Document:

NOMURA ASSET ACCEPTANCE CORPORATION,

                                    Depositor

                         NOMURA CREDIT & CAPITAL, INC.,

                                     Seller

                            GMAC MORTGAGE CORPORATION

                                    Servicer

                                       and

                              JPMORGAN CHASE BANK,

                              Trustee and Custodian

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

                         POOLING AND SERVICING AGREEMENT

                          Dated as of September 1, 2004

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

                       NOMURA ASSET ACCEPTANCE CORPORATION

               MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-AR2

<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>

                                                     ARTICLE I

DEFINITIONS.......................................................................................................4
    Section 1.02 Defined Terms....................................................................................4
    Section 1.02 Allocation of Certain Interest Shortfalls.......................................................42

                                                    ARTICLE II
    Section 2.01  Conveyance of Trust Fund.......................................................................43
    Section 2.02  Acceptance of the Mortgage Loans...............................................................44
    Section 2.03  Representations, Warranties and Covenants of the Servicer and the Seller.......................47
    Section 2.04  Representations and Warranties of the Depositor................................................52
    Section 2.05  Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases................53
    Section 2.06  Issuance of the REMIC I Regular Interests and the Class R-1 Certificates.......................54
    Section 2.08  Conveyance of the REMIC I Regular Interests....................................................54
    Section 2.09  Issuance of Class R Certificates...............................................................54
    Section 2.11  Establishment of Trust.........................................................................55

                                                    ARTICLE III
    Section 3.01  The Servicer to Act as Servicer................................................................56
    Section 3.02  Due-on-Sale Clauses; Assumption Agreements.....................................................57
    Section 3.03  Subservicers...................................................................................58
    Section 3.04  Documents, Records and Funds in Possession of the Servicer To Be Held for Trustee..............59
    Section 3.05  Maintenance of Hazard Insurance................................................................60
    Section 3.06  Presentment of Claims and Collection of Proceeds...............................................61
    Section 3.07  Maintenance of Insurance Policies..............................................................61
    Section 3.08  Reserved.......................................................................................62
    Section 3.09  Realization Upon Defaulted Mortgage Loans; Determination of Excess Liquidation Proceeds
                  and Realized Losses; Repurchases of Certain Mortgage Loans.....................................62
    Section 3.10  Servicing Compensation.........................................................................64
    Section 3.11  REO Property...................................................................................65
    Section 3.12  Liquidation Reports............................................................................65
    Section 3.13  Annual Certificate as to Compliance............................................................65
    Section 3.14  Annual Independent Certified Public Accountants' Servicing Report..............................66
    Section 3.15  Books and Records..............................................................................67
    Section 3.16  Trustee........................................................................................67
    Section 3.17  REMIC-Related Covenants........................................................................67
    Section 3.18  Reimbursement of Costs and Expenses............................................................68
    Section 3.19  Release of Mortgage Files......................................................................68
    Section 3.20  Documents, Records and Funds in Possession of the Servicer to be held for Trustee..............69
    Section 3.21  Possession of Certain Insurance Policies and Documents.........................................69

                                                      - ii -

<PAGE>

    Section 3.22  Annual Certificate as to Compliance............................................................69
    Section 3.23  UCC............................................................................................71
    Section 3.24  Optional Purchase of Defaulted Mortgage Loans..................................................71

                                                     ARTICLE IV
    Section 4.01  Collection of Mortgage Loan Payments; Custodial Account........................................72
    Section 4.02  Permitted Withdrawals From the Custodial Account...............................................74
    Section 4.03  Reports to Trustee.............................................................................76
    Section 4.04  Collection of Taxes; Assessments and Similar Items; Escrow Accounts............................76
    Section 4.05  Adjustments to Mortgage Interest Rate and Monthly Payment......................................77
    Section 4.06  Distribution Account...........................................................................77
    Section 4.07  Permitted Withdrawals and Transfers from the Distribution Account..............................78

                                                     ARTICLE V
    Section 5.01  Advances; Advance Facility.....................................................................81
    Section 5.02  Compensating Interest Payments.................................................................84
    Section 5.03  REMIC Distributions............................................................................84
    Section 5.04  Reserved.......................................................................................85
    Section 5.05  Reserved.......................................................................................85
    Section 5.06  Distributions on the Certificates..............................................................85
    Section 5.07  Allocation of Realized Losses..................................................................91
    Section 5.08  Prepayment Charges, Final Distributions on Certificates........................................93
    Section 5.09  Monthly Statements to Certificateholders.......................................................93
    Section 5.10 Reserved........................................................................................96
    Section 5.12  Class P Certificate Account....................................................................98
    Section 5.13  Basic Risk Reserve Fund........................................................................98

                                                     ARTICLE VI
    Section 6.01  The Certificates..............................................................................100
    Section 6.02  Certificate Register; Registration of Transfer and Exchange of Certificates...................101
    Section 6.03  Mutilated, Destroyed, Lost or Stolen Certificates.............................................104
    Section 6.04  Persons Deemed Owners.........................................................................104
    Section 6.05  Access to List of Certificateholders' Names and Addresses.....................................104
    Section 6.06  Book-Entry Certificates.......................................................................105
    Section 6.07  Notices to Depository.........................................................................106
    Section 6.08  Definitive Certificates.......................................................................106
    Section 6.09  Maintenance of Office or Agency...............................................................106

                                                    ARTICLE VII
    Section 7.01  Liabilities of the Depositor and the Servicer.................................................108
    Section 7.02  Merger or Consolidation of the Depositor or the Servicer......................................108
    Section 7.03  Indemnification of Depositor and the Servicer.................................................108
    Section 7.04  Limitations on Liability of the Depositor, the Servicer and Others............................109
    Section 7.05  Servicer Not to Resign........................................................................110
    Section 7.06  Termination of Servicer Without Cause; Appointment of Special Servicer........................110

                                                    ARTICLE VIII

                                                       -iii-

<PAGE>

    Section 8.01  Servicer Default..............................................................................112
    Section 8.02  Trustee to Act; Appointment of Successor......................................................113
    Section 8.03  Notification to Certificateholders............................................................115
    Section 8.04  Waiver of Servicer Defaults...................................................................115

                                                     ARTICLE IX
    Section 9.01  Duties of Trustee.............................................................................116
    Section 9.02  Certain Matters Affecting the Trustee.........................................................117
    Section 9.03  Trustee Not Liable for Certificates or Mortgage Loans.........................................119
    Section 9.04  Trustee May Own Certificates..................................................................120
    Section 9.05  Trustee's Compensation and Expenses; Indemnification..........................................120
    Section 9.06  Eligibility Requirements for Trustee..........................................................121
    Section 9.07  Insurance.....................................................................................121
    Section 9.08  Resignation and Removal of Trustee............................................................121
    Section 9.09  Successor Trustee.............................................................................122
    Section 9.10  Merger or Consolidation of Trustee............................................................122
    Section 9.11  Appointment of Co-Trustee or Separate Trustee.................................................123
    Section 9.12  Tax Matters...................................................................................124
    Section 9.13  Custodian's Fees and Expenses.................................................................126
    Section 9.14  Indemnification of Custodian..................................................................126
    Section 9.15  Reliance of Custodian.........................................................................127

                                                     ARTICLE X
    Section 10.01  Termination upon Liquidation or Repurchase of all Mortgage Loans.............................129
    Section 10.02  Final Distribution on the Certificates.......................................................129
    Section 10.03  Additional Termination Requirements..........................................................131

                                                     ARTICLE XI
    Section 11.01  Amendment....................................................................................132
    Section 11.02  Recordation of Agreement; Counterparts.......................................................133
    Section 11.03  Governing Law................................................................................133
    Section 11.04  Intention of Parties.........................................................................133
    Section 11.05  Notices......................................................................................134
    Section 11.06  Severability of Provisions...................................................................135
    Section 11.07  Assignment...................................................................................135
    Section 11.08  Limitation on Rights of Certificateholders...................................................135
    Section 11.09  Certificates Nonassessable and Fully Paid....................................................136
</TABLE>

                                                       -iv-

<PAGE>

EXHIBITS

Exhibit A-1       Form of Class I-A, II-A, III-A-1, III-A-2, Class III-A-3
Exhibit A-2       Form of Class M-[1][2][3][4] Certificates
Exhibit A-3       Form of Class X Certificates
Exhibit A-4       Form of Class P Certificates
Exhibit A-5       Form of Class R Certificates
Exhibit B         Mortgage Loan Schedule
Exhibit C-1       Form of Initial Certification
Exhibit C-2       Form of Interim Certification
Exhibit C-3       Form of Final Certification
Exhibit D         Form of Transfer Affidavit
Exhibit E         Form of Transferor Certificate
Exhibit F         Form of Investment Letter (Non-Rule 144A)
Exhibit G         Form of Rule 144A Investment Letter
Exhibit H         Form of Request for Release
Exhibit I         DTC Letter of Representations
Exhibit J         Schedule of Mortgage Loans with Lost Notes
Exhibit K         Prepayment Charge Schedule
Exhibit L         Form of Servicer's Certification
Exhibit M         Form of Trustee's Certification
Exhibit N         Appendix E of the Standard & Poor's Glossary For File
                  Format For LEVELS(R) Version 5.6 Revised

                                      -v-

<PAGE>

         POOLING AND SERVICING AGREEMENT, dated as of September 1, 2004, among
NOMURA ASSET ACCEPTANCE CORPORATION, a Delaware corporation, as depositor (the
"Depositor"), NOMURA CREDIT & CAPITAL, INC., a Delaware corporation, as seller
(in such capacity, the "Seller"), GMAC MORTGAGE CORPORATION, a Pennsylvania
corporation, as servicer (the "Servicer") and JPMORGAN CHASE BANK, a New York
banking corporation, not in its individual capacity, but solely as trustee (the
"Trustee") and as custodian (the "Custodian").

                              PRELIMINARY STATEMENT

         The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates.

                                     REMIC I
                                     -------

         As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC I." The R-I Interest will represent the sole
class of "residual interests" in REMIC I for purposes of the REMIC Provisions
(as defined herein) under federal income tax law. The following table
irrevocably sets forth the designation, the Uncertificated REMIC I Pass-Through
Rate, the Initial Uncertificated Principal Balance, and solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC I Regular Interests. None of the REMIC I
Regular Interests will be certificated.

<TABLE>
<CAPTION>
                                                          Uncertificated
                         Initial Uncertificated               REMIC I                  Assumed Final Maturity
      Designation          Principal Balance             Pass-Through Rate                    Date(1)
      -----------          -----------------             -----------------                    -------
<S>                              <C>                        <C>                           <C>
        LTI-AA                   $184,367,343.28            Variable(2)                   October 25, 2034
        LTI-IA                       $322,445.00            Variable(2)                   October 25, 2034
        LTI-IIA                      $358,150.00            Variable(2)                   October 25, 2034
       LTI-IIIA1                     $653,725.00            Variable(2)                   October 25, 2034
       LTI-IIIA2                     $311,775.00            Variable(2)                   October 25, 2034
       LTI-IIIA3                     $107,275.00            Variable(2)                   October 25, 2034
        LTI-M1                        $71,490.00            Variable(2)                   October 25, 2034
        LTI-M2                        $24,455.00            Variable(2)                   October 25, 2034
        LTI-M3                        $20,695.00            Variable(2)                   October 25, 2034
        LTI-M4                        $11,289.42            Variable(2)                   October 25, 2034
        LTI-ZZ                     $1,881,299.42            Variable(2)                   October 25, 2034
         LTI-P                           $100.00            Variable(2)                   October 25, 2034
       LTI-1SUB                          $470.49            Variable(2)                   October 25, 2034
       LTI-1GRP                        $6,919.40            Variable(2)                   October 25, 2034
       LTI-2SUB                          $522.62            Variable(2)                   October 25, 2034
       LTI-2GRP                        $7,685.62            Variable(2)                   October 25, 2034
       LTI-3SUB                        $1,565.47            Variable(2)                   October 25, 2034
       LTI-3GRP                       $23,020.97            Variable(2)                   October 25, 2034
        LTI-XX                   $188,089,757.56            Variable(2)                   October 25, 2034
</TABLE>

<PAGE>

-------------------
(1)      Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
         regulations, the Distribution Date in the month following the maturity
         date for the Mortgage Loan with the latest maturity date has been
         designated as the "latest possible maturity date" for each REMIC I
         Regular Interest.
(2)      Calculated in accordance with the definition of "Uncertificated REMIC I
         Pass-Through Rate" herein.

                                      -2-
<PAGE>

                                    REMIC II
                                    --------

         As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II". The R-II Interest will represent the sole class of
"residual interests" in REMIC II for purposes of the REMIC Provisions. The
following table irrevocably sets forth the Class designation, Pass-Through Rate
and Initial Certificate Principal Balance for each Class of Certificates and
uncertificated REMIC II Regular Interests that represents one or more of the
"regular interests" in REMIC II created hereunder:

<TABLE>
<CAPTION>
                        Initial Certificate                                             Assumed Final Maturity
 Class Designation       Principal Balance                Pass-Through Rate                     Date(1)
 -----------------       -----------------                -----------------                     -------
<S>                    <C>                     <C>                                         <C>
Class I-A              $     64,489,000        Class I-A Pass Through Rate                 October 25, 2034
Class II-A             $     71,630,000        Class II-A Pass Through Rate                October 25, 2034
Class III-A-1          $    130,745,000        Class III-A-1 Pass Through Rate             October 25, 2034
Class III-A-2          $     62,355,000        Class III-A-2 Pass Through Rate             October 25, 2034
Class III-A-3          $     21,455,000        Class III-A-3 Pass Through Rate             October 25, 2034
Class M-1              $     14,298,000        Class M-1 Pass Through Rate                 October 25, 2034
Class M-2              $      4,891,000        Class M-2 Pass-Through Rate                 October 25, 2034
Class M-3              $      4,139,000        Class M-3 Pass Through Rate                 October 25, 2034
Class M-4              $      2,257,884        Class M-4 Pass Through Rate                 October 25, 2034
Class X(2)             $              0        Class X Pass Through Rate                   October 25, 2034
Class P                $            100        N/A(3)                                      October 25, 2034
</TABLE>

-------------------
(1)      Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
         regulations, the Distribution Date in the month following the maturity
         date for the Mortgage Loan with the latest maturity date has been
         designated as the "latest possible maturity date" for each Class of
         Certificates.

(2)      The Class X Certificates will not accrue interest on their Certificate
         Principal Balance, but will accrue interest at the Class X Pass-Through
         Rate on the Certificate Notional Balance of the Class X Certificates
         outstanding from time to time which shall equal the aggregate of the
         Uncertificated Principal Balances of the REMIC I Regular Interests
         (other than REMIC I Regular Interest LTI-P). The Class X Certificates
         will not accrue interest on their Certificate Principal Balance.

(3)      The Class P Certificates will not be entitled to distributions of
         interest.

         In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Seller and the Trustee agree as follows:

                                      -3-
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01      Defined Terms.

         In addition to those terms defined in Section 1.02, whenever used in
this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:

         ACCOUNT:  Either the Distribution Account or the Custodial Account.

         ACCRUAL PERIOD: With respect to the Class I-A Certificates and the
Class X Certificates and any Distribution Date, the calendar month immediately
preceding such Distribution Date. With respect to the Group II, Group III and
Subordinate Certificates and any Distribution Date, the period commencing on the
immediately preceding Distribution Date (or with respect to the first Accrual
Period, the Closing Date) and ending on the day immediately preceeding the
related Distribution Date. All calculations of interest on the Class I-A
Certificates and the Class X Certificates will be based on a 360-day year
consisting of twelve 30-day months. All calculations of interest on the Group
II, Group III and Subordinate Certificates (other than the Class X Certificates)
will be made based on a 360-day year and the actual number of days elapsed in
the related Accrual Period.

         ADJUSTMENT DATE: With respect to each Mortgage Loan, the first day of
the month in which the Mortgage Rate of the Mortgage Loan changes pursuant to
the related Mortgage Note. The first Adjustment Date following the Cut-Off Date
as to each Mortgage Loan is set forth in the Loan Schedule.

         ADVANCE: An advance of delinquent payments of principal or interest in
respect of a Mortgage Loan required to be made by the Servicer pursuant to
Section 5.01 or by the Trustee in its capacity as Successor Servicer pursuant to
Section 5.01.

         ADVANCE FACILITY: As defined in Section 5.01(b)(i).

         ADVANCE FACILITY NOTICE: As defined in Section 5.01(b)(ii).

         ADVANCE FINANCING PERSON: As defined in Section 5.01(b)(i).

         ADVANCE REIMBURSEMENT AMOUNT: As defined in Section 5.01(b)(ii).

         AGGREGATE LOAN BALANCE: With respect to the Mortgage Loans and any
Distribution Date, the aggregate of the Stated Principal Balances of the
Mortgage Loans as of the last day of the related Due Period.

         AGGREGATE LOAN GROUP BALANCE: With respect to a Loan Group and any
Distribution Date, the aggregate of the Stated Principal Balances of the
Mortgage Loans in the related Loan Group as of the last day of the related Due
Period.

                                      -4-
<PAGE>

         AGREEMENT: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.

         AMOUNT HELD FOR FUTURE DISTRIBUTION: As to any Distribution Date, the
aggregate amount held in the Custodial Account at the close of business on the
immediately preceding Determination Date on account of (i) all Scheduled
Payments or portions thereof received in respect of the Mortgage Loans due after
the related Due Period and (ii) Principal Prepayments and Liquidation Proceeds
received in respect of the Mortgage Loans after the last day of the related
Prepayment Period.

         APPLIED LOSS AMOUNT: With respect to the Publicly Offered Certificates
and any Distribution Date, the excess of the aggregate Certificate Principal
Balance of the Publicly Offered Certificates over the Aggregate Loan Balance of
the Mortgage Loans after giving effect to all Realized Losses incurred with
respect to the Mortgage Loans during the related Due Period and payments of
principal to the Publicly Offered Certificates on such Distribution Date.

         APPRAISED VALUE: With respect to any Mortgage Loan originated in
connection with a refinancing, the appraised value of the Mortgaged Property
based upon the appraisal made at the time of such refinancing or, with respect
to any other Mortgage Loan, the lesser of (x) the appraised value of the
Mortgaged Property based upon the appraisal made by a fee appraiser at the time
of the origination of the Mortgage Loan, and (y) the sales price of the
Mortgaged Property at the time of such origination.

         AUTHORIZED SERVICER REPRESENTATIVE: Those Servicer representatives,
authorized to execute a Request for Release on behalf of the Servicer, whose
name and facsimile signature appear on a list furnished to the Trustee by the
Servicer on the Closing Date pursuant to this Agreement, as such list may be
amended by the Servicer from time-to-time.

         BANKRUPTCY CODE: Title 11 of the United States Code.

         BASIS RISK RESERVE FUND: The segregated non-interest bearing trust
account created and maintained by the Trustee pursuant to Section 5.13 hereof.

         BASIS RISK SHORTFALL: With respect to any Class of Group II, Group III
or Subordinate Certificates and any Distribution Date, the sum of (i) the
excess, if any, of the related Current Interest calculated on the basis of the
least of (x) One-Month LIBOR plus the applicable Certificate Margin, (y) the
Maximum Interest Rate and (z) 11.00% over the related Current Interest for the
applicable Distribution Date; (ii) any amount described in clause (i) remaining
unpaid from prior Distribution Dates; and (iii) interest on the amount in clause
(ii) for the related Accrual Period calculated on the basis of the least of (x)
One-Month LIBOR plus the applicable Certificate Margin, (y) the Maximum Interest
Rate and (z) 11.00%.

         BOOK-ENTRY CERTIFICATES: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the

                                      -5-
<PAGE>

Depository and as described in Section 6.06). As of the Closing Date, each Class
of Publicly Offered Certificates constitutes a Class of Book-Entry Certificates.

         BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in The City of New York, New York, the
Commonwealth of Pennsylvania, the city in which the Corporate Trust Office of
the Trustee is located or the States in which the Servicer's servicing
operations are located are authorized or obligated by law or executive order to
be closed.

         CALENDAR QUARTER: January 1 to March 31, April 1 to June 30, July 1 to
September 30, or October 1 to December 31, as applicable.

         CAP CONTRACTS: Shall mean (i) the Cap Contract between the Trustee and
the counterparty named thereunder, for the benefit of the Holders of the Class
III-A-1 Certificates, and (ii) the Cap Contract between the Trustee and the
counterparty thereunder, for the benefit of the Class III-A-2 Certificates.

         CARRYFORWARD INTEREST: With respect to any Class of Publicly Offered
Certificates and any Distribution Date, the sum of (i) the amount, if any, by
which (x) the sum of (A) Current Interest for that Class of Certificates for the
immediately preceding Distribution Date and (B) any unpaid Carryforward Interest
for such Class from previous Distribution Dates exceeds (y) the actual amount
distributed on such Class in respect of interest on the immediately preceding
Distribution Date and (ii) interest on such amount for the related Accrual
Period at the applicable Pass-Through Rate.

         CERTIFICATE: Any one of the certificates of any Class executed and
authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1 through A-6.

         CERTIFICATE MARGIN: With respect to each Distribution Date on or prior
to the first possible Optional Termination Date, 0.41%, 0.39%, 0.39%, 0.46%,
0.61%, 1.20%, 1.55% and 1.90%, for the Class II-A, Class III-A-1, Class III-A-2,
Class III-A-3, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates,
respectively. With respect to each Distribution Date following the first
possible Optional Termination Date, 0.82%, 0.38%, 0.78%, 0.92%, 1.11%, 1.70%,
2.05% and 2.40% for the Class II-A, Class III-A-1, Class III-A-2, Class III-A-3,
Class M-1, Class M-2, Class M-3 and Class M-4 Certificates, respectively.

         CERTIFICATE OWNER: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.

         CERTIFICATE PRINCIPAL BALANCE: As to any Publicly Offered Certificate
or Class P Certificate and as of any Distribution Date, the Initial Certificate
Principal Balance of such Certificate less the sum of (i) all amounts
distributed with respect to such Certificate in reduction of the Certificate
Principal Balance thereof on previous Distribution Dates, (ii) with respect to
any Class III-A-3 Certificate or any Class of Subordinate Certificates, any
reductions in the Certificate Principal Balance of such Certificate deemed to
have occurred in connection with the allocations of Realized Losses, if any and
(iii) with respect to the Class III-A-3 Certificates or Subordinate
Certificates, Subsequent Recoveries added to the Certificate Principal Balance
of

                                      -6-
<PAGE>

any such Certificate pursuant to Section 5.07(f), in each case up to the amount
of Applied Loss Amounts but only to the extent that any such Applied Loss Amount
has not been paid to any Class of Certificates as a Deferred Amount. As in any
Class X Certificate and any date of determination, the excess, if any, of (i)
the Aggregate Loan Balance over (ii) the then aggregate Certificate Principal
Balance of the Publicly Offered Certificates. References herein to the
Certificate Principal Balance of a Class of Certificates shall mean the
Certificate Principal Balances of all Certificates in such Class.

         CERTIFICATE REGISTER: The register maintained pursuant to Section 6.02.

         CERTIFICATEHOLDER OR HOLDER: The person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).

         CLASS: All Certificates bearing the same Class designation as set forth
in Section 6.01.

         CLASS I-A CERTIFICATE: Any Certificate designated as a "Class I-A
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class I-A Certificates as set forth herein and evidencing a Regular Interest
in REMIC II.

         CLASS I-A PASS-THROUGH RATE: With respect to the first Distribution
Date following the Closing Date, 3.746% per annum; with respect to each
Distribution Date thereafter, a per annum rate equal to the weighted average Net
Mortgage Rate of the Group I Mortgage Loans minus 1.05% per annum.

         CLASS II-A CERTIFICATE: Any Certificate designated as a "Class II-A
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class II-A Certificates as set forth herein and evidencing a Regular
Interest in REMIC II.

         CLASS II-A PASS-THROUGH RATE: With respect to the first Distribution
Date following the Closing Date, 2.250% per annum; with respect to each
Distribution Date thereafter, a per annum rate equal to the least of (i) the sum
of One-Month LIBOR for that Distribution Date plus (A) on or prior to the first
possible Optional Termination Date, 0.41% or (B) after the first possible
Optional Termination Date, 0.82%, (ii) the applicable Net Funds Cap and (iii)
11.00%.

         CLASS III-A-1 CERTIFICATE: Any Certificate designated as a "Class
III-A-1 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class III-A-1 Certificates as set forth herein and evidencing a Regular
Interest in REMIC II.

         CLASS III-A-1 PASS-THROUGH RATE: With respect to the first Distribution
Date following the Closing Date, 2.230% per annum; with respect to each
Distribution Date thereafter, a per annum rate equal to the least of (i) the sum
of One-Month LIBOR for that Distribution Date plus (A) on or prior to the first
possible Optional Termination Date, 0.3% or (B) after the first possible
Optional Termination Date, 0.78%, (ii) the applicable Net Funds Cap and (iii)
11.00%.

                                      -7-
<PAGE>

         CLASS III-A-2 CERTIFICATE: Any Certificate designated as a "Class
III-A-2 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class III-A-2 Certificates as set forth herein and evidencing a Regular
Interest in REMIC II.

         CLASS III-A-2 PASS-THROUGH RATE: With respect to the first Distribution
Date following the Closing Date, 2.230% per annum; with respect to each
Distribution Date thereafter, a per annum rate equal to the least of (i) the sum
of One-Month LIBOR for that Distribution Date plus (A) on or prior to the first
possible Optional Termination Date, 0.39% or (B) after the first possible
Optional Termination Date, 0.78%, (ii) the applicable Net Funds Cap and (iii)
11.00%.

         CLASS III-A-3 CERTIFICATE: Any Certificate designated as a "Class
III-A-3 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class III-A-3 Certificates as set forth herein and evidencing a Regular
Interest in REMIC II.

         CLASS III-A-3 PASS-THROUGH RATE: With respect to the first Distribution
Date following the Closing Date, 2.300% per annum; with respect to each
Distribution Date thereafter, a per annum rate equal to the least of (i) the sum
of One-Month LIBOR for that Distribution Date plus (A) on or prior to the first
possible Optional Termination Date, 0.46% or (B) after the first possible
Optional Termination Date, 0.92%, (ii) the applicable Net Funds Cap and (iii)
11.00%.

         CLASS M-1 CERTIFICATE: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC II.

         CLASS M-1 PASS-THROUGH RATE: With respect to the first Distribution
Date following the Closing Date, 2.450% per annum; with respect to each
Distribution Date thereafter, a per annum rate equal to the least of (i) the sum
of One-Month LIBOR for that Distribution Date plus (A) on or prior to the first
possible Optional Termination Date, 0.61% or (B) after the first possible
Optional Termination Date, 1.11%, (ii) the applicable Net Funds Cap and (iii)
11.00%.

         CLASS M-1 PRINCIPAL PAYMENT AMOUNT: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect with respect to such Distribution Date, the amount, if any, by which (x)
the sum of (i) the Certificate Principal Balances of the Senior Certificates, in
each case, after giving effect to payments on such Distribution Date and (ii)
the Certificate Principal Balance of the Class M-1 Certificates immediately
prior to such Distribution Date exceeds (y) the lesser of (A) the product of (i)
approximately 92.00% and (ii) the Aggregate Loan Balance for such Distribution
Date and (B) the amount, if any, by which (i) the Aggregate Loan Balance for
such Distribution Date exceeds (ii) 0.50% of the Aggregate Loan Balance as of
the Cut-off Date.

         CLASS M-2 CERTIFICATE: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC II.

                                      -8-
<PAGE>

         CLASS M-2 PASS-THROUGH RATE: With respect to the first Distribution
Date following the Closing Date, 3.040% per annum; with respect to each
Distribution Date thereafter, a per annum rate equal to the least of (i) the sum
of One-Month LIBOR for that Distribution Date plus (A) on or prior to the first
possible Optional Termination Date, 1.20% or (B) after the first possible
Optional Termination Date, 1.70%, (ii) the applicable Net Funds Cap and (iii)
11.00%.

         CLASS M-2 PRINCIPAL PAYMENT AMOUNT: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect with respect to such Distribution Date, the amount, if any, by which (x)
the sum of (i) the Certificate Principal Balances of the Senior Certificates and
the Class M-1 Certificates, in each case, after giving effect to payments on
such Distribution Date and (ii) the Certificate Principal Balance of the Class
M-2 Certificates immediately prior to such Distribution Date exceeds (y) the
lesser of (A) the product of (i) approximately 94.60% and (ii) the Aggregate
Loan Balance for such Distribution Date and (B) the amount, if any, by which (i)
the Aggregate Loan Balance for such Distribution Date exceeds (ii) 0.50% of the
Aggregate Loan Balance as of the Cut-off Date.

         CLASS M-3 CERTIFICATE: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC II.

         CLASS M-3 PASS-THROUGH RATE: With respect to the first Distribution
Date following the Closing Date, 3.390% per annum; with respect to each
Distribution Date thereafter, a per annum rate equal to the least of (i) the sum
of One-Month LIBOR for that Distribution Date plus (A) on or prior to the first
possible Optional Termination Date, 1.55% or (B) after the first possible
Optional Termination Date, 2.05%, (ii) the applicable Net Funds Cap and (iii)
11.00%.

         CLASS M-3 PRINCIPAL PAYMENT AMOUNT: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect with respect to such Distribution Date, the amount, if any, by which (x)
the sum of (i) the Certificate Principal Balances of the Senior, Class M-1 and
Class M-2 Certificates, in each case, after giving effect to payments on such
Distribution Date and (ii) the Certificate Principal Balance of the Class M-3
Certificates immediately prior to such Distribution Date exceeds (y) the lesser
of (A) the product of (i) approximately 96.80% and (ii) the Aggregate Loan
Balance for such Distribution Date and (B) the amount, if any, by which (i) the
Aggregate Loan Balance for such Distribution Date exceeds (ii) 0.50% of the
Aggregate Loan Balance as of the Cut-off Date.

         CLASS M-4 CERTIFICATE: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-4 Certificates as set forth herein and evidencing a Regular Interest
in REMIC II.

         CLASS M-4 PASS-THROUGH RATE: With respect to the first Distribution
Date following the Closing Date, 3.740% per annum; with respect to each
Distribution Date thereafter, a per annum rate equal to the least of (i) the sum
of One-Month LIBOR for that Distribution Date plus (A) on or prior to the first
possible Optional Termination Date, 1.90% or (B) after the first possible
Optional Termination Date, 2.40%, (ii) the applicable Net Funds Cap and (iii)
11.00%.

                                      -9-
<PAGE>

         CLASS M-4 PRINCIPAL PAYMENT AMOUNT: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect with respect to such Distribution Date, the amount, if any, by which (x)
the sum of (i) the Certificate Principal Balances of the Senior, Class M-1,
Class M-2 and Class M-3 Certificates, in each case, after giving effect to
payments on such Distribution Date and (ii) the Certificate Principal Balance of
the Class M-4 Certificates immediately prior to such Distribution Date exceeds
(y) the lesser of (A) the product of (i) approximately 98.00% and (ii) the
Aggregate Loan Balance for such Distribution Date and (B) the amount, if any, by
which (i) the Aggregate Loan Balance for such Distribution Date exceeds (ii)
0.50% of the Aggregate Loan Balance as of the Cut-off Date.

         CLASS P CERTIFICATE: Any Certificate designated as a "Class P
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class P Certificates as set forth herein and evidencing a Regular Interest
in REMIC II.

         CLASS P CERTIFICATE ACCOUNT: The Eligible Account established and
maintained by the Trustee pursuant to Section 5.12(a).

         CLASS R CERTIFICATE: Any Certificate designated as a "Class R"
Certificate on the face thereof in the form of Exhibit A-5 hereto, representing
the right to its Percentage Interest of distributions provided for the Class R
Certificates as set forth herein and evidencing the Class R-I Interest and Class
R-II Interest.

         CLASS R-I INTEREST:  The uncertificated Residual Interest in REMIC I.

         CLASS R-II INTEREST:  The uncertificated Residual Interest in REMIC II.

         CLASS X CERTIFICATE: Any Certificate designated as a "Class X
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class X Certificates as set forth herein and evidencing a Regular Interest
in REMIC II.

         CLASS X DISTRIBUTION AMOUNT: With respect to any Distribution Date and
the Class X Certificates, the sum of (i) the Excess Cap Payment, (ii) the
Current Interest and Carryforward Interest and (iii) any Overcollateralization
Release Amount for such Distribution Date remaining after payments pursuant to
items 1 though 12 of clause 5.06(II); provided, however that on and after the
Distribution Date on which the Certificate Principal Balance of the Publicly
Offered Certificates has been reduced to zero, the Class X Distribution Amount
shall include the Overcollateralization Amount.

         CLASS X PASS-THROUGH RATE: On any Distribution Date, a per annum rate
equal to the percentage equivalent of a fraction, the numerator of which is the
sum of the amounts calculated pursuant to clauses (A) through (K) below, and the
denominator of which is the aggregate of the Uncertificated Principal Balances
of REMIC I Regular Interest LTI-AA, REMIC I Regular Interest LTI-IA, REMIC I
Regular Interest LTI-IIA, REMIC I Regular Interest LTI-IIIA1, REMIC I Regular
Interest LTI-IIIA2, REMIC I Regular Interest LTI-IIIA3, REMIC I Regular Interest
LTI-M1, REMIC I Regular Interest LTI-M2, REMIC I Regular Interest LTI-M3,

                                      -10-
<PAGE>

REMIC I Regular Interest LTI-M4 and REMIC I Regular Interest LTI-ZZ. For
purposes of calculating the Pass-Through Rate for the Class X Certificates, the
numerator is equal to the sum of the following components:

                  (A) the Uncertificated REMIC II Pass-Through Rate for REMIC I
Regular Interest LTII-AA minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC I Regular Interest LTII-AA;

                  (B) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-IA minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest LTI-IA;

                  (C) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-IIA minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC I Regular Interest LTI-IIA;

                  (D) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-IIIA1 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC I Regular Interest LTI-IIIA1;

                  (E) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-IIIA2 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC I Regular Interest LTI-IIIA2;

                  (F) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-IIIA3 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC I Regular Interest LTI-IIIA3;

                  (G) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-M1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest LTI-M1;

                  (H) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-M2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest LTI-M2;

                  (I) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-VM3 minus the Marker Rate, applied to an amount equal to
the Uncertificated Principal Balance of REMIC I Regular Interest LTI-M3;

                  (J) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-M4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest LTI-M4; and

                  (K) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-ZZ minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest LTI-ZZ.

                                      -11-
<PAGE>

         CLEANUP CALL:  As defined in Section 10.01.

         CLOSING DATE:  September 29, 2004.

         CODE: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.

         COMPENSATING INTEREST: An amount to be deposited in the Distribution
Account by the Servicer to offset a Prepayment Interest Shortfall on a Mortgage
Loan subject to this Agreement; provided, however that the amount of
Compensating Interest required to be paid in respect of any Mortgage Loan shall
not exceed the Servicing Fee payable to the Servicer.

         CORPORATE TRUST OFFICE: The designated office of the Trustee where at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
Agreement is located at 4 New York Plaza, 6th Floor, New York, New York 10004,
Attention: Institutional Trust Services/Global Debt, Nomura Asset Acceptance
Corporation, Alternative Loan Trust, Series 2004-AR2, or at such other address
as the Trustee may designate from time to time.

         CORRESPONDING CERTIFICATE: WITH RESPECT TO:

                  (i)      REMIC I Regular Interest LTI-IA, the Class I-A
                           Certificates,
                  (ii)     REMIC I Regular Interest LTI-IIA, the Class II-A
                           Certificates;
                  (iii)    REMIC I Regular Interest LTI-IIIA1, the Class III-A-1
                           Certificates;
                  (iv)     REMIC I Regular Interest LTI-IIIA2, the Class III-A-2
                           Certificates;
                  (v)      REMIC I Regular Interest LTI-IIIA3, the Class III-A-3
                           Certificates;
                  (vi)     REMIC I Regular Interest LTI-M1, the Class M-1
                           Certificates;
                  (vii)    REMIC I Regular Interest LT-M2, the Class M-2
                           Certificates;
                  (viii)   REMIC I Regular Interest LTI-M3, the Class M -3
                           Certificates;
                  (ix)     REMIC I Regular Interest LTI-M4, the Class M -4
                           Certificates; and
                  (x)      REMIC I Regular Interest LTI-P, the Class P
                           Certificates.

         CURRENT INTEREST: With respect to any Class of Publicly Offered
Certificates and any Distribution Date, the amount of interest accruing at the
applicable Pass-Through Rate on the related Certificate Principal Balance during
the related Accrual Period; provided, that as to each Class of Publicly Offered
Certificates the Current Interest will be reduced by a pro rata portion of any
Net Interest Shortfalls to the extent not covered by excess interest. No Current
Interest will be payable with respect to any Class of Publicly Offered
Certificates after the Distribution Date on which the outstanding Certificate
Principal Balance of such Certificate has been reduced to zero.

         CUSTODIAL ACCOUNT: The account established and maintained by the
Servicer with respect to receipts on the Mortgage Loans and related REO
Properties in accordance with Section 4.01.

         CUSTODIAN: JPMorgan Chase Bank, a New York banking corporation.

         CUT-OFF DATE:  September 1, 2004.

                                      -12-
<PAGE>

         CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-off Date after
application of all Principal Prepayments received prior to the Cut-off Date and
scheduled payments of principal due on or before the Cut-off Date, whether or
not received, but without giving effect to any installments of principal
received in respect of Due Dates after the Cut-off Date.

         DEBT SERVICE REDUCTION: Means a reduction in the amount of the monthly
payment due on a Mortgage Loan as established by a bankruptcy court in a
bankruptcy of the related Mortgagor, except a reduction constituting a Deficient
Valuation or any reduction that results in permanent forgiveness of principal.

         DEFERRED AMOUNT: With respect to the Class III-A-3 Certificates or any
Class of Subordinate Certificates and any Distribution Date, the amount by which
(x) the aggregate of the Applied Loss Amounts previously applied in reduction of
the Certificate Principal Balance thereof exceeds (y) the aggregate of amounts
previously paid in reimbursement thereof and the amount by which the Certificate
Principal Balance of any such Class has been increased due to the collection of
Subsequent Recoveries.

         DEFICIENT VALUATION: Means the difference between the Stated Principal
Balance of a Mortgage Loan and a reduced secured debt as a result of a
bankruptcy court establishing the value of the Mortgaged Property at an amount
less than the then Stated Principal Balance of the Mortgage Loan in connection
with a bankruptcy of the related Mortgagor.

         DEFINITIVE CERTIFICATES: As defined in Section 6.06.

         DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

         DELINQUENCY RATE: With respect to the Mortgage Loans and any calendar
month will be, generally, the fraction, expressed as a percentage, the numerator
of which is the Aggregate Loan Balance of all Mortgage Loans 60 or more days
delinquent (including all foreclosures and REO Properties) as of the close of
business on the last day of such month, and the denominator of which is the
Aggregate Loan Balance as of the close of business on the last day of such
month.

         DELINQUENT: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of business
on the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.

         DENOMINATION: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate".

         DEPOSITOR: Nomura Asset Acceptance Corporation, a Delaware corporation,
or its successor in interest.

                                      -13-
<PAGE>

         DEPOSITORY: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.

         DEPOSITORY AGREEMENT: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of Exhibit
I.

         DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.

         DETERMINATION DATE: With respect to any Distribution Date, the 15th day
of the month of such Distribution Date or, if such 15th day is not a Business
Day, the immediately preceding Business Day.

         DISTRIBUTION ACCOUNT: Each trust account or accounts related to the
Mortgage Loans created and maintained by the Trustee pursuant to Section 4.06 in
the name of the Trustee for the benefit of the Certificateholders and designated
"JPMorgan Chase Bank, in trust for registered holders of Nomura Asset Acceptance
Corporation, Mortgage Pass-Through Certificates, Series 2004-AR2". Funds in the
Distribution Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement. The Distribution Account shall be
an Eligible Account.

         DISTRIBUTION DATE: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in October 2004.

         DUE DATE: As to any Mortgage Loan, the date in each month on which the
related Scheduled Payment is due, as set forth in the related Mortgage Note.

         DUE PERIOD: With respect to any Distribution Date, the period from the
second day of the calendar month preceding the calendar month in which such
Distribution Date occurs through close of business on the first day of the
calendar month in which such Distribution Date occurs.

         ELIGIBLE ACCOUNT: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which are rated by each Rating Agency in one of its two highest long-term and
its highest short-term rating categories respectively, at the time any amounts
are held on deposit therein, or (ii) an account or accounts in a depository
institution or trust company in which such accounts are insured by the FDIC (to
the limits established by the FDIC) and the uninsured deposits in which accounts
are otherwise secured such that, as evidenced by an Opinion of Counsel delivered
to the Trustee and to each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account or a perfected first

                                      -14-
<PAGE>

priority security interest against any collateral (which shall be limited to
Permitted Investments) securing such funds that is superior to claims of any
other depositors or creditors of the depository institution or trust company in
which such account is maintained, or (iii) a segregated, non-interest bearing
trust account or accounts maintained with the corporate 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 or (iv) any other account acceptable to the Rating Agencies as
evidenced in writing by the Rating Agencies. Eligible Accounts may bear
interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.

         ESCROW ACCOUNT: Shall mean the accounts maintained by the Servicer
pursuant to Section 4.04. Each Escrow Account shall be an Eligible Account.

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

         ERISA RESTRICTED CERTIFICATE: Each of the Class X, Class P and Residual
Certificates.

         EXCESS CAP PAYMENT: The excess, if any, of (1) the cap payments made by
the counterparty under the Cap Contracts with respect to the Class III-A-1
Certificates or Class III-A-2 Certificates over (2) the product of: (a) the
excess, if any, of One-Month LIBOR over a specified strike rate for the related
Distribution Date (provided, however, that if One-Month LIBOR exceeds 8.61% with
respect to the Class III-A-1 Certificates or 9.61% with respect to the Class
III-A-2 Certificates, the payment due will be calculated as if One-Month LIBOR
were 8.61% or 9.61%, as applicable); and (b) the Certificate Principal Balance
of the related Class of Certificates for such Distribution Date.

         EXCESS LIQUIDATION PROCEEDS: To the extent not required by law to be
paid to the related Mortgagor, the excess, if any, of any Liquidation Proceeds
with respect to a Mortgage Loan over the Stated Principal Balance of such
Mortgage Loan and accrued and unpaid interest at the related Mortgage Rate
through the last day of the month in which the Mortgage Loan has been
liquidated.

         EXEMPTION: Prohibited Transaction Exemption 93-32, as amended from time
to time.

         FANNIE MAE: Fannie Mae (formerly, Federal National Mortgage
Association), or any successor thereto.

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

         FINAL CERTIFICATION: The certification of the Custodian in the form
attached hereto as Exhibit C-3.

         FINAL RECOVERY DETERMINATION: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller or the Depositor pursuant to or as contemplated by Section 2.03(c)
or Section 10.01), a determination made by the Servicer pursuant to this
Agreement that all Insurance Proceeds, Liquidation Proceeds and other payments
or recoveries which the Servicer, in its reasonable good faith judgment, expects
to be finally recoverable in respect thereof have been so recovered. The Trustee
shall maintain records,

                                      -15-
<PAGE>

based solely on information provided by the Servicer, of
each Final Recovery Determination made thereby.

         FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989, as amended.

         FREDDIE MAC: Federal Home Loan Mortgage Corporation, or any successor
thereto.

         GROSS MARGIN: With respect to each Mortgage Loan, the fixed percentage
set forth in the related Mortgage Note that is added to the Index on each
Adjustment Date in accordance with the terms of the related Mortgage Note used
to determine the Mortgage Rate for such Mortgage Loan.

         GROUP I CERTIFICATES: The Class I-A Certificates.

         GROUP I ALLOCATION AMOUNT: With respect to any Distribution Date, the
product of the Senior Principal Payment Amount for that distribution date and a
fraction the numerator of which is the Principal Remittance Amount derived from
the Group I Mortgage Loans and the denominator of which is the Principal
Remittance Amount, in each case for that Distribution Date.

         GROUP I EXCESS INTEREST AMOUNT: With respect to any Distribution Date,
the product of the Monthly Excess Interest required to be distributed on that
Distribution Date pursuant to Section 5.06(iii)(1)(A) and a fraction the
numerator of which is the Principal Remittance Amount derived from the Group I
Mortgage Loans and the denominator of which is Principal Remittance Amount, in
each case for that Distribution Date.

         GROUP I MORTGAGE LOANS: Those Mortgage Loans identified on the Mortgage
Loan Schedule as Group I Mortgage Loans.

         GROUP II CERTIFICATES: The Class II-A Certificates.

         GROUP II ALLOCATION AMOUNT: With respect to any Distribution Date, the
product of the Senior Principal Payment Amount for that distribution date and a
fraction the numerator of which is the Principal Remittance Amount derived from
the Group II Mortgage Loans and the denominator of which is the Principal
Remittance Amount, in each case for that Distribution Date.

         GROUP II EXCESS INTEREST AMOUNT: With respect to any Distribution Date,
the product of the Monthly Excess Interest required to be distributed on that
Distribution Date pursuant to Section 5.06(iii)(1)(A) and a fraction the
numerator of which is the Principal Remittance Amount derived from the Group II
Mortgage Loans and the denominator of which is Principal Remittance Amount, in
each case for that Distribution Date.

         GROUP II MORTGAGE LOANS: Those Mortgage Loans identified on the
Mortgage Loan Schedule as Group II Mortgage Loans.

         GROUP III CERTIFICATES: The Class III-A-1, Class III-A-2 and Class
III-A-3 Certificates.

                                      -16-
<PAGE>

         GROUP III ALLOCATION AMOUNT: With respect to any Distribution Date, the
product of the Senior Principal Payment Amount for that distribution date and a
fraction the numerator of which is the Principal Remittance Amount derived from
the Group III Mortgage Loans and the denominator of which is the Principal
Remittance Amount, in each case for that Distribution Date.

         GROUP III EXCESS INTEREST AMOUNT: With respect to any Distribution
Date, the product of the Monthly Excess Interest required to be distributed on
that Distribution Date pursuant to Section 5.06(iii)(1)(A) and a fraction the
numerator of which is the Principal Remittance Amount derived from the Group III
Mortgage Loans and the denominator of which is Principal Remittance Amount, in
each case for that Distribution Date.

         GROUP III MORTGAGE LOANS: Those Mortgage Loans identified on the
Mortgage Loan Schedule as Group III Mortgage Loans.

         INDEMNIFIED PERSONS: The Trustee, the Servicer (including any successor
to the Servicer), the Custodian, the Trust Fund and their officers, directors,
agents and employees and, with respect to the Trustee, any separate co-trustee
and its officers, directors, agents and employees.

         INDEX: As of any Adjustment Date, the index applicable to the
determination of the Mortgage Rate on each Mortgage Loan which will generally be
based on Six-Month LIBOR or One-Year LIBOR.

         INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date.

         INITIAL CERTIFICATION: The certification of the Custodian in the form
attached hereto as Exhibit C-1.

         INSURANCE POLICY: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any Insurance Policies.

         INSURANCE PROCEEDS: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the servicing standard set forth in Section 3.01
other than any amount included in such Insurance Proceeds in respect of Insured
Expenses.

         INSURED EXPENSES: Expenses covered by any Insurance Policy with respect
to the Mortgage Loans.

         INTEREST DETERMINATION DATE: Shall mean the second LIBOR Business Day
preceding the commencement of each Accrual Period.

         INTEREST REMITTANCE AMOUNT: With respect to any Distribution Date, (i)
the sum, without duplication, of (a) all scheduled interest during the related
Due Period with respect to the

                                      -17-
<PAGE>

Mortgage Loans less the Servicing Fee and the fee payable to any provider of
lender-paid mortgage insurance, if any, (b) all Advances relating to interest
with respect to the Mortgage Loans made on or prior to the related Remittance
Date, (c) all Compensating Interest with respect to the Mortgage Loans and
required to be remitted by the Servicer pursuant to this Agreement with respect
to such Distribution Date, (d) Liquidation Proceeds and Subsequent Recoveries
with respect to the Mortgage Loans collected during the related Prepayment
Period (to the extent such Liquidation Proceeds and Subsequent Recoveries relate
to interest), (e) all amounts relating to interest with respect to each Mortgage
Loan repurchased by the Seller pursuant to Sections 2.02 and 2.03 and (f) all
amounts in respect of interest paid by the Depositor pursuant to Section 10.01
to the extent remitted by the Servicer to the Distribution Account pursuant to
this Agreement, minus (ii) all amounts relating to interest required to be
reimbursed pursuant to Sections 4.02, 4.04, 4.06, 4.07 and 9.05 or as otherwise
set forth in this Agreement.

         INTEREST SHORTFALL: With respect to any Distribution Date, the
aggregate shortfall, if any, in collections of interest (adjusted to the related
Net Mortgage Rates) on Mortgage Loans resulting from (a) Principal Prepayments
in full received during the related Prepayment Period, (b) partial Principal
Prepayments received during the related Prepayment Period to the extent applied
prior to the Due Date in the month of the Distribution Date and (c) interest
payments on certain of the Mortgage Loans being limited pursuant to the
provisions of the Relief Act.

         INTERIM CERTIFICATION: The certification of the Custodian in the form
attached hereto as Exhibit C-3.

         LAST SCHEDULED DISTRIBUTION DATE: The Distribution Date in October
2034.

         LATEST POSSIBLE MATURITY DATE: The Distribution Date following the
final scheduled maturity date of the Mortgage Loan in the Trust Fund having the
latest scheduled maturity date as of the Cut-off Date. For purposes of the
Treasury Regulations under Code section 860A through 860G, the latest possible
maturity date of each regular interest issued by REMIC I and REMIC II shall be
the Latest Possible Maturity Date.

         LIBOR BUSINESS DAY: Shall mean a day on which banks are open for
dealing in foreign currency and exchange in London.

         LIBOR DETERMINATION DATE: The second LIBOR Business Day before the
first day of the related Accrual Period.

         LIQUIDATED LOAN: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Servicer has certified in the related Prepayment
Period that it has received all amounts it expects to receive in connection with
such liquidation.

         LIQUIDATION PROCEEDS: Amounts, other than Insurance Proceeds, received
in connection with the partial or complete liquidation of a Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise, or in connection
with any condemnation or partial release of a

                                      -18-
<PAGE>

Mortgaged Property and any other proceeds received with respect to an REO
Property, less the sum of related unreimbursed Advances, Servicing Fees and
Servicing Advances and all expenses of liquidation, including property
protection expenses and foreclosure and sale costs, including court and
reasonable attorneys fees.

         LOAN GROUP: Any of Loan Group I, Loan Group II or Loan Group III. "Loan
Group I" refers to the Group I Mortgage Loans, "Loan Group II" refers to the
Group II Mortgage Loans, and so on.

         LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the Mortgage Loan and
the denominator of which is the Appraised Value of the related Mortgaged
Property.

         MAJORITY CLASS X CERTIFICATEHOLDER: The Holder of a 50.01% or greater
Percentage Interest in the Class X Certificates.

         MARKER RATE: With respect to the Offered Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the Uncertificated REMIC I Pass-Through Rates for REMIC I Regular Interest
LTI-IA, REMIC I Regular Interest LTI-IIA, REMIC I Regular Interest LTI-IIIA,
REMIC I Regular Interest LTI-IIIA2, REMIC I Regular Interest LTI-IIIA3, REMIC I
Regular Interest LTI-M1, REMIC I Regular Interest LTI-M2, REMIC I Regular
Interest LTI-M3, REMIC I Regular Interest LTI-M4 and REMIC I Regular Interest
LTI-ZZ, with the per annum rate on REMIC I Regular Interest LTI-IA subject to a
cap equal to the excess of (i) the weighted average Net Mortgage Rate of the
Group I Mortgage Loans over (ii) 1.05% for the purpose of this calculation, with
the per annum rate on REMIC I Regular Interest LTI-IIA subject to a cap equal to
the least of (x) One-Month LIBOR plus the Certificate Margin for the
Corresponding Certificate, (y) the applicable Net Funds Cap and (z) 11.00% for
the purpose of this calculation; with the per annum rate on REMIC I Regular
Interest LTI-IIIA1 subject to a cap equal to the least of (x) One-Month LIBOR
plus the Certificate Margin for the Corresponding Certificate, (y) the
applicable Net Funds Cap and (z) 11.00% for the purpose of this calculation;
with the per annum rate on REMIC I Regular Interest LTI-IIIA2 subject to a cap
equal to the least of (x) One-Month LIBOR plus the Certificate Margin for the
Corresponding Certificate, (y) the applicable Net Funds Cap and (z) 11.00% for
the purpose of this calculation; with the per annum rate on REMIC I Regular
Interest LTI-IIIA3 subject to a cap equal to the least of (x) One-Month LIBOR
plus the Certificate Margin for the Corresponding Certificate, (y) the
applicable Net Funds Cap and (z) 11.00% for the purpose of this calculation;
with the per annum rate on REMIC I Regular Interest LTI-M1 subject to a cap
equal to the least of (x) One-Month LIBOR plus the Certificate Margin for the
Corresponding Certificate, (y) the applicable Net Funds Cap and (z) 11.00% for
the purpose of this calculation; with the rate on REMIC I Regular Interest
LTI-M2 subject to a cap equal to the least of (x) One-Month LIBOR plus the
Certificate Margin for the Corresponding Certificate, (y) the applicable Net
Funds Cap and (z) 11.00% for the purpose of this calculation; with the per annum
rate on REMIC I Regular Interest LTI-M3 subject to a cap equal to the least of
(x) One-Month LIBOR plus the Certificate Margin for the Corresponding
Certificate, (y) the applicable Net Funds Cap and (z) 11.00% for the purpose of
this calculation; with the per annum rate on REMIC I Regular Interest LTI-M4
subject to a cap equal to the least of (x) One-Month LIBOR plus the Certificate
Margin for the Corresponding Certificate, (y) the applicable Net Funds Cap and
(z) 11.00% for the purpose of

                                      -19-
<PAGE>

this calculation; and with the per annum rate on REMIC I Regular Interest LTI-ZZ
subject to a cap of zero for the purpose of this calculation; provided, however,
that for this purpose, the calculation of the Uncertificated REMIC I
Pass-Through Rate and the related cap with respect to each such REMIC I Regular
Interest (other than REMIC I Regular Interest LTI-1A and REMIC I Regular
Interest LTI-ZZ) shall be multiplied by a fraction, the numerator of which is
the actual number of days in the Accrual Period and the denominator of which is
30.

         MAXIMUM INTEREST RATE: With respect to any Distribution Date and the
related Accrual Period and the Group II Certificates and Group III Certificates,
an annual rate equal to the weighted average of the Maximum Mortgage Interest
Rates of the Mortgage Loans in the related Loan Group minus the weighted average
expense rate of the Mortgage Loans in the related Loan Group. With respect to
any Distribution Date and the Subordinate Certificates, an annual rate equal to
the weighted average of the Maximum Mortgage Interest Rates of the Mortgage
Loans minus the weighted average expense fee rate of the Mortgage Loans.

         MAXIMUM MORTGAGE INTEREST RATE: With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the maximum Mortgage Rate
thereunder.

         MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.

         MERS(R) SYSTEM: The system of recording transfers of Mortgages
electronically maintained by MERS.

         MIN: The Mortgage Identification Number for Mortgage Loans registered
with MERS on the MERS(R) System.

         MINIMUM MORTGAGE INTEREST RATE: With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the minimum Mortgage Rate
thereunder.

         MOM LOAN: Any Mortgage Loan as to which MERS is acting as the mortgagee
of such Mortgage Loan, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns, at the origination thereof.

         MONTHLY EXCESS CASHFLOW: With respect to any Distribution Date, means
the sum of (a) the Monthly Excess Interest, (b) the Overcollateralization
Release Amount, if any, for such Distribution Date, and (c) the Principal
Remittance Amount remaining following payments of the Principal Payment Amount
to the Senior Certificates and Subordinate Certificates.

         MONTHLY EXCESS INTEREST: With respect to any Distribution Date, the
excess of (x) the Interest Remittance Amount for such Distribution Date over (y)
the sum of Current Interest and Carryforward Interest on the Senior Certificates
and Subordinate Certificates for such Distribution Date.

         MONTHLY STATEMENT: The statement delivered to the Certificateholders
pursuant to Section 5.08.

         MOODY'S: Moody's Investors Service, Inc. or its successor in interest.

                                      -20-
<PAGE>

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

         MORTGAGE FILE: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents delivered to the
Trustee to be added to the Mortgage File pursuant to this Agreement.

         MORTGAGE LOANS: Such of the Mortgage Loans transferred and assigned to
the Trustee pursuant to the provisions hereof, as from time to time are held as
a part of the Trust Fund (including any REO Property), the mortgage loans so
held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property.

         MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of September 29, 2004, between the Seller, as seller and the Depositor,
as purchaser.

         MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans (as from time to
time amended by the Servicer to reflect the deletion of Deleted Mortgage Loans
and the addition of Replacement Mortgage Loans pursuant to the provisions of
this Agreement) transferred to the Trustee as part of the Trust Fund and from
time to time subject to this Agreement, the initial Mortgage Loan Schedule being
attached hereto as Exhibit B-1, setting forth the following information with
respect to each Mortgage Loan:

                  (i)      the loan number;

                  (ii)     the Mortgage Rate in effect as of the Cut-off Date;

                  (iii)    the Servicing Fee Rate;

                  (iv)     the Net Mortgage Rate in effect as of the Cut-off
                           Date;

                  (v)      the maturity date;

                  (vi)     the original principal balance;

                  (vii)    the Cut-off Date Principal Balance;

                  (viii)   the original term;

                  (ix)     the remaining term;

                  (x)      the property type;

                  (xi)     with respect to each MOM Loan, the related MIN;

                  (xii)    the Servicer;

                                      -21-
<PAGE>

                  (xiii)   a code indicating whether the Mortgage Loan is
                           subject to a Prepayment Charge, the term of such
                           Prepayment Charge and the amount of such Prepayment
                           Charge;

                  (xiv)    the first Adjustment Date;

                  (xv)     the Gross Margin;

                  (xvi)    the Maximum Mortgage Interest Rate under the terms of
                           the Mortgage Note;

                  (xvii)   the Minimum Mortgage Interest Rate under the terms of
                           the Mortgage Note;

                  (xviii)  the Periodic Rate Cap;

                  (xix)    the first Adjustment Date immediately following the
                           Cut-off Date;

                  (xx)     the Index; and

                  (xxi)    the related Loan Group.

Such schedule shall also set forth the aggregate Cut-off Date Principal Balance
for all of the Mortgage Loans.

         MORTGAGE NOTE: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.

         MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note
which rate (A) as of any date of determination until the first Adjustment Date
following the Cut-off Date shall be the rate set forth in the Loan Schedule as
the Mortgage Rate in effect immediately following the Cut-off Date and (B) as of
any date of determination thereafter shall be the rate as adjusted on the most
recent Adjustment Date equal to the sum, rounded to the nearest 0.125% as
provided in the Mortgage Note, of the Index, as most recently available as of a
date prior to the Adjustment Date as set forth in the related Mortgage Note,
plus the related Gross Margin; provided that the Mortgage Rate on such Mortgage
Loan on any Adjustment Date shall never be more than the lesser of (i) the sum
of the Mortgage Rate in effect immediately prior to the Adjustment Date plus the
related Periodic Rate Cap, if any, and (ii) the related Maximum Mortgage
Interest Rate, and shall never be less than the greater of (i) the Mortgage Rate
in effect immediately prior to the Adjustment Date less the Periodic Rate Cap,
if any, and (ii) the related Minimum Mortgage Interest Rate. With respect to
each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.

         MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan.

                                      -22-
<PAGE>

         MORTGAGOR: The obligors on a Mortgage Note.

         NET FUNDS CAP: With respect to any Distribution Date and the Group II
Certificates, (a) a fraction expressed as a percentage, the numerator of which
is the product of (1) the related Optimal Interest Remittance Amount and (2) 12,
and the denominator of which is the Aggregate Loan Group Balance for Loan Group
II for the immediately preceding Distribution Date, multiplied by (b) a
fraction, expressed as a percentage, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the immediately
preceding Accrual Period. For federal income tax purposes, the equivalent of the
foregoing shall be expressed as the weighted average of the Uncertificated REMIC
I Pass-Through Rate on REMIC I Regular Interest LTI-2GRP, weighted on the basis
of the Uncertificated Principal Balance of such REMIC I Regular Interest. With
respect to any Distribution Date and the Group III Certificates, (a) a fraction
expressed as a percentage, the numerator of which is the product of (1) the
related Optimal Interest Remittance Amount and (2) 12, and the denominator of
which is the Aggregate Loan Group Balance for Loan Group III for the immediately
preceding distribution date, multiplied by (b) a fraction, expressed as a
percentage, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the immediately preceding Accrual Period. For
federal income tax purposes, the equivalent of the foregoing shall be expressed
as the weighted average of the Uncertificated REMIC I Pass-Through Rate on REMIC
I Regular Interest LTI-3GRP, weighted on the basis of the Uncertificated
Principal Balance of such REMIC I Regular Interest. With respect to any
Distribution Date and the Subordinate Certificates, (a) a fraction expressed as
a percentage, the numerator of which is the product of (1) the related Optimal
Interest Remittance Amount and (2) 12, and the denominator of which is the
Aggregate Loan Group Balance of Loan Group I, Loan Group II and Loan Group III
for the immediately preceding Distribution Date, weighted, in each case, on the
basis of the Aggregate Loan Group Balance of Loan Group I, Loan Group II and
Loan Group III less the Certificate Principal Balance of the related Senior
Certificates, multiplied by (b) a fraction, expressed as a percentage, the
numerator of which is 30 and the denominator of which is the actual number of
days elapsed in the immediately preceding Accrual Period. For federal income tax
purposes, the equivalent of the foregoing shall be expressed as the weighted
average of the Uncertificated REMIC I Pass-Through Rates on REMIC I Regular
Interest LTI-1SUB, REMIC I Regular Interest LTI-2SUB and REMIC I Regular
Interest LTI-3SUB, in each case subject to a cap and a floor equal to the
weighted average Net Mortgage Rate of the Group I Mortgage Loans, Group II
Mortgage Loans and the Group III Mortgage Loans, respectively, weighted in each
case on the basis of the Uncertificated Principal Balance of each such REMIC I
Regular Interest.

         NET INTEREST SHORTFALLS means Interest Shortfalls net of payments by
the Servicer in respect of Compensating Interest.

         NET MORTGAGE RATE: As to each Mortgage Loan, and at any time, the per
annum rate equal to the related Mortgage Rate less the sum of (i) the Servicing
Fee Rate and (ii) the rate at which the fee payable to any provider of
lender-paid mortgage insurance is calculated, if applicable.

         NON-BOOK-ENTRY CERTIFICATE: Any Certificate other than a Book-Entry
Certificate.

         NONRECOVERABLE ADVANCE: Any portion of an Advance or Servicing Advance
previously made or proposed to be made by the Servicer pursuant to this
Agreement or the Trustee as

                                      -23-
<PAGE>

Successor Servicer, that, in the good faith judgment of the Servicer or the
Trustee as Successor Servicer, will not or, in the case of a proposed Advance or
Servicing Advance, would not, be ultimately recoverable by it from the related
Mortgagor, related Liquidation Proceeds, Insurance Proceeds or otherwise.

         OFFICER'S CERTIFICATE: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor or the
Trustee (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (ii), if provided for
in this Agreement, signed by a Authorized Servicer Representative, as the case
may be, and delivered to the Depositor, the Seller and/or the Trustee, as the
case may be, as required by this Agreement.

         ONE-MONTH LIBOR: With respect to any Accrual Period (other than the
first Accrual Period), the rate determined by the Trustee on the related
Interest Determination Date on the basis of the rate for U.S. dollar deposits
for one month that appears on Telerate Screen Page 3750 as of 11:00 a.m. (London
time) on such Interest Determination Date. If such rate does not appear on such
page (or such other page as may replace that page on that service, or if such
service is no longer offered, such other service for displaying One-Month LIBOR
or comparable rates as may be reasonably selected by the Trustee), One-Month
LIBOR for the applicable Accrual Period will be the Reference Bank Rate. If no
such quotations can be obtained by the Trustee and no Reference Bank Rate is
available, One-Month LIBOR will be One-Month LIBOR applicable to the preceding
Accrual Period. The establishment of One-Month LIBOR on each Interest
Determination Date by the Trustee and the Trustee's calculation of the rate of
interest applicable to the Publicly Offered Certificates (other than the Class
I-A Certificates) for the related Accrual Period shall, in the absence of
manifest error, be final and binding. With respect to the first Accrual Period,
One-Month LIBOR shall equal 1.84% per annum.

         OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
for the Seller, the Depositor or the Servicer, reasonably acceptable to each
addressee of such opinion; provided that with respect to Section 2.05, 7.05 or
11.01, or the interpretation or application of the REMIC Provisions, such
counsel must (i) in fact be independent of the Seller, Depositor and the
Servicer, (ii) not have any direct financial interest in the Seller, Depositor
or the Servicer or in any affiliate of either, and (iii) not be connected with
the Seller, Depositor or the Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.

         OPTIMAL INTEREST REMITTANCE AMOUNT: With respect to any Distribution
Date will be equal to the excess of (i) the product of (1) (x) the weighted
average Net Mortgage Rates of the Mortgage Loans as of the first day of the
related Due Period minus, with respect in Loan Group I, 1.05% divided by (y) 12
and (2) the Aggregate Loan Balance for the immediately preceding Distribution
Date, over (ii) any expenses that reduce the Interest Remittance Amount that did
not arise as a result of a default or delinquency of the applicable Mortgage
Loans or were not taken into account in computing the expense fee rate.

                                      -24-
<PAGE>

         OPTIONAL TERMINATION: The termination of the Trust Fund as a result of
the purchase of all of the Mortgage Loans and any related REO Property pursuant
to the last paragraph of Section 10.01.

         OPTIONAL TERMINATION DATE: The first Distribution Date on which the
Depositor may purchase, at its option, the Mortgage Loans and related REO
Properties as described in Section 10.01.

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

         OUTSTANDING: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:

                  (a) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and

                  (b) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.

         OUTSTANDING MORTGAGE LOAN: As of any date of determination, a Mortgage
Loan with a Stated Principal Balance greater than zero that was not the subject
of a Principal Prepayment in full, and that did not become a Liquidated Loan,
prior to the end of the related Prepayment Period.

         OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution Date,
the excess, if any, of (a) the Aggregate Loan Balance for such Distribution Date
over (b) the aggregate Certificate Principal Balance of the Publicly Offered
Certificates on such Distribution Date (after taking into account the payment of
100% of the Principal Remittance Amount on such Distribution Date).

         OVERCOLLATERALIZATION DEFICIENCY AMOUNT: With respect to any
Distribution Date, the amount, if any, by which (x) the Targeted
Overcollateralization Amount for such Distribution Date exceeds (y) the
Overcollateralization Amount for such Distribution Date, calculated for this
purpose after giving effect to the reduction on such Distribution Date of the
aggregate Certificate Principal Balance of the Publicly Offered Certificates
resulting from the payment of the Principal Payment Amount on such Distribution
Date, but prior to allocation of any Applied Loss Amount on such Distribution
Date.

         OVERCOLLATERALIZATION RELEASE AMOUNT: With respect to any Distribution
Date, the lesser of (x) the Principal Remittance Amount for such Distribution
Date and (y) the amount, if any, by which (1) the Overcollateralization Amount
for such date, calculated for this purpose on the basis of the assumption that
100% of the aggregate of the Principal Remittance Amount for such date is
applied on such date in reduction of the aggregate of the Certificate Principal
Balances of the Publicly Offered Certificates, exceeds (2) the Targeted
Overcollateralization Amount for such Distribution Date.

         OWNERSHIP INTEREST: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.

                                      -25-
<PAGE>

         PASS-THROUGH RATE: The Class I-A, Class II-A, Class III-A-1, Class
III-A-2, Class III-A-3, Class M-1, Class M-2, Class M-3, Class M-4 and Class X
Pass-Through Rate, as applicable.

         PAYAHEAD: Any Scheduled Payment intended by the related Mortgagor to be
applied in a Due Period subsequent to the Due Period in which such payment was
received.

         PERCENTAGE INTEREST: With respect to any Certificate of a specified
Class, the Percentage Interest set forth on the face thereof or the percentage
obtained by dividing the Denomination of such Certificate by the aggregate of
the Denominations of all Certificates of such Class.

         PERIODIC RATE CAP: With respect the Adjustment Date for an Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note, which is the
maximum amount by which the Mortgage Rate for such Mortgage Loan may increase or
decrease (without regard to the Maximum Mortgage Interest Rate or the Minimum
Mortgage Interest Rate) on such Adjustment Date from the Mortgage Rate in effect
immediately prior to such Adjustment Date.

         PERMITTED INVESTMENTS: At any time, any one or more of the following
obligations and securities:

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

                  (ii) (ii) general obligations of or obligations guaranteed by
         any state of the United States or the District of Columbia receiving
         the highest long-term debt rating of each Rating Agency, or such lower
         rating as will not result in the downgrading or withdrawal of the
         ratings then assigned to the Certificates by each Rating Agency, as
         evidenced by a signed writing delivered by each Rating Agency;

                  (iii) (iii) [Reserved];

                  (iv) (iv) commercial or finance company paper which is then
         receiving the highest commercial or finance company paper rating of
         each Rating Agency, or such lower rating as will not result in the
         downgrading or withdrawal of the ratings then assigned to the
         Certificates by each Rating Agency, as evidenced by a signed writing
         delivered by each Rating Agency;

                  (v) (v) certificates of deposit, demand or time deposits, or
         bankers' acceptances issued by any depository institution or trust
         company incorporated under the laws of the United States or of any
         state thereof and subject to supervision and examination by federal
         and/or state banking authorities (including the Trustee in its
         commercial banking capacity), provided that the commercial paper and/or
         long term unsecured debt obligations of such depository institution or
         trust company are then rated one of the two highest long-term and the
         highest short-term ratings of each such Rating Agency for such
         securities, or such lower ratings as will not result in the downgrading
         or withdrawal of the rating then assigned to the Certificates by any
         Rating Agency, as evidenced by a signed writing delivered by each
         Rating Agency;

                                      -26-
<PAGE>

                  (vi) (vi) demand or time deposits or certificates of deposit
         issued by any bank or trust company or savings institution to the
         extent that such deposits are fully insured by the FDIC;

                  (vii) (vii) guaranteed reinvestment agreements issued by any
         bank, insurance company or other corporation containing, at the time of
         the issuance of such agreements, such terms and conditions as will not
         result in the downgrading or withdrawal of the rating then assigned to
         the Certificates by any such Rating Agency, as evidenced by a signed
         writing delivered by each Rating Agency;

                  (viii) (viii) repurchase obligations with respect to any
         security described in clauses (i) and (ii) above, in either case
         entered into with a depository institution or trust company (acting as
         principal) described in clause (v) above;

                  (ix) (ix) securities (other than stripped bonds, stripped
         coupons or instruments sold at a purchase price in excess of 115% of
         the face amount thereof) bearing interest or sold at a discount issued
         by any corporation incorporated under the laws of the United States or
         any state thereof which, at the time of such investment, have one of
         the two highest long term ratings of each Rating Agency, or such lower
         rating as will not result in the downgrading or withdrawal of the
         rating then assigned to the Certificates by any Rating Agency, as
         evidenced by a signed writing delivered by each Rating Agency;

                  (x) (x) units of money market funds registered under the
         Investment Company Act of 1940 including funds managed or advised by
         the Trustee or an affiliate thereof having a rating by S&P of AAAm-G,
         AAA-m, or AA-m, and if rated by Moody's, rated Aaa, Aa1 or Aa2;

                  (xi) (xi) short term investment funds sponsored by any trust
         company or banking association incorporated under the laws of the
         United States or any state thereof (including any such fund managed or
         advised by the Trustee or any affiliate thereof) which on the date of
         acquisition has been rated by each Rating Agency in their respective
         highest applicable rating category or such lower rating as will not
         result in the downgrading or withdrawal of the ratings then assigned to
         the Certificates by each Rating Agency, as evidenced by a signed
         writing delivered by each Rating Agency; and

                  (xii) (xii) such other investments having a specified stated
         maturity and bearing interest or sold at a discount acceptable to each
         Rating Agency as will not result in the downgrading or withdrawal of
         the rating then assigned to the Certificates by any Rating Agency, as
         evidenced by a signed writing delivered by each Rating Agency, as
         evidenced by a signed writing delivered by each Rating Agency;

provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.

                                      -27-
<PAGE>

         PERMITTED TRANSFEREE: Any person other than (i) the United States, any
State or political subdivision thereof, any possession of the United States or
any agency or instrumentality of any of the foregoing, (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 section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by section 511 of
the Code on unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(1) of the Code) with respect to any Residual
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership (other than a partnership that has any
direct or indirect foreign partners) or other entity (treated as a corporation
or a partnership for federal income tax purposes), created or organized in or
under the laws of the United States, any state thereof or the District of
Columbia, an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trustor and (vi) any other Person based upon an Opinion of Counsel (which
shall not be an expense of the Trustee) that states that the Transfer of an
Ownership Interest in a Residual Certificate to such Person may cause any REMIC
to fail to qualify as a REMIC at any time that any Certificates are Outstanding.
The terms "United States," "State" and "International Organization" shall have
the meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of Freddie Mac, a majority
of its board of directors is not selected by such government unit.

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

         PREPAYMENT ASSUMPTION: The assumed rate of prepayment, as described in
the Prospectus Supplement relating to each Class of Publicly Offered
Certificates.

         PREPAYMENT CHARGE: With respect to any Principal Prepayment, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note (other than any Servicer Prepayment Charge Payment Amount).

         PREPAYMENT CHARGE SCHEDULE: As of any date, the list of Mortgage Loans
providing for a Prepayment Charge included in the Trust Fund on such date,
attached hereto as Exhibit K (including the prepayment charge summary attached
thereto). The Depositor shall deliver or cause the delivery of the Prepayment
Charge Schedule to the Servicer and the Trustee on the Closing Date. The
Prepayment Charge Schedule shall set forth the following information with
respect to each Prepayment Charge:

         (i) the Mortgage Loan identifying number;

                                      -28-
<PAGE>

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

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

         (iv) the term of the related Prepayment Charge;

         (v) the original Stated Principal Balance of the related Mortgage Loan;
and

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

         PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the related Prepayment Period, (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03,
3.24 or 10.01 hereof), the amount, if any, by which (i) one month's interest at
the applicable Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan immediately prior to such prepayment exceeds (ii) the amount of
interest paid or collected in connection with such Principal Prepayment less the
sum of (a) the related Servicing Fee and (b) the fee payable to any provider of
lender-paid mortgage insurance, if any.

         PREPAYMENT PERIOD: With respect to any Distribution Date, the calendar
month immediately preceding the month in which such Distribution Date occurs.

         PRINCIPAL PAYMENT AMOUNT: With respect to each Distribution Date, the
Principal Remittance Amount for such date minus the Overcollateralization
Release Amount, if any, for such Distribution Date.

         PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 3.24 and 10.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.

         PRINCIPAL REMITTANCE AMOUNT: With respect to any Distribution Date, (i)
the sum, without duplication, of (a) the principal portion of all Scheduled
Payments on the Mortgage Loans due during the related Due Period whether or not
received on or prior to the related Determination Date, (b) the principal
portion of all unscheduled collections (other than Payaheads) including
Insurance Proceeds, Condemnation Proceeds, Subsequent Recoveries and all full
and partial Principal Prepayments exclusive of prepayment charges or penalties
collected during the related Prepayment Period, to the extent applied as
recoveries of principal on the Mortgage Loans, (c) the Stated Principal Balance
of each Mortgage Loan that was repurchased by the Seller during the related
Prepayment Period pursuant to Sections 2.02, 2.03 and 3.24, (d) the aggregate of
all Substitution Adjustment Amounts received during the related Prepayment
Period for the related Determination Date in connection with the substitution of
Mortgage Loans pursuant to Section 2.03(b), (e) amounts in respect of principal
on the Mortgage Loans paid by the Depositor pursuant to Section 10.01, (f) all
Liquidation Proceeds and Subsequent Recoveries with respect

                                      -29-
<PAGE>

to the Mortgage Loans collected during the related Prepayment Period (to the
extent such Liquidation Proceeds and Subsequent Recoveries relate to principal),
in each case to the extent remitted by the Servicer to the Distribution Account
pursuant to this Agreement and (g) the principal portion of Payaheads previously
received of the Mortgage Loans and intended for application in the related Due
Period minus (ii) all amounts required to be reimbursed pursuant to Sections
4.02, 4.05, 4.07, 5.10 and 9.05 or as otherwise set forth in this Agreement.

         PRIVATE CERTIFICATE: Each of the Class X, Class P and Class R
Certificates.

         PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated September 28,
2004 relating to the offering of the Publicly Offered Certificates.

         PUBLICLY OFFERED CERTIFICATES: Any Certificates other than the Private
Certificates.

         PUD: A planned unit development.

         PURCHASE PRICE: With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to Section 2.02, 2.03 or 3.24 hereof and as
confirmed by an Officer's Certificate from the Seller to the Trustee, an amount
equal to the sum of (i) 100% of the outstanding principal balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon
at the applicable Mortgage Rate through the first day of the month in which the
Purchase Price is to be distributed to the related Certificateholders, plus any
portion of the Servicing Fee, Servicing Advances and Advances payable to the
Servicer of the Mortgage Loan plus (iii) any costs and damages of the Trust Fund
in connection with any violation by such Mortgage Loan of any abusive or
predatory lending law, including any expenses incurred by the Trustee with
respect to such Mortgage Loan prior to the purchase thereof.

         RATING AGENCY: Each of S&P and Moody's. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.

         REALIZED LOSS: With respect to each Mortgage Loan as to which a Final
Recovery Determination has been made, an amount (not less than zero) equal to
(i) the Stated Principal Balance of such Mortgage Loan as of the commencement of
the calendar month in which the Final Recovery Determination was made, plus (ii)
accrued interest from the Due Date as to which interest was last paid by the
Mortgagor through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest was
then accruing on such Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, minus (iii) the proceeds, if
any, received in respect of such Mortgage Loan during the calendar month in
which such Final Recovery Determination was made, net of amounts that are
payable therefrom to the Servicer pursuant to this Agreement. To the extent the
Servicer receives subsequent Recoveries and respect to any Mortgage Loan, the
amount of the Realized Loss with respect to that Mortgage Loan will be reduced
to the extent that subsequent

                                      -30-
<PAGE>

recoveries are applied to reduce the Certificate Principal Balance of any Class
of Certificates on any Distribution Date.

         With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
Stated Principal Balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, minus (iii) the aggregate of
all unreimbursed Advances and Servicing Advances.

         With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.

         With respect to each Mortgage Loan which has become the subject of a
Debt Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly Payment.

         In addition, to the extent the Servicer receives Subsequent Recoveries
with respect to any Mortgage Loan, the amount of the Realized Loss with respect
to that Mortgage Loan will be reduced to the extent such Subsequent Recoveries
are applied to reduce the Certificate Principal Balance of any Class of
Certificates on any Distribution Date.

         RECORD DATE: With respect to the Certificates (other than the Group II,
Group III and Subordinate Certificates) and any Distribution Date, the close of
business on the last Business Day of the month preceding the month in which such
Distribution Date occurs. With respect to the Group II, Group III and
Subordinate Certificates and any Distribution Date, so long as the Group II,
Group III and Subordinate Certificates are Book-Entry Certificates, the Business
Day preceding such Distribution Date, and otherwise, the close of business on
the last Business Day of the month preceding the month in which such
Distribution Date occurs.

         REFERENCE BANKS: Shall mean leading banks selected by the Trustee and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) which have been
designated as such by the Trustee and (iii) which are not controlling,
controlled by, or under common control with, the Depositor, the Seller or the
Servicer.

         REFERENCE BANK RATE: With respect to any Accrual Period shall mean the
arithmetic mean, rounded upwards, if necessary, to the nearest whole multiple of
0.03125%, of the offered

                                      -31-
<PAGE>

rates for United States dollar deposits for one month that are quoted by the
Reference Banks as of 11:00 a.m., New York City time, on the related Interest
Determination Date to prime banks in the London interbank market for a period of
one month in an amount approximately equal to the aggregate Certificate
Principal Balance of the Publicly Offered Certificates (other than the Class I-A
Certificates) for such Accrual Period, provided that at least two such Reference
Banks provide such rate. If fewer than two offered rates appear, the Reference
Bank Rate will be the arithmetic mean, rounded upwards, if necessary, to the
nearest whole multiple of 0.03125%, of the rates quoted by one or more major
banks in New York City, selected by the Trustee, as of 11:00 a.m., New York City
time, on such date for loans in United States dollars to leading European banks
for a period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of the Publicly Offered Certificates (other than
the Class I-A Certificates) for such Accrual Period.

         REGULAR CERTIFICATE: Any Certificate other than a Residual Certificate.

         RELIEF ACT: The Servicemembers Civil Relief Act of 2003, as amended
from time to time.

         REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code.

         REMIC I: The segregated pool of assets subject hereto, constituting the
primary trust created hereby and to be administered hereunder, with respect to
which a REMIC election is to be made, consisting of (i) the Mortgage Loans and
all interest accruing and principal due with respect thereto after the Cut-off
Date to the extent not applied in computing the Cut-off Date Principal Balance
thereof and all related Prepayment Charges; (ii) the related Mortgage Files,
(iii) the Custodial Account (other than any amounts representing any Servicer
Prepayment Charge Payment Amount), the Distribution Account, the Class P
Certificate Account and such assets that are deposited therein from time to
time, together with any and all income, proceeds and payments with respect
thereto; (iv) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (v) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loans; (vi) the
rights under the Mortgage Loan Purchase Agreement, and (vii) all proceeds of the
foregoing, including proceeds of conversion, voluntary or involuntary, of any of
the foregoing into cash or other liquid property. Notwithstanding the foregoing,
however, REMIC I specifically excludes (i) all payments and other collections of
principal and interest due on the Mortgage Loans on or before the Cut-off Date,
(ii) all Prepayment Charges payable in connection with Principal Prepayments on
the Mortgage Loans made before the Cut-off Date, and (iii) the Basis Risk
Reserve Fund.

         REMIC I INTEREST LOSS ALLOCATION AMOUNT: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTI-AA minus the Marker Rate, divided by (b) 12.

         REMIC I MARKER ALLOCATION PERCENTAGE: 0.50% of any amount payable or
loss attributable from the Mortgage Loans, which shall be allocated to REMIC I
Regular Interest LTI-AA, REMIC I Regular Interest LTI-IA, REMIC I Regular
Interest LTI-IIA, REMIC I Regular Interest LTI-IIIA1, REMIC I Regular Interest
LTI-IIIA2, REMIC I Regular Interest

                                      -32-
<PAGE>

LTI-IIIA3, REMIC I Regular Interest LTI-M1, REMIC I Regular Interest LTI-M2,
REMIC I Regular Interest LTI-M3, REMIC I Regular Interest LTI-M4 and REMIC I
Regular Interest LTI-ZZ.

         REMIC I OVERCOLLATERALIZATION AMOUNT: With respect to any date of
determination, (i) 0.50% of the aggregate Uncertificated Principal Balances of
the REMIC I Regular Interests minus (ii) the aggregate of the Uncertificated
Principal Balances of REMIC I Regular Interest LTI-IA, REMIC I Regular Interest
LTI-IIA, REMIC I Regular Interest LTI-IIIA1, REMIC I Regular Interest LTI-IIIA2,
REMIC I Regular Interest LTI-IIIA3, REMIC I Regular Interest LTI-M1, REMIC I
Regular Interest LTI-M2, REMIC I Regular Interest LTI-M3 and REMIC I Regular
Interest LTI-M4, in each case as of such date of determination.

         REMIC I PRINCIPAL LOSS ALLOCATION AMOUNT: With respect to any
Distribution Date, an amount equal to (a) the product of (i) 50% of the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Principal Balances of REMIC I Regular Interest
LTI-IA, REMIC I Regular Interest LTI-IIA, REMIC I Regular Interest LTI-IIIA1,
REMIC I Regular Interest LTI-IIIA2, REMIC I Regular Interest LTI-IIIA3, REMIC I
Regular Interest LTI-M1, REMIC I Regular Interest LTI-M2, REMIC I Regular
Interest LTI-M3 and REMIC I Regular Interest LTI-M4 and the denominator of which
is the aggregate of the Uncertificated Principal Balances of REMIC I Regular
Interest LTI-IA, REMIC I Regular Interest LTI-IIA, REMIC I Regular Interest
LTI-IIIA1, REMIC I Regular Interest LTI-IIIA2, REMIC I Regular Interest
LTI-IIIA3, REMIC I Regular Interest LTI-M1, REMIC I Regular Interest LTI-M2,
REMIC I Regular Interest LTI-M3, REMIC I Regular Interest LTI-M4 and REMIC I
Regular Interest LTI-ZZ.

         REMIC I REGULAR INTERESTS: REMIC I Regular Interest LTI-AA, REMIC I
Regular Interest LTI-IA, REMIC I Regular Interest LTI-IIA, REMIC I Regular
Interest LTI-IIIA1, REMIC I Regular Interest LTI-IIIA2, REMIC I Regular Interest
LTI-IIIA3, REMIC I Regular Interest LTI-M1, REMIC I Regular Interest LTI-M2,
REMIC I Regular Interest LTI-M3, REMIC I Regular Interest LTI-M4, REMIC I
Regular Interest LTI-ZZ, REMIC I Regular Interest LTI-P, REMIC I Regular
Interest LT1-1SUB, REMIC I Regular Interest LTI-1GRP, REMIC I Regular Interest
LT1-2SUB, REMIC I Regular Interest LTI-2GRP, REMIC I Regular Interest LT1-3SUB,
REMIC I Regular Interest LTI-3GRP and REMIC I Regular Interest LT1-XX.

         REMIC I REGULAR INTEREST LTI-IA: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IA shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-AA: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-AA shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal,

                                      -33-
<PAGE>

subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

         REMIC I REGULAR INTEREST LTI-IIA: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IIA shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-IIIA1: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LTI-IIIA1
shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

         REMIC I REGULAR INTEREST LTI-IIIA2: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LTI-IIIA2
shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

         REMIC I REGULAR INTEREST LTI-IIIA3: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LTI-IIIA3
shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.

         REMIC I REGULAR INTEREST LTI-M1: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-M1 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-M2: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-M2 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-M3: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC

                                      -34-
<PAGE>

I. REMIC I Regular Interest LTI-M3 shall accrue interest at the related
Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto.

         REMIC I REGULAR INTEREST LTI-M4: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-M4 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-1SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-1SUB shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-1GRP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-1GRP shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-2SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-2SUB shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-2GRP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-2GRP shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-3SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-3SUB shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

                                      -35-
<PAGE>

         REMIC I REGULAR INTEREST LTI-3GRP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-3GRP shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-P: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-P shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.

         REMIC I REGULAR INTEREST LTI-XX: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-XX shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-ZZ: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-ZZ shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST LTI-ZZ MAXIMUM INTEREST DEFERRAL AMOUNT: With
respect to any Distribution Date, the excess of (i) accrued interest at the
Uncertificated REMIC I Pass-Through Rate applicable to REMIC I Regular Interest
LTI-ZZ for such Distribution Date on a balance equal to the Uncertificated
Principal Balance of REMIC I Regular Interest LTI-ZZ minus the REMIC I
Overcollateralization Amount, in each case for such Distribution Date, over (ii)
Uncertificated Accrued Interest on REMIC I Regular Interest LTI-IA, REMIC I
Regular Interest LTI-IIA, REMIC I Regular Interest LTI-IIIA1, REMIC I Regular
Interest LTI-IIIA2, REMIC I Regular Interest LTI-IIIA3, REMIC I Regular Interest
LTI-M1, REMIC I Regular Interest LTI-M2, REMIC I Regular Interest LTI-M3 and
REMIC I Regular Interest LTI-M4 for such Distribution Date, with the rate on
each such REMIC I Regular Interest subject to a cap equal to the related
Pass-Through Rate.

         REMIC I SUB WAC ALLOCATION PERCENTAGE: 0.50% of any amount payable or
loss attributable from the Mortgage Loans, which shall be allocated to REMIC I
Regular Interest LTI-1SUB, REMIC I Regular Interest LTI-1GRP, REMIC I Regular
Interest LTI-2SUB, REMIC I Regular Interest LTI-2GRP, REMIC I Regular Interest
LTI-3SUB, REMIC I Regular Interest LTI-3GRP and REMIC I Regular Interest LTI-XX.

         REMIC I SUBORDINATED BALANCE RATIO: The ratio among the Uncertificated
Principal Balances of each REMIC I Regular Interest ending with the designation
"SUB,", equal to the

                                      -36-
<PAGE>

ratio between, with respect to each such REMIC I Regular Interest, the excess of
(x) the aggregate Stated Principal Balance of the Group I Mortgage Loans, Group
II Mortgage Loans or Group III Mortgage Loans, as applicable over (y) the
current Certificate Principal Balance of related Senior Certificates.

         REMIC I TARGETED OVERCOLLATERALIZATION AMOUNT: 1% of the Targeted
Overcollateralization Amount.

         REMIC II: The segregated pool of assets consisting of all of the REMIC
I Regular Interests conveyed in trust to the Trustee, for the benefit of the
REMIC II Certificateholders pursuant to Section 2.07, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.

         REMIC II CERTIFICATE: Any Regular Certificate.

         REMIC OPINION: Shall mean an Opinion of Counsel to the effect that the
proposed action will not have an adverse affect on any REMIC created hereunder.

         REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.

         REMIC REGULAR INTEREST: Any REMIC I Regular Interest or a Regular
Certificate.

         REMITTANCE DATE: Shall mean the 18th day of the month and if such day
is not a Business Day, the immediately succeeding Business Day.

         REO PROPERTY: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.

         REPLACEMENT MORTGAGE LOAN: A Mortgage Loan or Mortgage Loans in the
aggregate substituted by the Seller for a Deleted Mortgage Loan, which must, on
the date of such substitution, as confirmed in a Request for Release, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of, the Stated Principal Balance of the Deleted Mortgage Loan;
(ii) have an adjustable Mortgage Rate not less than or more than 1% per annum
higher than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same
or higher credit quality characteristics than that of the Deleted Mortgage Loan;
(iv) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage
Loan; (v) have a remaining term to maturity no greater than (and not more than
one year less than) that of the Deleted Mortgage Loan; (vi) not permit
conversion of the Mortgage Rate from a fixed rate to a variable rate; (vii) be
secured by a first lien on the related Mortgaged Property; (viii) constitute the
same occupancy type as the Deleted Mortgage Loan or be owner occupied; (ix) have
a Maximum Mortgage Interest Rate not less than the Maximum Mortgage Interest
Rate on the Deleted Loan; (x) have a Minimum Mortgage Interest Rate not less
than the Minimum Mortgage Interest Rate of the Deleted Loan; (xi) have a Gross
Margin equal to the Gross Margin of the Deleted Loan; (xii) have a next

                                      -37-
<PAGE>

Adjustment Date not more than two months later than the next Adjustment Date on
the Deleted Loan; and (xiii) comply with each representation and warranty set
forth in the Mortgage Loan Purchase Agreement.

         REQUEST FOR RELEASE: The Request for Release to be submitted by the
Seller or the Servicer to the Custodian substantially in the form of Exhibit H.
Each Request for Release furnished to the Custodian by the Seller or the
Servicer shall be in duplicate and shall be executed by an officer of such
Person or a Authorized Servicer Representative (or, if furnished electronically
to the Custodian, shall be deemed to have been sent and executed by an officer
of such Person or a Authorized Servicer Representative) of the Servicer.

         REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.

         RESIDUAL CERTIFICATES: The Class R Certificates.

         RESPONSIBLE OFFICER: With respect to the Trustee, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, any Trust
Officer, any other officer customarily performing functions similar to those
performed by any of the above designated officers or other officers of the
Trustee specified by the Trustee having direct responsibility over this
Agreement and customarily performing functions similar to those performed by any
one of the designated officers, as 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.

         ROLLING THREE MONTH DELINQUENCY RATE: With respect to any Distribution
Date and the Mortgage Loans will be the fraction, expressed as a percentage,
equal to the average of the Delinquency Rates for each of the three (or one and
two, in the case of the first and second Distribution Dates) immediately
preceding months.

         S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
or its successor in interest.

         SCHEDULED PAYMENT: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.

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

         SELLER: Nomura Credit & Capital, Inc., a Delaware corporation, and its
successors and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.

         SENIOR CERTIFICATES: The Class I-A, Class II-A, Class III-A-1, Class
III-A-2 and Class III-A-3 Certificates.

         SENIOR ENHANCEMENT PERCENTAGE: With respect to any Distribution Date
will be the fraction, expressed as a percentage, the numerator of which is the
sum of the aggregate Certificate Principal Balance of the Subordinate
Certificates and the Overcollateralization Amount, in each case after giving
effect to payments on such Distribution Date (assuming no

                                      -38-
<PAGE>

Trigger Event is in effect), and the denominator of which is the Aggregate Loan
Balance for such Distribution Date.

         SENIOR PRINCIPAL PAYMENT AMOUNT: With respect to any Distribution Date
on or after the Stepdown Date and as long as a Trigger Event is not in effect
with respect to such Distribution Date, the amount, if any, by which (x) the
Certificate Principal Balances of the Senior Certificates, in each case,
immediately prior to such Distribution Date exceed (y) the lesser of (A) the
product of (i) approximately 84.40% and (ii) the Aggregate Loan Balance for such
Distribution Date and (B) the amount, if any, by which (i) the Aggregate Loan
Balance for such Distribution Date exceeds (ii) 0.50% of the Aggregate Loan
Balance as of the Cut-off Date.

         SERVICER: GMAC Mortgage Corporation or any successor thereto appointed
hereunder in connection with the servicing and administration of the Mortgage
Loans.

         SERVICER'S ASSIGNEE: As defined in Section 5.01(b)(ii).

         SERVICER DEFAULT: As defined in Section 8.01.

         SERVICER PREPAYMENT CHARGE PAYMENT AMOUNT: The amount payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.01.

         SERVICING ADVANCES: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable legal fees) incurred in the
performance by the Servicer of its servicing obligations hereunder, including,
but not limited to, the cost of (i) the preservation, restoration, inspection,
valuation and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, and including any expenses
incurred in relation to any such proceedings that result from the Mortgage Loan
being registered in the MERS(R) System, (iii) the management and liquidation of
any REO Property (including, without limitation, realtor's commissions), (iv)
compliance with any obligations under Section 3.07 hereof to cause insurance to
be maintained and (v) payment of taxes.

         SERVICING FEE: As to each Mortgage Loan and any Distribution Date, an
amount equal to 1/12th of the Servicing Fee Rate multiplied by the Stated
Principal Balance of such Mortgage Loan as of the last day of the related Due
Period or, in the event of any payment of interest that accompanies a Principal
Prepayment in full during the related Due Period made by the Mortgagor
immediately prior to such prepayment, interest at the Servicing Fee Rate on the
same Stated Principal Balance of such Mortgage Loan used to calculate the
payment of interest on such Mortgage Loan.

         SERVICING FEE RATE: 0.25% per annum.

         STARTUP DAY: The Startup Day for each REMIC formed hereunder shall be
the Closing Date.

         STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or related
REO Property and any Distribution Date, the Cut-off Date Principal Balance
thereof minus the sum of (i) the principal portion of the Scheduled Payments due
with respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date (and irrespective of any delinquency in

                                      -39-
<PAGE>

their payment), (ii) all Principal Prepayments with respect to such Mortgage
Loan received prior to or during the related Prepayment Period, and all
Liquidation Proceeds to the extent applied by the Servicer as recoveries of
principal in accordance with Section 3.09 of this Agreement with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the Prepayment Period related to such Distribution Date and
(iii) any Realized Losses on such Mortgage Loan incurred during the related
Prepayment Period. The Stated Principal Balance of a Liquidated Loan equals
zero.

         STEPDOWN DATE: The earlier to occur of (i) the first Distribution Date
following the Distribution Date in which the Certificate Principal Balances of
the Senior Certificates have been reduced to zero and (ii) the later to occur of
(x) the Distribution Date in October 2007 and (y) the first Distribution Date on
which the Senior Enhancement Percentage (calculated for this purpose only after
taking into account distributions of principal on the Mortgage Loans, but prior
to any distributions to the holders of the Publicly Offered Certificates on such
Distribution Date) is greater than or equal to approximately 15.60%.

         SUBORDINATE CERTIFICATES: The Class M-1, Class M-2, Class M-3 and Class
M-4 Certificates.

         SUBSEQUENT RECOVERIES: With respect to each Mortgage Loan, the amount
recovered by the Servicer (net of reimbursable expenses) with respect to a
defaulted Mortgage Loan with respect to which a Realized Loss was incurred,
after the liquidation or disposition of such Mortgage Loan.

         SUBSERVICING AGREEMENT: Any agreement entered into between the Servicer
and a subservicer with respect to the subservicing of any Mortgage Loan subject
to this Agreement by such subservicer.

         SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such term
pursuant to Section 2.03(d).

         SUCCESSOR SERVICER: The Trustee or any successor to the Servicer
appointed pursuant to Section 8.02 after the occurrence of a Servicer Default or
upon the resignation of the Servicer pursuant to this Agreement.

         TARGETED OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution
Date prior to the Stepdown Date, approximately 1.00% of the Aggregate Loan
Balance as of the Cut-off Date; with respect to any Distribution Date on or
after the Stepdown Date and with respect to which a Trigger Event is not in
effect, the greater of (a) 2.00% of the Aggregate Loan Balance for such
Distribution Date, or (b) 0.50% of the Aggregate Loan Balance as of the Cut-off
Date; with respect to any Distribution Date on or after the Stepdown Date with
respect to which a Trigger Event is in effect and is continuing, the Targeted
Overcollateralization Amount for the Distribution Date immediately preceding
such Distribution Date. Notwithstanding the foregoing, on and after any
Distribution Date following the reduction of the aggregate Certificate Principal
Balance of the Group I Certificates, the Group II Certificates and the Group III
Certificates to zero, the Targeted Overcollateralization Amount shall be zero.

                                      -40-
<PAGE>

         TAX MATTERS PERSON: The person designated as "tax matters person" in
the manner provided under Treasury regulation ss. 1.860F-4(d) and temporary
Treasury regulation ss. 301.6231(a)(7)-1T. The holder of the greatest Percentage
Interest in a Class of Residual Certificates shall be the Tax Matters Person for
the related REMIC. The Trustee, or any successor thereto or assignee thereof
shall serve as tax administrator hereunder and as agent for the related Tax
Matters Person.

         TERMINATION PRICE: The price, calculated as set forth in Section 10.01,
to be paid in connection with the purchase of the Mortgage Loans pursuant to
Section 10.01.

         TRANSFER AFFIDAVIT: As defined in Section 6.02(c).

         TRANSFER: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.

         TRIGGER EVENT: With respect to any Distribution Date, a Trigger Event
is in effect if either (i) the Rolling Three Month Delinquency Rate as of the
last day of the related Due Period equals or exceeds 40.00% of the Senior
Enhancement Percentage for such Distribution Date or (ii) the cumulative
Realized Losses as a percentage of the original Aggregate Loan Balance on the
Closing Date for such Distribution Date is greater than the percentage set forth
in the following table:

------------------------------------------------- ------------------------------
           RANGE OF DISTRIBUTION DATES              CUMULATIVE LOSS PERCENTAGE
------------------------------------------------- ------------------------------
October 2007 - September 2008                         1.25%*
------------------------------------------------- ------------------------------
October 2008 - September 2009                         2.00%*
------------------------------------------------- ------------------------------
October 2009 - September 2010                         2.50%*
------------------------------------------------- ------------------------------
October 2010 and thereafter                           2.75%*
------------------------------------------------- ------------------------------
         *The cumulative loss percentages set forth above are applicable to the
first Distribution Date in the corresponding range of Distribution Dates. The
cumulative loss percentage for each succeeding Distribution Date in a range
increases incrementally by 1/12 of the positive difference between the
percentage applicable to the first Distribution Date in that range and the
percentage applicable to the first Distribution Date in the succeeding range.

         TRUST FUND: Collectively, the assets of REMIC I, REMIC II, and the
Basis Risk Reserve Fund.

         TRUSTEE: JPMorgan Chase Bank, a New York banking corporation, not in
its individual capacity, but solely in its capacity as trustee for the benefit
of the Certificateholders under this Agreement, and any successor thereto, and
any corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.

                                      -41-
<PAGE>

         UNCERTIFICATED ACCRUED INTEREST: With respect to each Uncertificated
REMIC Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related Uncertificated Pass-Through Rate on the Uncertificated
Principal Balance of such REMIC Regular Interest. In each case, Uncertificated
Accrued Interest will be reduced by any Prepayment Interest Shortfalls and
shortfalls resulting from application of the Relief Act (allocated to such REMIC
Regular Interests as set forth in Sections 1.02 and 5.07).

         UNCERTIFICATED PRINCIPAL BALANCE: With respect to each REMIC Regular
Interest, the principal amount of such REMIC Regular Interest outstanding as of
any date of determination. As of the Closing Date, the Uncertificated Principal
Balance of each REMIC Regular Interest shall equal the amount set forth in the
Preliminary Statement hereto as its initial Uncertificated Principal Balance. On
each Distribution Date, the Uncertificated Principal Balance of each REMIC
Regular Interest shall be reduced by all distributions of principal made on such
REMIC Regular Interest on such Distribution Date pursuant to Section 5.07 and,
if and to the extent necessary and appropriate, shall be further reduced on such
Distribution Date by Realized Losses as provided in Section 5.07. The
Uncertificated Principal Balance of each REMIC Regular Interest shall never be
less than zero.

         UNCERTIFICATED REMIC I PASS-THROUGH RATE: With respect to REMIC I
Regular Interest LTI-AA, REMIC I Regular Interest LTI-IA, REMIC I Regular
Interest LTI-IIA, REMIC I Regular Interest LTI-IIIA1, REMIC I Regular Interest
LTI-IIIA2, REMIC I Regular Interest LTI-IIIA3, REMIC I Regular Interest LTI-M1,
REMIC I Regular Interest LTI-M2, REMIC I Regular Interest LTI-M3, REMIC I
Regular Interest LTI-M4, REMIC I Regular Interest LTI-ZZ, REMIC I Regular
Interest LT1-1SUB, REMIC I Regular Interest LT1-2SUB, Regular Interest LT1-3SUB
and REMIC I Regular Interest LT1-XX, the weighted average Net Mortgage Rate of
the Mortgage Loans. With respect to REMIC I Regular Interest LTI-1GRP, the
weighted average Net Mortgage Rate of the Group I Mortgage Loans. With respect
to REMIC I Regular Interest LTI-2GRP, the weighted average Net Mortgage Rate of
the Group II Mortgage Loans. With respect to REMIC I Regular Interest LTI-3GRP,
the weighted average Net Mortgage Rate of the Group III Mortgage Loans.

         VOTING RIGHTS: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions
hereunder. Voting Rights shall be allocated (i) 98% to the Certificates (other
than the Class X, Class P and the Residual Certificates) and (ii) 1% to each of
the Class X Certificates, Class P Certificates. Voting rights will be allocated
among the Certificates of each such Class in accordance with their respective
Percentage Interests. The Residual Certificates will not be allocated any voting
rights.

Section 1.02      ALLOCATION OF CERTAIN INTEREST SHORTFALLS.

         For purposes of calculating the amount of the Interest Remittance
Amount for any Distribution Date, (1) the aggregate amount of any Net Interest
Shortfalls in respect of the Mortgage Loans for any Distribution Date shall
reduce the Interest Remittance Amount on a PRO RATA basis based on, and to the
extent of, one month's interest at the then applicable respective Pass-Through
Rate on the respective Certificate Principal Balance of each class of Publicly
Offered Certificates and (2) the aggregate amount of any Realized Losses
allocated to the Class III-A-3 Certificates and Subordinate Certificates and
Basis Risk Shortfalls allocated to the

                                      -42-
<PAGE>

Publicly Offered Certificates for any Distribution Date shall be allocated to
the Class X Certificates based on, and to the extent of, one month's interest at
the then applicable respective Pass-Through Rate on the Certificate Principal
Balance thereof on any Distribution Date.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC I Regular Interests for any Distribution Date:

         The REMIC I Marker Allocation Percentage of the aggregate amount of any
Net Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated among REMIC I Regular Interest LTI-IA,
REMIC I Regular Interest LTI-IIA, REMIC I Regular Interest LTI-IIIA1, REMIC I
Regular Interest LTI-IIIA2, REMIC I Regular Interest LTI-IIIA3, REMIC I Regular
Interest LTI-M1, REMIC I Regular Interest LTI-M2, REMIC I Regular Interest
LTI-M3, REMIC I Regular Interest LTI-M4 and REMIC I Regular Interest LTI-ZZ, PRO
RATA based on, and to the extent of, one month's interest at the then applicable
respective Uncertificated REMIC I Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC I Regular Interest; and

         The REMIC I Sub WAC Allocation Percentage of the aggregate amount of
any Net Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated to Uncertificated Accrued Interest payable
to REMIC I Regular Interest LTI-1SUB, REMIC I Regular Interest LTI-1GRP, REMIC I
Regular Interest LTI-2SUB, REMIC I Regular Interest LTI-2GRP, REMIC I Regular
Interest LTI-3SUB, REMIC I Regular Interest LTI-3GRP and REMIC I Regular
Interest LTI-XX, PRO RATA based on, and to the extent of, one month's interest
at the then applicable respective Uncertificated REMIC I Pass-Through Rate on
the respective Uncertificated Principal Balance of each such REMIC I Regular
Interest.

                                      -43-
<PAGE>

                                   ARTICLE II

                            CONVEYANCE OF TRUST FUND
                         REPRESENTATIONS AND WARRANTIES

Section 2.01      CONVEYANCE OF TRUST FUND.

                  The Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title and
interest of the Seller in and to the assets in the Trust Fund.

                  The Seller has entered into this Agreement in consideration
for the purchase of the Mortgage Loans by the Depositor and has agreed to take
the actions specified herein.

                  The Depositor, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the use and benefit of the Certificateholders, without recourse, all
the right, title and interest of the Depositor in and to the Trust Fund.

                  In connection with such sale, the Depositor has delivered to,
and deposited with, the Trustee or the Custodian, as its agent, the following
documents or instruments with respect to each Mortgage Loan so assigned: (i) the
original Mortgage Note, including any riders thereto, endorsed without recourse
to the order of "JPMorgan Chase Bank, as Trustee for certificateholders of
Nomura Asset Acceptance Corporation, Mortgage Pass-Through Certificates, Series
2004-AR2," and showing to the extent available to the Seller an unbroken chain
of endorsements from the original payee thereof to the Person endorsing it to
the Trustee, (ii) the original Mortgage and, if the related Mortgage Loan is a
MOM Loan, noting the presence of the MIN and language indicating that such
Mortgage Loan is a MOM Loan, which shall have been recorded (or if the original
is not available, a copy), with evidence of such recording indicated thereon (or
if clause (x) in the proviso below applies, shall be in recordable form), (iii)
unless the Mortgage Loan is a MOM Loan, the assignment (either an original or a
copy, which may be in the form of a blanket assignment if permitted in the
jurisdiction in which the Mortgaged Property is located) to the Trustee of the
Mortgage with respect to each Mortgage Loan in the name of "JPMorgan Chase Bank,
as Trustee for certificateholders of Nomura Asset Acceptance Corporation,
Mortgage Pass-Through Certificates, Series 2004-AR2," which shall have been
recorded (or if clause (x) in the proviso below applies, shall be in recordable
form) (iv) an original or a copy of all intervening assignments of the Mortgage,
if any, to the extent available to the Seller, with evidence of recording
thereon, (v) the original policy of title insurance or mortgagee's certificate
of title insurance or commitment or binder for title insurance, if available, or
a copy thereof, or, in the event that such original title insurance policy is
unavailable, a photocopy thereof, or in lieu thereof, a current lien search on
the related Mortgaged Property and (vi) originals or copies of all available
assumption, modification or substitution agreements, if any; provided, however,
that in lieu of the foregoing, the Seller may deliver the following documents,
under the circumstances set forth below: (x) if any Mortgage, assignment thereof
to the Trustee or intervening assignments thereof have been delivered or are
being delivered to recording offices for recording and have not been returned in
time to permit

                                      -44-
<PAGE>

their delivery as specified above, the Depositor may deliver a true copy thereof
with a certification by the Seller or the title company issuing the commitment
for title insurance, on the face of such copy, substantially as follows:
"Certified to be a true and correct copy of the original, which has been
transmitted for recording"; and (y) in lieu of the Mortgage Notes relating to
the Mortgage Loans identified in the list set forth in Exhibit J, the Depositor
may deliver a lost note affidavit and indemnity and a copy of the original note,
if available; and provided, further, that in the case of Mortgage Loans which
have been prepaid in full after the Cut-Off Date and prior to the Closing Date,
the Depositor, in lieu of delivering the above documents, may deliver to the
Trustee a certification of a Authorized Servicer Representative to such effect
and in such case shall deposit all amounts paid in respect of such Mortgage
Loans, in the Distribution Account on the Closing Date. In the case of the
documents referred to in clause (x) related above, the Depositor shall deliver
such documents to the Trustee promptly after they are received. The Seller shall
cause, at its expense, the Mortgage and intervening assignments, if any, and to
the extent required in accordance with the foregoing, the assignment of the
Mortgage to the Trustee to be submitted for recording promptly after the Closing
Date; provided that the Seller need not cause to be recorded any assignment (a)
in any jurisdiction under the laws of which, as evidenced by an Opinion of
Counsel delivered by the Seller to the Trustee and the Rating Agencies, the
recordation of such assignment is not necessary to protect the Trustee's
interest in the related Mortgage Loan or (b) if MERS is identified on the
Mortgage or on a properly recorded assignment of the Mortgage as mortgagee of
record solely as nominee for Seller and its successors and assigns. In the event
that the Seller or the Depositor gives written notice to the Trustee that a
court has recharacterized the sale of the Mortgage Loans as a financing, the
Seller shall submit or cause to be submitted for recording as specified above
or, should the Seller fail to perform such obligations, the Trustee shall cause
each such previously unrecorded assignment to be submitted for recording as
specified above at the expense of the Trust pursuant to Section 9.05. In the
event a Mortgage File is released to the Servicer as a result of such Person
having completed a Request for Release, the Trustee shall, if not so completed,
complete the assignment of the related Mortgage in the manner specified in
clause (iii) above.

                  In connection with the assignment of any Mortgage Loan
registered on the MERS(R) System, the Seller further agrees that it will cause,
at the Seller's own expense, within 30 days after the Closing Date, the MERS(R)
System to indicate that such Mortgage Loans have been assigned by the Seller to
the Depositor and by the Depositor to the Trustee in accordance with this
Agreement for the benefit of the related Certificateholders by including (or
deleting, in the case of Mortgage Loans which are repurchased in accordance with
this Agreement) in such computer files (a) the code in the field which
identifies the specific Trustee and (b) the code in the field "Pool Field" which
identifies the series of the Certificates issued in connection with such
Mortgage Loans. The Seller further agrees that it will not, and will not permit
any Servicer to alter the codes referenced in this paragraph with respect to any
Mortgage Loan during the term of this Agreement unless and until such Mortgage
Loan is repurchased in accordance with the terms of this Agreement.

         Section 2.02      ACCEPTANCE OF THE MORTGAGE LOANS.

                  (a) Based on the Initial Certification received by it from the
Custodian, the Trustee acknowledges receipt of, subject to the further review
and exceptions reported by the Custodian pursuant to the procedures described
below, the documents (or certified copies

                                      -45-
<PAGE>

thereof) delivered to the Trustee or the Custodian on its behalf pursuant to
Section 2.01 and declares that it holds and will continue to hold directly or
through a custodian those documents and any amendments, replacements or
supplements thereto and all other assets of the Trust Fund delivered to it in
trust for the use and benefit of all present and future Holders of the
Certificates. On the Closing Date, the Custodian on the Trustee's behalf will
deliver an Initial Certification in the form annexed hereto as Exhibit C-1,
confirming whether or not it has received the Mortgage File for each Mortgage
Loan, but without review of such Mortgage File, except to the extent necessary
to confirm whether such Mortgage File contains the original Mortgage Note or a
lost note affidavit and indemnity in lieu thereof. No later than 90 days after
the Closing Date, the Custodian on the Trustee's behalf shall, for the benefit
of the Certificateholders, review each Mortgage File delivered to it and execute
and deliver to the Seller and the Trustee an Interim Certification substantially
in the form annexed hereto as Exhibit C-2. In conducting such review, the
Custodian on the Trustee's behalf will ascertain whether all required documents
have been executed and received and whether those documents relate, determined
on the basis of the Mortgagor name, original principal balance and loan number,
to the Mortgage Loans identified in Exhibit B to this Agreement, as supplemented
(provided, however, that with respect to those documents described in subclauses
(iv) and (vi) of Section 2.01, such obligations shall extend only to documents
actually delivered pursuant to such subclauses). In performing any such review,
the Custodian may conclusively rely on the purported due execution and
genuineness of any such document and on the purported genuineness of any
signature thereon. If the Custodian finds any document constituting part of the
Mortgage File not to have been executed or received, or to be unrelated to the
Mortgage Loans identified in Exhibit B, determined on the basis of the
Mortgagor's name, the original principal balance and the Mortgage Loan number,
or to appear to be defective on its face, the Custodian shall include such
information in the exception report attached to the Interim Certification. The
Seller shall correct or cure any such defect or, if prior to the end of the
second anniversary of the Closing Date, the Seller may substitute for the
related Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03 or shall deliver to the Trustee an Opinion of Counsel to the effect that
such defect does not materially or adversely affect the interests of the
Certificateholders in such Mortgage Loan within 60 days from the date of notice
from the Trustee of the defect and if the Seller fails to correct or cure the
defect or deliver such opinion within such period, the Seller will, subject to
Section 2.03, within 90 days from the notification of the Trustee purchase such
Mortgage Loan at the Purchase Price; provided, however, that if such defect
relates solely to the inability of the Seller to deliver the Mortgage,
assignment thereof to the Trustee, or intervening assignments thereof with
evidence of recording thereon because such documents have been submitted for
recording and have not been returned by the applicable jurisdiction, the Seller
shall not be required to purchase such Mortgage Loan if the Seller delivers such
documents promptly upon receipt, but in no event later than 360 days after the
Closing Date.

                  (b) No later than 180 days after the Closing Date, the
Custodian on the Trustee's behalf will review, for the benefit of the
Certificateholders, the Mortgage Files and will execute and deliver or cause to
be executed and delivered to the Seller and the Trustee, a Final Certification
substantially in the form annexed hereto as Exhibit C-3. In conducting such
review, the Custodian on the Trustee's behalf will ascertain whether each
document required to be recorded has been returned from the recording office
with evidence of recording thereon and the Custodian on the Trustee's behalf has
received either an original or a copy thereof, as required in

                                      -46-
<PAGE>

Section 2.01 (provided, however, that with respect to those documents described
in subclauses (iv) and (vi) of Section 2.01, such obligations shall extend only
to documents actually delivered pursuant to such subclauses). If the Custodian
finds any document with respect to a Mortgage Loan has not been received, or to
be unrelated, determined on the basis of the Mortgagor name, original principal
balance and loan number, to the Mortgage Loans identified in Exhibit B or to
appear defective on its face, the Custodian shall note such defect in the
exception report attached to the Final Certification and the Trustee shall
promptly notify the Seller. The Seller shall correct or cure any such defect or,
if prior to the end of the second anniversary of the Closing Date, the Seller
may substitute for the related Mortgage Loan a Replacement Mortgage Loan, which
substitution shall be accomplished in the manner and subject to the conditions
set forth in Section 2.03 or shall deliver to the Trustee an Opinion of Counsel
to the effect that such defect does not materially or adversely affect the
interests of Certificateholders in such Mortgage Loan within 60 days from the
date of notice from the Trustee of the defect and if the Seller is unable within
such period to correct or cure such defect, or to substitute the related
Mortgage Loan with a Replacement Mortgage Loan or to deliver such opinion, the
Seller shall, subject to Section 2.03, within 90 days from the notification of
the Trustee, purchase such Mortgage Loan at the Purchase Price; provided,
however, that if such defect relates solely to the inability of the Seller to
deliver the Mortgage, assignment thereof to the Trustee or intervening
assignments thereof with evidence of recording thereon, because such documents
have not been returned by the applicable jurisdiction, the Seller shall not be
required to purchase such Mortgage Loan, if the Seller delivers such documents
promptly upon receipt, but in no event later than 360 days after the Closing
Date.

                  (c) In the event that a Mortgage Loan is purchased by the
Seller in accordance with subsections 2.02(a) or (b) above or Section 2.03, the
Seller shall remit the applicable Purchase Price to the Trustee for deposit in
the Distribution Account and shall provide written notice to the Trustee
detailing the components of the Purchase Price, signed by an authorized officer.
Upon deposit of the Purchase Price in the Distribution Account and upon receipt
of a Request for Release with respect to such Mortgage Loan, the Trustee will
release to the Seller the related Mortgage File and the Trustee shall execute
and deliver all instruments of transfer or assignment, without recourse,
furnished to it by the Seller, as are necessary to vest in the Seller title to
and rights under the Mortgage Loan. Such purchase shall be deemed to have
occurred on the date on which the deposit into the Distribution Account was
made. The Trustee shall promptly notify the Rating Agencies of such repurchase.
The obligation of the Seller to cure, repurchase or substitute for any Mortgage
Loan as to which a defect in a constituent document exists shall be the sole
remedies respecting such defect available to the Certificateholders or to the
Trustee on their behalf. The Seller shall promptly reimburse the Trustee for any
expenses incurred by the Trustee in respect of enforcing the remedies for such
breach.

                  (d) The Seller shall deliver to the Trustee, and Trustee
agrees to accept the Mortgage Note and other documents constituting the Mortgage
File with respect to any Replacement Mortgage Loan, which the Custodian will
review as provided in subsections 2.02(a) and 2.02(b), provided, that the
Closing Date referred to therein shall instead be the date of delivery of the
Mortgage File with respect to each Replacement Mortgage Loan.

                                      -47-
<PAGE>

         Section 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER
AND THE SELLER.

                  (a) The Servicer hereby represents and warrants to, and
covenants with, the Seller, the Depositor and the Trustee as follows, as of the
Closing Date:

                  (i) It is duly organized and is validly existing and in good
         standing under the laws of the Commonwealth of Pennsylvania and is duly
         authorized and qualified to transact any and all business contemplated
         by this Agreement to be conducted by it in any state in which a
         Mortgaged Property is located or is otherwise not required under
         applicable law to effect such qualification and, in any event, is in
         compliance with the doing business laws of any such state, to the
         extent necessary to ensure its ability to service the Mortgage Loans in
         accordance with the terms of this Agreement and to perform any of its
         other obligations under this Agreement in accordance with the terms
         hereof.

                  (ii) It has the full corporate power and authority to service
         each Mortgage Loan, and to execute, deliver and perform, and to enter
         into and consummate the transactions contemplated by this Agreement and
         has duly authorized by all necessary corporate action on its part the
         execution, delivery and performance of this Agreement; and this
         Agreement, assuming the due authorization, execution and delivery
         hereof by the other parties hereto, constitutes its legal, valid and
         binding obligation, enforceable against it in accordance with its
         terms, except that (a) the enforceability hereof may be limited by
         bankruptcy, insolvency, moratorium, receivership and other similar laws
         relating to creditors' rights generally and (b) the remedy of specific
         performance and injunctive and other forms of equitable relief may be
         subject to equitable defenses and to the discretion of the court before
         which any proceeding therefor may be brought and further subject to
         public policy with respect to indemnity and contribution under
         applicable securities law.

                  (iii) The execution and delivery of this Agreement by it, the
         servicing of the Mortgage Loans by it under this Agreement, the
         consummation of any other of the transactions contemplated by this
         Agreement, and the fulfillment of or compliance with the terms hereof
         are in its ordinary course of business and will not (A) result in a
         material breach of any term or provision of its charter or by-laws or
         (B) materially conflict with, result in a material breach, violation or
         acceleration of, or result in a material default under, the terms of
         any other material agreement or instrument to which it is a party or by
         which it may be bound, or (C) constitute a material violation of any
         statute, order or regulation applicable to it of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over it; and it is not in breach or violation of any material indenture
         or other material agreement or instrument, or in violation of any
         statute, order or regulation of any court, regulatory body,
         administrative agency or governmental body having jurisdiction over it
         which breach or violation may materially impair its ability to perform
         or meet any of its obligations under this Agreement.

                  (iv) It is an approved servicer of conventional mortgage loans
         for Fannie Mae or Freddie Mac and is a mortgagee approved by the
         Secretary of Housing and Urban Development pursuant to sections 203 and
         211 of the National Housing Act.

                                      -48-
<PAGE>

                  (v) No litigation is pending or, to the best of its knowledge,
         threatened in writing, against it that would materially and adversely
         affect the execution, delivery or enforceability of this Agreement or
         its ability to service the Mortgage Loans or to perform any of its
         other obligations under this Agreement in accordance with the terms
         hereof.

                  (vi) No consent, approval, authorization or order of any court
         or governmental agency or body is required for its execution, delivery
         and performance of, or compliance with, this Agreement or the
         consummation of the transactions contemplated hereby, or if any such
         consent, approval, authorization or order is required, it has obtained
         the same.

                  (vii) The Servicer has accurately and fully reported, and will
         continue to accurately and fully report its borrower credit files to
         each of the credit repositories in a timely manner materially in
         accordance with the Fair Credit Reporting Act and its implementing
         legislation.

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

                  (ix) The Servicer will not waive any Prepayment Charge with
         respect to a Mortgage Loan unless it is waived in accordance with the
         standard set forth in Section 3.01.

If the covenant of the Servicer set forth in Section 2.03(a)(ix) above is
breached by the Servicer, the Servicer will pay the amount of such waived
Prepayment Charge, for the benefit of the Holders of the Class P Certificates by
depositing such amount into the Custodial Account within 90 days of the earlier
of discovery by the Servicer or receipt of notice by the Servicer of such
breach. Notwithstanding the foregoing, or anything to the contrary contained in
this Agreement, the Servicer shall have no liability for a waiver of any
Prepayment Charge in the event that the Servicer's determination to make such a
waiver was made by the Servicer in reliance on information properly received by
the Servicer from any Person in accordance with the terms of this Agreement.

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

                  (i) The Seller is duly organized, validly existing and in good
         standing under the laws of the State of Delaware and is duly authorized
         and qualified to transact any and all business contemplated by this
         Agreement to be conducted by the Seller in any state in which a
         Mortgaged Property is located or is otherwise not required under
         applicable law to effect such qualification and, in any event, is in
         compliance with the doing business laws of any such state, to the
         extent necessary to ensure its ability to enforce each Mortgage Loan,
         to sell the Mortgage Loans in accordance with the terms of this
         Agreement and to perform any of its other obligations under this
         Agreement in accordance with the terms hereof.

                                      -49-
<PAGE>

                  (ii) The Seller has the full corporate power and authority to
         sell each Mortgage Loan, and to execute, deliver and perform, and to
         enter into and consummate the transactions contemplated by this
         Agreement and has duly authorized by all necessary corporate action on
         the part of the Seller the execution, delivery and performance of this
         Agreement; and this Agreement, assuming the due authorization,
         execution and delivery hereof by the other parties hereto, constitutes
         a legal, valid and binding obligation of the Seller, enforceable
         against the Seller in accordance with its terms, except that (a) the
         enforceability hereof may be limited by bankruptcy, insolvency,
         moratorium, receivership and other similar laws relating to creditors'
         rights generally and (b) the remedy of specific performance and
         injunctive and other forms of equitable relief may be subject to
         equitable defenses and to the discretion of the court before which any
         proceeding therefor may be brought and further subject to public policy
         with respect to indemnity and contribution under applicable securities
         law.

                  (iii) The execution and delivery of this Agreement by the
         Seller, the sale of the Mortgage Loans by the Seller under this
         Agreement, the consummation of any other of the transactions
         contemplated by this Agreement, and the fulfillment of or compliance
         with the terms hereof are in the ordinary course of business of the
         Seller and will not (A) result in a material breach of any term or
         provision of the charter or by-laws of the Seller or (B) materially
         conflict with, result in a material breach, violation or acceleration
         of, or result in a material default under, the terms of any other
         material agreement or instrument to which the Seller is a party or by
         which it may be bound, or (C) constitute a material violation of any
         statute, order or regulation applicable to the Seller of any court,
         regulatory body, administrative agency or governmental body having
         jurisdiction over the Seller; and the Seller is not in breach or
         violation of any material indenture or other material agreement or
         instrument, or in violation of any statute, order or regulation of any
         court, regulatory body, administrative agency or governmental body
         having jurisdiction over it which breach or violation may materially
         impair the Seller's ability to perform or meet any of its obligations
         under this Agreement.

                  (iv) The Seller is an approved seller of conventional mortgage
         loans for Fannie Mae or Freddie Mac and is a mortgagee approved by the
         Secretary of Housing and Urban Development pursuant to sections 203 and
         211 of the National Housing Act.

                  (v) No litigation is pending or, to the best of the Seller's
         knowledge, threatened, against the Seller that would materially and
         adversely affect the execution, delivery or enforceability of this
         Agreement or the ability of the Seller to sell the Mortgage Loans or to
         perform any of its other obligations under this Agreement in accordance
         with the terms hereof.

                  (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 Seller of, or compliance by the Seller with,
         this Agreement or the consummation of the transactions contemplated
         hereby, or if any such consent, approval, authorization or order is
         required, the Seller has obtained the same.

                                      -50-
<PAGE>

                  (vii) The representations and warranties set forth in Section
         8 of the Mortgage Loan Purchase Agreement are true and correct as of
         the Closing Date.

                  (viii) No Mortgage Loan is subject to the Home Ownership and
         Equity Protection Act of 1994 or any comparable law and no Mortgage
         Loan is classified and/or defined as a "high cost", "covered", "high
         risk home" or "predatory" loan under any other state, federal or local
         law or regulation or ordinance (or a similarly classified loan using
         different terminology under a law imposing heightened regulatory
         scrutiny or additional legal liability for residential mortgage loans
         having high interest rates, points and/or fees).

                  (ix) No loan is a High Cost Loan or Covered Loan, as
         applicable (as such terms are defined in Appendix E of the Standard &
         Poor's Glossary For File Format For LEVELS(R) Version 5.6 Revised
         (attached hereto as Exhibit N.) and no Mortgage Loan originated on or
         after October 1, 2002 through March 6, 2003 is governed by the Georgia
         Fair Lending Act.

                  (x) Any and all requirements of any federal, state or local
         law including, without limitation, usury, truth in lending, real estate
         settlement procedures, consumer credit protection, equal credit
         opportunity, fair housing, predatory, abusive lending or disclosure
         laws applicable to the origination and servicing of the Mortgage Loans
         have been complied with in all material respects.

                  (c) Upon discovery by any of the parties hereto of a breach of
a representation or warranty set forth in Section 2.03(b)(viii) and (ix) and
Section 8 of the Mortgage Loan Purchase Agreement that materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, the party
discovering such breach shall give prompt written notice thereof to the other
parties. The Seller hereby covenants with respect to the representations and
warranties set forth in Section 2.03(b)(viii) and (ix) and Section 8 of the
Mortgage Loan Purchase Agreement, that within 90 days of the discovery of a
breach of any representation or warranty set forth therein that materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
it shall cure such breach in all material respects and, if such breach is not so
cured, (i) prior to the second anniversary of the Closing Date, remove such
Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and substitute in
its place a Replacement Mortgage Loan, in the manner and subject to the
conditions set forth in this Section; or (ii) repurchase the affected Mortgage
Loan or Mortgage Loans from the Trustee at the Purchase Price in the manner set
forth below; provided that any such substitution pursuant to (i) above or
repurchase pursuant to (ii) above shall not be effected prior to the delivery to
the Trustee of an Opinion of Counsel if required by Section 2.05 and any such
substitution pursuant to (i) above shall not be effected prior to the additional
delivery to the Trustee of a Request for Release. The Seller shall promptly
reimburse the Trustee for any expenses reasonably incurred by the Trustee in
respect of enforcing the remedies for such breach. To enable the Servicer to
amend the Mortgage Loan Schedule, the Seller shall, unless it cures such breach
in a timely fashion pursuant to this Section 2.03, promptly notify the Trustee
whether it intends either to repurchase, or to substitute for, the Mortgage Loan
affected by such breach. With respect to the representations and warranties in
Section 8 of the Mortgage Loan Purchase Agreement that are made to the best of
the Seller's knowledge, if it is discovered by any of the Depositor, the Seller

                                      -51-
<PAGE>

or the Trustee that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan, notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation or warranty, the Seller shall
nevertheless be required to cure, substitute for or repurchase the affected
Mortgage Loan in accordance with the foregoing.

                  With respect to any Replacement Mortgage Loan or Loans, the
Seller shall deliver to the Trustee for the benefit of the related
Certificateholders such documents and agreements as are required by Section
2.01. No substitution will be made in any calendar month after the Determination
Date for such month. Scheduled Payments due with respect to Replacement Mortgage
Loans in the Due Period related to the Distribution Date on which such proceeds
are to be distributed shall not be part of the Trust Fund and will be retained
by the Seller. For the month of substitution, distributions to
Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for the related Due Period and thereafter the Seller shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Servicer shall amend the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Replacement Mortgage Loan or Loans and shall deliver the
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
Replacement Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Replacement Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in Section 8 of the
Mortgage Loan Purchase Agreement with respect to such Mortgage Loan. Upon any
such substitution and the deposit into the Distribution Account of the amount
required to be deposited therein in connection with such substitution as
described in the following paragraph and receipt by the Trustee of a Request for
Release for such Mortgage Loan, the Trustee shall release to the Seller the
Mortgage File relating to such Deleted Mortgage Loan and held for the benefit of
the related Certificateholders and shall execute and deliver at the Seller's
direction such instruments of transfer or assignment as have been prepared by
the Seller, in each case without recourse, as shall be necessary to vest in the
Seller, or its respective designee, title to the Trustee's interest in any
Deleted Mortgage Loan substituted for pursuant to this Section 2.03. The Trustee
shall not have any further responsibility with regard to such Mortgage File.

                  For any month in which the Seller substitutes one or more
Replacement Mortgage Loans for a Deleted Mortgage Loan, the Trustee will
determine the amount (if any) by which the aggregate principal balance of all
the Replacement Mortgage Loans as of the date of substitution is less than the
Stated Principal Balance (after application of the principal portion of the
Scheduled Payment due in the month of substitution) of such Deleted Mortgage
Loan. An amount equal to the aggregate of such deficiencies, described in the
preceding sentence for any Distribution Date (such amount, the "Substitution
Adjustment Amount") shall be deposited into the Distribution Account, by the
Seller delivering such Replacement Mortgage Loan on the Determination Date for
the Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.

                  In the event that the Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited into the Distribution
Account maintained by the Trustee, on the Determination Date for the
Distribution Date in the month following the month during which the

                                      -52-
<PAGE>

Seller became obligated to repurchase or replace such Mortgage Loan and upon
such deposit of the Purchase Price, the delivery of an Opinion of Counsel if
required by Section 2.05 and the receipt of a Request for Release, the Trustee
shall release the related Mortgage File held for the benefit of the related
Certificateholders to the Seller, and the Trustee shall execute and deliver at
such Person's direction the related instruments of transfer or assignment
prepared by the Seller, in each case without recourse, as shall be necessary to
transfer title from the Trustee for the benefit of the Certificateholders and
transfer the Trustee's interest to the Seller to any Mortgage Loan purchased
pursuant to this Section 2.03. It is understood and agreed that the obligation
under this Agreement of the Seller to cure, repurchase or replace any Mortgage
Loan as to which a breach has occurred and is continuing shall constitute the
sole remedies against the Seller respecting such breach available to
Certificateholders, the Depositor or the Trustee.

                  (d) The representations and warranties set forth in Section
2.03 shall survive delivery of the respective Mortgage Loans and Mortgage Files
to the Trustee or the Custodian for the benefit of the Certificateholders.

         Section 2.04      REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.

                  The Depositor hereby represents and warrants to, and
covenants, with the Servicer, the Seller and the Trustee as follows, as of the
date hereof and as of the Closing Date:

                  (i) The Depositor is duly organized and is validly existing as
         a corporation in good standing under the laws of the State of Delaware
         and has full power and authority (corporate and other) necessary to own
         or hold its properties and to conduct its business as now conducted by
         it and to enter into and perform its obligations under this Agreement.

                  (ii) The Depositor has the full corporate power and authority
         to execute, deliver and perform, and to enter into and consummate the
         transactions contemplated by, this Agreement and has duly authorized,
         by all necessary corporate action on its part, the execution, delivery
         and performance of this Agreement; and this Agreement, assuming the due
         authorization, execution and delivery hereof by the other parties
         hereto, constitutes a legal, valid and binding obligation of the
         Depositor, enforceable against the Depositor in accordance with its
         terms, subject, as to enforceability, to (i) bankruptcy, insolvency,
         moratorium receivership and other similar laws relating to creditors'
         rights generally and (ii) the remedy of specific performance and
         injunctive and other forms of equitable relief may be subject to
         equitable defenses and to the discretion of the court before which any
         proceeding therefor may be brought and further subject to public policy
         with respect to indemnity and contribution under applicable securities
         law.

                  (iii) The execution and delivery of this Agreement by the
         Depositor, the consummation of the transactions contemplated by this
         Agreement, and the fulfillment of or compliance with the terms hereof
         are in the ordinary course of business of the Depositor and will not
         (A) result in a material breach of any term or provision of the charter
         or by-laws of the Depositor or (B) materially conflict with, result in
         a material breach, violation or acceleration of, or result in a
         material default under, the terms of any other material agreement or
         instrument to which the Depositor is a party or by which it

                                      -53-
<PAGE>

         may be bound or (C) constitute a material violation of any statute,
         order or regulation applicable to the Depositor of any court,
         regulatory body, administrative agency or governmental body having
         jurisdiction over the Depositor; and the Depositor is not in breach or
         violation of any material indenture or other material agreement or
         instrument, or in violation of any statute, order or regulation of any
         court, regulatory body, administrative agency or governmental body
         having jurisdiction over it which breach or violation may materially
         impair the Depositor's ability to perform or meet any of its
         obligations under this Agreement.

                  (iv) No litigation is pending, or, to the best of the
         Depositor's knowledge, threatened, against the Depositor that would
         materially and adversely affect the execution, delivery or
         enforceability of this Agreement or the ability of the Depositor to
         perform its obligations under this Agreement in accordance with the
         terms hereof.

                  (v) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by the Depositor of, or compliance by the Depositor
         with, this Agreement or the consummation of the transactions
         contemplated hereby, or if any such consent, approval, authorization or
         order is required, the Depositor has obtained the same.

                  The Depositor hereby represents and warrants to the Trustee as
of the Closing Date, following the transfer of the Mortgage Loans to it by the
Seller, the Depositor had good title to the Mortgage Loans and the related
Mortgage Notes were subject to no offsets, claims, defenses or counterclaims.

                  It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee or the Custodian for the benefit of the Certificateholders.
Upon discovery by the Depositor, the Servicer or the Trustee of a breach of such
representations and warranties, the party discovering such breach shall give
prompt written notice to the others and to each Rating Agency.

         Section 2.05      DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH
                           SUBSTITUTIONS AND REPURCHASES.

                  (a) Notwithstanding any contrary provision of this Agreement,
with respect to any Mortgage Loan that is not in default or as to which default
is not imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03
shall be made unless the Seller delivers to the Trustee an Opinion of Counsel,
addressed to the Trustee, to the effect that such repurchase or substitution
would not (i) result in the imposition of the tax on "prohibited transactions"
of REMIC I or REMIC II or contributions after the Closing Date, as defined in
sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause any
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding. Any Mortgage Loan as to which repurchase or substitution was
delayed pursuant to this paragraph shall be repurchased or the substitution
therefor shall occur (subject to compliance with Sections 2.02 or 2.03) upon the
earlier of (a) the occurrence of a default or imminent default with respect to
such Mortgage Loan and (b) receipt by the Trustee of an Opinion of Counsel to
the effect that such repurchase or substitution, as

                                      -54-
<PAGE>

applicable, will not result in the events described in clause (i) or clause (ii)
of the preceding sentence.

                  (b) Upon discovery by the Depositor or the Seller that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties and the Trustee. In connection therewith, the
Seller, at the its option, shall either (i) substitute, if the conditions in
Section 2.03(c) with respect to substitutions are satisfied, a Replacement
Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the affected
Mortgage Loan within 90 days of such discovery in the same manner as it would a
Mortgage Loan for a breach of representation or warranty contained in Section
2.03. The Trustee shall reconvey to the Seller the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Section 2.03.

         Section 2.06 ISSUANCE OF THE REMIC I REGULAR INTERESTS AND THE CLASS R
CERTIFICATES.

                  The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to the Custodian on its behalf of the related Mortgage
Files, subject to the provisions of Section 2.01 and Section 2.02, together with
the assignment to it of all other assets included in REMIC I, the receipt of
which is hereby acknowledged. The interests evidenced by the Class R-I Interest,
together with the REMIC I Regular Interests, constitute the entire beneficial
ownership interest in REMIC I. The rights of the Holders of the Class R-I
Interest and REMIC I (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC I in respect of the Class R-I Interest
and the REMIC I Regular Interests, respectively, and all ownership interests
evidenced or constituted by the Class R-I Interest and the REMIC I Regular
Interests, shall be as set forth in this Agreement.

         Section 2.07      CONVEYANCE OF THE REMIC I REGULAR INTERESTS .

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests). The Trustee
acknowledges receipt of the REMIC I Regular Interests and declares that it holds
and will hold the same in trust for the exclusive use and benefit of all present
and future Holders of the Class R-II Interest and REMIC II (as holder of the
REMIC I Regular Interests). The rights of the Holder of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC II in respect of the Class R-II
Interest and Regular Certificates, respectively, and all ownership interests
evidenced or constituted by the Class R-II Interest and the Regular
Certificates, shall be as set forth in this Agreement. The Class R-II Interest
and the Regular Certificates shall constitute the entire beneficial ownership
interest in REMIC II.

                                      -55-
<PAGE>

         Section 2.08      ISSUANCE OF RESIDUAL CERTIFICATES.

                  The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the Class R Certificates in authorized denominations.

         Section 2.09      ESTABLISHMENT OF TRUST.

                  The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "Nomura Asset Acceptance Corporation,
Alternative Loan Trust, Series 2004-AR2" and does hereby appoint JPMorgan Chase
Bank, as Trustee in accordance with the provisions of this Agreement.

                                      -56-
<PAGE>

                                   ARTICLE III

               ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

         Section 3.01      THE SERVICER TO ACT AS SERVICER.

                  The Servicer shall service and administer the Mortgage Loans
on behalf of the Trust and in the best interest of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) in
accordance with the terms of this Agreement and the Mortgage Loans and to the
extent consistent with such terms and in accordance with and exercising the same
care in performing those practices that the Servicer customarily employs and
exercises in servicing and administering mortgage loans for its own account
(including, compliance with all applicable federal, state and local laws).

                  To the extent consistent with the foregoing, the Servicer
shall seek the timely and complete recovery of principal and interest on the
Mortgage Notes related to the Mortgage Loans and shall waive a Prepayment Charge
only under the following circumstances: (i) such waiver is standard and
customary in servicing similar mortgage loans and (ii) either (A) such waiver is
related to a default or reasonably foreseeable default and would, in the
reasonable judgment of the Servicer, maximize recovery of total proceeds taking
into account the value of such Prepayment Charge and the related Mortgage Loan
and, if such waiver is made in connection with a refinancing of the related
Mortgage Loan, such refinancing is related to a default or a reasonably
foreseeable default or (B) such waiver is made in connection with a refinancing
of the related Mortgage Loan unrelated to a default or a reasonably foreseeable
default where (x) the related Mortgagor has stated to the Servicer an intention
to refinance the related Mortgage Loan and (y) the Servicer has concluded in its
reasonable judgment that the waiver of such Prepayment Charge would induce such
Mortgagor to refinance with the Servicer or (iii) the Servicer reasonably
believes such Prepayment Charge is unenforceable in accordance with applicable
law or the collection of such related Prepayment Charge would otherwise violate
applicable law. If a Prepayment Charge is waived as permitted by meeting both of
the standards described in clauses (i) and (ii)(B) above, then the Servicer is
required to pay the amount of such waived Prepayment Charge (the "Servicer
Prepayment Charge Payment Amount"), for the benefit of the Holders of the Class
P Certificates, by depositing such amount into the Custodial Account within 90
days of notice or discovery of such waiver meeting the standard set forth in
both clauses (i) and (ii)(B) above; provided, however, that the Servicer shall
not waive more than 5% of the Prepayment Charges (by number of Prepayment
Charges) set forth on the Prepayment Charge Schedule in accordance with clauses
(i) and (ii)(B) above. Notwithstanding any other provisions of this Agreement,
any payments made by the Servicer in respect of any waived Prepayment Charges
pursuant to clauses (i) and (ii)(B) above and the preceding sentence shall be
deemed to be paid outside of the Trust Fund.

                  Subject only to the above-described applicable servicing
standards (the "Accepted Servicing Practices") and the terms of this Agreement
and of the respective Mortgage Loans, the Servicer shall have full power and
authority, acting alone and/or through subservicers as

                                      -57-
<PAGE>

provided in Section 3.03, to do or cause to be done any and all things that it
may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any related Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided herein), (iii) to collect any Insurance Proceeds and
other Liquidation Proceeds, and (iv) subject to Section 3.09, to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan.

                  Without limiting the generality of the foregoing, the
Servicer, in its own name or in the name of the Trust, the Depositor or the
Trustee, is hereby authorized and empowered by the Trust, the Depositor and the
Trustee, when the Servicer believes it appropriate in its reasonable judgment,
to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders 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 held for the benefit of the Certificateholders.
The Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by any or all of them as are
necessary or appropriate to enable the Servicer to service and administer the
Mortgage Loans. Upon receipt of such documents, the Depositor and/or the Trustee
shall execute such documents and deliver them to the Servicer. In addition, the
Trustee shall execute, at the written request of the Servicer, and furnish to
the Servicer any special or limited powers of attorney agreeable to the Trustee
and its counsel for each county in which a Mortgaged Property is located and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder, provided such limited powers of
attorney or other documents shall be prepared by the Servicer and submitted to
the Trustee for review prior to execution.

                  In accordance with the standards of the first paragraph of
this Section 3.01, the Servicer shall advance or cause to be advanced funds as
necessary for the purpose of effecting the payment of taxes and assessments on
the Mortgaged Properties relating to the Mortgage Loans in order to preserve the
lien on the Mortgaged Property, which advances shall be reimbursable in the
first instance from related collections from the Mortgagors pursuant to Section
4.04, and further as provided in Section 4.02. All costs incurred by the
Servicer, if any, in effecting the payments of such taxes and assessments on the
related Mortgaged Properties and related insurance premiums shall not, for the
purpose of calculating monthly distributions to the Certificateholders, be added
to the Stated Principal Balance under the related Mortgage Loans,
notwithstanding that the terms of such Mortgage Loans so permit.

         Section 3.02      DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.

                  (a) Except as otherwise provided in this Section 3.02, when
any Mortgaged Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall to the extent that it has knowledge of such conveyance, enforce
any due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent
permitted under applicable law and governmental regulations, but only to the
extent that such enforcement will not adversely affect or jeopardize coverage
under any Required Insurance Policy. Notwithstanding the foregoing, the Servicer
shall

                                      -58-
<PAGE>

not be required to exercise such rights with respect to a Mortgage Loan if the
Person to whom the related Mortgaged Property has been conveyed or is proposed
to be conveyed satisfies the terms and conditions contained in the Mortgage Note
and Mortgage related thereto and the consent of the mortgagee under such
Mortgage Note or Mortgage is not otherwise so required under such Mortgage Note
or Mortgage as a condition to such transfer. In the event that the Servicer is
prohibited by law from enforcing any such due-on-sale clause, or if coverage
under any Required Insurance Policy would be adversely affected, or if
nonenforcement is otherwise permitted hereunder, the Servicer is authorized,
subject to Section 3.02(b), to take or enter into an assumption and modification
agreement from or with the person to whom such property has been or is about to
be conveyed, pursuant to which such person becomes liable under the Mortgage
Note and, unless prohibited by applicable state law, the Mortgagor remains
liable thereon, provided that the related Mortgage Loan shall continue to be
covered (if so covered before the Servicer enters such agreement) by the
applicable Required Insurance Policies. The Servicer, subject to Section
3.02(b), is also authorized with the prior approval of the insurers under any
Required Insurance Policies to enter into a substitution of liability agreement
with such Person, pursuant to which the original Mortgagor is released from
liability and such Person is substituted as Mortgagor and becomes liable under
the Mortgage Note. Notwithstanding the foregoing, the Servicer shall not be
deemed to be in default under this Section 3.02(a) by reason of any transfer or
assumption that the Servicer reasonably believes it is restricted by law from
preventing.

                  (b) Subject to the Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.02(a), in any case in which a
related Mortgaged Property has been conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption agreement or modification agreement
or supplement to the Mortgage Note or Mortgage that requires the signature of
the Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the related Mortgage Loan, the
Servicer shall prepare and deliver or cause to be prepared and delivered to the
Trustee for signature and shall direct, in writing, the Trustee to execute the
assumption agreement with the Person to whom the Mortgaged Property is to be
conveyed and such modification agreement or supplement to the Mortgage Note or
Mortgage or other instruments as are reasonable or necessary to carry out the
terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption, no material term of the
Mortgage Note (including, but not limited to, the Mortgage Rate, the amount of
the Scheduled Payment, the Index, Gross Margin, Periodic Rate Cap, Adjustment
Date, Maximum Mortgage Interest Rate or Minimum Mortgage Interest Rate and any
other term affecting the amount or timing of payment on the related Mortgage
Loan) may be changed. In addition, the substitute Mortgagor and the Mortgaged
Property must be acceptable to the Servicer in accordance with the servicing
standard set forth in Section 3.01. The Servicer shall notify the Trustee that
any such substitution or assumption agreement has been completed by forwarding
to the Trustee the original of such substitution or assumption agreement, which
in the case of the original shall be added to the related Mortgage File and
shall, for all purposes, be considered a part of such Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. Any
fee collected by the Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation.

                                      -59-
<PAGE>

         Section 3.03      SUBSERVICERS.

                  The Servicer shall perform all of its servicing
responsibilities hereunder or may cause a subservicer to perform any such
servicing responsibilities on its behalf, but the use by the Servicer of a
subservicer shall not release the Servicer from any of its obligations hereunder
with respect to the related Mortgage Loans. The Servicer shall pay all fees of
each of its subservicers from its own funds, and a subservicer's fee shall not
exceed the Servicing Fee payable to the Servicer hereunder.

                  At the cost and expense of the Servicer, without any right of
reimbursement from the Custodial Account, the Servicer shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange for any
servicing responsibilities to be performed by a successor subservicer; provided,
however, that nothing contained herein shall be deemed to prevent or prohibit
the Servicer, at its option, from electing to service the related Mortgage Loans
itself. In the event that the Servicer's responsibilities and duties under this
Agreement are terminated pursuant to Section 8.03, the Servicer shall at its own
cost and expense terminate the rights and responsibilities of each subservicer
with respect to the Mortgage Loans effective as of the date of the Servicer's
termination. The Servicer shall pay all fees, expenses or penalties necessary in
order to terminate the rights and responsibilities of each subservicer from the
Servicer's own funds without reimbursement from the Trust Fund.

                  Notwithstanding the foregoing, the Servicer shall not be
relieved of its obligations hereunder with respect to the Mortgage Loans and
shall be obligated to the same extent and under the same terms and conditions as
if it alone were servicing and administering the Mortgage Loans. The Servicer
shall be entitled to enter into an agreement with a subservicer for
indemnification of the Servicer by the subservicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.

                  Any subservicing agreement and any other transactions or
services relating to the Mortgage Loans involving a subservicer shall be deemed
to be between such subservicer and the Servicer alone, and the Trustee shall not
have any obligations, duties or liabilities with respect to such subservicer
including any obligation, duty or liability of the Trustee to pay such
subservicer's fees and expenses or any differential in the amount of the
servicing fee paid hereunder and the amount necessary to induce any successor
servicer to act as successor servicer under this Agreement and the transactions
provided for in this Agreement. For purposes of remittances to the Trustee
pursuant to this Agreement, the Servicer shall be deemed to have received a
payment on a Mortgage Loan when a subservicer has received such payment.

         Section 3.04      DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF THE
                           SERVICER TO BE HELD FOR TRUSTEE.

                  Notwithstanding any other provisions of this Agreement, the
Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a related Mortgage Loan coming into the
possession of the Servicer from time to time and shall account fully to the
Trustee for any funds received by the Servicer or that otherwise are collected
by the Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
such Mortgage Loan. All Mortgage Files and funds collected or held by, or under
the control of, the Servicer in

                                      -60-
<PAGE>

respect of any Mortgage Loans, whether from the collection of principal and
interest payments or from Liquidation Proceeds, including but not limited to,
any funds on deposit in the Custodial Account, shall be held by the Servicer for
and on behalf of the Trustee and shall be and remain the sole and exclusive
property of the Trustee, subject to the applicable provisions of this Agreement.
The Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the Custodial Account, the Distribution
Account or in any Escrow Account, or any funds that otherwise are or may become
due or payable to the Trustee for the benefit of the Certificateholders, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of set
off against any Mortgage File or any funds collected on, or in connection with,
a Mortgage Loan, except, however, that the Servicer shall be entitled to set off
against and deduct from any such funds any amounts that are properly due and
payable to the Servicer under this Agreement.

         Section 3.05      MAINTENANCE OF HAZARD INSURANCE.

                  (a) The Servicer shall cause to be maintained for each
Mortgage Loan hazard insurance with extended coverage on the Mortgaged Property
in an amount which is at least equal to the lesser of (i) the Stated Principal
Balance of such Mortgage Loan and (ii) the amount necessary to fully compensate
for any damage or loss to the improvements that are a part of such property on a
replacement cost basis, in each case 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. The Servicer shall also cause to be maintained
hazard insurance with extended coverage on each REO Property in an amount which
is at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such REO Property and (ii) the Stated Principal
Balance of the related Mortgage Loan at the time it became an REO Property. The
Servicer will comply in the performance of this Agreement with all reasonable
rules and requirements of each insurer under any such hazard policies. Any
amounts collected by the Servicer under any such policies (other than amounts to
be applied to the restoration or repair of the property subject to the related
Mortgage or amounts to be released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing loans held for its own
account, subject to the terms and conditions of the related Mortgage and
Mortgage Note and in accordance with the servicing standard set forth in Section
3.01) shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.02. Any cost incurred by the Servicer in maintaining any
such insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the Stated Principal Balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Servicer shall cause to be maintained a flood insurance
policy in respect thereof. Such flood insurance shall be in an amount equal to
the lesser of (i) the Stated Principal Balance of the related Mortgage Loan and
(ii) the maximum amount of such insurance available for the related Mortgaged
Property under the national flood insurance program (assuming that the area in
which such Mortgaged Property is located is participating in such program).

                                      -61-
<PAGE>

                  In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of B:VI or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.05, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.05, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Custodial Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Trustee and Certificateholders, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy.

                  (b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Fannie Mae or Freddie Mac if it were the purchaser of the
related Mortgage Loans, unless the Servicer has obtained a waiver of such
requirements from Fannie Mae or Freddie Mac. The Servicer shall provide the
Trustee, upon request, with copies of such insurance policies and fidelity bond.
The Servicer shall also maintain a fidelity bond in the form and amount that
would meet the requirements of Fannie Mae or Freddie Mac, unless the Servicer
has obtained a waiver of such requirements from Fannie Mae or Freddie Mac. The
Servicer shall be deemed to have complied with this provision if an Affiliate of
the Servicer has such errors and omissions and fidelity bond coverage and, by
the terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Servicer. Any such errors and omissions policy and
fidelity bond shall by its terms not be cancelable without thirty days' prior
written notice to the Trustee. The Servicer shall also cause its subservicers to
maintain a policy of insurance covering errors and omissions and a fidelity bond
which would meet such requirements.

         Section 3.06      PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.

                  The Servicer shall prepare and present on behalf of the
Trustee and the Certificateholders all claims under the Insurance Policies and
take such actions (including the negotiation, settlement, compromise or
enforcement of the insured's claim) as shall be necessary to realize recovery
under such Insurance Policies. Any proceeds disbursed to the Servicer in respect
of such Insurance Policies shall, within two Business Days of its receipt, be
deposited in the Custodial Account upon receipt, except that any amounts
realized that are to be applied to the repair or restoration of the related
Mortgaged Property as a condition precedent to the presentation of claims on the
related Mortgage Loan to the insurer under any applicable Insurance Policy need
not be so deposited (or remitted).

         Section 3.07      MAINTENANCE OF INSURANCE POLICIES.

                  The Servicer shall not take any action that would result in
noncoverage under any applicable Insurance Policy of any loss which, but for the
actions of the Servicer would have

                                      -62-
<PAGE>

been covered thereunder. The Servicer shall use its best efforts to keep in
force and effect (to the extent that the related Mortgage Loan requires the
Mortgagor to maintain such insurance), any applicable Insurance Policy. The
Servicer shall not cancel or refuse to renew any Insurance Policy that is in
effect at the date of the initial issuance of the Mortgage Note and is required
to be kept in force hereunder.

         Section 3.08      RESERVED.

         Section 3.09      REALIZATION UPON DEFAULTED MORTGAGE LOANS;
                           DETERMINATION OF EXCESS LIQUIDATION PROCEEDS AND
                           REALIZED LOSSES; REPURCHASES OF CERTAIN MORTGAGE
                           LOANS.

                  (a) The Servicer shall use reasonable efforts to foreclose
upon or otherwise comparably convert the ownership of 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. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided that
the Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration of any property unless it shall
determine (i) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 4.02). If
the Servicer reasonably believes that Liquidation Proceeds with respect to any
such Mortgage Loan would not be increased as a result of such foreclosure or
other action, such Mortgage Loan will be charged-off and will become a
Liquidated Loan. The Servicer will give notice of any such charge-off to the
Trustee. The Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided that such costs and expenses
shall be Servicing Advances and that it shall be entitled to reimbursement
thereof from the proceeds of liquidation of the related Mortgaged Property, as
contemplated in Section 4.02. If the Servicer has knowledge that a Mortgaged
Property that the Servicer is contemplating acquiring in foreclosure or by
deed-in-lieu of foreclosure is located within a one-mile radius of any site with
environmental or hazardous waste risks known to the Servicer, the Servicer
shall, prior to acquiring the Mortgaged Property, consider such risks and only
take action in accordance with its established environmental review procedures.

                  With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such REO
Property solely as the Trustee hereunder and not in its individual capacity. The
Servicer shall ensure that the title to such REO Property references this
Agreement and the Trustee's capacity hereunder. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Servicer and

                                      -63-
<PAGE>

the Certificateholders for the period prior to the sale of such REO Property.
The Servicer shall prepare for and deliver to the Trustee a statement with
respect to each REO Property that has been rented showing the aggregate rental
income received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Trustee to comply with the reporting requirements of the REMIC Provisions. The
net monthly rental income, if any, from such REO Property shall be deposited in
the Custodial Account no later than the close of business on each Determination
Date. The Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 6050H, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.

                  In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Servicer shall dispose of such Mortgaged
Property prior to three years after its acquisition by the Trust Fund or, at the
expense of the Trust Fund, request from the Internal Revenue Service more than
60 days prior to the day on which such three-year period would otherwise expire,
an extension of the three-year grace period. The Trustee shall be supplied with
an Opinion of Counsel (such opinion not to be an expense of the Trustee or the
Trust Fund) to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to such three-year period will not result in the imposition
of taxes on "prohibited transactions" of any REMIC as defined in section 860F of
the Code or cause any REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
Property acquired by the Trust Fund shall be rented (or allowed to continue to
be rented) or otherwise used for the production of income by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code or (ii) subject any REMIC to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property under section 860G(c) of the Code or otherwise, unless
the Servicer has agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes.

                  The decision of the Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Servicer that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the management of any Mortgaged
Properties acquired through foreclosure or other judicial proceeding, net of
reimbursement to the Servicer for expenses incurred (including any property or
other taxes) in connection with such management and net of unreimbursed
Servicing Fees, Advances, Servicing Advances and any management fee paid or to
be paid with respect to the management of such Mortgaged Property, shall be
applied to the payment of principal of, and interest on, the related defaulted
Mortgage Loans (with interest accruing as though such Mortgage Loans were still
current) and all such income shall be deemed, for all purposes in the Agreement,
to be payments on account of principal and interest on the related Mortgage
Notes and shall be deposited into the Custodial Account. To the extent the
income received during a Prepayment Period is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan, such excess shall be considered to
be a partial Principal Prepayment for all purposes hereof.

                                      -64-
<PAGE>

                  The Liquidation Proceeds from any liquidation of a Mortgage
Loan, net of any payment to the Servicer as provided above, shall be deposited
in the Custodial Account on the next succeeding Determination Date following
receipt thereof for distribution on the related Distribution Date, except that
any Excess Liquidation Proceeds shall be retained by the Servicer as additional
servicing compensation.

                  The proceeds of any Liquidated Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income from
an REO Property, shall be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 4.02 or this Section 3.09; second, to
reimburse the Servicer for any unreimbursed Advances, pursuant to Section 4.02
or this Section 3.09; third, to accrued and unpaid interest (to the extent no
Advance has been made for such amount) on the Mortgage Loan or related REO
Property, at the Net Mortgage Rate to the first day of the month in which such
amounts are required to be distributed; and fourth, as a recovery of principal
of the Mortgage Loan.

                  (b) On each Determination Date, the Servicer shall determine
the respective aggregate amounts of Excess Liquidation Proceeds and Realized
Losses, if any, with respect to any Mortgage Loan for the related Prepayment
Period.

                  (c) The Servicer has no intent to foreclose on any Mortgage
Loan based on the delinquency characteristics as of the Closing Date; provided,
however, that the foregoing does not prevent the Servicer from initiating
foreclosure proceedings on any date hereafter if the facts and circumstances of
such Mortgage Loans including delinquency characteristics in the Servicer's
discretion so warrant such action.

         Section 3.10      SERVICING COMPENSATION.

                  As compensation for its activities hereunder, the Servicer
shall be entitled to retain or withdraw from the Custodial Account out of each
payment of interest on each Mortgage Loan included in the Trust Fund an amount
equal to the Servicing Fee. In addition, the Servicer shall be entitled to
recover unpaid Servicing Fees out of Liquidation Proceeds, Insurance Proceeds or
condemnation proceeds to the extent permitted by Section 4.02.

                  Additional servicing compensation with respect to Mortgage
Loans in the form of any Excess Liquidation Proceeds, assumption fees, late
payment charges, insufficient funds charges and ancillary income to the extent
such fees or charges are received by the Servicer, all income and gain net of
any losses realized from Permitted Investments with respect to funds in or
credited to the Custodial Account shall be retained by the Servicer to the
extent not required to be deposited in the Custodial Account pursuant to Section
4.02. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of any
premiums for hazard insurance, as required by Section 3.05 and maintenance of
the other forms of insurance coverage required by Section 3.07) and shall not be
entitled to reimbursement therefor except as specifically provided in Section
4.02.

                                      -65-
<PAGE>

         Section 3.11      REO PROPERTY.

                  (a) In the event the Trust Fund acquires ownership of any REO
Property in respect of any related Mortgage Loan, the deed or certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Servicer shall sell any REO Property as expeditiously as
possible and in accordance with the provisions of this Agreement. Pursuant to
its efforts to sell such REO Property, the Servicer shall protect and conserve
such REO Property in the manner and to the extent required herein, in accordance
with the REMIC Provisions.

                  (b) The Servicer shall deposit all funds collected and
received in connection with the operation of any REO Property into the Custodial
Account.

                  (c) The Servicer, upon the final disposition of any REO
Property, shall be entitled to reimbursement for any related unreimbursed
Advances, unreimbursed Servicing Advances or Servicing Fees from Liquidation
Proceeds received in connection with the final disposition of such REO Property;
provided, that any such unreimbursed Advances or Servicing Fees as well as any
unpaid Servicing Fees may be reimbursed or paid, as the case may be, prior to
final disposition, out of any net rental income or other net amounts derived
from such REO Property.

         Section 3.12      LIQUIDATION REPORTS.

                  Upon the foreclosure of any Mortgaged Property or the
acquisition thereof by the Trust Fund pursuant to a deed-in-lieu of foreclosure,
the Servicer shall submit a liquidation report to the Trustee containing such
information as shall be mutually acceptable to the Servicer and the Trustee with
respect to such Mortgaged Property.

         Section 3.13      ANNUAL CERTIFICATE AS TO COMPLIANCE.

                  (a) The Servicer shall deliver to the Depositor and the
Trustee not later than March 15th of each year commencing in 2005 (or, in each
case, if such day is not a Business Day, the immediately preceding Business
Day), a certificate of a Authorized Servicer Representative stating, as to each
signatory thereof, that (i) a review of the activities of the Servicer during
the preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status thereof except for such
defaults as such officer in its good faith judgment believe to be immaterial.

                  (b) (i) The Servicer shall deliver to the Depositor and the
Trustee, on or before March 15th of each year commencing in 2005, a
certification containing the information set forth in Exhibit L. Such
certification shall be signed by the senior officer in charge of servicing of
the Servicer. In addition, the Servicer shall provide such other information
with respect to the related Mortgage Loans and the servicing and administration
thereof within the control of the Servicer which shall be required to enable the
Depositor and the Trustee to comply

                                      -66-
<PAGE>

with the reporting requirements of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act").

                  (ii) The Servicer shall indemnify and hold harmless the
Depositor, the Trustee and their respective officers, directors, agents and
affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other costs and expenses
to the extent arising out of or based upon a breach by the Servicer or any of
its officers, directors, agents or affiliates of its obligations under this
Section 3.13(b), or a breach in any of the representations in the certification
delivered pursuant to clause (b)(i) above, or the Servicer's gross negligence,
bad faith or willful misconduct in connection therewith. If the indemnification
provided for herein is unavailable to the Depositor and the Trustee as a result
of a court of law or other administrative or regulatory body with authority
holding such indemnification void on the basis of public policy or similar
reason, then the Servicer agrees that it shall contribute to the amount paid or
payable by the Depositor and the Trustee as a result of the losses, claims,
damages or liabilities of the Depositor or the Trustee in such proportion as is
appropriate to reflect the relative fault of the Trustee or the Depositor on the
one hand and the Servicer on the other in connection with a breach of the
Servicer's obligations under this Section 3.13(b) or the Servicer's gross
negligence, bad faith or wilful misconduct in connection therewith or a breach
of any of the representations in the certification delivered pursuant to clause
(b)(i) above with respect to the matters covered by this Section 3.13(b)(ii).

         Section 3.14      ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
                           SERVICING REPORT.

                  Not later than March 15th of each year, commencing in 2005,
the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the servicing of residential mortgage loans during the most recently
completed fiscal or calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by
subservicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those subservicers. Promptly upon receipt of such report, the Servicer shall
furnish a copy of such report to the Depositor, the Trustee and each Rating
Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided that such
statement is delivered by the Servicer to the Trustee.

                                      -67-
<PAGE>

         Section 3.15      BOOKS AND RECORDS.

                  The Servicer shall be responsible for maintaining, and shall
maintain, a complete set of books and records for the related Mortgage Loans
which shall be appropriately identified in the Servicer's computer system to
clearly reflect the ownership of the related Mortgage Loans by the Trust. In
particular, the Servicer shall maintain in its possession, available for
inspection by the Trustee and shall deliver to the Trustee upon reasonable prior
request and during normal business hours, evidence of compliance with all
federal, state and local laws, rules and regulations. To the extent that
original documents are not required for purposes of realization of Liquidation
Proceeds or Insurance Proceeds, documents maintained by the Servicer may be in
the form of microfilm or microfiche or such other reliable means of recreating
original documents, including, but not limited to, optical imagery techniques so
long as the Servicer complies with the requirements of Accepted Servicing
Practices.

                  The Servicer shall maintain with respect to each related
Mortgage Loan and shall upon reasonable prior request and during normal business
hours make available for inspection by the Trustee the related servicing file
during the time such Mortgage Loan is subject to this Agreement and thereafter
in accordance with applicable law.

         Section 3.16      THE TRUSTEE.

                  The Trustee shall furnish the Servicer with any powers of
attorney and other documents in form as mutually agreed upon and necessary or
appropriate to enable the Servicer to service and administer the Mortgage Loans
and REO Properties.

                  The Trustee shall provide access to the records and
documentation in possession of the Trustee regarding the related Mortgage Loans
and REO Property and the servicing thereof to the Certificateholders, the FDIC,
and the supervisory agents and examiners of the FDIC, such access being afforded
only upon reasonable prior written request and during normal business hours at
the office of the Trustee; provided, however, that, unless otherwise required by
law, the Trustee shall not be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow representatives of the above entities
to photocopy any of the records and documentation and shall provide equipment
for that purpose at a charge that covers the Trustee's actual costs.

                  The Trustee shall execute and deliver as directed in writing
by the Servicer any court pleadings, requests for trustee's sale or other
documents necessary or desirable to (i) the foreclosure or trustee's sale with
respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Security Instrument;
(iii) obtain a deficiency judgment against the Mortgagor; or (iv) enforce any
other rights or remedies provided by the Mortgage Note or Security Instrument or
otherwise available at law or equity.

         Section 3.17      REMIC-RELATED COVENANTS.

                  For as long as each REMIC shall exist, the Trustee shall act
in accordance herewith to assure continuing treatment of such REMIC as a REMIC,
and the Trustee shall comply with any directions of the Seller or the Servicer
to assure such continuing treatment. In

                                      -68-
<PAGE>

particular, the Trustee shall not (a) knowingly sell or permit the sale of all
or any portion of the Mortgage Loans or of any investment of deposits in an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of
this Agreement, as applicable, accept any contribution to any REMIC after the
Startup Day without receipt of a REMIC Opinion.

         Section 3.18      REIMBURSEMENT OF COSTS AND EXPENSES .

                  (a) To the extent that the costs and expenses of the Trustee
related to any termination of the Servicer, appointment of a Successor Servicer
or the transfer and assumption of servicing by the Trustee with respect to this
Agreement (including, without limitation, (i) all legal costs and expenses and
all due diligence costs and expenses associated with an evaluation of the
potential termination of the Servicer as a result of an event of default by such
Person and (ii) all costs and expenses associated with the complete transfer of
servicing, including all servicing files and all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Successor Servicer to correct any errors or insufficiencies in the
servicing data or otherwise to enable the successor service to service the
related Mortgage Loans in accordance with this Agreement) are not fully and
timely reimbursed by the Servicer, the Trustee shall be entitled to
reimbursement of such costs and expenses from the Distribution Account.

                  (b) If the Trustee acts as a Successor Servicer to the
Servicer, it will not assume liability for the representations and warranties of
the Servicer contained herein.

         Section 3.19      RELEASE OF MORTGAGE FILES.

                  (a) Upon becoming aware of the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification that payment in full has
been escrowed in a manner customary for such purposes for payment to the related
Certificateholders on the next Distribution Date, the Servicer will promptly
furnish to the Trustee and the Custodian, on behalf of the Trustee, two copies
of a certification substantially in the form of Exhibit H hereto signed by a
Authorized Servicer Representative or in a mutually agreeable electronic format
which will, in lieu of a signature on its face, originate from a Authorized
Servicer Representative (which certification shall include a statement to the
effect that all amounts received in connection with such payment that are
required to be deposited in the Custodial Account pursuant to Article V have
been or will be so deposited) and shall request that the Custodian, on behalf of
the Trustee, deliver to the Servicer the related Mortgage File. Within five (5)
Business Days of receipt of such certification and request, the Custodian, on
behalf of the Trustee, shall release the related Mortgage File to the Servicer
and the Trustee and Custodian shall have no further responsibility with regard
to such Mortgage File. Upon any such payment in full, the Servicer is
authorized, to give, as agent for the Trustee, as the mortgagee under the
Mortgage that secured the related Mortgage Loan, an instrument of satisfaction
(or assignment of mortgage without recourse) regarding the Mortgaged Property
subject to the Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses

                                      -69-
<PAGE>

incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Custodial Account.

         (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with this Agreement, the
Trustee shall execute such documents as shall be prepared and furnished to the
Trustee by the Servicer (in form reasonably acceptable to the Trustee) and as
are necessary to the prosecution of any such proceedings. The Custodian, on
behalf of the Trustee, shall, upon the written request of the Servicer, and
delivery to the Custodian, on behalf of the Trustee, of two copies of a request
for release signed by a Authorized Servicer Representative substantially in the
form of Exhibit H (or in a mutually agreeable electronic format which will, in
lieu of a signature on its face, originate from a Authorized Servicer
Representative), release the related Mortgage File held in its possession or
control to the Servicer. Such request for release shall obligate the Servicer to
return the Mortgage File to the Custodian on behalf of the Trustee, when the
need therefor by such Person no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certificate of a Authorized
Servicer Representative similar to that hereinabove specified, the Mortgage File
shall be released by the Custodian, on behalf of the Trustee, to the Servicer.

         Section 3.20 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF THE SERVICER
TO BE HELD FOR TRUSTEE.

                  (a) The Servicer (to the extent required by this Agreement)
shall transmit to the Trustee or to Custodian such documents and instruments
coming into the possession of such Person from time to time as are required by
the terms hereof to be delivered to the Trustee or the Custodian. Any funds
received by the Servicer in respect of any Mortgage Loan or which otherwise are
collected by the Servicer as Liquidation Proceeds or Insurance Proceeds in
respect of any Mortgage Loan shall be held for the benefit of the Trustee and
the related Certificateholders subject to the right of the Servicer to retain
its Servicing Fee and other amounts as provided in this Agreement.

         Section 3.21    POSSESSION OF CERTAIN INSURANCE POLICIES AND DOCUMENTS.

                  The Servicer shall retain possession and custody of the
originals (to the extent available) of any Insurance Policies, or certificate of
insurance if applicable, and any certificates of renewal as to the foregoing as
may be issued from time to time as contemplated by this Agreement. Until all
amounts distributable in respect of the Certificates have been distributed in
full, the Trustee (or the Custodian, as directed by the Trustee) shall retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement.

         Section 3.22      ANNUAL CERTIFICATE AS TO COMPLIANCE.

                  (a) The Depositor shall prepare and file or caused to be
prepared and filed the initial Form 8-K. Within 15 days after each Distribution
Date, the Trustee shall, in accordance with industry standards, file with the
Commission via the Electronic Data Gathering and Retrieval System ("EDGAR"), a
Form 8-K with a copy of the statement to be furnished by the Trustee to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January

                                      -70-
<PAGE>

30, 2005, the Trustee shall, in accordance with industry standards, file a Form
15 Suspension Notice with respect to the Trust Fund. Prior to March 30, 2005 and
annually thereafter, if required, the Trustee shall, subject to subsection (d)
below, file a Form 10-K, in substance conforming to industry standards, with
respect to the Trust Fund. Such Form 10K shall be signed by the Depositor and
shall include, to the extent available, as exhibits (i) the Servicer's annual
statement of compliance described under Section 3.13 hereof, (ii) the Servicer's
accountants report described under Section 3.14 and (iii) the Form 10-K
certification signed by the Depositor. If items (i), (ii) and (iii) in the
preceding sentence are not timely delivered, the Trustee shall file an amended
Form 10-K including such documents as exhibits reasonably promptly after they
are delivered to the Trustee. The Depositor hereby grants to the Trustee a
limited power of attorney to execute and file each Form 8-K and the Form 15 on
behalf of the Depositor. Such power of attorney shall continue until either the
earlier of (i) receipt by the Trustee from the Depositor of written termination
of such power of attorney and (ii) the termination of the Trust Fund. The
Depositor agrees to promptly furnish to the Trustee, from time to time upon
request, such further information, reports and financial statements within its
control related to this Agreement and the Mortgage Loans as the Trustee
reasonably deems appropriate to prepare and file a Form 8-K and the Form 15 with
the Commission. The Trustee will reasonably cooperate with the Depositor in
connection with any additional filings with respect to the Trust Fund as the
Depositor deems necessary under the Exchange Act. Copies of all reports filed by
the Trustee under the Exchange Act shall be sent to the Depositor.

                  (b) In connection with the filing of any 10-K hereunder, the
Trustee shall sign a certification (in the form attached hereto as Exhibit M) on
behalf of the Depositor regarding certain aspects of the Form 10-K certification
signed by the Depositor, provided, however, that the Trustee shall not be
required to undertake an analysis of any accountant's report attached as an
exhibit to the Form 10-K.

                  (c) (i) The Trustee shall indemnify and hold harmless the
Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach of the Trustee's obligations under this Section 3.22 or the
Trustee's negligence, bad faith or willful misconduct in connection therewith.

                           (ii) The Depositor shall indemnify and hold harmless
the Trustee and its officers, directors and Affiliates
from and against any losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments and other costs and
expenses arising out of or based upon a breach of the obligations of the
Depositor under this Section 3.22 or the Depositor's negligence, bad faith or
willful misconduct in connection therewith.

                            (iii) If the indemnification provided for herein is
unavailable or insufficient to hold harmless the
Depositor or the Trustee, as applicable, then the other party, in connection
with a breach of its respective obligations under this Section 3.22 or its
respective negligence, bad faith or willful misconduct in connection therewith,
agrees that it shall contribute to the amount paid or payable by the other party
as a result of the losses, claims, damages or liabilities of the other party in
such proportion as is appropriate to reflect the relative fault and the relative
benefit of the Depositor on the one hand and the Trustee on the other.

                                      -71-
<PAGE>

                  (d) Nothing shall be construed from the foregoing subsections
(a), (b) and (c) to require the Trustee or any officer, director or Affiliate
thereof to sign any Form 10-K or any certification contained therein.
Furthermore, the inability of the Trustee to file a Form 10-K as a result of the
lack of required information as set forth in Section 3.22(a) or required
signatures on such Form 10-K or any certification contained therein shall not be
regarded as a breach by the Trustee of any obligation under this Agreement.

                  (e) Notwithstanding the provisions of Section 11.01, this
Section 3.22 may be amended without the consent of the Certificateholders.

         Section 3.23      UCC.

                  The Seller agrees to execute and file continuation statements
for any Uniform Commercial Code financing statements which were filed in
connection with the Trust. The Seller shall file any financing statements or
amendments and continuation statements thereto required by any change in the
Uniform Commercial Code.

         Section 3.24      OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.

                  With respect to any Mortgage Loans which as of the first day
of a Calendar Quarter is delinquent in payment by 91 days or more or is an REO
Property, the Seller shall have the right to purchase such Mortgage Loan or REO
Property from the Trust at a price equal to the Purchase Price.

                  If at any time the Seller remits to the Trustee a payment for
deposit in the Distribution Account covering the amount of the Purchase Price
for such a Mortgage Loan, then the Trustee shall execute the assignment of such
Mortgage Loan at the request of the Seller without recourse to the Seller which
shall succeed to all the Trustee's right, title and interest in and to such
Mortgage Loan, and all security and documents relative thereto. Such assignment
shall be an assignment outright and not for security. The Seller will thereupon
own such Mortgage, and all such security and documents, free of any further
obligation to the Trustee or the Certificateholders with respect thereto. The
Seller shall be responsible for any transfer costs incurred with respect to a
Mortgage Loan purchased pursuant to this Section 3.24.

                                      -72-
<PAGE>

                                   ARTICLE IV

                                    ACCOUNTS

         Section 4.01   COLLECTION OF MORTGAGE LOAN PAYMENTS; CUSTODIAL ACCOUNT.

                  (a) The Servicer shall make reasonable efforts in accordance
with Accepted Servicing Practices to collect all payments called for under the
terms and provisions of the related Mortgage Loans to the extent such procedures
shall be consistent with this Agreement and the terms and provisions of any
related Required Insurance Policy. Consistent with the foregoing, the Servicer
may in its discretion (i) waive any late payment charge and (ii) extend the due
dates for payments due on a Mortgage Note for a Mortgage Loan for a period not
greater than 180 days; provided, however no such extension shall be materially
adverse to the Certificateholders. In the event of any such arrangement, the
Servicer shall make Advances on the related Mortgage Loan during the scheduled
period in accordance with the amortization schedule of such Mortgage Loan
without modification thereof by reason of such arrangements, and shall be
entitled to reimbursement therefor in accordance with Section 5.01. The Servicer
shall not be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Mortgage Note or otherwise
or against any public or governmental authority with respect to a taking or
condemnation) if it reasonably believes that enforcing the provision of the
Mortgage or other instrument pursuant to which such payment is required is
prohibited by applicable law. In addition, if (x) a Mortgage Loan is in default
or default is imminent or (y) the Servicer delivers to the Trustee a REMIC
Opinion, the Servicer may, (A) amend the related Mortgage Note to reduce the
Mortgage Rate applicable thereto, provided that such reduced Mortgage Rate shall
in no event be lower than 4.790% with respect to any Mortgage Loan and (B) amend
any Mortgage Note for a Mortgage Loan to extend to the maturity thereof.

                  (b) The Servicer shall establish and maintain a segregated
Custodial Account (which shall at all times be an Eligible Account) with a
depository institution in the name of the Servicer for the benefit of the
Trustee on behalf of the Certificateholders and designated "JPMorgan Chase Bank,
as trustee for registered holders of Nomura Asset Acceptance Corporation,
Mortgage Pass-Through Certificates, Series 2004-AR2". On behalf of the Trust
Fund, the Servicer shall deposit or cause to be deposited in the clearing
account in which it customarily deposits payments and collection on Mortgage
Loans in connection with its mortgage loan servicing activities on a daily basis
and in no event more than one Business Day after the Servicer's receipt thereof,
and shall thereafter deposit in the Custodial Account, in no event more than two
Business Days after the Servicer's receipt thereof, except as otherwise
specifically provided herein, the following payments and collections remitted by
subservicers or received by it in respect of the Mortgage Loans subsequent to
the Cut-off Date (other than in respect of principal and interest due on the
related Mortgage Loans on or before the Cut-off Date) and the following amounts
required to be deposited hereunder:

                  (i) all payments on account of principal, including Principal
         Prepayments and Subsequent Recoveries, on the Mortgage Loans;

                                      -73-
<PAGE>

                  (ii) all payments on account of interest on the Mortgage Loans
         net of the related Servicing Fee permitted under Section 3.10;

                  (iii) all Liquidation Proceeds, Insurance Proceeds and
         condemnation proceeds with respect to the Mortgage Loans, other than
         proceeds to be applied to the restoration or repair of the related
         Mortgaged Properties or released to the Mortgagor in accordance with
         the Servicer's normal servicing procedures;

                  (iv) any amount required to be deposited by the Servicer
         pursuant to Section 4.01(c) in connection with any losses on Permitted
         Investments;

                  (v) any amounts required to be deposited by the Servicer
         pursuant to Section 3.05;

                  (vi) any amounts paid by an Advance Financing Person in
         respect of Advances or Servicing Advances;

                  (vii) any Prepayment Charges collected by the Servicer in
         connection with the Principal Prepayment of any of the Mortgage Loans
         and any Servicer Prepayment Charge Payment Amounts; and

                  (viii) any other amounts required to be deposited hereunder.

                  The foregoing requirements for deposit by the Servicer into
the Custodial Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of late
payment charges or assumption fees, if collected, need not be deposited by the
Servicer. In the event that the Servicer shall deposit any amount not required
to be deposited and not otherwise subject to withdrawal pursuant to Section
4.02, it may at any time withdraw or direct the institution maintaining the
Custodial Account, to withdraw such amount from the Custodial Account, any
provision herein to the contrary notwithstanding. Such withdrawal or direction
may be accomplished by delivering written notice thereof to the institution
maintaining the Custodial Account, that describes the amounts deposited in error
in the Custodial Account. The Servicer shall maintain adequate records with
respect to all withdrawals made pursuant to this Section. All funds deposited in
the Custodial Account shall be held in trust for the Certificateholders until
withdrawn in accordance with Section 4.02.

                  (c) The institution that maintains the Custodial Account or
other authorized entity shall invest the funds in the Custodial Account, in the
manner directed by the Servicer, in Permitted Investments which shall mature not
later than the next succeeding Remittance Date and shall not be sold or disposed
of prior to its maturity. All such Permitted Investments shall be made in the
name of the Trustee, for the benefit of the Certificateholders. All income and
gain net of any losses realized from any such investment shall be for the
benefit of the Servicer as servicing compensation and shall be remitted to it
monthly as provided herein. The amount of any losses incurred in the Custodial
Account in respect of any such investments shall be deposited by the Servicer
into the Custodial Account immediately as realized, out of its own funds.

                                      -74-
<PAGE>

                  (d) The Servicer shall give at least 30 days advance notice to
the Trustee, the Seller, each Rating Agency and the Depositor of any proposed
change of location of the Custodial Account prior to any change thereof.

         Section 4.02      PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.

                  (a) The Servicer may from time to time make withdrawals from
the Custodial Account for the following purposes:

                  (i) to pay itself (to the extent not previously paid to or
         withheld by the Servicer), as servicing compensation in accordance with
         Section 3.10, that portion of any payment of interest that equals the
         Servicing Fee for the period with respect to which such interest
         payment was made, and, as additional servicing compensation, those
         other amounts set forth in Section 3.10;

                  (ii) to reimburse the Servicer or an Advance Financing Person
         for (A) any unreimbursed Advances to the extent of amounts received
         which represent late recoveries of payments of principal and/or
         interest (net of the related Servicing Fees), Liquidation Proceeds and
         Insurance Proceeds on the Mortgage Loans with respect to which such
         Advances were made in accordance with the provisions of Section 5.01;
         and (B) any unreimbursed Advances with respect to the final liquidation
         of a Mortgage Loan that are Nonrecoverable Advances, but only to the
         extent that late recoveries of payments of principal and/or interest,
         Liquidation Proceeds and Insurance Proceeds received with respect to
         such Mortgage Loan are insufficient to reimburse the Servicer or an
         Advance Financing Person for such unreimbursed Advances or (C) subject
         to Section 4.02(b), any unreimbursed Advances to the extent of Amounts
         Held For Future Distribution funds held in the Custodial Account that
         were not included in the Available Distribution Amount for the
         preceding Distribution Date;

                  (iii) to reimburse the Servicer or an Advance Financing Person
         for any Nonrecoverable Advances;

                  (iv) to reimburse the Servicer from Insurance Proceeds for
         Insured Expenses covered by the related Insurance Policy;

                  (v) to pay the Servicer any unpaid Servicing Fees and to
         reimburse it or any Advance Financing Person for any unreimbursed
         Servicing Advances, provided, however, that the Servicer's or such
         Advance Financing Person's right to reimbursement for Servicing
         Advances pursuant to this subclause (v) with respect to any Mortgage
         Loan shall be limited to amounts received on particular Mortgage
         Loan(s) (including, for this purpose, late recoveries of payments of
         principal and/or interest, Liquidation Proceeds, Insurance Proceeds,
         condemnation proceeds and purchase and repurchase proceeds) that
         represent late recoveries of the payments for which such Servicing
         Advances were made;

                  (vi) to pay to the Seller or the Depositor with respect to
         each Mortgage Loan or property acquired in respect thereof that has
         been purchased pursuant to Section 2.02,

                                      -75-
<PAGE>

         2.03 or 3.24, all amounts received thereon and not taken into account
         in determining the related Stated Principal Balance of such repurchased
         Mortgage Loan;

                  (vii) to pay any expenses recoverable by the Servicer pursuant
         to Section 7.04;

                  (viii) to withdraw any amount deposited in the Custodial
         Account and not required to be deposited therein; and

                  (ix) to clear and terminate the Custodial Account upon
         termination of this Agreement pursuant to Section 10.01 hereof.

                  In addition, no later than 3:00 p.m. Eastern time on the
Remittance Date, the Servicer shall withdraw from the Custodial Account and
remit to the Trustee (a) all amounts deposited in the Custodial Account as of
the close of business on the last day of the related Due Period (net of charges
against or withdrawals from the Custodial Account pursuant to this Section
4.02), plus (b) all Advances, if any, which the Servicer is obligated to make
pursuant to Section 5.01, minus (c) any amounts attributable to Principal
Prepayments, Liquidation Proceeds, Insurance Proceeds or condemnation proceeds
received after the applicable Prepayment Period, which amounts shall be remitted
on the following Remittance Date, together with any Compensating Interest
required to be deposited in the Custodial Account in connection with such
Principal Prepayment in accordance with Section 5.02, and minus (d) any amounts
attributable to Scheduled Payments collected but due on a Due Date or Due Dates
subsequent to the first day of the month in which such Remittance Date occurs,
which amounts shall be remitted on the Remittance Date next succeeding the Due
Date related to such Scheduled Payment.

                  The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Custodial Account pursuant to subclauses (i), (ii), (iv),
(v) and (vi) above. Prior to making any withdrawal from a Custodial Account
pursuant to subclause (iii), the Servicer shall deliver to the Trustee an
Officer's Certificate of a Authorized Servicer Representative indicating the
amount of any previous Advance or Servicing Advance determined by the Servicer
to be a Nonrecoverable Advance and identifying the related Mortgage Loan(s), and
their respective portions of such Nonrecoverable Advance.

                  (b) Notwithstanding the foregoing, any Amounts Held For Future
Distribution withdrawn by the Servicer as permitted in Section 4.02(a)(ii) in
reimbursement of Advances previously made by the Servicer shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the Custodial Account, no later than the close of business on any future
Remittance Date on which the funds on deposit in the Custodial Account shall be
less than the amount required to be remitted to the Trust on such Remittance
Date; provided, however that if the rating of the Servicer (including any
Successor Servicer) is less than "BBB", the Servicer shall be required to
replace such funds by deposit to the Distribution Account, no later than the
close of business on the Remittance Date immediately following the Due Period or
Prepayment Period for which such amounts relate.

                                      -76-
<PAGE>

         Section 4.03      REPORTS TO TRUSTEE.

         On or before the tenth calendar day of each month, the Servicer shall
furnish to the Trustee electronically in a format reasonably acceptable to the
Trustee loan accounting reports in the investor's assigned loan number order to
document the payment activity on each Mortgage Loan on an individual mortgage
loan basis. With respect to each month, such loan accounting reports shall
contain the following, or other items reasonably requested by the Trustee and
which it needs in connection with the performance of its duties under Sections
5.06 and 5.09:

                  (i) With respect to each Scheduled Payment (on both an actual
         and scheduled basis with respect to mortgage loan balances and on an
         actual basis with respect to paid-through dates), the amount of such
         remittance allocable to principal (including a separate breakdown of
         any Principal Prepayment, including the amount of any Prepayment
         Interest Shortfall);

                  (ii) with respect to each Monthly Payment, the amount of such
         remittance allocable to scheduled interest;

                  (iii) the amount of any Prepayment Charges collected by the
         Servicer;

                  (iv) the amount of servicing compensation received by the
         Servicer during the prior calendar month;

                  (v) the Aggregate Loan Group Balance of the Mortgage Loans in
         each Loan Group and the Aggregate Loan Balance;

                  (vi) the aggregate amount of Advances made by the Servicer
         pursuant to Section 5.01;

                  (vii) the aggregate of any expenses reimbursed to the Servicer
         during the prior calendar month pursuant to Section 4.02; and

                  (viii) the number and aggregate outstanding principal balances
         of Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89 days,
         (3) 90 days or more; (b) as to which foreclosure has commenced; and (c)
         as to which REO Property has been acquired.

         Section 4.04      COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS;
                           ESCROW ACCOUNTS.

                  To the extent required by the related Mortgage Note, the
Servicer shall establish and maintain one or more accounts (each, an "Escrow
Account") and deposit and retain therein all collections from the Mortgagors (or
advances by the Servicer) for the payment of taxes, assessments, hazard
insurance premiums or comparable items for the account of the Mortgagors.
Nothing herein shall require the Servicer to compel a Mortgagor to establish an
Escrow Account in violation of applicable law.

                  Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, condominium or PUD association dues, or comparable items, to
reimburse the Servicer out of related

                                      -77-
<PAGE>

collections for any payments made with respect to each Mortgage Loan pursuant to
Section 3.01 (with respect to taxes and assessments and insurance premiums) and
Section 3.05 (with respect to hazard insurance), to refund to any Mortgagors any
sums as may be determined to be overages, to pay interest, if required by law or
the terms of the related Mortgage or Mortgage Note, to such Mortgagors on
balances in the Escrow Account, to remove amounts deposited in error or to clear
and terminate the Escrow Account at the termination of this Agreement in
accordance with Section 10.01 thereof. The Escrow Account shall not be a part of
the Trust Fund.

         Section 4.05      ADJUSTMENTS TO MORTGAGE RATE AND SCHEDULED PAYMENT.

         On each applicable Adjustment Date, the Mortgage Rate with respect to
each Mortgage Loan shall be adjusted, in compliance with the requirements of the
related Mortgage and Mortgage Note, to equal the sum of the Index plus the Gross
Margin (rounded in accordance with the related Mortgage Note) subject to the
applicable Periodic Rate Cap, Maximum Mortgage Interest Rate and Minimum
Mortgage Interest Rate, as set forth in the Mortgage Note. The Servicer shall
execute and deliver the notices required by each Mortgage and Mortgage Note,
applicable laws and regulations regarding interest rate adjustments. The
Servicer shall also provide timely notification to the Trustee of all applicable
data and information regarding such interest rate adjustments and the Servicer's
methods of implementing such interest rate adjustments. Upon the discovery by
the Servicer or the Trustee that the Servicer has failed to adjust a Mortgage
Rate or a Scheduled Payment pursuant to the terms of the related Mortgage Note
and Mortgage, the Servicer shall immediately deposit in the Custodial Account
from its own funds the amount of any interest loss caused thereby without
reimbursement therefor.

         Section 4.06      DISTRIBUTION ACCOUNT.

                  (a) The Trustee shall establish and maintain in the name of
the Trustee, for the benefit of the Certificateholders, the Distribution Account
as a segregated non-interest bearing trust account or accounts. The Trustee will
deposit in the Distribution Account as identified by the Trustee and as received
by the Trustee, the following amounts:

                           (i) All payments and recoveries in respect of
principal on the Mortgage Loans, including, without
limitation, Principal Prepayments, Subsequent Recoveries, Liquidation Proceeds,
Insurance Proceeds, condemnation proceeds and all payments and recoveries in
respect of interest on the Mortgage Loans withdrawn by the Servicer from the
Custodial Account and remitted by the Servicer to the Trustee;

                           (ii) Any Advance and any Compensating Interest
Payments;

                           (iii) Any Prepayment Charges collected by the
Servicer in connection with the Principal Prepayment of any of the Mortgage
Loans (including any Servicer Prepayment Charge Payment Amounts);

                           (iv) Any Insurance Proceeds or Liquidation Proceeds
received by or on behalf of the Trustee or which
were not deposited in the Custodial Account;

                                      -78-
<PAGE>

                           (v) The Repurchase Price with respect to any Mortgage
Loans purchased by the Seller or Section 2.02 or 2.03, any amounts which are to
be treated pursuant to Section 2.04 of this Agreement as the payment of such a
Repurchase Price, the Repurchase Price with respect to any Mortgage Loans
purchased by the Depositor pursuant to Section 3.24, and all proceeds of any
Mortgage Loans or property acquired with respect thereto repurchased by the
Depositor or its designee pursuant to Section 10.01;

                           (vi) Any amounts required to be deposited with
respect to losses on investments of deposits in an
Account; and

                           (vii) Any other amounts received by or on behalf of
the Trustee and required to be deposited in the
Distribution Account pursuant to this Agreement.

                  (b) All amounts deposited to the Distribution Account shall be
held by the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement. The requirements for crediting the Distribution Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges or assumption,
tax service, statement account or payoff, substitution, satisfaction, release
and other like fees and charges, need not be credited by the Servicer to the
Distribution Account.

                  (c) The amount at any time credited to the Distribution
Account shall be held uninvested.

         Section 4.07      PERMITTED WITHDRAWALS AND TRANSFERS FROM THE
                           DISTRIBUTION ACCOUNT.

                  (a) The Trustee will, from time to time make or cause to be
made such withdrawals or transfers from the Distribution Account pursuant to
this Agreement for the following purposes:

                           (i) On an ongoing basis, Trustee to pay any expenses
recoverable by the Trustee pursuant to this Agreement.

                           (ii) to reimburse the Trustee as Successor Servicer
or the Servicer for any Advance or Servicing Advance of its own funds, the right
of the Trustee as Successor Servicer or the Servicer to reimbursement pursuant
to this subclause (ii) being limited to amounts received on a particular
Mortgage Loan (including, for this purpose, the Purchase Price therefor,
Insurance Proceeds, Liquidation Proceeds and condemnation proceeds) which
represent late payments or recoveries of the principal of or interest on such
Mortgage Loan respecting which such Advance or Servicing Advance was made;

                           (iii) to reimburse the Trustee or the Servicer from
Insurance Proceeds or Liquidation Proceeds relating to a particular Mortgage
Loan for amounts expended by the Trustee as Successor Servicer or the Servicer
in good faith in connection with the restoration of the related Mortgaged
Property which was damaged by an uninsured cause or in connection with the
liquidation of such Mortgage Loan;

                                      -79-
<PAGE>

                           (iv) to reimburse the Trustee as Successor Servicer
or the Servicer from Insurance Proceeds relating to a particular Mortgage Loan
for insured expenses incurred with respect to such Mortgage Loan and to
reimburse the Trustee as Successor Servicer or the Servicer from Liquidation
Proceeds from a particular Mortgage Loan for Liquidation Expenses incurred with
respect to such Mortgage Loan;

                           (v) to reimburse the Trustee as Successor Servicer or
the Servicer for advances of funds pursuant to this Agreement, and the right to
reimbursement pursuant to this subclause being limited to amounts received on
the related Mortgage Loan (including, for this purpose, the Purchase Price
therefor, Insurance Proceeds, Liquidation Proceeds and condemnation proceeds)
which represent late recoveries of the payments for which such advances were
made;

                           (vi) to reimburse the Trustee as Successor Servicer
or the Servicer for any Advance or advance, after a Realized Loss has been
allocated with respect to the related Mortgage Loan if the Advance or advance
has not been reimbursed pursuant to clauses (ii) and (v);

                           (vii)    Reserved;

                           (viii) to reimburse the Trustee for expenses, costs
and liabilities incurred by and reimbursable to it pursuant to this Agreement
(including the expenses of the Trustee in connection with a tax audit in
connection with the performance of its obligations pursuant to Section 9.12);

                           (ix) to pay to the Trust Fund, as additional
servicing compensation, any Excess Liquidation Proceeds to the extent not
retained by the Servicer;

                           (x) to reimburse or pay the Servicer any such amounts
as are due thereto under this Agreement and have not been retained by or paid to
the Servicer, to the extent provided herein or therein;

                           (xi) to reimburse the Trustee for expenses incurred
in the transfer of servicing responsibilities of the terminated Servicer after
the occurrence and continuance of a Servicer Default to the extent not paid by
the terminated Servicer;

                           (xii) after the occurrence of an event of default
under the Advance Facility, to reimburse any Advance Financing Person for any
Advances or Servicing Advances made by such Advance Financing Person pursuant to
Section 5.01(b) and not reimbursed to such Advance Financing Person pursuant to
Section 4.02;

                           (xiii) to reimburse the Custodian for expenses, costs
and liabilities incurred or reimbursable to it pursuant to this Agreement;

                           (xiv) to remove amounts deposited in error; and

                           (xv) to clear and terminate the Distribution Account
pursuant to Section 10.01.

                                      -80-
<PAGE>

                  (b) The Trustee shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (ii) through
(v), inclusive, and (vii) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Trustee
without being deposited in the Distribution Account under Section 4.07.

                  (c) On each Distribution Date, the Trustee shall distribute
funds on deposit in the Distribution Account to the holders of the Certificates
in accordance with Section 5.06.

                                      -81-
<PAGE>

                                    ARTICLE V

                           ADVANCES AND DISTRIBUTIONS

         Section 5.01      ADVANCES; ADVANCE FACILITY.

                  (a) The Servicer shall make an Advance with respect to any
Mortgage Loan and deposit such Advance in the Distribution Account no later than
3:00 p.m. Eastern time on the Remittance Date in immediately available funds.
The Servicer shall be obligated to make any such Advance only to the extent that
such advance would not be a Nonrecoverable Advance. If the Servicer shall have
determined that it has made a Nonrecoverable Advance or that a proposed Advance
or a lesser portion of such Advance would constitute a Nonrecoverable Advance,
the Servicer shall deliver (i) to the Trustee for the benefit of the
Certificateholders funds constituting the remaining portion of such Advance, if
applicable, and (ii) to the Depositor, each Rating Agency and the Trustee an
Officer's Certificate setting forth the basis for such determination.

                  In lieu of making all or a portion of such Advance from its
own funds, the Servicer may (i) cause to be made an appropriate entry in its
records relating to the Custodial Account that any Amounts Held for Future
Distribution has been used by the Servicer in discharge of its obligation to
make any such Advance and (ii) transfer such funds from the Custodial Account to
the Distribution Account. Any funds so applied and transferred shall be replaced
by the Servicer by deposit in the Distribution Account, no later than the close
of business on any future Remittance Date on which the funds on deposit in the
Custodial Account shall be less than the amount required to be remitted to the
Trust on such Remittance Date; provided, however that if the rating of the
Servicer (including any Successor Servicer) is less than "BBB", the Servicer
shall be required to replace such funds by deposit to the Distribution Account,
no later than the close of business on the Remittance Date immediately following
the Due Period or Prepayment Period for which such amounts relate.

                  The Servicer shall be entitled to be reimbursed from the
Custodial Account for all Advances of its own funds made pursuant to this
Section as provided in Section 4.02. The obligation to make Advances with
respect to any Mortgage Loan shall continue until such Mortgage Loan is paid in
full or the related Mortgaged Property or related REO Property has been
liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section 5.01.

                  Subject to and in accordance with the provisions of Article
VIII hereof, in the event that the Servicer fails to make such Advance, then the
Trustee, as a Successor Servicer, shall be obligated to make such Advance only
to the extent such Advance, if made, would not constitute a Nonrecoverable
Advance, subject to the provisions of Sections 5.01 and 8.02.

                  (b)(i) The Servicer is hereby authorized to enter into a
financing or other facility (any such arrangement, an "Advance Facility"), the
documentation for which complies with Section 5.01(b)(v) below, under which (1)
the Servicer assigns or pledges its rights under this

                                      -82-
<PAGE>

Agreement to be reimbursed for any or all Advances and/or Servicing Advances to
(i) a Person, which may be a special-purpose bankruptcy-remote entity (an
"SPV"), (ii) a Person, which may simultaneously assign or pledge such rights to
an SPV or (iii) a lender (a "Lender"), which, in the case of any Person or SPV
of the type described in either of the preceding clauses (i) or (ii), may
directly or through other assignees and/or pledgees, assign or pledge such
rights to a Person, which may include a trustee acting on behalf of holders of
debt instruments (any such Person or any such Lender, an "Advance Financing
Person"), and/or (2) an Advance Financing Person agrees to fund all the Advances
and/or Servicing Advances required to be made by the Servicer pursuant to this
Agreement. No consent of the Trustee, Certificateholders or any other party
shall be required before the Servicer may enter into an Advance Facility nor
shall the Trustee or the Certificateholders be a third party beneficiary of any
obligation of an Advance Financing Person to the Servicer. Notwithstanding the
existence of any Advance Facility under which an Advance Financing Person agrees
to fund Advances and/or Servicing Advances, (A) the Servicer (i) shall remain
obligated pursuant to this Agreement to make Advances and/or Servicing Advances
pursuant to and as required by this Agreement and (ii) shall not be relieved of
such obligations by virtue of such Advance Facility and (B) neither the Advance
Financing Person nor any Servicer's Assignee (as hereinafter defined) shall have
any right to proceed against or otherwise contact any Mortgagor for the purpose
of collecting any payment that may be due with respect to any related Mortgage
Loan or enforcing any covenant of such Mortgagor under the related Mortgage Loan
documents.

                  (ii) If the Servicer enters into an Advance Facility, the
Servicer and the related Advance Financing Person shall deliver to the Trustee
at the address set forth in Section 11.05 hereof no later than the Servicer
Remittance Date immediately following the effective date of such Advance
Facility a written notice (an "Advance Facility Notice"), stating (a) the
identity of the Advance Financing Person and (b) the identity of the Person (the
"Servicer's Assignee") that will, subject to Section 5.01(b)(iii) hereof, have
the right to make withdrawals from the Custodial Account pursuant to Section
4.02 hereof to reimburse previously unreimbursed Advances and/or Servicing
Advances ("Advance Reimbursement Amounts"). Advance Reimbursement Amounts (i)
shall consist solely of amounts in respect of Advances and/or Servicing Advances
for which the Servicer would be permitted to reimburse itself in accordance with
Section 4.02 hereof, assuming the Servicer had made the related Advance(s)
and/or Servicing Advance(s) and (ii) shall not consist of amounts payable to a
successor Servicer in accordance with Section 4.02 hereof to the extent
permitted under Section 5.01(b)(v) below.

                  (iii) Notwithstanding the existence of an Advance Facility,
the Servicer, on behalf of the Advance Financing Person and the Servicer's
Assignee, shall be entitled to receive reimbursements of Advances and/or
Servicing Advances in accordance with Section 4.02 hereof, which entitlement may
be terminated by the Advance Financing Person pursuant to a written notice to
the Trustee in the manner set forth in Section 11.05 hereof. Upon receipt of
such written notice, the Servicer shall no longer be entitled to receive
reimbursement for any Advance Reimbursement Amounts and the Servicer's Assignee
shall immediately have the right to receive from the Custodial Account all
Advance Reimbursement Amounts. Notwithstanding the foregoing, and for the
avoidance of doubt, (i) the Servicer and/or the Servicer's Assignee shall only
be entitled to reimbursement of Advance Reimbursement Amounts hereunder from
withdrawals from the Custodial Account pursuant to Section 4.02 of this
Agreement and shall

                                      -83-
<PAGE>

not otherwise be entitled to make withdrawals or receive amounts that shall be
deposited in the Distribution Account pursuant to Section 4.06 hereof, and (ii)
none of the Trustee or the Certificateholders shall have any right to, or
otherwise be entitled to, receive any Advance Reimbursement Amounts to which the
Servicer or Servicer's Assignee, as applicable, shall be entitled pursuant to
Section 4.02 hereof. An Advance Facility may be terminated by the joint written
direction of the Servicer and the related Advance Financing Person. Written
notice of such termination shall be delivered to the Trustee in the manner set
forth in Section 11.05 hereof. None of the Depositor or the Trustee shall, as a
result of the existence of any Advance Facility, have any additional duty or
liability with respect to the calculation or payment of any Advance
Reimbursement Amount, nor, as a result of the existence of any Advance Facility,
shall the Depositor or the Trustee have any additional responsibility to track
or monitor the administration of the Advance Facility or the payment of Advance
Reimbursement Amounts to Servicer's Assignee. The Servicer shall indemnify the
Depositor, the Trustee, any successor Servicer and the Trust Fund for any claim,
loss, liability or damage resulting from any claim by the related Advancing
Financing Person, except to the extent that such claim, loss, liability or
damage resulted from or arose out of negligence, recklessness or willful
misconduct on the part of the Depositor, the Trustee or any successor Servicer,
as the case may be, or failure by the successor Servicer or the Trustee, as the
case may be, to remit funds as required by this Agreement or the commission of
an act or omission to act by the successor Servicer or the Trustee, as the case
may be, and the passage of any applicable cure or grace period, such that an
Event of Default under this Agreement occurs or such entity is subject to
termination for cause under this Agreement. The Servicer shall maintain and
provide to any successor Servicer and, upon request, the Trustee a detailed
accounting on a loan-by-loan basis as to amounts advanced by, pledged or
assigned to, and reimbursed to any Advancing Financing Person. The successor
Servicer shall be entitled to rely on any such information provided by the
Servicer, and the successor Servicer shall not be liable for any errors in such
information.

                  (iv) An Advance Financing Person who receives an assignment or
pledge of rights to receive Advance Reimbursement Amounts and/or whose
obligations are limited to the funding of Advances and/or Servicing Advances
pursuant to an Advance Facility shall not be required to meet the criteria for
qualification as the Servicer.

                  (v) As between the Servicer and its Advance Financing Person,
on the one hand, and a successor Servicer and its Advance Financing Person, if
any, on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis
with respect to each Mortgage Loan as to which an Advance and/or Servicing
Advance shall have been made and be outstanding shall be allocated on a
"first-in, first out" basis. In the event the Servicer's Assignee shall have
received some or all of an Advance Reimbursement Amount related to Advances
and/or Servicing Advances that were made by a Person other than the Servicer or
its related Advance Financing Person in error, then the Servicer's Assignee
shall be required to remit any portion of such Advance Reimbursement Amount to
each Person entitled to such portion of such Advance Reimbursement Amount.
Without limiting the generality of the foregoing, the Servicer shall remain
entitled to be reimbursed by the Advance Financing Person for all Advances
and/or Servicing Advances funded by the Servicer to the extent the related
Advance Reimbursement Amounts have not been assigned or pledged to such Advance
Financing Person or Servicer's Assignee.

                                      -84-
<PAGE>

                  (vi) For purposes of any Officer's Certificate of the Servicer
delivered pursuant to Section 5.01(a), any Nonrecoverable Advance referred to
therein may have been made by the Servicer. In making its determination that any
Advance or Servicing Advance theretofore made has become a Nonrecoverable
Advance, the Servicer shall apply the same criteria in making such determination
regardless of whether such Advance or Servicing Advance shall have been made by
the Servicer.

                  (vii) Any amendment to this Section 5.01(b) or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 5.01(b),
including amendments to add provisions relating to a successor Servicer, may be
entered into by the Trustee, the Depositor and the Servicer without the consent
of any Certificateholder, provided such amendment complies with Section 11.01
hereof. All reasonable costs and expenses (including attorneys' fees) of each
party hereto of any such amendment shall be borne solely by the Servicer. The
parties hereto hereby acknowledge and agree that: (a) the Advances and/or
Servicing Advances financed by and/or pledged to an Advance Financing Person
under any Advance Facility are obligations owed to the Servicer payable only
from the cash flows and proceeds received under this Agreement for reimbursement
of Advances and/or Servicing Advances only to the extent provided herein, and
the Trustee and the Trust are not, as a result of the existence of any Advance
Facility, obligated or liable to repay any Advances and/or Servicing Advances
financed by the Advance Financing Person; (b) the Servicer will be responsible
for remitting to the Advance Financing Person the applicable amounts collected
by it as reimbursement for Advances and/or Servicing Advances funded by the
Advance Financing Person, subject to the provisions of this Agreement; and (c)
the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and any Advance
Financing Person.

         Section 5.02      COMPENSATING INTEREST PAYMENTS.

         In the event that there is a Prepayment Interest Shortfall arising from
a voluntary Principal Prepayment in part or in full by the Mortgagor with
respect to any Mortgage Loan, the Servicer shall, to the extent of the Servicing
Fee for such Distribution Date, deposit into the Distribution Account, as a
reduction of and to the extent of, the Servicing Fee for such Distribution Date,
no later than the close of business on the Remittance Date immediately preceding
such Distribution Date, an amount equal to the Prepayment Interest Shortfall;
and in case of such deposit, the Servicer shall not be entitled to any recovery
or reimbursement from the Depositor, the Trustee, the Seller, the Trust Fund or
the related Certificateholders.

         Section 5.03      REMIC DISTRIBUTIONS.

                  On each Distribution Date the Trustee, shall be deemed to
allocate distributions to the REMIC I Regular Interests in accordance with
Section 5.11 hereof.

                                      -85-
<PAGE>

         Section 5.04      Reserved.

         Section 5.05      Reserved.

         Section 5.06      DISTRIBUTIONS ON THE CERTIFICATES.

         On each Distribution Date, the Trustee shall withdraw funds on deposit
in the Distribution Account and make distributions to the Certificates as
directed in accordance with the related Remittance Report for such Distribution
Date, in the following order of priority:

                  (i) On each Distribution Date, the Interest Remittance Amount
         for such Distribution Date will be paid in the following order of
         priority:

                           (1) from the Interest Remittance Amount for Loan
                  Group I, Loan Group II and Loan Group III, to the Senior
                  Certificates, pro rata based on amounts due, Current Interest
                  and any Carryforward Interest for such Class and such
                  Distribution Date, applied in accordance with the last
                  paragraph of this clause (i);

                           (2) first, from the Interest Remittance Amount for
                  Loan Group III, then from the Interest Remittance Amount for
                  Loan Group II and then from the Interest Remittance Amount for
                  Loan Group I, to the Class M-1 Certificates, Current Interest
                  and Carryforward Interest for such Class and Distribution
                  Date;

                           (3) first, from the Interest Remittance Amount for
                  Loan Group III, then from the Interest Remittance Amount for
                  Loan Group II and then from the Interest Remittance Amount for
                  Loan Group I, to the Class M-2 Certificates, Current Interest
                  and Carryforward Interest for such Class and Distribution
                  Date;

                           (4) first, from the Interest Remittance Amount for
                  Loan Group III, then from the Interest Remittance Amount for
                  Loan Group II and then from the Interest Remittance Amount for
                  Loan Group I, to the Class M-3 Certificates, Current Interest
                  and Carryforward Interest for such Class and Distribution
                  Date;

                           (5) first, from the Interest Remittance Amount for
                  Loan Group III, then from the Interest Remittance Amount for
                  Loan Group II and then from the Interest Remittance Amount for
                  Loan Group I, to the Class M-4 Certificates, Current Interest
                  and Carryforward Interest for such Class and Distribution
                  Date; and

                           (6) for application as part of Monthly Excess
                  Cashflow for such Distribution Date, any Monthly Excess
                  Interest for such Distribution Date.

                  The Interest Remittance Amount for Loan Group I, Loan Group II
         and Loan Group III distributed pursuant to clause (i)(1) above will be
         applied to the Senior Certificates as follows: (a) the Interest
         Remittance Amount for Loan Group I will be distributed in the following
         order of priority: (x) first, to the Class I-A Certificates, Current
         Interest and any Carryforward Interest for such Class for such
         Distribution Date;

                                      -86-
<PAGE>

         and then (y) concurrently, to (1) the Class II-A Certificates and (2)
         to the Class III-A-1, Class III-A-2 and Class III-A-3 Certificates,
         Current Interest and Carryforward Interest for each such Class for such
         Distribution Date, on a pro rata basis based on the entitlement of each
         such Class, after taking into account the distribution of the Interest
         Remittance Amount for Loan Group II and the Interest Remittance Amount
         for Loan Group 3 on such Distribution Date; (b) the Interest Remittance
         Amount for Loan Group II will be distributed in the following order of
         priority: (x) first, to the Class II-A Certificates, Current Interest
         and any Carryforward Interest for such Class for such Distribution
         Date; and then (y) concurrently, to (1) the Class I-A Certificates and
         (2) to the Class III-A-1, Class III-A-2 and Class III-A-3 Certificates,
         Current Interest and Carryforward Interest for each such Class for such
         Distribution Date, on a pro rata basis based on the entitlement of each
         such Class, after taking into account the distribution of the Interest
         Remittance Amount for Loan Group I and the Interest Remittance Amount
         for Loan Group III on such distribution date; and (c) the Interest
         Remittance Amount for Loan Group III will be distributed in the
         following order of priority: (x) first, concurrently, to the Class
         III-A-1, Class III-A-2 and Class III-A-3 Certificates, Current Interest
         and any Carryforward Interest for each such Class for such Distribution
         Date, on a pro rata basis, based on the entitlement of each such Class;
         and then (y) concurrently, to (1) the Class I-A Certificates and (2) to
         the Class II-A Certificates, Current Interest and Carryforward Interest
         for each such Class for such Distribution Date, on a pro rata basis
         based on the entitlement of each such Class, after taking into account
         the distribution of the Interest Remittance Amount for Loan Group I and
         the Interest Remittance Amount for Loan Group II on such Distribution
         Date.

                  (ii) The Principal Payment Amount will be paid on each
         Distribution Date as follows:

                           I. On each Distribution Date (a) prior to the
                  Stepdown Date or (b) with respect to which a Trigger Event is
                  in effect, the Principal Payment Amount will be paid in the
                  following order of priority:

                  (i)      (a) from the Principal Remittance Amount derived from
                           the Group I Mortgage Loans, to the Class I-A
                           Certificates, until its Certificate Principal Balance
                           has been reduced to zero;

                           (b) from the Principal Remittance Amount derived from
                           the Group II Mortgage Loans, to the Class II-A
                           Certificates, until its Certificate Principal Balance
                           has been reduced to zero;

                           (c) from the Principal Remittance Amount derived from
                           the Group III Mortgage Loans, to the Class III-A-1,
                           Class III-A-2 and Class III-A-3 Certificates, on pro
                           rata basis, based on their respective Certificate
                           Principal Balances, until the Certificate Principal
                           Balance of each such Class has been reduced to zero;

                  (ii)     (a) from the Principal Remittance Amount derived from
                           the Group I Mortgage Loans remaining after the
                           Certificate Principal Balance of the

                                      -87-
<PAGE>

                           Class I-A Certificates has been reduced to zero, to
                           the Class II-A, Class III-A-1, Class III-A-2 and
                           Class III-A-3 Certificates, on a pro rata basis,
                           based on their respective Certificate Principal
                           Balances remaining after payments pursuant to clause
                           I(i) above, until the Certificate Principal Balance
                           of each such Class has been reduced to zero;

                           (b) from the Principal Remittance Amount derived from
                           the Group II Mortgage Loans remaining after the
                           Certificate Principal Balance of the Class II-A
                           Certificates has been reduced to zero, to the Class
                           I-A, Class III-A-1, Class III-A-2 and Class III-A-3
                           Certificates, on a pro rata basis, based on their
                           respective Certificate Principal Balances remaining
                           after payments pursuant to clause I(i) above, until
                           the Certificate Principal Balance of each such Class
                           has been reduced to zero;

                           (c) from the Principal Remittance Amount derived from
                           the Group III Mortgage Loans remaining after the
                           Certificate Principal Balances of the Class III-A-1,
                           Class III-A-2 and Class III-A-3 Certificates have
                           been reduced to zero, to the Class I-A Certificates
                           and Class II-A Certificates, on a pro rata basis,
                           based on their respective Certificate Principal
                           Balances remaining after payments pursuant to clause
                           I(i) above, until the Certificate Principal Balance
                           of each such Class has been reduced to zero;

                           (iii) to the Class M-1 Certificates, until its
                  Certificate Principal Balance is reduced to zero;

                           (iv) to the Class M-2 Certificates, until its
                  Certificate Principal Balance is reduced to zero;

                           (v) to the Class M-3 Certificates, until its
                  Certificate Principal Balance is reduced to zero;

                           (vi) to the Class M-4 Certificates, until its
                  Certificate Principal Balance is reduced to zero; and

                           (vii) for application as part of Monthly Excess
                  Cashflow for such Distribution Date pursuant to subclause
                  (iii) below, any such Principal Payment Amount remaining after
                  application pursuant to clauses I(i) through (vi) above.

                           II. On each Distribution Date (a) on or after the
                  Stepdown Date and (b) with respect to which a Trigger Event is
                  not in effect, the Principal Payment Amount will be paid in
                  the following order of priority:

                  (i)      (a) from the Principal Remittance Amount derived from
                           the Group I Mortgage Loans, the Group I Allocation
                           Amount to the Class I-A Certificates, until its
                           Certificate Principal Balance has been reduced to
                           zero;

                                      -88-
<PAGE>

                           (b) from Principal Remittance Amount derived from the
                           Group II Mortgage Loans, the Group II Allocation
                           Amount to the Class II-A Certificates, until its
                           Certificate Principal Balance has been reduced to
                           zero;

                           (c) from the Principal Remittance Amount derived from
                           the Group III Mortgage Loans, the Group III
                           Allocation Amount to the Class III-A-1, Class III-A-2
                           and Class III-A-3 Certificates, on pro rata basis,
                           based on their respective Certificate Principal
                           Balances, until the Certificate Principal Balance of
                           each such Class has been reduced to zero;

                  (ii)     (a) from the Group I Allocation Amount remaining
                           after the Certificate Principal Balance of the Class
                           I-A Certificates has been reduced to zero, to the
                           Class II-A, Class III-A-1, Class III-A-2 and Class
                           III-A-3 Certificates, on a pro rata basis, based on
                           their respective Certificate Principal Balances
                           remaining after payments pursuant to clause II(i)
                           above, until the Certificate Principal Balance of
                           each such Class has been reduced to zero;

                           (b) from the Group II Allocation Amount remaining
                           after the Certificate Principal Balance of the Class
                           II-A Certificates has been reduced to zero, to the
                           Class I-A, Class III-A-1, Class III-A-2 and Class
                           III-A-3 Certificates, on a pro rata basis, based on
                           their respective Certificate Principal Balances
                           remaining after payments pursuant to clause II(i)
                           above, until the Certificate Principal Balance of
                           each such Class has been reduced to zero;

                                    (c) from the Group III Allocation Amount
                           remaining after the Certificate Principal Balances of
                           the Class III-A-1, Class III-A-2 and Class III-A-3
                           Certificates have been reduced to zero, to the Class
                           I-A Certificates and Class II-A Certificates, on a
                           pro rata basis, based on their respective Certificate
                           Principal Balances remaining after payments pursuant
                           to clause II(i) above, until the Certificate
                           Principal Balance of each such Class has been reduced
                           to zero;

                           (ii) to the Class M-1 Certificates, the Class M-1
                  Principal Payment Amount for such Distribution Date, until its
                  Certificate Principal Balance is reduced to zero;

                           (iii) to the Class M-2 Certificates, the Class M-2
                  Principal Payment Amount for such Distribution Date, until its
                  Certificate Principal Balance is reduced to zero;

                           (iv) to the Class M-3 Certificates, the Class M-3
                  Principal Payment Amount for such Distribution Date, until its
                  Certificate Principal Balance is reduced to zero;

                                      -89-
<PAGE>

                           (v) to the Class M-4 Certificates, the Class M-4
                  Principal Payment Amount for such Distribution Date, until its
                  Certificate Principal Balance is reduced to zero; and

                           (vi) for application as part of Monthly Excess
                  Cashflow for such Distribution Date pursuant to clause (iii)
                  below, any such Principal Payment Amount remaining after
                  application pursuant to clauses II(i) through (v) above.

         (iii)    On each Distribution Date, the Monthly Excess Cashflow will be
                  distributed in the following order of priority:

                  (1)(A) until the aggregate Certificate Principal Balance of
         the Publicly Offered Certificates equals the Aggregate Loan Balance for
         such Distribution Date minus the Targeted Overcollateralization Amount
         for such date, on each Distribution Date (a) prior to the Stepdown Date
         or (b) with respect to which a Trigger Event is in effect, to the
         extent of Monthly Excess Interest for such Distribution Date, to the
         Publicly Offered Certificates, in the following order of priority:

         (a)      (i) the Group I Excess Interest Amount in the following order
                  of priority: (x) first, to the Class I-A Certificates, until
                  its Certificate Principal Balance has been reduced to zero;
                  and then (y) concurrently, to (1) the Class II-A Certificates
                  and (2) to the Class III-A-1, Class III-A-2 and Class III-A-3
                  Certificates, on a pro rata basis based on their respective
                  Certificate Principal Balances after taking into account the
                  distribution of the Group II Excess Interest Amount and the
                  Group III Excess Interest Amount, as applicable, until the
                  Certificate Principal Balance of each such class has been
                  reduced to zero;

                           (ii) the Group II Excess Interest Amount in the
                           following order of priority: (x) first, to the Class
                           II-A Certificates, until its Certificate Principal
                           Balance has been reduced to zero; and then (y)
                           concurrently, to (1) the Class I-A Certificates and
                           (2) to the Class III-A-1, Class III-A-2 and Class
                           III-A-3 Certificates, on a pro rata basis based on
                           their respective Certificate Principal Balances after
                           taking into account the distribution of the Group I
                           Excess Interest Amount and Group III Excess Interest
                           Amount, as applicable, until the Certificate
                           Principal Balance of each such class has been reduced
                           to zero;

                           (iii) the Group III Excess Interest Amount in the
                           following order of priority: (x) first, to the Class
                           III-A-1, Class III-A-2 and Class III-A-3
                           Certificates, on a pro rata basis based on their
                           respective Certificate Principal Balances, until the
                           Certificate Principal Balance of each such class has
                           been reduced to zero; and then (y) concurrently, to
                           (1) the Class I-A Certificates and (2) to the Class
                           II-A Certificates, on a pro rata basis based on their
                           respective Certificate Principal Balances after
                           taking into account the distribution of the Group I
                           Excess Interest Amount and Group II Excess Interest
                           Amount, as applicable, until the Certificate
                           Principal Balance of each such class has been reduced
                           to zero;

                                      -90-
<PAGE>

                           (b) to the Class M-1 Certificates, until its
                           Certificate Principal Balance is reduced to zero;

                           (c) to the Class M-2 Certificates, until its
                           Certificate Principal Balance is reduced to zero;

                           (d) to the Class M-3 Certificates, until its
                           Certificate Principal Balance is reduced to zero;

                           (e) to the Class M-4 Certificates, until its
                           Certificate Principal Balance is reduced to zero;

                 (B) on each Distribution Date on or after the Stepdown Date and
         with respect to which a Trigger Event is not in effect, to fund any
         principal distributions required to be made on such Distribution Date
         set forth in Section 5.06(ii)II after giving effect to the distribution
         of the Principal Payment Amount for such date, in accordance with the
         priorities set forth therein;

                  (2) to the Class III-A-3 Certificates, any Deferred Amount for
         such Class;

                  (3) to the Class M-1 Certificates, any Deferred Amount for
         such Class;

                  (4) to the Class M-2 Certificates, any Deferred Amount for
         such Class;

                  (5) to the Class M-3 Certificates, any Deferred Amount for
         such Class;

                  (6) to the Class M-4 Certificates, any Deferred Amount for
         such Class;

                  (7) to the Basis Risk Reserve Fund and then from the Basis
         Risk Reserve Fund to the Class II-A, Class III-A-1, Class III-A-2 and
         Class III-A-3 Certificates, concurrently, any Basis Risk Shortfall for
         each such class, on a pro rata basis based on the entitlement of each
         such class; provided, however that any payments in respect of Basis
         Risk Shortfalls payable to the Class III-A-1 Certificates and Class
         III-A-2 Certificates pursuant to this clause shall be determined after
         taking into account payments made from the Cap Provider under the Cap
         Agreements;

                  (8) to the Class M-1 Certificates, any Basis Risk Shortfall
         for such Class;

                  (9) to the Class M-2 Certificates, any Basis Risk Shortfall
         for such Class;

                  (10) to the Class M-3 Certificates, any Basis Risk Shortfall
         for such Class;

                  (11) to the Class M-4 Certificates, any Basis Risk Shortfall
         for such Class;

                  (12) to the Basis Risk Reserve Fund, any amounts required to
         be deposited therein pursuant to the last paragraph of this subsection;

                  (13) to the Class X Certificates, the Class X Distribution
         Amount; and

                                      -91-
<PAGE>

                  (14) to the Class R Certificates, any remaining amount. It is
         not anticipated that any amounts will be distributed to the Class R
         Certificates under this clause (14).

         Distributions pursuant to clauses (7) through (11) above on any
Distribution Date will be made after giving effect to any withdrawals from the
Basis Risk Reserve Fund on such date to pay Basis Risk Shortfalls. On each
Distribution Date, the Trustee, after making the required distributions of
interest and principal to the Certificates as described in clauses (i) and (ii)
above and after the distribution of the Monthly Excess Cashflow as described in
clause (iii) above, will withdraw from the Basis Risk Reserve Fund the amounts
on deposit therein and distribute such amounts to the Publicly Offered
Certificates in respect of any Basis Risk Shortfalls in the following manner and
order of priority: first, concurrently to the Senior Certificates (other than
the Class I-A Certificates) on a pro rata basis, based on the entitlement of
each such Class, the amount of any Basis Risk Shortfalls allocated to such Class
for such Distribution Date; second, to the Class M-1 Certificates, the amount of
any Basis Risk Shortfall allocated to such Class for such Distribution Date for
such Class; third, to the Class M-2 Certificates, the amount of any Basis Risk
Shortfall allocated to such Class for such Distribution Date for such Class;
fourth, to the Class M-3 Certificates, the amount of any Basis Risk Shortfalls
allocated to such Class for such Distribution Date for such Class; and fifth, to
the Class M-4 Certificates, the amount of any Basis Risk Shortfalls allocated to
such Class for such Distribution Date.

           (iv) Subject to Section 10.02 hereof respecting the final
distribution on a Class of Publicly Offered Certificates, on each Distribution
Date the Trustee shall make distributions to each Holder of a Publicly Offered
Certificate of record on the preceding Record Date either by wire transfer in
immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if (i) such Holder has so
notified the Trustee at least 5 Business Days prior to the related Record Date
and (ii) such Holder shall hold Regular Certificates with aggregate principal
denominations of not less than $1,000,000 or evidencing a Percentage Interest
aggregating 10% or more with respect to such Class or, if not, by check mailed
by first class mail to such Certificateholder at the address of such holder
appearing in the Certificate Register. Notwithstanding the foregoing, but
subject to Section 10.02 hereof respecting the final distribution, distributions
with respect to Publicly Offered Certificates registered in the name of a
Depository shall be made to such Depository in immediately available funds.

         Section 5.07      ALLOCATION OF REALIZED LOSSES .

                  (a) On or prior to each Determination Date, the Trustee shall
determine the amount of any Realized Loss in respect of each Mortgage Loan that
occurred during the immediately preceding calendar month.

                  (b) The interest portion of Realized Losses on the Mortgage
Loans shall be allocated to the Certificates as described in Section 1.02
hereof.

                  (c) The principal portion of all Realized Losses on the
Mortgage Loans shall be allocated on each Distribution Date as follows: first,
to Net Monthly Excess Cashflow; second, to the Class X Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; third, to the
Class M-4 Certificates, until the Certificate Principal Balance

                                      -92-
<PAGE>

thereof has been reduced to zero; fourth, to the Class M-3 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero; fifth, to
the Class M-2 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; sixth, to the Class M-1 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; and seventh,
with respect to Realized Losses on the Group III Mortgage Loans only, to the
Class III-A-3 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero. All such Realized Losses to be allocated to the
Certificate Principal Balances of the Class III-A-3 Certificates and all Classes
of Subordinate Certificates on any Distribution Date shall be so allocated after
the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class III-A-3
Certificate or any Class of Subordinate Certificates shall be to the Certificate
Principal Balance of such Class immediately prior to the relevant Distribution
Date, before reduction thereof by any Realized Losses, in each case to be
allocated to such Class of Certificates, on such Distribution Date.

                  Any allocation of the principal portion of Realized Losses to
a Class III-A-3 Certificate or Subordinate Certificate on any Distribution Date
shall be made by reducing the Certificate Principal Balance thereof by the
amount so allocated; any allocation of Realized Losses to a Class X Certificates
shall be made by reducing the amount otherwise payable in respect thereof
pursuant to Section 5.06(iii)(13). No allocations of any Realized Losses shall
be made to the Certificate Principal Balances of the Class I-A, Class II-A,
Class III-A-1, Class III-A-2 Certificates or Class P Certificates.

                  All such Realized Losses and all other losses allocated to a
Class of Certificates hereunder will be allocated among the Certificates of such
Class in proportion to the Percentage Interests evidenced thereby.

                  (d) Notwithstanding anything to the contrary contained herein,
if on any Distribution Date the Trustee discovers, based solely on the reports
delivered by the Servicer under this Agreement that any Subsequent Recoveries
have been collected by the Servicer with respect to the Mortgage Loans, the
amount of such Subsequent Recoveries will be applied to increase the Certificate
Principal Balance of the Class III-A-3 Certificates or the Class of Subordinate
Certificates with the highest payment priority to which Realized Losses have
been allocated, but not by more than the amount of Realized Losses previously
allocated to the Class III-A-3 Certificates or that Class of Subordinate
Certificates pursuant to this Section 5.07. The amount of any remaining
Subsequent Recoveries will be applied to sequentially increase the Certificate
Principal Balance of the Class III-A-3 Certificates or the Subordinate
Certificates, beginning with the Class III-A-3 Certificates or the Class of
Subordinate Certificates with the next highest payment priority, up to the
amount of such Realized Losses previously allocated to such Class of
Certificates pursuant to this Section 5.07 but only to the extent that any such
Applied Loss Amount has not been paid to any Class of Certificates as a Deferred
Amount. Holders of such Certificates will not be entitled to any payment in
respect of current interest on the amount of such increases for any Accrual
Period preceding the Distribution Date on which such increase occurs. Any such
increases shall be applied to the Certificate Principal Balance of each Class
III-A-3 Certificates or each Mezzanine Certificate of such Class in accordance
with its respective Percentage Interest.

                                      -93-
<PAGE>

                  (e) The REMIC I Marker Allocation Percentage of all Realized
Losses on the Mortgage Loans shall be allocated on each Distribution Date to the
following REMIC I Regular Interests in the specified percentages, as follows:
first, to Uncertificated Accrued Interest payable to the REMIC I Regular
Interest LTI-AA and REMIC I Regular Interest LTI-ZZ up to an aggregate amount
equal to the REMIC I Interest Loss Allocation Amount, 98% and 2%, respectively;
second, to the Uncertificated Principal Balances of the REMIC I Regular Interest
LTI-AA and REMIC I Regular Interest LTI-ZZ up to an aggregate amount equal to
the REMIC I Principal Loss Allocation Amount, 98% and 2%, respectively; third,
to the Uncertificated Principal Balances of REMIC I Regular Interest LTI-AA,
REMIC I Regular Interest LTI-M4 and REMIC I Regular Interest LTI-ZZ, 98%, 1% and
1%, respectively, until the Uncertificated Principal Balance of REMIC I Regular
Interest LTI-M4 has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC I Regular Interest LTI-AA, REMIC I Regular Interest
LTI-M3 and REMIC I Regular Interest LTI-ZZ, 98%, 1% and 1%, respectively, until
the Uncertificated Principal Balance of REMIC I Regular Interest LTI-M3 has been
reduced to zero; fifth, to the Uncertificated Principal Balances of REMIC I
Regular Interest LTI-AA, REMIC I Regular Interest LTI-M2 and REMIC I Regular
Interest LTI-ZZ, 98%, 1% and 1%, respectively, until the Uncertificated
Principal Balance of REMIC I Regular Interest LTI-M2 has been reduced to zero;
sixth, to the Uncertificated Principal Balances of REMIC I Regular Interest
LTI-AA, REMIC I Regular Interest LTI-M1 and REMIC I Regular Interest LTI-ZZ,
98%, 1% and 1%, respectively, until the Uncertificated Principal Balance of
REMIC I Regular Interest LTI-M1 has been reduced to zero; and seventh, with
respect to Realized Losses on the Group III Mortgage Loans only, to the
Uncertificated Principal Balances of REMIC I Regular Interest LTI-AA, REMIC I
Regular Interest LTI-IIIA3 and REMIC I Regular Interest LTI-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC I Regular
Interest LTI-IIIA3 has been reduced to zero.

                  The REMIC I Sub WAC Allocation Percentage of all Realized
Losses on the Mortgage Loans shall be applied after all distributions have been
made on each Distribution Date first, so as to keep the Uncertificated Principal
Balance of each REMIC I Regular Interest ending with the designation "GRP" equal
to 0.01% of the aggregate Stated Principal Balance of the Mortgage Loans in the
related Loan Group; second, to each REMIC I Regular Interest ending with the
designation "SUB," so that the Uncertificated Balance of each such REMIC I
Regular Interest is equal to 0.01% of the excess of (x) the aggregate Stated
Principal Balance of the Mortgage Loans in the related Loan Group over (y) the
current Certificate Principal Balance of the Senior Certificate in the related
Loan Group (except that if any such excess is a larger number than in the
preceding distribution period, the least amount of Realized Losses shall be
applied to such REMIC I Regular Interests such that the REMIC I Subordinated
Balance Ratio is maintained); and third, any remaining Realized Losses shall be
allocated to REMIC I Regular Interest LTI-XX.

         Section 5.08      PREPAYMENT CHARGES.

           On each Distribution Date, all amounts representing Prepayment
Charges in respect of the Mortgage Loans received during the related Prepayment
Period and deposited in the Distribution Account will be withdrawn from the
Distribution Account and distributed by the Trustee in accordance with the
Remittance Report to the Class P Certificates and shall not be available for
distribution to the holders of any other Class of Certificates. The payment of
such

                                      -94-
<PAGE>

Prepayment Charges shall not reduce the Certificate Principal Balance of
the Class P Certificates.

         Section 5.09      MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.

                  (a) Not later than each Distribution Date, the Trustee shall
         prepare and make available to each Holder of Certificates and the
         Depositor via its website a statement setting forth for the
         Certificates with respect to the related Mortgage Loans and related
         Certificates:

                  (i) the amount of the related distribution to Holders of each
         Class allocable to principal, separately identifying (A) the aggregate
         amount of any Principal Prepayments included therein, (B) the aggregate
         of all scheduled payments of principal included therein, (C) the
         Monthly Excess Interest with respect to the Certificates (if any) and
         (D) the amount of Prepayment Charges distributed to the Class P
         Certificates;

                  (ii) the amount of such distribution to Holders of each Class
         allocable to interest;

                  (iii) the Certificate Principal Balance of each Class of
         Certificates, if applicable, after giving effect (i) to all
         distributions allocable to principal on such Distribution Date and (ii)
         the allocation of any Realized Losses for such Distribution Date;

                  (iv) the aggregate of the Stated Principal Balances of all of
         the Mortgage Loans in each Loan Group and the aggregate Stated
         Principal Balance of the Mortgage Loans, in each case for the following
         Distribution Date;

                  (v) the amount of the Servicing Fees paid to or retained by
         the Servicer for the related Due Period;

                  (vi) the Pass-Through Rate for each Class of Certificates with
         respect to the current Accrual Period;

                  (vii) the cumulative amount of Realized Losses to date and, in
         addition, if the Certificate Principal Balance of any Class of
         Certificates has been reduced to zero, the cumulative amount of any
         Realized Losses that have not been allocated to any Class of
         Certificates;

                  (viii) the number and aggregate principal amounts of Mortgage
         Loans in each Loan Group and the Mortgage Loans in the aggregate, (A)
         Delinquent (exclusive of Mortgage Loans in foreclosure and bankruptcy)
         (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, (B) in
         foreclosure and delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3)
         91 or more days and (C) in bankruptcy and delinquent (1) 31 to 60 days,
         (2) 61 to 90 days and (3) 91 or more days, in each case as of the close
         of business on the last day of the calendar month preceding such
         Distribution Date;

                  (ix) with respect to any Mortgage Loan that was liquidated
         during the preceding calendar month, the loan number and Stated
         Principal Balance of, and Realized

                                      -95-
<PAGE>

         Loss on, such Mortgage Loan as of the close of business on the
         Determination Date preceding such Distribution Date;

                  (x) the total number and principal balance of any real estate
         owned or REO Properties in each Loan Group and the Mortgage Loans in
         the aggregate as of the close of business on the Determination Date
         preceding such Distribution Date;

                  (xi) the three month rolling average of the percent equivalent
         of a fraction, the numerator of which is the Aggregate Loan Group
         Balance of the Mortgage Loans in a Loan Group that are 60 days or more
         delinquent or are in bankruptcy or foreclosure or are REO Properties,
         and the denominator of which is the Aggregate Loan Group Balance of all
         of the Mortgage Loans in such Loan Group as of the last day of such
         Distribution Date;

                  (xii) the Realized Losses during the related Prepayment Period
         and the cumulative Realized Losses through the end of the preceding
         month;

                  (xiii) the amount of any Basis Risk Shortfalls; and

                  (xiv) amounts payable in respect of each Cap Contract.

                  The Trustee may make the foregoing monthly statement (and, at
its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders via its internet
website. The Trustee's internet website shall initially be located at
"www.jpmorgan.com/sfr". Assistance in using the website can be obtained by
calling the Trustee's customer service desk at (877) 722-1095. Parties that are
unable to use the above distribution options are entitled to have a paper copy
mailed to them via first class mail by calling the customer service desk and
indicating such. The Trustee may change the way monthly statements are
distributed in order to make such distributions more convenient or more
accessible to the above parties.

                  (b) The Trustee's responsibility for making the above
         information available to the Certificateholders is limited to the
         availability, timeliness and accuracy of the information derived from
         the Depositor and the Servicer. The Trustee will make available a copy
         of each statement provided pursuant to this Section 5.09 to each Rating
         Agency.

                  (c) Within a reasonable period of time after the end of each
         calendar year, the Trustee shall cause to be furnished upon request to
         each Person who at any time during the calendar year was a
         Certificateholder, a statement containing the information set forth in
         clauses (a)(i) and (a)(ii) of this Section 5.09 aggregated for such
         calendar year or applicable portion thereof during which such Person
         was a Certificateholder. Such obligation of the Trustee shall be deemed
         to have been satisfied to the extent that substantially comparable
         information shall be provided by the Trustee pursuant to any
         requirements of the Code as from time to time in effect.

                  (d) Upon filing with the Internal Revenue Service, the Trustee
         shall furnish to the Holders of the Residual Certificates the
         applicable Form 1066 and each applicable Form 1066Q and shall respond
         promptly to written requests made not more frequently than quarterly by
         any Holder of a Residual Certificate with respect to the following
         matters:

                                      -96-
<PAGE>

                  (i) The original projected principal and interest cash flows
         on the Closing Date on each Class of regular and residual interests
         created hereunder and on the Mortgage Loans, based on the Prepayment
         Assumption;

                  (ii) The projected remaining principal and interest cash flows
         as of the end of any calendar quarter with respect to each Class of
         regular and residual interests created hereunder and the Mortgage
         Loans, based on the Prepayment Assumption;

                  (iii) The applicable Prepayment Assumption and any interest
         rate assumptions used in determining the projected principal and
         interest cash flows described above;

                  (iv) The original issue discount (or, in the case of the
         Mortgage Loans, market discount) or premium accrued or amortized
         through the end of such calendar quarter with respect to each Class of
         regular or residual interests created hereunder and to the Mortgage
         Loans, together with each constant yield to maturity used in computing
         the same;

                  (v) The treatment of losses realized with respect to the
         Mortgage Loans or the regular interests created hereunder, including
         the timing and amount of any cancellation of indebtedness income of a
         REMIC with respect to such regular interests or bad debt deductions
         claimed with respect to the Mortgage Loans;

                  (vi) The amount and timing of any non-interest expenses of a
         REMIC; and

                  (vii) Any taxes (including penalties and interest) imposed on
         the REMIC, including, without limitation, taxes on "prohibited
         transactions," "contributions" or "net income from foreclosure
         property" or state or local income or franchise taxes.

                  The information pursuant to clauses (i), (ii), (iii) and (iv)
above shall be provided by the Depositor pursuant to Section 9.12.

         Section 5.10      RESERVED.

         Section 5.11      REMIC I ALLOCATIONS.

                  (a) On each Distribution Date, the following amounts, in the
following order of priority and in accordance with the Remittance Report, shall
be distributed by REMIC I to REMIC II on account of the REMIC I Regular
Interests or withdrawn from the Distribution Account and distributed to the
Holders of the Class R-II Interest, as the case may be:

                           (i) first, to the Holders of REMIC I Regular Interest
LTI-AA, REMIC I Regular Interest LTI-IA, REMIC I Regular Interest LTI-IIA, REMIC
I Regular Interest LTI-IIIA1, REMIC I Regular Interest LTI-IIIA2, REMIC I
Regular Interest LTI-IIIA3, REMIC I Regular Interest LTI-M1, REMIC I Regular
Interest LTI-M2, REMIC I Regular Interest LTI-M3, REMIC I Regular Interest
LTI-M4 and REMIC I Regular Interest LTI-ZZ, pro rata, in an amount equal to (A)
the Uncertificated Accrued Interest for each such REMIC I Regular Interest for
such Distribution Date, plus (B) any amounts in respect thereof remaining unpaid
from previous Distribution Dates. Amounts payable as Uncertificated Accrued
Interest in respect of

                                      -97-
<PAGE>

REMIC I Regular Interest LTI-ZZ shall be reduced and deferred when the REMIC I
Overcollateralization Amount is less than the REMIC I Targeted
Overcollateralization Amount, by the lesser of (x) the amount of such difference
and (y) the REMIC I Regular Interest LTI-ZZ Maximum Interest Deferral Amount and
such amount will be payable to the Holders of REMIC I Regular Interest LTI-IA,
REMIC I Regular Interest LTI-IIA, REMIC I Regular Interest LTI-IIIA1, REMIC I
Regular Interest LTI-IIIA2, REMIC I Regular Interest LTI-IIIA3, REMIC I Regular
Interest LTI-M1, REMIC I Regular Interest LTI-M2, REMIC I Regular Interest
LTI-M3 and REMIC I Regular Interest LTI-M4 in the same proportion as the
Overcollateralization Deficiency is allocated to the Corresponding Certificates
and the Uncertificated Principal Balance of REMIC I Regular Interest LTI-ZZ
shall be increased by such amount;

                           (ii) second, to the Holders of REMIC I Regular
Interests, in an amount equal to the remainder of the
REMIC I Marker Allocation Percentage of the Interest Remittance Amount and the
Principal Payment Amount for such Distribution Date after the distributions made
pursuant to clause (i) above, allocated as follows:

                  (A) 98.00% of such remainder (other than amounts payable under
clause (C) below) to the Holders of REMIC I Regular Interest LTI-AA and REMIC I
Regular Interest LTI-P, until the Uncertificated Principal Balance of such REMIC
I Regular Interest is reduced to zero, provided, however, that the
Uncertificated Principal Balance of REMIC I Regular Interest LTI-P shall not be
reduced until the Distribution Date in September 2009 or any Distribution Date
thereafter, at which point such amount shall be distributed to REMIC I Regular
Interest LTI-P, until $100 has been distributed pursuant to this clause;

                  (B) 2.00% of such remainder, first, to the Holders REMIC I
Regular Interest LTI-IA, REMIC I Regular Interest LTI-IIA, REMIC I Regular
Interest LTI-IIIA1, REMIC I Regular Interest LTI-IIIA2, REMIC I Regular Interest
LTI-IIIA3, REMIC I Regular Interest LTI-M1, REMIC I Regular Interest LTI-M2,
REMIC I Regular Interest LTI-M3 and REMIC I Regular Interest LTI-M4, in the same
proportion as principal payments are allocated to the Corresponding
Certificates, until the Uncertificated Principal Balances of such REMIC I
Regular Interests are reduced to zero and second, to the Holders of REMIC I
Regular Interest LTI-ZZ (other than amounts payable under the proviso below),
until the Uncertificated Principal Balance of such REMIC I Regular Interest is
reduced to zero; and

                  (C) any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-I Interest).

                  provided, however, that (i) 98.00% and (ii) 2.00% of any
principal payments that are attributable to an Overcollateralization Release
Amount shall be allocated to Holders of (i) REMIC I Regular Interest LTI-AA and
REMIC I Regular Interest LTI-P, in that order and (ii) REMIC I Regular Interest
LTI-ZZ, respectively; provided that REMIC I Regular Interest LTI-P shall not be
reduced until the Distribution Date in September 2009, at which point such
amount shall be distributed to REMIC I Regular Interest LTI-P, until $100 has
been distributed pursuant to this clause.

         to the Holders of REMIC I Regular Interests, in an amount equal to the
remainder of the REMIC I Sub WAC Allocation Percentage of the Interest
Remittance Amount and the Principal

                                      -98-
<PAGE>

Payment Amount for such Distribution Date after the distributions made pursuant
to clause (ii) above, such that distributions of principal shall be deemed to be
made to the REMIC I Regular Interests first, so as to keep the Uncertificated
Principal Balance of each REMIC I Regular Interest ending with the designation
"GRP" equal to 0.01% of the aggregate Stated Principal Balance of the Mortgage
Loans in the related Loan Group; second, to each REMIC I Regular Interest ending
with the designation "SUB," so that the Uncertificated Principal Balance of each
such REMIC I Regular Interest is equal to 0.01% of the excess of (x) the
aggregate Stated Principal Balance of the Mortgage Loans in the related Loan
Group over (y) the current Certificate Principal Balance of the Senior
Certificates in the related Loan Group (except that if any such excess is a
larger number than in the preceding distribution period, the least amount of
principal shall be distributed to such REMIC I Regular Interests such that the
REMIC I Subordinated Balance Ratio is maintained); and third, any remaining
principal to REMIC I Regular Interest LTI-XX.

         Section 5.12      CLASS P CERTIFICATE ACCOUNT.

                  (a) The Trustee shall establish and maintain with itself a
separate, segregated trust account titled "Nomura Asset Acceptance Corporation,
Alternative Loan Trust 2004-AR2 Class P Certificate Account". On the Closing
Date, the Depositor will deposit, or cause to be deposited in the Class P
Certificate Account $100.00. The amount on deposit in the Class P Certificate
Account shall be held uninvested. On the August 2009 Distribution Date, the
Trustee shall withdraw the amount on deposit in the Class P Certificate Account
and remit such amount to the Holders of the Class P Certificates, in reduction
of the Certificate Principal Balance thereof.

         Section 5.13      BASIS RISK RESERVE FUND.

                  (a) The Trustee shall establish a Basis Risk Reserve Fund on
behalf of the holders of the Publicly Offered Certificates (other than the Class
I-A Certificates). The Basic Risk Reserve Fund must be an Eligible Account. The
Basis Risk Reserve Fund shall be entitled "Basis Risk Reserve Fund, JPMorgan
Chase Bank as Trustee for the benefit of holders of Nomura Asset Acceptance
Corporation, Mortgage Pass-Through Certificates, Series 2004-AR2, Class II-1,
Class III-A-1, Class III-A-2, Class III-A-3, Class M-1, Class M-2, Class M-3 and
Class M-4". Any payments received by the Trustee under the Cap Contracts shall
be deposited into the Basis Risk Reserve Fund for the benefit of the Class
III-A-1 Certificates and Class III-A-2 Certificates; provided that the amount of
any Excess Cap Payments shall be held for the benefit of the Class X
Certificates and payable as part of the Class X Distribution Amount for the
related Distribution Date. On each Distribution Date as to which there is a
Basis Risk Shortfall payable to any Class of Certificates, the Trustee shall
deposit the amounts pursuant to paragraphs 7, 8, 9, 10 and 11 of Section
5.06(iii) into the Basis Risk Reserve Fund and the Trustee has been directed by
the Class X Certificateholder to distribute such amounts to the Holders of the
Publicly Offered Certificates (other than the Class I-A Certificates) in the
amounts and priorities set forth in Section 5.06(iii).

                  (b) The Basis Risk Reserve Fund is an "outside reserve fund"
within the meaning of Treasury Regulation ss.1.860G-2(h) and shall be an asset
of the Trust Fund but not an asset of any REMIC. The Trustee on behalf of the
Trust shall be the nominal owner of the Basis

                                      -99-
<PAGE>

Risk Reserve Fund. The Class X Certificateholders shall be the beneficial owners
of the Basis Risk Reserve Fund, subject to the power of the Trustee to transfer
amounts under Section 5.06(iii). Amounts in the Basis Risk Reserve Fund shall be
held either uninvested in a trust or deposit account of the Trustee with no
liability for interest or other compensation thereof or, at the written
direction of the Majority Class X Certificateholder, be invested in Permitted
Investments that mature no later than the Business Day prior to the next
succeeding Distribution Date. All net income and gain from such investments
shall be distributed to the Majority Class X Certificateholder, not as a
distribution in respect of any interest in any REMIC, on such Distribution Date.
All amounts earned on amounts on deposit in the Basis Risk Reserve Fund shall be
taxable to the Majority Class X Certificateholder. Any losses on such
investments shall be deposited in the Basis Risk Reserve Fund by the Majority
Class X Certificateholder out of its own funds immediately as realized. In the
event that the Majority Class X Certificateholder shall fail to provide
investment instructions to the Trustee, the amounts on deposit in the Basis Risk
Reserve Fund shall be held uninvested.

                  (c) For federal tax return and information reporting, the
amount allocated to the right of the holders of the Publicly Offered
Certificates (other than the Class I-A Certificates) to receive payments from
the Basis Risk Reserve Fund in respect of any Basis Risk Shortfalls that may be
obtained from the Trustee upon written request.

                                     -100-
<PAGE>

                                   ARTICLE VI

                                THE CERTIFICATES

         Section 6.01      THE CERTIFICATES.

                  The Certificates shall be substantially in the forms attached
hereto as Exhibits A-1 through A-6. The Publicly Offered Certificates shall be
issuable in registered form, and the Private Certificates shall be issueable in
fully certificated form in the minimum dollar denominations, integral dollar
multiples in excess thereof (except that one Certificate of each Class may be
issued in a different amount which must be in excess of the applicable minimum
dollar denomination) and aggregate dollar denominations as set forth in the
following table:

<TABLE>
<CAPTION>

    CLASS          MINIMUM        INTEGRAL MULTIPLE IN  ORIGINAL CERTIFICATE         PASS-THROUGH RATE
                 DENOMINATION      EXCESS OF MINIMUM      PRINCIPAL BALANCE
------------------------------------------------------------------------------------------------------------------
<S>               <C>                      <C>             <C>                <C>
     I-A          $25,000                  $1              $  64,489,000      Class I-A Pass-Through Rate
    II-A          $25,000                  $1              $  71,630,000      Class II-A Pass-Through Rate
   III-A-1        $25,000                  $1              $ 130,745,000      Class III-A-1 Pass-Through Rate
   III-A-2        $25,000                  $1              $  62,355,000      Class IIII-A-2 Pass-Through Rate
   III-A-3       $100,000                  $1              $  21,455,000      Class III-A-3 Pass-Through Rate
     M-1          $25,000                  $1              $  14,298,000      Class M-1 Pass-Through Rate
     M-2          $25,000                  $1              $   4,891,000      Class M-2 Pass-Through Rate
     M-3          $25,000                  $1              $   4,139,000      Class M-3 Pass-Through Rate
     M-4          $25,000                  $1              $   2,257,884      Class M-4 Pass-Through Rate
      X               N/A                 N/A              $ 376,259,884      Class X Pass-Through Rate
      P               N/A                 N/A              $         100      N/A
      R               N/A                 N/A           N/A                   N/A
</TABLE>

                  The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer upon the written
order of the Depositor. 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 Trustee,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such authentication and delivery. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate the countersignature
of the Trustee by manual signature, and such countersignature upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly countersigned and delivered hereunder. All
Certificates shall be dated the date of their countersignature. On the Closing
Date, the Trustee shall authenticate the Certificates to be issued at the
written direction of the Depositor, or any affiliate thereof.

                  The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.

                                     -101-
<PAGE>

         Section 6.02      CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND
                           EXCHANGE OF CERTIFICATES.

                  (a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 6.09, a Certificate Register for the
Trust Fund in which, subject to the provisions of subsections (b) and (c) below
and 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 of Transfer of
any Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.

                  At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. 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. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.

                  No service charge to the Certificateholders shall be made for
any registration of Transfer or exchange of Certificates, but 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 may be required.

                  All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.

                  (b) No Transfer of a Private Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall each certify
to the Trustee in writing the facts surrounding the Transfer in substantially
the forms set forth in Exhibit E (the "Transferor Certificate") and (x) deliver
a letter in substantially the form of either Exhibit F (the "Investment Letter")
or Exhibit G (the "Rule 144A Letter") or (y) there shall be delivered to the
Trustee an Opinion of Counsel, at the expense of the transferor, that such
Transfer may be made pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be an expense of the Depositor, the Seller, the
Trustee or the Trust Fund. The Depositor shall provide to any Holder of a
Private Certificate and any prospective transferee designated by any such
Holder, information regarding the related Certificates and the Mortgage Loans
and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for Transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration

                                     -102-
<PAGE>

exemption provided by Rule 144A. The Trustee shall cooperate with the Depositor
in providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect such
Transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Seller 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.

                  No Transfer of an ERISA Restricted Certificate shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA and/or a plan subject to
Section 4975 of the Code, or a Person acting on behalf of any such plan or using
the assets of any such plan, or (ii) in the case of any such ERISA Restricted
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or a plan subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee for the benefit of the Trustee, the Depositor and
the Servicer and on which they may rely to the effect that the purchase and
holding of such ERISA Restricted Certificate is permissible under applicable
law, will not result in any prohibited transactions under ERISA or Section 4975
of the Code and will not subject the Trustee, the Depositor or any Servicer to
any obligation in addition to those expressly undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the Depositor
or any Servicer. Notwithstanding anything else to the contrary herein, any
purported transfer of an ERISA Restricted Certificate to or on behalf of an
employee benefit plan subject to Section 406 of ERISA and/or a plan subject to
Section 4975 of the Code other than in compliance with the foregoing shall be
void and of no effect; provided that the restriction set forth in this sentence
shall not be applicable if there has been delivered to the Trustee an Opinion of
Counsel meeting the requirements of clause (ii) of the first sentence of this
paragraph. The Trustee shall not be under any liability to any Person for any
registration of transfer of any ERISA Restricted Certificate that is in fact not
permitted by this Section 6.02(b) 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. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA Restricted
Certificate that was in fact an employee benefit plan subject to Section 406 of
ERISA or a plan subject to Section 4975 of the Code or a Person acting on behalf
of any such plan at the time it became a Holder or, at such subsequent time as
it became such a plan or Person acting on behalf of such a plan, all payments
made on such ERISA Restricted Certificate at and after either such time. Any
such payments so recovered by the Trustee shall be paid and delivered by the
Trustee to the last preceding Holder of such Certificate that is not such a plan
or Person acting on behalf of a plan.

                  Each beneficial owner of a Class M-1, Class M-2, Class M-3 or
Class M-4 Certificate or any interest therein shall be deemed to have
represented, by virtue of its acquisition or holding of that certificate or
interest therein, that either (i) it is not a Plan or investing with "Plan
Assets", (ii) it has acquired and is holding such certificate in reliance on the
Exemption, and that it understands that there are certain conditions to the
availability of the Exemption, including that the certificate must be rated, at
the time of purchase, not lower than "BBB-" (or its

                                     -103-
<PAGE>

equivalent) by S&P or Moody's, and the certificate is so rated or (iii) (1) it
is an insurance company, (2) the source of funds used to acquire or hold the
certificate or interest therein is an "insurance company general account," as
such term is defined in Prohibited Transaction Class Exemption ("PTCE") 95-60
and (3) the conditions in Sections I and III of PTCE 95-60 have been satisfied.

                  (c) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:

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

                  (ii) No Ownership Interest in a Residual Certificate may be
         registered on the Closing Date or thereafter transferred, and the
         Trustee shall not register the Transfer of any Residual Certificate
         unless, in addition to the certificates required to be delivered to the
         Trustee under subparagraph (b) above, the Trustee shall have been
         furnished with an affidavit (a "Transfer Affidavit") of the initial
         owner or the proposed transferee in the form attached hereto as Exhibit
         D.

                  (iii) Each Person holding or acquiring any Ownership Interest
         in a Residual Certificate shall agree (A) to obtain a Transfer
         Affidavit from any other Person to whom such Person attempts to
         Transfer its Ownership Interest in a Residual Certificate, (B) to
         obtain a Transfer Affidavit from any Person for whom such Person is
         acting as nominee, trustee or agent in connection with any Transfer of
         a Residual Certificate and (C) not to Transfer its Ownership Interest
         in a Residual Certificate or to cause the Transfer of an Ownership
         Interest in a Residual Certificate to any other Person if it has actual
         knowledge that such Person is not a Permitted Transferee.

                  (iv) Any attempted or purported Transfer of any Ownership
         Interest in a Residual Certificate in violation of the provisions of
         this Section 6.02(c) shall be absolutely null and void and shall vest
         no rights in the purported Transferee. If any purported transferee
         shall become a Holder of a Residual Certificate in violation of the
         provisions of this Section 6.02(c), then the last preceding Permitted
         Transferee shall be restored to all rights as Holder thereof
         retroactive to the date of registration of Transfer of such Residual
         Certificate. The Trustee shall be under no liability to any Person for
         any registration of Transfer of a Residual Certificate that is in fact
         not permitted by Section 6.02(b) and this 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 after receipt of
         the related Transfer Affidavit. The Trustee shall be entitled but not
         obligated to recover from any Holder of a Residual Certificate that was
         in fact not a Permitted Transferee at the time it became a Holder or,
         at such subsequent time as it became other than a Permitted Transferee,
         all payments made on such Residual Certificate at and after either such
         time.

                                     -104-
<PAGE>

         Any such payments so recovered by the Trustee shall be paid and
         delivered by the Trustee to the last preceding Permitted Transferee of
         such Certificate.

                  The restrictions on Transfers of a Residual Certificate set
forth in this Section 6.02(c) shall cease to apply (and the applicable portions
of the legend on a Residual Certificate may be deleted) with respect to
Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee or the Seller to
the effect that the elimination of such restrictions will not cause any REMIC to
fail to qualify as a REMIC at any time that the Certificates are outstanding or
result in the imposition of any tax on the Trust Fund, a Certificateholder or
another Person. Each Person holding or acquiring any ownership Interest in a
Residual Certificate hereby consents to any amendment of this Agreement that,
based on an Opinion of Counsel furnished to the Trustee, is reasonably necessary
(a) to ensure that the record ownership of, or any beneficial interest in, a
Residual Certificate is not transferred, directly or indirectly, to a Person
that is not a Permitted Transferee and (b) to provide for a means to compel the
Transfer of a Residual Certificate that is held by a Person that is not a
Permitted Transferee to a Holder that is a Permitted Transferee.

                  (d) The preparation and delivery of all certificates and
opinions referred to above in this Section 6.02 shall not be an expense of the
Trust Fund, the Trustee, the Depositor or the Seller.

         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 of the ownership thereof and
(b) there is delivered to the Trustee 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, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 6.03, 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 replacement Certificate issued
pursuant to this Section 6.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 6.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.

         Section 6.04      PERSONS DEEMED OWNERS.

                  The Trustee and any agent of the Trustee may treat the person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions as provided in this Agreement and for all
other purposes whatsoever, and neither the Trustee nor any agent of the Trustee
shall be affected by any notice to the contrary.

         Section 6.05      ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
                           ADDRESSES.

                                     -105-
<PAGE>

                  If three or more Certificateholders (a) request such
information in writing from the Trustee, (b) state that such Certificateholders
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor shall request such information in writing from the Trustee, then the
Trustee shall, within ten Business Days after the receipt of such request,
provide the Depositor or such Certificateholders at such recipients' expense the
most recent list of the Certificateholders of the Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.

         Section 6.06      BOOK-ENTRY CERTIFICATES.

                  The Certificates, other than the Class X, Class P and Class R
Certificates upon original issuance, shall be issued in the form of one or more
typewritten Certificates representing the Book-Entry Certificates, to be
delivered to the Depository by or on behalf of the Depositor. Such Certificates
shall initially be registered on the Certificate Register in the name of the
Depository or its nominee, and no Certificate Owner of such Certificates will
receive a definitive certificate representing such Certificate Owner's interest
in such Certificates, except as provided in Section 6.08. Unless and until
definitive, fully registered Certificates ("Definitive Certificates") have been
issued to the Certificate Owners of such Certificates pursuant to Section 6.08:

                  (a) the provisions of this Section shall be in full force and
effect;

                  (b) the Depositor and the Trustee may deal with the Depository
and the Depository Participants for all purposes (including the making of
distributions) as the authorized representative of the respective Certificate
Owners of such Certificates;

                  (c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;

                  (d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 6.08, the Depository will make
book-entry transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;

                  (e) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;

                  (f) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants; and

                                     -106-
<PAGE>

                  (g) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.

                  For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates.

         Section 6.07      NOTICES TO DEPOSITORY.

                  Whenever any notice or other communication is required to be
given to Certificateholders of a Class with respect to which Book-Entry
Certificates have been issued, unless and until Definitive Certificates shall
have been issued to the related Certificate Owners, the Trustee shall give all
such notices and communications to the Depository.

         Section 6.08      DEFINITIVE CERTIFICATES.

                  If, after Book-Entry Certificates have been issued with
respect to any Certificates, (a) the Depositor or the Depository advises the
Trustee that the Depository is no longer willing or able to discharge properly
its responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Trustee and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Trustee shall notify all Certificate Owners of such Certificates, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to applicable Certificate Owners requesting the same.
The Depositor shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon surrender to the Trustee of any such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall countersign and deliver such Definitive Certificates. Neither
the Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.

                                     -107-
<PAGE>

         Section 6.09      MAINTENANCE OF OFFICE OR AGENCY.

                  The Trustee will maintain or cause to be maintained at its
expense an office or offices or agency or agencies at 2001 Bryan Street, 8th
Floor, Dallas, Texas, 75201, Attention: ITS Transfer Department, Nomura Asset
Acceptance Corporation, 2004-AR2 where Certificates may be surrendered for
registration of transfer or exchange. The Trustee will give prompt written
notice to the Certificateholders of any change in such location of any such
office or agency.

                                     -108-
<PAGE>

                                   ARTICLE VII

                         THE DEPOSITOR AND THE SERVICER

         Section 7.01      LIABILITIES OF THE DEPOSITOR AND THE SERVICER.

         Each of the Depositor and the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by it herein.

         Section 7.02      MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE
                           SERVICER.

                  (a) Each of the Depositor and the Servicer will keep in full
force and effect its rights and franchises as a corporation under the laws of
the state of its incorporation, and will obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its duties under this Agreement.

                  (b) Any Person into which the Depositor or any Servicer may be
merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or the Servicer shall be a party, or any
Person succeeding to the business of the Depositor or the Servicer shall be the
successor of the Depositor or the Servicer hereunder, without the execution or
filing of any paper or further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.

         Section 7.03      INDEMNIFICATION OF DEPOSITOR AND THE SERVICER.

                  (a) The Depositor agrees to indemnify the Indemnified Persons
for, and to hold them harmless against, any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or relating to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement or the Certificates (i) related to the
Depositor's failure to perform its duties in compliance with this Agreement
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) or (ii) incurred by reason of the Depositor's
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. This indemnity shall survive the resignation and the termination of
this Agreement.

                  (b) The Servicer agrees to indemnify the Indemnified Persons
for, and to hold them harmless against, any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or relating to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to the Servicer's gross negligence in the performance of its
duties under this Agreement or failure to service the Mortgage Loans in material
compliance with the terms of this Agreement and for a material breach of any
representation, warranty or covenant of the Servicer contained herein. The
Servicer shall immediately notify the Trustee if a claim is made by a third

                                     -109-
<PAGE>

party with respect to this Agreement or the Mortgage Loans, assume (with the
consent of the Trustee and with counsel reasonably satisfactory to the Trustee)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly appeal or pay, discharge and satisfy any
judgment or decree which may be entered against it or any Indemnified Person in
respect of such claim but failure to so notify the Servicer shall not limit its
obligations hereunder. The Servicer agrees that it will not enter into any
settlement of any such claim without the consent of the Indemnified Persons
unless such settlement includes an unconditional release of such Indemnified
Persons from all liability that is the subject matter of such claim. The
provisions of this Section 7.03(b) shall survive termination of this Agreement.

         Section 7.04 LIMITATIONS ON LIABILITY OF THE DEPOSITOR, THE SERVICER
AND OTHERS.

                  Subject to the obligation of the Depositor and the Servicer to
indemnify the Indemnified Persons pursuant to Section 7.03:

                  (a) Neither the Depositor, the Servicer nor any of the
directors, officers, employees or agents of the Depositor and the Servicer shall
be under any liability to the Indemnified Persons, the Trust Fund or the
Certificateholders for taking any action or for refraining from taking any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
Servicer or any such Person against any breach of warranties or representations
made herein or any liability which would otherwise be imposed by reason of such
Person's willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder.

                  (b) The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor and 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.

                  (c) The Depositor, the Servicer, the Trustee, the Custodian
and any director, officer, employee or agent of the Depositor, the Servicer, the
Trustee or the Custodian shall be indemnified by the Trust Fund and held
harmless thereby against any loss, liability or either expense (including
reasonable legal fees and disbursements of counsel) incurred on their part that
may be sustained in connection with, arising out of, or related to, any claim or
legal action (including any pending or threatened claim or legal action)
relating to this Agreement or the Certificates, other than (i) with respect to
the Servicer, such loss, liability or expense related to the Servicer's failure
to perform its duties in compliance with this Agreement (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) or, with respect to the Custodian, to the Custodian's failure to
perform its duties hereunder, (ii) with respect to the Servicer, any such loss,
liability or expense incurred by reason of the Servicer's willful misfeasance,
bad faith or gross negligence in the performance of its duties hereunder or
(iii) with respect to the Custodian, any such loss, liability or expense
incurred by reason of the Custodian's willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder.

                  (d) Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties under this

                                     -110-
<PAGE>

Agreement and that in its opinion may involve it in any expense or liability;
provided, however, the Trustee may in its discretion, undertake any such action
which it may deem necessary or desirable with respect to this Agreement and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund, and the Trustee shall be entitled to be
reimbursed therefor out of the Distribution Account as provided by Section 4.05.
Nothing in this Subsection 7.04(d) shall affect the Trustee's obligation to take
such actions as are necessary to ensure the servicing and administration of the
Mortgage Loans pursuant to this Agreement.

                  (e) In taking or recommending any course of action pursuant to
this Agreement, unless specifically required to do so pursuant to this
Agreement, the Trustee shall not be required to investigate or make
recommendations concerning potential liabilities which the Trust might incur as
a result of such course of action by reason of the condition of the Mortgaged
Properties.

                  (f) The Trustee shall not be liable for any acts or omissions
of the Servicer, the Depositor or the Custodian.

         Section 7.05      SERVICER NOT TO RESIGN.

                  The Servicer shall not resign from the obligations and duties
hereby imposed on it except upon the determination that its duties hereunder are
no longer permissible under applicable law or the performance of such duties are
no longer possible in order to comply with applicable law and such incapacity or
impossibility cannot be cured by the Servicer. Any determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee which Opinion of Counsel shall be in form and
substance acceptable to the Trustee. No appointment of a successor to the
Servicer shall be effective hereunder unless (a) the Rating Agencies have
confirmed in writing that such appointment will not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to the
Certificates, (b) such successor shall have represented that it is meets the
eligibility criteria set forth in Section 8.02 and (c) such successor has agreed
to assume the obligations of the Servicer hereunder to the extent of the
Mortgage Loans. The Servicer shall provide a copy of the written confirmation of
the Rating Agencies and the agreement executed by such successor to the Trustee.
No such resignation shall become effective until a Qualified Successor or the
Trustee shall have assumed the Servicer's responsibilities and obligations
hereunder. The Servicer shall notify the Trustee and the Rating Agencies of its
resignation.

         Section 7.06      TERMINATION OF SERVICER WITHOUT CAUSE; APPOINTMENT OF
                           SPECIAL SERVICER.

                  (a) The Seller may, at its option, terminate the servicing
responsibilities of GMAC Mortgage Corporation as Servicer hereunder with respect
to the Mortgage Loans without cause. No such termination shall become effective
unless and until a successor to GMAC Mortgage Corporation shall have been
appointed to service and administer the related Mortgage Loans pursuant to the
terms and conditions of this Agreement. No appointment shall be effective unless
(i) such successor to GMAC Mortgage Corporation meets the eligibility criteria
contained in Section 8.02, (ii) the Trustee shall have consented to such
appointment, (iii) the Rating

                                     -111-
<PAGE>

Agencies have confirmed in writing that such appointment will not result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
the Certificates, (iv) such successor has agreed to assume the obligations of
GMAC Mortgage Corporation hereunder to the extent of the Mortgage Loans and (v)
all amounts reimbursable to GMAC Mortgage Corporation pursuant to the terms of
this Agreement shall have been paid to GMAC Mortgage Corporation by the
successor appointed pursuant to the terms of this Section 7.06 or by the Seller
including without limitation, all unreimbursed Advances and Servicing Advances
made by GMAC Mortgage Corporation and all out-of-pocket expenses of GMAC
Mortgage Corporation incurred in connection with the transfer of servicing to
such successor. The Seller shall provide a copy of the written confirmation of
the Rating Agencies and the agreement executed by such successor to the Trustee.

                  (b) In addition, the Seller may, at its option, appoint a
special servicer with respect to certain of the Mortgage Loans. The Seller and
GMAC Mortgage Corporation shall negotiate in good faith with any proposed
special servicer with respect to the duties and obligations of such special
servicer with respect to any such Mortgage Loan. Any subservicing agreement
shall contain terms and provisions acceptable to the Trustee and shall obligate
the special servicer to service such Mortgage Loans in accordance with Accepted
Servicing Practices. The fee payable to the special servicer for the performance
of such duties and obligations will paid from the Servicing Fee collected by
GMAC Mortgage Corporation with respect to each such Mortgage Loan and will be
remitted to such special servicer by GMAC Mortgage Corporation.

                                     -112-
<PAGE>

                                  ARTICLE VIII

                        DEFAULT; TERMINATION OF SERVICER

         Section 8.01      SERVICER DEFAULT.

                  In case one or more of the following events of default by the
Servicer (each, a "Servicer Default") shall occur and be continuing, that is to
say:

                  (i) any failure to remit to the Trustee any payment required
to be made under the terms of this Agreement which continues unremedied for a
period of three Business Days; or

                  (ii) failure duly to observe or perform in any material
respect any other of the covenants or agreements set forth in this Agreement,
the breach of which has a material adverse effect and which continue unremedied
for a period of sixty days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee; or

                  (iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or

                  (iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property; or

                  (v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or

                  (vi) the Servicer attempts to assign its right to servicing
compensation hereunder (other than any payment by the Servicer of any portion of
the Servicing Fee to the Seller as provided in a separate side letter between
the Seller and the Servicer) or the Servicer attempts to sell or otherwise
dispose of all or substantially all of its property or assets or to assign this
Agreement or the servicing responsibilities hereunder or to delegate its duties
hereunder or any portion thereof except, in each case as otherwise permitted
herein; or

                  (vii) the Servicer ceases to be qualified to transact business
in any jurisdiction where it is currently so qualified, but only to the extent
such non-qualification materially and adversely affects the Servicer's ability
to perform its obligations hereunder; or

         then, and in each and every such case, so long as a Servicer Default
shall not have been remedied, the Trustee, by notice in writing to the Servicer
shall with respect to a payment default

                                     -113-
<PAGE>

by the Servicer pursuant to Section 8.01(i) and, upon the occurrence and
continuance of any other Servicer Default, may, and, at the written direction of
Certificateholders evidencing not less than 25% of the Voting Rights shall, in
addition to whatever rights the Trustee on behalf of the Certificateholders may
have under Section 7.03 and at law or equity to damages, including injunctive
relief and specific performance, terminate all the rights and obligations of the
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof without compensating the Servicer for the same. 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 Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee. Upon written request from the
Trustee, the Servicer shall prepare, execute and deliver, any and all documents
and other instruments, place in the Trustee's possession all Mortgage Files
relating to the related Mortgage Loans, and 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 or assignment of
the Mortgage Loans and related documents, or otherwise, at the Servicer's sole
expense. The defaulting Servicer shall cooperate with the Trustee in effecting
the termination of its responsibilities and rights hereunder including, without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by the defaulting Servicer to the
Custodial Account or Escrow Accounts or thereafter received with respect to the
Mortgage Loans or any related REO Property (provided, however, that the
defaulting Servicer shall continue to be entitled to receive all amounts accrued
or owing to it under this Agreement on or prior to the date of such termination,
whether in respect of Advances, Servicing Advances, accrued and unpaid Servicing
Fees or otherwise, and shall continue to be entitled to the benefits of Section
7.04, notwithstanding any such termination, with respect to events occurring
prior to such termination). The Trustee shall not have knowledge of a Servicer
Default unless a Responsible Officer of the Trustee has actual knowledge or
unless written notice of any Servicer Default is received by the Trustee at its
Corporate Trust Office and such notice references the Certificates, the Trust
Fund or this Agreement.

         Section 8.02      TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

                  On and after the time the Servicer receives a notice of
termination pursuant to Section 8.01, the Trustee shall automatically become the
successor to the Servicer with respect to the transactions set forth or provided
for herein and after a transition period (not to exceed 90 days), shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make Advances pursuant to Article VI hereof except
as otherwise provided herein; provided, however, that the Trustee's obligation
to make Advances in its capacity as Successor Servicer shall not be subject to
such 90 day transition period and the Trustee in such capacity will make any
Advance required to be made by the predecessor Servicer on the Distribution Date
on which the predecessor Servicer was required to make such Advance. Effective
on the date of such notice of termination, as compensation therefor, the Trustee
shall be entitled to all fees, costs and expenses relating to the Mortgage Loans
that the terminated Servicer would have been entitled to if it had continued to
act hereunder, provided, however, that the Trustee shall not be (i) liable for
any acts or omissions of the terminated Servicer, (ii) obligated to make
Advances if it is prohibited from doing so under applicable law or determines
that such Advance, if made, would constitute a Nonrecoverable Advance, (iii)
responsible for expenses of the terminated Servicer pursuant to Section 2.03 or
(iv) obligated to deposit losses on any Permitted Investment directed

                                     -114-
<PAGE>

by the terminated Servicer. Notwithstanding the foregoing, the Trustee may, if
it shall be unwilling to so act, or shall, if it is prohibited by applicable law
from making Advances pursuant to Article VI or if it is otherwise unable to so
act, appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution the appointment of which does
not adversely affect the then current rating of the Certificates by each Rating
Agency 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. Any Successor Servicer shall (i) be an institution that is a Fannie
Mae and Freddie Mac approved seller/servicer in good standing, that has a net
worth of at least $15,000,000 and (ii) be willing to act as successor servicer
of any Mortgage Loans under this Agreement and shall have executed and delivered
to the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the terminated Servicer
(other than any liabilities of the terminated Servicer hereof incurred prior to
termination of the Servicer under Section 8.01), with like effect as if
originally named as a party to this Agreement, provided that each Rating Agency
shall have acknowledged in writing that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation. If the Trustee assumes
the duties and responsibilities of the Servicer in accordance with this Section
8.02, the Trustee shall not resign as Servicer until a Successor Servicer has
been appointed and has accepted such appointment. Pending appointment of a
successor to the terminated Servicer hereunder, the Trustee, unless the Trustee
is prohibited by law from so acting, shall, subject to Section 4.04 hereof, 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 or otherwise as it and such
successor shall agree; provided that no such compensation shall be in excess of
that permitted the terminated Servicer hereunder. The Trustee and such successor
shall take such action, consistent with this Agreement as shall be necessary to
effectuate any such succession. Neither the Trustee nor any other Successor
Servicer shall be deemed to be in default hereunder by reason of any failure to
make, or any delay in making, any distribution hereunder or any portion thereof
or any failure to perform, or any delay in performing, any duties or
responsibilities hereunder, in either case caused by the failure of the Servicer
to deliver or provide, or any delay in delivering or providing, any cash,
information, documents or records to it.

                  The costs and expenses of the Trustee in connection with the
termination of the Servicer, appointment of a Successor Servicer and, if
applicable, any transfer of servicing, including, without limitation, all costs
and expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee or the Successor Servicer to service the
Mortgage Loans properly and effectively, to the extent not paid by the
terminated Servicer as may be required herein, shall be payable to the Trustee
from the Distribution Account pursuant to Section 4.07. Any successor to the
terminated Servicer as successor servicer under this Agreement shall give notice
to the applicable Mortgagors of such change of servicer and shall, during the
term of its service as successor servicer maintain in force the policy or
policies that the terminated Servicer is required to maintain pursuant to
Section 3.04.

                                     -115-
<PAGE>

         Section 8.03      NOTIFICATION TO CERTIFICATEHOLDERS.

                  (a) Upon any termination of or appointment of a successor to
the Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.

                  (b) Within 60 days after the occurrence of any Servicer
Default, the Trustee shall transmit by mail to all Certificateholders notice of
each the Servicer Default hereunder known to the Trustee, unless such default
shall have been cured or waived.

         Section 8.04      WAIVER OF SERVICER DEFAULTS.

                  The Trustee may waive only by written notice from
Certificateholders evidencing 66-2/3 of the Voting Rights (unless such default
materially and adversely affects all Certificateholders, in which case the
written direction shall be from all of the Certificateholders) any default by
the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Servicer Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived in writing.

                                     -116-
<PAGE>

                                   ARTICLE IX

                    CONCERNING THE TRUSTEE AND THE CUSTODIAN

         Section 9.01      DUTIES OF TRUSTEE.

                  (a) The Trustee, prior to the occurrence of a Servicer
         Default, and after the curing or waiver of all Servicer Defaults, which
         may have occurred undertakes to perform such duties and only such
         duties as are specifically set forth in this Agreement as duties of the
         Trustee. If a Servicer Default has occurred and has not been cured or
         waived, the Trustee shall exercise such of the rights and powers vested
         in it by this Agreement, and the same degree of care and skill in their
         exercise, as a prudent person would exercise under the circumstances in
         the conduct of such Person's own affairs.

                  (b) Upon receipt of all resolutions, certificates, statements,
         opinions, reports, documents, orders or other instruments which are
         specifically required to be furnished to the Trustee pursuant to any
         provision of this Agreement, the Trustee shall examine them to
         determine whether they are in the form required by this Agreement;
         provided, however, that the Trustee shall not be responsible for the
         accuracy or content of any resolution, certificate, statement, opinion,
         report, document, order or other instrument furnished by the Servicer.

                  (c) On each Distribution Date, the Trustee shall make monthly
         distributions and the final distribution to the Certificateholders from
         funds in the Distribution Account as provided in Sections 5.04, 5.06
         and 10.01 based the applicable Remittance Report.

                  (d) 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 willful misconduct; provided,
         however, that:

                  (i) Prior to the occurrence of a Servicer Default and after
         the curing or waiver of all the Servicer Defaults which may have
         occurred with respect to the Trustee, 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 their respective 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 and
         shall be fully protected in acting or refraining from acting, as to the
         truth of the statements and the correctness of the opinions expressed
         therein, upon any certificates or opinions furnished to the Trustee and
         conforming to the requirements of this Agreement;

                  (ii) The Trustee shall not be liable in its individual
         capacity for an error of judgment made in good faith by a Responsible
         Officer or Responsible Officers of the Trustee unless it shall be
         proved that the Trustee was negligent in ascertaining the pertinent
         facts;

                  (iii) The Trustee shall not be liable with respect to any
         action taken, suffered or omitted to be taken by it in good faith and
         believed by it to be authorized or within the

                                     -117-
<PAGE>

         rights or powers conferred upon it by this Agreement or in accordance
         with the directions of the Holders of Certificates evidencing not less
         than 25% of the aggregate Voting Rights of the Certificates, if such
         action or non-action relates to the time, method and place of
         conducting any proceeding for any remedy available to the Trustee or
         exercising any trust or other power conferred upon the Trustee under
         this Agreement;

                  (iv) The Trustee shall not be required to take notice or be
         deemed to have notice or knowledge of any default or Servicer Default
         unless a Responsible Officer of the Trustee shall have actual knowledge
         thereof. In the absence of such notice, the Trustee may conclusively
         assume there is no such default or Servicer Default;

                  (v) The Trustee shall not in any way be liable by reason of
         any insufficiency in any Account held by or in the name of Trustee
         unless it is determined by a court of competent jurisdiction that the
         Trustee's gross negligence or willful misconduct was the primary cause
         of such insufficiency (except to the extent that the Trustee is obligor
         and has defaulted thereon);

                  (vi) Anything in this Agreement to the contrary
         notwithstanding, in no event shall the Trustee be liable for special,
         indirect, punitive or consequential loss or damage of any kind
         whatsoever (including but not limited to lost profits), even if the
         Trustee has been advised of the likelihood of such loss or damage and
         regardless of the form of action and whether or not any such damages
         were forseeable or contemplated; and

                  (vii) None of the Seller, the Depositor or the Trustee shall
         be responsible for the acts or omissions of the other, it being
         understood that this Agreement shall not be construed to render them
         partners, joint venturers or agents of one another.

The Trustee shall not be required to expend or risk its own funds or otherwise
incur liability, financial or otherwise, 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 terminated Servicer hereunder.

                  (e) All funds received by the Trustee and required to be
deposited in the Distribution Account pursuant to this Agreement will be
promptly so deposited by the Trustee.

         Section 9.02      CERTAIN MATTERS AFFECTING THE TRUSTEE.

                  (a) Except as otherwise provided in Section 9.01:

                  (i) The Trustee may conclusively rely and shall be fully
         protected in acting or refraining from acting in reliance on any
         resolution or certificate of the Seller, the Depositor or the Servicer,
         any certificates of auditors or any other certificate, statement,
         instrument, opinion, report, notice, request, consent, order,
         appraisal, bond or other paper or document believed by it to be genuine
         and to have been signed or presented by the proper party or parties;

                                     -118-
<PAGE>

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

                  (iii) The Trustee shall not be under any obligation to
         exercise any of the trusts or powers vested in it by this Agreement,
         other than its obligation to give notices pursuant to 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
         such Certificateholders shall have offered to the Trustee reasonable
         security or indemnity satisfactory to it against the costs, expenses
         and liabilities which may be incurred therein or thereby. Nothing
         contained herein shall, however, relieve the Trustee of the obligation,
         upon the occurrence of a Servicer Default of which a Responsible
         Officer of the Trustee has actual knowledge (which has not been cured
         or waived), to exercise such of the rights and powers vested in it by
         this Agreement, and to use the same degree of care and skill in their
         exercise, as a prudent person would exercise under the circumstances in
         the conduct of his own affairs;

                  (iv) The Trustee shall not be liable in its individual
         capacity for any action taken, suffered or omitted by it in good faith
         and believed by it to be authorized or within the discretion or rights
         or powers conferred upon it by this Agreement;

                  (v) 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 document, unless requested in
         writing to do so by Holders of Certificates evidencing not less than
         25% of the aggregate Voting Rights of the Certificates and provided
         that 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 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
         expense or liability as a condition to taking any such action. The
         reasonable expense of every such examination shall be paid by the
         Certificateholders requesting the investigation;

                  (vi) The Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or through
         Affiliates, nominees, custodians, agents or attorneys. The Trustee
         shall not be liable or responsible for the misconduct or negligence of
         any of the Trustee's agents or attorneys or paying agent appointed
         hereunder by the Trustee with due care;

                  (vii) Should the Trustee deem the nature of any action
         required on its part to be unclear, the Trustee may require prior to
         such action that it be provided by the Depositor with reasonable
         further instructions; 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 accountable for other than its
         negligence or willful misconduct in the performance of any such act;

                                     -119-
<PAGE>

                  (viii) The Trustee shall not be required to give any bond or
         surety with respect to the execution of the trust created hereby or the
         powers granted hereunder;

                  (ix) The Trustee shall not have any duty to conduct any
         affirmative investigation as to the occurrence of any condition
         requiring the repurchase of any Mortgage Loan by any Person pursuant to
         this Agreement, or the eligibility of any Mortgage Loan for purposes of
         this Agreement; and

                  (x) The Trustee shall have no duty hereunder with respect to
         any complaint, claim, demand, notice or other document it may receive
         or which may be alleged to have been delivered or served upon it by the
         parties as a consequence of the assignment of any Mortgage Loan
         hereunder; provided, however that the Trustee shall promptly remit to
         the Servicer upon receipt any such complaint, claim, demand, notice or
         other document (i) which is delivered to the Trustee at is Corporate
         Trust Office, (ii) of which a Responsible Officer has actual knowledge
         or (iii) which contains information sufficient to permit the Trustee to
         make a determination that the real property to which such document
         relates is a Mortgaged Property.

                  (b) The Trustee is hereby directed by the Depositor to execute
         the Cap Contracts on behalf of the Trust Fund in the form presented to
         it by the Depositor and shall have no responsibility for the contents
         of the Cap Contracts, including, without limitation, the
         representations and warranties contained therein. Any funds payable by
         the Trustee under the Cap Contracts at closing shall be paid by the
         Depositor. Notwithstanding anything to the contrary contained herein or
         in the Cap Contracts, the Trustee shall not be required to make any
         payments to the counterparty under the Cap Contracts.

         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 shall not have any
responsibility for their correctness. The Trustee does not make any
representation as to the validity or sufficiency of the Certificates (other than
the signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan except as expressly provided in Sections 2.02 and 2.06; provided,
however, that the foregoing shall not relieve the Custodian of the obligation to
review the Mortgage Files pursuant to Sections 2.02 and 2.05 of this Agreement.
The Trustee's signature and authentication (or authentication of its agent) on
the Certificates shall be solely in its capacity as Trustee and shall not
constitute the Certificates an obligation of the Trustee in any other capacity.
The Trustee shall not be accountable for the use or application by the Depositor
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Depositor with respect to the
Mortgage Loans. The Trustee (other than in its capacity as Custodian and on such
capacity, subject to the provisions of Section 2.06) shall not be responsible
for the legality or validity of this Agreement or any document or instrument
relating to this Agreement, the validity of the execution of this Agreement or
of any supplement hereto or instrument of further assurance, or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
hereunder or intended to be issued hereunder. The Trustee shall not at

                                     -120-
<PAGE>

any time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. The Trustee shall not have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement.

         Section 9.04      TRUSTEE MAY OWN CERTIFICATES.

                  The Trustee in its individual capacity or in any capacity
other than as Trustee hereunder may become the owner or pledgee of any
Certificates with the same rights it would have if it were not the Trustee and
may otherwise deal with the parties hereto.

         Section 9.05      TRUSTEE'S COMPENSATION AND EXPENSES; INDEMNIFICATION.

                  (a) As compensation for the performance of its obligations
under this Agreement, the Trustee shall be entitled to all income and gain
realized from any investment of funds in the Distribution Account.

                  In addition, the Trustee will be entitled to recover from the
Distribution Account pursuant to Section 4.07 all reasonable out-of-pocket
expenses, disbursements and advances and the expenses of the Trustee in
connection with the performance of its duties and obligations hereunder or under
any related documents, any Servicer Default, any breach of this Agreement or any
claim or legal action (including any pending or threatened claim or legal
action) incurred or made by the Trustee in the administration of the trusts
hereunder (including the reasonable compensation, expenses and disbursements of
its counsel) except any such expense, disbursement or advance as may arise from
its negligence or intentional misconduct. If funds in the Distribution Account
are insufficient therefor, the Trustee shall recover such expenses from the
Seller. Such compensation and reimbursement obligation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust. The rights of the Trustee under this Section 9.05 shall survive the
termination of this Agreement and the resignation or removal of the Trustee.

                  (b) The Trustee and its directors, officers, agents and
employees shall be indemnified and held harmless by the Trust Fund against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including reasonable attorney's fees, that may be imposed on,
incurred by or asserted against it or them in any way directly or indirectly
relating to or arising out of the transactions contemplated by this Agreement or
any other agreement entered into in connection herewith, including, but not
limited to, the Mortgage Loan Purchase Agreement assigned to the Trust pursuant
to this Agreement or any action taken or not taken by it or them hereunder or in
connection herewith except to the extent caused by the Trustee's negligence or
willful misconduct. The indemnification provided for under this Section 9.05
shall survive the termination of this Agreement and the resignation or removal
of the Trustee.

                                     -121-
<PAGE>

                  The Trustee and its directors, officers, agents and employees
shall be indemnified and held harmless by the Trust Fund from and against any
and all claims, demands, losses, penalties, liabilities, costs, damages,
injuries and expenses, including, without limitation, reasonable attorneys' fees
and expenses, suffered or sustained by the Trustee, either directly or
indirectly, relating to or arising out of any environmental law or regulation of
the United States or any state thereof, including, without limitation, any
judgment, award, settlement, reasonable attorneys' fees and expenses and other
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim.

         Section 9.06      ELIGIBILITY REQUIREMENTS FOR TRUSTEE.

                  The Trustee and any successor Trustee shall during the entire
duration of this Agreement be a state bank or trust company or a national
banking association organized and doing business under the laws of a state or
the United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee, $50,000,000, subject
to supervision or examination by federal or state authority and, in the case of
the Trustee, rated "BBB" or higher by Fitch Ratings with respect to their
long-term rating and rated "A-1" or higher by Standard & Poor's and "Baa2" or
higher by Moody's with respect to any outstanding long-term unsecured
unsubordinated debt, and, in the case of a successor Trustee other than pursuant
to Section 9.10, rated in one of the two highest long-term debt categories of,
or otherwise acceptable to, each of the Rating Agencies. If the Trustee
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 of this Section 9.06 the combined capital and surplus of such
corporation shall be deemed to be its total equity capital (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 9.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.08.

         Section 9.07      INSURANCE.

                  The Custodian hereunder, at its own expense, shall at all
times maintain and keep in full force and effect such insurance in amounts, with
standard coverage and subject to deductibles, as are customary for insurance
typically maintained by banks which act as custodians but, in any event not less
than that required by Fannie Mae. Evidence of such insurance shall be furnished
to any Certificateholder upon reasonable written request.

         Section 9.08      RESIGNATION AND REMOVAL OF TRUSTEE.

                  The Trustee may at any time resign and be discharged from the
Trust hereby created by giving written notice thereof to the Depositor and the
Seller, with a copy to the Rating Agencies. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by written
instrument, in triplicate, one copy of which instrument shall be delivered to
the resigning trustee and the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation or removal, the resigning or removed
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.

                                     -122-
<PAGE>

                  If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 hereof and shall fail to resign
after written request thereto by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged as 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
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor may remove the
Trustee and appoint a successor trustee by written instrument, in multiple
copies, a copy of which instrument shall be delivered to the Trustee and the
successor trustee.

                  The Holders evidencing at least 51% of the Voting Rights of
each Class of Certificates may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in multiple copies,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered by the successor trustee to the
Trustee so removed and the successor trustee so appointed. Notice of any removal
of the Trustee shall be given to each Rating Agency by the Trustee or successor
trustee.

                  Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 9.08 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 10.09 hereof.

         Section 9.09      SUCCESSOR TRUSTEE.

                  Any successor trustee appointed as provided in Section 9.08
hereof shall execute, acknowledge and deliver to the Depositor 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 and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein.

                  No successor trustee shall accept appointment as provided in
this Section 9.09 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 9.07 hereof and its
appointment shall not adversely affect the then current rating of the
Certificates.

                  Upon acceptance of appointment by a successor trustee as
provided in this Section 9.09, the successor trustee shall mail notice of the
succession of such trustee hereunder to all Holders of Certificates. If the
successor trustee fails to mail such notice within ten days after acceptance of
appointment, the Depositor shall cause such notice to be mailed at the expense
of the Trust Fund.

         Section 9.10      MERGER OR CONSOLIDATION OF TRUSTEE.

                  Any corporation, state bank or national banking association
into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation,

                                     -123-
<PAGE>

state bank or national banking association resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation,
state bank or national banking association succeeding to substantially all of
the corporate trust business of the Trustee or shall be the successor of the
Trustee hereunder, provided that such corporation shall be eligible under the
provisions of Section 9.06 without the execution or filing of any paper or
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.

         Section 9.11      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 Fund or property securing any Mortgage Note may at
the time be located, the Trustee 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 Fund, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust Fund or any part thereof, whichever
is applicable, and, subject to the other provisions of this Section 9.11, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
9.06 and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 9.09.

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

                  (i) All rights, powers, duties and obligations conferred or
         imposed upon the Trustee, except for the obligation of the Trustee as
         Successor Servicer under this Agreement to advance funds on behalf of
         the terminated Servicer, shall be conferred or imposed upon and
         exercised or performed by the Trustee and such separate trustee or
         co-trustee jointly (it being understood that such separate trustee or
         co-trustee is not authorized to act separately without the 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 a Trustee hereunder or as a Successor 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 Fund 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;

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

                  (iii) The Trustee may at any time accept the resignation of or
         remove any separate trustee or co-trustee.

                  Any notice, request or other writing given to the 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

                                     -124-
<PAGE>

of them. Every instrument appointing any separate trustee or co-trustee shall
refer to this Agreement and the conditions of this Article IX. Each separate
trustee and co-trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument of appointment,
either jointly with the 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 a copy thereof given to the Depositor. The Trust Fund
shall pay associated fees and expenses.

                  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.

         Section 9.12      TAX MATTERS.

                  It is intended that the Trust Fund shall constitute, and that
the affairs of the Trust Fund shall be conducted so that each REMIC formed
hereunder qualifies as, a "real estate mortgage investment conduit" as defined
in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Trustee covenants and agrees that it shall act as agent (and the
Trustee is hereby appointed to act as agent) on behalf of the Trust Fund. The
Trustee, as agent on behalf of the Trust Fund, shall do or refrain from doing,
as applicable, the following: (a) the Trustee shall prepare and file, or cause
to be prepared and filed, in a timely manner, U.S. Real Estate Mortgage
Investment Conduit Income Tax Returns (Form 1066 or any successor form adopted
by the Internal Revenue Service) and prepare and file or cause to be prepared
and filed with the Internal Revenue Service and applicable state or local tax
authorities income tax or information returns for each taxable year with respect
to each such REMIC containing such information and at the times and in the
manner as may be required by the Code or state or local tax laws, regulations,
or rules, and furnish or cause to be furnished to Certificateholders the
schedules, statements or information at such times and in such manner as may be
required thereby; (b) the Trustee shall apply for an employer identification
number with the Internal Revenue Service via a Form SS-4 or other comparable
method for each REMIC that is or becomes a taxable entity, and within thirty
days of the Closing Date, furnish or cause to be furnished to the Internal
Revenue Service, on Forms 8811 or as otherwise may be required by the Code, the
name, title, address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code for the
Trust Fund; (c) the Trustee shall make or cause to be made elections, on behalf
of each REMIC formed hereunder to be treated as a REMIC on the federal tax
return of such REMIC for its first taxable year (and, if necessary, under
applicable state law); (d) the Trustee shall prepare and forward, or cause to be
prepared and forwarded, to the Certificateholders and to the Internal Revenue
Service and, if necessary, state tax authorities, all information returns and
reports as and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original issue
discount using the Prepayment Assumption; (e) the Trustee shall provide
information necessary

                                     -125-
<PAGE>

for the computation of tax imposed on the transfer of a Residual Certificate to
a Person that is not a Permitted Transferee, or an agent (including a broker,
nominee or other middleman) of a Person that is not a Permitted Transferee, or a
pass-through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) the
Trustee shall, to the extent under its control, conduct the affairs of the Trust
Fund at all times that any Certificates are outstanding so as to maintain the
status of each REMIC formed hereunder as a REMIC under the REMIC Provisions; (g)
the Trustee shall 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
formed hereunder; (h) the Trustee shall pay, from the sources specified in the
last paragraph of this Section 9.12, the amount of any federal, state and local
taxes, including prohibited transaction taxes as described below, imposed on any
REMIC formed hereunder prior to the termination of the Trust Fund when and as
the same shall be due and payable (but such obligation shall not prevent the
Trustee or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Trustee from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); (i) the Trustee shall sign or cause to be signed federal, state or
local income tax or information returns or any other document prepared by the
Trustee pursuant to this Section 9.12 requiring a signature thereon by the
Trustee; (j) the Trustee shall maintain records relating to each REMIC formed
hereunder including but not limited to the income, expenses, assets and
liabilities of each such REMIC and adjusted basis of the Trust Fund property
determined at such intervals as may be required by the Code, as may be necessary
to prepare the foregoing returns, schedules, statements or information; (k) the
Trustee shall, for federal income tax purposes, maintain books and records with
respect to the REMICs on a calendar year and on an accrual basis; (l) the
Trustee shall not enter into any arrangement not otherwise provided for in this
Agreement by which the REMICs will receive a fee or other compensation for
services nor permit the REMICs to receive any income from assets other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code; and (m) as and when
necessary and appropriate, the Trustee shall represent the Trust Fund in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of any REMIC formed hereunder, enter into settlement agreements
with any governmental taxing agency, extend any statute of limitations relating
to any tax item of the Trust Fund, and otherwise act on behalf of each REMIC
formed hereunder in relation to any tax matter involving any such REMIC.

                  In order to enable the Trustee to perform its duties as set
forth herein, the Depositor shall provide, or cause to be provided, to the
Trustee within 10 days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby indemnifies the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis.

                                     -126-
<PAGE>

                  In the event that any tax is imposed on "prohibited
transactions" of any REMIC as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" of the Trust Fund as defined in Section
860G(c) of the Code, on any contribution to any REMIC after the startup day
pursuant to Section 860G(d) of the Code, or any other tax is imposed, including,
without limitation, any federal, state or local tax or minimum tax imposed upon
any REMIC and is not paid as otherwise provided for herein, such tax shall be
paid by (i) the Trustee, if any such other tax arises out of or results from a
breach by the Trustee of any of its obligations under this Section, (ii) any
party hereto (other than the Trustee) to the extent any such other tax arises
out of or results from a breach by such other party of any of its obligations
under this Agreement or (iii) in all other cases, or in the event that any
liable party hereto fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts otherwise to be
distributed to the Residual Certificateholders, and second with amounts
otherwise to be distributed to all other Certificateholders in the following
order of priority: first, to the Subordinate Certificates in reverse numerical
order, and second, to the Senior Certificates (pro rata based on the amounts to
be distributed). Notwithstanding anything to the contrary contained herein, to
the extent that such tax is payable by the Holder of any Certificates, the
Trustee is hereby authorized to retain on any Distribution Date, from the
Holders of the Residual Certificates (and, if necessary, second, from the
Holders of the other Certificates in the priority specified in the preceding
sentence), funds otherwise distributable to such Holders in an amount sufficient
to pay such tax. The Trustee shall include in its Remittance Report instructions
as to distributions to such parties taking into account the priorities described
in the second preceding sentence. The Trustee agrees to promptly notify in
writing the party liable for any such tax of the amount thereof and the due date
for the payment thereof.

         Section 9.13      CUSTODIAN'S FEES AND EXPENSES.

                  The Seller covenants and agrees to pay the Custodian from time
to time, and the Custodian shall be entitled to reasonable compensation for all
services rendered by it in the exercise and performance of any of the powers and
duties of the Custodian hereunder, and the Seller will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian 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 to the extent that such cost or expense is
indemnified by the Depositor pursuant to this Agreement.

         Section 9.14      INDEMNIFICATION OF CUSTODIAN.

                  The Custodian and its directors, officers, agents and
employees shall be indemnified and held harmless by the Trust Fund against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including reasonable attorney's fees, that may be imposed on,
incurred by or asserted against it or them in any way relating to or arising out
of this Agreement or any action taken or not taken by it or them hereunder
except to the extent caused by the Custodian's negligence or willful misconduct.
If funds in the Trust Fund are insufficient therefor, the Custodian shall
recover such expenses from the Seller. The indemnification provided for under

                                     -127-
<PAGE>

this Section 9.14 shall survive the termination of this Agreement and the
resignation or removal of the Custodian.

         Section 9.15      RELIANCE OF CUSTODIAN.

                  (a) The Custodian may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
request, instructions, direction, certificate, opinion or other document
furnished to the Custodian, reasonably believed by the Custodian to be genuine
and to have been signed or presented by the proper party or parties and
conforming to the requirements of this Agreement;

                  (b) The Custodian shall have no duties or responsibilities
except those that are specifically set forth in this Agreement. The Custodian
shall have no responsibility nor duty with respect to any Mortgage File while
such Mortgage File is not in its possession. If the Custodian requests
instructions from the Trustee with respect to any act, action or failure to act
in connection with this Agreement, the Custodian shall be entitled to refrain
from acting unless and until the Custodian shall have received written
instructions from the Trustee with respect to a Mortgage File without incurring
any liability therefor to the Trustee or any other Person;

                  (c) The Custodian shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Custodian unless it shall be proved that the Custodian was negligent in
ascertaining the pertinent facts;

                  (d) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Custodian be liable for special,
indirect, punitive or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Custodian has been
advised of the likelihood of such loss or damage and regardless of the form of
action and whether or not any such damages were foreseeable or contemplated;

                  (e) The Custodian shall not be required to expend or risk its
own funds or otherwise incur financial liability (other than expenses or
liabilities otherwise required to be incurred by the express terms of this
Agreement) in the performance of any of its duties hereunder if it shall have
reasonable grounds for believing that the repayment of such funds or indemnity
satisfactory to it is not reasonably assured to it;

                  (f) The Custodian may consult with counsel and any advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection with respect to any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;

                  (g) The Custodian makes no representations and has no
responsibilities as to (i) the validity, legality, enforceability,
recordability, sufficiency, due authorization or genuineness of any of the
documents contained in the Mortgage Files or any of the Mortgage Loans or (ii)
the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan;

                  (h) Neither the Custodian nor any of this directors, officers,
agents or employees shall be liable for any action taken, suffered or omitted to
be taken by it in good faith

                                     -128-
<PAGE>

and believed by it to be authorized or within the rights or powers conferred
upon it by this Agreement. The obligations of the Custodian or any of its
directors, officers, agents or employees shall be determined solely by the
express provisions of this Agreement. No representation, warranty, covenant,
agreement, obligation or duty of the Custodian or any of its directors,
officers, agents or employees shall be implied with respect to this Agreement or
the Custodian's services hereunder;

                  (i) The Custodian, its directors, officers and employees shall
be under no duty or obligation to inspect, review or examine the Mortgage Files
to determine that the contents thereof are genuine, enforceable or appropriate
for the represented purpose or that they have been actually recorded or that
they are other than what they purport to be on their face;

                  (j) Any corporation into which the Custodian 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 Custodian shall be a
party, or any corporation succeeding to the business of the Custodian shall be
the successor of the Custodian hereunder without the execution or filing of any
paper with any party hereto or any further act on the part of any of the parties
hereto except where an instrument of transfer or assignment is required by law
to effect such succession, anything to the contrary herein notwithstanding.

                                     -129-
<PAGE>

                                    ARTICLE X

                                   TERMINATION

         Section 10.01     TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL
                           MORTGAGE LOANS.

                  Subject to Section 10.03, the obligations and responsibilities
of the Depositor, the Seller and the Trustee created hereby with respect to the
Trust Fund shall terminate upon the earlier of (a) the later to occur of the
Depositor's exercise of its optional right to purchase the Mortgage Loans and
related REO Properties (the "Clean-up Call") and (b) the later of (i) the
maturity or other liquidation (or any Advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to Certificateholders of all amounts required
to be distributed to them pursuant to this Agreement, as applicable. In no event
shall the trusts created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of St.
James, living on the date hereof and (ii) the Latest Possible Maturity Date.

                  The Cleanup Call shall be exercisable at a price (the
"Termination Price") equal to the sum of (i) 100% of the Stated Principal
Balance of Mortgage Loan, (ii) accrued interest thereon at the applicable
Mortgage Rate to, but not including, the first day of the month of such
purchase, (iii) the appraised value of any related REO Property (up to the
Stated Principal Balance of the related Mortgage Loan), such appraisal to be
conducted by an appraiser mutually agreed upon by the Depositor and the Trustee
and (iv) unreimbursed out-of-pocket costs of the Servicer or the Trustee,
including unreimbursed servicing advances and the principal portion of any
unreimbursed Advances, made on the related Mortgage Loans prior to the exercise
of such repurchase right and (v) any unreimbursed costs and expenses of the
Trustee payable pursuant to Section 9.05.

                  The right to exercise the Cleanup Call pursuant to the
preceding paragraph shall be exercisable if the Stated Principal Balance of all
of the Mortgage Loans at the time of any such repurchase, is less than ten
percent of the aggregate Cut-off Date Principal Balance of the Mortgage Loans.

         Section 10.02     FINAL DISTRIBUTION ON THE CERTIFICATES.

                  If on any Determination Date, (i) the Trustee determines based
on the reports delivered by the Servicer under this Agreement that there are no
Outstanding Mortgage Loans, and no other funds or assets in the Trust Fund other
than the funds in the Distribution Account, the Trustee shall to send a final
distribution notice promptly to each related Certificateholder or (ii) the
Trustee determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Trustee shall notify the Certificateholders
within five (5) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made
on the immediately following Distribution Date. Any final distribution made
pursuant to the immediately preceding sentence will be made only upon
presentation and surrender of the related Certificates at the office of the
Trustee set forth herein. If the Depositor

                                     -130-
<PAGE>

elects to terminate the Trust Fund pursuant to Section 10.01, at least 20 days
prior to the date notice is to be mailed to the Certificateholders, the
Depositor shall notify the Trustee of the date the Depositor intends to
terminate the Trust Fund. The Depositor shall remit the Termination Price to the
Trustee on the Business Day prior to the Distribution Date for such Optional
Termination by the Depositor.

                  Notice of the exercise of the Cleanup Call, specifying the
Distribution Date on which the Certificateholders may surrender their
Certificates for payment of the final distribution and cancellation, shall be
given promptly by the Trustee by letter to the Certificateholders mailed not
earlier than the 10th day and no later than the 15th day of the month
immediately preceding the month of such final distribution. Any such notice
shall specify (a) the Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of the Certificates at
the office therein designated, (b) the amount of such final distribution, (c)
the location of the office or agency at which such presentation and surrender
must be made and (d) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.
The Trustee will give such notice to each Rating Agency at the time such notice
is given to the Certificateholders.

                  In the event such notice is given, the Depositor shall deposit
in the Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit and the receipt by the Trustee of a
Request for Release therefor, the Trustee shall promptly release to the
Depositor, as applicable the Mortgage Files for the related Mortgage Loans and
any documents necessary to transfer any related REO Property.

                  Upon presentation and surrender of the related Certificates,
the Trustee shall cause to be distributed to Certificateholders of each Class
the amounts allocable to such Certificates held in the Distribution Account in
the order and priority set forth in Section 5.04 and/or Section 5.06 hereof on
the final Distribution Date and in proportion to their respective Percentage
Interests.

                  In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a second
written notice to the remaining affected Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining affected Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain a part of the Trust Fund. If within two years after the
second notice all affected Certificates shall not have been surrendered for
cancellation, the related Residual Certificateholders shall be entitled to all
unclaimed funds and other assets of the Trust Fund that remain subject hereto
and the Trustee shall release such funds upon written direction.

         Section 10.03     ADDITIONAL TERMINATION REQUIREMENTS.

                                     -131-
<PAGE>

                  (a) In the event of (i) the exercise by the Depositor of the
Cleanup Call exercisable by the Depositor pursuant to the terms of this
Agreement, or (ii) the final payment on or other liquidation of the last
Mortgage Loan or REO Property in the related REMIC pursuant to Section 10.01,
the following additional requirements, unless the Trustee has been supplied with
an Opinion of Counsel, at the expense of the Depositor, to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 11.03
will not (i) result in the imposition of taxes on "prohibited transactions" of a
REMIC, or (ii) cause any REMIC to fail to qualify as a REMIC at any time that
any Certificates are outstanding:

                  (1) The Depositor shall establish a 90-day liquidation period
and notify the Trustee thereof, and the Trustee shall in turn specify the first
day of such period in a statement attached to the tax return for each of REMIC I
and REMIC II pursuant to Treasury Regulation Section 1.860F-1. The Depositor
shall satisfy all the requirements of a qualified liquidation under Section 860F
of the Code and any regulations thereunder, as evidenced by an Opinion of
Counsel obtained at the expense of the Depositor;

                  (2) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Depositor shall
sell all of the assets of REMIC I for cash; and

                  (3) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the Holders of the related Residual Certificates all cash on
hand in the Trust Fund (other than cash retained to meet claims), and the Trust
Fund shall terminate at that time.

                  (b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Depositor to specify the 90-day liquidation period
for REMIC I and REMIC II, which authorization shall be binding upon all
successor Certificateholders.

                  (c) The Trustee as agent for each REMIC hereby agrees to adopt
and sign such a plan of complete liquidation upon the written request of the
Depositor, and the receipt of the Opinion of Counsel referred to in Section
10.03(a)(1) and to take such other action in connection therewith as may be
reasonably requested by the Depositor.

                                     -132-
<PAGE>

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

         Section 11.01     AMENDMENT.

                  This Agreement may be amended from time to time by parties
hereto, without the consent of any of the Certificateholders to cure any
ambiguity, to correct or supplement any provisions herein, to change the manner
in which the Distribution Account maintained by the Trustee or the Custodial
Account are maintained or to make such other provisions with respect to matters
or questions arising under this Agreement as shall not be inconsistent with any
other provisions herein if such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder; provided that any such amendment shall be deemed not to
adversely affect in any material respect the interests of the Certificateholders
and no such Opinion of Counsel shall be required if the Person requesting such
amendment obtains a letter from each Rating Agency stating that such amendment
would not result in the downgrading or withdrawal of the respective ratings then
assigned to the Certificates.

                  Notwithstanding the foregoing, without the consent of the
Certificateholders, the parties hereto may at any time and from time to time
amend this Agreement to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or appropriate to maintain the qualification
of each of REMIC I and REMIC II as a REMIC under the Code or to avoid or
minimize the risk of the imposition of any tax on either REMIC I or REMIC II
pursuant to the Code that would be a claim against REMIC I or REMIC II at any
time prior to the final redemption of the Certificates, provided that the
Trustee has been provided an Opinion of Counsel, which opinion shall be an
expense of the party requesting such opinion but in any case shall not be an
expense of the Trustee or the Trust Fund, to the effect that such action is
necessary or appropriate to maintain such qualification or to avoid or minimize
the risk of the imposition of such a tax.

                  This Agreement may also be amended from time to time by the
parties hereto and the Holders of each Class of Certificates affected thereby
evidencing over 50% of the Voting Rights of such Class or Classes 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; provided that no such amendment shall (i) reduce in
any manner the amount of, or delay the timing of, payments required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) cause either REMIC I or REMIC II to cease to qualify as a
REMIC or (iii) reduce the aforesaid percentages of Certificates 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.

                  Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, which opinion shall be an expense of
the party requesting such amendment but in any case shall not be an expense of
the Trustee, to the effect that such amendment will not (other

                                     -133-
<PAGE>

than an amendment pursuant to clause (ii) of, and in accordance with, the
preceding paragraph) cause the imposition of any tax on REMIC I or REMIC II or
the Certificateholders or cause REMIC I or REMIC II to cease to qualify as a
REMIC at any time that any Certificates are outstanding. Further, nothing in
this Agreement shall require the Trustee to enter into an amendment without
receiving an Opinion of Counsel, satisfactory to the Trustee that (i) such
amendment is permitted and is not prohibited by this Agreement and (ii) that all
requirements for amending this Agreement (including any consent of the
applicable Certificateholders) have been complied with.

                  Promptly after the execution of any amendment to this
Agreement requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance of such amendment to each
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, 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 regulations as the Trustee may prescribe.

         Section 11.02     RECORDATION OF AGREEMENT; COUNTERPARTS.

                  To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all of 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. The Seller or the Depositor shall effect
such recordation at the Trust's expense upon the request in writing of a
Certificateholder, but only if such direction is accompanied by an Opinion of
Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.

                  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     GOVERNING LAW.

                  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

                                     -134-
<PAGE>

         Section 11.04     INTENTION OF PARTIES.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Notes, Mortgages, assignments of Mortgages, title
insurance policies and any modifications, extensions and/or assumption
agreements and private mortgage insurance policies relating to the Mortgage
Loans by the Seller to the Depositor, and by the Depositor to the Trust Fund be,
and be construed as, an absolute sale thereof to the Depositor or the Trust
Fund, as applicable. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Seller to the Depositor, or by the
Depositor to the Trust Fund. However, in the event that, notwithstanding the
intent of the parties, such assets are held to be the property of the Seller or
the Depositor, as applicable, or if for any other reason this Agreement is held
or deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) each conveyance provided for
in this Agreement shall be deemed to be an assignment and a grant by the Seller
or the Depositor, as applicable, for the benefit of the Certificateholders, of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired.

                  The Depositor for the benefit of the Certificateholders shall,
to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the assets of the Trust Fund, such security interest would be deemed
to be a perfected security interest of first priority under applicable law and
will be maintained as such throughout the term of the Agreement.

         Section 11.05     NOTICES.

                  (a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:

                  (i) Any material change or amendment to this Agreement;

                  (ii) The occurrence of any Servicer of Default that has not
been cured;

                  (iii) The resignation or termination of the Servicer or the
Trustee and the appointment of any successor; and

                  (iv) The final payment to Certificateholders.

                  In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:

                  (i) Each report to Certificateholders described in Section
5.09;

                  (ii) Each annual statement as to compliance described in
Section 3.16; and

                  (iii) Each annual independent public accountants' servicing
report described in Section 4.17.

                                     -135-
<PAGE>

                  (b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered at or mailed
by registered mail, return receipt requested, postage prepaid, or by recognized
overnight courier, or by facsimile transmission to a number provided by the
appropriate party if receipt of such transmission is confirmed to (i) in the
case of the Depositor, Nomura Asset Acceptance Corp., 2 World Financial Center,
Building B, New York, New York 10281 Attention: Nomura Asset Acceptance
Corporation, Alternative Loan Trust, Series 2004-AR2; (ii) in the case of the
Seller, Nomura Credit & Capital, Inc., 2 World Financial Center, Building B, New
York, New York 10281, Attention: Nomura Asset Acceptance Corporation,
Alternative Loan Trust, Series 2004-AR2 or such other address as may be
hereafter furnished to the other parties hereto by the Seller in writing; (iii)
in the case of the Servicer, GMAC Mortgage Corporation, 500 Enterprise Road
Horsham, Pennsylvania 19044, Attention: Ken Perkins; (iv) in the case of the
Trustee, at each Corporate Trust Office or such other address as the Trustee may
hereafter furnish to the other parties hereto; (v) in the case of the Rating
Agencies, (x) Standard & Poor's, 55 Water Street, 41st Floor, New York, New York
10041, Attention: Mortgage Surveillance Group and (y) Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10007, Attention: Home Equity
Monitoring. Any notice delivered to the Seller or the Trustee under this
Agreement shall be effective only upon receipt. Any notice required or permitted
to be mailed to a Certificateholder, unless otherwise provided herein, shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register; any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.

         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 pursuant to Section 7.02, this Agreement may not be assigned
by the Seller or the Depositor.

         Section 11.08     LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.

                  The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.

                  No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of

                                     -136-
<PAGE>

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 party by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

                  No 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 a Servicer Default and of the continuance thereof, as
hereinbefore provided, the Holders of Certificates evidencing not less than 25%
of the Voting Rights evidenced by the Certificates shall also have made written
request to the Trustee to institute such action, suit or proceeding in its own
name as Trustee, hereunder and shall have offered to the Trustee such indemnity
satisfactory to it as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee or 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 provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the 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 common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 11.08, each
and every Certificateholder or the Trustee shall be entitled to such relief as
can be given either at law or in equity.

         Section 11.09     CERTIFICATES NONASSESSABLE AND FULLY PAID.

                  It is the intention of the Depositor that Certificateholders
shall not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and shall
be deemed fully paid.

                                      * * *

                                     -137-
<PAGE>

Pooling & Servicing Agreement

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

                                          NOMURA ASSET ACCEPTANCE
                                          CORPORATION,
                                          as Depositor

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

                                          NOMURA CREDIT & CAPITAL, INC.,
                                          as a Seller

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

                                          GMAC MORTGAGE CORPORATION,
                                          as Servicer

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

                                          JPMORGAN CHASE BANK
                                          as Trustee

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

                                          JPMORGAN CHASE BANK
                                          as Custodian

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

<PAGE>

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

                  On this ___ day of September 2004, before me, a notary public
in and for said State, appeared ________________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of Nomura
Asset Acceptance Corporation, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation and acknowledged to me that such corporation executed the
within instrument.

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

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

[Notarial Seal]

<PAGE>

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

                  On this ____ day of September 2004, before me, a notary public
in and for said State, appeared ______________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of Nomura
Credit & Capital, Inc., that executed the within instrument, and also known to
me to be the person who executed it on behalf of such corporation, and
acknowledged to me that such corporation executed the within instrument.

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

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

[Notarial Seal]

<PAGE>

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

                  On this ____ day of September 2004, before me, a notary public
in and for said State, appeared _________________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of GMAC
Mortgage Corporation, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation and acknowledged to me that such corporation executed the
within instrument.

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

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

[Notarial Seal]

<PAGE>

STATE OF          )
                  ) ss.:
COUNTY OF         )

                  On this ____ day of September 2004, before me, a notary public
in and for said State, appeared _______________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of JPMorgan
Chase Bank that executed the within instrument, and also known to me to be the
person who executed it on behalf of such corporation, and acknowledged to me
that such corporation executed the within instrument.

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

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

[Notarial Seal]

<PAGE>

                                   EXHIBIT A-1

              FORM OF CLASS [I][II][III]-A[-1][-2][-3] CERTIFICATE

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

            THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON [CLASS III-A-3] [AND REALIZED LOSSES
ALLOCABLE HERETO]. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED
HEREIN.

            UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

<PAGE>

Certificate No. __                       Pass-Through Rate:  [Variable][____%]

Class [I][II][III]-A[-1][-2][-3] Senior

Date of Pooling and Servicing Agreement  Aggregate Initial Certificate
and Cut-off Date: September 1, 2004      of this Certificate as of the Cut-off
                                         Date:
                                         $

Trustee: JPMorgan Chase Bank
                                         Initial Certificate Principal Balance
                                         of this Certificate as of the Cut-off
First Distribution Date: October 25,     Date:
2004                                     $

Assumed Final Distribution Date:
September [__], 2034                     CUSIP:

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AR2

      evidencing a fractional undivided interest in the distributions allocable
      to the Class [I][II][III]-A[-1][-2][-3] Certificates with respect to a
      Trust Fund consisting primarily of a pool of conventional one- to
      four-family adjustable interest rate mortgage loans sold by NOMURA ASSET
      ACCEPTANCE CORPORATION

            This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Nomura Asset
Acceptance Corporation ("NAAC") or the Trustee or any of their affiliates or any
other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by NAAC or the Trustee or
any of their affiliates or any other person. None of NAAC, the Trustee or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.

            This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, adjustable rate mortgage loans
secured by one- to four- family residences, units in planned unit developments
and individual condominium units (collectively, the "Mortgage Loans") sold by
NAAC. The Mortgage Loans were sold by Nomura Credit & Capital, Inc. (the
"Seller") to NAAC. The Trust Fund was created pursuant to the Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement"), among NAAC, as depositor (the "Depositor"), the Seller, as seller,
GMAC Mortgage Corporation, as servicer, and JPMorgan Chase Bank, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which

                                       2

<PAGE>

is set forth hereafter. To the extent not defined herein, capitalized terms used
herein shall have the meaning ascribed to them 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 its acceptance hereof assents and by which such Holder is bound.

            Interest on this Certificate will accrue during [for Class I-A
Certificates] the calendar month prior to the calendar month in which a
Distribution Date (as hereinafter defined) occurs [for Class II-A, III-A-1,
III-A-2 and III-A-3 Certificates, the period commencing on the immediately
preceding Distribution Date (or with respect to the First Distribution Date, the
Closing Date) and ending on the day immediately preceding the related
distribution date] on the Certificate Principal Balance hereof at a per annum
rate equal to the Pass-Through Rate set forth above with respect to the first
Distribution Date and for any Distribution thereafter at a per annum
pass-through rate equal to[for Class I-A Certificates] the weighted average of
the Net Mortgage Rates of the Group I Mortgage Loans minus __%] [for Class II-A,
III-A-1, III-A-2 and III-A-3 Certificates] will equal the least of (i) the sum
of one-month LIBOR for that distribution date plus (A) on or prior to the first
possible optional termination date, ___% or (B) after the first possible
optional termination date, ___%, (ii) the applicable Net Funds Cap and (iii)
11.00%]. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"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 [for Class I-A Certificates] the last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
calendar month immediately preceding the month in which the Distribution Date
occurs[for Class II-A, III-A-1, III-A-2 and III-A-3 Certificates] [the Business
Day immediately preceding such Distribution Date], an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
(of interest and principal, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the Distribution Date in the month following the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the Certificate Principal Balance of this Class of Certificates will be
reduced to zero.

            Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made 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
appointed by the Trustee for that purpose and designated in such notice. The
initial Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal hereon [for Class III-A-3 Certificates]
[and Realized Losses on the Group III Mortgage Loans allocable to the Class
III-A-3 Certificates].

            This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

            The Certificateholder, by its acceptance of this Certificate, agrees
that it will look

                                       3

<PAGE>

solely to the Trust Fund for payment hereunder and that the Trustee is not
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 and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Classes or
Classes of Certificates affected thereby evidencing over 50% of the Voting
Rights of such Class or Classes. 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 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 registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or 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 in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

            The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

            No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of Depositor, the Trustee or any such agent shall be affected
by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional

                                       4

<PAGE>

repurchase may be made only if on such Distribution Date the aggregate Stated
Principal Balance of the Mortgage Loans is less than 10% of the aggregate Stated
Principal Balance of the Mortgage Loans at the Cut-off Date. The exercise of
such right will effect the early retirement of the Certificates. In no event,
however, will the Trust Fund created by the Agreement continue beyond the
expiration of 21 years after the death of certain persons identified in the
Agreement.

            Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

                                       5

<PAGE>

      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:      September __, 2004            JPMORGAN CHASE BANK,
                                          not in its  individual  capacity but
                                          solely as Trustee

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

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

            This is one of the Class [I][II][III]-A[-1][-2][-3] Certificates
referred to in the within-mentioned Agreement.

                                          JPMORGAN CHASE BANK Authorized
                                          signatory of JPMorgan Chase Bank, not
                                          in its individual capacity but solely
                                          as Trustee

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

<PAGE>

                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

            I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

Dated:                           ______________________________________________
                                    Signature by or on behalf of assignor

                                 ______________________________________________
                                    Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.

            This information is provided by __________________, the assignee
named above, or ________________________, as its agent.

<PAGE>

                                   EXHIBIT A-3

                   FORM OF CLASS M-[1][2][3][4] CERTIFICATE

            THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR
CERTIFICATES [AND THE CLASS M-1 CERTIFICATES] [AND THE CLASS M-2 CERTIFICATES]
[AND THE CLASS M-3 CERTIFICATES] AS DESCRIBED IN THE AGREEMENT (AS DEFINED
BELOW).

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

            THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DECREASED BY PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.

            EACH BENEFICIAL OWNER OF A CERTIFICATE OR ANY INTEREST THEREIN SHALL
BE DEEMED TO HAVE REPRESENTED, BY VIRTUE OF ITS ACQUISITION OR HOLDING OF THAT
CERTIFICATE OR INTEREST THEREIN, THAT EITHER (I) IT IS NOT A PLAN OR INVESTING
WITH "PLAN ASSETS", (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE IN
RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 2002-41 AS AMENDED ("EXEMPTION"),
AND THAT IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO THE AVAILABILITY OF
THE EXEMPTION, INCLUDING THAT THE CERTIFICATE MUST BE RATED, AT THE TIME OF
PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY S&P, FITCH RATINGS OR
MOODY'S, AND THE CERTIFICATE IS SO RATED OR (III) (1) IT IS AN INSURANCE
COMPANY, (2) THE SOURCE OF FUNDS USED TO ACQUIRE OR HOLD THE CERTIFICATE OR
INTEREST THEREIN IS AN "INSURANCE COMPANY GENERAL ACCOUNT," AS SUCH TERM IS
DEFINED IN PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60, AND (3) THE
CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN SATISFIED.

<PAGE>

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

<PAGE>

Certificate No. 1                       Pass-Through Rate: [Variable][__%]

Class M-[1][2][3][4] Subordinate

                                        Aggregate Initial Certificate
Date of Pooling and Servicing           Principal Balance of this Certificate
Agreement and Cut-off Date:             as of the Cut-off Date:
September 1, 2004                       $
Trustee: JPMorgan Chase Bank
                                        Initial Certificate Principal Balance
                                        of this Certificate as of the Cut-off
First Distribution Date:                Date:
October 25, 2004                        $

                                        CUSIP:

Assumed Final Distribution Date:
September [__], 2034

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AR2

      evidencing a fractional undivided interest in the distributions allocable
      to the Class M-[1][2][3][4] Certificates with respect to a Trust Fund
      consisting primarily of a pool of conventional one- to four-family
      adjustable interest rate mortgage loans sold by NOMURA ASSET ACCEPTANCE
      CORPORATION.

            This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Nomura Asset
Acceptance Corporation ("NAAC") or the Trustee or any of their affiliates or any
other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by NAAC or the Trustee or
any of their affiliates or any other person. None of NAAC, the Trustee or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.

            This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, adjustable rate mortgage loans
secured by one- to four- family residences, units in planned unit developments
and individual condominium units (collectively, the "Mortgage Loans") sold by
NAAC. The Mortgage Loans were sold by Nomura Credit & Capital, Inc. (the
"Seller") to NAAC. The Trust Fund was created pursuant to the Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement"), among NAAC, as depositor (the "Depositor"), the Seller, as seller,
GMAC Mortgage Corporation, as servicer, and JPMorgan Chase Bank, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which

<PAGE>

is set forth hereafter. To the extent not defined herein, capitalized terms used
herein shall have the meaning ascribed to them 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 its acceptance hereof assents and by which such Holder is bound.

            Interest on this Certificate will accrue during the period
commencing on the immediately preceding Distribution Date (as defined herein)
(or, with respect to the First Distribution Date, the Closing Date) on the
Certificate Principal Balance hereof at a per annum rate equal to the
Pass-Through Rate set forth above with respect to the first Distribution Date
and for any Distribution thereafter at a per annum pass-through rate equal to
the least of (i) the sum of one-month LIBOR for that distribution date plus (A)
on or prior to the first possible optional termination date, ___% or (B) after
the first possible optional termination date, ___%, (ii) the applicable Net
Funds Cap and (iii) 11.00%. The Trustee will distribute on the 25th day of each
month, or, if such 25th day is not a Business Day, the immediately following
Business Day (each, a "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 Business Day immediately preceding such
Distribution Date, an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount (of interest and principal, if any)
required to be distributed to the Holders of Certificates of the same Class as
this Certificate. The Assumed Final Distribution Date is the Distribution Date
in the month following the latest scheduled maturity date of any Mortgage Loan
and is not likely to be the date on which the Certificate Principal Balance of
this Class of Certificates will be reduced to zero.

            Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made 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
appointed by the Trustee for that purpose and designated in such notice. The
initial Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto.

            This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

            The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not 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

<PAGE>

thereof and the modification of the rights and obligations of the Depositor and
the rights of the Certificateholders under the Agreement from time to time by
the parties thereto with the consent of the Holders of the Class or Classes of
Certificates affected thereby evidencing over 50% of the Voting Rights of such
Class or Classes. 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 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 registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or 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 in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

            Each beneficial owner of a Certificate or any interest therein shall
be deemed to have represented, by virtue of its acquisition or holding of that
certificate or interest therein, that either (i) it is not a Plan or investing
with "Plan Assets", (ii) it has acquired and is holding such certificate in
reliance on the Exemption, and that it understands that there are certain
conditions to the availability of the Exemption, including that the certificate
must be rated, at the time of purchase, not lower than "BBB-" (or its
equivalent) by S&P, Fitch Ratings or Moody's, and the certificate is so rated or
(iii) (1) it is an insurance company, (2) the source of funds used to acquire or
hold the certificate or interest therein is an "insurance company general
account," as such term is defined in Prohibited Transaction Class Exemption
("PTCE") 95-60, and (3) the conditions in Sections I and III of PTCE 95-60 have
been satisfied.

            The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

            No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Trustee or any such agent shall be
affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the

<PAGE>

optional repurchase by the party named in the Agreement of all the Mortgage
Loans and other assets of the Trust Fund in accordance with the terms of the
Agreement. Such optional repurchase may be made only if on such Distribution
Date the aggregate Stated Principal Balance of the Mortgage Loans is less than
10% of the aggregate Stated Principal Balance of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.

            Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

<PAGE>

      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:      September __, 2004            JPMORGAN CHASE BANK,
                                          not in its  individual  capacity but
                                          solely as Trustee

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

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

            This is one of the Class M-[1][2][3][4] Certificates referred to in
the within-mentioned Agreement.

                                          JPMORGAN CHASE BANK Authorized
                                          signatory of JPMorgan Chase Bank, not
                                          in its individual capacity but solely
                                          as Trustee

                                          By:
                                             ------------------------------
                                                   Authorized Signatory
<PAGE>

                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

            I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

Dated:                           ______________________________________________
                                    Signature by or on behalf of assignor

                                 ______________________________________________
                                    Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.

            This information is provided by __________________, the assignee
named above, or ________________________, as its agent.

<PAGE>

                                   EXHIBIT A-3

                           FORM OF CLASS X CERTIFICATE

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

            THIS CERTIFICATE IS SUBORDINATE TO THE SENIOR CERTIFICATES AND
MEZZANINE CERTIFICATES TO THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO
HEREIN.

            THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH
ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE
THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION.

            NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS
THE TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 6.02(B) OF
THE AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE, THE
DEPOSITOR OR THE SERVICERS THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE IS
<PAGE>

PERMISSIBLE UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL
NOT SUBJECT THE TRUSTEE TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT, ALL IN ACCORDANCE WITH SECTION 6.02(B) OF THE
AGREEMENT.

<PAGE>

Certificate No. 1                       Percentage Interest: [___%]

Class X                                 Variable Pass-Through Rate

Date of Pooling and Servicing           Initial Notional Balance of this
Agreement and Cut-off Date:             Certificate as of the Cut-off Date:
September 1, 2004                       $
Trustee: JPMorgan Chase Bank
                                        Initial Notional Balance of this
First Distribution Date:                Certificate as of the Cut-off Date:
October 25, 2004                        $

                                        CUSIP:

Assumed Final Distribution Date:
September 25, 2034

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AR2

      evidencing a fractional undivided interest in the distributions allocable
      to the Class X Certificates with respect to a Trust Fund consisting
      primarily of a pool of conventional one- to four-family adjustable
      interest rate mortgage loans sold by NOMURA ASSET ACCEPTANCE CORPORATION

            This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Nomura Asset
Acceptance Corporation ("NAAC") or the Trustee referred to below or any of their
affiliates or any other person. Neither this Certificate nor the underlying
Mortgage Loans are guaranteed or insured by any governmental entity or by NAAC
or the Trustee or any of their affiliates or any other person. None of NAAC, the
Trustee or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.

            This certifies that Nomura Securities International, Inc. is the
registered owner of the Percentage Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund"), generally consisting of conventional first lien,
adjustable rate mortgage loans secured by one- to four- family residences, units
in planned unit developments and individual condominium units (collectively, the
"Mortgage Loans") sold by NAAC. The Mortgage Loans were sold by Nomura Credit &
Capital, Inc. (the "Seller") to NAAC. The Trust Fund was created pursuant to the
Pooling and Servicing

<PAGE>

Agreement dated as of the Cut-off Date specified above (the "Agreement"), among
NAAC, as depositor (the "Depositor"), the Seller, as seller, GMAC Mortgage
Corporation, as servicer, and JPMorgan Chase Bank, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, capitalized terms used herein shall have the
meaning ascribed to them 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 its acceptance hereof
assents and by which such Holder is bound.

      Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Notional Balance hereof at a per annum rate equal to the Pass-Through Rate as
set forth in the Agreement. The Trustee will distribute on the 25th day of each
month, or, if such 25th day is not a Business Day, the immediately following
Business Day (each, a "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 last day (or if such last day is not a Business
Day, the Business Day immediately preceding such last day) of the calendar month
immediately preceding the month in which the Distribution Date occurs, an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to the Holders of Certificates of the
same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month following the latest scheduled maturity date of
any Mortgage Loan.

            Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made 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
appointed by the Trustee for that purpose and designated in such notice.

            No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit E and either F
or G, as applicable, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor or the Trustee in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such

<PAGE>

Holder's prospective transferee upon which such Opinion of Counsel is based.
Neither the Depositor nor the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor and the Seller 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.

            No transfer of this Class X Certificate will be made unless the
Trustee has received either (i) an opinion of counsel acceptable to and in form
and substance satisfactory to the Trustee with respect to the permissibility of
such transfer under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Internal Revenue Code (the "Code")
and stating, among other things, that the transferee's acquisition and holding
of a Class X Certificate is permissible under applicable law, will not
constitute or result in a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code and will not subject the Trustee, the
Depositor or the Servicer to any obligation or liability in addition to those
undertaken in the Agreement, all in accordance with Section 6.02(b) of the
Agreement or (ii) a representation letter, in the form as described by the
Agreement, stating that the transferee is not an employee benefit or other plan
subject to the prohibited transaction provisions of ERISA or Section 4975 of the
Code (a "Plan"), or any other person (including an investment manager, a named
fiduciary or a trustee of any Plan) acting, directly or indirectly, on behalf of
or purchasing any Certificate with "plan assets" of any Plan.

            This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

            The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not 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 and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Class or
Classes of Certificates affected thereby evidencing over 50% of the Voting
Rights of such Class or Classes. 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 lieu hereof whether or not notation of such

<PAGE>

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 registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or 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 in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

            The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

            No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Trustee or any such agent shall be
affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional repurchase may be made only if on such
Distribution Date the aggregate Stated Principal Balance of the Mortgage Loans
is less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
at the Cut-off Date. The exercise of such right will effect the early retirement
of the Certificates. In no event, however, will the Trust Fund created by the
Agreement continue beyond the expiration of 21 years after the death of certain
persons identified in the Agreement.

            Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

<PAGE>

      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:      September __, 2004            JPMORGAN CHASE BANK,
                                          not in its  individual  capacity but
                                          solely as Trustee

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

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

                                          JPMORGAN CHASE BANK Authorized
                                          signatory of JPMorgan Chase Bank, not
                                          in its individual capacity but solely
                                          as Trustee

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

<PAGE>

                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

            I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

Dated:                           ______________________________________________
                                    Signature by or on behalf of assignor

                                 ______________________________________________
                                    Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.

            This information is provided by __________________, the assignee
named above, or ________________________, as its agent.

<PAGE>

                                   EXHIBIT A-4

                           FORM OF CLASS P CERTIFICATE

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

            THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL
ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE NAMED HEREIN.

            THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH
ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE
THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS\

<PAGE>

OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION.

            NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS
THE TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 6.02(B) OF
THE AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE THAT THE
PURCHASE AND HOLDING OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW,
WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
DEPOSITOR OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT, ALL IN ACCORDANCE WITH SECTION 6.02(B) OF THE
AGREEMENT.

<PAGE>

Certificate No. 1                       Percentage Interest: [_%]

Class P

                                        Aggregate Initial Certificate
Date of Pooling and Servicing           Principal Balance of this Certificate
Agreement and Cut-off Date:             as of the Cut-off Date:
September 1, 2004                       $
Trustee: JPMorgan Chase Bank
                                        Initial Certificate Principal Balance
                                        of this Certificate as of the Cut-off
First Distribution Date:                Date:
October 25, 2004                        $

                                        CUSIP:
Assumed Final Distribution Date:
September [__], 2034

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AR2

      evidencing a fractional undivided interest in the distributions allocable
      to the Class P Certificates with respect to a Trust Fund consisting
      primarily of a pool of conventional one- to four-family adjustable
      interest rate mortgage loans sold by NOMURA ASSET ACCEPTANCE CORPORATION

            This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Nomura Asset
Acceptance Corporation ("NAAC") or the Trustee referred to below or any of their
affiliates or any other person. Neither this Certificate nor the underlying
Mortgage Loans are guaranteed or insured by any governmental entity or by NAAC
or the Trustee or any of their affiliates or any other person. None of NAAC, the
Trustee or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.

            This certifies that Nomura Securities International, Inc. is the
registered owner of the Percentage Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund"), generally consisting of conventional first lien,
adjustable rate mortgage loans secured by one- to four- family residences, units
in planned unit developments and individual condominium units (collectively, the
"Mortgage Loans") sold by NAAC. The Mortgage Loans were sold by Nomura Credit &
Capital,

<PAGE>

Inc. (the "Seller") to NAAC. The Trust Fund was created pursuant to the Pooling
and Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement"), among NAAC, as depositor (the "Depositor"), the Seller, as seller,
GMAC Mortgage Corporation, as servicer, and JPMorgan Chase Bank, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them 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 its
acceptance hereof assents and by which such Holder is bound.

            Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made 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
appointed by the Trustee for that purpose and designated in such notice.

            No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit E and either F
or G, as applicable, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor or the Trustee in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. Neither the Depositor
nor the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor and the Seller 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.

            No transfer of this Certificate will be made unless the Trustee has
received either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee with respect to the permissibility of such
transfer under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Internal Revenue Code (the

<PAGE>

"Code") and stating, among other things, that the transferee's acquisition of a
Class P Certificate will not constitute or result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code and will not
subject the Trustee, the Depositor or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement, all in accordance
with Section 6.02(b) of the Agreement or (ii) a representation letter, in the
form as described by the Agreement, stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan.

            This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

            The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not 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 and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Class or
Classes of Certificates affected thereby evidencing over 50% of the Voting
Rights of such Class or Classes. 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 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 registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or 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 in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

            The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and

<PAGE>

subject to certain limitations therein set forth, this Certificate is
exchangeable for one or more new Certificates evidencing the same Class and in
the same aggregate Percentage Interest, as requested by the Holder surrendering
the same.

            No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Trustee or any such agent shall be
affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional repurchase may be made only on if on such
Distribution Date the aggregate Stated Principal Balance of the Mortgage Loans
is less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
at the Cut-off Date. The exercise of such right will effect the early retirement
of the Certificates. In no event, however, will the Trust Fund created by the
Agreement continue beyond the expiration of 21 years after the death of certain
persons identified in the Agreement.

            Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

<PAGE>

      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:      September __, 2004            JPMORGAN CHASE BANK,
                                          not in its  individual  capacity but
                                          solely as Trustee

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

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

                                          JPMORGAN CHASE BANK Authorized
                                          signatory of JPMorgan Chase Bank, not
                                          in its individual capacity but solely
                                          as Trustee

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

<PAGE>

                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

            I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

Dated:                           ______________________________________________
                                    Signature by or on behalf of assignor

                                 ______________________________________________
                                    Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.

            This information is provided by __________________, the assignee
named above, or ________________________, as its agent.

<PAGE>

                                   EXHIBIT A-6

                           FORM OF CLASS R CERTIFICATE

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

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

            NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS
THE TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 6.02(B) OF
THE AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THAT THE
PURCHASE AND HOLDING OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW,
WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
DEPOSITOR OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT, ALL IN ACCORDANCE WITH SECTION 6.02(B) OF THE
AGREEMENT.

            ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES, ANY STATE OR
POLITICAL SUBDIVISION THEREOF, ANY POSSESSION OF THE UNITED STATES, OR ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN INSTRUMENTALITY
WHICH IS A CORPORATION IF ALL OF ITS ACTIVITIES ARE SUBJECT TO TAX AND EXCEPT
FOR FREDDIE MAC, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT SELECTED BY SUCH
GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY OF EITHER OF THE FOREGOING, (C) ANY ORGANIZATION
(OTHER THAN CERTAIN FARMERS' COOPERATIVES DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS EXEMPT FROM

<PAGE>

THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX IMPOSED BY SECTION 511 OF THE CODE (INCLUDING THE TAX IMPOSED BY SECTION
511 OF THE CODE ON UNRELATED BUSINESS TAXABLE INCOME), (D) RURAL ELECTRIC AND
TELEPHONE COOPERATIVES DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (E) AN
ELECTING LARGE PARTNERSHIP UNDER SECTION 775(A) OF THE CODE (ANY SUCH PERSON
DESCRIBED IN THE FOREGOING CLAUSES (A), (B), (C), (D) OR (E) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR (F) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER,
SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE
A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO,
THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED
TO THE PROVISIONS OF THIS PARAGRAPH.

<PAGE>

Certificate No.__

Class R                                 Percentage Interest: ____

                                        Initial Certificate Principal Balance
Date of Pooling and Servicing           of this Certificate as of the Cut-off
Agreement                               Date:
and Cut-off Date: September 1, 2004     $______________

                                        Initial Certificate Notional Balance
                                        of this Certificate as of the Cut-off
First Distribution Date:                Date:
October 25, 2004                        $______________

Trustee: JPMorgan Chase Bank            CUSIP:

Assumed Final Distribution Date:
September [__], 2034

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                 SERIES 2004-AR2

      evidencing a fractional undivided interest in the distributions allocable
      to the Class R-[I][II] Certificates with respect to a Trust Fund
      consisting primarily of a pool of conventional one- to four-family
      adjustable interest rate mortgage loans sold by NOMURA ASSET ACCEPTANCE
      CORPORATION.

            This Certificate is payable solely from the assets of the Trust
Fund, and does not represent an obligation of or interest in Nomura Asset
Acceptance Corporation ("NAAC") or the Trustee referred to below or any of their
affiliates or any other person. Neither this Certificate nor the underlying
Mortgage Loans are guaranteed or insured by any governmental entity or by NAAC
or the Trustee or any of their affiliates or any other person. None of NAAC, the
Trustee or any of their affiliates will have any obligation with respect to any
certificate or other obligation secured by or payable from payments on the
Certificates.

            This certifies that Nomura Securities International, Inc. is the
registered owner of the Percentage Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund"), generally consisting of conventional first lien,
adjustable rate mortgage loans secured by one- to four- family residences, units
in planned unit developments and individual condominium units (collectively, the
"Mortgage Loans") sold by NAAC. The Mortgage Loans were sold by Nomura Credit &
Capital, Inc. (the "Seller") to NAAC. The Trust Fund was created pursuant to the
Pooling and Servicing

<PAGE>

Agreement dated as of the Cut-off Date specified above (the "Agreement"), among
NAAC, as depositor (the "Depositor"), the Seller, as seller, GMAC Mortgage
Corporation, as servicer, and JPMorgan Chase Bank, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, capitalized terms used herein shall have the
meaning ascribed to them 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 its acceptance hereof
assents and by which such Holder is bound.

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

            The Trustee will distribute on the 25th day of each month, or, if
such 25th day is not a Business Day, the immediately following Business Day
(each, a "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 last day (or if such last day is not a Business
Day, the Business Day immediately preceding such last day) of the calendar month
immediately preceding the month in which the Distribution Date occurs, an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amounts required to be distributed to the Holders of Certificates of the
same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month following the latest scheduled maturity date of
any Mortgage Loan.

            Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made 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
appointed by the Trustee for that purpose and designated in such notice.

            No transfer of this Class R Certificate will be made unless the
Trustee has

<PAGE>

received either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee with respect to the permissibility of such
transfer under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Internal Revenue Code (the "Code") and
stating, among other things, that the transferee's acquisition and holding of a
Class R-[I][II] Certificate is permissible under applicable law, will not
constitute or result in a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code and will not subject the Trustee, the
Depositor or the Servicer to any obligation or liability in addition to those
undertaken in the Agreement, all in accordance with Section 6.02(b) of the
Agreement or (ii) a representation letter, in the form as described by the
Agreement, stating that the transferee is not an employee benefit or other plan
subject to the prohibited transaction provisions of ERISA or Section 4975 of the
Code (a "Plan"), or any other person (including an investment manager, a named
fiduciary or a trustee of any Plan) acting, directly or indirectly, on behalf of
or purchasing any Certificate with "plan assets" of any Plan.

            This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

            The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not 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 and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Class or
Classes of Certificates affected thereby evidencing over 50% of the Voting
Rights of such Class or Classes. 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 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 registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or 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 in authorized
denominations representing a like

<PAGE>

aggregate Percentage Interest will be issued to the designated transferee.

            The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

            No service charge will be made to the Certificateholders for any
such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of Depositor, the Trustee or any such agent shall be affected
by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional repurchase may be made only if on such
Distribution Date the aggregate Stated Principal Balance of the Mortgage Loans
is less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
at the Cut-off Date. The exercise of such right will effect the early retirement
of the Certificates. In no event, however, will the Trust Fund created by the
Agreement continue beyond the expiration of 21 years after the death of certain
persons identified in the Agreement.

            Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

<PAGE>

      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:      September __, 2004            JPMORGAN CHASE BANK,
                                          not in its  individual  capacity but
                                          solely as Trustee

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

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

                                          JPMORGAN CHASE BANK Authorized
                                          signatory of JPMorgan Chase Bank, not
                                          in its individual capacity but solely
                                          as Trustee

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

<PAGE>

                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

            I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

Dated:                           ______________________________________________
                                    Signature by or on behalf of assignor

                                 ______________________________________________
                                    Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.

            This information is provided by __________________, the assignee
named above, or ________________________, as its agent.

<PAGE>

                                    EXHIBIT B

                             MORTGAGE LOAN SCHEDULE
                             ----------------------

      The Preliminary and Final Mortgage Loan Schedules shall set forth the
following information with respect to each Mortgage Loan:

      (a) the loan number;

      (b) the Mortgage Rate in effect as of the Cut-off Date;

      (c) the Servicing Fee Rate;

      (d) the Net Mortgage Rate in effect as of the Cut-off Date;

      (e) the maturity date;

      (f) the original principal balance;

      (g) the Cut-off Date Principal Balance;

      (h) the original term;

      (i) the remaining term;

      (j) the property type;

      (k) the MIN with respect to each Mortgage Loan; and

      (l) the applicable Servicer.

<PAGE>

                                                                   EXHIBIT C-1

                          FORM OF INITIAL CERTIFICATION

Nomura Asset Acceptance Corporation       JP Morgan Chase Bank
2 World Financial Center, Building B         4 New York Plaza, 6th Floor
New York, New York 10281                     New York, New York  10004
                                          Attention:  ITS  Structured  Finance
Services,
                                          Nomura   Asset    Acceptance   Corp.
2004-AR2

          Re:  Pooling and Servicing Agreement, dated as of September 1, 2004,
               among Nomura Asset Acceptance Corporation, as depositor, Nomura
               Credit & Capital, Inc., as seller, GMAC Mortgage Corporation, as
               servicer, and JPMorgan Chase Bank, as trustee, issuing
               Mortgage-Pass Through Certificates, Series 2004-AR2
               ----------------------------------------------------------------

Ladies and Gentlemen:

      In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as otherwise
noted on the attached exception report, that as to each Mortgage Loan listed on
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed
on the attachment hereto) it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: (i) all documents required to be included
in the Mortgage File pursuant to the Pooling and Servicing Agreement are in its
possession; (ii) such documents have been reviewed by it and appear regular on
their face, have, where applicable, been executed and relate to such Mortgage
Loan; and (iii) based on examination by it, and only as to such documents, the
information set forth in the Mortgage Loan Schedule as to Mortgagor Name,
original principal balance and loan number respecting such Mortgage Loan is
correct and accurately reflects the information in the Mortgage Loan File.

      The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The undersigned makes no
representation that any documents specified in subclauses (iv) and (vi) of the
third paragraph of Section 2.01 should be included in any Mortgage File. The
undersigned makes no representations as to: (i) the validity, legality,
enforceability, recordability, sufficiency, due authorization or genuineness of
any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.

                                      C-1-1

<PAGE>

      Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                          JPMORGAN CHASE BANK, as Custodian

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

                                     C-1-2
<PAGE>

                                                                   EXHIBIT C-2

                          FORM OF INTERIM CERTIFICATION

Nomura Asset Acceptance Corporation       JP Morgan Chase Bank
2 World Financial Center, Building B      4 New York Plaza, 6th Floor
New York, New York 10281                  New York, New York  10004
                                          Attention:  ITS  Structured  Finance
                                                      Services,
                                          Nomura Asset Acceptance Corp.
                                                      2004-AR2

          Re:  Pooling and Servicing Agreement, dated as of September 1, 2004,
               among Nomura Asset Acceptance Corporation, as depositor, Nomura
               Credit & Capital, Inc., as seller, GMAC Mortgage Corporation, as
               servicer, and JPMorgan Chase Bank, as trustee, issuing
               Mortgage-Pass Through Certificates, Series 2004-AR2
               ----------------------------------------------------------------

Ladies and Gentlemen:

      In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as otherwise
noted on the attached exception report, that as to each Mortgage Loan listed on
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed
on the attachment hereto) it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: (i) all documents required to be included
in the Mortgage File pursuant to the Pooling and Servicing Agreement are in its
possession; (ii) such documents have been reviewed by it and appear regular on
their face, have, where applicable, been executed and relate to such Mortgage
Loan; and (iii) based on examination by it, and only as to such documents, the
information set forth in the Mortgage Loan Schedule as to Mortgagor Name,
original principal balance and loan number respecting such Mortgage Loan is
correct and accurately reflects the information in the Mortgage Loan File.

      The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The undersigned makes no
representation that any documents specified in subclauses (iv) and (vi) of the
third paragraph of Section 2.01 should be included in any Mortgage File. The
undersigned makes no representations as to: (i) the validity, legality,
enforceability, recordabililty, sufficiency, due authorization or genuineness of
any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.

                                      C-2-1

<PAGE>

      Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                          JPMORGAN CHASE BANK, as Custodian

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

                                     C-2-2

<PAGE>

                                                                   EXHIBIT C-3

                           FORM OF FINAL CERTIFICATION

Nomura Asset Acceptance Corporation       JP Morgan Chase Bank
2 World Financial Center, Building B      4 New York Plaza, 6th Floor
New York, New York 10281                  New York, New York 10004
                                          Attention:  ITS  Structured  Finance
                                                      Services,
                                          Nomura Asset Acceptance Corp.
                                                      2004-AR2

          Re:  Pooling and Servicing Agreement, dated as of September 1, 2004,
               among Nomura Asset Acceptance Corporation, as depositor, Nomura
               Credit & Capital, Inc., as seller, GMAC Mortgage Corporation, as
               servicer, and JPMorgan Chase Bank, as trustee, issuing
               Mortgage-Pass Through Certificates, Series 2004-AR2
               ----------------------------------------------------------------

Ladies and Gentlemen:

      In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as otherwise
noted on the attached exception report, that as to each Mortgage Loan listed on
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed
on the attachment hereto) it has received the documents set forth in Section
2.01 and has determined that (i) all documents required to be included in the
Mortgage File pursuant to the Pooling and Servicing Agreement are in its
possession; (ii) such documents have been reviewed by it and appear regular on
their face, have, where applicable, been executed and relate to such Mortgage
Loan; and (iii) based on examination by it, and only as to such documents, the
information set forth in the Mortgage Loan Schedule as to Mortgagor name,
original principal balance and loan number respecting such Mortgage Loan is
correct and accurately reflects the information in the Mortgage Loan File.

      The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The undersigned makes no
representation that any documents specified in subclauses (iv) and (vi) of the
third paragraph of Section 2.01 should be included in any Mortgage File. The
undersigned makes no representations as to: (i) the validity, legality,
enforceability, recordability, sufficiency, due authorization or genuineness of
any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.

                                      C-3-1

<PAGE>

      Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                          JPMORGAN CHASE BANK, as Custodian

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

                                     C-3-2

<PAGE>

                                                                       EXHIBIT D

                           FORM OF TRANSFER AFFIDAVIT

                                                Affidavit  pursuant to Section
                                                860E(e)(4) of the Internal
                                                Revenue Code of 1986, as
                                                amended, and for other purposes

STATE OF          )
                  )ss:
COUNTY OF         )

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

      1. That he/she 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.

      2. That (i) the Investor is not a "disqualified organization" as defined
in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended (the
"Code"), and will not be a disqualified organization as of [Closing Date] [date
of purchase]; (ii) it is not acquiring the Nomura Asset Acceptance Corporation
Alternative Loan Trust, Mortgage Pass Through Certificates, Series 2004-AR2,
Class R Certificates (the "Residual Certificates") for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by Nomura Asset Acceptance
Corporation (upon advice of counsel) to constitute a reasonable arrangement to
ensure that the Residual Certificates will not be owned directly or indirectly
by a disqualified organization; and (iv) it will not transfer such Residual
Certificates unless (a) it has received from the transferee an affidavit in
substantially the same form as this affidavit containing these same four
representations and (b) as of the time of the transfer, it does not have actual
knowledge that such affidavit is false.

      3. That the Investor is one of the following: (i) a citizen or resident of
the United States, (ii) a corporation or partnership (including an entity
treated as a corporation or partnership for federal income tax purposes) created
or organized in, or under the laws of, the United States or any state thereof or
the District of Columbia (except, in the case of a partnership, to the extent
provided in regulations), provided that no partnership or other entity treated
as a partnership for United States federal income tax purposes shall be treated
as a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are United States Persons, (iii) an
estate whose income is subject to United States federal income tax regardless of
its source, or (iv) a trust other than a "foreign trust," as defined in Section
7701 (a)(31) of the Code.

      4. That the Investor's taxpayer identification number is
______________________.

                                       D-1

<PAGE>

      5. That no purpose of the acquisition of the Residual Certificates is to
avoid or impede the assessment or collection of tax.

      6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.

      7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.

      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] this ____ day of _________, 20__.

                                    [NAME OF INVESTOR]

                                    By:
                                       -----------------------------------
                                        [Name of Officer]
                                        [Title of Officer]
                                        [Address of Investor for receipt of
                                        distributions]

                                        Address of Investor for receipt of tax
                                        information:

                                       D-2

<PAGE>

      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/she
executed the same as his/her free act and deed and the free act and deed of the
Investor.

      Subscribed and sworn before me this ___ day of _________, 20___.

NOTARY PUBLIC

COUNTY OF

STATE OF

My commission expires the ___ day of ___________________, 20___.

                                       D-3

<PAGE>

                                                                       EXHIBIT E

                         FORM OF TRANSFEROR CERTIFICATE

                              ______________, 2004

Nomura Asset Acceptance Corporation
2 World Financial Center, Building B
New York, New York 10281

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004-2477
Attention: Nomura Asset Acceptance
 Corporation, Alternative Loan Trust, Series 2004-AR2

            Re:   Nomura Asset Acceptance Corporation
                  Mortgage Pass-Through Certificates, Series 2004-AR2, Class__
                  ------------------------------------------------------------

Ladies and Gentlemen:

      In connection with the sale by ___________ (the "Seller") to ________ (the
"Purchaser") of $_________ Initial Certificate Principal Balance of Mortgage
Pass-Through Certificates, Series 2004-AR2, Class _____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of September 1, 2004, among Nomura Asset
Acceptance Corporation, as depositor (the "Depositor"), Nomura Credit & Capital,
Inc., as seller, GMAC Mortgage Corporation, as servicer, and JPMorgan Chase
Bank, as trustee (the "Trustee"). The Seller hereby certifies, represents and
warrants to, a covenants with, the Depositor and the Trustee that:

      Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act in any
manner set forth in the foregoing sentence with respect to any Certificate. The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.

                                      E-1
<PAGE>

                                       Very truly yours,

                                       -----------------------------------
                                       (Seller)

                                       By:
                                            ------------------------------

                                       Name:
                                            ------------------------------

                                       Title:
                                            ------------------------------

                                      E-2
<PAGE>

                                                                       EXHIBIT F

            FORM OF INVESTOR REPRESENTATION LETTER (NON-RULE 144A)

                                ___________,2004

Nomura Asset Acceptance Corporation
2 World Financial Center
New York, New York 10281

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004
Attention: Nomura Asset Acceptance Corporation,
 Alternative Loan Trust, 2004-AR2

            Re:   Nomura Asset Acceptance Corporation, Alternative Loan Trust,
                  Mortgage Pass-Through Certificates, Series 2004-AR2
                  ---------------------------------------------------

Ladies and Gentlemen:

      _______________ (the "Purchaser") intends to purchase from ____________
(the "Seller") $_________ Initial Certificate Principal Balance of Mortgage
Pass-Through Certificates, Series 2004-AR2, Class _____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of September 1, 2004, among Nomura Asset
Acceptance Corporation, as depositor (the "Depositor"), Nomura Credit & Capital,
Inc., as seller, GMAC Mortgage Corporation, as servicer, and JP Morgan Chase
Bank, as trustee (the "Trustee"). All terms used herein and not otherwise
defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Purchaser hereby certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

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

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

                                      F-1

<PAGE>

            3.    The   Purchaser   is   (a)  a   substantial,   sophisticated
                  institutional  investor having such knowledge and experience
                  in financial and business  matters,  and, in particular,  in
                  such   matters   related  to   securities   similar  to  the
                  Certificates,  such that it is  capable  of  evaluating  the
                  merits  and risks of  investment  in the  Certificates,  (b)
                  able to bear the economic  risks of such an  investment  and
                  (c) an "accredited  investor" within the meaning of Rule 501
                  (a) promulgated pursuant to the Act.

            4.    The  Purchaser  has  been  furnished  with,  and  has had an
                  opportunity  to  review  (a)  a  copy  of  the  Pooling  and
                  Servicing   Agreement   and  (b)  such   other   information
                  concerning  the  Certificates,  the  Mortgage  Loans and the
                  Depositor as has been  requested by the  Purchaser  from the
                  Depositor  or the Seller and is relevant to the  Purchaser's
                  decision to purchase the  Certificates.  The  Purchaser  has
                  had any questions  arising from such review  answered by the
                  Depositor  or  the  Seller  to  the   satisfaction   of  the
                  Purchaser.

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

                                      F-2

<PAGE>

                                       Very truly yours,

                                       -----------------------------------
                                        (Purchaser)

                                       By:
                                            ------------------------------

                                       Name:
                                            ------------------------------

                                       Title:
                                            ------------------------------

                                       F-3

<PAGE>

                                                                       EXHIBIT G

                       FORM OF RULE 144A INVESTMENT LETTER

                                                                          [Date]
Nomura Credit & Capital, Inc.
2 World Financial Center, Building B
New York, New York 10281

Nomura Asset Acceptance Corporation
2 World Financial Center
New York, New York 10281

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004

          Re:  Nomura Asset Acceptance Corporation, Alternative Loan Trust,
               Mortgage Pass-Through Certificates, Series 2004-AR2 (the
               "Certificates"), including the Class Certificates (the "Private
               Certificates")
               ---------------------------------------------------------------

Dear Ladies and Gentlemen:

      In connection with our purchase of Private Certificates, we confirm that:

               (i)  we understand that the Private Certificates are not being
                    registered under the Securities Act of 1933, as amended (the
                    "Act") or any applicable state securities or "Blue Sky"
                    laws, and are being sold to us in a transaction that is
                    exempt from the registration requirements of such laws;

               (ii) any information we desired concerning the Certificates,
                    including the Private Certificates, the trust in which the
                    Certificates represent the entire beneficial ownership
                    interest (the "Trust") or any other matter we deemed
                    relevant to our decision to purchase Private Certificates
                    has been made available to us;

               (iii) we are able to bear the economic risk of investment in
                    Private Certificates; we are an institutional "accredited
                    investor" as defined in Section 501(a) of Regulation D
                    promulgated under the Act and a sophisticated institutional
                    investor and we agree to obtain a representation from any
                    transferee that such transferee is an institutional
                    "accredited investor" so long as we are required to obtain a
                    representation letter regarding compliance with the Act;

                                       G-1
<PAGE>

               (iv) we are acquiring Private Certificates for our own account,
                    not as nominee for any other person, and not with a present
                    view to any distribution or other disposition of the Private
                    Certificates;

               (v)  we agree the Private Certificates must be held indefinitely
                    by us (and may not be sold, pledged, hypothecated or in any
                    way disposed of) unless subsequently registered under the
                    Act and any applicable state securities or "Blue Sky" laws
                    or an exemption from the registration requirements of the
                    Act and any applicable state securities or "Blue Sky" laws
                    is available;

               (vi) we agree that in the event that at some future time we wish
                    to dispose of or exchange any of the Private Certificates
                    (such disposition or exchange not being currently foreseen
                    or contemplated), we will not transfer or exchange any of
                    the Private Certificates unless:

                    (A) (1) the sale is to an Eligible Purchaser (as defined
                    below), (2) if required by the Pooling and Servicing
                    Agreement (as defined below) a letter to substantially the
                    same effect as either this letter or, if the Eligible
                    Purchaser is a Qualified Institutional Buyer as defined
                    under Rule 144A of the Act, the Rule 144A and Related
                    Matters Certificate in the form attached to the Pooling and
                    Servicing Agreement (as defined below) (or such other
                    documentation as may be acceptable to the Trustee) is
                    executed promptly by the purchaser and delivered to the
                    addressees hereof and (3) all offers or solicitations in
                    connection with the sale, whether directly or through any
                    agent acting on our behalf, are limited only to Eligible
                    Purchasers and are not made by means of any form of general
                    solicitation or general advertising whatsoever; and

                    (B) if the Private Certificate is not registered under the
                    Act (as to which we acknowledge you have no obligation), the
                    Private Certificate is sold in a transaction that does not
                    require registration under the Act and any applicable state
                    securities or "blue sky" laws and, if JPMorgan Chase Bank
                    (the "Trustee") so requests, a satisfactory Opinion of
                    Counsel is furnished to such effect, which Opinion of
                    Counsel shall be an expense of the transferor or the
                    transferee;

               (vii) we agree to be bound by all of the terms (including those
                    relating to restrictions on transfer) of the Pooling and
                    Servicing, pursuant to which the Trust was formed; we have
                    reviewed carefully and understand the terms of the Pooling
                    and Servicing Agreement;

               (viii)we either: (i) are not acquiring the Privately Offered
                    Certificate directly or indirectly by, or on behalf of, an
                    employee benefit plan or other retirement arrangement which
                    is subject to Title I of the Employee Retirement Income
                    Security Act of 1974, as amended, and/or section 4975 of the

                                       G-2
<PAGE>

                    Internal Revenue Code of 1986, as amended, or (ii) are
                    providing the opinion of counsel specified in Section
                    6.02(b) of the Agreement.

               (ix) we understand that each of the Class ___ Certificates bears,
                    and will continue to bear, legends substantially to the
                    following effect: "THIS CERTIFICATE HAS NOT BEEN AND WILL
                    NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
                    AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
                    SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
                    CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
                    RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE
                    WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY
                    (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
                    144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A
                    QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
                    144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
                    PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS
                    INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
                    OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2)
                    PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE
                    144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN
                    CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
                    WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or
                    (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH ALL
                    OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING
                    NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
                    SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER
                    SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B)
                    THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE
                    TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER
                    IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
                    APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
                    APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY
                    OTHER APPLICABLE JURISDICTION.

                    NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON,
                    UNLESS THE TRANSFEREE PROVIDES EITHER A CERTIFICATION
                    PURSUANT TO SECTION 6.02(b) OF THE AGREEMENT OR AN OPINION
                    OF COUNSEL SATISFACTORY TO THE TRUSTEE THAT THE PURCHASE AND
                    HOLDING OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE
                    LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT
                    PROHIBITED

                                       G-3
<PAGE>
                    TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT
                    INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
                    SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE TRUSTEE,
                    THE DEPOSITOR OR THE SERVICER TO ANY OBLIGATION OR LIABILITY
                    IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, ALL IN
                    ACCORDANCE WITH SECTION 6.02(b) OF THE AGREEMENT.

      "Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.

      Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement, dated as of September 1, 2004,
between Nomura Asset Acceptance Corporation, as depositor, Nomura Credit &
Capital, Inc., as seller, GMAC Mortgage Corporation, as servicer, and JPMorgan
Chase Bank, as Trustee (the "Pooling and Servicing Agreement').

      If the Purchaser proposes that its Certificates be registered in the name
of a nominee on its behalf, the Purchaser has identified such nominee below, and
has caused such nominee to complete the Nominee Acknowledgment at the end of
this letter.

Name of Nominee (if any):
                         -------------------

                                       G-4
<PAGE>

      IN WITNESS  WHEREOF,  this document has been executed by the undersigned
who  is  duly  authorized  to do so on  behalf  of  the  undersigned  Eligible
Purchaser on the ___ day of ________, 20___.

                                    Very truly yours,

                                   [PURCHASER]

                                    By:
                                       -----------------------------------
                                                (Authorized Officer)

                                          [By:
                                               ---------------------------
                                                Attorney-in-fact]

                                       G-5
<PAGE>

                             Nominee Acknowledgment

      The undersigned hereby acknowledges and agrees that as to the Certificates
being registered in its name, the sole beneficial owner thereof is and shall be
the Purchaser identified above, for whom the undersigned is acting as nominee.

                                    [NAME OF NOMINEE]

                                    By:
                                       ------------------------------------
                                                (Authorized Officer)

                                          [By:
                                              ---------------------------
                                                Attorney-in-fact]

                                       G-6
<PAGE>

                                                                       EXHIBIT H

                        REQUEST FOR RELEASE OF DOCUMENTS

To:   JPMorgan Chase Bank
      Institutional Trust Services
      4 New York Plaza, 6th Floor
      New York, New York 10004-2477

RE:   Pooling and  Servicing  Agreement  dated as of September 1, 2004,  among
      Nomura Asset  Acceptance  Corporation,  as  depositor,  Nomura  Credit &
      Capital,  Inc., as seller, GMAC Mortgage Corporation,  as servicer,  and
      JPMorgan Chase Bank, as Trustee

      In connection with the administration of the Mortgage Loans held by you
pursuant to the above-captioned Pooling and Servicing Agreement, we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage
Loan described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents (check one):

_____       1.    Mortgage Paid in Full and proceeds have been deposited into
                  the Custodial Account

_____       2.    Foreclosure

_____       3.    Substitution

_____       4.    Other Liquidation

____        5.     Nonliquidation Reason:  _________

_____       6.    Mortgage Loan paid in full

                                          By:
                                             ----------------------------------
                                                (authorized signer)

                                          Issuer:
                                                 ------------------------------
                                          Address:
                                                 ------------------------------

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

                                       H-1

<PAGE>

                                                                       EXHIBIT I

                          DTC Letter of Representations
                             [provided upon request]

                                       I-1

<PAGE>

                                                                       EXHIBIT J

                  Schedule of Mortgage Loans with Lost Notes

                                     [None]

                                       J-1
<PAGE>

                                                                       EXHIBIT K

                           Prepayment Charge Schedule

                                       K-1

<PAGE>

                                                                       EXHIBIT L

                        FORM OF SERVICER'S CERTIFICATION

               Re:  Pooling and Servicing Agreement (the "POOLING AND SERVICING
                    AGREEMENT"), dated as of September 1, 2004, by and among
                    Nomura Asset Acceptance Corporation, as depositor (the
                    "Depositor"), Nomura Credit & Capital, Inc., as seller (the
                    "Seller"), JPMorgan Chase Bank, as trustee (the "Trustee"),
                    GMAC Mortgage Corporation, as servicer, ("GMAC")
                    ----------------------------------------------------------

I, [identify the certifying individual], certify to the Depositor and the
Trustee, and their officers, directors and affiliates, and with the knowledge
and intent that they will rely upon this certification, that:

1.   I am responsible for reviewing the activities performed by GMAC under the
     Pooling and Servicing Agreement and based upon my knowledge and the annual
     compliance review required under the Pooling and Servicing Agreement, and
     except as disclosed in the annual compliance statement required to be
     delivered to the Trustee in accordance with the terms of the Pooling and
     Servicing Agreement (which has been so delivered to the Trustee), GMAC has
     fulfilled its obligations under the Pooling and Servicing Agreement. Based
     upon my knowledge, the annual statement of compliance delivered by GMAC
     under the Pooling and Servicing Agreement does not contain any untrue
     statement of material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statement was made, not misleading; and

2.   Based on my knowledge, all significant deficiencies relating to GMAC's
     compliance with the minimum servicing standards for purposes of the report
     provided by an independent public accountant, after conducting a review
     conducted in compliance with the Uniform Single Attestation Program for
     Mortgage Bankers or similar procedure, as set forth in the Pooling and
     Servicing Agreement, have been disclosed to such accountant and are
     included in such reports.

Date: _________________________

_______________________________
[Signature] [Title]

                                       L-1
<PAGE>

                                    EXHIBIT M
                         FORM OF TRUSTEE'S CERTIFICATION

[DEPOSITOR/ISSUER NAME]

Re:   [Transaction Name]

Reference is made to the Pooling and Servicing Agreement, dated as of September
1, 2004 (the "Pooling and Servicing Agreement"), by and among JPMorgan Chase
Bank (the "Trustee"), GMAC Mortgage Corporation, as servicer, ("GMAC"), Nomura
Asset Acceptance Corporation, as depositor (the "Depositor") and Nomura Credit &
Capital, Inc., as seller (the "Seller"). The Trustee, hereby certifies to the
Depositor, and its officers, directors and affiliates, and with the knowledge
and intent that they will rely upon this certification, that:

          (i)  The Trustee has reviewed the annual report on Form 10-K for the
               fiscal year [ ], and all reports on Form 8-K containing
               distribution reports filed in respect of periods included in the
               year covered by that annual report, relating to the
               above-referenced trust;

          (ii) Based solely upon the information provided to us by the servicer,
               the information set forth in the reports referenced in (i) above
               does not contain any untrue statement of material fact; and

          (iii) Based on my knowledge, the distribution information required to
               be provided by the Trustee under the Pooling and Servicing
               Agreement is included in these reports.

Date:

                                    JPMorgan Chase Bank, as Trustee

                                    By:    ____________________________
                                    Name:  ____________________________
                                    Title: ____________________________

                                       M-1

<PAGE>

                                    EXHIBIT N

APPENDIX E - STANDARD & POOR'S ANTI-PREDATORY LENDING CATEGORIZATION

Standard & Poor's has categorized loans governed by anti-predatory lending laws
in the Jurisdictions listed below into three categories based upon a combination
of factors that include (a) the risk exposure associated with the assignee
liability and (b) the tests and thresholds set forth in those laws. Note that
certain loans classified by the relevant statute as Covered are included in
Standard & Poor's High Cost Loan Category because they included thresholds and
tests that are typical of what is generally considered High Cost by the
industry.
<TABLE>
<CAPTION>

STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
-----------------------------------------------

---------------------------------------------------------------------------------------------
  State/Jurisdiction    Name of Anti-Predatory Lending             Category under Applicable
                           Law/Effective Date                       Anti-Predatory Lending Law
  ------------------    ------------------------------             -------------------------
----------------------------------------------------------------------------------------------

<S>                    <C>                                         <C>
Arkansas               Arkansas Home Loan Protection               High Cost Home Loan
                       Act, Ark. Code Ann. ss.ss. 23-53-101
                       et seq.

                       Effective July 16, 2003
----------------------------------------------------------------------------------------------

Cleveland Heights, OH  Ordinance No. 72-2003 (PSH), Mun.           Covered Loan
                       Code ss.ss. 757.01 et seq.

                       Effective June 2, 2003
----------------------------------------------------------------------------------------------

Colorado               Consumer Equity Protection, Colo.           Covered Loan
                       Stat. Ann. ss.ss. 5-3.5-101 et seq.

                       Effective for covered loans offered
                       or entered into on or after January 1,
                       2003. Other provisions of the Act took
                       effect on June 7, 2002

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

Connecticut            Connecticut Abusive Home Loan               High Cost Home Loan
                       Lending Practices Act, Conn. Gen.
                       Stat. ss.ss. 36a-746 et seq.

                       Effective October 1, 2001
----------------------------------------------------------------------------------------------

District of Columbia   Home Loan Protection Act, D.C.               Covered Loan
                       Code ss.ss. 26-1151.01 et seq.

                       Effective for loans closed on or
                       after January 28, 2003
----------------------------------------------------------------------------------------------

Florida                Fair Lending Act, Fla. Stat. Ann.            High Cost Home Loan
                       ss.ss. 494.0078 et seq.

                       Effective October 2, 2002
----------------------------------------------------------------------------------------------

Georgia (Oct. 1, 2002  Georgia Fair Lending Act, Ga.                High Cost Home Loan
- Mar. 6, 2003)        Code Ann. ss.ss. 7-6A-1 et seq.

                       Effective October 1, 2002 - March
                       6, 2003
----------------------------------------------------------------------------------------------

Georgia as amended     Georgia Fair Lending Act, Ga.               High Cost Home Loan
(Mar. 7, 2003 -        Code Ann. ss.ss. 7-6A-1 et seq.
current)
                       Effective for loans closed on or
                       after March 7, 2003
----------------------------------------------------------------------------------------------

                                      N-1
<PAGE>

----------------------------------------------------------------------------------------------
HOEPA Section 32       Home Ownership and Equity                   High Cost Loan
                       Protection Act of 1994, 15 U.S.C.
                       ss. 1639, 12 C.F.R. ss.ss. 226.32 and
                       226.34

                       Effective October 1, 1995,
                       amendments October 1, 2002
----------------------------------------------------------------------------------------------

Illinois               High Risk Home Loan Act, Ill.               High Risk Home Loan
                       Comp. Stat. tit. 815, ss.ss. 137/5 et
                       seq.

                       Effective January 1, 2004 (prior
                       to this date, regulations under
                       Residential Mortgage License Act
                       effective from May 14, 2001)
----------------------------------------------------------------------------------------------

Kansas                 Consumer Credit Code, Kan. Stat.            High Loan to Value
                       Ann. ss.ss. 16a-1-101 et seq.               Consumer Loan (id. ss.
                                                                   16a-3-207) and;
                       Sections 16a-1-301 and 16a-3-207        --------------------------------
                       became effective April 14, 1999;            High APR Consumer
                       Section 16a-3-308a became                   Loan (id. ss.
                       effective July 1, 1999                      16a-3-308a)

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

Kentucky               2003 KY H.B. 287 - High Cost Home           High Cost Home Loan
                       Loan Act, Ky. Rev. Stat. ss.ss.
                       360.100 et seq.

                       Effective June 24, 2003

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

Maine                  Truth in Lending, Me. Rev. Stat.            High Rate High Fee
                       tit. 9-A, ss.ss. 8-101 et seq.              Mortgage

                       Effective September 29, 1995 and
                       as amended from time to time

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

Massachusetts          Part 40 and Part 32, 209 C.M.R.             High Cost Home Loan
                       ss.ss. 32.00 et seq. and 209 C.M.R.
                       ss.ss. 40.01 et seq.

                       Effective March 22, 2001 and
                       amended from time to time

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

Nevada                 Assembly Bill No. 284, Nev. Rev.            Home Loan
                       Stat. ss.ss. 598D.010 et seq.

                       Effective October 1, 2003

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

New Jersey             New Jersey Home Ownership                   High Cost Home Loan
                       Security Act of 2002, N.J. Rev.
                       Stat. ss.ss. 46:10B-22 et seq.

                       Effective for loans closed on or
                       after November 27, 2003

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

New Mexico             Home Loan Protection Act, N.M.             High Cost Home Loan
                       Rev. Stat. ss.ss. 58-21A-1 et seq.

                       Effective as of January 1, 2004;
                       Revised as of February 26, 2004

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

New York               N.Y. Banking Law Article 6-l               High Cost Home Loan

                       Effective for applications made
                       on or after April 1, 2003

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

                                      N-2
<PAGE>

----------------------------------------------------------------------------------------------
North Carolina         Restrictions and Limitations on            High Cost Home Loan
                       High Cost Home Loans, N.C. Gen.
                       Stat. ss.ss. 24-1.1E et seq.

                       Effective July 1, 2000; amended
                       October 1, 2003 (adding open-end
                       lines of credit)

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

Ohio                   H.B. 386 (codified in various               Covered Loan
                       sections of the Ohio Code), Ohio
                       Rev. Code Ann. ss.ss. 1349.25 et seq.

                       Effective May 24, 2002

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

Oklahoma               Consumer Credit Code (codified in           Subsection 10
                       various sections of Title 14A)              Mortgage

                       Effective July 1, 2000; amended
                       effective January 1, 2004

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

South Carolina         South Carolina High Cost and                 High Cost Home Loan
                       Consumer Home Loans Act, S.C.
                       Code Ann. ss.ss. 37-23-10 et seq.

                       Effective for loans taken on or
                       after January 1, 2004

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

West Virginia          West Virginia Residential                    West Virginia
                       Mortgage Lender, Broker and                  Mortgage Loan Act
                       Servicer Act, W. Va. Code Ann. ss.ss.        Loan
                       31-17-1 et seq.

                       Effective June 5, 2002
----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>

STANDARD & POOR'S COVERED LOAN CATEGORIZATION

---------------------------------------------------------------------------------------------
  State/Jurisdiction    Name of Anti-Predatory Lending             Category under Applicable
                           Law/Effective Date                       Anti-Predatory Lending Law
  ------------------    ------------------------------             -------------------------
----------------------------------------------------------------------------------------------

<S>                    <C>                                           <C>
Georgia (Oct. 1, 2002  Georgia Fair Lending Act, Ga.                 Covered Loan
- Mar. 6, 2003)        Code Ann. ss.ss. 7-6A-1 et seq.

                        Effective October 1, 2002 - March
                       6, 2003

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

New Jersey             New Jersey Home Ownership                     Covered Home Loan
                       Security Act of 2002, N.J. Rev.
                       Stat. ss.ss. 46:10B-22 et seq.

                       Effective November 27, 2003 -
                       July 5, 2004
----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>

STANDARD & POOR'S HOME LOAN CATEGORIZATION

---------------------------------------------------------------------------------------------
  State/Jurisdiction    Name of Anti-Predatory Lending             Category under Applicable
                           Law/Effective Date                       Anti-Predatory Lending Law
  ------------------    ------------------------------             -------------------------
----------------------------------------------------------------------------------------------

<S>                    <C>                                           <C>
                                      N-3
<PAGE>
----------------------------------------------------------------------------------------------

Georgia (Oct. 1, 2002  Georgia Fair Lending Act, Ga.                 Home Loan
- Mar. 6, 2003)        Code Ann. ss.ss. 7-6A-1 et seq.

                       Effective October 1, 2002 - March
                       6, 2003

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

New Jersey             New Jersey Home Ownership                     Home Loan
                       Security Act of 2002, N.J. Rev.
                       Stat. ss.ss. 46:10B-22 et seq.

                       Effective for loans closed on or
                       after November 27, 2003

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

New Mexico             Home Loan Protection Act, N.M.                 Home Loan
                       Rev. Stat. ss.ss. 58-21A-1 et seq.

                       Effective as of January 1, 2004;
                       Revised as of February 26, 2004

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

North Carolina         Restrictions and Limitations on                Consumer Home Loan
                       High Cost Home Loans, N.C. Gen.
                       Stat. ss.ss. 24-1.1E et seq.

                       Effective July 1, 2000; amended
                       October 1, 2003 (adding open-end
                       lines of credit)

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

South Carolina         South Carolina High Cost and                   Consumer Home Loan
                       Consumer Home Loans Act, S.C.
                       Code Ann. ss.ss. 37-23-10 et seq.

                       Effective for loans taken on or
                       after January 1, 2004

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

</TABLE>

                                      N-4EXHIBIT 10. 1

                                   CREE, INC.

                      CHARLES SWOBODA EMPLOYMENT AGREEMENT

     This  Agreement  is entered  into as of October  13,  2004 (the  "Effective
Date") by and  between  Cree,  Inc.  (the  "Company")  and  Charles  M.  Swoboda
("Executive").

1. Duties and Scope of Employment.

     (a) Positions and Duties. As of the Effective Date, Executive will serve as
President  and Chief  Executive  Officer,  reporting to the  Company's  Board of
Directors  (the "Board").  Executive will render such business and  professional
services in the performance of his duties,  consistent with Executive's position
within the  Company,  as will  reasonably  be assigned to him by the Board.  The
period  Executive is employed by the Company under this Agreement is referred to
herein as the "Employment Term".

     (b) Board Membership.  At each annual meeting of the Company's stockholders
during the Employment  Term,  the Company will nominate  Executive to serve as a
member of the  Board.  Executive's  service  as a member  of the  Board  will be
subject  to any  required  stockholder  approval.  While a member of the  Board,
Executive  will be permitted  to attend all meetings of the Board and  executive
sessions thereof, on substantially the same basis as other members of the Board,
except as is prohibited by applicable law or listing  standard.  Notwithstanding
the preceding sentence,  Executive will not have the right to attend any portion
of a meeting  or  executive  session  where the item of  discussion  relates  to
Executive's  employment,  including  (but  not  limited  to)  his  compensation,
performance, and/or service on the Board.

     (c)  Obligations.   During  the  Employment  Term,  Executive  will  devote
Executive's full business  efforts and time to the Company.  For the duration of
the  Employment  Term,  Executive  agrees  not to  actively  engage in any other
employment,  occupation,  or  consulting  activity  for any  direct or  indirect
remuneration without the prior approval of the Board (which approval will not be
unreasonably  withheld);  provided,  however,  that Executive  may,  without the
approval of the Board,  serve in any capacity  with any civic,  educational,  or
charitable   organization,   provided  such  services  do  not  interfere   with
Executive's obligations to Company.

2.  At-Will  Employment.  Executive  and  the  Company  agree  that  Executive's
employment with the Company constitutes "at-will" employment.  Executive and the
Company  acknowledge that this employment  relationship may be terminated at any
time, upon written notice to the other party,  with or without good cause or for
any or no cause, at the option either of the Company or Executive.  However,  as
described in this  Agreement,  Executive  may be entitled to severance  benefits
depending  upon the  circumstances  of  Executive's  termination  of employment.
Executive  agrees  to  resign  from  his  position  as a  member  of  the  Board
immediately  following  the  termination  of  his  employment  if the  Board  so
requests.
<PAGE>
3. Term of Agreement.  This  Agreement  will have an initial term of three years
commencing on the  Effective  Date.  On the third  anniversary  of the Effective
Date,  and on each annual  anniversary of the Effective  Date  thereafter,  this
Agreement automatically will renew for an additional one-year term unless either
party  provides the other party with written  notice of non-renewal at least 120
days  prior to the  date of  automatic  renewal.  Notwithstanding  any  contrary
provision  in this  Section  3, in the event of a Change of  Control  during the
Employment  Term, this Agreement will continue for not less than 12 months after
the date of the Change of Control.

4. Compensation.

     (a) Base Salary.  As of the Effective  Date, the Company will pay Executive
an annual  salary of $500,000 as  compensation  for his  services  (such  annual
salary,  as is then effective,  to be referred to herein as "Base Salary").  The
Base Salary will be paid  periodically in accordance  with the Company's  normal
payroll  practices  and  be  subject  to  the  usual,   required   withholdings.
Executive's  salary will be subject to review by the  Compensation  Committee of
the Board (the "Committee") not less than annually, and adjustments will be made
in the discretion of the Compensation Committee.

     (b) Annual  Incentive.  Executive will be eligible to receive earned annual
incentives  payable for the achievement of performance  goals established by the
Committee.  Executive's  target  annual  incentive  will be at least 70% of Base
Salary,  as determined by the Committee.  The actual earned  incentive,  if any,
payable to  Executive  for any fiscal year of the  Company  will depend upon the
extent to which the applicable  performance  goal(s)  specified by the Committee
are achieved and will be decreased or increased for under- or  over-performance.
For each fiscal year of the Company,  the  Committee  will endeavor to establish
the applicable performance goal(s) no later than the 90th day of the fiscal year
to which the goals relate.  Executive  will have the  opportunity to discuss the
nature of such  performance  goals with the Committee prior to such  performance
goals being  established.  Except as specifically  provided herein,  Executive's
annual  incentive  will be subject to the terms and  conditions of the Company's
annual  incentive  plan  for  executive  officers,  including  payment  date and
continued employment obligations.

     (c) Long-Term  Incentive.  Executive will be eligible to receive  long-term
incentives  subject to terms and conditions  established  by the Committee,  the
underlying  long-term  incentive plan document,  and the  Committee's  terms and
conditions for the applicable type of award,  including vesting criteria such as
continued service or performance objectives.

5. Employee  Benefits.  Executive  will be eligible to participate in accordance
with the terms of all Company employee benefit plans, policies, and arrangements
that are applicable to other executive  officers of the Company,  as such plans,
policies,  and  arrangements  may exist from time to time.  Notwithstanding  the
preceding  sentence,  Executive's  eligibility  for benefits  (other than annual
incentive, long term incentives or other long-term compensation (whether payable
in cash, stock, or otherwise),  salary, or similar) will be at least as great as
that of any other executive officer of the Company, provided,  however, that (a)
Executive  will be eligible for any enhanced  level of benefits that he approves
only upon subsequent Committee approval,  and (b) Executive will not be eligible
for any  extraordinary or unusual benefits provided to another executive officer
as part of a  negotiation  for such  executive  officer to  commence or continue
employment.

                                      -2-
<PAGE>
6.  Expenses.  The Company  will  reimburse  Executive  for  reasonable  travel,
entertainment,  and other expenses  incurred by Executive in the  furtherance of
the  performance  of  Executive's  duties  hereunder,  in  accordance  with  the
Company's expense reimbursement policy as in effect from time to time.

7.  Termination  of Employment.  In the event  Executive's  employment  with the
Company terminates for any reason,  Executive will be entitled to any (a) unpaid
Base Salary accrued up to the effective  date of  termination,  (b) unpaid,  but
earned and accrued  annual  incentive  for any  completed  fiscal year as of his
termination  of  employment,  (c) pay for accrued but unused  vacation  that the
Company is legally  obligated to pay Executive,  (d) benefits or compensation as
provided under the terms of any employee benefit and compensation  agreements or
plans applicable to Executive,  (e) unreimbursed  business  expenses required to
reimbursed to Executive,  and (f) rights to  indemnification  Executive may have
under the Company's Articles of Incorporation, Bylaws, the Employment Agreement,
or separate  indemnification  agreement,  as  applicable.  In  addition,  if the
termination  is by the Company  without  Cause or by Executive  for Good Reason,
Executive  will be entitled to the amounts and benefits  specified in Section 8,
subject to the limitation of Section 8(e).

8. Severance.

     (a) Termination  Without Cause or Resignation for Good Reason other than in
connection with a Change of Control. If Executive's  employment is terminated by
the Company  without Cause or by Executive for Good Reason,  and the termination
is not in  Connection  with a Change of  Control,  then,  subject  to Section 9,
Executive will receive: (i) continued payment of Base Salary for the Continuance
Period,  (ii) a lump sum payment,  paid at the time fiscal year bonuses are next
paid to other Company executive  officers following  Executive's  termination of
employment,  equal to twice the average of Executive's  earned annual incentives
for  the  two  most  recently  completed  fiscal  years  immediately   preceding
Executive's termination of employment,  (iii) reimbursement for premiums paid to
continued medical benefits for Executive,  Executive's  spouse,  and Executive's
eligible  dependents  under the Company's  Benefit Plans for twelve (12) months,
payable  when  such  premiums  are due  (provided  Executive  validly  elects to
continue  coverage  under  applicable  law), and (iv)  accelerated  vesting with
respect to 50% of Executive's then outstanding,  unvested equity awards that (y)
were granted  prior to the Effective  Date and have an exercise  price per share
lower than the per share fair market value of the  Company's  common stock as of
the Effective Date, or (z) are granted on or after the Effective Date.

     (b) Termination  Without Cause or Resignation for Good Reason in connection
with a Change of Control. If Executive's employment is terminated by the Company
without  Cause  or by  Executive  for Good  Reason,  and the  termination  is in
Connection with a Change of Control,  then, subject to Section 9, Executive will
receive: (i) continued payment of Base Salary for the Continuance Period, (ii) a
lump sum  payment  of an  amount  equal to  Executive's  current  target  annual
incentive,  prorated in the  proportion  that the days  elapsed  starting on the
first day of the  fiscal  year  during  which  the  termination  of  Executive's
employment  occurs  through the date of  Executive's  termination  of employment
bears to 365,  paid  within  thirty (30) days of  termination,  (iii) a lump sum
payment,  paid at the time  fiscal year  bonuses are next paid to other  Company
executive officers  following  Executive's  termination of employment,  equal to
twice the  average of  Executive's  earned  annual  incentives  for the two most
recently completed fiscal years immediately preceding Executive's termination of
employment,  (iv)  reimbursement for premiums paid to continued medical benefits

                                      -3-

<PAGE>
for Executive, Executive's spouse, and Executive's eligible dependents under the
Company's Benefit Plans for twenty-four (24) months,  payable when such premiums
are due (provided Executive validly elects to continue coverage under applicable
law),  and (v)  full  accelerated  vesting  with  respect  to  Executive's  then
outstanding, unvested equity awards.

               (i) Section 280G  Gross-up.  If any payment or benefit  Executive
          receives  pursuant to Section 8, this  Agreement,  or  otherwise,  but
          determined  without  regard to any additional  payment  required under
          this  Section  8(b)(i),   (collectively,   the  "Payment")  would  (y)
          constitute a "parachute payment" within the meaning of Section 280G of
          the Internal Revenue Code of 1986, as amended (the "Code"), and (z) be
          subject to the excise tax  imposed by Section  4999 of the Code or any
          interest or  penalties  payable  with respect to such excise tax (such
          excise  tax,  together  with  any such  interest  and  penalties,  are
          hereinafter  collectively  referred  to as  the  "Excise  Tax"),  then
          Executive  will be entitled to receive from the Company an  additional
          payment (the "Gross-Up  Payment," and any iterative  payments pursuant
          to this paragraph also will be "Gross-Up  Payments") in an amount that
          will fund the payment by  Executive  of any Excise Tax on the Payment,
          as well as all income and  employment  taxes on the Gross-Up  Payment,
          any Excise Tax imposed on the  Gross-Up  Payment  and any  interest or
          penalties  imposed with respect to income and employment taxes imposed
          on the Gross-Up  Payment.  For this purpose,  all income taxes will be
          assumed  to apply to  Executive  at the  highest  marginal  rate.  Any
          Gross-Up Payment will be paid to Executive, or for his benefit, within
          15  days  following  receipt  by  the  Company  of the  report  of the
          accounting firm described below.

               The  accounting  firm  engaged by the Company  for general  audit
          purposes  as of the day prior to the  effective  date of the Change of
          Control will perform the  foregoing  calculations.  If the  accounting
          firm so  engaged  by the  Company is also  serving  as  accountant  or
          auditor for the  individual,  entity or group  which will  control the
          Company upon the  occurrence of a Change of Control,  the Company will
          appoint  a  nationally  recognized  accounting  firm  other  than  the
          accounting  firm engaged by the Company for general audit  purposes to
          make the determinations required hereunder.  The Company will bear all
          expenses with respect to the  determinations  by such  accounting firm
          required to be made hereunder.

               The accounting firm engaged to make the determinations  hereunder
          will  provide its  calculations,  together  with  detailed  supporting
          documentation,  to the Company and Executive  within  thirty  calendar
          days after the date on which such  accounting firm has been engaged to
          make  such  determinations  or such  other  time as  requested  by the
          Company or Executive. If the accounting firm determines that no Excise
          Tax is payable with respect to a Payment,  it will furnish the Company
          and Executive with an opinion reasonably  acceptable to Executive that
          no Excise  Tax will be  imposed  with  respect  to such  Payment.  Any
          reasonable  good  faith  determinations  of the  accounting  firm made
          hereunder will be final,  binding, and conclusive upon the Company and
          Executive.

               If the Excise Tax is subsequently  determined to be less than the
          amount taken into  account  hereunder  at the time of  termination  of
          employment,  the Executive shall repay to the Company, at the time the
          reduction  in Excise Tax is  finally  determined,  the  portion of the
          Gross-Up Payment attributable to such reduction.  If the Excise Tax is
          determined  to exceed the amount taken into  account  hereunder at the
          time  of  termination  of  employment,   the  Company  shall  make  an
          additional Gross-Up Payment to the Executive in respect of such excess
          at the time the amount of such excess

                                      -4-
<PAGE>
          is finally  determined.  The  Executive  shall  notify the  Company in
          writing  of any  claim  by  the  Internal  Revenue  Service  that,  if
          successful,  would  require the payment by the Company of the Gross-Up
          Payment.  Such notification  shall be given as soon as practicable but
          no later than ten (10)  business  days after the Executive is informed
          in writing of such claim and shall  apprise  the Company of the nature
          of such  claim and the date on which  such  claim is  requested  to be
          paid.  The Executive  shall not pay such claim prior to the expiration
          of the thirty  (30) day period  following  the date on which he or she
          gives such notice to the Company (or such shorter period ending on the
          date that any payment of taxes with respect to such claim is due).  If
          the Company  notifies the Executive in writing prior to the expiration
          of such period that it desires to contest  such claim,  the  Executive
          shall:

                    (a) give the Company any information reasonably requested by
               the Company relating to such claim;

                    (b) take such  action in  connection  with  contesting  such
               claim as the Company  shall  reasonably  request in writing  from
               time to time,  including,  without  limitation,  accepting  legal
               representation   with  respect  to  such  claim  by  an  attorney
               reasonably selected by the Company;

                    (c)  cooperate  with the  Company  in good faith in order to
               effectively contest such claim; and

                    (d) permit the  Company to  participate  in any  proceedings
               relating to such claim;

          provided,  however,  that the Company  shall bear and pay directly all
          costs and expenses (including legal and accounting fees and additional
          interest and penalties)  incurred in connection  with such contest and
          shall  indemnify  and hold the  Executive  harmless,  on an  after-tax
          basis, for any Excise Tax, FICA tax, or income tax (including interest
          and  penalties  with  respect  thereto)  imposed  as a result  of such
          representation  and payment of costs and expenses.  Without limitation
          on the foregoing provisions of this Section, the Company shall control
          all proceedings taken in connection with such contest and, at its sole
          option,  may  pursue  or  forgo  any and all  administrative  appeals,
          proceedings,  hearings,  and conferences  with the taxing authority in
          respect of such claim and may, at its sole option,  either  direct the
          Executive  to pay the tax  claimed and sue for a refund or contest the
          claim in any permissible manner, and the Executive agrees to prosecute
          such contest to a determination before any administrative tribunal, in
          a court of initial jurisdiction,  and in one or more appellate courts,
          as the Company shall determine; provided, however, that if the Company
          directs  the  Executive  to pay such  claim and sue for a refund,  the
          Company shall advance the amount of such payment to the Executive,  on
          an  interest-free  basis,  and shall  indemnify and hold the Executive
          harmless,  on an  after-tax  basis,  from any Excise Tax or income tax
          (including  interest or penalties with respect  thereto)  imposed with
          respect to such  advance or with  respect to any  imputed  income with
          respect to such advance; and provided,  further, that any extension of
          the  statute  of  limitations  relating  to  payment  of taxes for the
          taxable year of the  Executive  with  respect to which such  contested
          amount  is  claimed  to be due is  limited  solely  to such  contested
          amount.  Furthermore,  the  Company's  control of the contest shall be
          limited to issues with  respect to which a Gross-Up  Payment  would be

                                      -5-
<PAGE>
          payable  hereunder  and the  Executive  shall be entitled to settle or
          contest,  as the case may be,  other  issues  raised  by the  Internal
          Revenue Service or any other taxing authority.

               If any such  claim  referred  to in this  Section  is made by the
          Internal  Revenue  Service  and  the  Company  does  not  request  the
          Executive  to contest  the claim  within  the  thirty  (30) day period
          following  notice of the claim, the Company shall pay to the Executive
          the amount on any  Gross-Up  Payment  owed to the  Executive,  but not
          previously  paid  pursuant  to  this  Section,  immediately  upon  the
          expiration  of such thirty (30) day period.  If any such claim is made
          by the Internal Revenue Service and the Company requests the Executive
          to contest  such claim,  but does not advance the amount of such claim
          to the Executive  for purposes of such contest,  the Company shall pay
          to the  Executive  the  amount  of any  Gross-Up  Payment  owed to the
          Executive,  but not  previously  paid  under  the  provisions  of this
          Section, within five (5) business days of a Final Determination of the
          liability of the  Executive  for such Excise Tax. For purposes of this
          Agreement,  a "Final  Determination"  shall be  deemed  to occur  with
          respect to a claim when (i) there is a decision,  judgment, decree, or
          other order by any court of competent  jurisdiction,  which  decision,
          judgment, decree, or other order has become final, i.e., all allowable
          appeals  pursuant to this Section have been  exhausted by either party
          to the action,  (ii) there is a closing  agreement  made under Section
          7121 of the Code, or (iii) the time for instituting a claim for refund
          has expired,  or if a claim was filed,  the time for instituting  suit
          with respect thereto has expired.

               If, after the receipt by the  Executive of an amount  advanced by
          the Company pursuant to this Section,  the Executive  becomes entitled
          to receive any refund with respect to such claim,  the Executive shall
          (subject to the  Company's  complying  with the  requirements  of this
          Section)  within five (5) business  days of receiving  any such refund
          pay to the  Company  the  amount  of such  refund  (together  with any
          interest paid or credited thereon after taxes applicable thereto).  If
          after  the  receipt  by the  Executive  of an amount  advanced  by the
          Company  pursuant  to this  Section,  a  determination  is made by the
          Internal  Revenue  Service  that the  Executive is not entitled to any
          refund with  respect to such claim and the Company does not notify the
          Executive  in writing of its intent to contest  such  denial of refund
          prior to the  expiration of thirty (30) days after the Company  learns
          of such  determination,  then such advance shall be forgiven and shall
          not be  required  to be repaid  and the amount of such  advance  shall
          offset, to the extent thereof, the amount of Gross-Up Payment required
          to be paid.

     (c) Voluntary  Termination  without Good Reason;  Termination for Cause. If
Executive's  employment  with the Company  terminates  voluntarily  by Executive
without Good Reason or is terminated for Cause by the Company,  then,  except as
provided in Section 7, (i) all further vesting of Executive's outstanding equity
awards will  terminate  immediately,  (ii) all payments of  compensation  by the
Company to Executive hereunder will terminate  immediately,  and (iii) Executive
will be eligible for severance  benefits  only in accordance  with the Company's
then established plans, programs, and practices.

     (d)  Termination  due to Death or  Disability.  If  Executive's  employment
terminates by reason of death or Disability, then, except as provided in Section
7, (i) Executive's  outstanding  equity awards will terminate in accordance with
the terms and conditions of the applicable award agreement(s); (ii) all payments
of   compensation   by  the  Company  to  Executive   hereunder  will  terminate
immediately,  and (iii)  Executive will be entitled to receive  benefits only in
accordance with the Company's then established plans, programs, and practices.

                                      -6-

<PAGE>
     (e) Sole Right to  Severance.  This  Agreement  is  intended  to  represent
Executive's  sole  entitlement to severance  payments and benefits in connection
with the termination of his employment. If however, the Company adopts a written
program that provides for  severance  payments or benefits that in the aggregate
are greater than the payments and benefits  provided under this Agreement,  then
to the extent  Executive is entitled to receive  severance  payments or benefits
under such  Company  program,  severance  payments and benefits due to Executive
under this Agreement will be so reduced.

9. Conditions to Receipt of Severance; No Duty to Mitigate.

     (a)  Separation  Agreement  and  Release  of  Claims.  The  receipt  of any
severance  pursuant  to Section 8 will be subject to  Executive  signing and not
revoking a separation  agreement and release of claims in substantially the form
attached  as  Exhibit  A,  but with any  appropriate  modifications,  reflecting
changes in applicable law, as is necessary or appropriate to provide the Company
with the  protection  it  would  have if the  release  were  executed  as of the
Effective  Date.  No  severance  will be paid or provided  until the  separation
agreement and release agreement becomes effective.

     (b) Nondisparagement.  During the Employment Term and for the longer of (i)
12  months  thereafter  or (ii)  the  Continuance  Period,  Executive  will  not
knowingly  disparage,  criticize,  or otherwise make any  derogatory  statements
regarding  the  Company,   its  directors,   or  its  officers.   The  foregoing
restrictions  will not  apply to any  statements  that  are made  truthfully  in
response to a subpoena or other compulsory legal process.

     (c) Other Requirements. Executive's receipt of continued severance payments
will be  subject  to  Executive  continuing  to  comply  with  the  terms of the
Confidential Information Agreement as amended by this Agreement.

     (d) No Duty to  Mitigate.  Executive  will not be required to mitigate  the
amount of any payment contemplated by this Agreement, nor will any earnings that
Executive may receive from any other source reduce any such payment.

10. Definitions.

     (a) Benefit Plans.  For purposes of this  Agreement,  "Benefit Plans" means
plans,  policies, or arrangements that the Company sponsors (or participates in)
and that  immediately  prior to Executive's  termination  of employment  provide
Executive,  Executive's  spouse,  and/or  Executive's  eligible  dependents with
medical, dental, or vision benefits. Benefit Plans do not include any other type
of  benefit  (including,  but not by way of  limitation,  financial  counseling,
disability,  life insurance,  or retirement  benefits).  A requirement  that the
Company  provide  Executive,   Executive's  spouse,  and  Executive's   eligible
dependents  with coverage  under the Benefit Plans will not be satisfied  unless
the coverage is no less favorable  than that provided to Executive,  Executive's
spouse,  and Executive's  eligible  dependents  immediately prior to Executive's
termination of employment.  Subject to the immediately  preceding sentence,  the
Company may, at its option,  satisfy any  requirement  that the Company  provide
coverage under any Benefit Plan by instead  providing  coverage under a separate
plan  or  plans  providing  coverage  that  is no less  favorable  or by  paying
Executive a lump-sum  payment  which is, on an after-tax  basis,  sufficient  to
provide Executive and Executive's eligible

                                      -7-

<PAGE>
dependents with equivalent  coverage under a third party plan that is reasonably
available to Executive, Executive's spouse, and Executive's eligible dependents.

     (b) Cause.  For purposes of this  Agreement,  "Cause" means (i) Executive's
willful and continued failure to perform the duties and  responsibilities of his
position that is not corrected  within a thirty (30) day correction  period that
begins upon delivery to Executive of a written demand for  performance  from the
Board that  describes  the basis for the Board's  belief that  Executive has not
substantially performed his duties; (ii) any act of personal dishonesty taken by
Executive in connection with his  responsibilities as an employee of the Company
with the intention or reasonable expectation that such may result in substantial
personal  enrichment of Executive;  (iii) Executive's  conviction of, or plea of
nolo contendre to, a felony that the Board  reasonably  believes has had or will
have a material detrimental effect on the Company's  reputation or business,  or
(iv)  Executive  materially  breaching  Executive's   Confidential   Information
Agreement  as modified by this  Agreement,  which breach is (if capable of cure)
not cured within thirty (30) days after the Company  delivers  written notice to
Executive of the breach.

     (c) Change of Control. For purposes of this Agreement,  "Change of Control"
will  have  the  same  meaning  as  in  Section  7.1  of  the  Company's  Equity
Compensation  Plan (as amended and restated August 5, 2002 and without regard to
any subsequent amendments).

     (d)  Continuance  Period.  For  purposes  of this  Agreement,  "Continuance
Period"  means the period of time  beginning on the date of the  termination  of
Executive's  employment and ending on the later of (i) the date twenty-four (24)
months following the termination of Executive's employment or (ii) the date that
the term of this  Agreement  otherwise  expires.  Notwithstanding  the preceding
sentence,  in  the  event  of a  termination  of  Executive's  employment  where
Executive is not entitled to severance  under Section 8(a) or Section 8(b),  the
Continuance Period shall be of no duration.

     (e) Disability.  For purposes of this  Agreement,  Disability will have the
same defined meaning as in the Company's long-term disability plan.

     (f) Good Reason.  For purposes of this  Agreement,  "Good Reason" means the
occurrence  of  any  of  the  following,  without  Executive's  consent:  (i)  a
significant  reduction of Executive's  duties or  responsibilities,  a change in
Executive's position as Chief Executive Officer or President,  or the removal of
Executive  from  any of such  duties,  positions,  or  responsibilities;  (ii) a
reduction in  Executive's  Base Salary or target annual  incentive  compensation
other than a one-time  reduction that also is applied to substantially all other
executive  officers of the Company on Executive's  recommendation or approval if
Executive's reduction is substantially proportionate to, or no greater than, the
reduction  applied to  substantially  all other  executive  officers;  (iii) the
Company  requiring  Executive  to  report  to  anyone  other  than the  Board of
Directors; (iv) the Company eliminating from reporting to Executive any position
that previously  directly  reported to Executive;  or (v) the Company  requiring
Executive to relocate his principal place of business or the Company  relocating
its  headquarters,  in  either  case to a  facility  or  location  outside  of a
thirty-five  (35)  mile  radius  from  Executive's  current  principal  place of
employment;  provided, however, that Executive only will have Good Reason if the
event  or  circumstances  constituting  Good  Reason  specified  in  any  of the
preceding  clauses is not cured within  thirty (30) days after  Executive  gives
written  notice  to  the  Board.   Executive's  actions  approving  any  change,
reduction,  requirement, or occurrence in his role as Chief Executive Officer or

                                      -8-
<PAGE>
a director  (that  otherwise may be  considered  Good Reason) will be considered
consent for the purposes of this Good Reason definition.

     In  addition,  "Good  Reason"  also  means  the  occurrence  of  any of the
following,  without  Executive's  express written consent,  in Connection with a
Change of Control: (i) a substantial  reduction by the Company of the facilities
and  perquisites  (including  office space and location)  available to Executive
provided such reduction is not applied to all executive officers of the Company;
(ii) a material  reduction  in the kind or level of  employee  benefits to which
Executive is entitled with the result that Executive's  overall benefits package
is   significantly   reduced;   provided  such   reduction  is  not  applied  to
substantially all executive officers of the Company; or (iii) the failure of the
Company to obtain the  assumption of the  Employment  Agreement by the successor
(as defined in Section  13).

     (g) In Connection with a Change of Control. For purposes of this Agreement,
a termination of Executive's  employment with the Company is "in Connection with
a Change of Control" if Executive's  employment is terminated within twelve (12)
months following a Change of Control.

11.  Indemnification.  Subject to  applicable  law,  Executive  will be provided
indemnification  to the maximum  extent  permitted by the  Company's  bylaws and
Certificate  of  Incorporation,   with  such  indemnification  to  be  on  terms
determined by the Board or any of its committees, but on terms no less favorable
than provided to any other Company  executive officer or director and subject to
the terms of any separate written indemnification agreement.

12. Confidential Information. Executive will execute the Company's standard form
of Employee Agreement Regarding Confidential Information, Intellectual Property,
and Noncompetition  appended hereto as Exhibit B (the "Confidential  Information
Agreement");  provided, however, that Executive agrees he will be subject to the
noncompetition/nonsolicitation  provision of such  agreement  (paragraph  11(a))
during the Employment Term and,  except as provided in Section 20 hereof,  until
the later of (a) the date  twelve  (12)  months  following  the  termination  of
Executive's employment, or (b) the expiration of the Continuance Period.

13. Assignment.  This Agreement will be binding upon and inure to the benefit of
(a)  the  heirs,   executors,   and  legal  representatives  of  Executive  upon
Executive's  death, and (b) any successor of the Company.  Any such successor of
the Company will be deemed  substituted  for the Company under the terms of this
Agreement for all  purposes.  For this  purpose,  "successor"  means any person,
firm,  corporation,  or other  business  entity  which at any time,  whether  by
purchase,  merger,  or  otherwise,   directly  or  indirectly  acquires  all  or
substantially  all of the assets or business of the Company.  None of the rights
of  Executive  to receive  any form of  compensation  payable  pursuant  to this
Agreement may be assigned or  transferred  except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance, or other
disposition of Executive's  right to compensation or other benefits will be null
and void.

14. Notices. All notices, requests, demands, and other communications called for
hereunder  will be in  writing  and  will be  deemed  given  (a) on the  date of
delivery if delivered  personally,  (b) one day after being sent  overnight by a
well  established  commercial  overnight  service,  or (c) four days after being
mailed by registered or certified mail,  return receipt  requested,  prepaid and

                                      -9-

<PAGE>
addressed to the parties or their successors at the following  addresses,  or at
such other addresses as the parties may later designate in writing:

                  If to the Company:

                  Attn: Chairman of the Compensation Committee
                  c/o Corporate Secretary
                  Cree, Inc.
                  4600 Silicon Drive
                  Durham, NC 27703

                  If to Executive:

                  at the last residential address known by the Company.

15.  Severability.  If any provision hereof becomes or is declared by a court of
competent  jurisdiction  to be illegal,  unenforceable,  or void, this Agreement
will continue in full force and effect without said provision.

16. Arbitration.  The Parties agree that any and all disputes arising out of the
terms of this  Agreement,  Executive's  employment  by the Company,  Executive's
service as an officer or director of the Company,  or  Executive's  compensation
and benefits, their interpretation, and any of the matters herein released, will
be subject to binding arbitration in Durham,  North Carolina before the American
Arbitration   Association  under  its  National  Rules  for  the  Resolution  of
Employment  Disputes,   supplemented  by  the  North  Carolina  Rules  of  Civil
Procedure.  The Parties agree that the prevailing  party in any arbitration will
be entitled  to  injunctive  relief in any court of  competent  jurisdiction  to
enforce the arbitration  award. The Parties hereby agree to waive their right to
have any  dispute  between  them  resolved in a court of law by a judge or jury.
This paragraph will not prevent either party from seeking  injunctive relief (or
any other  provisional  remedy)  from any  court  having  jurisdiction  over the
Parties  and the  subject  matter  of  their  dispute  relating  to  Executive's
obligations under this Agreement and the Confidential Information Agreement.

17. Legal and Tax Expenses.  The Company will reimburse  Executive up to $15,000
for reasonable legal and tax advice expenses  incurred by him in connection with
the negotiation,  preparation,  and execution of this Agreement. In addition, in
the event of a dispute relating to any provision of this Agreement following the
Effective  Date,  the Company will  reimburse  Executive's  fees and expenses as
incurred  quarterly,  including  reasonable  attorneys' fees, in connection with
such dispute, provided Executive prevails on at least one material issue in such
dispute,  or provided an arbitrator  does not determine that  Executive's  legal
positions were  frivolous or without legal  foundation.  In the event  Executive
does not so prevail or in the event of such determination,  Executive will repay
to the Company any  amounts  previously  reimbursed  by it, and  Executive  will
reimburse the Company for its fees and expenses, including reasonable attorneys'
fees, incurred in connection with the dispute.

18.  Integration.  This Agreement,  together with the  Confidential  Information
Agreement and the standard forms of equity award grant that describe Executive's

                                      -10-

<PAGE>
outstanding  equity awards,  represents the entire  agreement and  understanding
between the parties as to the subject  matter herein and supersedes all prior or
contemporaneous  agreements whether written or oral. No waiver,  alteration,  or
modification  of any of the  provisions of this Agreement will be binding unless
in a writing  and is signed by duly  authorized  representatives  of the parties
hereto.

19.  Waiver of Breach.  The waiver of a breach of any term or  provision of this
Agreement, which must be in writing, will not operate as or be construed to be a
waiver of any other previous or subsequent breach of this Agreement.

20.  Survival.  The  Confidential   Information  Agreement,  the  Company's  and
Executive's responsibilities under Sections 7, 8 and 9, and Sections 11, 12, 16,
and 17 will  survive the  termination  of this  Agreement.  Notwithstanding  the
preceding  sentence,  in the event this  Agreement  expires  because the Company
delivers notice of non-renewal of the term of this Agreement pursuant to Section
3, the amendment of the Confidential  Information  Agreement provided by Section
12 will expire as of the expiration of the term of this Agreement.

21.  Headings.  All captions and Section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

22. Tax  Withholding.  All  payments  made  pursuant to this  Agreement  will be
subject to withholding of applicable  taxes.

23.  Governing  Law. This Agreement will be governed by the laws of the State of
North Carolina (with the exception of its conflict of laws provisions).

24.  Acknowledgment.  Executive  acknowledges that he has had the opportunity to
discuss this matter with and obtain  advice from his private  attorney,  has had
sufficient  time to,  and has  carefully  read  and  fully  understands  all the
provisions of this  Agreement,  and is knowingly and  voluntarily  entering into
this Agreement.

25.  Counterparts.  This  Agreement  may be executed in  counterparts,  and each
counterpart  will  have  the same  force  and  effect  as an  original  and will
constitute  an  effective,  binding  agreement  on  the  part  of  each  of  the
undersigned.

                                      -11-
<PAGE>
     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by a duly authorized officer, as of the day and year written
below.

COMPANY:

CREE, INC.

       /s/ James E. Dykes                           Date:    October 13, 2004
------------------------------------------
James E. Dykes
Compensation Committee Chairman

EXECUTIVE:

         /s/ Charles M. Swoboda                     Date:    October 13, 2004
-------------------------------------------
Charles M. Swoboda

               [SIGNATURE PAGE TO C. SWOBODA EMPLOYMENT AGREEMENT]

                                      -12-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}]]