights of others;

                           (xi) The Mortgage Loan Rate for each Adjustable Rate
                  Mortgage Loan will be adjustable on each related Adjustment
                  Date and will equal the sum, rounded upward to the nearest
                  three decimal places, of the Index plus the related Gross
                  Margin, subject to any related Minimum Rates, Maximum Rates or
                  any limitations or periodic adjustments, in each case as
                  specified in the related Mortgage Loan Schedule. No Mortgage
                  Loans in any Mortgage Loan Group are subject to negative
                  amortization.

                           (xii) With respect to any Adjustable Rate Mortgage
                  Loan, no mortgage document in the Mortgage File contains any
                  provision permitting or requiring conversion of the Mortgage
                  Loan to a fixed interest rate nor is the Mortgage Loan Rate
                  conditioned upon Mortgagor maintaining accounts with Seller;

                           (xiii) As of the Closing Date or Subsequent Cut-off
                  Date, as appropriate (a) no Mortgage Loan had two or more
                  Monthly Mortgage Payments past due and (b) no Mortgage Loan
                  had one Monthly Mortgage Payments past due;

                           (xiv) As of the related Cut-off Date or Subsequent
                  Cut-off Date, as appropriate, there is no delinquent tax or
                  assessment lien on any Mortgaged Property, and, to the best
                  knowledge of the Seller, each Mortgaged Property is free of
                  damage and is in good repair and is not affected by hazardous
                  or toxic wastes or substances;

                           (xv) There is no offset, right of rescission,
                  counterclaim or defense, including the defense of usury, with
                  respect to any Mortgage Note or Mortgage, 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 to 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;

                           (xvi) As of the related Cut-off Date or Subsequent
                  Cut-off Date, as appropriate, there is no mechanic's lien or
                  claim for work, labor or material affecting any Mortgaged
                  Property that is or may be a lien prior to, or equal to or on
                  a parity with, the lien of the related Mortgage except those
                  that are insured against by any title insurance policy
                  referred to in paragraph (xvii) below;

                           (xvii) To the best of the Seller's knowledge, each
                  Mortgage Loan at the time it was made complied in all material
                  respects with applicable local, state and federal laws and
                  regulations, including, without limitation, the federal
                  Truth-

                                      -44-
<PAGE>

                  in-Lending Act and other consumer protection laws, real estate
                  settlement procedure, usury, equal credit opportunity,
                  disclosure and recording laws;

                           (xviii) With respect to each Mortgage Loan, a
                  lender's title insurance policy (issued in standard form by a
                  title insurance company authorized to transact business in the
                  state where the related Mortgaged Property is located), in an
                  amount at least equal to the Original Principal Amount of such
                  Mortgage Loan insuring the mortgagee's interest under the
                  related Mortgage Loan as the holder of a valid lien of record
                  on the real property described in the related Mortgage
                  (subject only to exceptions of the character referred to in
                  paragraph (viii) above), was effective on the date of the
                  origination of such Mortgage Loan, and, as of the Closing
                  Date, such policy is in full force and effect and thereafter
                  such policy shall continue in full force and effect and shall
                  inure to the benefit of the Certificateholders upon
                  consummation of the transactions contemplated by this
                  Agreement;

                           (xix) As of the related Cut-off Date or Subsequent
                  Cut-off Date, as appropriate, either (a) the improvements upon
                  each Mortgaged Property are covered by a valid and existing
                  hazard insurance policy (which may be a blanket policy) with a
                  generally acceptable carrier that provides for fire and
                  extended coverage representing coverage not less than the
                  least of (a) the outstanding principal balance of the related
                  Mortgage Loan (together, in the case of a Junior Mortgage
                  Loan, with the outstanding principal balance of the Senior
                  Lien), (b) the minimum amount required to compensate for
                  damage or loss on a replacement cost basis or (c) the full
                  insurable value of the Mortgaged Property or (b) in the case
                  of a Junior Mortgage Loan, a policy has been issued by a
                  generally acceptable carrier that will cover the full
                  Principal Balance of such Junior Mortgage Loan in the event of
                  a loss covered by a hazard typically insured against by the
                  type of policy referred to in clause (xviii)(a);

                           (xx) If any Mortgaged Property is in an area
                  identified in the Federal Register by FEMA as having special
                  flood hazards, a flood insurance policy in a form meeting the
                  requirements of the current guidelines of the Federal
                  Insurance Administration, if obtainable with respect to such
                  Mortgaged Property, is in effect with respect to such
                  Mortgaged Property with a generally acceptable carrier in an
                  amount representing coverage not less than the least of (A)
                  the outstanding principal balance of the related Mortgage Loan
                  (together, in the case of a Junior Mortgage Loan, with the
                  outstanding principal balance of the Senior Lien), (B) the
                  minimum amount required to compensate for damage or loss on a
                  replacement cost basis or (C) the maximum amount of insurance
                  that is available under the Flood Disaster Protection Act of
                  1973;

                           (xxi) Each Mortgage and Mortgage Note is the legal,
                  valid and binding obligation of the maker thereof and is
                  enforceable in accordance with its terms, except only as such
                  enforcement may be limited by bankruptcy, insolvency,
                  reorganization, moratorium or other similar laws affecting the
                  enforcement of creditors' rights generally and by general
                  principles of equity

                                      -45-
<PAGE>

                  (whether considered in a proceeding or action in equity or at
                  law), and all parties to each Mortgage Loan had full legal
                  capacity to execute all documents relating to such Mortgage
                  Loan and convey the estate therein purported to be conveyed;
                  with respect to each Mortgage Loan, only one original Mortgage
                  Note exists;

                           (xxii) The Seller has caused and will cause to be
                  performed any and all acts required to be performed to
                  preserve the rights and remedies of the Trustee in any
                  insurance policies applicable to each Mortgage Loan, including
                  any necessary notifications of insurers, assignments of
                  policies or interests therein, and establishment of
                  co-insured, joint loss payee and mortgagee rights in favor of
                  the Trustee;

                           (xxiii) As of the Cut-off Date, Initial Mortgage
                  Loans representing no more than 1% of the Original Group I
                  Balance and Initial Mortgage Loans representing no more than
                  1% of the Original Group II Balance, respectively, are secured
                  by Mortgaged Properties located within any single zip code
                  area;

                           (xxiv) Each original Mortgage has been recorded or is
                  in the process of being recorded, and all subsequent
                  assignments of the original Mortgage (other than the
                  assignment from the Seller to the Trustee and any assignment
                  to the Seller or an affiliate thereof) have been recorded in
                  the appropriate jurisdictions as to which no Opinion of
                  Counsel was delivered pursuant to Section 2.01 or 2.02, as
                  applicable, or such Mortgages and assignments are in the
                  process of being recorded);

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

                           (xxvi) The proceeds of each Mortgage Loan have been
                  fully disbursed, and there is no obligation on the part of the
                  mortgagee to make future advances thereunder. Any and all
                  requirements as to completion of any on-site or off-site
                  improvements and as to disbursements of any escrow funds
                  therefor either have been complied with or are not yet
                  required to be complied with but will be complied with as and
                  when required. All costs, fees and expenses incurred in making
                  or closing or recording such Mortgage Loans were paid;

                           (xxvii) No Mortgage Note is or has been secured by
                  any collateral, pledged account or other security other than
                  the lien of the corresponding Mortgage;

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

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

                                      -46-
<PAGE>

                           (xxx) Each Mortgaged Property consists of one or more
                  contiguous parcels of real property with a residential
                  dwelling erected thereon;

                           (xxxi) Each Mortgage Loan contains a provision for
                  the acceleration of the payment of the unpaid principal
                  balance of such Mortgage Loan in the event the related
                  Mortgaged Property is sold without the prior consent of the
                  mortgagee thereunder;

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

                           (xxxiii) To the best knowledge of the Seller, there
                  is no proceeding pending or threatened for the total or
                  partial condemnation of any Mortgaged Property, nor is such a
                  proceeding currently occurring;

                           (xxxiv) To the best knowledge of the Seller, all of
                  the improvements that were included for the purposes of
                  determining the Appraised Value of any Mortgaged Property lie
                  wholly within the boundaries and building restriction lines of
                  such Mortgaged Property, and no improvements on adjoining
                  properties encroach upon such Mortgaged Property except those
                  that are identified in the related title insurance policy and
                  affirmatively insured;

                           (xxxv) To the best knowledge of the Seller, no
                  improvement located on or being part of any Mortgaged Property
                  is in violation of any applicable zoning law or regulation,
                  all inspections, licenses and certificates required to be made
                  or issued with respect to all occupied portions of each
                  Mortgaged Property and, with respect to the use and occupancy
                  of the same, including but not limited to certificates of
                  occupancy and fire underwriting certificates, have been made
                  or obtained from the appropriate authorities and such
                  Mortgaged Property is lawfully occupied under applicable law;

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

                                      -47-
<PAGE>

                           (xxxvii) With respect to each Junior Mortgage Loan,
                  if any, either (A) no consent for such Mortgage Loan was
                  required by the holder of the related Senior Lien prior to the
                  making of such Mortgage Loan or (B) such consent has been
                  obtained and is contained in the related Mortgage File;

                           (xxxviii) Each Mortgage contains customary and
                  enforceable provisions that render the rights and remedies of
                  the holder thereof adequate for the realization against the
                  related Mortgaged Property of the benefits of the security,
                  including by trustee's sale and by judicial foreclosure and
                  there is no homestead or other exemption available to the
                  related Mortgagor that would materially interfere with the
                  right to sell the related Mortgaged Property at a trustee's
                  sale or the right to foreclose upon the related Mortgaged
                  Property;

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

                           (xl) No instrument of release or waiver has been
                  executed in connection with any Mortgage Loan, and no
                  Mortgagor has been released, in whole or in part, except in
                  connection with an assumption agreement that has been approved
                  by the primary mortgage guaranty insurer, if any, and that has
                  been delivered to the Trustee;

                           (xli) The maturity date of each Junior Mortgage Loan,
                  if any, is at least 12 months prior to the maturity date of
                  the related Senior Lien if such Senior Lien provides for a
                  balloon payment;

                           (xlii) As of the Cut-off Date, at least 92.59% of the
                  Initial Mortgage Loans in Group I (by Original Group I
                  Balance) and 99.62% of the Initial Mortgage Loans in Group II
                  (by Original Group II Balance) are secured by Mortgaged
                  Properties that are maintained by the related Mortgagors as
                  primary residences;

                           (xliii) There are no defaults (other than
                  delinquencies) in complying with the terms of the Mortgage,
                  and all taxes, governmental assessments, insurance premiums,
                  water, sewer and municipal charges, leasehold payments or
                  ground rents that previously became due and owing have been
                  paid, or an escrow of funds has been established in an amount
                  sufficient to pay for every such item that remains unpaid; the
                  Seller has not advanced funds, or induced, solicited or
                  knowingly received any advance of funds by a party other than
                  the Mortgagor, directly or indirectly, for the payment of any
                  amount required by the Mortgage, other than interest accruing
                  from the date of the Mortgage Note or date of disbursement of
                  the Mortgage proceeds, whichever is greater, to the date that
                  precedes by one month the due date of the first installment of
                  principal and interest;

                                      -48-
<PAGE>

                           (xliv) To the best of the Seller's knowledge, all
                  parties that have had any interest in the Mortgage Loan,
                  whether as mortgagee, assignee, pledgee or otherwise during
                  the period in which they held and disposed of such interest,
                  were and either are now or, in the case of subclause (1) of
                  this clause, will be within 30 days of the Closing Date or
                  Subsequent Cut-off Date, as appropriate, (1) in compliance
                  with any and all applicable licensing requirements of the laws
                  of the state wherein the Mortgaged Property is located, and
                  (2) (A) organized under the laws of such state, or (B)
                  qualified to do business in such state, or (C) federal savings
                  and loan associations or national banks having principal
                  offices in such state, or (D) not doing business in such state
                  so as to require qualification or licensing;

                           (xlv) No Mortgage Loan was selected by the Seller for
                  inclusion in the Trust on any basis intended to adversely
                  affect the Trust;

                           (xlvi) A full appraisal of each Mortgaged Property
                  was performed in connection with the origination of the
                  related Mortgage Loan, and such appraisal is the appraisal
                  referred to in determining the Appraised Value of such
                  Mortgaged Property;

                           (xlvii) With respect to each Junior Mortgage Loan, if
                  any, the related Senior Lien requires equal monthly payments
                  or, if such Senior Lien bears an adjustable interest rate, the
                  monthly payments for such Senior Lien may be adjusted no more
                  frequently than monthly;

                           (xlviii) With respect to any Junior Mortgage Loan
                  with a related Senior Lien that provides for negative
                  amortization or an open-end feature that permits additional
                  borrowings, the balance of such Senior Lien reflected on the
                  Mortgage Loan Schedule and used to calculate the Combined
                  Loan-to-Value Ratio for such Junior Mortgage Loan is based on
                  the maximum amount of negative amortization, deferred interest
                  or maximum amount of borrowings permitted under such Senior
                  Lien;

                           (xlix) The Company has not required the Mortgagor to
                  sign a letter in connection with the origination of any
                  Mortgage Loan in which such Mortgagor indicates its inability
                  to repay such Mortgage Loan in accordance with the terms of
                  the related Mortgage Note;

                           (l) [Reserved];

                           (li) As of the related Cut-off Date or Subsequent
                  Cut-off Date, as appropriate, no Mortgage Loan in any Mortgage
                  Loan Group was secured by more than one Mortgaged Property;

                           (lii) With respect to each Hybrid Loan, all of the
                  terms of the Mortgage pertaining to interest rate adjustments,
                  payment adjustments and adjustments of the outstanding
                  principal balance are enforceable; such adjustments will not
                  affect the priority of the Mortgage lien and all of the

                                      -49-
<PAGE>

                  adjustments have been properly calculated, recorded, reported
                  and applied in accordance with the Mortgage and applicable
                  law;

                           (liii) All insurance policies, other than any primary
                  mortgage insurance policies purchased by the Seller or
                  Servicer or any of its affiliates, are the valid and binding
                  obligation of the insurer and contain a standard mortgagee
                  clause naming the originator, its successors and assigns, as
                  mortgagee. Such insurance policies require prior notice to the
                  insured of termination or cancellation and no such notice has
                  been received, each Mortgage obligates the Mortgagor
                  thereunder to maintain all such insurance at the Mortgagor's
                  cost and expense, and upon the Mortgagor's failure to do so,
                  authorizes the holder of the Mortgage to obtain and maintain
                  such insurance at the Mortgagor's cost and expense and to seek
                  reimbursement therefor from the Mortgagor;

                           (liv) None of the Mortgage Loans is subject to a plan
                  of bankruptcy and no Mortgagor has sought protection or relief
                  under any state or federal bankruptcy or insolvency law during
                  the term of the related Mortgage;

                           (lv) At least 48.19% of the Initial Mortgage Loans in
                  Group I (by Original Group I Balance) and at least 32.50% of
                  the Initial Mortgage Loans in Group II (by Original Group II
                  Balance) have Monthly Mortgage Payments due during the first
                  Collection Period during which such Mortgage Loan is included
                  in the Trust;

                           (lvi) All Mortgage Loans were underwritten or
                  re-underwritten in accordance with the underwriting guidelines
                  of the Company;

                           (lvii) To the knowledge of the Seller, no
                  misrepresentation, negligence, fraud or similar occurrence
                  with respect to a Mortgage Loan has taken place on the part of
                  the Mortgagor, any appraiser, any builder or developer, or any
                  other party having statutory or common law liabilities with
                  respect to the origination of the Mortgage Loan or in any
                  related application for insurance in relation to such Mortgage
                  Loan;

                           (lviii) To the knowledge of the Seller, certain
                  Mortgage Loans are secured by Mortgaged Properties upon which
                  are affixed manufactured housing or modular homes, provided
                  that it is the intent and agreement of the parties hereto that
                  this representation shall be deemed breached if any Mortgage
                  Loan is determined to be secured by a Mortgaged Property upon
                  which is affixed manufactured housing or a modular home and
                  such Mortgage Loan is subject to a foreclosure which results
                  in a Realized Loss;

                           (lix) There was no fraud involved in the origination
                  of any Mortgage Loans by the mortgagee or the Mortgagor, any
                  appraiser or any other party involved in the origination of
                  the Mortgage Loans;

                           (lx) No Mortgage Loan is 60 days or more
                  contractually delinquent as of the Cut-off Date and no
                  Subsequent Mortgage Loan will be 60 days or more

                                      -50-
<PAGE>

                  contractually delinquent as of its Subsequent Transfer Date
                  (and accordingly there are no Restricted Mortgage Loans
                  required to be listed in Schedule II);

                           (lxi) All requirements for the valid transfer of each
                  PMI Policy, including any assignments or notices required in
                  each PMI Policy, have been satisfied;

                           (lxii) As of the Closing Date with respect to each
                  Mortgage Loan that is subject to a PMI Policy, the Seller has
                  not taken any action, or omitted to take any action, and there
                  are no circumstances that would cause the PMI Insurer to deny
                  a claim with respect to such Mortgage;

                           (lxiii) As of the Cut-off Date, not more than 81.56%
                  of the Initial Mortgage Loans included in Group I are
                  "cash-out refinance" Mortgage Loans (as such term is described
                  under the Company's underwriting guidelines) and not more than
                  87.14% of the Initial Mortgage Loans included in Group II are
                  "cash-out refinance" Mortgage Loans;

                           (lxiv) The information set forth in the Prepayment
                  Charge Schedule (including the Prepayment Charge Summary
                  attached thereto) is complete, true and correct in all
                  material respects on the date or dates when such information
                  is furnished and each Prepayment Charge is permissible and
                  enforceable in accordance with its terms (except to the extent
                  that the enforceability thereof may be limited by bankruptcy,
                  insolvency, moratorium, receivership and other similar laws
                  relating to creditors' rights generally or the collectability
                  thereof may be limited due to acceleration in connection with
                  a foreclosure) under applicable state law;

                           (lxv) The Servicer will not waive any Prepayment
                  Charge unless it is waived in accordance with the standard set
                  forth in Section 3.22; and

                           (lxvi) On the Closing Date, as measured by the
                  Cut-off Date aggregate Principal Balance, 3.91% of the
                  Mortgage Loans having Loan-to-Value Ratios exceeding 80% are
                  covered by the PMI Policy.

                           (lxvii) As of the Cut-off Date, none of the Initial
                  Mortgage Loans in Group I or in Group II were subject to the
                  Home Ownership and Equity Protection Act of 1994 ("HOEPA") or
                  any comparable state law.

                           (lxviii) No proceeds from any Initial Mortgage Loan
                  were used to finance single-premium credit, life and
                  disability insurance policies.

                           (lxix) No Initial Mortgage Loan imposes a prepayment
                  charge for a term in excess of five years.

                           (lxx) All of the Mortgage Loans were originated by a
                  mortgagee approved by the Secretary of Housing and Urban
                  Development pursuant to sections 203 and 211 of the National
                  Housing Act.

                                      -51-
<PAGE>

         It is understood and agreed that the representations and warranties set
forth in this Section shall survive the sale and assignment of the Mortgage
Loans to the Trust and the issuance, sale and delivery of the Certificates. Upon
discovery by the Seller, the Depositor, the Servicer or a Responsible Officer of
the Trustee of a breach of any of the foregoing representations and warranties,
without regard to any limitation set forth in such representation or warranty
concerning the knowledge of the Seller as to the facts stated therein, which
breach materially and adversely affects the value of the related Mortgage Loan
or the interests of the Certificateholders in the related Mortgage Loan, the
party discovering such breach shall give prompt written notice to the Trustee
which shall inform the other parties hereto, and each of the Rating Agencies and
take such other action as it deems appropriate pursuant to Section 9.01.

         Within 60 days of its discovery or its receipt of notice of such
breach, the Seller shall use all reasonable efforts to cure such breach in all
material respects. Unless, prior to the expiration of such 60-day period, such
breach has been cured in all material respects or otherwise does not exist or
continue to exist, the Seller shall, not later than the Deposit Date in the
month following the related Collection Period in which any such cure period
expired, but in all events within 90 days of the earlier of the discovery of the
breach or the Seller's receipt of notice of breach (or at the election of the
Seller, an earlier Collection Period), either (I) repurchase such Mortgage Loan
(or, in the case of any representation and warranty stated above in terms of
minimum or maximum aggregate percentage amounts, repurchase Mortgage Loans such
that, after giving effect to such repurchase, the related representation and
warranty would be complied with) (including any property acquired in respect
thereof and any insurance policy or insurance proceeds with respect thereto)
from the Trust in the same manner and subject to the same conditions as set
forth in Section 2.03 or (II) remove such Mortgage Loan and substitute in its
place a Qualified Replacement Mortgage Loan (or, in the case of any
representation and warranty stated above in terms of minimum or maximum
aggregate percentage amounts, remove such Mortgage Loans and substitute in their
place Qualified Replacement Mortgage Loans such that, after giving effect to
such substitution, the related representation and warranty would be complied
with) in the same manner and subject to the same conditions as set forth in
Section 2.03. Upon making any such repurchase or substitution, the Seller shall
be entitled to receive an instrument of assignment or transfer from the Trustee,
without recourse to the Trustee, to the same extent as set forth in Section 2.03
with respect to the repurchase of or substitution for Defective Mortgage Loans
under that Section. The Seller acknowledges that, in the event of corresponding
breaches under this Section 2.05 and Section 2.05A with respect to any affected
Mortgage Loan, the Seller's obligation to cure its breach with respect to such
Mortgage Loan, or to repurchase or substitute for such Mortgage Loan, is
superior to the Depositor's obligation to cure its corresponding breach with
respect to such Mortgage Loan, or to repurchase or substitute for such Mortgage
Loan. It is understood and agreed that the obligation of the Seller to
repurchase or substitute any such Defective Mortgage Loan (or property acquired
in respect thereof or insurance policy or current or future insurance proceeds
with respect thereto) shall constitute the sole remedy against it respecting
such breach of the foregoing representations or warranties available to the
Certificateholders, the Depositor or the Trustee, as the case may be.

         Notwithstanding the foregoing, a substitution of a Mortgage Loan by the
Seller for a breach will not be made unless the Trustee receive an Officer's
Certificate of the Seller certifying that the Qualified Replacement Mortgage
Loan conforms to the requirements of this Agreement and an Opinion of Counsel
that such substitution will not be a "prohibited

                                      -52-
<PAGE>

transaction" as defined in Section 860F(a)(2) of the Code. Any substitution must
be effected not later than two years after the Closing Date, or within such
longer period of time as may be permitted under the REMIC Provisions for
substitution of mortgage loans.

         Section 2.05A Representations and Warranties of the Depositor as to the
Mortgage Loans.

         The Depositor hereby represents and warrants to the Trustee with
respect to each Initial Mortgage Loan as of the date hereof that as of the
Closing Date, and following the transfer of the Initial Mortgage Loans to it by
the Seller, the Depositor had good title to the Initial Mortgage Loans and the
Mortgage Notes were subject to no offsets, defenses or counterclaims.

         The Depositor hereby assigns, transfers and conveys to the Trustee all
of its rights with respect to the Mortgage Loans including, without limitation,
the representations and warranties of the Seller made pursuant to Section 2.05
hereof, together with all rights of the Depositor to require the Seller to cure
any breach thereof or to repurchase or substitute for any affected Mortgage Loan
in accordance with this Agreement.

         The representations and warranties set forth in this Section shall
survive the sale and assignment of the Mortgage Loans to the Trust and the
issuance, sale and delivery of the Certificates. Upon discovery of a breach of
any of the foregoing representations and warranties that materially and
adversely affects the value of such Mortgage Loans or the interests of the
Certificateholders in such Mortgage Loans, the party discovering such breach
shall give prompt written notice to the other parties. Within 60 days of its
discovery or its receipt of notice of breach, the Depositor shall cure such
breach in all material respects. Any cure of any breach or repurchase or
substitution for any affected Mortgage Loan by the Seller under Section 2.05
shall relieve the Depositor of its obligation to cure its corresponding breach
with respect to the related Mortgage Loan under this Section.

         Section 2.06 Execution and Authentication of Certificates. The Trustee
shall on behalf of the Trust, not in its individual capacity but solely as
Trustee, cause to be executed, and delivered on the Closing Date to or upon the
order of the Depositor, in exchange for the Mortgage Loans and the other assets
comprising the Trust, simultaneously with the sale, assignment and transfer to
the Trustee of the Mortgage Loans, each Class of Certificates duly executed by
the Trustee, and authenticated by the Trustee, pursuant to Section 6.01, in
authorized denominations, equaling, 100% of the Percentage Interests in each
Class, and collectively evidencing the entire ownership of the Trust.

         Section 2.07 Reserved.

         Section 2.08 Indemnification of the Trust. The Seller shall indemnify
the Trust for any liability incurred thereby as a result of a breach of the
representation and warranty set forth in clause (xvii) of Section 2.05 (without
regard to any limitation therein relating to the knowledge of the Seller). This
indemnity obligation shall be in addition to any other obligation the Seller may
have in connection with any such breach.

                                      -53-
<PAGE>

                                  ARTICLE III

                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
                               CERTIFICATE ACCOUNT

         Section 3.01 The Servicer and the Sub-Servicers. Acting directly or
through one or more Sub-Servicers as provided in Section 3.15, the Servicer, as
servicer, shall administer the Mortgage Loans with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable home equity mortgage loans that it services for itself or others. The
duties of the Servicer shall include collecting and posting of all payments,
responding to inquiries of Mortgagors or by federal, state or local government
authorities with respect to the Mortgage Loans, investigating delinquencies,
reporting tax information to Mortgagors in accordance with its customary
practices and accounting for collections and furnishing monthly and annual
statements to the Trustee with respect to distributions and making Monthly
Advances and Servicing Advances pursuant to Section 5.02. The Servicer shall
follow its customary standards, policies and procedures in performing its duties
as Servicer, to the extent not in conflict with the provisions of this
Agreement. Notwithstanding the appointment of any Sub-Servicer, the Servicer
shall remain liable for the performance of all of the servicing obligations and
responsibilities under this Agreement. The Servicer shall maintain all licenses
and qualifications necessary to perform its servicing obligations hereunder in
the jurisdictions in which it services Mortgage Loans. If the Servicer commences
directly to service a material number or principal amount of Mortgage Loans with
related Mortgaged Properties located in any other state, the Servicer will use
its reasonable efforts promptly to obtain, and thereafter to maintain, all
licenses and qualifications necessary to perform its servicing obligations
hereunder in each such state. Each Sub-Servicer shall maintain all licenses and
qualifications necessary to perform its servicing obligations in the states
where the Mortgaged Properties to which the applicable Sub-Servicing Agreement
relates are located. The Servicer shall cooperate with the Trustee and furnish
to the Trustee such information in its possession as may be necessary or
appropriate to enable the Trustee to perform its tax reporting duties hereunder.
The Trustee shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.

         Without limiting the generality of the foregoing, the Servicer (i)
shall continue, and is hereby authorized and empowered by the Trustee, to
execute and deliver, on behalf of itself, the Certificateholders and the Trustee
or any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the related Mortgaged
Properties (ii) may consent to any modification of the terms of any Mortgage
Note not expressly prohibited hereby if the effect of any such modification will
not be to materially and adversely affect the security afforded by the related
Mortgaged Property or to decrease or slow (other than as permitted by Section
3.02(a)(ii)) the timing of receipt of any payments required thereunder and (iii)
shall not consent to the placing of a lien senior to or on parity with that of
the Mortgage on the related Mortgaged Property.

         The Servicer may but shall not be obligated to sue to enforce or
collect on any of the Mortgage Loans or any insurance policy covering a Mortgage
Loan, in its own name if possible, or on behalf of the Trust. If the Servicer
commences a legal proceeding to enforce a Mortgage

                                      -54-
<PAGE>

Loan or any such insurance policy, the Trustee shall thereupon be deemed to have
automatically assigned the Mortgage Loan or the rights under such insurance
policy to the Servicer for purposes of collection only. If, however, in any suit
or legal proceeding for enforcement, it is held that the Servicer may not
enforce or collect on a Mortgage Loan or any insurance policy covering a
Mortgage Loan on the ground that it is not a real party in interest or a holder
entitled to enforce such Mortgage Loan or such insurance policy, as the case may
be, then the Trustee shall, upon the written request of a Servicing Officer,
furnish the Servicer with such powers of attorney and other documents as are
necessary or appropriate to enable the Servicer to enforce such Mortgage Loan or
insurance policy, as the case may be. Amounts expended by the Servicer under
this paragraph shall be considered Servicing Advances.

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

         The parties intend that each REMIC Pool shall constitute a REMIC, and
that the affairs of each REMIC Pool shall be conducted so as to qualify it as a
REMIC. In furtherance of such intention, (i) the Servicer covenants and agrees
that it shall act as agent (and the Servicer is hereby appointed to act as
agent) on behalf of each REMIC Pool, and that in such capacity it shall: (a) use
its best efforts to conduct the affairs of such REMIC Pool at all times that any
Certificates are outstanding so as to maintain the status thereof as a REMIC
under the REMIC Provisions; (b) not knowingly or intentionally take any action
or omit to take any action that would cause the termination of the REMIC status
of any REMIC Pool or that would subject such REMIC Pool to tax, including the
modification of a qualified mortgage that would subject such REMIC Pool to tax;
and (c) exercise reasonable care not to allow such REMIC Pool to receive income
from the performance of services or from assets not permitted under the REMIC
Provisions to be held by a REMIC, and (ii) the Holder of the Class R
Certificates covenants and agrees that it shall (a) pay the amount of any
federal income tax, including, without limitation, prohibited transaction taxes,
taxes on net income from foreclosure property, and taxes on certain
contributions to a REMIC after the Startup Day, imposed on any REMIC Pool when
and as the same shall be due and payable (but such obligation shall not prevent
the Holder of the Class R Certificates or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall not prevent the
Holder of the Class R Certificates from withholding or depositing payment of
such tax, if permitted by law, pending the outcome of such proceedings); and (b)
pay the amount of any and all taxes imposed on any REMIC Pool pursuant to
Sections 24870, 24874 and 23153 of the California Revenue and Taxation Code. The
Holder of the Class R Certificates shall not be entitled to reimbursement for
any taxes paid pursuant to this Section.

         Section 3.02 Collection of Certain Mortgage Loan Payments; Collection
Account and Certificate Account.

                  (a) The Servicer shall, to the extent such procedures shall be
         consistent with this Agreement, follow such collection procedures as it
         follows from time to time with respect to home equity mortgage loans in
         its servicing portfolio that are comparable to the Mortgage Loans;
         provided that the Servicer shall always at least follow collection
         procedures that are consistent with standard industry practices.
         Consistent with the foregoing, and subject to the limitations in
         Section 3.05, the Servicer may in its discretion (i) waive any
         assumption fees, late payment charges, charges for checks returned for

                                      -55-
<PAGE>

         insufficient funds, if any, excluding Prepayment Charges, or other fees
         that may be collected in the ordinary course of servicing the Mortgage
         Loans, (ii) if a Mortgagor is in default or about to be in default
         because of a Mortgagor's financial condition, arrange with the
         Mortgagor a schedule for the payment of delinquent payments due on the
         related Mortgage Loan, or (iii) modify payments of monthly principal
         and interest on any Mortgage Loan becoming subject to the terms of the
         Relief Act in accordance with the Servicer's general policies for
         comparable home equity mortgage loans subject to such Act.

                  (b) The Servicer shall establish and maintain, or cause to be
         established and maintained, one or more Eligible Accounts that in the
         aggregate are the Collection Account. All amounts held in the
         Collection Account shall be invested by the depository institution or
         trust company then maintaining the account at the written direction of
         the Servicer in Permitted Investments that mature not later than the
         Deposit Date next succeeding the date of investment. No Permitted
         Investment shall be sold or disposed of prior to maturity. The Servicer
         shall not retain any cash or investment in the Collection Account for a
         period in excess of 12 months and cash therein shall be considered
         transferred to Certificate Account on a first-in, first-out basis. All
         net income realized from any such investment shall be for the benefit
         of the Servicer as additional servicing compensation and shall be
         subject to its withdrawal or order from time to time.

                  (c) Subject to Section 3.02(d), the Servicer shall deposit in
         the Collection Account each of the following payments on and
         collections in respect of the Mortgage Loans as soon as practicable,
         but in no event later than the close of business on the second Business
         Day after its receipt thereof:

                           (i) all payments in respect of or allocable to
                  interest on the Mortgage Loans (including any net income from
                  REO Properties);

                           (ii) all Principal Payments;

                           (iii) all Payments Ahead;

                           (iv) all Net Liquidation Proceeds;

                           (v) all Trust Insurance Proceeds (including, for this
                  purpose, any amounts required to be credited by the Servicer
                  pursuant to the last sentence of Section 3.04); and

                           (vi) all Prepayment Charges.

         The Servicer shall replace such amounts previously withdrawn from the
Collection Account and applied by the Servicer towards the payment of a Monthly
Advance pursuant to Section 5.02(a) or towards the payment of a Servicing
Advance pursuant to Section 5.02(b) by depositing into the Collection Account on
or prior to the Deposit Date immediately following such withdrawal an amount
equal to the total of all such amounts applied to the payment of a Servicing
Advance and those amounts applied to the payment of a Monthly Advance required
to be deposited pursuant to Section 5.01(b).

                                      -56-
<PAGE>

         The foregoing requirements respecting deposits to the Collection
Account are exclusive, it being understood that, without limiting the generality
of the foregoing, the Servicer need not deposit in the Collection Account
amounts representing fees, late payment charges, charges for checks returned for
insufficient funds, if any, or extension or other administrative charges
(excluding Prepayment Charges) paid by Mortgagors or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items. The amounts deposited
in the Collection Account are subject to withdrawal by the Servicer, from time
to time, (i) to make deposits into the Certificate Account pursuant to Section
3.02(e), (ii) to pay itself the Monthly Servicing Fee pursuant to Section 3.08
and to make Servicing Advances or to reimburse itself for Servicing Advances, as
applicable, in either case in accordance with Section 5.02(b), (iii) to make
Monthly Advances or to reimburse itself for payments of Monthly Advances, as
applicable, in either case in accordance with Section 5.02(a) and (iv) to
reimburse itself for expenses reimbursable pursuant to Section 7.03 hereof. In
addition, if the Servicer deposits in the Collection Account any amount not
required to be so deposited or any amount in respect of payments by Mortgagors
made by checks subsequently returned for insufficient funds or other reason for
non-payment, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.

                  (d) Upon such terms as the Rating Agencies may approve, the
         Servicer may make the deposits to the Collection Account referred to in
         Section 3.02(c) on a later day than the second Business Day after
         receipt of the amounts required to be so deposited, which terms and
         later day shall be specified by the Rating Agencies and confirmed to
         the Trustee and the Servicer in writing.

                  (e) The Trustee shall establish and maintain the Certificate
         Account. The Certificate Account shall be an Eligible Account
         segregated on the books of the Trustee and held by the Trustee in
         trust, and the Certificate Account and the amounts deposited therein
         shall not be subject to any claim, liens or encumbrances of any
         creditors or depositors of the Trustee or the Company (whether made
         directly or indirectly through a liquidator, receiver or trustee in
         bankruptcy of the Trustee or the Company). At or before 2:00 p.m. Los
         Angeles time on each Deposit Date, the Servicer shall withdraw from the
         Collection Account all amounts on deposit therein that constitute any
         portion of Available Funds for a Mortgage Loan Group and the related
         Distribution Date (including any amounts therein that are being held
         for distribution on a subsequent Distribution Date which are being
         applied toward the Monthly Advance for the related Distribution Date
         pursuant to Section 5.02(a)) and all Prepayment Charges collected
         during the related Collection Period and remit such amounts to the
         Trustee for deposit in the Certificate Account. In addition, any
         Compensating Interest and Monthly Advances required to be made by the
         Servicer for the related Mortgage Loan Group in respect of the related
         Distribution Date and any amounts required to be deposited into the
         Certificate Account in connection with a purchase or repurchase of any
         Mortgage Loans in such Mortgage Loan Group or any shortage on such
         Mortgage Loans by the Seller or the Servicer pursuant to Section 2.03,
         2.05, 3.01, 3.06 or 10.01 or a substitution of a Qualified Replacement
         Mortgage Loan pursuant to Section 2.03 or 2.05, or in connection with a
         purchase of Mortgage Loans by the Servicer pursuant to Section 10.01 or
         in connection with the Servicer's failure to adjust the Mortgage Loan
         Rate on an Adjustable Rate Mortgage Loan, shall be remitted to the
         Trustee for deposit in the Certificate Account on

                                      -57-
<PAGE>

         the applicable Deposit Date. On the Closing Date, the Class P Deposit
         shall be deposited in to the Certificate Account. Any amounts held in
         the Certificate Account (other than the Class P Deposit) may be
         invested at the written direction of the Servicer in Permitted
         Investments upon the same terms and conditions as those specified in
         clause (b) above with respect to the Collection Account except that
         such investments shall mature not later than the Business Day preceding
         the Distribution Date next succeeding the date of investment, and in
         the absence of such direction the Trustee shall invest in Permitted
         Investments described in clause (E) of the definition of Permitted
         Investments. All net income realized from any such investment shall be
         for the benefit of the Servicer as additional servicing fee; except
         that the net investment income realized from such investments in
         respect of the Business Day immediately preceding any Distribution Date
         shall be for the benefit of the Trustee as additional trustee fee, and
         shall be subject to its withdrawal or order from time to time.

         Section 3.03 Additional Servicing Responsibilities for the Adjustable
Rate Mortgage Loans. The Servicer shall enforce each Adjustable Rate Mortgage
Loan and shall timely calculate, record, report and apply all Mortgage Loan Rate
adjustments in accordance with the related Mortgage Note. The Servicer's records
shall, at all times, reflect then-current Mortgage Loan Rate and Monthly
Mortgage Payment and the Servicer shall timely notify the Mortgagor of any
changes to the Mortgage Loan Rate and the Monthly Mortgage Payment. If the
Servicer fails to adjust the Mortgage Loan Rate or the Monthly Mortgage Payment
in accordance with the terms of the Mortgage Note for the related Adjustable
Rate Mortgage Loan, or if the Servicer fails to notify the related Mortgagor of
any such adjustment as required under the terms of such Mortgage Note, or if any
liability, claim or defense arises with respect to any Adjustable Rate Mortgage
Loan solely as a result of any such failure, the Servicer shall pay, from its
own funds and without right of reimbursement therefor, any shortage in amounts
collected or collectible on the related Adjustable Rate Mortgage Loan that
results. The Servicer shall deposit any amounts in respect of such shortage in
the Certificate Account on the Deposit Date with respect to the related
Collection Period.

         Section 3.04 Hazard Insurance Policies. The Servicer shall cause to be
maintained for each Mortgage Loan (including Mortgage Loans as to which the
related Mortgaged Property has been acquired by the Trust upon foreclosure, by
deed in lieu of foreclosure or comparable conversion), hazard insurance
(including flood insurance coverage, if obtainable, to the extent such property
is located in a federally designated flood area in such amount as is required
under applicable FEMA guidelines) with extended coverage in an amount that is
not less than the least of (i) the maximum insurable value from time to time of
the improvements that are a part of such property, or (ii) the combined
principal balance of such Mortgage Loan and the principal balance of each
mortgage loan senior to such Mortgage Loan at the time of such foreclosure plus
accrued interest and the good-faith estimate of the Servicer of related
Liquidation Expenses to be incurred in connection therewith; provided, further
that such hazard insurance shall be in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each such hazard insurance policy shall contain
a standard mortgagee clause naming the originator, its successors and assigns,
as mortgagee and shall require prior notice to the insured of termination or
cancellation. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional

                                      -58-
<PAGE>

insurance on property acquired in respect of a Mortgage Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. Amounts collected by the
Servicer under any such policies shall be deposited in the Collection Account or
Certificate Account, as the case may be, in accordance with Section 3.02 to the
extent that they constitute Net Liquidation Proceeds or Trust Insurance
Proceeds. If the Servicer shall obtain and maintain a blanket policy, issued by
an insurer acceptable to each Rating Agency, insuring against such hazard
losses, it shall conclusively be deemed to have satisfied its obligations as set
forth in the first sentence of this Section, it being understood and agreed that
such policy may contain a deductible clause that is in form and substance
consistent with standard industry practice, in which case the Servicer shall, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with the first sentence of this Section, and there
shall have been a loss that would have been covered by such policy, deposit in
the Collection Account in accordance with Section 3.02 the amount not otherwise
payable under the blanket policy because of such deductible clause.

         Section 3.05 Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements. In any case in which property subject to a Mortgage is
voluntarily conveyed by the Mortgagor, the Servicer shall enforce any
due-on-sale clause contained in the related Mortgage Note or Mortgage, to the
extent permitted by such Mortgage Note or Mortgage, applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any related insurance policy or
result in legal action by the Mortgagor. Subject to the foregoing, the Servicer
may take or enter into an assumption and modification agreement from or with the
Person to whom such Mortgaged Property has been or is about to be conveyed,
pursuant to which such Person becomes liable under the related Mortgage Note and
the Mortgagor remains liable thereon or, if the Person to whom such Mortgaged
Property has been or is about to be conveyed satisfies the Servicer's
then-current underwriting standards for home equity mortgage loans similar to
the Mortgage Loans, and the Servicer in its reasonable judgment finds it
appropriate, is released from liability thereon. If the Trustee is holding the
Mortgage Files, the Servicer shall notify the Trustee that any assumption and
modification agreement has been completed by delivering to the Trustee an
Officer's Certificate certifying that such agreement is in compliance with this
Section and the Servicer shall forward to the Trustee the original of such
assumption and modification agreement. Such assumption and modification
agreement shall, for all purposes, be considered a part of the related Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any such agreement, the Mortgage Loan Rate
shall not be reduced (but may be increased), the Principal Balance of such
Mortgage Loan shall not be changed and the term of such Mortgage Loan will not
be extended beyond the existing term of such Mortgage Loan. Any fee collected by
the Servicer for entering into any such agreement shall be retained by the
Servicer as additional servicing compensation.

         Notwithstanding the foregoing paragraph of this Section 3.05 or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reasons
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer that the Servicer reasonably believes it may be restricted by law from
preventing, for any reason whatsoever.

                                      -59-
<PAGE>

         Section 3.06 Realization upon Liquidated Mortgage Loans. Subject to the
limitations set forth in this Section 3.06 with respect to Restricted Mortgage
Loans, the Servicer, on behalf of the Trust, shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.02(a); provided that if the Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances, then the Servicer shall not cause the Trust to
acquire title to such Mortgaged Property in a foreclosure or similar proceeding.
In connection with such foreclosure or other conversion, the Servicer shall
follow such practices (including, in the case of any default on a related Senior
Lien, the advancing of funds to correct such default) and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
first, second and third lien one- to four-family mortgage loan servicing
activities (including the procurement of a drive-by appraisal of the related
Mortgaged Property prior to foreclosure or other conversion). The foregoing is
subject to the proviso that neither the Servicer nor the Trustee shall be
required to expend its own funds in connection with any foreclosure or towards
the correction of any default on a related Senior Lien or restoration of any
Mortgaged Property unless, in the reasonable judgment of the Servicer, such
foreclosure, correction or restoration will increase Net Liquidation Proceeds
(taking into account any unreimbursed Monthly Advances made or expected to be
made with respect to such Mortgage Loan). Amounts expended by the Servicer under
this paragraph shall be considered Servicing Advances.

         To the extent the Net Liquidation Proceeds derived from any such
foreclosure or conversion exceed the unpaid Principal Balance of the related
Mortgage Loan and accrued interest thereon at the applicable Mortgage Loan Rate
to the related due date during the Collection Period in which such foreclosure
or conversion occurs (net of any related Monthly Advances or Servicing Advances
that were unreimbursed prior to the receipt of such Net Liquidation Proceeds),
such excess shall be paid to the Holder of the Class R-I Certificate.

         Neither the Trust nor the Trustee on behalf of the Trust shall complete
foreclosure proceedings with respect to any Restricted Mortgage Loan. In lieu of
foreclosure, any Restricted Mortgage Loan shall be repurchased or substituted in
accordance with and subject to the limitations contained in Section 2.05.

         Notwithstanding the foregoing, the Servicer, at its sole option, may
purchase from the Trust on any Deposit Date any Mortgage Loan as to which the
related Mortgagor has failed to make full Monthly Mortgage Payments as required
under the related Mortgage Note for three consecutive months at any time
following the Cut-off Date and prior to such Deposit Date at a price equal to
the Purchase Price by depositing such amount in the Certificate Account on such
Deposit Date pursuant to Section 3.02; provided, however, that the aggregate
Principal Balances of the Mortgage Loans purchased by the Servicer pursuant to
the exercise of the option granted in this sentence shall not exceed 3% of the
sum of the Original Pool Balance plus the amount of the Prefunding Account
Deposit and such Mortgage Loans may be purchased only in the order of the most
delinquent to the least delinquent.

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

                                      -60-
<PAGE>

on behalf of the Certificateholders, and the Servicer shall manage, conserve and
protect each such Mortgaged Property for the Certificateholders solely for the
purpose of its prompt disposition and sale. The Servicer shall use its best
efforts to dispose of each such Mortgaged Property as expeditiously as possible
consistent with the goal of maximizing Net Liquidation Proceeds (taking into
account any unreimbursed Monthly Advances made or expected to be made with
respect to such Mortgage Loan). Neither the Trustee nor the Servicer, acting on
behalf of the Trust, shall provide financing from the Trust to any purchaser of
any such Mortgaged Property.

         In the event that the Trust acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, such Mortgaged Property shall be disposed of by the Servicer on
behalf of the Trust no later than the last day of the third calendar year
following the year in which the foreclosure occurred. The Servicer shall further
ensure that the Mortgaged Property is administered so that it constitutes
"foreclosure property" within the meaning of Code Section 860G(a)(8) at all
times, that the sale of such property does not result in the receipt by any
REMIC Pool of any income from non-permitted assets as described in Code Section
860F(a)(2)(B), and that no REMIC Pool derives any "net income from foreclosure
property" within the meaning of Code Section 860G(c)(2) with respect to such
property.

         Section 3.07 Trustee to Cooperate; Release of Mortgage Files. Upon the
payment in full of the principal balance of any Mortgage Loan, if the Trustee is
holding the Mortgage Files, the Servicer shall notify the Trustee by a
certification in the form of Exhibit H hereto (which certification shall include
a statement to the effect that all amounts received in connection with such
payment which are required to be deposited to the Collection Account pursuant to
Section 3.02 have been so deposited) of a Servicing Officer. Such notification
shall be made each month at the time that the Servicer delivers its Servicer
Remittance Report to the Trustee pursuant to Section 4.01. Upon any such payment
in full, the Servicer is authorized to procure from such trustee under the
Mortgage that secured the related Mortgage Note a deed of full reconveyance
covering the related Mortgaged Property encumbered by such Mortgage, which deed,
except as otherwise provided in Section 2941(c) of the California Civil Code or
other applicable law, shall be recorded by such trustee in the office of the
County Recorder in which the Mortgage is recorded, or, as the case may be, to
procure from such trustee an instrument of satisfaction or, if the related
Mortgagor so requests, an assignment without recourse, in each case prepared by
the Servicer at its expense and executed by the Trustee, which deed of
reconveyance, instrument of satisfaction or assignment shall be delivered by the
Servicer to the Person entitled thereto, it being understood and agreed that no
expenses incurred in connection with such deed of reconveyance, assignment or
instrument of satisfaction shall be reimbursed from amounts at the time on
deposit in the Collection or Certificate Account. From time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the Trustee
shall, upon written request of the Servicer and delivery to the Trustee of a
trust receipt signed by a Servicing Officer, release the related Mortgage File
to the Servicer and shall execute such documents prepared by the Servicer as
shall be necessary to the prosecution of any such proceedings. Such trust
receipt shall state that the Servicer is holding the Mortgage File in trust for
the Trustee and shall obligate the Servicer to return the Mortgage File to the
Trustee when the need therefor by the Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a

                                      -61-
<PAGE>

certificate of a Servicing Officer similar to that herein above specified, the
trust receipt shall be released by the Trustee to the Servicer.

         Section 3.08 Servicing Compensation; Payment of Certain Expenses by the
Servicer. On each Deposit Date, the Servicer shall be entitled to receive, by
withdrawal by the Servicer from the Collection Account, out of collections of
interest on the Mortgage Loans for the related Collection Period, as servicing
compensation for such Collection Period, the Monthly Servicing Fee. Additional
servicing compensation shall be assumption fees, late payment charges, charges
for checks returned for insufficient funds, or extension and other
administrative charges received by the Servicer (excluding Prepayment Charges)
and any earnings on investments by the Servicer of amounts held in escrow
accounts established thereby on behalf of Mortgagors (any such investments to be
made in compliance with applicable law). The Servicer is obligated to pay
Compensating Interest out of the related Monthly Servicing Fee on each Deposit
Date, to the extent of one-half of the amount of the Monthly Servicing Fee, and
shall not be entitled to reimbursement therefor. The Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
(including payment of the fees and expenses relating to the Annual Independent
Public Accountant's Servicing Report described in Section 3.10, and all other
fees and expenses not otherwise expressly stated hereunder for the account of
the Certificateholders) and shall not be entitled to reimbursement therefor
except as specifically provided herein.

         Section 3.09 Annual Statement as to Compliance.

                  (a) The Servicer will deliver to the Trustee, the Seller, the
         Depositor and each Rating Agency, on or before May 31 of each year,
         beginning with May 31, 2002, an Officer's Certificate of the Servicer
         substantially in the form set forth in Exhibit F hereto stating that
         (a) a review of the activities of the Servicer during the preceding
         calendar year (or since the Closing Date in the case of the first such
         statement) and of its performance under this Agreement has been made
         under such officer's supervision and (b) to the best of such officer's
         knowledge, based on such review, the Servicer has fulfilled all its
         material obligations under this Agreement throughout such year (or
         since the Closing Date in the case of the first such statement), or, if
         there has been a default in the fulfillment of any such obligation,
         specifying each such default known to such officer and the nature and
         status thereof.

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

         Section 3.10 Annual Independent Public Accountants' Servicing Report.
On or before May 31 of each year, beginning with May 31, 2002, the Servicer at
its expense shall cause a firm of nationally recognized independent public
accountants (who may also render other services to the Servicer) to furnish a
report to the Trustee, the Seller, the Depositor and each Rating Agency to the
effect that such firm has examined certain documents and records (including the
Servicer Remittance Reports delivered by the Servicer during the period covered
by such reports) relating

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<PAGE>

to the servicing activities of the Servicer (which would include servicing of
Mortgage Loans under this Agreement) for the period covered by such report, and
that such examination (which will have been conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers to
the extent that the procedures in such audit guide are applicable to the
servicing obligations set forth in this Agreement), has disclosed no exceptions
or errors in records relating to the servicing activities of the Servicer,
including servicing of Mortgage Loans subject to this Agreement, that, in the
opinion of such firm, are material, except for such exceptions as shall be set
forth in such report.

         Section 3.11 Access to Certain Documentation and Information Regarding
the Mortgage Loans.

                  (a) The Servicer shall provide to Certificateholders that are
         federally insured savings associations and the FDIC and its supervisory
         agents and examiners access to the documentation regarding the Mortgage
         Loans required by applicable regulations of the Office of Thrift
         Supervision, and to the Trustee all documentation relating to the
         Mortgage Loans that is in the possession of the Servicer, such access
         being afforded without charge but only upon reasonable request and
         during normal business hours at the offices of the Servicer. The
         Servicer shall accurately and fully provide information regarding
         payment performance of the Mortgagors to the nationally recognized
         credit repositories. Nothing in this Section shall derogate from the
         obligation of the Servicer to observe any applicable law prohibiting
         disclosure of information regarding the Mortgagors and the failure of
         the Servicer to provide access as provided in this Section as a result
         of such obligation shall not constitute a breach of this Section.

                  (b) The Servicer shall supply information to the Trustee in
         such form as the Trustee shall reasonably request, by the start of the
         third Business Day preceding each Distribution Date, as is required in
         the Trustee's reasonable judgment to enable the Trustee to make
         required distributions and to furnish the certificates, statements and
         reports to Certificateholders required pursuant to this Agreement.

         Section 3.12 Maintenance of Fidelity Bond and Errors and Omissions
Policy. The Servicer shall during the term of its service as Servicer maintain
in force a (a) policy or policies of insurance covering errors and omissions in
the performance of its obligations as Servicer hereunder and (b) fidelity bond
in respect of its officers, employees and agents, in each case having coverage
amounts that satisfy FNMA or FHLMC requirements for mortgage loan originators
and servicers.

         Section 3.13 Notices to the Rating Agencies and the Trustee . In
addition to the other notices required to be given to the Rating Agencies and
the Trustee by the provisions of this Agreement, the Servicer shall give notice
to each Rating Agency, the Trustee, the Depositor and the Seller of (a) any
amendment to this Agreement, (b) the final distribution on the Offered
Certificates, (c) the occurrence of an Event of Default and (d) the repurchase,
purchase or substitution, as applicable, of any Mortgage Loan pursuant to
Section 2.03, 2.05, 3.01 or 3.06 by the Seller or Servicer, as the case may be.

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<PAGE>

         Section 3.14 Reports of Foreclosures and Abandonment of Mortgaged
Properties. Each calendar year beginning in 2002 the Servicer shall make the
reports of foreclosures and abandonments of any Mortgaged Property required by
Code Section 6050J. In order to facilitate this reporting process, the Servicer,
on or before February 28th of each year, shall provide to the Internal Revenue
Service and the Trustee reports relating to each instance occurring during the
previous calendar year in which the Servicer (i) on behalf of the Trustee
acquired an interest in a Mortgaged Property through foreclosure or other
comparable conversion in full or partial satisfaction of a Mortgage Loan, or
(ii) knows or has reason to know that a Mortgaged Property has been abandoned.
The reports from the Servicer shall be in form and substance sufficient to meet
the reporting requirements imposed by such Section 6050J.

         Section 3.15 Sub-Servicers and Sub-Servicing Agreements.

                  (a) The Servicer may enter into Sub-Servicing Agreements for
         any servicing and administration of Mortgage Loans with any institution
         that is in compliance with the laws of each state necessary to enable
         it to perform its obligations under such Sub-Servicing Agreement. The
         Servicer shall give notice to the Seller, the Trustee, the Depositor,
         the Rating Agencies and the PMI Insurer of the appointment of any
         Sub-Servicer. The Servicer shall not enter into any Sub-Servicing
         Agreement that does not provide for the servicing of the Mortgage Loans
         specified therein on a basis consistent with the terms of this
         Agreement or that otherwise violates the provisions of this Agreement.
         The Servicer may enter into, and make amendments to, any Sub-Servicing
         Agreement or enter into different forms of Sub-Servicing Agreements;
         provided, however, that any such amendments or forms shall be
         consistent with and not violate the provisions of this Agreement.

                  (b) For purposes of this Agreement the Servicer shall be
         deemed to have received payments on Mortgage Loans when any
         Sub-Servicer has received such payments. With respect to the Servicer's
         obligations under Section 3.01 to make deposits in the Collection
         Account, the Servicer shall be deemed to have made such deposits when
         any Sub-Servicer has made such deposits into a Sub-Servicing Account if
         permitted by the related Sub-Servicing Agreement.

                  (c) Any Sub-Servicing Agreement and any other transactions or
         services relating to the Mortgage Loans involving a Sub-Servicer shall
         be deemed to be between the Sub-Servicer and the Servicer alone and the
         Trustee shall not be deemed a party thereto and shall have no claims,
         rights, obligations, duties or liabilities with respect to any
         Sub-Servicer, except that the Trustee shall have such claims or rights
         that arise as a result of any funds held by a Sub-Servicer in trust for
         or on behalf of the Trust. Notwithstanding the execution of any
         Sub-Servicing Agreement, the Servicer shall not be relieved of any
         liability hereunder and shall remain obligated and liable for the
         servicing and administration of the Mortgage Loans.

                  (d) The Servicer shall be entitled to terminate any
         Sub-Servicing Agreement and the rights and obligations of any
         Sub-Servicer pursuant to any Sub-Servicing Agreement in accordance with
         the terms and conditions of such Sub-Servicing Agreement. In the event
         of termination of any Sub-Servicer, all servicing obligations of

                                      -64-
<PAGE>

         such Sub-Servicer shall be assumed simultaneously by the Servicer
         without any act or deed on the part of such Sub-Servicer or the
         Servicer, and the Servicer either shall service directly the related
         Mortgage Loans or shall enter into a Sub-Servicing Agreement with a
         successor Sub-Servicer. The Sub-Servicer shall give written notice to
         the Trustee, the Depositor and the Seller of the termination of any
         Sub-Servicer.

                  (e) Any Sub-Servicing Agreement shall (i) include the
         provision that such agreement may be immediately terminated by the
         Trustee in accordance with the terms of this Agreement, in the event
         that the Servicer shall, for any reason, no longer be the Servicer
         (including termination due to an Event of Default) and (ii) clearly and
         unambiguously state that either (x) such termination is effective
         without a fee or (y) any termination fee is the sole responsibility of
         the Servicer and none of the Trust, the Trustee, the Seller, the
         Depositor or the Certificateholders has any liability therefor,
         regardless of the circumstances surrounding such termination.

         Section 3.16 Prefunding Account.

                  (a) If a Prefunding Account is specified in Article I, the
         Trustee will establish and maintain the Prefunding Account. No later
         than the Closing Date, the Trustee will deposit in the Prefunding
         Account the Prefunding Account Deposit from the proceeds of the sale of
         the Offered Certificates. Subject to this Section, upon the conveyance
         of Subsequent Mortgage Loans to the Trust on any Subsequent Transfer
         Date, the Depositor shall instruct the Trustee to withdraw from the
         Prefunding Account (i) an amount equal to the Subsequent Purchase Price
         for the Subsequent Mortgage Loans to be included in each Mortgage Loan
         Group and make a corresponding reduction in the amount on deposit in
         the Prefunding Account allocated to such Mortgage Loan Group, and to
         pay such amount to or upon the order of the Depositor upon satisfaction
         of the conditions set forth in Section 2.02 of this Agreement with
         respect to such transfer.

                  (b) The Prefunding Account will be part of the Trust but not
         part of any REMIC Pool. Amounts held in the Prefunding Account shall be
         invested in Permitted Investments of the type specified in clause (f)
         of the definition of Permitted Investments. The Trustee shall not be
         liable for any losses on amounts invested in accordance with the
         provisions hereof. Any losses realized in connection with any such
         investment shall be for the account of the Seller and the Seller shall
         deposit the amount of such loss (to the extent not offset by income
         from other investments) in the Prefunding Account immediately upon the
         realization of such loss. All interest and any other investment
         earnings on amounts held in the Prefunding Account shall be taxed to
         the Seller and for federal and state income tax purposes the Seller
         shall be deemed to be the owner of the Prefunding Account. All interest
         and any other investment earnings on amounts held in the Prefunding
         Account shall be paid by the Trustee to the Seller on the Distribution
         Date next following the end of the Funding Period.

                  (c) On the Distribution Date next following the end of the
         Funding Period, any amounts remaining in the Prefunding Account (net of
         reinvestment earnings payable to the Seller) shall be deposited at such
         time into the Certificate Account for distribution

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<PAGE>

         in the related allocated amounts as part of the Principal Distribution
         Amount for the related Mortgage Loan Group on such Distribution Date.

         Section 3.17 Capitalized Interest Account.

                  (a) Unless all Subsequent Mortgage Loans are purchased by the
         Trust on the Closing Date, or unless a Capitalized Interest Account is
         not specified in Article I, the Trustee shall establish and maintain
         the Capitalized Interest Account. On the Closing Date, the Trustee will
         deposit the Capitalized Interest Account Deposit in the Capitalized
         Interest Account or, if all Subsequent Mortgage Loans are purchased on
         the Closing Date, in the Certificate Account. The Trustee shall hold
         the Capitalized Interest Account Deposit for the benefit of the Offered
         Certificateholders.

                  (b) The Capitalized Interest Account will be part of the Trust
         but not part of any REMIC Pool. Amounts held in the Capitalized
         Interest Account prior to the first Deposit Date shall be invested in
         Permitted Investments of the type specified in clause (f) of the
         definition of Permitted Investments, which Permitted Investments shall
         mature no later than the Deposit Date immediately following the end of
         the Funding Period. The Trustee shall not be liable for any losses on
         amounts invested in accordance with the provisions hereof. All interest
         and other investment earnings on amounts held in the Capitalized
         Interest Account (and any other amounts remaining on deposit therein in
         excess of the amounts to be so withdrawn and deposited into the
         Certificate Account) shall be paid or released by the Trustee to the
         Seller on the Distribution Date immediately following the end of the
         Funding Period and taxed to the Seller. For federal and state income
         tax purposes the Seller shall be deemed to be the owner of the
         Capitalized Interest Account. Any losses realized in connection with
         any such investment shall be for the account of the Seller and the
         Seller shall deposit the amount of such loss (to the extent not offset
         by income from other investments) in the Capitalized Interest Account
         immediately upon the realization of such loss. All amounts earned on
         deposit in the Capitalized Interest Account shall be taxed to the
         Seller.

                  (c) On each Prefunding Distribution Date, the Trustee shall
         transfer from the Capitalized Interest Account to the Certificate
         Account the Capitalized Interest Requirement, if any, for such
         Distribution Date; provided, however, that on the final Subsequent
         Transfer Date the Trustee shall (i) transfer the Capitalized Interest
         Requirement, if any, for the following Distribution Date from the
         Capitalized Interest Account to the Certificate Account, (ii) remit the
         balance of the funds on deposit in the Capitalized Interest Account to
         the Seller and (iii) close the Capitalized Interest Account.

         Section 3.18 [Reserved]

         Section 3.19 [Reserved]

         Section 3.20 [Reserved]

         Section 3.21 Net Rate Cap Fund. The Trustee will establish the Net Rate
Cap Fund on the Closing Date. On the Closing Date, the Class C
Certificateholders will deposit, or cause to be deposited, into the Net Rate Cap
Fund $10,000. On each Distribution Date as to which there

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is a Net Rate Cap Carryover, the Trustee has been directed by the Class C
Certificateholders to, and therefor will, deposit into the Net Rate Cap Fund the
amounts described in Section 5.01(e)(5), rather than distributing such amounts
to the Class C Certificateholders. On each such Distribution Date, the Trustee
shall hold all such amounts for the benefit of the Offered Certificateholders,
other than the Class A-IO Certificateholders, and will distribute such amounts
to the applicable Certificateholders pursuant to Section 5.01(e)(5). If no Net
Rate Cap Carryover is payable on a Distribution Date, the Trustee shall deposit
into the Net Rate Cap Fund on behalf of the Class C Certificateholders an amount
such that when added to other amounts already on deposit in the fund, the
aggregate amount on deposit therein is equal to $10,000. For federal and state
income tax purposes, the Class C Certificateholders will be deemed to be the
owners of the Net Rate Cap Fund and all amounts deposited into the Net Rate Cap
Fund (other than the initial $10,000 deposit) shall be treated as amounts
distributed by REMIC III with respect to the Class C Distribution Amount and
Class C Carryforward Amount. Related amounts held in the Net Rate Cap Fund and
not distributable to any Offered Certificateholders on any Distribution Date
will be invested by the Trustee in investments designated in writing by the
Class C Certificateholders having maturities on or prior to the next succeeding
Distribution Date on which such related amounts will be distributable to the
applicable Class of Certificateholders; provided, that, if no such designation
is made by the Class C Certificateholders, all such amounts shall remain
uninvested. Upon the termination of the Trust, or the payment in full of the
Offered Certificateholders, other than the Class A-IO Certicateholders, all
amounts remaining on deposit in the Net Rate Cap Fund will be released from the
lien of the Trust and distributed to the Class C Certificateholders or their
designees. The Net Rate Cap Fund will be part of the Trust but not part of any
REMIC Pool and any payments to Offered Certificateholders of related Net Rate
Cap Carryover will not be payments with respect to a "regular interest" in a
REMIC within the meaning of Code Section 860G(a)(1).

         Section 3.22 Covenants and Representations Regarding Prepayment
Charges. (a) The Servicer will not waive any Prepayment Charge or part of a
Prepayment Charge unless in connection with a Mortgage Loan that is in default
or for which a default is reasonably foreseeable.

                  (b) The information set forth in the Prepayment Charge
         Schedule (including the prepayment charge summary attached thereto) is
         complete, true and correct in all material respects at the date or
         dates respecting which such information is furnished and each
         Prepayment Charge is permissible and enforceable in accordance with its
         terms (except to the extent that the enforceability thereof may be
         limited by bankruptcy, insolvency, moratorium, receivership and other
         similar laws relating to creditors' rights generally) under applicable
         state law.

                  (c) Upon discovery by the Seller, the Depositor, the Servicer
         or a Responsible Officer of the Trustee of a breach of the foregoing,
         which materially and adversely affects the right of the Holders of the
         Class P Certificates to any Prepayment Charge, the party discovering
         such breach shall give prompt written notice to the other parties.
         Within 60 days of the earlier of discovery by the Servicer or the
         Seller, as the case may be, or receipt of notice by the Servicer or the
         Seller, as the case may be, of a breach of clause (a) or (b) above,
         then in the case of clause (a) above the Servicer shall cure

                                      -67-
<PAGE>

         such breach in all material respects and in the case of clause (b)
         above the Seller shall cure such breach in all material respects. If
         the covenant in clause (a) above is breached, the Servicer must pay
         into the Collection Account the amount of the waived Prepayment Charge.
         If the representation in clause (b) above is breached, in addition to
         any rights the Trustee may have hereunder, the Seller must pay into the
         Collection Account the amount of the scheduled Prepayment Charge, less
         any amount previously collected and paid by the Servicer into the
         Collection Account.

         Section 3.23 Claims Upon the PMI Policy. The Servicer shall, on behalf
of the Trust, prepare and file in a timely basis with the PMI Insurer, with a
copy to the Trustee, all claims that may be made under any PMI Policy with
respect to PMI Mortgage Loans. Consistent with its rights and obligations
hereunder, the Servicer shall take all actions required under each PMI Policy as
a condition to the payment of any such claim. Any amount received from the PMI
Insurer with respect to any PMI Mortgage Loan shall be deposited by the
Servicer, not later than the Business Day following receipt thereof, into the
Certificate Account for distribution on the related Distribution Date as part of
Liquidation Proceeds for the related Mortgage Loan Group.

                                   ARTICLE IV

                                REMITTANCE REPORT

         Section 4.01 Servicer Remittance Report. With respect to each
Distribution Date, not later than the fifth Business Day prior to the related
Deposit Date the Servicer shall deliver to the Trustee, the Depositor and the
Seller a computer-readable magnetic tape or disk containing the Servicer
Remittance Report detailing the payments and collections received in respect of
the Mortgage Loans in each Mortgage Loan Group during the immediately preceding
Collection Period. The computer-readable magnetic tape or disk shall include
loan-by-loan information that specifies account number, borrower name,
outstanding principal balance and activity since the last Distribution Date.
Such tape shall be in the form and have the specifications as may be agreed to
among the Servicer, the Trustee, the Depositor and the Seller from time to time
and shall include information concerning original loan-to-value ratios, the lien
positions of and number of days contractually delinquent of the Mortgage Loans
and information necessary to calculate Delinquency Events, Cumulative Loss
Events and Required Overcollateralization Amounts.

         In addition to the foregoing, the Servicer shall provide the Trustee,
the Depositor and the Seller at the time the tape is delivered to the Trustee a
Liquidation Report and accompanying Officer's Certificate with respect to each
Mortgage Loan that became a Liquidated Mortgage Loan during the related
Collection Period substantially in the form of Exhibits I and J hereto.

         Section 4.02 Trustee Distribution Date Statement. The Trustee shall,
not later than the Business Day prior to each Deposit Date, furnish by telecopy
to the Servicer, the Depositor and the Seller a statement derived from
information on the Servicer Remittance Report that sets forth the following
information for the Offered Certificates relating to the next succeeding
Distribution Date:

                  (a) the total amount of payments in respect of or allocable to
         interest on the Mortgage Loans received from the related Mortgagors by
         the Servicer during such

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<PAGE>

         Collection Period (including any net income from REO Properties
         received during the related Collection Period);

                  (b) the aggregate amount of all Principal Prepayments received
         from the related Mortgagors by the Servicer during such Collection
         Period;

                  (c) the aggregate amount of all Principal Payments received
         from the related Mortgagors by the Servicer during such Collection
         Period;

                  (d) the total amount of Payments Ahead received during the
         related Collection Period;

                  (e) the aggregate of any Trust Insurance Proceeds received by
         the Servicer during such Collection Period;

                  (f) the aggregate of any Net Liquidation Proceeds received by
         the Servicer during such Collection Period;

                  (g) the total amount of Compensating Interest payments to be
         paid by the Servicer pursuant to Section 3.08;

                  (h) the aggregate Purchase Prices for (i) any Defective
         Mortgage Loans that the Seller is required to repurchase on the related
         Deposit Date pursuant to Section 2.03 or 2.05 and (ii) any Mortgage
         Loan that the Servicer is required to purchase on the related Deposit
         Date pursuant to Section 3.01 or 3.06;

                  (i) any amounts required to be deposited by the Seller on the
         related Deposit Date in connection with the substitution of a Qualified
         Replacement Mortgage Loan pursuant to Section 2.03 or 2.05;

                  (j) the amount of Monthly Advances to be made by the Servicer
         pursuant to Section 5.02(a);

                  (k) the related Monthly Servicing Fee attributable to the
         Mortgage Loans in the related Mortgage Loan Group;

                  (l) the amount of Monthly Advances reimbursable to the
         Servicer in such Collection Period pursuant to Section 5.02(a) and not
         previously reimbursed;

                  (m) the amount of any Servicing Advance made by the Servicer
         pursuant to Section 5.02(b) and not previously reimbursed;

                  (n) the amount of any Interest Shortfall for the related
         Distribution Date;

                  (o) the number and Principal Balance of Mortgage Loans in each
         Mortgage Loan Group that, as of the end of the preceding calendar month
         were (i) 30 or more days contractually delinquent, (ii) 60 or more days
         contractually delinquent, (iii) 90 or more days contractually
         delinquent, (iv) in foreclosure, (v) as to which the Mortgagor is in

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         bankruptcy to the knowledge of the Servicer, or (vi) as to which the
         related Mortgaged Property was an REO Property;

                  (p) the dollar amount of (i) claims paid by the PMI Insurer
         under the PMI Policy as of the related Distribution Date as reported by
         the Servicer and (ii) the claims denied by the PMI Insurer under the
         PMI Policy as of the related Distribution Date as reported by the
         Servicer;

                  (q) Prepayment Charges collected for the related Distribution
         Date; and

                  (r) the Pass-Through Rates for each Class of Offered
         Certificates.

                                   ARTICLE V

                  PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS

         Section 5.01 Distributions. (a) On each Distribution Date, the Trustee
shall distribute to each Certificateholder of record on the related Record Date
(other than as provided in Section 10.01 respecting the final distribution to
Certificateholders if the termination of the Trust is in connection with a
purchase of the assets of the Trust by the Servicer pursuant to Section 10.01)
by check or money order mailed to such Certificateholder at the address
appearing in the Certificate Register, or upon written request by a Holder of a
Certificate, by wire transfer (in the event such Certificateholder owns of
record one or more Certificates that have principal or notional denominations
aggregating at least $5,000,000 and has given the Trustee, at least five
Business Days prior to the related Record Date, written instruction for making
such wire transfer to a bank account maintained in the United States), or by
such other means of payment as such Certificateholder and the Trustee shall
agree, such Certificateholder's Percentage Interest of the amounts (to the
extent applicable to the Class of such Holder's Certificate) and in the
following orders of priority with respect to each Mortgage Loan Group.
Notwithstanding such priorities, the aggregate of amounts distributed on all
Distribution Dates in reduction of the Certificate Principal Balance of any
Class shall not exceed the Certificate Principal Balance of such Class as of the
Closing Date.

                  (b) On each Distribution Date, the Trustee shall withdraw the
         portion of Available Funds for each Mortgage Loan Group from the
         Certificate Account in such amount so as to pay concurrently, to the
         Trustee, the Trustee Fee; to the Servicer, the Monthly Servicing Fee
         and the applicable PMI Insurer Premium (in such amount, as shall have
         been calculated by the Servicer and notified in writing to the
         Trustee), if any, paid by the Servicer (in each case to the extent not
         otherwise reimbursed from the Collection Account); and to the PMI
         Insurer, the PMI Insurer Premium, if any (to the extent not paid by the
         Servicer), in each case for such Mortgage Loan Group and Distribution
         Date.

                  (c) On each Distribution Date, after subtracting amounts
         payable toward the Trustee Fee, the Monthly Servicing Fee and the
         Primary Mortgage Insurance Premium, if any, the Trustee shall withdraw
         from the Certificate Account that portion of Available Funds for such
         Distribution Date consisting of the Interest Remittance Amount for such
         Distribution Date, and make the following disbursements and transfers
         in the order of

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<PAGE>

         priority described below, in each case to the extent of the related
         Interest Remittance Amount remaining for such Distribution Date:

                  1. To each class of Senior Certificates, the related Class
         Interest Distribution for the applicable Distribution Date, allocated
         as follows:

                           A. The portion of the related Class Interest
                  Distribution attributable to the Group I Mortgage Loans will
                  be distributed:

                                    first, concurrently, to the Class A-IO
                                    Certificates, the Group I Class A-IO Class
                                    Interest Distribution and to the Class A-1
                                    Certificates, the Class Interest
                                    Distribution for the Class A-1 Certificates,
                                    allocated pro rata based on entitlement
                                    pursuant to this clause first; and

                                    second, concurrently, to the Class A-IO
                                    Certificates, the Group II Class A-IO Class
                                    Interest Distribution and to the Class A-2
                                    Certificates, the Class Interest
                                    Distribution for the Class A-2 Certificates,
                                    in each case to the extent not paid pursuant
                                    to clause B. below, allocated pro rata based
                                    on entitlement pursuant to this clause
                                    second;

                           B. The portion of the related Class Interest
                  Distribution attributable to the Group II Mortgage Loans will
                  be distributed:

                                    first, concurrently, to the Class A-IO
                                    Certificates, the Group II Class A-IO Class
                                    Interest Distribution and to the Class A-2
                                    Certificates, the Class Interest
                                    Distribution for the Class A-2 Certificates,
                                    allocated pro rata based on entitlement
                                    pursuant to this clause first; and

                                    second, concurrently, to the Class A-IO
                                    Certificates, the Group I Class A-IO Class
                                    Interest Distribution and to the Class A-1
                                    Certificates, the Class Interest
                                    Distribution for the Class A-1 Certificates,
                                    in each case to the extent not paid pursuant
                                    to clause A. above, allocated pro rata based
                                    on entitlement pursuant to this clause
                                    second;

                  2. Sequentially, to the Class M-1, Class M-2 and Class B
         Certificates, in that order, the related Class Monthly Interest Amount
         for the applicable Distribution Date.

                  (d) On each Distribution Date, the Trustee shall withdraw from
         the Certificate Account that portion of Available Funds for such
         Distribution Date consisting of amounts in respect of principal
         received, and distribute to the Holders of the Offered Certificates,
         other than the Class A-IO Certificates, such amount, to the extent of
         the Principal Distribution Amount, in the following amounts and order
         of priority:

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<PAGE>

                  1. To the Class A Certificates, the Senior Principal
         Distribution Amount for the applicable Distribution Date, excluding any
         Subordination Increase Amount included in that amount, distributed as
         follows:

                           A. To the Class A-1 Certificates, payable solely from
                  the Basic Principal Amount from the Group I Mortgage Loans, an
                  amount equal to the product of (a) the Senior Principal
                  Distribution Amount, excluding any Subordination Increase
                  Amount included in that amount, and (b) the Class A Principal
                  Allocation Percentage applicable to the Class A-1
                  Certificates, until the Certificate Principal Balance thereof
                  is reduced to zero;

                           B. To the Class A-2 Certificates, payable solely from
                  the Basic Principal Amount from the Group II Mortgage Loans,
                  an amount equal to the product of (a) the Senior Principal
                  Distribution Amount, excluding any Subordination Increase
                  Amount included in that amount, and (b) the Class A Principal
                  Allocation Percentage applicable to the Class A-2
                  Certificates, until the Certificate Principal Balance thereof
                  is reduced to zero;

                  2. To the Class M-1 Certificates, the Class M-1 Principal
         Distribution Amount for the applicable Distribution Date, excluding any
         Subordination Increase Amount included in that amount, until its
         Certificate Principal Balance is reduced to zero.

                  3. To the Class M-2 Certificates, the Class M-2 Principal
         Distribution Amount for the applicable Distribution Date, excluding any
         Subordination Increase Amount included in that amount, until its
         Certificate Principal Balance is reduced to zero.

                  4. To the Class B Certificates, the Class B Principal
         Distribution Amount for the applicable Distribution Date, excluding any
         Subordination Increase Amount included in that amount, until its
         Certificate Principal Balance is reduced to zero.

         If the Certificate Principal Balance of either Class of Class A
Certificates is reduced to zero, then the remaining amount of principal
distributions distributable to the Holders of the Class A Certificates on such
Distribution Date, and the amount of principal distributions distributable to
the Holders of the Class A Certificates on all subsequent Distribution Dates,
will be distributed to the Holders of the Class of Class A Certificates
remaining outstanding, until the Certificate Principal Balance of such Class of
Class A Certificates remaining outstanding has been reduced to zero.

                  (e) On each Distribution Date, the Trustee shall withdraw from
         the Certificate Account that portion of Available Funds consisting of
         any Excess Interest and shall pay such amount in the following order of
         priority, in each case to the extent of the Excess Interest remaining
         undistributed:

                  1. To the Offered Certificates other than the Class A-IO
         Certificates, the Subordination Increase Amount for the applicable
         Distribution Date, allocated in the order set forth in Section 5.01(d)
         above.

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<PAGE>

                  2. To the Class M-1 Certificates, any related (a) Class
         Interest Carryover Shortfall and then (b) Class Principal Carryover
         Shortfall.

                  3. To the Class M-2 Certificates, any related (a) Class
         Interest Carryover Shortfall and then (b) Class Principal Carryover
         Shortfall.

                  4. To the Class B Certificates, any related (a) Class Interest
         Carryover Shortfall and then (b) Class Principal Carryover Shortfall.

                  5. To fund a distribution to Class C Certificateholders of the
         Class C Distribution Amount plus any Class C Carryforward Amount;
         provided that, pursuant to Section 3.21 hereof, on any Distribution
         Date as to which there is any unpaid Net Rate Cap Carryover, the
         Trustee will deposit from amounts that would otherwise be distributable
         to the Class C Certificateholders funds into the Net Rate Cap Fund for
         immediate application pursuant to this clause of the distribution of
         the related Net Rate Cap Carryover to the applicable Class of Offered
         Certificates, other than the Class A-IO Certificates, in proportion to
         their respective Net Rate Cap Carryover, and such deposit will
         constitute payment in full of and satisfaction of all obligations
         hereunder to distribute amounts equal to the related Net Rate Cap
         Carryover to the Class C Certificateholders, including for purposes of
         Section 9.16, and the Trustee, the Servicer and the Class C
         Certificateholders agree hereby appropriately to report any deposit of
         Net Rate Cap Carryover as if corresponding distributions had been made
         to the Class C Certificateholders for federal income tax and accounting
         purposes with respect to the Class C Distribution Amount and Class C
         Carryforward Amount. (All distributions or deemed distributions with
         respect to the Class C Distribution Amount and Class C Carryforward
         Amount shall be applied first to the interest components of such
         amounts and second to reduce the Class C Certificate Principal
         Balance).

                  6. To the Class R Certificates, the remainder.

                  (f) By accepting a Class C Certificate, each Class C
         Certificateholder hereby agrees to direct the Trustee, and the Trustee
         hereby is directed, to deposit into the Net Rate Cap Fund the amounts
         described in Section 3.21 on each Distribution Date as to which there
         is any Net Rate Cap Carryover rather than distributing such amounts to
         the Class C Certificateholders. By accepting a Class C Certificate,
         each Class C Certificateholder further agrees that such direction is
         given for good and valuable consideration, the receipt and sufficiency
         of which is acknowledged by such acceptance.

                  (g) On each Distribution Date, the Trustee shall make
         distributions to the Holders of the Class P Certificates of all
         Prepayment Charges on deposit in the Certificate Account with respect
         to the Mortgage Loans in each Mortgage Loan Group during the related
         Collection Period. Such Prepayment Charges will not be available for
         distributions to the Holders of the other Classes of Certificates and
         shall not reduce the Class P Certificate Principal Balance. If at any
         time the Pool Balance is $15,000 or less, the Trustee shall withdraw a
         portion of the Class P Deposit from the Certificate Account and apply
         such amount to the Class P Certificate Principal Balance such that the
         remaining Class P Deposit is always less than 0.66% of the sum of the
         Pool Balance and

                                      -73-
<PAGE>

         the remaining Class P Deposit. After all of the Certificates (other
         than the Class P Certificates) have been paid in full, the Trustee
         shall withdraw the remaining Class P Deposit from the Certificate
         Account and apply such amount to reduce the Class P Certificate
         Principal Balance to zero.

         Notwithstanding any of the foregoing, the aggregate of amounts
distributed on all Distribution Dates in reduction of the Certificate Principal
Balance of any Class of Certificates shall not exceed the Certificate Principal
Balance of such Class as of the Closing Date.

         Section 5.02 Monthly Advances; Servicing Advances.

                  (a) On or before each Deposit Date, the Servicer will deposit
         in the Collection Account in respect of each Mortgage Loan Group, in
         same day funds, an amount, if any (a "Monthly Advance"), equal to the
         sum of (i) with respect to all Mortgage Loans as to which the Monthly
         Mortgage Payment due during the related Collection Period has not been
         received as of the close of business on the related Determination Date,
         the aggregate of the interest portions of each Monthly Mortgage Payment
         in respect of the related Mortgage Loan Group due during the related
         Collection Period (net of the aggregate of the Monthly Servicing Fees
         for each Mortgage Loan Group attributable to such Mortgage Loans),
         inclusive of those amounts representing the interest portions of
         Monthly Mortgage Payments due during the first Collection Period, plus
         (ii) with respect to each Mortgaged Property that was acquired in
         foreclosure or similar action (each, an "REO Property") during or prior
         to the related Collection Period and as to which a final sale did not
         occur during the related Collection Period, an amount equal to the
         excess, if any, of interest on the Principal Balance of such REO
         Property at the related Mortgage Loan Rate (net of the Monthly
         Servicing Fee attributable to such REO Property) over the net income
         from such REO Property transferred to the Collection Account or the
         Certificate Account, as the case may be, for such Distribution Date;
         provided, however, that in no case will the Servicer be required to
         make advances with respect to any period or portion of any Collection
         Period following (i) the final due date with respect to any Mortgage
         Loan and (ii) to the extent that the Servicer reasonably believes that
         the amount of such advance will not be recoverable from subsequent
         collections on the related Mortgage Loan or from Liquidation Proceeds
         from the related Mortgage Loan in the event such Mortgage Loan is
         liquidated.

                  The Servicer shall be permitted to fund all or a portion of
         any Monthly Advance required to be made on a Deposit Date on any
         Business Day and to reimburse itself for any Monthly Advance paid from
         the Servicer's own funds out of amounts on deposit in the Collection
         Account in respect of collections on any Mortgage Loan in the related
         Mortgage Loan Group that are not required to be deposited on such
         Deposit Date in the Certificate Account as any portion of Available
         Funds for such Mortgage Loan Group and the related Distribution Date;
         provided, however, that the Servicer shall be required to replace any
         such amounts by deposit to the Collection Account on or before the next
         Deposit Date and the amount of such deposit shall thereafter be
         considered a Monthly Advance for purposes of reimbursement under this
         Agreement. The Servicer may recover Monthly Advances made from its own
         funds (i) from the Mortgagor on whose behalf such Monthly Advance was
         made and from collections on the related Mortgage

                                      -74-
<PAGE>

         Loan, including Liquidation Proceeds, Insurance Proceeds and such other
         amounts as may be collected by the Servicer from the Mortgagor or
         otherwise relating to the Mortgage Loan and (ii) in the case of a
         Monthly Advance that the Servicer reasonably believes will not be
         recoverable from the related Mortgage Loan, from collections or
         recoveries on any Mortgage Loan in the related Mortgage Loan Group, in
         each case prior to the payment of such amounts to the Collection
         Account or to any other party to this Agreement.

                  (b) The Servicer shall from time to time during the term of
         this Agreement make such Servicing Advances as the Servicer shall deem
         appropriate or advisable under the circumstances and are required
         pursuant to the terms of this Agreement; provided, however, that in no
         case will the Servicer be required to make Servicing Advances with
         respect to any Mortgage Loan to the extent that the Servicer reasonably
         believes that the amount of such advance will not be recoverable from
         subsequent collections on the related Mortgage Loan or from Liquidation
         Proceeds from the related Mortgage Loan in the event such Mortgage Loan
         is liquidated. Servicing Advances may be paid by the Servicer out of
         amounts on deposit in the Collection Account in respect of the related
         Mortgage Loan Group from time to time; provided, however, that the
         Servicer shall be required to replace any such amounts by deposit to
         the Collection Account in respect of the related Mortgage Loan Group on
         or before the first Deposit Date occurring after the payment of a
         Servicing Advance with such amounts, and the amount of such deposit
         shall thereafter be considered a Servicing Advance for purposes of
         reimbursement under this Agreement. The Servicer may recover Servicing
         Advances made from its own funds (i) from the Mortgagor on whose behalf
         such Servicing Advance was made and from collections on the related
         Mortgage Loan, including Liquidation Proceeds, Insurance Proceeds and
         such other amounts as may be collected by the Servicer from the
         Mortgagor or otherwise relating to the Mortgage Loan and (ii) in the
         case of a Servicing Advance that subsequent to the date the advance was
         made the Servicer reasonably believes that such advance will not be
         recoverable from the related Mortgage Loan, from collections or
         recoveries on any Mortgage Loan in the related Mortgage Loan Group, in
         each case prior to the payment of such amounts to the Collection
         Account or to any other party to this Agreement.

         Section 5.03 Statements to Certificateholders. Concurrently with each
distribution charged to the Certificate Account on a Distribution Date the
Trustee shall make available on its web site, located at
http://www-apps.gis.deutsche-bank.com/invr, a written statement (a "Statement to
Certificateholders") setting forth the following information with respect to the
Offered Certificates:

                  (a) the amount of the distribution with respect to each Class
         of Certificates (based on a Certificate in the original principal
         amount of $1,000);

                  (b) the amount of such distribution allocable to principal on
         the related Mortgage Loans in each Mortgage Loan Group, separately
         identifying the aggregate amount of any Prepayments or other recoveries
         of principal included therein;

                                      -75-
<PAGE>

                  (c) the amount of such distribution allocable to interest on
         the related Mortgage Loans in each Mortgage Loan Group separately
         identifying the aggregate amount of any prepayment or other recoveries
         of principal included therein;

                  (d) the Class Monthly Interest Amount and Class Interest
         Carryover Shortfall for each Class of Certificates;

                  (e) the outstanding Certificate Principal Balance of each
         Class of Offered Certificates (based on a Certificate in the original
         principal amount of $1,000) that will be outstanding after giving
         effect to any payment of principal on such Distribution Date;

                  (f) the aggregate of the Principal Balances of all Mortgage
         Loans after giving effect to any payments of principal on such
         Distribution Date by Mortgage Loan Group and for the entire Trust, and
         each Group Factor;

                  (g) based upon information furnished by the Servicer, such
         information as may be required by Section 6049(d)(7)(C) of the Code and
         the regulations promulgated thereunder to assist the Certificateholders
         in computing their market discount;

                  (h) the total of all amounts paid by the Seller and the
         Servicer during the related Collection Period in connection with
         purchases or repurchases from the Trust of Mortgage Loans and
         substitutions for Mortgage Loans of Qualified Replacement Mortgage
         Loans with respect to each Mortgage Loan Group and by reason for such
         purchase;

                  (i) the weighted average Mortgage Loan Rate of the Mortgage
         Loans in each Mortgage Loan Group;

                  (j) whether a Delinquency Event or a Cumulative Loss Event has
         occurred and, if so, what event;

                  (k) the amount of any Excess Interest included in such
         distribution;

                  (l) the Overcollateralization Amount, Required
         Overcollateralization Amount and Applied Realized Loss Amount, both in
         the aggregate and with respect to each applicable Class, for such
         Distribution Date;

                  (m) the Basic Principal Amount with respect to each Mortgage
         Loan Group;

                  (n) the amount of any Net Rate Cap Carryover paid and
         remaining unpaid as of such Distribution Date;

                  (o) the Capitalized Interest Requirement and amounts remaining
         in the Prefunding Account each as of such Distribution Date;

                  (p) the amount of any draw to be made on any PMI Policy on the
         related Distribution Date, and the amounts to be paid to the PMI
         Insurer, if any, as of such

                                      -76-
<PAGE>

         Distribution Date in respect of the PMI Insurer Premiums with respect
         to each PMI Mortgage Loan in the related Mortgage Loan Group;

                  (q) with respect to each Mortgage Loan Group, the number of
         Mortgage Loans in each Mortgage Loan Group and the aggregate of their
         Principal Balances as a percentage of the Group I Balance or Group II
         Balance, as appropriate, that as of the end of the immediately
         preceding calendar month are (i) 30 to 59 days delinquent, (ii) 60 to
         89 days delinquent, (iii) 90 or more days delinquent, (iv) the subject
         of bankruptcy proceedings (to the actual knowledge of the Servicer),
         (v) in foreclosure and (vi) as to which the related Mortgaged Property
         is REO Property; and

                  (r) the Certificate Principal Balance of each Class of
         Certificates then outstanding after giving effect to all payments or
         principal on such Distribution Date. In the case of information
         furnished pursuant to subclauses (a), (b), (c) and (d) above, the
         amounts shall be expressed as a dollar amount per Certificate with a
         $1,000 principal denomination.

         Within 90 days after the end of each calendar year, the Trustee shall
mail such report to Morgan Stanley & Co. Incorporated, 1585 Broadway, New York,
New York 10036, Attention: Mortgage Finance (which report shall include, in
addition to the information contained in reports to others hereunder, the total
amount of interest on the Mortgage Loans for the period covered by such report),
and to each Person who at any time during the calendar year was an Offered
Certificateholder, a statement for each Certificateholder containing the
information set forth in subclauses (a) through (c) above, aggregated for such
calendar year or, in the case of each Person who was an Offered
Certificateholder for a portion of such calendar year, setting forth such
information for each month thereof for the portion of the year during which such
Person was a Certificateholder. The Servicer shall provide any other information
necessary in order to report income in respect of the Certificateholders for
federal income tax purposes.

         Section 5.04 Allocation of Losses. On each Distribution Date, the
Trustee shall determine the total of the Applied Realized Loss Amounts for such
Distribution Date. The Applied Realized Loss Amount for any Distribution Date
shall be applied by reducing the Certificate Principal Balance of each Class of
Subordinate Certificates beginning with the Class of Subordinate Certificates
then outstanding with the lowest relative payment priority, in each case until
the respective Certificate Principal Balance thereof is reduced to zero. Any
Applied Realized Loss Amount allocated to a Class of Subordinate Certificates
shall be allocated among the Subordinate Certificates of such Class in
proportion to their respective Percentage Interests.

                                   ARTICLE VI

                                THE CERTIFICATES

         Section 6.01 The Certificates.

                  (a) The Certificates shall be substantially in the forms set
         forth in Exhibits A-1, A-2, A-3, A-4, B-1, B-2 and B-3 hereto, and
         shall, on original issue, be executed and delivered by the Trustee on
         behalf of the Trust, not individually but solely as Trustee to

                                      -77-
<PAGE>

         or upon the order of the Depositor concurrently with the sale and
         assignment to the Trustee of the Trust.

                  (b) The Book-Entry Certificates will be evidenced by one or
         more certificates, beneficial ownership of which will be held in
         minimum dollar denominations of $25,000 and integral multiples of
         $1,000 in excess thereof. The Class P Certificates, the Class R-I
         Certificate, the Class R-II Certificate and the Class R-III Certificate
         shall be issuable solely as single certificates evidencing the entire
         Percentage Interests of the Class P Certificates, the Class R-I
         Certificates, the Class R-II Certificates and the Class R-III
         Certificates, respectively, and the Class C Certificates shall be
         initially issued as a single certificate evidencing the entire
         Percentage Interest thereof.

                  (c) The Certificates shall be executed by manual or facsimile
         signature by the Trustee on behalf of the Trust (not in its individual
         capacity but solely as Trustee) by an authorized officer of the
         Trustee. Certificates bearing the manual or facsimile signatures of
         individuals who were, at the time when such signatures were affixed,
         authorized to sign on behalf of the Trustee shall bind the Trust,
         notwithstanding that such individuals or any of them have ceased to be
         so authorized prior to the countersigning and delivery of such
         Certificates or did not hold such offices at the date of such
         Certificate. No Certificate shall be entitled to any benefit under this
         Agreement, or be valid for any purpose, unless such Certificate shall
         have been manually authenticated by the Trustee substantially in the
         form provided for herein, and such signature upon any Certificate shall
         be conclusive evidence, and the only evidence, that such Certificate
         has been duly authenticated and delivered hereunder. All Certificates
         shall be dated the date of their authentication.

         Section 6.02 Registration of Transfer and Exchange of Certificates.

                  (a) The Trustee shall cause to be kept at the Corporate Trust
         Office a Certificate Register in which, subject to such reasonable
         regulations as it may prescribe, the Trustee shall provide for the
         registration of Certificates and of transfers and exchanges of
         Certificates as herein provided.

         Upon surrender for registration or transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose (as designated by
the Trustee from time to time) and upon satisfaction of the conditions set forth
in Section 6.02(b) and (c), the Trustee shall execute, authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Certificates of the same Class and of a like aggregate Percentage Interest. As
of the Closing Date, the Trustee designates its office located on 648 Grassmere
Park Road, Nashville, TN 37211, Attn: Transfer Department for such purpose.

         At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of the same Class and of a
like aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute, authenticate and deliver the
Certificates that the Certificateholder making the exchange is entitled to
receive.

                                      -78-
<PAGE>

         Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Company or the Trustee) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing.

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

         All Certificates surrendered for transfer or exchange shall be canceled
by the Trustee in accordance with its standard procedures.

                  (b) No transfer of a Class R Certificate shall be made unless,
         as evidenced by an Opinion of Counsel and Transfer Affidavit delivered
         to the Trustee, each in form and substance satisfactory to the Trustee,
         such transfer is not subject to registration under the Securities Act
         or any applicable state securities laws. Any such Opinion of Counsel
         and Transfer Affidavit shall not be obtained at the expense of the
         Trustee, the Trust, the Seller, the Depositor or the Servicer. The
         Holder of a Class R Certificate desiring to effect such transfer shall,
         and does hereby agree to, indemnify the Trustee, the Seller, the
         Depositor and the Servicer against any liability that may result if the
         transfer is not so exempt or is not made in accordance with the
         Securities Act and such state laws. Neither the Seller, the Servicer,
         the Depositor nor the Trustee or the Trust is under an obligation to
         register the Class R Certificates under the Securities Act or any state
         securities law.

         The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of such Class R Certificate to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfers of restricted securities
generally.

         No legal or beneficial interest in all or any of the Class R
Certificates may be transferred directly or indirectly to: (i) a Disqualified
Organization or an agent of a Disqualified Organization (including a broker,
nominee or middleman), (ii) an entity that holds REMIC residual securities as
nominee to facilitate the clearance and settlement of such securities through
electronic book-entry changes in accounts of participating organizations (a
"Book-Entry Nominee"), (iii) an individual, corporation, partnership or other
Person unless such transferee (A) is not a Foreign Person or (B) is a Foreign
Person that will hold such Class R Certificate in connection with the conduct of
a trade or business within the United States and has furnished the transferor
and the Trustee with, and agrees to periodically furnish in accordance with
Treasury regulations, an effective Internal Revenue Service Form W-8ECI (or any
applicable successor form) or (C) is a Foreign Person that has delivered (at the
expense of the transferee) to both the transferor and the Trustee an opinion of
a nationally recognized tax counsel to the effect that the transfer of the Class
R Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of the Class R
Certificate will not be disregarded for federal income tax purposes (any such
Person who is not covered by clause (A), (B) or (C) above being referred to
herein as a "Non-permitted Foreign Holder") or (iv) to an ERISA Plan or an
entity, including an insurance company separate account or general account,
whose underlying assets include ERISA Plan assets by reason of an

                                      -79-
<PAGE>

ERISA Plan's investment in the entity or a Person investing the assets of an
ERISA Plan or such an entity, whether as nominee, trustee, agent or otherwise
(such plan, entity or Person, an "ERISA Prohibited Holder"), and any such
purported transfer shall be void and have no effect.

         The Trustee shall not execute, and shall not authenticate and deliver,
a new Class R Certificate and shall not accept a surrender for the registration
of transfer or register the transfer of, any Class R Certificate, unless the
transferor thereof shall have provided to the Trustee a Transfer Affidavit
substantially in the form attached as Exhibit G hereto, signed by the
transferee, to the effect that the transferee is not a Disqualified Organization
and is not a nominee for a beneficial owner of the Class R Certificate from
which the transferee has not received a substantially similar affidavit, a
Book-Entry Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited
Holder. Such Transfer Affidavit shall contain (i) the consent of the transferee
to any such amendments of this Agreement as may be required to further
effectuate the foregoing restrictions on transfer of the Class R Certificates to
Disqualified Organizations, Book-Entry Nominees, Non-permitted Foreign Holders
or ERISA Prohibited Holders and (ii) a representation from the transferee that
such transferee does not have the intent or purpose to impede the assessment or
collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificates. Such Transfer Affidavit, if not
executed in connection with the initial issuance of the Class R Certificates,
also shall be accompanied by a Transferor Affidavit, substantially in the form
attached hereto as Exhibit K, signed by the transferor to the effect that as of
the time of the transfer, the transferor has no actual knowledge that such
affidavit is false and that the transferor does not have the intent or purpose
to impede the assessment or collection of any federal, state or local income
taxes legally required to be paid with respect to the Class R Certificate.

         Each Class R Certificate shall bear a legend referring to the foregoing
restrictions. Any Person acquiring the Class R Certificate, or beneficial
ownership thereof, agrees to give the Servicer written notice that it is a
"pass-through interest holder" within the meaning of Treasury Regulation Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring the Class R Certificate, or
beneficial ownership thereof, if it is, or is acquiring the Class R Certificate
on behalf of, a "pass-through interest holder."

         Upon notice to the Servicer that any legal or beneficial interest in
any Class R Certificate has been transferred, directly or indirectly, to a
Disqualified Organization in contravention of the foregoing restrictions or to a
pass-through entity as defined in the REMIC Provisions an interest of which is
held by a Disqualified Organization, the Servicer agrees to furnish to the
Internal Revenue Service and to any transferor of the Class R Certificate or
such agent or such pass-through entity such information as may be required to be
delivered thereto by the Code as necessary to the application of Code Section
860E(e) and described in Treasury regulations ss.1.860D-1(b)(5)(ii), or any
successor provision, including, but not limited to, the present value of the
total anticipated excess inclusions with respect to the Class R Certificate (or
portion thereof) for periods after such transfer. Such information shall be
provided in the manner described in Treasury regulations ss.1.860E-2(a)(5), or
any successor provision. At the election of the Servicer, the cost to the
Servicer of computing and furnishing such information may be

                                      -80-
<PAGE>

charged to the transferor or such agent referred to above; provided, however,
that the Servicer shall in no event be excused from furnishing such information.

         The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of the Class R Certificates to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfer of restricted securities generally.

                  (c) No transfer of a Class C Certificate, Class P Certificate
         or beneficial interest therein shall be made unless the Trustee shall
         have received (i) a letter from the transferor, substantially in the
         form attached hereto as Exhibit M, and (ii) a representation letter
         from the transferee, substantially in the form attached hereto as
         either Exhibit N-1 or Exhibit N-2, as applicable:

         Notwithstanding anything else to the contrary herein, any purported
transfer of a Class C Certificate, or a Class P Certificate or a beneficial
interest therein to or on behalf of an employee benefit plan subject to ERISA or
to the Code or a person acting on behalf of an ERISA Plan or using the assets of
an ERISA Plan to effect such transfer shall be void and of no effect.

         To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any Class C Certificate or any Class P
Certificate that is in fact not permitted by Section 6.02(c) or for making any
payments due on such Certificate to the holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the transfer was registered by the Trustee in accordance with the
foregoing requirements.

         The Class C Certificates, the Class P Certificates, this Agreement and
related documents may be amended or supplemented from time to time to modify
restrictions on and procedures for resale and other transfer of such Class C
Certificates or a Class P Certificate to reflect any change in applicable law or
regulation (or the interpretation thereof) or practices relating to the resale
or transfers of restricted securities generally.

                  (d) The Book-Entry Certificates shall, subject to Section
         6.02(e), at all times remain registered in the name of the Depository
         or its nominee and at all times: (i) registration thereof may not be
         transferred by the Trustee except to another Depository; (ii) the
         Depository shall maintain book-entry records with respect to the
         Certificate Owners and with respect to ownership and transfers of such
         Certificates; (iii) ownership and transfers of registration of the
         Certificates issued in book-entry form on the books of the Depository
         shall be governed by applicable rules established by the Depository and
         the rights of Certificate Owners with respect to Book-Entry
         Certificates shall be governed by applicable law and agreements between
         such Certificate Owners and the Depository, Depository Participants,
         and indirect participating firms; (iv) the Depository may collect its
         usual and customary fees, charges and expenses from its Depository
         Participants; (v) the Trustee shall deal with the Depository as the
         authorized representative of the Certificate Owners of the Book-Entry
         Certificates for all purposes including the making of payments due on
         the Book-Entry Certificates and exercising the rights of Holders of

                                      -81-
<PAGE>

         Book-Entry Certificates under this Agreement; (vi) the Trustee may rely
         and shall be fully protected in relying upon information furnished by
         the Depository; (vii) Certificate Owners shall not be entitled to
         certificates for the Book-Entry Certificates and (viii) the Trustee may
         establish a reasonable record date in connection with solicitations of
         consents from or voting by holders of Book-Entry Certificates and give
         notice to the Depository of such record date.

         All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.

                  (e) If (x)(i) the Depositor or the Depository advises the
         Trustee in writing that the Depository is no longer willing, qualified
         or able to properly discharge its responsibilities as Depository, and
         (ii) the Trustee or the Depositor is unable to locate a qualified
         successor, (y) the Depositor at its option advises the Trustee in
         writing that it elects to terminate the book-entry system through the
         Depository or (z) after the occurrence of an Event of Default,
         Certificate Owners representing not less than 51% of the aggregate
         Certificate Principal Balance of the Book-Entry Certificates together
         advise the Trustee and the Depository in writing that the continuation
         of a book-entry system through the Depository is no longer in the best
         interests of the Certificate Owners, the Trustee shall notify all
         Certificate Owners, through the Depository, of the occurrence of any
         such event and of the availability of definitive, fully registered
         Certificates ("Definitive Certificates") to Certificate Owners
         requesting the same. Upon surrender to the Trustee of such Certificates
         by the Depository, accompanied by registration instructions from the
         Depository for registration, the Trustee shall issue the Definitive
         Certificates and the expense of any such issuance shall be reimbursed
         by the Trust pursuant to Section 9.05. Neither the Depositor nor the
         Trustee shall be liable for any delay in delivery of such instructions
         and may conclusively rely on, and shall be protected in relying on,
         such instructions. Upon the issuance of Definitive Certificates all
         references herein to obligations imposed upon or to be performed by the
         Depository shall be deemed applicable with respect to such Definitive
         Certificates and the Certificates as Certificateholders hereunder.

                  (f) On or prior to the Closing Date, there shall be delivered
         to the Trustee (as agent for the Depository) one certificate for each
         Class of Book-Entry Certificates registered in the name of the
         Depository's nominee, Cede & Co. The face amount of each such
         Certificate shall be equal to the Principal Balance thereof. Each
         Certificate issued in book-entry form shall bear the following legend:

         "Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE

                                      -82-
<PAGE>

OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."

         Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Trustee or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee, the Servicer, the
Depositor and the Seller such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of notice to the Trustee
that such Certificate has been acquired by a bona fide purchaser, the Trustee
shall execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class and Percentage Interest. Upon the issuance of any new Certificate under
this Section, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership of the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.

         Section 6.04 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Depositor and any of their respective agents may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 5.01 and for all other
purposes whatsoever, and neither the Servicer, the Seller, the Trustee, the
Depositor nor any of their respective agents shall be affected by notice to the
contrary.

         Section 6.05 Actions of Certificateholders.

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

                  (b) The fact and date of the execution by any
         Certificateholder of any such instrument or writing may be proved in
         any reasonable manner that the Trustee deems sufficient.

                  (c) Any request, demand, authorization, direction, notice,
         consent, waiver or other act by a Certificateholder shall bind every
         Holder of every Certificate issued upon the registration of transfer
         thereof or in exchange therefor or in lieu thereof, in respect of
         anything done, or omitted to be done, by the Trustee, the Seller, the
         Depositor or the

                                      -83-
<PAGE>

         Servicer in reliance thereon, whether or not notation of such action is
         made upon such Certificate.

                                  ARTICLE VII

                   THE SERVICER, THE SELLER AND THE DEPOSITOR

         Section 7.01 Liability of the Seller, the Depositor and the Servicer.
The Seller, the Depositor and the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Seller, the Depositor and the Servicer herein.

         Section 7.02 Merger or Consolidation of, or Assumption of the
Obligations of the Seller, the Depositor or Servicer. Any corporation or other
entity (i) into which the Seller, the Depositor or the Servicer may be merged or
consolidated, (ii) that may result from any merger, conversion or consolidation
to which the Seller, the Depositor or the Servicer shall be a party, or (iii)
that may succeed to all or substantially all of the business of the Seller, the
Depositor or the Servicer, which corporation or other entity shall, in any case
where an assumption shall not be effected by operation of law, execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement, shall be the successor to the Seller, the Depositor or the Servicer,
as the case may be, under this Agreement without the execution or filing of any
document or any further act by any of the parties to this Agreement; except that
if the Servicer is not the surviving entity, then the surviving entity shall
execute and deliver to the Trustee an agreement of assumption to perform every
obligation of the Servicer hereunder.

         Section 7.03 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of its directors, officers, employees or agents
shall be under any liability to the Trustee, the Trust or the Certificateholders
for any action taken or for refraining from the taking of any action by the
Servicer pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such person
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of the duties of the
Servicer or by reason of reckless disregard of the obligations and duties of the
Servicer hereunder. The Servicer and any director, officer, employee or agent of
the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement, and that in its
opinion may involve it in any expense or liability; provided, however, the
Servicer may undertake any such action which it may deem necessary to protect
itself, the rights of the other parties to the Agreement or the interests of the
Certificateholders. In such event, the Servicer shall be entitled to receive
prompt reimbursement of reasonable legal expenses and costs for such action, and
any liability resulting therefrom, from the Trust.

         Section 7.04 Servicer Not to Resign. Subject to the provisions of
Section 7.02 regarding the merger or consolidation of the Servicer into or with
another entity, the Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that the performance of its
duties or obligations hereunder is no longer permissible under

                                      -84-
<PAGE>

applicable law or regulation or are in material conflict by reason of applicable
law or regulation with any other activities carried on by it at the date of this
Agreement. Any such determination permitting the resignation of the Servicer
pursuant to this Section shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No resignation pursuant to this Section 7.04
(a) shall become effective until the Trustee or a successor servicer shall have
assumed the responsibilities and obligations of the Servicer in accordance with
Section 8.02 or (b) shall relieve the Servicer of responsibility for any
obligations pursuant to this Agreement that specifically survive the resignation
or termination of the Servicer. Each of the Rating Agencies shall be given
written notice of a resignation of the Servicer pursuant to this Section.

         If, at the time the Servicer is removed or resigned and the Trustee
does not appoint a different successor servicer, then the Trustee shall become
the successor servicer.

         Upon the termination or resignation of the Servicer, the Servicer also
shall promptly (and in any event no later than 10 Business Days subsequent to
such termination or resignation) deliver or cause to be delivered to the Trustee
or successor servicer all the books and records (including, without limitation,
records kept in electronic form) that the Servicer has maintained for the
Mortgage Loans, including all tax bills, assessment notices, insurance premium
notices and all other documents as well as all original documents then in the
Servicer's possession. The Servicer may retain copies of any such books and
records.

         Any collections received by the Servicer after termination or
resignation shall be endorsed by it and remitted directly and immediately to the
Trustee or the successor servicer. The Servicer shall be entitled to receive the
Monthly Servicing Fee through the day on which it is terminated as Servicer
(which may be pro rated for a partial month).

         To the extent that the Servicer, at the time of its termination or
resignation, has therefore expended any amounts as Monthly Advances or Servicing
Advances with respect to any Mortgage Loan, which Monthly Advances or Servicing
Advances remain unreimbursed as of such date ("Unrecovered Advances") the
Servicer shall thereafter be entitled to receive from the successor servicer,
monthly, such information as may be generated by the successor servicer as may
be reasonably necessary to enable the Servicer to monitor the recovery of, and
collection efforts undertaken with respect to, the Unrecovered Advances, which
information will include details of collection activities, payment records and
trial balances. To the extent that the successor servicer receives any amounts
that relate to reimbursement for Unrecovered Advances made by the prior
Servicer, such amounts shall be remitted to the prior Servicer on the related
Distribution Date. To the extent that the Servicer, based upon the information
supplied by the successor servicer, believes that any discrepancies exist
between actual Unrecovered Advances received by the successor servicer and the
amounts forwarded to the Servicer as recovered Unrecovered Advances, the
Servicer and the successor servicer shall attempt in good faith to reconcile
such discrepancies.

         The Servicer agrees to cooperate reasonably with the successor servicer
in effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide to the successor servicer all
documents and records reasonably requested by it to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the successor
servicer all amounts that then have been or should have been deposited in the
Collection

                                      -85-
<PAGE>

Account, or that are thereafter received with respect to the Mortgage Loans. The
successor servicer shall not be held liable by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof caused by
(i) the failure of the Servicer to deliver, or any delay in delivering, cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the Servicer.

         The Servicer which is being terminated or is resigning shall give
notice to the Mortgagors of the transfer of the servicing to the successor
servicer. Said notice shall be a joint notice of servicing transfer in the form
required by applicable law.

         Section 7.05 Merger or Consolidation of the Seller or Depositor. Any
corporation or other entity (i) into which the Seller or the Depositor may be
merged or consolidated, (ii) that may result from any merger, conversion or
consolidation to which the Seller or the Depositor shall be a party, or (iii)
that may succeed to all or substantially all of the business of the Seller or
the Depositor, which corporation or other entity shall, in any case where an
assumption shall not be effected by operation of law, execute an agreement of
assumption to perform every obligation of the Seller or the Depositor, as the
case may be, under this Agreement, shall be the successor to the Seller or the
Depositor, as the case may be, hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement, except that
if the Seller or the Depositor in any of the foregoing cases is not the
surviving entity, then the surviving entity shall execute and deliver to the
Trustee an agreement of assumption to perform every obligation of the Seller or
the Depositor, as the case may be, hereunder.

                                  ARTICLE VIII

                                     DEFAULT

         Section 8.01 Events of Default. If any one of the following events
(each an "Event of Default") shall occur and be continuing:

                  (a) Any failure by the Servicer to (i) make a required Monthly
         Advance on any Deposit Date or (ii) deposit in the Collection Account
         or the Certificate Account any other amount required to be deposited
         therein under this Agreement or failure to pay the Trustee Fee, which,
         in the case of a failure to make a required deposit to the Collection
         Account, continues unremedied for a period of five Business Days after
         the date upon which written notice of such failure shall have been
         given to the Servicer by the Trustee or to the Servicer and the Trustee
         by Holders of Certificates evidencing Voting Interests represented by
         all Certificates aggregating not less than 51%;

                  (b) Failure on the part of the Servicer duly to observe or
         perform in any material respect any other covenants or agreements of
         the Servicer set forth in the Certificates or in this Agreement, which
         failure (i) materially and adversely affects the Certificateholders and
         (ii) continues unremedied for a period of 30 days after the date on
         which written notice of such failure (which notice shall refer
         specifically to this Section), requiring the same to be remedied, shall
         have been given to the Servicer by the Trustee or to the Servicer and
         the Trustee by the Holders of Certificates evidencing Voting Interests
         represented by all Certificates aggregating not less than 51%;

                                      -86-
<PAGE>

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

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

                  (e) The occurrence of any merger or consolidation of the
         Servicer described in Section 7.02 following which the Servicer does
         not have a net worth of at least $10,000,000 determined in accordance
         with generally accepted accounting principles.

then, and in each and every such case, so long as such Event of Default shall
not have been remedied by the Servicer, either the Trustee or the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%, by notice then given in writing to the Servicer,
the Depositor, the Seller and to the Trustee, may terminate all of the rights,
responsibilities and obligations of the Servicer as Servicer under this
Agreement. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Certificates or the Mortgage Loans or otherwise, shall pass to and be
vested in the successor servicer pursuant to and under this Section and Sections
7.04 and 8.02 and, without limitation, the successor servicer is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Mortgage Loans and related documents, or otherwise. The
Servicer agrees to cooperate with the successor servicer in effecting the
termination of its responsibilities and rights as Servicer hereunder, including,
without limitation, the transfer to the successor servicer for the
administration by it of all cash amounts that shall at the time be held by the
Servicer that have been deposited by the Servicer in the Collection Account or
the Certificate Account or thereafter received by the Servicer with respect to
the Mortgage Loans.

         All reasonable costs and expenses (including attorneys' fees) incurred
in connection with transferring the Mortgage Files to the successor servicer,
amending this Agreement to reflect the appointment of a successor as Servicer
pursuant to this Section 8.01 and Sections 7.04 and 8.02 or otherwise in
connection with the assumption by the successor servicer of the duties of the
predecessor servicer hereunder shall be paid by the predecessor servicer upon
presentation of reasonable documentation of such costs and expenses.

                                      -87-
<PAGE>

         Section 8.02 Trustee to Act; Appointment of Successor. (a) On and after
the time the Servicer receives a notice of termination pursuant to Section 8.01,
the Trustee shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall succeed to all the rights, powers and privileges
of the Servicer hereunder and be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, including without limitation, the obligation to make Monthly Advances
and to pay Compensating Interest. As compensation therefor, the Trustee shall be
entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
foregoing, if the Trustee shall be unwilling so to act, or the Trustee is
legally unable so to act, the Trustee with the consent of the Rating Agencies
may promptly appoint, or petition a court of competent jurisdiction to appoint
any established housing and home finance institution or any institution that
regularly services home equity loans that is then servicing a home equity loan
portfolio and having all licenses, permits and approvals required by applicable
law, and having a net worth of not less than $10,000,000 as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder; provided that any such
successor servicer shall be acceptable to the Rating Agencies, which acceptance
shall not be unreasonably withheld and, if such successor servicer shall not
have been appointed by the Trustee, the Trustee shall be provided 5 Business
Days' prior notice of any such appointment; and provided further that the
appointment of any such successor servicer will not result in the qualification,
reduction or withdrawal of the rating assigned to any subclass of Offered
Certificates by any Rating Agency. Pending appointment of a successor to the
Servicer hereunder, unless the Trustee is prohibited by law from so acting, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer hereunder; and provided further that, if
due to market conditions, the parties thereto shall agree to compensation in
excess of that permitted the Servicer hereunder, the Trustee shall not be
responsible for any such amounts in excess thereof. Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. The appointment of a successor servicer shall
not affect any liability of the predecessor Servicer that may have arisen under
this Agreement prior to its termination as Servicer (including without
limitation, any liability for a deductible amount pursuant to the last sentence
of Section 3.04), nor shall any successor servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer or the
Seller or Depositor of any of its representations or warranties contained herein
or in any related document or agreement. Each of the Rating Agencies shall be
given written notice of the appointment of a successor servicer pursuant to this
Section.

                  (b) The Trustee, shall be reimbursed for Transition Costs, if
         any, incurred in connection with the assumption of responsibilities of
         the successor servicer, upon its delivering to the Seller and Depositor
         documentation of such costs and expenses. The Trustee shall have no
         claim against the Servicer, any Certificateholder, the Trust or any
         other party to this Agreement for any costs and expenses incurred in
         effecting such succession in excess of the amount specified in the
         definition of "Transition Costs."

                                      -88-
<PAGE>

         Section 8.03 Notifications to Certificateholders. Upon any termination
or appointment of a successor to the Servicer pursuant to this Article Eight,
the Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register, the PMI
Insurer and to each Rating Agency.

         Within 60 days of obtaining actual knowledge of the occurrence of any
Event of Default that remains uncured, the Trustee shall transmit by mail to all
Certificateholders notice of such Event of Default.

         Section 8.04 Assumption or Termination of Sub-Servicing Agreements by
the Trustee or any Successor Servicer. Upon the termination of the Servicer as
servicer under this Agreement, the Trustee as successor to the Servicer
hereunder or any other successor to the Servicer hereunder may, subject to the
terms of any Sub-Servicing Agreement, in its sole and absolute discretion elect
to assume or terminate any Sub-Servicing Agreement then in force and effect
between the Servicer and the Sub-Servicer. Notwithstanding the foregoing, any
termination fee due to a Sub-Servicer because of its termination by the Trustee
hereunder shall be the responsibility of the terminated Servicer and not the
Trustee. Upon the assumption of any Sub-Servicing Agreement, the Servicer agrees
to deliver to the assuming party any and all documents and records relating to
the applicable Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effectuate the
orderly transfer of the Sub-Servicing Agreement.

                                   ARTICLE IX

                                   THE TRUSTEE

         Section 9.01 Duties of the Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
that may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Default of which
a Responsible Officer of the Trustee shall have actual knowledge shall have
occurred (which has not been cured) and subject to the provisions of Section
9.13, the Trustee shall exercise such of the rights and powers vested in it by
this Agreement, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.

         No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; except that:

                  (a) prior to the occurrence of an Event of Default, and after
         the curing of all such Events of Default that may have occurred, the
         duties and obligations of the Trustee shall be determined solely by the
         express provisions of this Agreement, the Trustee shall not be liable
         except for the performance of such duties and obligations as are
         specifically set forth in this Agreement, no implied covenants or
         obligations shall be read into this Agreement against the Trustee and,
         in the absence of bad faith on the part of the Trustee, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon any certificates,
         filings or opinions furnished to the Trustee and conforming to the
         requirements of this Agreement;

                                      -89-
<PAGE>

                  (b) the Trustee shall not be personally liable for an error of
         judgment made in good faith by a Responsible Officer of the Trustee,
         unless it shall be proved that the Trustee was negligent in
         ascertaining the pertinent facts;

                  (c) the Trustee shall not be personally liable with respect to
         any action taken, suffered or omitted to be taken by it in good faith
         in accordance with the direction of the Holders of Certificates
         evidencing Voting Interests represented by all Certificates (or all
         affected Certificates, as appropriate) aggregating not less than 51%
         relating to the time, method and place of conducting any proceeding for
         any remedy available to the Trustee, or exercising any trust or power
         conferred upon the Trustee, under this Agreement; and

                  (d) the Trustee shall not be charged with knowledge of any
         failure by the Servicer to comply with the obligations of the Servicer
         referred to in clauses (a) and (b) of Section 8.01 unless a Responsible
         Officer obtains actual knowledge of such failure or the Trustee
         receives written notice of such failure from the Servicer or the
         Holders of Certificates evidencing Voting Interests represented by all
         Certificates aggregating not less than 51%, as the case may be; and

                  (e) the Trustee shall not be required to expend or risk its
         own funds or otherwise incur financial liability in the performance of
         any of its duties hereunder, or in the exercise of any of its rights or
         powers, if there is reasonable ground for believing that the repayment
         of such funds or adequate indemnity against such risk or liability is
         not reasonably assured to it, and none of the provisions contained in
         this Agreement shall in any event require the Trustee to perform, or be
         responsible for the manner of performance of, any of the obligations of
         the Servicer under this Agreement, except during such time, if any, as
         the Trustee shall be the successor to, and be vested with the rights,
         duties, powers and privileges of, the Servicer in accordance with the
         terms of this Agreement.

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

                  (a) The Trustee may rely and shall be protected in acting or
         refraining from acting upon any resolution, Officer's Certificate,
         certificate of auditors or any other certificate, statement,
         instrument, opinion, report, notice, request, consent, order,
         appraisal, bond or other paper or document reasonably believed by it to
         be genuine and to have been signed or presented by the proper party or
         parties;

                  (b) The Trustee may consult with counsel selected by it with
         due care and any advice obtained from such counsel or Opinion of
         Counsel shall be full and complete authorization and protection in
         respect of any action taken or suffered or omitted by it hereunder in
         good faith and in accordance with such advice or Opinion of Counsel;

                  (c) The Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Agreement, or to
         institute, conduct or defend any litigation hereunder or in relation
         hereto, at the request, order or direction of any of the
         Certificateholders, pursuant to the provisions of this Agreement,
         unless the Person so

                                      -90-
<PAGE>

         requesting, ordering or directing same shall have offered to the
         Trustee reasonable security or indemnity against the costs, expenses
         and liabilities that may be incurred therein or thereby; the right of
         the Trustee to perform any discretionary act enumerated in this
         Agreement shall not be construed as a duty, and the Trustee shall not
         be answerable for other than its negligence or willful misconduct in
         the performance of any such act; nothing contained herein shall,
         however, relieve the Trustee of the obligations, upon the occurrence of
         an Event of Default known to a Responsible Officer of the Trustee
         (which has not been cured), to exercise such of the rights and powers
         vested in it by this Agreement, subject to the provisions of Section
         9.13, and to use the same degree of care and skill in their exercise as
         a prudent man would exercise or use under the circumstances in the
         conduct of his own affairs;

                  (d) The Trustee shall not be personally liable for any action
         taken, suffered or omitted by it in good faith in accordance with the
         direction of the Holders of Certificates evidencing Voting Interests
         representing all Certificates (or all affected Certificates, as
         appropriate) aggregating not less than 51%;

                  (e) Prior to the occurrence of an Event of Default and after
         the curing of all Events of Default that may have occurred, the Trustee
         shall not be bound to make any investigation into the facts or matters
         stated in any resolution, certificate, statement, instrument, opinion,
         report, notice, request, consent, order, approval, bond or other paper
         or documents, unless requested in writing to do so by the Holders of
         Certificates evidencing Voting Interests represented by all
         Certificates (or all affected Certificates, as appropriate) aggregating
         not less than 51%; provided, however, that if the payment within a
         reasonable time to the Trustee of the costs, expenses or liabilities
         likely to be incurred by it in the making of such investigation is, in
         the opinion of the Trustee, not reasonably assured to the Trustee by
         the security afforded to it by the terms of this Agreement, the Trustee
         may require reasonable indemnity against such cost, expense or
         liability as a condition to such proceeding; the reasonable expense of
         every such examination shall be paid by the Servicer or, if paid by the
         Trustee, shall be reimbursed by the Servicer upon demand; and nothing
         in this clause (e) shall derogate from the obligation of the Servicer
         to observe any applicable law prohibiting disclosure of information
         regarding the Mortgagors; and

                  (f) The Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents or attorneys or a custodian. The Trustee shall not be
         liable or responsible for the misconduct of any agent, attorney or
         custodian appointed with due care by the Trustee hereunder.

         Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the signature and
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Depositor, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates and the
signature of the Trustee on this Agreement) or of any Mortgage, Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the

                                      -91-
<PAGE>

proceeds of such Certificates, or for the use or application of any funds paid
to the Servicer in respect of the Mortgage Loans or deposited in or withdrawn
from the Collection Account by the Servicer.

         Section 9.04 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.

         Section 9.05 Payment of the Trustee's Fees and Expenses.

                  (a) On each Distribution Date, the Trust shall pay to the
         Trustee an amount equal to the Trustee Fee described in the definition
         thereof (including any fees and expenses of a co-trustee or separate
         trustee appointed under Section 9.10) as compensation for all services
         rendered by the Trustee (and any such co-trustee or separate trustee)
         in the execution of the trusts hereby created and in the exercise and
         performance of any of the powers and duties hereunder of the Trustee
         (and any such co-trustee or separate trustee).

                  (b) The Trust shall pay or reimburse the Trustee the Trustee
         Fee pursuant to Section 5.01 and such other reasonable expenses,
         disbursements and advances incurred or made by the Trustee in
         accordance with any of the provisions of this Agreement (including the
         reasonable compensation and the expenses and disbursements of its
         counsel and of all persons not regularly in its employ) except any such
         expense, disbursement or advance as may arise from its negligence or
         bad faith or that is otherwise reimbursable to the Trustee by the
         Servicer pursuant to Section 9.05(a) above; provided, however, that the
         Trustee shall not refuse to perform any of its duties hereunder solely
         as a result of the failure of the Trust to pay or reimburse such
         expenses, disbursements or advances.

                  (c) The Servicer agrees to indemnify the Trustee from, and
         hold it harmless against, any and all losses and liabilities, damages,
         claims or expenses (including reasonable attorneys' fees) arising in
         respect of its acts or omissions in connection with this Agreement or
         the Certificates except to the extent the negligence, bad faith or
         intentional misconduct of the Trustee contributes to the loss,
         liability, damage, claim or expense.

                  (d) This Section 9.05 shall survive the termination of this
         Agreement or the resignation or removal of the Trustee as regards
         rights accrued prior to such resignation or removal.

Section 9.06 Eligibility Requirements for the Trustee. The Trustee hereunder
shall at all times be a bank or other depository institution doing business
under the laws of the United States or any state thereof, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $100,000,000 and subject to supervision or examination by federal or
state authority and rated at least BBB by Standard & Poor's and Baa2 by Moody's.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes

                                      -92-
<PAGE>

of this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 9.07.

         Section 9.07 Resignation or Removal of the Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer and each Rating Agency. Upon receiving
such notice of resignation, the Servicer shall promptly appoint a successor
trustee satisfying the criteria set forth in Section 9.06 by written instrument,
copies of which shall be delivered to the resigning Trustee, the successor
trustee and the Servicer. If no successor trustee shall have been so appointed
and having accepted appointment within 30 days after the giving of such notice
of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.

         If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, or the Trustee shall
fail to perform its obligations under this Agreement, then the Servicer, the
Depositor or the Seller shall remove the Trustee and appoint a successor trustee
satisfying the criteria set forth in Section 9.06 by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee.

         If at any time the Trustee shall fail to duly observe or perform in any
material respect any covenants or agreements of the Trustee set forth in Section
9.01 of this Agreement, which failure (i) materially and adversely affects the
Certificateholders and (ii) continues unremedied for a period of 10 days after
the date on which written notice of such failure (which notice shall refer
specifically to this Section), requiring the same to be remedied, shall have
been given to the Trustee, the Seller, the Depositor and the Servicer by the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%, then the Servicer, the Depositor or
the Seller may remove the Trustee and appoint a successor trustee satisfying the
criteria set forth in Section 9.06 by written instrument, in duplicate, one copy
of which instrument shall be delivered to Trustee so removed and one copy to the
successor trustee.

         Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08. The provisions of Section 9.05 shall survive any such
resignation or removal.

         Section 9.08 Successor Trustee. Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Servicer
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties

                                      -93-
<PAGE>

and obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Seller, the Servicer, the Depositor and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations.

         No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance it shall be eligible under the
provisions of Section 9.06.

         Upon acceptance of appointment by a successor trustee as provided in
this Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register and to each Rating Agency. If the Servicer fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Servicer.

        Section 9.09 Merger or Consolidation of the Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee or substantially all of the Trustee's
trust business, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 9.06, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

         Section 9.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the Servicer
and the Trustee, acting jointly, shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section, such powers, duties, obligations,
rights, indemnities and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 9.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 9.08. Each of the Rating Agencies shall be given written notice of the
appointment of a co-trustee or a separate trustee pursuant to this Section.

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

                  (a) All rights, powers, duties and obligations conferred or
         imposed upon the Trustee shall be conferred or imposed upon and
         exercised or performed by the Trustee

                                      -94-
<PAGE>

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

                  (b) No trustee hereunder shall be held personally liable by
         reason of any act or omission of any other trustee hereunder; and

                  (c) The Servicer and the Trustee acting jointly may at any
         time accept the resignation of or remove any separate trustee or
         co-trustee, except that following the occurrence of an Event of Default
         that has not been cured, the Trustee, acting alone may accept the
         resignation of or remove any separate or co-trustor.

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

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

         No appointment of any separate trustee or co-trustee shall absolve the
Trustee of its duties and obligations under this Agreement.

         Section 9.11 Compliance with REMIC Provisions. The Trustee shall
neither knowingly nor intentionally take any action or omit to take any action
in the performance of its duties hereunder that would cause any REMIC Pool to
fail to qualify as a REMIC or that would cause the imposition of a tax on any
REMIC Pool. The Trustee shall: (a) prepare and file, or cause to be prepared and
filed, such federal, state and local income tax and information returns or
reports using the calendar year as the taxable year for each REMIC Pool when and
as required by the REMIC Provisions and other applicable federal, state and
local income tax laws, which returns or reports shall be signed by the Trustee
or such other person as may be required thereby; (b) make an election, on behalf
of each REMIC Pool, to be treated as a REMIC and make the

                                      -95-
<PAGE>

appropriate designations, if applicable, in accordance with Section 9.16 on the
federal income tax return of the REMIC Pool for its first taxable year, in
accordance with the REMIC Provisions; (c) prepare and forward, or cause to be
prepared and forwarded, to the Certificateholders all information reports, or
furnish or cause to be furnished by telephone, mail, publication or other
appropriate method such information, as and when required to be provided to them
in accordance with the Code; (d) exercise reasonable care not to allow the
creation of any "interests" in any REMIC Pool within the meaning of Code Section
860D(a)(2) other than the interests represented by the Certificates (other than
the Class R-I, Class R-II and Class P Certificates) in the case of REMIC III,
the REMIC II Interests in the case of REMIC II, and the REMIC I Interests in the
case of REMIC I; and (e) within 30 days of the Startup Day, furnish or cause to
be furnished to the Internal Revenue Service, on Form 8811 or as may otherwise
be required by the Code, the name, title, address, and telephone number of the
person that Certificateholders may contact for tax information relating to their
Certificates (and the Trustee shall act as the representative of each REMIC Pool
for this purpose), together with such additional information as may be required
by such Form, and shall update such information at the time and in the manner
required by the Code. Each Class R Certificateholder shall designate the
Servicer, if permitted by the Code and applicable law, to act as "tax matters
person" for the related REMIC Pool within the meaning of Treasury regulations
Section 1.860F-4(d), and the Servicer is hereby designated as agent of each
Class R Certificateholder for such purpose (or if the Servicer is not so
permitted, the Holder of the related Class R Certificate shall be the tax
matters person in accordance with the REMIC Provisions).

         Section 9.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceedings relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered in accordance with the terms of this Agreement.

         Section 9.13 Exercise of Trustee Powers by Certificateholders. The
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%, may direct the time, method and
place of conducting any proceeding relating to the Trust or the Certificates or
for any remedy available to the Trustee with respect to the Certificates or
exercising any trust or power conferred on the Trustee with respect to the
Certificates of the Trust provided that:

                           (i) such direction shall not be in conflict with any
                  rule of law or with this Agreement;

                           (ii) the Trustee shall have been provided with
                  indemnity satisfactory to it; and

                           (iii) the Trustee may take any other action deemed
                  proper by the Trustee that is not inconsistent with such
                  direction; provided, however, that the

                                      -96-
<PAGE>

                  Trustee need not take any action that it reasonably determines
                  might involve it in liability unless it has been
                  satisfactorily indemnified and, with respect to actions
                  directed by Certificateholders, may be unjustly prejudicial to
                  the Holders not so directing.

         Section 9.14 Tax Returns. The Trustee shall maintain all information in
its possession as may be required in connection with the preparation of all
federal and, if applicable, state and local income tax and information returns
of each REMIC Pool (including, but not limited to, tax reporting under the REMIC
Provisions for each REMIC Pool) and shall prepare, execute and file as required
all such returns. The Trustee shall include in the first federal income tax
return the information required to be included therein under the REMIC
Provisions, including, but not limited to, Treasury regulation ss.1.860D-1(d)(2)
and Treasury regulation ss.1.860F-4(b)(2), or any successor provisions . The
Servicer shall report all required tax information to Mortgagors in accordance
with applicable law. To the extent directly applicable, the Prepayment
Assumption used in pricing the Offered Certificates will be used in preparing
any reports concerning or touching on interest payments made or original issue
discount with respect to the Certificates.

         Section 9.15 Taxpayer Identification Number. The Trustee shall prepare
and file with the Internal Revenue Service, on behalf of each REMIC Pool within
the time period prescribed therefor, an application on IRS Form SS-4 for such
REMIC Pool. The Trustee, upon receipt from the Internal Revenue Service of the
Notice of Taxpayer Identification Number assigned to each REMIC Pool, shall
promptly forward a copy of such notice to the Servicer.

         Section 9.16 Miscellaneous REMIC Matters.

         (a) The Trustee shall elect that REMIC I, REMIC II and REMIC III shall
be treated as REMICs under Section 860D of the Code, as described in Section
9.11. The REMIC I REMIC Pool, REMIC II REMIC Pool and REMIC III REMIC Pool shall
constitute the assets of REMIC I, REMIC II and REMIC III respectively. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such REMIC
elections.

         (b) REMIC I will be evidenced by the Class IA, Class IB, Class IC,
Class ID, Class IE, Class IF, Class IG, Class IH, Class II, Class IJ, Class IK,
Class IL and Class IM Interests and the Class P Certificates (together, the
"REMIC I Regular Interests"), which (i) (except in the case of the Class P
Certificates) will be uncertificated and non-transferable and (ii) are hereby
designated as the "regular interests" in REMIC I and (y) the Class R-I
Certificate, which is hereby designated as the single "residual interest" in
REMIC I (the REMIC I Regular Interests, together with the Class R-I Certificate,
the "REMIC I Interests"). The REMIC I Regular Interests (other than the Class P
Certificates) shall be recorded on the records of the REMIC I as being issued to
and held by the Trustee on behalf of REMIC II.

         The REMIC I Interests will have the following designations, initial
principal balances and pass-through rates:

                                      -97-
<PAGE>

                 REMIC I                 Initial                  Pass-Through
                Interests                Balance                      Rate
                ---------                -------                      ----
                    P                         $100                     0%(2)
                    IA                  10,051,536                     (1)
                    IB                  $1,401,437                     (1)
                    IC                  $1,595,826                     (1)
                    ID                  $1,817,069                     (1)
                    IE                  $2,068,868                     (1)
                    IF                  $2,355,430                     (1)
                    IG                  $2,681,540                     (1)
                    IH                  $3,052,642                     (1)
                    II                  $3,362,700                     (1)
                    IJ                  $2,865,432                     (1)
                    IK                  $2,138,494                     (1)
                    IL                  $1,609,026                     (1)
                    IM                $140,008,314.47                  (1)
                   R-I                          $0                     0%

(1)      The per annum Pass-Through Rate on these REMIC I Regular Interests
         shall at any time of determination equal the weighted average of the
         Net Loan Rates of the Mortgage Loans.

(2)      The Class P Certificates shall be entitled to receive all Prepayment
         Charges collected with respect to the Mortgage Loans. Such Prepayment
         Charges shall not be available for distribution with respect to any
         other Class of REMIC I Interests. The Prepayment Charges received by
         the Class P Certificates shall not be applied to the principal balance
         of those Certificates.

         On each Distribution Date, principal collections and realized losses on
the Mortgage Loans shall be allocated first, to the Class IM Interests, and
then, to the REMIC I Regular Interests (other than the Class IM Interests and
Class P Certificates), sequentially, in reverse order to which they are listed
above, until the principal balance of each such class is reduced to zero. The
Class R-I Certificates shall have no principal balance and no pass-through rate
and shall be entitled to only those distributable assets (exclusive of the Class
P Deposit), if any, remaining in REMIC I on each Distribution Date after all
amounts required to be distributed to the REMIC I Regular Interests (other than
the Class P Certificates) and applicable Trust expenses have been paid. If, at
any time, the Pool Balance is $15,000 or less, a portion of the Class P Deposit
shall be paid as principal with respect to the Class P Certificates such that
the remaining Class P Deposit is always less than 0.66% of the sum of the Pool
Balance and the remaining Class P Deposit. After all of the REMIC I Regular
Interests (other than the Class P Certificates) have been paid in full, the
remaining available funds in REMIC I shall first be applied to reduce the
principal balance of the Class P Certificates to zero, and then shall be payable
with respect to the Class R-I Certificates. It is expected that there will not
be any distributions on the Class R-I Certificate.

                                      -98-
<PAGE>

         (c) REMIC II will be evidenced by (x) the Class II-A-1, Class II-A-2,
Class II-M-1, Class II-M-2, Class II-B, the 12 components of Class II-A-IO
described in note (2) below, and Class II-Q Interests (the "REMIC II Regular
Interests"), which will be uncertificated and non-transferable and are hereby
designated as the "regular interests" in REMIC II and (y) the Class R-II
Certificates, which are hereby designated as the single "residual interest" in
REMIC II (the REMIC II Regular Interests, together with the Class R-II
Certificates, the "REMIC II Interests"). The REMIC II Regular Interests shall be
recorded on the records of REMIC II as being issued to and held by the Trustee
on behalf of REMIC III.

         The Basic Principal Distribution Amount shall be allocated 99% to the
Class II-Q Certificate and 1% to the Class II-A-1, Class II-A-2, Class II-M-1,
Class II-M-2 and Class II-B Interests until paid in full. The aggregate amount
of the Basic Principal Distribution Amount allocated to the Class II-A-1, Class
II-A-2, Class II-M-1, Class II-M-2 and Class II-B Interests shall be apportioned
among such classes in the same manner as such amount is payable with respect to
the Class A-1, Class A-2, Class M-1, Class M-2 and Class B Certificates,
respectively. The Excess Overcollateralization Amount shall be allocated
entirely to the Class II-Q Certificates until paid in full.

         On any Distribution Date, any interest paid with respect to the
Mortgage Loans that is allocable to payments of principal on the Certificates
pursuant to Section 5.01(e) (the "Turbo Amount") will not be payable to the
REMIC II Regular Interests. Instead, a portion of the interest payable with
respect to the Class II-Q Interest which equals 1% of the Turbo Amount will be
payable as a reduction of the principal balances of the Class II-A-1, Class
II-A-2, Class II-M-1, Class II-M-2 and Class II-B Interests in the same manner
as the Turbo Amount is allocated among the Class A-1, Class A-2, Class M-1,
Class M-2 and Class B Certificates, respectively (and will be accrued and added
to principal on the Class II-Q Interest).

         Losses on the Mortgage Loans shall be applied such that after all
distributions have been made on such Distribution Date, the principal balances
of the Class II-A-1, Class II-A-2, Class II-M-1, Class II-M-2 and Class II-B
Interests equal 1% of the principal balances of the Class A-1, Class A-2, Class
M-1, Class M-2 and Class B Certificates, respectively, and the principal balance
of the Class II-Q Interest equals the Pool Balance less an amount equal to the
aggregate principal balances of the Class II-A-1, Class II-A-2, Class II-M-1,
Class II-M-2 and Class II-B Interests.

         The REMIC II Interests will have the following designations and
pass-through rates, and distributions of principal and interest thereon shall be
allocated to the Certificates in the following manner:

                                      -99-
<PAGE>

                                    Pass-        Allocation      Allocation
 REMIC II         Initial          Through           of              of
Interests         Balance           Rate         Principal        Interest
---------         -------           ----         ---------        --------
 II-A-1         $1,326,630            (1)            (3)           (4),(5)
 II-A-2          $ 160,870            (1)            (3)           (4),(5)
 II-M-1          $ 109,375            (1)            (3)           (4),(5)
 II-M-2           $ 83,125            (1)            (3)           (4),(5)
 II-B             $ 70,000            (1)            (3)           (4),(5)
 II-Q         $173,258,314.47         (1)            (3)           (4),(5)
 II-A-IO                $0            (2)            N/A         Class A-IO
 R-II                   $0            0%             N/A           N/A(6)

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

(1)      The per annum Pass-Through Rate on these REMIC II Regular Interests
         shall at any time of determination equal the weighted average of the
         Pass-Through Rates of the REMIC I Regular Interests (other than the
         Class P Certificates), after first subtracting 6.0% from the
         Pass-Through Rates of each of such regular interests (other than the
         Class IM Interests) for the Distribution Dates indicated below for each
         of such regular interests.

                        6.0% Subtraction                    6.0% Subtraction
           REMIC I        Distribution        REMIC I         Distribution
           Interest          Dates            Interest           Dates
          ----------    -----------------    ----------     -----------------
              IA             1 - 36              IG              1 - 18
              IB             1 - 33              IH              1 - 15
              IC             1 - 30              II              1 - 12
              ID             1 - 27              IJ              1 - 9
              IE             1 - 24              IK              1 - 6
              IF             1 - 21              IL              1 - 3

(2)      Interest on the Class II-A-IO will equal the sum of 12 strips of
         interest, with each strip being a strip off the principal balance of a
         REMIC I Regular Interest (other than the Class IM Interests and the
         Class P Certificates) at 6.0% per annum for the Distribution Dates
         indicated in the table in note (1) for such regular interest, and 0.0%
         thereafter. Each of the 12 interest strips comprising the interest on
         the Class II-A-IO shall constitute 12 separate components of the Class
         II-A-IO, each of which shall be designated as a separate REMIC II
         Regular Interest.

(3)      Principal will be allocated to and apportioned among the Class A-1,
         Class A-2, Class M-1, Class M-2 and Class B Certificates, in the same
         proportion as principal is payable with respect to such Certificates,
         except that a portion of such principal in an amount up to the Excess
         Overcollateralization Amount shall first be allocated as a payment of
         interest to the Class C Certificates, and all principal will be
         allocated to the Class C Certificates

                                     -100-
<PAGE>

         after the principal balances of the Class A-1, Class A-2, Class M-1,
         Class M-2 and Class B Certificates have been reduced to zero.

(4)      Except as provided in note (5), interest with respect to this REMIC II
         Regular Interest will be allocated among the Class A-1, Class A-2,
         Class M-1, Class M-2 and Class B Certificates in the same proportion as
         interest is payable on such Certificates.

(5)      Any interest with respect to this REMIC II Regular Interest in excess
         of the product of (i) 100 times the weighted average coupon of the
         Class II-A-1, Class II-A-2, Class II-M-1, Class II-M-2, Class II-B and
         Class II-Q Interests, where each of such REMIC II Regular Interests,
         other than the Class II-Q Interest, is first subject to a cap and floor
         equal to the Class A-1, Class A-2, Class M-1, Class M-2 and Class B
         Pass-Through Rates, respectively, and the Class II-Q Interest is
         subject to a cap equal to 0%, and (ii) the principal balance of this
         REMIC II Regular Interest, shall not be allocated to the Class A-1,
         Class A-2, Class M-1, Class M-2 or Class B Certificates, but will be
         allocated to the Class C Certificates. However, the Class C
         Certificates shall be subordinated to the extent provided in Section
         5.01.

(6)      On each Distribution Date, available funds, if any, remaining in REMIC
         II after payments of interest and principal, as designated above, will
         be distributed to the Class R-II Certificate. It is expected that there
         will not be any distributions on the Class R-II Certificates.

         (d) The Offered Certificates and Class C Certificates, but exclusive,
in each case, of any rights to receive any Net Rate Cap Carryover, are hereby
designated as "regular interests" with respect to REMIC III and the Class R-III
Certificate is hereby designated as the single "residual interest" with respect
to REMIC III. The Class R-III Certificate shall have no pass-through rate and
shall have no principal balance. On each Distribution Date, available funds, if
any, remaining in REMIC III after payments of interest and principal on the
regular interests in REMIC III will be distributed to the Class R-III
Certificates.

         (e) The Closing Date is hereby designated as the "Startup Day" of each
of REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of
the Code. The "latest possible maturity date", solely for purposes of Treasury
regulation ss.1.860G-1(a)(4)(iii), of each of the REMIC I and REMIC II Regular
Interests and each of the "regular interests" with respect to REMIC III is
November 25, 2035.

                                   ARTICLE X

                                   TERMINATION

         Section 10.01 Termination Upon Purchase or Liquidation of All Mortgage
Loans. Subject to Section 10.02, the respective obligations and responsibilities
hereunder of the Servicer, the Seller, the Depositor and the Trustee (other than
the obligation of the Trustee to make certain payments to Certificateholders
after the final Distribution Date and the obligation of the Seller to send
certain notices as hereinafter set forth) and the Trust created hereby shall

                                     -101-
<PAGE>

terminate with respect to all Certificates upon the last action required to be
taken by the Trustee on the final Distribution Date pursuant to this Article
following the earlier of (a) the purchase by the Servicer of all Mortgage Loans
then remaining in the Trust and all property acquired by the Trust in respect of
any such Mortgage Loan at a price equal to the sum of (x) 100% of the Principal
Balance of each such Mortgage Loan (other than any Mortgage Loan as to which
title to the underlying Mortgaged Property has been acquired by the Trust and
whose fair market value is included pursuant to clause (y) below) as of the
final Distribution Date and (y) the fair market value of such acquired Mortgaged
Property (determined as described below), plus accrued and unpaid interest at
the applicable Mortgage Loan Rate on the Principal Balance of each such Mortgage
Loan (including any Mortgage Loan as to which title to the underlying Mortgaged
Property has been acquired by the Trust) through the end of the Collection
Period preceding the date of repurchase and the aggregate amount of unreimbursed
Servicing Advances made in respect of any such Mortgage Loan, less any payments
of principal and interest received by the Trust during such Collection Period in
respect of each such Mortgage Loan (the "Termination Price") or (b) the final
payment or other liquidation of the Principal Balance of the last Mortgage Loan
remaining in the Trust or the disposition of all property remaining in the Trust
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, who are living on the Closing Date. The fair market
value of Mortgaged Properties pursuant to the foregoing clause (y) shall be
determined by the Servicer as of the close of business on the third Business Day
next preceding the date upon which notice of any such termination is furnished
to Certificateholders pursuant to the third paragraph of this Section 10.01.

         The right of the Servicer to purchase all outstanding Mortgage Loans
pursuant to clause (a) above is exercisable only on or after the related
Clean-up Call Date. If such right is exercised, (i) the Servicer shall remit the
Termination Price specified in this Section to the Trustee for deposit in the
Certificate Account pursuant to Section 3.02 (e) on or before the related
Deposit Date and (ii) the Trustee, if it has received the Mortgage Files
pursuant to Section 2.01, shall, promptly following remittance of such
Termination Price, release to the Servicer the Mortgage Files pertaining to the
Mortgage Loans being purchased and all other documents furnished by the Servicer
as are necessary to transfer the Trustee's interest in the Mortgage Loans to the
Servicer.

         Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
related Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation shall be given promptly by
the Trustee (upon receipt of written directions from the Servicer, which
directions shall be received by the Trustee not later than the 15th day of the
month preceding the month of such final distribution) by letter to
Certificateholders mailed not earlier than the first day and not later than the
10th day of the month of such final distribution specifying (a) the Distribution
Date upon which final distribution of the related Certificates will be made upon
presentation and surrender of Certificates at the office or agency of the
Trustee therein designated, (b) the amount of any such final distribution and
(c) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon

                                     -102-
<PAGE>

presentation and surrender of such Certificates at the office or agency of the
Trustee therein specified.

         If the termination of the Trust is in connection with a purchase of the
assets of the Trust by the Servicer pursuant to clause (a) of the first
paragraph in this Section, the Trustee shall cause to be distributed to
Certificateholders on the final Distribution Date, an amount equal to (i) as to
the Offered Certificates, and upon presentation and surrender thereof, to the
Holders thereof in proportion to their respective Percentage Interests the
Certificate Principal Balance, and the Class Interest Distribution applicable to
such Offered Certificate and (ii) as to the Servicer, any unpaid servicing
compensation with respect to such Distribution Date (other than amounts retained
to meet claims) after application pursuant to clause (i) above and payment to
the Servicer of any amounts to which it is entitled as reimbursement hereunder
and (iii) as to the Class C Certificateholders and upon presentation and
surrender of the Class C Certificates, in proportion to their Percentage
Interests, any amounts remaining after application pursuant to clauses (i) and
(ii), up to an amount equal to the Class C Distribution Amount and any Class C
Carryforward Amount; provided, however, that if the fair market value of any
acquired property referred to in, or covered by, clause (a)(y) of the first
paragraph of this Section is less than the Principal Balance of the related
Mortgage Loan, then the excess of such Principal Balance over such fair market
value shall be allocated in reduction of the amounts otherwise distributable on
the final Distribution Date in the following order of priority: first, to the
Holders of the applicable Class R Certificates, second to the Holders of the
Class C Certificate and third to the Holders of the Offered Certificates,
sequentially, in reverse order of priority, beginning with the Class of Offered
Certificates then outstanding with the lowest relative payment priority, in each
case until the respective Certificate Principal Balance thereof is reduced to
zero. The distribution on the final Distribution Date in connection with the
purchase by the Servicer of the assets in the Trust shall be in lieu of the
distribution otherwise required to be made on such Distribution Date in respect
of each Class of Certificates. The Servicer shall provide in writing to the
Trustee the information with respect to the amounts so to be paid.

         In the event that all of the relevant Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before the
fifth day following such final Distribution Date, the Trustee shall on such date
cause all funds in the Certificate Account not distributed in the final
distribution to Certificateholders to be withdrawn therefrom and credited to the
remaining Certificateholders by holding such funds uninvested in a separate
escrow account for the benefit of such Certificateholders, and the Servicer (if
the Servicer exercised its right to purchase the assets of the Trust as provided
above) or the Trustee (in any other case) shall give a second written notice to
the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, any funds deposited in such escrow account and
remaining unclaimed shall be paid by the Trustee to the Servicer and thereafter
Certificateholders shall look only to the Servicer with respect to any claims in
respect of such funds.

         Section 10.02 Additional Termination Requirements. In the event the
Servicer exercises its purchase option as provided in Section 10.01(a), each
REMIC Pool shall be terminated in accordance with the following additional
requirements, and the Trustee shall receive an Opinion of Counsel to the effect
that the termination of such REMIC Pool (i) will constitute a "qualified

                                     -103-
<PAGE>

liquidation" of each REMIC Pool within the meaning of Code Section
860F(a)(4)(A), and (ii) will not subject such REMIC Pool to tax or cause such
REMIC Pool to fail to qualify as a REMIC at any time that any Certificates are
outstanding.

                           (i) Within 90 days prior to the final Distribution
                  Date set forth in the notice of intention to purchase the
                  Mortgage Loans given by the Servicer under Section 10.01, the
                  Trustee, at the direction of the Servicer, shall adopt a plan
                  of complete liquidation of each REMIC Pool on behalf of the
                  REMIC within the meaning of Code Section 860F(a)(4)(A)(8),
                  which shall be evidenced by such notice; and

                           (ii) At or after the time of adoption of such a plan
                  of complete liquidation and at or prior to the final
                  Distribution Date, the Trustee shall sell all of the assets of
                  each REMIC Pool to the Servicer, as the case may be, for cash
                  at the purchase price specified in Section 10.01 and shall
                  distribute such cash in the manner specified in Section 10.01.

                           (iii) The Holder of the Class R Certificates will be
                  deemed to have adopted a plan of liquidation on the date that
                  the Trustee, at the direction of the Servicer, has adopted
                  such plan. The Trustee shall attach a statement to the final
                  return of each REMIC Pool for which a plan of liquidation is
                  adopted by the Trustee, at the direction of the Servicer,
                  setting forth the date of adoption of the plan of liquidation.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

         Section 11.01 Amendment. This Agreement may be amended from time to
time by the Servicer, the Seller, the Depositor and the Trustee, without the
consent of any of the Certificateholders, (a) to cure any error or any ambiguity
or to correct or supplement any provisions herein which may be inconsistent with
any other provisions herein; (b) to add to the duties or obligations of the
Servicer hereunder; (c) to maintain or improve any rating then assigned by any
Rating Agency to any subclass of the Offered Certificates; (d) to add any other
provisions with respect to matters or questions arising under this Agreement, as
the case may be (including specifically amendments or supplements pursuant to
the second paragraph of Section 6.02(b)); (e) to modify, eliminate or add to any
of its provisions to such extent as shall be necessary to maintain the
qualification of each REMIC Pool as a REMIC at all times that any Certificates
are outstanding or to avoid or minimize the risk of the imposition of any tax on
any REMIC Pool pursuant to the Code that would be a claim against any REMIC
Pool, provided that in the case of this clause (e) the Trustee has received an
Opinion of Counsel addressed to the Trustee to the effect that such action is
necessary or desirable to maintain such qualification or to avoid or minimize
the risk of the imposition of any such tax; (f) to modify, eliminate or add to
the provisions of Section 6.02(c) or any other provisions hereof restricting
transfer of the Class R Certificates or (g) to modify, eliminate or add to the
provisions hereunder in order to provide for one or more third parties to effect
all or a portion of the Monthly Advances or Servicing Advances and to provide
for the reimbursement from the Trust Fund of such third party for such

                                     -104-
<PAGE>

Monthly Advances or Servicing Advances (i) from amounts payable to the Servicer,
(ii) from collections which the Servicer would have been permitted to otherwise
retain and (iii) from any other amounts that would otherwise be payable to the
Servicer if the Servicer had made such Monthly Advances or Servicing Advances or
from such other funds owed to the Servicer, in each case as the Servicer shall
agree; provided that in all such cases the Trustee has obtained written
confirmation from each Rating Agency that any such modifications to this
Agreement will not result in a qualification, reduction or withdrawal of the
rating assigned to any Class of Offered Certificates by such Rating Agency and
has received an Opinion of Counsel to the effect that any such modifications to
this Agreement do not give rise to a risk that any REMIC Pool or any of the
Certificateholders will be subject to a tax caused by a transfer to a
Disqualified Organization; provided, further, that in all such cases such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.

         This Agreement may also be amended from time to time by the Servicer,
the Seller, the Depositor and the Trustee and the Holders of Certificates
evidencing Voting Interests of each Class affected thereby aggregating not less
than 51%, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates of such Class; provided,
however, that no such amendment shall (a) reduce in any manner the amount of, or
delay the timing of, collections of payments on Mortgage Loans or distributions
which are required to be made on any Certificate without the consent of the
Holder of such Certificate or (b) reduce the aforesaid percentage of each Class
the Holders of which are required to consent to any such amendment, without the
consent of the Holders of all Certificates of such Class then outstanding.

         Promptly after the execution of any such amendment or consent pursuant
to the next preceding paragraph, the Trustee shall furnish written notification
of the substance of such amendment to each affected Certificateholder and each
Rating Agency.

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

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

         Notwithstanding any provisions of this Section 11.01, no amendment of
this Agreement shall be permitted without the consent of Certificateholders
(other than the Seller, Depositor, its affiliates, and agents) evidencing Voting
Interests aggregating not less than 51%, unless the Trustee is provided with an
Officer's Certificate of the Seller or the Depositor that indicates that such
amendment would not have an adverse impact on the sale treatment of the Mortgage
Loans from the Seller to the Depositor or from the Depositor to the Trust on the
Closing Date under generally accepted accounting principles and that such
amendment would not, by itself, result in

                                     -105-
<PAGE>

the consolidation of the Trust with the Seller or Depositor under generally
accepted accounting principles.

         Section 11.02 Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Servicer, at its
expense but only upon, determination of the Servicer accompanied by an Opinion
of Counsel to the effect that such recordation is legally required to protect
the Trustee's interest in the Mortgage Loans.

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

         Section 11.03 Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement, the Trust or any REMIC established pursuant to Section 3.01, nor
entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust or any REMIC established pursuant to this
Agreement, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.

         Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the operation and management of the
Trust or any REMIC established pursuant to this Agreement, or the obligations of
the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.

         No Certificateholder, solely by virtue of its status as a
Certificateholder, shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Voting Interests represented by all
Certificates (or all affected Certificates, as appropriate) aggregating not less
than 51% shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provision of this
Agreement to affect, disturb or prejudice the rights of the

                                     -106-
<PAGE>

Holders of any other Certificates, or to obtain or seek to obtain priority over
or preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section, each and every Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.

         Section 11.04 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York (without regard to conflict of
laws principles and the application of the laws of any other jurisdiction), and
the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.

         Section 11.05 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (a) in the case of the Seller, at 350 South Grand Avenue, Los
Angeles, California 90070, Attn: Chief Financial Officer, with a copy to General
Counsel; (b) in the case of the Depositor, at 350 South Grand Avenue, Los
Angeles, California 90070, Attn: Chief Financial Officer, with a copy to General
Counsel; (c) in the case of the Trustee, at the Corporate Trust Office at 1761
East St. Andrew Place, Santa Ana, California 92705-4934, Attn: AA0103; Aames
Capital Corporation, Series 2001-3; (d) in the case of the Servicer, Countrywide
Home Loans, Inc., 4500 Park Granada, Calabasas California 91302 Attn: Dave
Sambol, with a copy to Countrywide Home Loans, Inc. 400 Countrywide Way, Simi
Valley, California 93065, Attn: Lupe Montero, Vice President; (e) in the case of
S&P, to Standard & Poor's, 55 Water Street, 41st Floor, New York, New York
10041, Attn: Mortgage Surveillance Group; (f) in the case of Moody's, to Moody's
Investors Service Inc., 99 Church Street, New York, New York 10007, Attn:
Residential Mortgage Pass-Through Monitoring; (g) in the case of the PMI
Insurer, Mortgage Guaranty Insurance Corporation, MGIC Plaza, P.O. Box 488,
Milwaukee, Wisconsin 53201, Attention: Tim Edwards or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at its
address shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice. Any notice or
other document required to be delivered or mailed by the Trustee to any Rating
Agency shall be given on a best efforts basis and only as a matter of courtesy
and accommodation and the Trustee shall have no liability for failure to deliver
such notice or document to any such Rating Agency.

         Section 11.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.

         Section 11.07 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in this Section and Sections 7.02, 7.04 and
7.05, this Agreement may not be assigned by the Seller, the Depositor or the
Servicer without the prior written consent of the Holders of Certificates
evidencing not less than 66% of the Voting Interests of all Certificates.

                                     -107-
<PAGE>

         Section 11.08 Certificates Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that Certificates upon execution, authentication
and delivery thereof by the Trustee pursuant to Section 2.06 are and shall be
deemed fully paid.

                               [Signatures follow]

                                     -108-
<PAGE>

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

                                AAMES CAPITAL CORPORATION,
                                     as Seller

                                By: /S/ John Kohler
                                   ----------------------------------------
                                   Name:  John Kohler
                                   Title: Executive Vice President

                                AAMES CAPITAL ACCEPTANCE CORPORATION
                                   as Depositor,

                                By: /s/ John Kohler
                                   ----------------------------------------
                                   Name:  John Kohler
                                   Title: Executive Vice President

                                BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                                   as Trustee and not in its individual capacity

                                By: /s/ Barbara Campbell
                                   ----------------------------------------
                                   Name:  Barbara Campbell
                                   Title: Assistant Secretary

                                COUNTRYWIDE HOME LOANS, INC.
                                   as Servicer

                                By: /s/ Michael Schloessmann
                                   ----------------------------------------
                                   Name:  Michael Schloessmann
                                   Title: Vice President

                                     -109-
<PAGE>

State of California        )
                           )      ss.:
County of Los Angeles      )

         On the 25th day of September in the year 2001, before me, the
undersigned, personally appeared ______________________, personally known to me
or proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

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

[Notary Seal]

                                     -110-
<PAGE>

State of California          )
                             )      ss.:
County of Los Angeles        )

         On the 25th day of September in the year 2001, before me, the
undersigned, personally appeared ______________________, personally known to me
or proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

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

[Notary Seal]

                                     -111-
<PAGE>

State of ____________        )
                             )      ss.:
County of __________         )

         On the 25th day of September in the year 2001, before me, the
undersigned, personally appeared _____________________, personally known to me
or proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

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

[Notary Seal]

                                     -112-
<PAGE>

State of ____________              )
                                   )      ss.:
County of __________               )

         On the 25th day of September in the year 2001, before me, the
undersigned, personally appeared ___________________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

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

[Notary Seal]

                                     -113-

<PAGE>

                                   Schedule I

                              List of Sub-Servicers

None.

<PAGE>

                                   Schedule II

                      Schedule of Restricted Mortgage Loans

None.

<PAGE>

                                                                     EXHIBIT A-1

                           FORM OF CLASS A CERTIFICATE

Date of Pooling and Servicing                  Initial Certificate
Agreement and Cut-off Date:                    Balance:  $
September 1, 2001
First Distribution Date:                       CUSIP No.:
October 25, 2001
Denomination:  $                               Certificate No.:  A-_

                        Class A-_ Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2001-3
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                            SERIES 2001-3, CLASS A-_

         evidencing a percentage interest in the distributions allocable to the
         Class A-_ Certificates with respect to a Trust consisting primarily of
         a pool of conventional, closed-end, fixed and adjustable rate
         residential mortgage loans, sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL acceptance CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown above by the Initial Certificate
Principal Balance for such class) in a trust, the assets of which

                                     A-1-1

<PAGE>

consist primarily of a pool of conventional, closed-end, fixed and adjustable
rate residential mortgage loans (the "Mortgage Loans"), sold by Aames Capital
Acceptance Corp. (the "Depositor") into the Trust, serviced by Countrywide Home
Loans, Inc. (the "Servicer," which term includes any successor Servicer under
the Agreement referred to below). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, Aames Capital Corporation, as seller ("Seller"), the Servicer and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable
interest and principal distributable thereon, as more specifically set forth in
the Agreement.

         Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.

         This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2001-3 Mortgage Pass-Through Certificates,
Series 2001-3, Class A-_" (herein called the "Class A-_ Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

         The Class A-_ Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and that the Trustee in its individual
capacity is

                                      A-1-2
<PAGE>

not personally liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Depositor, the Servicer, and the rights of the Certificateholders
under the Agreement at any time by the Servicer and the Trustee and the Holders
of Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

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

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price

                                     A-1-3
<PAGE>

determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 5% of the sum of the Original Pool Balance and the Prefunding Account
Deposit.

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                     A-1-4
<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  September  ___, 2001

                                  BANKERS TRUST COMPANY
                                     OF CALIFORNIA, N.A., as Trustee
                                  By:
                                        --------------------------------------
                                                  Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the
Certificates referred to in
the within named Agreement

By:
      -------------------------------------------
      Authorized Officer of Bankers Trust Company
            of California, N.A., as Trustee

                                     A-1-5
<PAGE>

                                                                     EXHIBIT A-2

                           FORM OF CLASS M CERTIFICATE

Date of Pooling and Servicing                  Original Class M-_ Certificate
Agreement and Cut-off Date:                    Balance:  $
September __, 2001
First Distribution Date:                       CUSIP No. :
October 25, 2001
Denomination:  $                               Certificate No.:  M-_

                        Class M-_ Pass-Through Rate: __%
                          AAMES MORTGAGE TRUST 2001-3
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                            SERIES 2001-3, CLASS M-_

         evidencing a percentage interest in the distributions allocable to the
         Class M-_ Certificates with respect to a Trust consisting primarily of
         a pool of conventional, closed-end, fixed and adjustable rate
         residential mortgage loans, sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.

         THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.

                                     A-2-1
<PAGE>

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown above by the Original Class M-_
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the "Mortgage Loans"), deposited by Aames Capital Acceptance
Corp. (the "Depositor") into the Trust, serviced by Countrywide Home Loans, Inc.
(the "Servicer," which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") among the Depositor, Aames
Capital Corporation, as seller ("Seller"), the Servicer and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"), a summary of certain of
the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable
interest and principal distributable thereon, as more specifically set forth in
the Agreement.

         Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.

         This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2001-3 Mortgage Pass-Through Certificates,
Series 2001-3, Class M-_" (herein called the "Class M-_ Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

                                     A-2-2
<PAGE>

         The Class M-_ Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and that the Trustee
in its individual capacity is not personally liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee and the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

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

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

                                     A-2-3
<PAGE>

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Servicer to purchase being subject to the
Pool Balance at the time of purchase being less than 5% of the sum of the
Original Pool Balance and the Prefunding Account Deposit.

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                     A-2-4
<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  September  ___, 2001

                                          BANKERS TRUST COMPANY
                                             OF CALIFORNIA, N.A., as Trustee
                                          By:
                                                --------------------------------
                                                      Authorized Officer

CERTIFICATE OF AUTHENTICATION:
This is one of the Class M-_
Certificates referred to in
the within named Agreement
By:
      -------------------------------------------
      Authorized Officer of Bankers Trust Company
           of California, N.A., as Trustee

                                     A-2-5
<PAGE>

                                                                     EXHIBIT A-3

Date of Pooling and Servicing                Original Class B-_ Certificate
Agreement and Cut-off Date:                  Balance:  $
September __, 2001
First Distribution Date:                     CUSIP No. :
October 25, 2001
Denomination:  $                             Certificate No.:  B-_

                         Class B Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2001-3
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2001-3, CLASS B

         evidencing a percentage interest in the distributions allocable to the
         Class B Certificates with respect to a Trust consisting primarily of a
         pool of conventional, closed-end, fixed and adjustable rate residential
         mortgage loans, sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL acceptance CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

         THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown

                                     A-3-1

<PAGE>

above by the Original Class B Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate residential mortgage loans (the "Mortgage Loans"), deposited
by Aames Capital Acceptance Corp. (the "Depositor") into the Trust, serviced by
Countrywide Home Loans, Inc. (the "Servicer," which term includes any successor
Servicer under the Agreement referred to below). The Trust was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Depositor, Aames Capital Corporation, as seller ("Seller"), the
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable
interest and principal distributable thereon, as more specifically set forth in
the Agreement.

         Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.

         This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2001-3 Mortgage Pass-Through Certificates,
Series 2001-3, Class B" (herein called the "Class B Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

         The Class B Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely

                                     A-3-2

<PAGE>

to the funds on deposit in the Certificate Account and that the Trustee in its
individual capacity is not personally liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee and the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

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

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price

                                     A-3-3

<PAGE>

determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 5% of the sum of the Original Pool Balance and the Prefunding Account
Deposit.

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                     A-3-4

<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  September  ___, 2001

                                        BANKERS TRUST COMPANY
                                           OF CALIFORNIA, N.A., as Trustee
                                        By:
                                            ------------------------------------
                                                    Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Class B-_
Certificates referred to in
the within named Agreement

By:
    -------------------------------------------
    Authorized Officer of Bankers Trust Company
         of California, N.A., as Trustee

                                     A-3-5

<PAGE>

                                                                     EXHIBIT A-4

                         FORM OF CLASS A-IO CERTIFICATE

Date of Pooling and Servicing                Percentage Interest: 100%
Agreement and Cut-off Date:
September __, 2001                           CUSIP No. :
First Distribution Date:                     Certificate No.:  A-IO-_
October 25, 2001

                        Class A-IO Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2001-3
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                            SERIES 2001-3, CLASS A-IO

         evidencing a percentage interest in the distributions allocable to the
         Class A-IO Certificates with respect to a Trust consisting primarily of
         a pool of conventional, closed-end, fixed and adjustable rate
         residential mortgage loans, sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

         THIS CLASS A-IO CERTIFICATE HAS NO PRINCIPAL BALANCE.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate in a trust, the assets of
which consist primarily of a pool of conventional, closed-end, fixed and
adjustable rate residential mortgage loans (the "Mortgage Loans"), deposited by
Aames Capital Acceptance Corp. (the "Depositor") into the Trust,

                                     A-4-1
<PAGE>

serviced by Countrywide Home Loans, Inc. (the "Servicer," which term includes
any successor Servicer under the Agreement referred to below). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, Aames Capital Corporation, as seller
("Seller"), the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the applicable interest
distributable thereon, as more specifically set forth in the Agreement.

         Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.

         This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2001-3 Mortgage Pass-Through Certificates,
Series 2001-3, Class A-IO " (herein called the "Class A-IO Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

         The Class A-IO Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and that the Trustee in its individual
capacity is not personally liable to the Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly provided
in the Agreement, subject to any liability under the Agreement.

                                     A-4-2
<PAGE>

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee and the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

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

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Servicer to

                                     A-4-3
<PAGE>

purchase being subject to the Pool Balance at the time of purchase being less
than 5% of the sum of the Original Pool Balance and the Prefunding Account
Deposit.

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                     A-4-4
<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  September  ___, 2001

                                          BANKERS TRUST COMPANY
                                             OF CALIFORNIA, N.A., as Trustee
                                          By:
                                              ----------------------------------
                                                      Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Class A-IO
Certificates referred to in
the within named Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
        of California, N.A., as Trustee

                                     A-4-5
<PAGE>

                                                                     EXHIBIT B-1

                           FORM OF CLASS C CERTIFICATE

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET FORTH IN
THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02(c) OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS TO THE TRANSFEROR AND THE TRUSTEE THAT (1) SUCH TRANSFEREE
IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE"), OR A PERSON ACTING ON BEHALF OF A PLAN OR
USING THE ASSETS OF A PLAN TO EFFECT SUCH PURCHASE AND IS NOT AN INSURANCE
COMPANY PURCHASING SUCH CERTIFICATE OR INTEREST FROM FUNDS IN A GENERAL ACCOUNT
OR SEPARATE ACCOUNT (WITH CERTAIN LIMITATIONS) OR (2) SUCH TRANSFEREE IS AN
INSURANCE COMPANY PURCHASING A CLASS C CERTIFICATE WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS DEFINED IN SECTION V(E) OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) SATISFYING SECTION III OF PTCE
95-60.

                                     B-1-1

<PAGE>

Date of Pooling and Servicing                     Percentage Interest: __%
Agreement and Cut-off Date:
September __, 2001                                Certificate No.:
First Distribution Date:
October 25, 2001

                           AAMES MORTGAGE TRUST 2001-3
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2001-3, CLASS C

         evidencing a percentage interest in the distributions allocable to the
         Class C Certificate with respect to a Trust consisting primarily of a
         pool of conventional, closed-end, fixed and adjustable rate residential
         mortgage loans sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

         This certifies that Capital Z Investments, L.P. is the registered owner
of the Percentage Interest specified on the face of this Class C Certificate.
This Class C Certificate is one series of Certificates issued by a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
rate and adjustable rate residential mortgage loans (the "Mortgage Loans"),
deposited by Aames Capital Acceptance Corp. (the "Depositor") into the Trust,
serviced by Countrywide Home Loans, Inc. (the "Servicer," which term includes
any successor Servicer under the Agreement referred to below). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, Aames Capital Corporation, as seller
("Seller"), the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned to such terms in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

         No transfer of a Class C Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is

                                     B-1-2

<PAGE>

to be made, the Trustee shall require the Holder to deliver an Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer is exempt (describing the applicable exemption
and the basis therefor) from or is being made pursuant to the registration
requirements of the Act and of any applicable state securities laws. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor, the Seller and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws. In connection with any such
transfer, the Trustee will also require an affidavit, in the form as described
in the Agreement, stating the matters set forth on the legend of this Class C
Certificate.

         The Class C Certificates are entitled to the Class C Distribution
Amount on each Distribution Date. The Class C Certificates are not entitled to
any payments on and collections in respect of the Mortgage Loans on any
Distribution Date until all other distributions on the Offered Certificates for
such Distribution Date and reimbursements of certain advances have been made in
accordance with the Agreement. The Holder of this Certificate, by its acceptance
of this Certificate, agrees that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the the Depositor, the Servicer and the Trustee and the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

         The Certificates are issuable only as registered Certificates without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for a new Certificate evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in the Agreement, and thereupon a new
Certificate evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.

                                     B-1-3

<PAGE>

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The the Depositor and the Trustee and any of their respective agents
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the the Depositor, the Trustee nor any of
their respective agents shall be affected by any notice to the contrary.

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of all Mortgage Loans in the Trust will result in
early retirement of the Certificates, the right of the Servicer to purchase
being subject to the Pool Balance at the time of purchase being less than 5% of
the sum of the Original Pool Balance and the Prefunding Account Deposit..

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                     B-1-4

<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  September __, 2001

                                           BANKERS TRUST COMPANY
                                              OF CALIFORNIA, N.A., as Trustee
                                           By:
                                               ---------------------------------
                                                      Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Certificates
referred to in the within named
Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
         of California, N.A., as Trustee

                                     B-1-5

<PAGE>

                                                                     EXHIBIT B-2

                           FORM OF CLASS R CERTIFICATE

         THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02(b) OF THE AGREEMENT REFERRED TO
HEREIN.

         FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"RESIDUAL INTEREST" IN EACH OF TWO "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G(A)(2) AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). A TRANSFEREE OF THIS
CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN SECTION
6.02(b) OF THE POOLING AND SERVICING AGREEMENT, AND SHALL BE REQUIRED TO FURNISH
AN AFFIDAVIT TO THE TRANSFEROR AND THE TRUSTEE TO THE EFFECT THAT (I) IT IS NOT
(i) A DISQUALIFIED ORGANIZATION, AS SUCH TERM IS DEFINED IN CODE SECTION
860E(e)(5), OR AN AGENT (INCLUDING A BROKER, NOMINEE OR OTHER MIDDLEMAN) FOR
SUCH DISQUALIFIED ORGANIZATION, (ii) AN ENTITY THAT HOLDS REMIC RESIDUAL
SECURITIES AS NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH
SECURITIES THROUGH BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS
(A "BOOK-ENTRY NOMINEE"), (iii) AN INDIVIDUAL, CORPORATION, PARTNERSHIP OR OTHER
PERSON UNLESS SUCH TRANSFEREE (A) IS NOT A FOREIGN PERSON OR (B) IS A FOREIGN
PERSON THAT WILL HOLD SUCH CLASS R CERTIFICATE IN CONNECTION WITH THE CONDUCT OF
A TRADE OR BUSINESS WITHIN THE UNITED STATES AND HAS FURNISHED THE TRANSFEROR
AND THE TRUSTEE WITH AN EFFECTIVE INTERNAL REVENUE SERVICE FORM 4224 OR (C) IS A
FOREIGN PERSON THAT HAS DELIVERED TO BOTH THE TRANSFEROR AND THE TRUSTEE AN
OPINION OF A NATIONALLY RECOGNIZED TAX COUNSEL TO THE EFFECT THAT THE TRANSFER
OF THE CLASS R CERTIFICATE TO IT IS IN ACCORDANCE WITH THE REQUIREMENTS OF THE
CODE AND THE REGULATIONS PROMULGATED THEREUNDER AND THAT SUCH TRANSFER OF THE
CLASS R CERTIFICATE WILL NOT BE DISREGARDED FOR FEDERAL INCOME TAX PURPOSES (ANY
SUCH PERSON WHO IS NOT COVERED BY CLAUSE (A), (B) OR (C) ABOVE BEING REFERRED TO
HEREIN AS A "NON-

                                      B-2-1

<PAGE>

PERMITTED FOREIGN HOLDER") OR (iv) ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR ANY PERSON WHICH IS AN INDIVIDUAL RETIREMENT ACCOUNT
OR EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO SECTION 4975 OF THE CODE
(AN "ERISA PLAN") OR AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT
OR GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE ERISA PLAN ASSETS BY REASON
OF AN ERISA PLAN'S INVESTMENT IN THE ENTITY, OR ANY PERSON INVESTING THE ASSETS
OF AN ERISA PLAN OR SUCH AN ENTITY, WHETHER AS NOMINEE, TRUSTEE, AGENT OR
OTHERWISE, (II) IT HAS NO INTENT OR PURPOSE TO IMPEDE THE ASSESSMENT OR
COLLECTION OF ANY FEDERAL, STATE OR LOCAL INCOME TAXES LEGALLY REQUIRED TO BE
PAID WITH RESPECT TO THE CLASS R CERTIFICATE, AND (III) IT HAS AGREED TO SUCH
AMENDMENTS TO FURTHER EFFECTUATE THE RESTRICTIONS ON TRANSFERS TO DISQUALIFIED
ORGANIZATIONS, AGENTS THEREOF, BOOK-ENTRY NOMINEES, NON-PERMITTED FOREIGN
HOLDERS OR ERISA PLANS. THE TERM "FOREIGN PERSON" MEANS A PERSON WHO IS NOT ONE
OF THE FOLLOWING: A CITIZEN OR RESIDENT OF THE UNITED STATES, A CORPORATION OR
PARTNERSHIP (OR OTHER ENTITY CLASSIFIED AS A CORPORATION OR PARTNERSHIP FOR U.S.
FEDERAL INCOME TAX PURPOSES) CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE
UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF, AN ESTATE THAT IS SUBJECT TO
U.S. FEDERAL INCOME TAX REGARDLESS OF THE SOURCE OF ITS INCOME, OR TRUST IF (i)
A COURT WITHIN THE UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER
THE ADMINISTRATION OF THE TRUST, AND (ii) ONE OR MORE UNITED STATES PERSONS HAVE
THE AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST.

         THE HOLDER OF THIS CLASS R CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED
TO HAVE AGREED TO THE DESIGNATION OF THE SERVICER AS ITS AGENT TO ACT AS "TAX
MATTERS PERSON" TO PERFORM THE FUNCTIONS OF A "TAX MATTERS PARTNER" FOR PURPOSES
OF SUBCHAPTER C OF CHAPTER 63 OF SUBTITLE F OF THE CODE, OR, IF SO REQUESTED BY
THE SERVICER, TO ACT AS TAX MATTERS PERSON.

                                      B-2-2

<PAGE>

Date of Pooling and Servicing                  Percentage Interest: __%
Agreement and Cut-off Date:
September __, 2001                             Certificate No.: __
First Distribution Date:
October 25, 2001

                           AAMES MORTGAGE TRUST 2001-3
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2001-3, CLASS R

         evidencing a percentage interest in the distributions allocable to the
         Class R Certificate with respect to a Trust consisting primarily of a
         pool of conventional, closed-end, fixed rate and adjustable rate
         residential mortgage loans sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORP. OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

         This certifies that Aames Capital Acceptance Corp. is the registered
owner of the Percentage Interest specified on the face of this Class R
Certificate. This Class R Certificate is one series of Certificates issued by a
trust, the assets of which consist primarily of a pool of conventional,
closed-end, fixed rate and adjustable rate residential mortgage loans (the
"Mortgage Loans"), deposited by Aames Capital Acceptance Corp. (the "Depositor")
into the Trust, serviced by Countrywide Home Loans, Inc. (the "Servicer," which
term includes any successor Servicer under the Agreement referred to below). The
Trust was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Depositor, Aames Capital
Corporation, as seller ("Seller"), the Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned to such
terms in the Agreement. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

         No transfer of a Class R Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is

                                      B-2-3

<PAGE>

to be made, the Trustee shall require the Holder to deliver an Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer is exempt (describing the applicable exemption
and the basis therefor) from or is being made pursuant to the registration
requirements of the Act and of any applicable state securities laws. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws. In connection with any such transfer, the Trustee
will also require an affidavit, in the form as described in the Agreement,
stating the matters set forth on the legend of this Class R Certificate.

          The Holder of the Class R Certificate, by acceptance hereof, is deemed
to have designated the Servicer, if permitted by the Code and applicable law, to
act as the "tax matters person", to perform the functions of a "tax matters
partner" for purposes of Subchapter C of Chapter 63 of Subtitle F of the Code
and if not so permitted, the Holder of the Class R Certificate, is deemed to
have agreed to act as such "tax matters person".

         The Class R Certificate is not entitled to any payments on and
collections in respect of the Mortgage Loans on any Distribution Date until all
other distributions for such Distribution Date have been made in accordance with
the Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Servicer, and the Trustee and the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of the Certificates.

         This Certificate is issuable only as a registered Certificate without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, the
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as

                                      B-2-4

<PAGE>

described in the Agreement, and thereupon a new Certificate evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Servicer to purchase being subject to the
Pool Balance at the time of purchase being less than 5% of the sum of the
Original Pool Balance and the Prefunding Account Deposit.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                      B-2-5

<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  September __,2001

                                           BANKERS TRUST COMPANY
                                              OF CALIFORNIA, N.A., as Trustee
                                           By:
                                              ---------------------------------
                                                    Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Certificates
referred to in the within named
Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
        of California, N.A., as Trustee

                                      B-2-6

<PAGE>

                                                                     EXHIBIT B-3

                           FORM OF CLASS P CERTIFICATE

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET FORTH IN
THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02(c) OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY DISTRIBUTIONS
EXCEPT AS PROVIDED HEREIN.

                                      B-3-1

<PAGE>

Date of Pooling and Servicing                     Percentage Interest: 100%
Agreement and Cut-off Date:
September __, 2001                                Certificate No.: __
First Distribution Date:
October 25, 2001

                           AAMES MORTGAGE TRUST 2001-3
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2001-3, CLASS P

         evidencing a percentage interest in the distributions allocable to the
         Class P Certificate with respect to a Trust consisting primarily of a
         pool of conventional, closed-end, fixed and adjustable rate residential
         mortgage loans sold and serviced by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORP. OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

         This certifies that Countrywide Home Loans, Inc. is the registered
owner of the Percentage Interest specified on the face of this Class P
Certificate. This Class P Certificate is one series of Certificates issued by a
trust, the assets of which consist primarily of a pool of conventional,
closed-end, fixed rate and adjustable rate residential mortgage loans (the
"Mortgage Loans"), deposited by Aames Capital Acceptance Corp. (the "Depositor")
into the Trust, serviced by Countrywide Home Loans, Inc. (the "Servicer," which
term includes any successor Servicer under the Agreement referred to below). The
Trust was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Depositor, Aames Capital
Corporation, as seller ("Seller"), the Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned to such
terms in the Agreement. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

         No transfer of a Class P Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is

                                      B-3-2

<PAGE>

to be made, the Trustee shall require the Holder to deliver an Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer is exempt (describing the applicable exemption
and the basis therefor) from or is being made pursuant to the registration
requirements of the Act and of any applicable state securities laws. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws. In connection with any such transfer, the Trustee
will also require an affidavit, in the form as described in the Agreement,
stating the matters set forth on the legend of this Class P Certificate.

         The Class P Certificates do not have a pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. The
Holder of this Certificate, by its acceptance of this Certificate, agrees that
the Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Servicer and the Trustee and the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

         The Certificates are issuable only as registered Certificates without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, each
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in the Agreement, and thereupon a new
Certificate evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

                                      B-3-3

<PAGE>

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of all Mortgage Loans in the Trust will result in
early retirement of the Certificates, the right of the Servicer to purchase
being subject to the Pool Balance at the time of purchase being less than 5% of
the sum of the Original Pool Balance and the Prefunding Account Deposit.

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                      B-3-4

<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  September __,2001

                                          BANKERS TRUST COMPANY
                                             OF CALIFORNIA, N.A., as Trustee
                                          By:
                                             -----------------------------------
                                                     Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Certificates
referred to in the within named
Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
         of California, N.A., as Trustee

                                      B-3-5

<PAGE>

                                                                       EXHIBIT C

                                   [RESERVED]

                                      C-1

<PAGE>

                                                                       EXHIBIT D

                                   [RESERVED]

                                      D-1

<PAGE>

                                                                       EXHIBIT E

                             MORTGAGE LOAN SCHEDULE

                       [On file with Sponsor and Trustee]

                                      E-1

<PAGE>

                                                                       EXHIBIT F

                    FORM OF ANNUAL STATEMENT AS TO COMPLIANCE

         The undersigned, ______________________________,
_______________________ of Countrywide Home Loans, Inc. (the "Servicer"), in its
capacity as Servicer under that certain Pooling and Servicing Agreement dated as
of September 1, 2001 (the "Pooling and Servicing Agreement") among Aames Capital
Corporation, as seller, Aames Capital Acceptance Corp., as depositor,
Countrywide Home Loans, Inc., as servicer and Bankers Trust Company of
California, N.A., as trustee, does hereby certify pursuant to Section 3.09 of
the Pooling and Servicing Agreement that as of the ___ day of ____________,
____:

                  (a)      a review of the activities of the Servicer for the
                           year ended December 31, ____ and of its performance
                           under the Pooling and Servicing Agreement has been
                           made under my supervision, and

                  (b)      to the best of my knowledge, based on such review,
                           the Servicer has fulfilled all of its material
                           obligations under the Pooling and Servicing Agreement
                           throughout such year.

         IN WITNESS WHEREOF, I have hereunto signed my name as of this ____day
of ___________, ____.

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

                                      F-1

<PAGE>

                                                                       EXHIBIT G

                FORM OF AFFIDAVIT PURSUANT TO SECTION 860E(e)(4)
                OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED

STATE OF______________________ )
                               ) ss.:
COUNTY OF_____________________ )

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

         1._______That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ] [the United States], on behalf of which he
makes this affidavit. Capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Agreement as defined in the Class R
Certificate.

         2._______That the Investor's Taxpayer Identification Number is
[_______________________].

         3._______That the Investor is not a "Disqualified Organization" within
the meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as
amended (the "Code"), or an agent of a Disqualified Organization (including a
broker, nominee or middleman) and will not be a "Disqualified Organization" as
of [date of transfer], and that the Investor is not acquiring a Class R
Certificate of the Aames Mortgage Trust 2001-3 Mortgage Pass-Through
Certificates, Series 2001-3 (the "Class R Certificate") for the account of, or
as an agent (including a broker, nominee or middleman) of any entity as to which
the Investor has not received an affidavit substantially in the form of this
affidavit. For these purposes, a "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (other than an instrumentality if all of its activities are subject to
tax and a majority of its board of directors is not selected by such
governmental entity), any cooperative organization furnishing electrical energy
or providing telephone service to persons in rural areas as described in Code
Section 1381(a)(2)(c), or any organization (other than a farmers' cooperative
described in Code Section 521) that is exempt from federal income tax unless
such organization is subject to the tax on unrelated business income imposed by
Code Section 511.

         4._______That the Investor is not (i) an entity that holds Class R
Certificates as nominee to facilitate the clearance and settlement of such Class
R Certificates through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee"), (ii) an individual,
corporation, partnership or other person unless such transferee (A) is not a
Foreign Person or (B) is a Foreign Person that will hold such Class R
Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee with an effective
Internal Revenue Service Form 4224 or (C) is a Foreign Person that has delivered
to both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of a Class R Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Class R Certificate will

                                      G-1

<PAGE>

not be disregarded for federal income tax purposes (any such person who is not
covered by clause (A), (B) or (C) above being referred to herein as a
"Non-permitted Foreign Holder") or (iii) a Person that is an employee benefit
plan within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, or any Person that is an individual retirement
account or employee benefit plan, trust or account subject to Section 4975 of
the Code (an "ERISA Plan") or an entity, including an insurance company separate
account or general account, whose underlying assets include ERISA Plan assets by
reason of an ERISA Plan's investment in the entity or a Person investing the
assets of an ERISA Plan or such an entity, whether as nominee, trustee, agent or
otherwise (an "ERISA Prohibited Holder").

         5._______That the Investor agrees to any such amendments of the Pooling
and Servicing Agreement as may be required to further effectuate the
restrictions on transfer of the Class R Certificate to such a Disqualified
Organization or a Book-Entry Nominee or a Non-permitted Foreign Holder or an
ERISA Prohibited Holder.

         6._______That the Investor has no intent or purpose to impede the
assessment or collection of any federal, state or local income taxes legally
required to be paid with respect to the Class R Certificate and will not
transfer the Class R Certificate to any Person that it has reason to believe has
the intention to impede the assessment or collection of such taxes and that the
Investor understands that, as the holder of the Class R Certificate, it may
incur tax liabilities in excess of any cash flows generated by the Class R
Certificates.

         7._______The Investor has been advised of, understands and acknowledges
that under the Code, a substantial tax would be imposed on a "pass-through
entity" holding a Class R Certificate if at any time during the taxable year of
the pass-through entity a Person that is a Disqualified Organization is the
record holder of an interest in such entity. (For this purpose, a "pass-through
entity" includes a regulated investment company, a real estate investment trust
or common trust fund, a partnership, trust or estate, and certain cooperatives
and, except as may be provided in Treasury Regulations, persons holding
interests in pass through entities as a nominee for another Person). A
pass-through entity shall be relieved of liability for the tax if it had
received from such Person an affidavit (in substantially the same form as this
affidavit) that such Person is not a Disqualified Organization and the entity
had no actual knowledge that the affidavit was false. The Investor will advise
the Trustee and the Servicer if it becomes a pass-through entity or if it is a
pass-through entity, if any of the interest holders are or become Disqualified
Persons.

         8._______The Investor has reviewed the provisions of Section 6.02 of
the Agreement and understands the legal consequences of the acquisition of a
Class R Certificate including, without limitation, the restrictions on
subsequent transfers. The Investor expressly agrees to be bound by and to abide
by the provisions of Section 6.02 of the Agreement, as such Section may be
amended from time to time.

         9._______The Investor agrees to require an affidavit substantially
similar to this affidavit from any Person to whom the Investor attempts to
transfer its Class R Certificate including any Person with respect to which the
Investor is then acting as nominee, trustee or agent, and in connection with any
transfer by a Person for whom the Investor is acting as nominee, trustee or

                                      G-2

<PAGE>

agent, and the Investor will not transfer its Class R Certificate to be
transferred to any Person that the Investor knows is a Disqualified
Organization.

         10.______The Investor is acquiring the Class R Certificate either (i)
for its own account or (ii) as nominee, trustee or agent for another Person and
has attached hereto an affidavit from such Person in substantially the same form
as this affidavit. If clause (ii) of the preceding sentence is applicable, such
Person is not a Disqualified Organization and the Investor has no knowledge that
any such affidavit from such Person is false.

                                      G-3

<PAGE>

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

                                           [NAME OF INVESTOR]

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

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

         Subscribed and sworn before me this _____day of ___________, ____.

NOTARY PUBLIC
COUNTY OF___________________________________
STATE OF____________________________________
My Commission expires the ____ day of ________, ____.

                                      G-4

<PAGE>

                                                                       EXHIBIT H

                    FORM OF NOTICE REGARDING PAYMENT IN FULL
                      OF PRINCIPAL BALANCE OF MORTGAGE LOAN

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705
         Re:   Aames Mortgage Trust 2001-3
               Mortgage Pass-Through Certificates, Series 2001-3

Ladies and Gentlemen:

         Reference is made to Section 3.07 of the Pooling and Servicing
Agreement dated as of September 1, 2001 (the "Pooling and Servicing Agreement")
among Aames Capital Corporation, as Seller, Aames Capital Acceptance Corp., as
Depositor, Countrywide Home Loans, Inc., as Servicer and Bankers Trust Company
of California, N.A., as Trustee. All capitalized terms used but not defined
herein shall have the meanings given to such terms in the Pooling and Servicing
Agreement.

         The undersigned hereby certifies that the Principal Balance of the
Mortgage Loan(s) listed on Schedule A annexed hereto has been paid in full and
that all amounts received in connection with the payment of such Mortgage
Loan(s) that were required to be deposited or credited in the Certificate
Account pursuant to Section 3.02 of the Pooling and Servicing Agreement have
been so deposited or credited.

         The undersigned further certifies that he is a Servicing Officer of the
Servicer holding the office set forth beneath his signature and that he is duly
authorized to execute this certificate on behalf of the Servicer.

                                        COUNTRYWIDE HOME LOANS, INC.
Date:______________________             By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                      H-1

<PAGE>

                                                                       EXHIBIT I

                           FORM OF LIQUIDATION REPORT
<TABLE>
<CAPTION>
<S>      <C>                                                                             <C>
1.       Type of Liquidation (REO disposition/charge-off/short pay-off)

                o    Date Last Paid

                o    Date of Foreclosure

                o    Date of REO

                o    Date of REO Disposition

                o    Property Sale Price; Estimated Market Value at Disposition

2.       Liquidation Proceeds
                o    Principal Prepayment                                                 $
                                                                                           -------------------------
                o    Property Sale Proceeds
                                                                                           -------------------------
                o    Insurance Proceeds
                                                                                           -------------------------
                o    Other (itemize)

                o    TOTAL                                                                $
                                                                                           =========================

         Liquidation Expenses
                o    Servicing Advances                                                   $
                                                                                           -------------------------
                o    Monthly Advances
                                                                                           -------------------------
                o    Contingency Fees
                                                                                           -------------------------
                o    Servicing Fees
                                                                                           -------------------------
                o    Annual Expense Escrow Amount
                                                                                           -------------------------
                o    Supplemental Fee (if any)
                                                                                           -------------------------
                o    Additional Interest (if any)
                                                                                           -------------------------
                o    Monthly Sponsor Fee (if any)

                o    TOTAL                                                                $
                                                                                           =========================

3.       Net Liquidation Proceeds*
         (Total of Item 2 minus total of Item 3)                                          $
                                                                                           -------------------------

4.       Accrued and Unpaid Interest on Mortgage Loan                                     $
                                                                                           -------------------------

5.       Principal Balance of Mortgage Loan                                               $
                                                                                           -------------------------

6.       Realized Loss on Mortgage Loan (Item 4 plus Item 5 minus Item 3,
         with a Realized Loss resulting only if the total of this
         calculation is a positive number) $                                              $
                                                                                           -------------------------
</TABLE>
*Applied first to Item 4 and then to Item 5.

                                      I-1

<PAGE>

                                                                       EXHIBIT J

                              OFFICER'S CERTIFICATE

         I, _____________________, hereby certify that I am the duly elected
_____________________ of Countrywide Home Loans, Inc. acting as servicer
pursuant to a Pooling and Servicing Agreement dated as of September 1, 2001 by
and among the Aames Capital Corporation, as Seller, Aames Capital Acceptance
Corp., as Depositor, Countrywide Home Loans, Inc. and Bankers Trust Company of
California, N.A., as Trustee, and further certify, to the best of my knowledge
and after due inquiry that the following, including the attached Liquidation
Report, is a summary of the facts and circumstances surrounding the "charge-off"
of any Mortgage Loans during the Collection Period from _____ 1 through _____
30/31, ____;

[Insert the following information for each "charged-off" Mortgage Loan]

         Loan #
         Borrower Name
         Property Address
         Date of "charge-off"
         Original Principal Balance
         Outstanding Principal Balance
         Mortgage Loan Rate
         Accrued Interest at time of "charge off"
         Unreimbursed Servicing Advances at time of "charge off"
         Unreimbursed Delinquency Advances at time of "charge off"
         # of days in default at time of "charge off"
         Original Appraised Value Current appraised value based upon "drive by"
         Amount of outstanding first lien
         Estimate of Foreclosure Costs
                  Broker Fees
                  Legal Fees
                  Repair and Miscellaneous Expenses
         Projected Marketing Period
         Estimate of Loss on Foreclosure and Liquidation

Capitalized terms not otherwise defined herein have the meanings set forth in
the Pooling and Servicing Agreement.

                                      J-1

<PAGE>

         IN WITNESS WHEREOF, I have hereunto signed by name and affixed the seal
of the Servicer.

Dated:
      ------------------                  -------------------------------------
                                          Name:
                                          Title:

                                      J-2

<PAGE>

                                                                       EXHIBIT K

                          FORM OF TRANSFEROR AFFIDAVIT
                           [LETTERHEAD OF TRANSFEROR]

                             ----------------, ----

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705
         Re:      Aames Mortgage Trust 2001-3
                  Mortgage Pass-Through Certificates, Series 2001-3

Ladies and Gentlemen:

         We have reviewed the attached affidavit of [NAME OF TRANSFEREE] and
have no actual knowledge that such affidavit is not true and has no reason to
believe that the requirements set forth in paragraph 3, paragraph 4(i) or
paragraph 4(ii) are not satisfied and have no reason to believe that the
transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to a
Class R Certificate. In addition, we have conducted a reasonable investigation
at the time of the transfer and found that the transferee had historically paid
its debts as they came due and found no significant evidence to indicate that
the transferee will not continue to pay its debts as they become due.

                                   Very truly yours,

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

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

                                      K-1

<PAGE>

                                                                       EXHIBIT L

                                   [RESERVED]

                                      L-1
<PAGE>

                                                                       EXHIBIT M

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705
         Re:      Aames Mortgage Trust 2001-3,
                  Mortgage Pass-Through Certificates,
                  Series, 2001-3, Class [  ] (the "Certificates")

Ladies and Gentlemen:

         In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act and (c)
with respect to our disposition of the Certificates, we have no knowledge that
the transferee is not a permitted transferee.

                               Very truly yours,

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

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

                                      M-1

<PAGE>

                                                                     EXHIBIT N-1

                    FORM OF INVESTMENT LETTER [NON-RULE 144A]

                                     [DATE]

Aames Capital Corporation, as Seller
350 South Grand Avenue
Los Angeles, California 90071

Aames Capital Acceptance Corporation, as Depositor
350 South Grand Avenue
Los Angeles, California 90071

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705

         Re:      Aames Mortgage Trust 2001-3,
                  Mortgage Pass-Through Certificates,
                  Series, 2001-3, Class [  ] (the "Certificates")

Ladies and Gentlemen:

         In connection with our acquisition of the above-captioned Certificates,
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the Seller
and the Depositor concerning the purchase of the Certificates and all matters
relating thereto or any additional information deemed necessary to our decision
to purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or (ii) the
purchaser is an insurance company which is purchasing such certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, (e) we are acquiring the Certificates for investment for our
own account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or

<PAGE>

negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.

                                        Very truly yours,

                                        [NAME OF TRANSFEREE]

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

                                     N-1-2

<PAGE>

                                                                     EXHIBIT N-2

                            FORM OF RULE 144A LETTER

                                     [DATE]

Aames Capital Corporation, as Seller
350 South Grand Avenue
Los Angeles, California 90071

Aames Capital Acceptance Corporation, as Depositor
350 South Grand Avenue
Los Angeles, California 90071

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705
         Re:      Aames Mortgage Trust 2001-3,
                  Mortgage Pass-Through Certificates,
                  Series, 2001-3, Class [  ] (the "Certificates")

Ladies and Gentlemen:

         In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Seller and the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (c) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (d) we have not, nor has
anyone acting on our behalf offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security from, or otherwise approached or negotiated with
respect to the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Act or that would render the disposition of the Certificates a violation of
Section 5 of the Act or require registration pursuant thereto, nor will act, nor
has authorized or will authorize any person to act, in such manner with respect
to the Certificates, (e) we are a "qualified institutional buyer" as that term
is defined in Rule 144A under the Act and have completed either of the forms of

                                     N-2-1

<PAGE>

certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates for our own account or for resale pursuant to Rule 144A and
further, understand that such Certificates may be resold, pledged or transferred
only (i) to a person reasonably believed to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Act.

                                             Very truly yours,

                                             [NAME OF TRANSFEREE]

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

                                     N-2-2

<PAGE>

                                                          ANNEX 1 TO EXHIBIT N-2

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

                  The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

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

(b) In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $ 1 in securities (except for the excluded
securities referred to below) as of the end of the Buyer's most recent fiscal
year (such amount being calculated in accordance with Rule 144A and (ii) the
Buyer satisfies the criteria in the category marked below.

                  ___      Corporation, etc. The Buyer is a corporation (other
                           than a bank, savings and loan association or similar
                           institution), Massachusetts or similar business
                           trust, partnership, or charitable organization
                           described in Section 501(c)(3) of the Internal
                           Revenue Code of 1986, as amended.

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

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

----------------
1    Buyer must own and/or invest on a discretionary basis at least $100,000,000
     in securities unless Buyer is a dealer, and, in that case, Buyer must own
     and/or invest on a discretionary basis at least $10,000,000 in securities.

                                     N-2-3

<PAGE>

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

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

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

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

                  ___      Investment Advisor. The Buyer is an investment
                           advisor registered under the Investment Advisors Act
                           of 1940.

                  ___      Small Business Investment Company. Buyer is a small
                           business investment company licensed by the U.S.
                           Small Business Administration under Section 301(c) or
                           (d) of the Small Business Investment Act of 1958.

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

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

                  (d) For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market. Further, in determining such
aggregate amount, the Buyer may have included securities owned by subsidiaries
of the Buyer, but only if such subsidiaries are consolidated with the Buyer in
its financial statements prepared in accordance with generally accepted
accounting principles and if the investments of such subsidiaries are managed
under the Buyer's direction. However, such securities were not included if the
Buyer is a majority-owned, consolidated subsidiary of another enterprise and the
Buyer is not itself a reporting company under the Securities Exchange Act of
1934, as amended.

                                     N-2-4

<PAGE>

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

                  (f) Until the date of purchase of the Rule 144A Securities,
the Buyer will notify each of the parties to which this certification is made of
any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a reaffirmation
of this certification as of the date of such purchase. In addition, if the Buyer
is a bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                       Print Name of Buyer

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

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

                                     N-2-5

<PAGE>

                                                          ANNEX 2 TO EXHIBIT N-2

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

                  The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

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

                  (b) In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year. For purposes of determining the amount of securities
owned by the Buyer or the Buyer's Family of Investment Companies, the cost of
such securities was used, except (i) where the Buyer or the Buyer's Family of
Investment Companies reports its securities holdings in its financial statements
on the basis of their market value, and (ii) no current information with respect
to the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market.

                                     N-2-6

<PAGE>

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

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

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

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

                  (e) The Buyer is familiar with Rule 144A and under-stands that
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

                  (f) Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.

                                       Print Name of Buyer

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

                                       IF AN ADVISER:

                                       -----------------------------------------
                                                  Print Name of Buyer
                                       Date:
                                            ---------------

                                     N-2-7

<PAGE>

                                                                       EXHIBIT O

               Mortgage Guaranty Insurance Corporation PMI Policy

                   [Available from Aames Capital Corporation]

                                      O-1

<PAGE>

                                                                       EXHIBIT P

                           List of PMI Mortgage Loans

                   [Available from Aames Capital Corporation]

                                      P-1

<PAGE>

                                                                       EXHIBIT Q

                                   [RESERVED]

                                      Q-1

<PAGE>

                                                                       EXHIBIT R

                           Prepayment Charge Schedule

                   [Available from Aames Capital Corporation]

                                      R-1

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